Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices 58117

1The Intermediate Companies have been or will

be formed prior to consummation of the proposed

merger described in the filing.

2See LG&E Energy Corp., Holding Co. Act Release

No. 26886 (Apr. 30, 1998).

3LG&E Energy will merge with a Kentucky

corporation to be formed as a direct, wholly owned

subsidiary of PowerGen US Investments Corp.

(‘‘Merger Sub’’), with LG&E Energy as the surviving

entity.

4LG&E Energy’s direct and indirect nonutility

subsidiaries are described in Appendix A to this

notice.

POSTAL SERVICE

Sunshine Act Meeting

TIMES AND DATES: 9 a.m., Monday,

October 2, 2000; 8:30 a.m., Tuesday,

October 3, 2000.

PLACE: Previously Published.

STATUS: October 2 (Closed); October 3

(Open).

MATTERS TO BE CONSIDERED: 

Addition to Agenda

Tuesday, October 3—8:30 a.m. (Open)

Fiscal Year 2001 Annual Performance

Plan

CONTACT PERSON FOR MORE INFORMATION:

David G. Hunter, Secretary of the Board,

U.S. Postal Service, 475 L’Enfant Plaza,

SW., Washington, DC 20260–1000.

Telephone (202) 268–4800.

David G. Hunter,

Secretary.

TENTATIVE AGENDA

Monday Session

October 2—9 a.m. (Closed)—San Diego

Marriott in Marina Ballroom D

1. Financial Performance. (Mr. Richard

Strasser)

2. Fiscal Year 2001 Integrated Financial

Plan. (Mr. Richard Strasser)

3. Establish/Deploy Process. (Mr. Patrick

Donahoe)

4. Fiscal Year 2001 EVA Variable Pay

Program. (Ms. Yvonne Maguire)

5. Overview of the Sales Organization.

(Ms. Gail Sonnenberg)

6. Briefing on Advertising. (Mr. Allen

Kane)

7. EEO Settlement Authority. (Ms. Mary

Anne Gibbons)

8. Personnel Matters.

9. Compensation Issues.

Tuesday Session

October 3—8:30 a.m. (Open)—San

Diego Marriott in Marina Ballroom D

1. Minutes of the Previous Meeting,

August 28–29, 2000.

2. Remarks of the Postmaster General

and CEO. (Mr. William Henderson)

3. Fiscal Year 2001 Annual Performance

Plan. (Chairman Dyhrkopp)

4. Board of Governors Calendar Year

2001 Meeting Schedule. (Chairman

Dyhrkopp)

5. Office of the Governors FY 2001

Budget. (Chairman Dyhrkopp)

6. Preliminary FY 2002 Appropriation

Request. (Mr. Richard Strasser)

7. Capital Investments.

a. Champaign, Illinois, Processing and

Distribution Facility Expansion.

(Mr. Danny Jackson)

b. Stamford, Connecticut—New

Springdale Station Additional

Funding. (Ms. Diane Van Loozen)

8. Report on the San Diego District.

9. Tentative Agenda for the November

13–14, 2000, meeting in

Washington, DC.

[FR Doc. 00–24912 Filed 9–25–00; 2:12 pm]

BILLING CODE 7710–12–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 35–27231; International Series

Release No. 1232]

Filings Under the Public Utility Holding

Company Act of 1935, as Amended

(‘‘Act’’)

September 20, 2000.

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 under the Act. 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(s) is/are available for

public inspection through the

Commission’s Branch 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 13, 2000, to the Secretary,

Securities and Exchange Commission,

Washington, DC 20549–0609, 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 the case of an attorney at

law, by certificate) should be filed with

the request. Any request for hearing

should identify specifically the issues of

facts 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 October 13, 2000, the

application(s) and/or declaration(s), as

filed or as amended, may be granted

and/or permitted to become effective.

PowerGen PLC, et al. (70–9671)

PowerGen plc (‘‘PowerGen’’), a public

limited company organized under the

laws of England and Wales, its wholly

owned nonutility holding company

subsidiaries, PowerGen US Holdings

Limited (‘‘US Holdings’’), PowerGen US

Investments Limited, Ergon US

Investments Limited, PowerGen

Luxembourg sarl, PowerGen

Luxembourg Holdings sarl, PowerGen

Luxembourg Investments sarl,

PowerGen US Partnership and

PowerGen U.S. Investments Corporation

(these subsidiaries, ‘‘Intermediate

Companies’’), each located at 53 New

Broad Street, London EC2M 1SL, United

Kingdom; 1 LG&E Energy Corp. (‘‘LG&E

Energy’’), a public-utility holding

company exempt from registration by

order under section 3(a)(1) of the Act,2

located at 220 West Main Street,

Louisville, Kentucky 40232; LG&E

Energy’s wholly owned public-utility

company subsidiaries Louisville Gas

and Electric Company (‘‘LG&E’’),

located at 220 West Main Street,

Louisville, Kentucky 40232, and

Kentucky Utilities Company (‘‘KU’’,

located at One Quality Street,

Lexington, Kentucky 40507, and LG&E

Energy’s nonutilty subsidiaries LG&E

Capital Corp., LG&E Energy Marketing

Inc. and LG&E Energy Power Inc., each

located at 220 West Main Street,

Lexington, Kentucky 40232

(collectively, ‘‘Applicants’’), have filed a

joint application-declaration

(‘‘Application’’) under sections 2(a)(7),

2(a)(8), 3(a)(1), 3(a)(2), 4, 5, 6(a), 7, 9(a),

10, 11(b), 12(b), 12(c), 13(b), 14, 15 and

33 of the Act, and rules 42, 43, 45, 46,

52, 53, 54, 80–91, 93 and 94 in

connection with the proposed

acquisition of LG&E Energy by

PowerGen (‘‘Merger’’) and related

transactions. Following the Merger,

PowerGen and each of the Intermediate

Companies will register under section 5

of the Act.

Summary of Proposals

PowerGen proposes to acquire all of

the issued and outstanding common

stock of LG&E Energy 3 (‘‘LG&E Energy

Common Stock’’). Through the

acquisition, PowerGen would indirectly

acquire LG&E; KU; a 20% interest in

Electric Energy, Inc. (‘‘EEI’’ and together

with LG&E and KU, ‘‘LG&E Energy

Utility Subsidiaries’’),4 an electric

utility company; and a 4.9% interest

held by LG&E and a 2.9% interest held

by KU in Ohio Valley Electric Company

(‘‘OEC’’), an electric utility company;

and LG&E Energy’s direct and indirect

nonutility subsidiaries (‘‘LG&E Energy

Nonutility Subsidiaries,’’ and together

58118 Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices

5PowerGen has one other direct subsidiary,

PowerGen Share Scheme Trustee Limited (‘‘Share

Trustee’’). Share Trustee, a trust company,

administers employee stock plans to benefit the

employees of PowerGen.

6PowerGen’s subsidiaries and activities are

described in Appendix A to this notice.

7PowerGen Group Holdings, a new, unlimited

liability holding company, will be established

between PowerGen and PowerGen UK. This

measure will permit PowerGen International to

become a sister company, rather than a subsidiary,

of PowerGen UK. At the same time, it will create

a single FUCO, with ownership of all FUCO

businesses except those in the LG&E Energy Group.

8Applicants explain that the golden share, which

is held by the U.K. government, effectively operates

as governmental change-in-control regulation.

9All figures are presented on a U.S. Generally

Accepted Accounting Procedures (‘‘U.S. GAAP’’)

basis. The figures for revenues and net income were

translated into dollars using a rate of U.S. $1.6172

for one pound, and the figure for total assets was

translated using a rate of U.S. $1.6117 for one

pound. Consistent with U.S. GAAP, PowerGen’s

share of joint ventures and associates’ businesses is

included in net income and assets but is omitted

from revenues.

with the LG&E Energy Utility

Subsidiaries, the ‘‘LG&E Energy

Subsidiaries’’). PowerGen seeks to retain

LG&E Energy and KU as public-utility

holding company subsidiaries exempt

from registration under sections 3(a)(1)

and 3(a)(2), respectively. PowerGen

seeks authority to engage in acquisitionrelated financing transactions; to retain

the gas utility system of LG&E; and to

retain PowerGen’s existing utility and

non utility activities, businesses and

investments and the LG&E Energy

Nonutility Subsidiaries. Applicants

request that the Commission disregard:

(1) For purposes of calculating the

percentage limitation of rule 58,

nonutility investments made by LG&E

Energy prior to the effective date of rule

58; and (2) for purposes of applying

section 11(b)(2) of the Act, the existence

in the corporate structure of the

Intermediate Companies and KU.

Applicants further request authority: (1)

To execute a system tax allocation

agreement, (2) to establish a service

company subsidiary and (3) to adopt

utility and non utility service company

agreements.

In addition, Applicants request

authorization to engage in a series of

financial transactions. Following the

Merger, Applicants propose to maintain

in place the existing financing

arrangements of LG&E and its

subsidiaries and to engage in a variety

of transactions, including, among other

things: (1) External financings by

PowerGen, US Holdings, LG&E and KU,

(2) intrasystem financings by the

Intermediate Companies, LG&E and the

LG&E Energy Subsidiaries (together

with LG&E Energy, ‘‘LG&E Energy

Group’’), (3) guarantees by PowerGen,

US Holdings and members of the LG&E

Energy Group securities and other

obligations of their subsidiaries, (4)

payment by members of the LG&E

Energy Group of dividends out of

unearned capital or surplus and (5) use

of securities proceeds to invest in

exempt wholesale generators and

foreign utility companies.

Parties

PowerGen

PowerGen, through its subsidiaries, is

a leading U.K. gas and electric company

with significant investments in utility

operations outside the U.K. and the U.S.

PowerGen conducts its business through

two direct subsidiaries: PowerGen U.K.

which conducts PowerGen’s U.K.

businesses, and U.S. Holdings.5

PowerGen U.K. serves as a holding

company over PowerGen Energy

(formerly East Midlands Electricity plc)

and those PowerGen subsidiaries that

will not be in the LG&E Energy chain of

ownership following the Merger.

PowerGen U.K.’s primary businesses

are generation and distribution of

electricity. It is also involved, either

directly or through its subsidiaries or

investment interests, in the

transportation, marketing and delivery

of natural gas, and the development and

operation of combined heat and power

plants (i.e., cogeneration) and renewable

energy facilities (i.e., wind farms).

PowerGen Energy, plc (‘‘PowerGen

Energy’’) is the third largest regional

electricity company in England and

Wales. It distributes electricity to

approximately 2.3 million residential

and business customers in a service

territory covering a 16,000 square

kilometer area. PowerGen Energy

operates a distribution network of over

67,000 kilometers of overhead lines and

underground cables together with utility

connections and metering services.

PowerGen U.K.’s other significant

subsidiaries are: PowerGen CHP Limited

and PowerGen CoGeneration Limited,

subsidiaries that construct and operate

power plants that provide electricity

and heat or steam to industrial

customers; PowerGen Energy Trading

Limited, a subsidiary that trades

electricity, gas and oil in seven energy

trading markets in the U.K. and Europe;

PowerGen Energy Solutions Limited, a

subsidiary that provides tailored energy

service products and advice to

customers; PowerGen Renewables

Holdings Limited, a 50% owned

subsidiary that develops wind farms;

PowerGen Gas Limited, a subsidiary

that operates PowerGen U.K’s natural

gas pipelines in the U.K.; and PowerGen

International Limited (‘‘PowerGen

International’’), a power project

developer involved in eleven projects in

Europe, India and Asia.6

Prior to consummation of the Merger,

either PowerGen U.K. or PowerGen

Group Holdings, a holding company to

be organized, intends to file Form U–57,

under rule 57, claiming status as a

foreign utility company (‘‘FUCO’’)

under section 33 of the Act.7 Applicants

anticipate that the claimant will retain

FUCO status following the Merger.

PowerGen’s ordinary shares are listed

on the London Stock Exchange (‘‘LSE’’).

PowerGen has an American Depositary

Share (‘‘ADS’’) program under which

some of its shares trade in the United

States as American Depositary Receipts

(‘‘ADRs’’) on the New York Stock

Exchange (‘‘NYSE’’). According to a

report filed by PowerGen with the

Commission on Form 20–F on March

29, 2000, in accordance with section

12(b) of the Securities Exchange Act of

1934, PowerGen had issued and

outstanding as of January 2, 2000

649,726,502 ordinary shares, 50 pence

par value per share, 49,998 shares of

limited voting redeemable preference

shares, 1 pound sterling par value per

share, and one ‘‘golden share.’’ 8 As of

PowerGen’s fiscal year ended January 2,

2000, PowerGen had revenues, net

income and total assets of $6.058

billion, $1.819 billion, and $10.740

billion, respectively.9

LG&E Energy

LG&E engages in the generation,

transmission, and distribution of

electricity to approximately 366,000

customers in Louisville and adjacent

areas in Kentucky. LG&E also purchases,

distributes, and sells natural gas to

approximately 295,000 customers

within this service area and in limited

additional areas. For the twelve months

ended December 31, 1999, LG&E had

electric operating revenues of $790.7

million, gas operating revenues of

$177.6 million, electric operating

income of $189.9 million, and gas

operating income of $7.9 million. LG&E

is subject to regulation by the Federal

Energy Regulatory Commission

(‘‘FERC’’) and the Kentucky Public

Service Commission (‘‘Kentucky

Commission’’).

KU is engaged in producing,

transmitting, and selling electric energy

to approximately 458,000 customers in

over 600 communities and adjacent

suburban and rural areas in 77 counties

in central, southeastern and western

Kentucky, and to approximately 29,000

customers in five counties in

southwestern Virginia. In Virginia, KU

Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices 58119

10 KU is also a holding company by reason of its

ownership interests in OVEC and EEI. KU is exempt

from registration by order under section 3(a)(1) of

the Act. See KU Energy Corp., Holding Co. Act

Release No. 25409 (Nov. 13, 1991).

11As of December 31, 1999, the market value of

the assets of LG&E Energy Foundation was $19.9

million.

12LEM has discontinued its merchant trading and

sales business, but maintains the technical systems

and personnel necessary to make power marketing

sales from assets owned or controlled by its

affiliates.

13LG&E Energy Subsidiaries are described in

Appendix A of this notice.

14Under Kentucky law, dissenting shareholders

are entitled to seek the judicially determined value

of their common stock in lieu of the $24.85

provided in the Merger Agreement.

15Applicants state that the Merger is expected to

have no effect on the outstanding public debt of the

LG&E Energy Group.

16Applicants state that there will be no third

party holders of voting equity securities in the

Intermediate Companies.

17Applicants state that the Credit Facility was

established both to fund the Merger and, if

necessary, to provide funding and accommodate

working capital needs of the Intermediate

Companies and the LG&E Energy Group. 18Applicants state that, although the Credit

Facility permits other borrowers, Applicants intend

that US Holdings will be the only borrower, with

a guarantee provided by PowerGen.

operates under the name Old Dominion

Power Company. KU also sells electric

energy at wholesale for resale to twelve

Kentucky municipalities and one

Pennsylvania municipality. In addition,

KU owns and operates a small amount

of electric utility property in one county

in Tennessee.10

For the year ended December 31,

1999, KU had operating revenues of

$937.3 million and operating income of

$196.4 million. KU is subject to

regulation by the FERC, the Kentucky

Commission, the Virginia State

Corporation Commission (‘‘Virginia

Commission ’’), and the Tennessee

Regulatory Authority (‘‘Tennessee

Commission’’).

In addition to its utility subsidiaries,

LG&E Energy has three direct, nonutility

subsidiaries. LG&E Energy Foundation,

Inc., a charitable foundation exempt

from taxation under section 501(c)(3) of

the Internal Revenue Code, makes

charitable contributions to qualified

entitles.11 LG&E Energy Marketing Inc.

(‘‘LEM’’) engages in energy marketing

and trading.12 LG&E Capital Corp, is a

holding company for nonutility

investments. Through various

subsidiaries and joint ventures, LG&E

Capital Corp. is involved in numerous

energy-related businesses. These

nonutility subsidiaries include: LG&E

Credit Corp., which offers consumer

lending programs and services in

Louisville; LG&E International Inc., a

management and holding company for

international energy project investments

and operations, each of which qualifies

for FUCO status; LG&E Power, Inc.,

which develops, operates, maintains

and owns interests in domestic power

facilities, each of which qualifies as an

exempt wholesale generator under

section 32 of the Act or qualifying

facility under the Public Utilities

Regulatory Policy Act of 1978; WKE

CORP., a company whose subsidiaries

operate the Big Rivers Electric

Corporation’s generation facilities; and

CRC-Evans International, Inc., which

provides equipment and services used

in the construction and rehabilitation of

gas and oil piplines.13

As of February 29, 2000, there were

129,677,030 shares of LG&E Energy

Common Stock outstanding. As of

December 31, 1999, on a consolidated

basis, LG&E Energy’s assets, operating

revenues, and net income were $5,133.8

million, $2,707.3 million, and $62.1

million, respectively.

Proposed Merger and Resulting

Structure

In accordance with an Agreement and

Plan of Merger dated February 27, 2000,

among LG&E Energy, PowerGen,

PowerGen US Investments Corp., a

Delaware corporation to be formed as an

indirect, wholly owned subsidiary of

PowerGen, and Merger Sub (‘‘Merger

Agreement’’), LG&E Energy will merge

into Merger Sub, with LG&E Energy as

the surviving entity. LG&E Energy will

be an indirect, wholly owned subsidiary

of PowerGen.

As consideration for each share of

LG&E Energy Common Stock

outstanding at the time of the Merger,

LG&E Energy shareholders will receive

$24.85 per share in cash, without

interest.14 LG&E Energy shareholders

will not obtain any stock consideration

from PowerGen in the Merger.

Applicants estimate that total cash

payable to LG&E Energy shareholders

(‘‘Cash Consideration’’), based on the

number of shares of LG&E Energy

Common Stock outstanding on February

27, 2000, will be approximately $3.23

billion.15

PowerGen intends to establish the

Intermediate Companies as intermediate

holding companies in the corporate

structure between PowerGen and LG&E

Energy.16 Applicants state that the

Intermediate Companies will exist

primarily to create an economically

efficient structure for the Merger and the

ongoing operations of PowerGen and the

LG&E Energy Subsidiaries. Applicants

request that the Commission disregard

the Intermediate Companies, LG&E

Energy and KU solely for purposes of

section 11(b)(2) of the Act.

Financing of the Merger

As noted previously, the Cash

Consideration for the Merger will be

approximately $3.23 billion. PowerGen

intends to finance the Merger by

borrowings under a fully committed

bank facility (‘‘Credit Facility’’).17

PowerGen and U.S. Holdings

established the Credit Facility on

February 27, 2000. It was originally

underwritten by five internationally

recognized banks and subsequently

syndicated among a larger group. It

provides for up to $4.0 billion in

borrowings by PowerGen, US Holdings

and other Intermediate Companies that

are subsidiaries of US Holdings as

approved in writing by the banks, and

guaranteed by PowerGen or US

Holdings.18 The Credit Facility has a

final maturity of five years from the date

of signing. To the extent necessary,

Applicants request authorization for

borrowings under the Credit Facility.

Retention of LG&E’s Gas System

Applicants seek to retain the gas

integrated public-utility system of LG&E

in addition to the electric integrated

public-utility system of LG&E Energy.

Applicants have submitted a study of

the gas utility operations that analyze

the lost economies that these operations

would suffer upon divestiture.

Applicants represent that substantial

lost economies would result from

divestiture.

Approval of Tax Allocation Agreement

Applicants request approval of an

agreement for the allocation of

consolidated tax among PowerGen US

Partnership, PowerGen US Investments

Corp. and the LG&E Energy Group

following the Merger (‘‘Tax Allocation

Agreement’’). Approval is necessary

because the Tax Allocation Agreement

will provide for the retention by the

PowerGen entities within the

consolidated group of certain payments

for tax losses, rather than the allocation

of the losses to subsidiary companies

without payment, as would otherwise

be required by rule 45(c)(5) under the

Act.

Subsidiary Service Company and

Affiliated Transactions

Applicants propose to form a

subsidiary service company of LG&E

Energy, to be named LG&E Energy

Services, Inc. (‘‘LG&E Services’’), to

provide goods and services to members

of the LG&E Energy Group, and to a

lesser extent, to PowerGen and its other

subsidiaries. Applicants request that

LG&E Services be authorized under

58120 Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices

section 13(b) and rule 88 to provide

goods and services to associate

companies, and to charge for goods and

services to LG&E Energy Subsidiaries

under two separate service agreements,

one for the LG&E Energy Utility

Subsidiaries and one for the LG&E

Energy Nonutility Subsidiaries. In

addition, Applicants propose that

members of the PowerGen System

provide goods and services to the LG&E

Energy Group. Presently, it is

anticipated that the majority of transAtlantic goods and services will be

provided by the PowerGen system,

principally, PowerGen UK (or

PowerGen Group Holdings, if

applicable). Charges for services

provided to public-utility associate

companies will comply with the at-cost

requirements of section 13.

In addition, Applicants request that

the Commission grant an exemption

under section 13(b) from the at-cost

requirement of section 13 and rules 90

and 91 for any nonutility subsidiary of

Powergen to provide services to: (1)

Associate FUCOs and exempt wholesale

generators (‘‘EWGs’’) that derive no part

of their income, directly or indirectly,

from the generation, transmission or

distribution of electric energy for sale or

the distribution of natural gas at retail

in the United States; and (2) services

provided to an associate EWG,

qualifying facility (‘‘QF’’), or

independent power project (‘‘IPP’’)

provided that the purchaser of the

electricity sold by the entity is not an

associate company of LG&E Energy. No

services will be provided at marketbased rates to a QF, IPP or EWG that

sells electricity to an LG&E Energy

Utility Subsidiary.

Certain LG&E Energy Group

companies have in place arrangements

for the provision of facilities, personnel

and services to other LG&E Energy

Group companies, as described below.

All such arrangements for the provision

of goods, services and construction are

provided at cost as determined in

accordance with rules 90 and 91.

Certain of the goods, services and

construction to be provided by the

providing company to the other LG&E

Energy Group companies are provided

through contracts with third parties.

Where practicable, the contracting LG&E

Energy Group companies will enter into

assignments to LG&E Service of any

such existing contracts. In addition, the

Applicants expect that upon the

expiration or renegotiation of the

original contract for such goods,

services and construction, LG&E

Services will enter into new contracts

with such third parties, in compliance

with the requirements of rules 87, 90

and 91. The Applicants seek the

necessary approval for the continued

performance of these arrangements

through December 31, 2001 in order to

allow an orderly transition of such

contracts and arrangements.

Description of Financing Proposals

Applicants request authority through

February 28, 2004 (‘‘Authorization

Period’’) to engage in a variety of

financing transactions subsequent to the

Merger including: (1) External

financings and guarantees by PowerGen,

US Holdings, LG&E Energy and the

LG&E Energy Subsidiaries, (2)

intrasystem financings by the

Intermediate Companies, other special

purpose PowerGen subsidiaries, LG&E

Energy and the LG&E Energy

Subsidiaries, (3) increases in the

number of shares authorized by the

Intermediate Companies with respect to

any capital security, without further

Commission authorization, (4) currency

and interest rate hedging instruments,

(5) acquisition, redemption or

retirement of securities issued by the

Intermediate Companies and members

of the LG&E Energy Group, (6) the

formation of financing entities and the

issuance by those entities of securities

authorized to be issued and sold under

the authority requested in the

Application, (7) acquisition of

intermediate subsidiaries for the

purpose of investing in EWGs, FUCO,

rule 58 subsidiaries (‘‘Rule 58

Subsidiaries’’), exempt

telecommunications companies

(‘‘ETCs’’) and other non-exempt,

nonutility subsidiaries, (8)

reorganization and restructuring of the

Intermediate Companies and the LG&E

Energy Nonutility Subsidiaries, (9)

investment of up to 100% of the

PowerGen system’s consolidated

retained earnings post-Merger in EWGs

and FUCOs, (10) financial reporting as

described in the Application, (11)

maintenance of the existing financial

arrangements of the LG&E Energy Group

and (12) the payment by the PowerGen,

the Intermediate Companies and

members of the LG&E Energy Group of

dividends out of capital or unearned

surplus. In addition, Applicants request

an exemption for certain reporting

requirements.

The proceeds from the sale of

securities in external financing

transactions by US Holdings and the

LG&E Energy Group will be used for the

general corporate purposes of the LG&E

Energy Subsidiaries. The proceeds from

the sale of the capital stock and shortterm debt by PowerGen will be used by

the PowerGen system, subject to any

applicable limits on such uses.

The Applicants represent that no

proceeds of financing by PowerGen will

be used to acquire a new subsidiary,

other than a special purpose financing

entity as described below, unless such

acquisition is consummated in

accordance with an order of the

Commission or an available exemption

under the Act.

PowerGen and US Holdings External

Financing

Applicants propose that PowerGen

and US Holdings be granted authority to

issue equity and debt securities in

amounts that, except as noted below,

would not aggregate more than $6

billion outstanding at any time during

the Authorization Period (‘‘Aggregate

Limitation’’). Debt incurred to finance

the Merger, including any borrowings

under the Credit Facility, would be

included in the Aggregate Limitation.

These securities could include, but

would not necessarily be limited to,

ordinary shares, preferred shares,

options, warrants, long- and short-term

debt (including commercial paper),

convertible securities, subordinated

debt, bank borrowings and securities

with call or put options. In addition to

the Aggregate Limitation, aggregate

outstanding amounts of securities

issued by PowerGen would be subject to

the limits for each type of security

described below:

Security $ billions

Ordinary Shares, including options and warrants ................ 4.0

Preferred stock ......................... 1.0

Short-term debt financing ......... 4.0

Long-term debt financing .......... 6.0

Ordinary Shares

PowerGen’s common equity consists

of ordinary shares, with a par value of

50 pence each, that are listed on the

LSE. PowerGen currently has ADSs in

the United States which trade as ADRs

on the NYSE and are registered under

the Securities Act of 1933, as amended.

Ordinary share financings by

PowerGen covered by this Application

may occur in any one of the following

ways: (1) Through a pro rata rights

offering directly to existing

shareholders; (2) through underwriters

or dealers under underwriting

agreements of a type standard in the

United Kingdom, the United States, or

other places of sale; (3) through agents;

(4) directly in private placements or

other non-public offerings to a number

of purchasers or a single purchaser; (5)

directly to employees (or to trusts

established for their benefit) and other

shareholders through PowerGen’s

Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices 58121

19PowerGen does not itself anticipate issuing

long-term debt during the Authorization Period.

employee benefit plans; (6) through the

issuance of bonus shares (i.e., stock

splits or stock dividends) to existing

shareholders; or (7) through the

issuance of options or warrants to

acquire ordinary shares.

PowerGen seeks authority to use its

ordinary shares (or associated ADSs or

ADRs) as consideration for acquisitions

that are otherwise authorized under the

Act. Among other things, transactions

may involve the exchange of PowerGen

equity securities for securities of the

company being acquired in order to

provide the seller with certain tax

advantages. The PowerGen ordinary

shares to be exchanged may, among

other things, be purchased on the open

market or may be original issue. For

purposes of the $6.0 billion external

financing limit, PowerGen ordinary

shares used as consideration in an

acquisition would be valued at market

value based upon the last closing price

of the ordinary shares on the LSE prior

to the execution of the transaction

agreement.

In addition to other general corporate

purposes, the ordinary shares will be

used to fund employee benefit plans.

PowerGen currently has and Applicants

propose that it maintain three employee

benefit plans under which its employees

may acquire ordinary shares of

PowerGen as part of their compensation:

(1) The PowerGen ShareSave Scheme,

(2) the PowerGen Executive Share

Option Scheme and (3) the PowerGen

Restricted Share Plan. The PowerGen

ShareSave Scheme is available to all

eligible employees of PowerGen. It

provides for the issuance of share

options that are normally exercisable on

completion of a three or five year ‘‘saveas-you-earn’’ contract. The exercise

price of options granted may be at a

discount of no more than 20% of the

market price at the date of the grant. The

PowerGen Executive Share Option

Scheme is available to executive

directors and other senior executives

and managers selected by the

Remuneration Committee of the Board

of Directors. Options are generally

exercisable between the third and tenth

anniversaries of the date of the grant,

and are granted at the market price of

PowerGen’s shares at the time of the

grant or higher where options have

previously been exercised at a higher

rate. The PowerGen Restricted Share

Plan involves two types of awards: (1)

Medium Term Bonus Awards and (2)

Annual Bonus Enhancement Awards.

The Medium Term Bonus Awards are

available to executive directors and

senior managers selected by the

Remuneration Committee. Shares of

equivalent value to the annual bonus

received by the participant are placed

into trust. Subject to certain

performance conditions being met,

shares vest into the ownership of the

participant after three and four years,

and may be called for a year after that.

The annual bonus Enhancement Awards

are available to executive directors and

managers who may elect to forgo some

or all of their cash Annual Bonus.

Shares of equivalent value to the bonus

forgone are placed into trust, and if held

in trust for a period of three years, are

enhanced by PowerGen on the basis of

one extra share for every four shares so

held.

In addition, PowerGen may adopt one

or more other plans which will provide

for the issuance and/or sale of

PowerGen ordinary shares, share

options and share awards to a group

which has not yet been determined but

may include directors, officers and

employees of the companies in the

PowerGen System. PowerGen also has

agreed to give holders of LG&E Energy

stock options the right to convert those

options into options for PowerGen

ADSs. PowerGen may issue its ordinary

shares under the requested authority

described in this notice in order to

satisfy its obligations under these plans.

Ordinary shares for use under share

plans may be newly issued shares or

shares purchased in the open market.

PowerGen or the Share Trustee may

make open-market purchases of

ordinary shares in accordance with the

terms of or in connection with the

operation of the plans.

Securities issued by PowerGen under

all of the plans will be included within

the $6.0 billion external financing limit

and will be valued, if ordinary shares,

at market value based on the closing

price on the LSE on the day before the

issuance of the shares. Options issued

by PowerGen under the plans will be

valued at zero until exercised.

Any ordinary shares issued by US

Holdings will be issued solely to

PowerGen absent additional authority

from the Commission. However,

Applicants propose that US Holdings

issue non-voting preferred stock from

time to time during the Authorization

Period. Any preferred stock would have

dividend rates or methods of

determining the same, redemption

provisions, conversion or put terms and

other terms and conditions as US

Holdings may determine at the time of

issuance. All issuances of preferred

stock will be at rates or prices, and

under conditions negotiated under,

based upon, or otherwise determined by

competitive market conditions.

PowerGen and US Holdings Short-Term

Debt

Applicants request that PowerGen

and US Holdings may engage in shortterm financing as each may deem

appropriate in light of its needs and

market conditions at the time of

issuance. Financing could include,

without limitation, commercial paper

sold in established U.S. or European

commercial paper markets, lines of

credit with banks or other financial

institutions and debt securities issued

under an indenture or a note program.

All transactions will be at rates or

prices, under conditions negotiated

using, based upon or otherwise

determined by competitive market

conditions.

US Holdings Long-Term Debt

Applicants propose that US Holdings

issue long-term debt from time to time

during the Authorization Period.19 Any

long-term debt would have the

designation, aggregate principal amount,

interest rate(s) or method of determining

the same, terms of payment of interest,

redemption provisions, non-refunding

provisions, sinking fund terms, put

terms and other terms and conditions as

are deemed appropriate at the time of

issuance. In addition, the long-term debt

may be convertible into preferred shares

of US Holdings or exchangeable for

ordinary shares of PowerGen authorized

to be issued hereunder. The maturity of

any long-term debt will not exceed 50

years.

The long-term debt may be issued and

sold under standard underwriting

agreements or under negotiated bank

facilities. In the case of public debt

offerings, distribution may be effected

through private negotiations with

underwriters, dealers or agents, or

through competitive bidding among

underwriters. In addition, the long-term

debt may be issued and sold through

private placements or other non-public

offerings to one or more persons. All

transactions will be at rates or prices,

under conditions negotiated using,

based upon or otherwise determined by

competitive market conditions.

In addition to the specific securities

listed above, PowerGen and US

Holdings may issue other types of

securities during the Authorization

Period that are not exempt from prior

Commission approval. Applicants

request that the Commission reserve

jurisdiction over the issuance of

additional types of securities by

PowerGen and US Holdings. Applicants

also undertake to have a post-effective

58122 Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices

20Applicants also seek authority for PowerGen

Capital to issue non-voting ordinary shares to other

Intermediate Companies and to loan the proceeds

from any such issuance to US Holdings on

commercially reasonable terms.

21Luxembourg Securities will own less than 1%

of the voting securities of PowerGen Luxembourg

Holdings.

22The terms of the participating loan note

provide for the payment in any year, from dividend

payments received in such year, an amount that

causes the rate of tax credit for UK double tax relief

purposes to be equivalent to the current rate of UK

corporation tax.

amendment filed in this proceeding that

will describe the general terms of each

such security and request a

supplemental order of the Commission

authorizing the issuance thereof.

Applicants further request that each

supplemental order be issued by the

Commission without further public

notice.

Intermediate Company Financings

The portion of an individual

Intermediate Company’s aggregate

financing to be effected through the sale

of equity securities to its immediate

parent company during the

Authorization Period cannot be

determined at this time. It may happen

that the proposed sale of capital

securities may in some cases exceed the

capital stock of a given Intermediate

Company authorized at the date of the

Merger, in which case the limit will be

increased. In addition, an Intermediate

Company may choose to use other forms

of capital securities. Capital stock

includes common stock, ordinary

shares, preferred stock, other preferred

securities, options and/or warrants

convertible into common or preferred

stock, rights, and similar securities. As

needed to accommodate the sale of

additional equity, Applicants request

the authority to increase the amount or

change the terms of any Intermediate

Company’s authorized capital securities,

without additional Commission

approval. The terms that may be

changed include dividend rates,

conversion rates and dates, and

expiration dates. Applicants note that

except for the financings of US Holdings

described above, each of the

Intermediate Companies will be wholly

owned directly or indirectly by

PowerGen and will not have third-party

investors.

Applicants also propose that

Intermediate Companies and LG&E

Energy be authorized to borrow from its

parent company. These inter-company

loans would be on terms and conditions

not materially less favorable than those

obtainable by US Holdings from third

parties.

Separately, US Holdings and its direct

subsidiary, PowerGen US Investments

Limited, will enter into parallel loans in

order to effect a currency hedging

transaction. Applicants believe that,

although the transaction will be booked

as loans, they do not constitute loans or

extensions of credit within the meaning

of section 12(a) of the Act and request

approval of such transactions.

PowerGen Capital and Luxembourg

Securities

Applicants propose for PowerGen to

establish two subsidiaries, PowerGen

Capital and Luxembourg Securities, sarl,

which will stand outside the chain of

the Intermediate Companies, to serve as

conduits through which dividend

payments from LG&E Energy are

repatriated to PowerGen.

PowerGen Capital will be a sister

company to US Holdings, and will not

be in the chain of ownership between

PowerGen and LG&E Energy. Applicants

propose that PowerGen Capital issue

non-voting ordinary shares to PowerGen

Luxembourg sarl (‘‘PowerGen

Luxembourg’’), an indirect subsidiary of

US Holdings, and an Intermediate

Company in the chain of ownership of

LG&E Energy, and loan the proceeds

from the sale to US Holdings.20

Applicants state that PowerGen Capital

will serve as a conduit through which

dividend payments from LG&E Energy

are repatriated to PowerGen in the most

economically efficient manner, and ask

that the transactions not be deemed to

constitute an ‘‘upstream loan’’ for

purposes of section 12(a).

Luxembourg Securities also will not

be an Intermediate Company, but will

be wholly owned by an Intermediate

Company. At the time of the Merger,

Luxembourg Securities will own voting

preference share capital of PowerGen

Luxembourg Holdings sarl (‘‘PowerGen

Luxembourg Holdings’’), an

Intermediate Company.21 The ordinary

shares of PowerGen Luxembourg

Holdings will be owned by PowerGen

Luxembourg, also an Intermediate

Company. The only assets of

Luxembourg Securities will be the

preference shares of PowerGen

Luxembourg Holdings and a

participating loan note to be issued for

tax purposes by PowerGen Luxembourg

Holdings.22 The funds that PowerGen

Luxembourg Holdings will be using to

make payments on the participating

loan note will originate as lawfully

payable dividends from LG&E Energy

and these funds will be dividended by

Luxembourg Securities to its immediate

parent and, ultimately, to PowerGen.

Neither PowerGen Capital nor

Luxembourg Securities will issue

securities to third parties, nor will it be

engaged in any substantive business

activity other than to effect the dividend

repatriation.

LG&E Energy Group Financings

Applicants seek Commission approval

to retain the existing financing

arrangements of members of the LG&E

Energy Group, which, to this date, have

been exempt from Commission

authorization. These arrangements are

more particularly described in

Appendix B to this notice. Applicants

request that the Commission authorize

the existing financing arrangements

through the Authorization Period.

LG&E Energy Financing

Applicants propose that LG&E Energy

obtain funds externally through sales of

short-term debt securities, which

include commercial paper and bank

financings. The aggregate amount of

short-term debt of LG&E Energy to be

outstanding at any one time during the

Authorization Period shall not exceed

$400 million. This financing could

include, without limitation, commercial

paper sold in established U.S. or

European commercial paper markets,

lines of credit with banks or other

financial institutions, and debt

securities issued under an indenture or

a note program. Applicants also request

that the Commission reserve jurisdiction

over the issuance by LG&E Energy of

additional types of securities and the

amount thereof.

LG&E Energy Utility Subsidiary

Financing

All securities of LG&E and KU, except

for securities with maturities of two

years or less, are approved by the

Kentucky Commission. Accordingly,

authority is requested for LG&E and KU

to issue debt with maturities of two

years or less to one or more associate or

non-associate lenders, provided that the

aggregate principal amount of such debt

incurred by either at any one time

during the Authorization Period not

exceed $400 million outstanding. In

addition, LG&E and KU may find it

necessary or desirable to issue other

types of securities during the

Authorization Period that are not

exempt from prior Commission

approval. Applicants request that the

Commission reserve jurisdiction over

the issuance of such additional types of

securities and the amount of these

issuances.

Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices 58123

23 If LG&E Energy is denied its request for

continuing exemption under section 3(a)(1) of the

Act, upstream loans to LG&E Energy would violate

section 12(a) of the Act as of the moment LG&E

Energy registers as a holding company. In such

event, LG&E Energy requests that these borrowings

and extensions of credit not be deemed illegal

under the Act, pending their repayment over a

reasonable period of time. Because of the amount

of the borrowings, LG&E Energy requests that it be

granted two years from the date of the order

authorizing the proposals in this Application to

repay these borrowings and eliminate the

extensions of credit.

LG&E Energy Nonutility Subsidiary

Financings

The LG&E Energy Nonutility

Subsidiaries have financing

arrangements in place, which

arrangements Applicants propose to

maintain in place following the Merger.

To the extent such financing

arrangements are not exempt under rule

52, Applicants request authorization for

such arrangements. These arrangements

are more particularly described in

Exhibit C to this Notice. Applicants

believe that, in almost all cases,

financings entered into by the LG&E

Energy Nonutility Subsidiaries will be

exempt from prior Commission

authorization pursuant to rule 52(b).

Applicants request authority, to the

extent necessary, to engage in these

transactions and ask that the

Commission reserve jurisdiction over

the issuance of these securities.

Intra-System Financings

The activities of LG&E Energy and the

LG&E Energy Nonutility Subsidiaries

are financed, in part, through intercompany loans. The sources of funds for

the operations of LG&E Energy and the

LG&E Energy Nonutility Subsidiaries

include internally generated funds and

proceeds of external financings. Outside

of borrowings from the LG&E Money

Pool (as defined below), there were

outstanding as of December 31, 1999,

inter-company loans among LG&E

Energy and the LG&E Energy Nonutility

Subsidiaries in a net principal amount

of approximately $757 million,

including upstream loans from LG&E

Capital to LG&E Energy in the aggregate

amount of approximately $230 million.

The Applicants request authorization

to maintain in place the existing

intercompany loans.23 In addition, the

Applicants request authorization for

additional inter-company loans among

LG&E Energy and the LG&E Energy

Nonutility Subsidiaries in a net

principal amount at any one time

outstanding during the Authorization

Period not to exceed $1.0 billion. The

authorization for inter-system financing

requested in this paragraph excludes (1)

financing that is exempt pursuant to

rules 45(b) and 52, as applicable, and (2)

amounts outstanding from time to time

under the LG&E Money Pool and/or the

Utility Money Pool and Nonutility

Money Pool. These financings would

generally be in the form of cash capital

contributions, open account advances,

intercompany loans, and/or capital

stock purchases. The terms and

conditions of intercompany loans

available to any borrowing company

will be materially no less favorable than

the terms and conditions of loans

available to such borrowing company

from thirdparty lenders.

Money Pools

LG&E Energy, LG&E and KU currently

participate in a money pool (‘‘LG&E

Money Pool’’). Through the LG&E

Money Pool, LG&E and KU make

unsecured short-term borrowings from

the money pool and contribute surplus

funds to the money pool. LG&E Energy

contributes surplus funds to the LG&E

Money Pool, but does not borrow from

the LG&E Money Pool. At March 31,

2000, LG&E Energy and LG&E were

contributors to the LG&E Money Pool

and KU had borrowings from the LG&E

Money Pool of approximately $17.2

million.

Applicants request that the

Commission authorize the continuation

of the LG&E Money Pool for an interim

period not to exceed two years to permit

LG&E Energy to make a transition from

the LG&E Money Pool to the Utility

Money Pool and the Nonutility Money

Pool as discussed below.

Applicants propose that LG&E Energy,

LG&E, KU and the LG&E Energy

Nonutility Subsidiaries replace the

LG&E Money Pool with the Utility

Money Pool and Nonutility Money Pool

and request authority to do so. Further,

LG&E and KU, to the extent not

exempted by rule 52, also request

authorization to make unsecured shortterm borrowings from the Utility Money

Pool, to contribute surplus funds to the

Utility Money Pool and to lend and

extend credit to (and acquire promissory

notes from) one another through the

Utility Money Pool. Applicants request

authorization for LG&E Energy to

contribute surplus funds and to lend

and extend credit to (1) LG&E and KU

through the Utility Money Pool and (2)

LG&E Energy Nonutility Subsidiaries

through the Nonutility Money Pool.

Under the proposed terms of the Utility

Money Pool, short-term funds would be

available from surplus funds in the

treasuries of the LG&E Energy, KU and

the LG&E (‘‘Internal Funds’’), surplus

funds in the treasury of LG&E Energy,

and proceeds from bank borrowings by

Utility Money Pool participants or the

sale of commercial paper by the Utility

Money Pool participants for loan to the

Utility Money Pool (‘‘External Funds’’).

Utility Money Pool participants that

borrow would borrow pro rata from

each company that lends, in the

proportion that the total amount loaned

by each such lending company bears to

the total amount then loaned through

the Utility Money Pool.

If only Internal Funds make up the

funds available in the Utility Money

Pool, the interest rate applicable and

payable to or by the Utility Money Pool

participants for all loans of such

Internal Funds outstanding on any day

will be the rates for high-grade

unsecured 30-day commercial paper

sold through dealers by major

corporations as quoted in the Wall

Street Journal on the preceding business

day. If only External Funds comprise

the funds available in the Utility Money

Pool, the interest rate applicable to

loans of such External Funds would be

equal to the lending company’s cost for

such External Funds, or, if more than

one Utility Money Pool participant had

made available External Funds on such

day, the applicable interest rate would

reflect a weighted average of the two

rates.

Funds not required by the Utility

Money Pool to make loans (with the

exception of funds required to satisfy

the Utility Money Pool’s liquidity

requirements) would ordinarily be

invested in one or more short-term

investments, including: (1) Interestbearing accounts with banks, (2)

obligations issued or guaranteed by the

U.S. government and/or its agencies and

instrumentalities, including obligations

under repurchase agreements, (3)

obligations issued or guaranteed by any

state or political subdivision thereof,

provided that such obligations are rated

not less than ‘‘A’’ by a nationally

recognized rating agency, (4)

commercial paper rated not less than

‘‘A–1’’ or ‘‘P–1’’ or their equivalent by

a nationally recognized rating agency,

(5) money market funds, (6) bank

certificates of deposit, (7) Eurodollar

funds and (8) such other investments as

are permitted by section 9(c) of the Act

and rule 40. The interest income and

investment income earned on loans and

investments of surplus funds would be

allocated among the participants in the

Utility Money Pool in accordance with

the proportion each participant’s

contribution of funds bears to the total

amount of funds in the Utility Money

Pool.

Each Applicant receiving a loan

through the Utility Money Pool would

be required to repay the principal

amount of such loan, together with all

58124 Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices

interest accrued thereon, on demand.

All loans made through the Utility

Money Pool may be prepaid by the

borrower without premium or penalty.

The Nonutility Money Pool will be

operated substantially on the same

terms and conditions as the Utility

Money Pool. All contributions to, and

borrowings from, the Nonutility Money

Pool are exempt under the terms of rule

52 under the Act, except contributions

and extensions of credit by LG&E

Energy, authorization for which

applicants request authority. LG&E

Services will administer the Utility and

Nonutility Money Pools on an ‘‘at cost’’

basis and will maintain separate records

for each money pool.

Guarantees

Applicants request authority for

PowerGen to guarantee obligations

incurred by US Holdings under the

Aggregate Limitations. In addition,

Applicants request that PowerGen and

US Holdings to enter into guarantees,

obtain letters of credit, extend credit or

otherwise provide credit support with

respect to the obligations of the

Intermediate Companies and members

of the LG&E Energy Group as may be

appropriate to enable such system

companies to carry on their respective

authorized or permitted businesses.

Guarantees entered into pursuant to this

authorization by PowerGen and US

Holdings will be subject to a $2.5 billion

limit, based upon the amount at risk

outstanding at any one time, which

amount is in addition to guarantees by

PowerGen of securities issued by US

Holdings under the Aggregate

Limitation.

Existing Guarantees of the LG&E Energy

Group

Members of the LG&E Energy Group

have in place certain guarantees and

other credit support arrangements, more

particularly described in Appendix D to

this notice, which arrangements

Applicants request that the Group

maintain following the Merger

(‘‘Existing Guarantees’’). In addition,

Applicants request authorization for

LG&E Energy to enter into guarantees,

extend credit and obtain letters of credit

expense agreements and otherwise to

provide credit support for the

obligations from time to time of the

LG&E Energy Subsidiaries during the

Authorization Period in an aggregate

principal amount not to exceed $1.5

billion, based on the amount at risk,

outstanding at any one time, exclusive

of the Existing Guarantees.

In addition, the Applicants request

authorization for the LG&E Energy

Nonutility Subsidiaries to enter into

guarantees, extend credit, obtain letters

of credit or otherwise provide credit

support with respect to the obligations

of the other LG&E Energy Nonutility

Subsidiaries as may be appropriate to

enable the LG&E Energy Nonutility

Subsidiaries to carry on their

businesses, in an aggregate principal

amount not to exceed $1.5 billion

outstanding at any one time, exclusive

of the Existing Guarantees and any

guarantees that may be exempt under

rule 45(b).

Interest Rate and Currency Risk

Management Devices

Applicants request authority to enter

into, perform, purchase and sell

financial instruments intended to

manage the volatility of interest rates

and currency exchange rates, including

but not limited to interest rate and

currency swaps, caps, floors, collars and

forward agreements or any other similar

agreements. Activities of this nature

could include (1) converting variable

rate debt to fixed rate debt, (2)

converting fixed rate debt to variable

rate debt, (3) limiting the impact of

changes in interest rates resulting from

variable rate debt and (4) hedging

currency exposures of foreign currency

denominating debt. In addition, the

Applicants may utilize instruments to

manage interest rate and currency risks

in future periods for planned issuances

of debt securities. In no case will the

notional amount of any hedging

instruments exceed that of the

underlying debt instrument.

Acquisition, Redemption or Retirement

of Securities

Applicants propose that each of

PowerGen, the Intermediate Companies

and each member of the LG&E Energy

Group acquire, redeem, or retire its

securities or those of its direct and

indirect subsidiaries, which securities

may be either outstanding presently or

issued and sold in the future from time

to time during the Authorization Period.

Financing Entities

Applicants request authority for US

Holdings and the LG&E Energy

Subsidiaries to organize and acquire

voting interest in or equity securities of

new corporations, trusts, partnerships or

other entities created for the purpose of

facilitating financing through their

issuance to third parties of trust

preferred securities or other securities

authorized by the Application.

Applicants also request authority for

these financing entities to issue the

securities to third parties. Additionally,

Applicants request authority with

respect to (1) the issuance of debentures

or other evidences of indebtedness by

any of US Holdings and the LG&E

Energy Subsidiaries to a financing entity

in return for the proceeds of the

financing and (2) the guarantee by

PowerGen, US Holdings or the LG&E

Energy Subsidiaries of the financing

entity’s obligations in connection with

its issuance of securities. Any amounts

issued by financing entities to third

parties under these authorizations will

count against the external financing

limit for US Holdings or and of the

LG&E Energy Subsidiaries, as

applicable. However, the underlying

intra-system mirror debt and guarantee

will not count against any applicable

intercompany financing limit or the

separate guarantee limits for PowerGen

and US Holdings, or for the LG&E

Energy Group.

Receivables Factoring Program

Applicants propose that each of LG&E

and KU, prior to the closing of the

Merger, implement a receivables

factoring program, providing for the

factoring of accounts receivable

(‘‘Receivables’’), including outstanding

consumer billings, through one or more

existing or newly-formed subsidiaries of

LG&E and KU (‘‘Receivables Sub’’), to

one or more unaffiliated third parties

(‘‘Purchasers’’). Each Receivables Sub

will purchase Receivables from the

related associate company as the

Receivables are generated at a discount

based on, among other things, the

collection history of the associate

company.

Each Receivables Sub will enter into

purchase and sale agreements with one

or more Purchasers under which

Receivables Sub may sell (from time to

time in its discretion and subject to the

satisfaction of certain conditions

precedent) fractional, undivided

ownership interests expressed as a

percentage (‘‘Receivable Interests’’) in

(1) Receivables of its related associate

company and (2) certain related assets,

including any security or guarantee for

the Receivables, all collections thereon

and related record (‘‘Related Assets’’).

The Purchasers of the Receivable

Interests are expected to be special

purpose corporations, which acquire

receivables and other assets and issue

commercial paper to finance these

acquisitions and/or financial

institutions, and their respective

successors or assigns.

Primarily because of the reserves that

are included in the calculation of the

Receivable Interests sold to the

Purchasers, the purchase price paid by

the Purchasers for the Receivable

Interests will be lower than the

purchase price paid by the Receivables

Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices 58125

Sub to the associate company for the

Receivables and Related Assets. The

funds available at the Receivables Sub at

any time may not match the cost of the

Receivables and Related Assets

available for purchase from the associate

company. In the event that the

Receivables and Related Assets

originated by an associate company

exceeds the amount of cash that the

applicable Receivables Sub has

available, either the Receivables Sub

will pay the purchase price of the

Receivables in part in cash and in part

through the use of an inter-company

note, or the associate company will

make an additional capital contribution

to the Receivables Sub in the form of

excess Receivables and Related Assets.

Applicants state that, for financial

reporting purposes, LG&E Energy will

treat the transfer of Receivables Interest

from associate companies to the

Receivables Subs as sales under U.S.

GAAP. Applicants request that the

Commission authorize the retention of

existing Receivables Subs, the creation

of new subsidiaries for the purpose of

acting as Receivables Subs and the

payment of dividends or other

distributions by the Receivables Subs to

their own parent companies, to the

extent the dividends or other

distributions may be considered to be

paid out of capital or unearned surplus.

Applicants also request that the

Commission authorize the intercompany notes issued by the

Receivables Subs to its parent, as

described above. These inter-company

notes will not be counted against the

intra-system financing limit requested.

Intermediate Subsidiaries

Applicants propose that LG&E Energy

and the LG&E Energy Nonutility

Subsidiaries acquire the securities of

one or more intermediate subsidiaries

(‘‘LG&E Energy Intermediate

Subsidiaries’’), which would be

organized exclusively for the purpose of

acquiring, holding and/or financing the

acquisition of the securities of, or other

interest in, one or more EWGs, FUCOs,

Rule 58 Subsidiaries, ETCs or other

nonexempt, nonutility subsidiaries,

provided that the LG&E Energy

Intermediate Subsidiaries may also

engage in development activities and

administrative activities relating to

these subsidiaries. Investments in LG&E

Energy Intermediate Subsidiaries may

take the form of any combination of the

following: (1) Purchases of capital

shares, partnership interests, member

interests in limited liability companies,

trust certificates or other forms of equity

interests, (2) capital contributions, (3)

open account advances with or without

interest, (4) loans and (5) guarantees

issued, provided or arranged in respect

of the securities or other obligations of

any LG&E Energy Intermediate

Subsidiaries.

Reorganization

Applicants propose that the

Intermediate Companies receive a

general grant of authority to adjust the

capital structure of the Intermediate

Companies from time to time, in order

to reflect tax and accounting changes

after the Merger, without the need to

apply for or receive prior Commission

approval, on the condition that the

reorganization will not result in (1) any

Intermediate Company being organized

under any jurisdiction other than a

member state of the European Union

with which the United States has a

Double Taxation Treaty, or a state of the

United States, (2) any Intermediate

Companies not being wholly-owned,

directly or indirectly, by PowerGen or,

other than in respect of the debt and

preferred stock of US Holdings, having

third party investors, (3) the

Intermediate Companies being engaged

in any business or trade other than the

business of owning, directly or

indirectly, equity securities of LG&E

Energy and the financing transactions

described in the notice and (4) any of

the Intermediate Companies being

regulated by United Kingdom or other

third country regulatory authorities

having jurisdiction over electricity rates

and service. Such restructurings may

involve the creation of new, the

elimination of existing or the

consolidation of Intermediate

Companies and/or the re-incorporation

of an Intermediate Company in a

different jurisdiction.

In addition, Applicants request

authority for LG&E Energy to reorganize

and restructure the LG&E Energy

Nonutility Subsidiaries from time to

time, without the need to apply for or

receive prior Commission approval, on

the condition that the reorganization

will not result in the entry by the LG&E

Energy Nonutility Subsidiaries into new

lines of business that have not

previously been authorized by the

Commission or that are not permissible

on an exempt basis under the Act or

Commission rule. These restructurings

may involve the creation of new, or the

elimination of existing, LG&E Energy

Nonutility Subsidiaries, the

consolidation of LG&E Energy

Nonutility Subsidiaries, the spin-off of a

portion of an existing business of an

LG&E Energy Nonutility Subsidiary to

another LG&E Nonutility Subsidiary, the

reincorporation of an existing LG&E

Energy Nonutility Subsidiary in a

different state, the transfer of authority

from one LG&E Energy Nonutility

Subsidiary to another, the transfer or

sale of one LG&E Energy Nonutility

Subsidiary, or its assets, to LG&E Energy

or another LG&E Energy Nonutility

Subsidiary or other similar type

arrangements.

EWG/FUCO Related Financings

As a general matter, PowerGen

intends to fund its FUCO activities at

the level of its first-tier subsidiary,

PowerGen UK (or PowerGen Group

Holdings, as applicable), under which

PowerGen subsidiaries, other than the

Intermediate Companies and the LG&E

Energy Group, will be segregated.

However, under certain circumstances,

it may be desirable from time to time for

PowerGen to provide some additional

investment capital or credit support for

FUCO acquisitions or operations. At the

end of the fiscal year 1999 (as adjusted

for investments subsequently sold), the

combined LG&E Energy Group and

PowerGen ‘‘aggregate investment’’ in

EWGs and FUCOs was approximately

$1.270 billion. This investment

represents 77% of PowerGen

consolidated retained earnings at the

end of fiscal year 1999, calculated in

accordance with U.S. GAAP. Applicants

seek authority to finance, after the

Merger, additional EWG and FUCO

investments and operations in an

aggregate amount of up to 100% percent

of the consolidated retained earnings of

the entire PowerGen system at any one

time outstanding during the

Authorization Period. These financings

may include the issuance or sale of

securities for the purpose of financing

the acquisition or operations of an EWG

or FUCO or the guarantee of a security

of an EWG or FUCO.

Payment of Dividends

Applicants will use the purchase

method of accounting for the Merger.

Applicants state that, under applicable

exemptions to these accounting rules,

PowerGen is not required to ‘‘push

down’’ the premium paid in the Merger

to the LG&E Energy Group. However

changes in circumstances or changes in

accounting principles or the application

thereof may result in such a pushdown

or a similar non-cash charge to retained

earnings. Accordingly, Applicants

request authority for PowerGen, the

Intermediate Companies and members

of the LG&E Energy Group to pay

dividends out of additional paid-incapital up to the amount of LG&E

Energy’s consolidated retained earnings

just prior to the Merger and out of

earnings before the amortization of

goodwill after the Merger. In addition,

58126 Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices

Applicants request authorization for the

LG&E Energy Nonutility Subsidiaries to

pay dividends with respect to the

securities of companies, from time to

time through the Authorization Period,

out of capital and unearned surplus

capital (including revaluation reserve),

to the extent permitted under applicable

corporate law.

Requests for Exemption From Rule

26(a)(1)

Applicants request an exemption from

rule 26(a)(1) under the Act, regarding

the maintenance of financial statements

in conformance with Regulation S-X, for

any subsidiary of PowerGen UK (or

PowerGen Group Holdings as of its

formation) organized outside the United

States. Any FUCO acquired directly or

indirectly by PowerGen subsequent to

the issuance of an order in this

Application will maintain its financial

statements in accordance with U.S.

GAAP or reconcile such statements to

U.S. GAAP in the same manner as

required by Form 20–F.

Appendix A—Nonutility Businesses

PowerGen

I. FUCOs and ETCs

PowerGen owns, directly or indirectly, the

following interests in foreign utility

companies (‘‘FUCOs’’) and exempt

telecommunications companies (‘‘ETCs’’) (all

of the following subsidiaries or affiliates are

100% owned, except where noted):

Telecentric Solutions Ltd (internet sales

services; ETC); PowerGen UK plc (electric

generation and holding and financing

company over subsidiaries; FUCO); 33.3%

interest in Phambile Nobane (Proprietary) Ltd

(gas distribution project in South Africa;

FUCO); PowerGen CHP Ltd (development

and operation of cogeneration plant in UK

and holding company and financing

company for PowerGen Cogeneration Ltd and

Biogeneration Ltd; FUCO and energy-related

company); PowerGen Cogeneration Ltd

(operates cogeneration plant in UK; FUCO or

energy-related company); 50% interest in

Biogeneration Ltd (operates biomass plant in

UK; FUCO or energy-related company); 50%

interest in PowerGen Renewables Ltd

(operates 9 windfarms in UK; FUCO or

energy-related company); 25% interest in

Yorkshire Windpower Ltd (operates 2

windfarms in UK; FUCO or energy-related

company); 25% interest in TPG Wind Ltd

(operates 1 windfarm in UK; FUCO or

energy-related company); Gen Net. Com Ltd

(internet services provider; ETC); PowerGen

Systems & Services (information technology

services company; ETC); Garnedd Power Co

Ltd (hydro electric plant in Wales; FUCO);

PowerGen Retail Gas Ltd (gas retail in UK;

FUCO); 99% interest in PT PowerGen Jawa

Timur (operator of Paiton station in

Indonesia; FUCO); 49.99% interest in

Turbogas Produtora Energetica SA (owner of

Tapada station in Portugal; FUCO); 75%

interest in Portugen Energia SA (operator of

Tapada station in Portugal; FUCO); Csepel

Eromu Rt (owner of Csepel I plant in

Hungary; FUCO); PowerGen Energia RT

(operator of Csepel II project in Hungary;

FUCO); Csepel Aramtermelo (owner of

Csepel II station in Hungary, which is under

construction; FUCO); 49.5% interest in

Yallourn Energy PTY Ltd (owner of Yallourn

station in Australia; FUCO); 74.1% interest in

Gujarat PowerGen Energy Corporation

(owner of Pagathan plant in India; FUCO);

20.5% interest in Kraftwerk Schkopau GbR

(owner of Schkopau plant in Germany;

FUCO); 22.5% interest in Kraftwerk

Schkopau B’Gessellschaft GmbH (operator of

Schkopau plant in Germany; FUCO); 49.9%

interest in LG Energy Co Ltd (owner of

Bugkok plant; FUCO); and 35% interest in PT

Jawa Power (owner of Paiton station in

Indonesia; FUCO); PowerGen Energy plc

(electric distribution in UK and holding

company for PowerGen Retail Gas Ltd, East

Midlands Electricity Gen Ltd, Charnwood

Insurance Co Ltd, Coppice Insurance Co Ltd,

East Midlands Electricity Gen (IPG) Ltd,

Phambile Nobane (Proprietary) Ltd, and 29

dormant companies; FUCO).

II. Intermediate Holding Companies and

Financing Entities

PowerGen owns, directly or indirectly, the

following interests in intermediate holding

companies holding, or financing entities

financing, its nonutility business interests

(all of the following subsidiaries or affiliates

are 100% owned, except where noted):

PowerGen (Kentucky) Ltd (representative

office in UK for PowerGen’s interest in LG&E

Energy Corp.); PowerGen East Midlands

Investments (holding and financing company

for PowerGen Energy plc, an electric

distribution company and holding company

for other energy facilities); PowerGen (East

Midlands) Holdings (financing company);

East Midlands Electricity Gen (Non Fossil)

Ltd (holding company for Biogas Generation

Ltd, an energy-related company); PowerGen

Directors Ltd (company administration);

PowerGen Secretaries Ltd (company

administration); PowerGen Investments Ltd

(holding and finance company for PowerGen

Renewables Holdings Ltd); 50% interest in

PowerGen Renewables Holdings Ltd (holding

and finance company for PowerGen

Renewables Ltd); PowerGen Finance Ltd

(finance company); Ergon Finance Ltd

(finance company); PowerGen Energy

Solutions (energy management company in

UK and holding company for DelComm Ltd,

a dormant company; also qualifies as energyrelated company); Ergon Nominees Ltd

(finance company); PowerGen Projects

Consultancy Ltd (with Malaysian Branch)

(project management; also qualifies as

energy-related company); PowerGen

International Limited (holding and financing

company for PowerGen Overseas Holdings

Limited, Visioncash, Ergon Overseas

Holdings Ltd, Inputrapid Ltd, Ergon Energy

Ltd, PowerGen Serang Ltd, and North

Queensland Power Ltd); PowerGen Overseas

Holdings Limited (holding and finance

company for Ergon Generation (Malaysia)

Sdn Rhd, a dormant holding company);

Visioncash (finance company); Ergon

Overseas Holdings Ltd (holds 84% of, and

serves as finance company for, PowerGen

Holdings BV, which is a holding and finance

company); Inputrapid Ltd (holds 16% of, and

serves as finance company for, PowerGen

Holdings BV); PowerGen Holdings BV

(holding and finance company for sixteen

direct subsidiaries); PowerGen Nederland BV

(finance company); 33% interest in MIBRAG

BV (finance company for Mibrag lignite mine

in Germany); 33% interest in MIBRAG IB

GmbH (finance company for Mibrag lignite

mine in Germany); 33% interest in MIBRAG

IV GmbH (finance company for Mibrag

lignite mine in Germany); 33% interest in

MIBRAG IVB GmbH (finance company for

Mibrag lignite mine in Germany); PowerGen

Australia Holdings BV (finance company for

Yallourn Energy Pty Limited, a FUCO);

PowerGen Australia BV (finance company for

Yallourn Energy Pty Limited, a FUCO);

PowerGen Aus PTY Ltd (finance company);

49.5% interest in Auspower PTY Ltd (finance

company); 49.5% interest in Mezzco PTY Ltd

(financing partnership); PowerGen India Ltd

(holds 46.3% of the Gujarat PowerGen

Energy Corporation (‘‘Gujarat’’), a FUCO,

with PowerGen BV Holdings holding 27.8%;

also serves as financing company for

Gujarat); 50% interest in Saale Energie GmbH

(financing company for Schkopau plant);

40% interest in PT Power Jawa Barat

(developer of Serang project, a prospective

power station in Indonesia; also qualifies as

an energy-related company); 35% interest in

BLCP Power Limited (developer of Map Ta

Phut project, a prospective power station in

Thailand; also qualifies as an energy-related

company); PowerGen (Malaysia) Sdn Bhd

(regional headquarters of PowerGen in

Malaysia; operation headquarter support

service); Ergon Energy Ltd (holding and

finance company for PT Jawa Power, a

FUCO); 49.95% interest in LLPCo Holdings

Ltd (holding and finance company for LLPCo

PTY Ltd); 49.95% interest in LLPCo PTY Ltd

(manages Yallourn Investments); 49.95%

interest in Yallourn Investments, A Limited

Partnership (LLP) (financing partnership for

Yallourn station); and 49.95% interest in

Meerco PTY Ltd (finance company for

Yallourn Energy Pty Limited, a FUCO).

III. Energy-Related Companies

The following is a list of the companies

Applicants assert are energy-related

companies, owned directly or indirectly by

PowerGen (all of the following subsidiaries

or affiliates are 100% owned, except where

noted): EME Industrial Shipping Ltd (gas

shipping in UK); 50% interest in Biogas

Generation Ltd (waste combustion in UK);

East Midlands Pipelines Ltd (installation and

operation of gas pipelines); PowerGen Energy

Trading Ltd (energy trading in Europe); 50%

interest in PowerGen Renewables

Developments Ltd (develops windfarms in

UK; holding company for Blyth Offshore

Wind Ltd); 16.5% interest in Blyth Offshore

Wind Ltd (developing an offshore windfarm);

50% interest in Fusers Ltd (develops

windfarms in Ireland; holding company for

Tursillagh Windfarm Ltd); 25% interest in

Tursillagh Windfarm Ltd (develops

windfarms in Ireland); 50% interest in

Cottam Development Centre Ltd (turbine

testing/operation in UK); PowerGen Gas Ltd

(gas pipeline transportation and operation in

Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices 58127

UK); 33% interest in MIBRAG mbH (owner

of Mibrag lignite mine in Germany); 49%

interest in Bina Power Supply Company

Limited (developer of Bina project); and

49.5% interest in Saale Energie Services

GmbH (consultancy services).

IV. Nonutility Companies Authorized by

Order or Commission Precedent

In addition to the above nonutility

subsidiaries and affiliates, PowerGen also

owns interests in the following nonutility

entities, a description of which follows each

entity’s name in parentheses (all of the

following subsidiaries or affiliates are 100%

owned, except where noted): Ergon Pensions

Trustee Ltd (pension scheme trustee);

PowerGen Share Trustees Ltd (share scheme

trustee); PowerGen Share Scheme Trustee

Limited (Qualifying Employee Trust

Company); Charnwood Insurance Co Ltd,

Guernsey (captive insurance company);

58.9% interest in Hams Hall Management Co

Ltd (property management company); East

Midlands Electricity Share Scheme Trustees

Ltd (staff share scheme trustee); and Ergon

Insurance Ltd (captive insurance company).

V. Inactive Companies

PowerGen also, directly or indirectly, owns

the following inactive companies (all of the

following subsidiaries or affiliates are 100%

owned, except where noted): Central England

Networks Ltd; Drakmarn O&M Ltd;

Electricity Ltd; Ergon Properties Ltd; First

Energy (UK) Ltd; Kinesis Resources Ltd;

Kinesis Resource Management Ltd; Kinetica

Ltd; Lincoln Green Energy Ltd; PowerGas

Ltd; PowerGen Leasing Ltd; PowerGen

Technology Ltd; The Power Generation

Company Ltd; Wavedriver Ltd; Coppice

Insurance Co Ltd, Guernsey; East Midlands

Electricity Gen (IPG) Ltd; Derek B Haigh Ltd;

East Midlands Electricity Distribution Ltd;

East Midlands Electricity Generation (Rugby)

Ltd; East Midlands Electricity Supply Ltd;

East Midlands Telecommunications Ltd;

EMCO Ltd; EME Employment Co Ltd; EME

Employment Co No. 2 Ltd; Furse Earthing

and Lightning Project Systems Ltd; Furse

Specialist Contracting Ltd; Homepower

Retail (EME) Ltd; J Smith (Southern) Ltd; M

MacDonald & Co Ltd; Padfield and Howes

Ltd; Ransome Properties Ltd; SGB

(Steeplejacks) Ltd; Statco 2 Ltd; Statco 3 Ltd;

Statco 4 Ltd; Statco 5 Ltd; Statco 6 Ltd; Statco

7 Ltd; The Peerless Engineering Co Ltd; The

Santon Steeplejacks Co Ltd; 50% interest in

Windy Hills Ltd; DelComm Ltd; PowerGen

Brasil Limitada; Csepel Holdings BV; 40%

interest in North Queensland Power Ltd;

Powerconsult Ltd; Powercoal Ltd; Ergon

Power Ltd; Ergon Generation (Malaysia) Sdn

Bhd (to be used in possible Malaysia energy

projects); and PowerGen Serang Ltd (will be

holding company for Serang project, a

prospective power station in Indonesia).

LG&Energy

I. EWGs, FUCOs, and QFs

LG&E Energy owns, directly or indirectly,

the following interests in exempt wholesale

generators (‘‘EWGs’’), foreign utility

companies (‘‘FUCOs’’), and qualifying

facilities (‘‘QFs’’) (all of the following

subsidiaries or affiliates are 100% owned,

except where noted), which constitute the

vast majority of LG&E Energy’s nonutility

businesses: LG&E Power Monroe LLC(lease

and combustion turbine purchase in Monroe,

Georgia; EWG); Western Kentucky Energy

Corp. (leases the generating facilities owned

by Big Rivers Electric Corporation, certified

as an EWG, and sells the output of those

facilities to LG&E Energy Marketing Inc. and,

potentially, other affiliates and third-parties);

40% of Tenaska III Texas Partners (owns QF

facility in Paris, Texas); 5% of Tenaska

Washington Partners, L.P. (owns QF facility

in Ferndale, Washington); 45% general

partner interest and 5% indirect general

partner interest in LG&E-Westmoreland

Southampton (owns QF facility in

Southampton, Virginia); 45% general partner

interest and 5% indirect general partner

interest in LG&E-Westmoreland Altavista

(owns QF facility in Altavista, Virginia); 45%

general partner interest and 5% indirect

general partner interest in LG&EWestmoreland Hopewell (owns QF facility in

Hopewell, Virginia); 0.5% general partner

interest and 49.5% limited partner interest in

Windpower Partners 1993, L.P. (owns QF

facility, windmill farms, in Minnesota and

California); 0.33% direct and 0.113% indirect

general partner interest and 24.67% direct

and 8.22% indirect limited partnership

interest in Windpower Partners 1994, L.P.

(owns EWG facility, a windmill farm, in Salt

Flat, Texas); 45.84% interest in K.W. Tarifa,

S.A. (power generation facilities in Spain;

FUCO); 45.9% interest in Distribuidora de

Gas del Centro S.A. (natural gas distribution

company in Argentina; FUCO); 14.4%

interest in Distribuidora de Gas Cuyana S.A.

(natural gas distribution company in

Argentina; FUCO); and 19.6% interest in Gas

Natural BAN S.A. (natural gas distribution

company in Argentina; FUCO).

II. EWG, QF and FUCO Related Intermediate

Holding Companies and Financing Entities

LG&E Energy owns, directly or indirectly,

the following interests in intermediate

holding companies holding, or financing

entities financing, its nonutility business

interests (all of the following subsidiaries or

affiliates are 100% owned, except where

noted): LG&E Capital Corp. (primary holding

company for LG&E Energy’s nonutility

business interests); LG&E International Inc.

(management and holding company for

international energy project investments and

operations); WKE Corp. (holding company

for EWGs that are parties to the lease and

related transactions with Big Rivers Electric

Corporation, other than LG&E Energy

Marketing Inc.); LG&E Power Inc.

(management and holding company for QFs

and EWGs); KUCC Paris Corporation (holds

15% limited partnership interest in Tenaska

III Partners, Ltd., which owns 40% of

Tenaska III Texas Partners, a QF); KUCC

Ferndale Corporation (holds limited

partnership interests in QFs); LG&E Power

Spain, Inc. (management and holding

company for energy power projects in Spain);

LG&E Power Argentina II Inc. (owner of

45.9% combined equity interest in

Distribuidora de Gas del Centro S.A., a

FUCO); LG&E Power Argentina III LLC

(owner of 14.4% combined equity interest in

Distribuidora de Gas Cuyana S.A., a FUCO);

LG&E Centro S.A. (receives consulting

revenues and pays management expenses

related to Distribuidora de Gas del Centro

S.A. (10% owned indirectly through LG&E

Power Argentina II Inc.); holding company

for FUCO); LG&E Power Finance Inc. (special

purpose financing subsidiary formed to

purchase and resell certain subordinated

indebtedness collection rights as a part of a

settlement of claims with K.W. Tarifa, S.A. (a

FUCO and Spanish corporation owned

45.9% by LG&E Power Spain Inc.)); Inversora

de Gas del Centro S.A. (owner of 51% equity

interest in Distribuidora de Gas de Centro

S.A., a FUCO (75% ownership)); LG&E Power

Development Inc. (development of QFs and

EWGs); American Power, Incorporated

(owner of 99% interest in LG&E Power

Monroe L.L.C., a QF); LG&E Power Gregory

I, Inc. (formed to hold interests in Gregory

Power Partners L.P., which will be a QF);

LG&E Power Gregory II Inc. (formed to hold

interests in Gregory Power Partners LLC,

which will be an EWG); LG&E Power Gregory

III Inc. (formed to hold interests in Gregory

Power Partners LLC, which will be a QF);

LG&E Power Gregory IV Inc. (formed to hold

interests in Gregory Power Partners L.P.,

which will be a QF); KUCC Grimes GP

Corporation (intermediate holding company

formed in conjunction with EWG project in

Grimes, Texas); KUCC Grimes LP

Corporation (intermediate holding company

formed in conjunction with EWG project in

Grimes, Texas); LG&E Power 11 Incorporated

(indirect owner of interest in QF in

Southampton, Virginia); LG&E Southampton

Incorporated (indirect owner of interest in

QF in Southampton, Virginia); LG&E Power

12 Incorporated (indirect owner of interest in

QF in Altavista, Virginia); LG&E Altavista

Incorporated (indirect owner of interest in

QF in Altavista, Virginia); LG&E Power 13

Incorporated (indirect owner of interest in

QF in Hopewell, Virginia); LG&E Hopewell

Incorporated (indirect owner of interest in

QF in Hopewell, Virginia); LG&E Power 16

Incorporated (indirect owner of interest in

QF in Roanoke Valley, North Carolina); LG&E

Power Roanoke Incorporated (indirect owner

of interest in QF in Roanoke Valley, North

Carolina); LG&E Power 21 Incorporated

(indirect owner of interest in QF, windmills

in California and Minnesota); LG&E Power 21

Wind Incorporated (indirect owner of interest

in QF, windmills in California and

Minnesota); LG&E Power 31 Incorporated

(indirect owner of interest in QF in Salt Flat,

Texas); 33.3% interest in LQC LP LLC

(indirect owner of interest in QF in Salt Flat,

Texas); 33.3% interest in LQ GP LLC

(indirect owner of interest in QF in Salt Flat,

Texas); LG&E Power 31 Wind Incorporated

(indirect owner of interest in QF in Salt Flat,

Texas); 15% of Tenaska III Partners, Ltd.

(owns 40% of Tenaska III Texas Partners, a

QF, in Paris, Texas); 20% general partnership

interest in LG&E Southampton L.P.

(intermediate holding company for QF); 20%

general partnership interst in LG&E Altavista

L.P. (intermediate holding company for QF);

20% general partnership interest in LG&E

Hopewell L.P. (intermediate holding

company for QF); 50% general partnership

interest in Westmoreland-LG&E Partners

(owner of QF interestst in Roanoke Valley,

North Carolina); 24.0% interest in Inversora

58128 Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices

24 34.6% by Hadson Gas Transmission LLC

(‘‘HGTC’’); 65.4% by LG&E Natural Plains

Marketing LLC.

25 34.6% by HGTC; 65.4% by LG&E Natural

Plains Energy Services LLC.

26 1% held by LG&E Power Gregory II, Inc. and

49% held by LG&E Power Gregory II, Inc.

de Gas Cuyana S.A. (intermediate holding

company for FUCO); 28% interest in Invergas

S.A. (owns 51% interest in Gas Natural BAN

S.A., a FUCO); and 28% interest in Gas

Natural S.D.G. Argentina S.A. (owns 19% of

Gas Natural BAN S.A., a FUCO).

III. Energy-Related Companies

The following is a list of the energy-related

companies owned, directly or indirectly, by

LG&E Energy (all of the following

subsidiaries or affiliates are 100% owned,

except where noted) that Applicants assert

are energy-related: LG&E Energy Marketing

Inc. (power marketing); LG&E Home Services

Inc. (appliance repair and warranty); LG&E

Enertech Inc. (engineering, energy

management and consulting services); LG&E

Energy Services Inc. (formed to submit bid to

provide electric service to Ft. Campbell

project; FSF Minerals Inc. (owns Pittsburgh

and Midway coal reserves near Henderson,

Kentucky); LCC Inc. (formed to bid on a coal

project); KU Solutions Corporation (energy

marketing and services corporation); LG&E

Power Engineers and Constructors Inc.

(engineering and project management); LG&E

Power Services Inc. (power facilities

management and operation); LG&E Power

Operations Inc. (intermediate holding

company for QFs; power project ownership,

management and development); LG&E

Facilities Inc. (marketing, processing, storage

and transmission of natural gas); LG&E

Natural Gathering & Processing LLC and

Llano Gathering Inc. (both natural gas

transmission and processing); LG&E Natural

Plains Marketing LLC and LG&E Crown Inc.

(both marketing of natural gas); Hadson Gas

Transmission LLC and Power Tex Parent Inc.

(both natural gas transmission); LG&E

Natural Plains Energy Services LLC and

LG&E Minor Facilities Inc. (natural gas

transmission); LG&E Natural Pipeline LLC

and Llano Storage Inc. (both natural gas

storage and transmission); LG&E Energy

Natural Industrial Marketing Co. (natural gas

marketing and transmission); LG&E Fuels

Services Inc. (formed for alternative fuels

investments); CRC-Evans Pipeline

International, Inc. (primary operating

company of CRC-Evans companies providing

specialized equipment and services for

pipeline construction); CRC-Key, Inc.

(manufactures concrete weights for pipeline

construction); CRC-Evans B.V. (international

sales office); CRC-Evans Canada LTD.

(company for Canada operations); PIH

Holdings LTD. (holding company for

operations in Europe and the Middle East);

Pipeline Induction Head Ltd. (services for

pipelines); GGSI Crown J.V.24 (owns gas

gathering and processing assets); Power Tex

J.V.25 (owns gas gathering and processing

assets); 50% general partnership interest in

Adobe Merchant 89 (owns gas gathering and

processing assets); 50% interest in Gregory

Power Partners LLC26 (owns and developing

power project in Gregory, Texas; will be a

QF); 1% general partnership interest and

49% limited partnership interest in Gregory

Power Partners L.P. (owns and developing

power project in Gregory, Texas; will be a

QF); 50% general partnership interest in

Wheeler Gathering System (owns gas

gathering and processing assets); 11.5%

general partnership interest in Hillsboro

Gathering System (owns gas gathering and

processing assets); and LG&E Industrial Sales

Corporation (owner of natural gas

transmission assets).

IV. Other Nonutility Companies

In addition to the above nonutility

subsidiaries and affiliates, LG&E Energy also

owns interests in the following nonutility

entities, a description of which follows each

entity’s name in parentheses (all of the

following subsidiaries or affiliates are 100%

owned, except where noted): LG&E Energy

Foundation Inc. (charitable contributions);

LG&E Credit Corp. (offers consumer lending

programs for energy efficient products in the

Louisville metropolitan area); CRC-Evans

International, Inc. (formed for the acquisition

of CRC Holdings Corp., which owns interests

in energy-related companies); WKE Station

Two Inc. (operates the Station Two

generating facility that is owned by the City

of Henderson, Kentucky under an agreement

with the city and Big Rivers Electric

Corporation); 28% interest in ServiConfort

Argentina S.A. (provides retail services to gas

customers in Argentina).

V. Inactive Companies

LG&E Energy also, directly or indirectly,

owns the following inactive companies (all of

the following subsidiaries or affiliates are

100% owned, except where noted):

Lexington Utilities Company; LNGCL Inc.

(indirectly held former interest in Natural

Gas Clearinghouse); LNGCG Inc. (indirectly

held former interest in Natural Gas

Clearinghouse); KUCC Frederickson

Corporation (owns 10% interest of Tenaska

Washington Partners, II, L.P.); KUCC

Portland 34 Corporation (holds 21% interest

in Portland 34, L.P. and serves as its general

partner); KUCC Portland 34, L.P. (former

lessor regarding combustion turbine);

Portland 34 LTD Corporation (holds 79%

limited partnership interests in Portland 34,

L.P.); KUCC Development Corporation

(former development company); KUCC

Grimes Corporation (intermediate holding

company for developing EWG project in

Grimes, TX); WKE Facilities Corp.; LCC LLC;

FCD LLC; Excalibur Development LLC; LG&E

Mendoza Services Inc. (originally formed to

hold investment in foreign power facilities);

LG&E Power Venezuela I, Inc. (originally

formed to hold investment in foreign power

facilities); LG&E Power Australia I Inc.;

Ultrasystems Construction Co., Inc.

(originally formed to construct power and

related facilities); HD Energy Corporation;

Hadson Financial Corporation (former

management company); Ultrasystems Small

Power, Incorporated; Hadson Fuels, Inc.;

70% interest in HD/WS Corporation (holding

company for ash disposal activities); LG&E

Power 5 Incorporated (former owners of

investment in power facilities); LG&E Power

6 Incorporated (former owner of investment

in power facilities): LG&E Power 14

Incorporated (owner of investment in power

facilities); LG&E Power 18 Incorporated

(owner of investment in power facilities);

LG&E Erie Partner Incorporated (owner of

investment in power facilities); LG&E Power

22 Incorporated (owner of investment in

power facilities); LG&E Power 29

Incorporated (indirect owner of interest in

QF); LG&E Power 25 Incorporated (owner of

investment in power facilities); LG&E Power

26 Incorporated (owner of investment in

power facilities); LG&E Australia Pty

Limited; LG&E Power Constructors Inc.

(former constructor of QFs and EWGs);

Ultraclean Incorporated; NuHPI, Inc.;

Ultrafuels Incorporated; Ultrafuels 1

Incorporated; Ultrapower Biomass Fuels

Corporation; Hadson Power Live Oak

Incorporated; Ultrasystems Small Power 1,

Incorporated; Triple T Services, Inc.; 25.4%

capital stock interest in Babcock & Wilcox;

10% interest in Tenaska Washington

Partners, II, L.P. (interest in power general

facilities; former facility in Frederickson,

Washington); 17% general partnership

interest in Babcock-Ultrapower West Enfield;

17% general partnership interest in BabcockUltrapower Jonesboro; 45% general

partnership interest in LG&E Power 14–

Buena Vista (owner of investment in power

facilities); 1% general partnership interest,

49% limited partnership interest, and a 0.5%

general partnership interest in Erie Power

Partners L.P. (former owner of power supply

contract); 2% general partnership interest

and 49% limited partnership interest in

LG&E/Kelso Power Partners, L.P. (formed to

develop and own power facilities); 50%

general partnership interest in Maine Power

Services; 50% general partnership interest in

LG&E–Westmoreland Rensselaer (former

owner of power generation facilities); LG&E

Power Argentina I, Inc. (management and

holding company of former natural gas

projects in Argentina); LG&E Power Spain

LLC (formed to facilitate possible merger

with LG&E Power Spain Inc.); and LG&E

Natural Canada Inc. (former natural gas

marketer).

Appendix B—Existing Financing

Arrangements of U.S. Utility

Subsidiaries

LG&E

Bond Financing:

At 12/31/99

First Mortgage Bonds—(× 000’s)

Series due July 1, 2000, 7.5%*—20,000

Series due August 15, 2003, 6%—42,600

Pollution control series:

P due June 15, 2015, 7.45%—25,000

Q due November 1, 2020, 7.625%—83,335

R due November 1, 2020, 6.55%—41,665

S due September 1, 2017, variable—31,000

T due September 1, 2017, variable—60,000

U due August 15, 2013, variable—35,200

V due August 15, 2019, 5.625%—102,000

W due October 15, 2020, 5.45%—26,000

X due April 15, 2023, 5.90%—40,000

Total first mortgage bonds—506,800

Pollution control bonds (unsecured):

Jefferson County Series due September 1,

2026, variable—22,500

Trimble County Series due September 1,

2026, variable—27,500

Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices 58129

Jefferson County Series due November 1,

2027, variable—35,000

Trimble County Series due November 1,

2027, variable—35,000

Total unsecured pollution control bonds—

120,000

Total LG&E bonds outstanding—626,800

*Redeemed

Capital Stock:

Common Stock, without par value—

Authorized: 75,000,000 shares

Outstanding: 21,294,233 shares

Cumulative Preferred Stock:

Shares

outstanding

Current

redemption

price

$25 par value, 1,720,000 shares authorized, 5% series ................................................................................................ 860,287 $28.00

Without par value, 6,750,000 shares authorized:

Auction rate .............................................................................................................................................................. 500,000 100.00

5.875% series ........................................................................................................................................................... 250,000 104.70

Short-Term Financing:

$200 million revolving credit line, expiring

November 2001.

Commercial paper program, up to $200

million authorized

KU

Bond Financing:

At 12/31/99

First Mortgage Bonds— (x 000’s)

Series Q, due June 15, 2000, 5.95%—

61,500

Series Q, due June 15, 2003, 6.32%—

62,000

Series S, due January 15, 2006, 5.99%—

36,000

Series P, due May 15, 2007, 7.92%—53,000

Series R, due June 1, 2025, 7.55%—50,000

Series P, due May 15, 2027, 8.55—%33,000

Pollution Control Series:

Series 7, due May 1, 2010, 7.375%—4,000

Series 8, due September 15, 2016, 7.45%—

96,000

Series 1B, due February 1, 2018, 6.25%—

20,930

Series 2B, due February 1, 2018, 6.25%—

2,400

Series 3B, due February 1, 2018, 6.25%—

7,200

Series 4B, due February 1, 2018, 6.25%—

7,400

Series 7, due May 1, 2020, 7.60%—8,900

Series 9, due December 1, 2023, 5.75%—

50,000

Series 10, due November 1, 2024,

variable—54,000

Total KU bonds outstanding—546,330

Capital Stock:

Common Stock, without par value—

Authorized: 80,000,000 shares

Outstanding: 37,817,878 shares

Cumulative Preferred Stock:

Shares

outstanding

Current

redemption price

Without par value, 5,300,000 shares authorized:

4.75% series, $100 stated value ....................................................................................................................... 200,000 101.00.

6.53% series, $100 stated value ....................................................................................................................... 200,000 Not redeemable.

Short-Term Financing:

Commercial paper program, inactive.

Uncommitted credit line with Centric

Corporation (‘‘Centric’’), up to $60

million.

Appendix C—Existing Financing

Arrangements of U.S. Non-Utility

Subsidiaries

LG&E Capital Corp.

Long-Term Debt:

At 12/31/99—(× 000’s)

Medium term notes, due September 7,

2000, variable—50,000

Medium term notes, due May 1, 2004,

6.205%—150,000

Medium term notes, due January 15, 2008,

6.46%—150,000

Medium term notes, due November 1,

2011, 5.75%—150,000

Total Capital Corp. bonds outstanding—

500,000

Credit Facilities:

$200 million revolving lines of credit,

expiring September 2000.

$500 million revolving line of credit,

expiring September 2002.

$20 million uncommitted letter of credit

facility.

Commercial paper program, up to $600

million authorized.

CRC-Evans Pipeline International Inc.

At 12/31/99—(× 000’s)

Note payable, due May 2003, 6.75%—$281

Distribution de Gas del Centro

At 12/31/99—(× 000’s)

Argentine negotiable obligations, due

August 2001, 10.5%—$37,782

Appendix D—Guarantees

Obligations of LG&E Capital Supported by

LG&E Energy under the Support Agreement

1. Obligations of LG&E Capital on each of

its credit facilities, in an aggregate principal

amount of $720 million.

2. Obligations of LG&E Capital in respect

of its commercial paper program, in an

authorized principal amount of $600 million.

3. Obligations of LG&E Capital in respect

of its medium-term notes outstanding, in an

aggregate principal amount as of March 31,

2000 of $500 million.

4. Obligations of LG&E Capital in respect

of a guarantee of lease obligations of LG&E

Power Monroe, LLC. See ‘‘Guarantees issued

by LG&E Energy and the U.S. Non-Utility

Subsidiaries’’ below.

5. Obligations of LG&E Capital under

interest rate swap transactions in an

aggregate notional amount of $50 million,

entered into in connection with the hedging

of interest rate risk on outstanding

indebtedness of LG&E Capital Corp.

6. Obligations of LG&E Capital under a

guarantee of certain obligations of LG&E

Energy Marketing Inc. under several

Purchased Power Agreements relating to the

purchase of 560 MW of power. No limit is

stated.

Guarantees Issued by LG&E Energy and the

U.S. Non-Utility Subsidiaries

1. LG&E Power and LG&E Capital

guarantee certain obligations of LG&E Energy

Marketing. These guarantees are provided in

lieu of letters of credit or other credit

enhancements required by counterparties

and are provided in order to minimize the

cost of providing the commodity required

under the contract. The guarantees typically

have a stated maximum amount, but the

actual exposure is typically only a small

percentage of the aggregate maximums stated

amount of the guarantee. The maximum

stated amount on such guarantees as of

March 31, 2000 was $461 million. In other

cases, no maximum amount is stated. The

aggregate exposure of LG&E Power and LG&E

Capital under such guarantees as of March

31, 2000 was approximately $63 million.

2. Guarantee by LG&E Capital of the lease

obligations of LG&E Power Monroe, LLC

under an operating lease relating to three

combustion turbines and related facilities to

be installed and constructed in Monroe,

Georgia. The value of the assets under lease

is expected to be approximately $175

million.

3. Guarantee by LG&E Capital of the

obligation of LG&E Power Inc. under a lease

of office space in Irvine, CA in an aggregate

amount of less than $5 million.

4. Guarantees by LG&E Capital to provide

equity contributions in respect of the Gregory

Project. Each guarantee is unlimited on its

58130 Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices

27Unicom Corporation, HCAR No. 26090 (July 22,

1994).

28Each of the entities that will be directly or

indirectly owned subsidiaries of Exelon upon

consummation of the Merger is referred to in this

notice individually as a ‘‘Subsidiary’’ and

collectively as ‘‘Subsidiaries.’’ ‘‘Utility

Subsidiaries’’ includes ComEd, PECO, Genco,

Commonwealth Edison Company of Indiana (which

has no retail customers), PECO Energy Power

Company, Susquehanna Power Company and

Susquehanna Electric Company (the latter three are

exclusively engaged in owning and operating an

electric generation project, all of the power from

which is sold at wholesale.) ‘‘Nonutility

Subsidiaries’’ includes all other subsidiaries of

Exelon and also includes other direct or indirect

subsidiaries that Exelon may form after the Merger

in accordance with a Commission order or with an

applicable rule or order; provided, however, that for

purposes of the requests described below with

respect to the nonutility money pool, the term

‘‘Nonutility Subsidiaries’’ includes only Services

and Enterprises.

face, but the underlying agreements

effectively limit the guaranteed obligations to

$4.5 million.

5. Guarantees by LG&E Capital of the

obligations of HD/WS Corporation under a

standby ash disposal agreement relating to

certain power projects in Franklin, VA,

Altavista, VA and Hopewell, VA. There is no

stated cap on the potential liability under

these guarantees.

6. Guarantee by LG&E Energy of all

obligations of certain of the U.S. Non-Utility

Subsidiaries relating to the lease of the

generating assets of Big Rivers Electric

Corporation (‘‘Big Rivers’’). The transaction

provides the U.S. Non-Utility Subsidiaries

with access to approximately 1,700

megawatts of capacity and requires that

power be supplied to Big Rivers at

contractual prices. The leased assets are

expected to be capable of meeting the

requirements of Big Rivers throughout the

term of the lease. In addition, the U.S. NonUtility Subsidiaries are required to make

annual lease payments of $31.5 million to Big

Rivers through July 2023.

7. LG&E Energy has guaranteed all

obligations of LG&E Energy Marketing in its

contract with Oglethorpe Power Corporation

(‘‘OPC’’). Under this contract LG&E Energy

Marketing is required to supply

approximately one-half of the system-wide

power needs of OPC at fixed prices and has

access to one-half of OPC’s generation

capacity. LG&E Energy Marketing has

assumed the risk of price increases for any

power it is required to purchase off system

and any load growth under this contract.

LG&E Energy has discontinued its merchant

energy trading operation which includes

servicing of this contract has booked reserves

to cover expected future losses from these

activities. In July 1998, LG&E Energy

recorded an after-tax loss on disposal of

discontinued operations of $225 million. In

December 1999, LG&E Energy increased the

size of this reserve by $175 million based on

what it believes to be appropriate estimates

of future energy prices and load growth.

There is no guarantee that higher-thananticipated future commodity prices or load

demands or other factors could not result in

additional losses.

8. Guarantee by LG&E Capital of certain

obligations, up to a maximum amount of $96

million, payable by LG&E Power

Development Inc. with respect to a purchase

contract for eight turbines.

Exelon Corporation, et al. (70–9693)

Exelon Corporation (‘‘Exelon’’),

Exelon Business Services Company

(‘‘Services’’), Exelon Ventures Company

(‘‘Ventures’’), Exelon Enterprises

Company, LLC (‘‘Enterprises’’), Exelon

Generation Company, LLC (‘‘Genco’’),

and Exelon Energy Delivery Company

(‘‘Energy Delivery’’), each located at 10

South Dearborn Street, Chicago, Illinois

60603 and each a subsidiary of PECO

Energy Company (‘‘PECO’’), a

combination gas and electric utility

holding company claiming exemption

from registration under section 3(a)(1) of

the Act by rule 2 under the Act; PECO

and its utility subsidiaries, PECO Energy

Power Company, Susquehanna Power

Company and Susquehanna Electric

Company, each located at 2301 Market

Street, Philadelphia, Pennsylvania

19101; and Commonwealth Edison

Company (‘‘ComEd’’ and collectively,

‘‘Applicants’’), an electric utility

subsidiary of Unicom Corporation

(‘‘Unicom’’), an electric utility holding

company exempt by order from

registration under section 3(a)(1),27,

each located at 10 South Dearborn

Street, Chicago, Illinois 60603, have

filed an application-declaration under

sections 6(a), 7, 9(a), 10, 12(b) and 12(c)

of the Act and rules 43, 44, 45, 46, 53

and 54 under the Act.

In a separate filing with this

Commission, file no. 70–9645 (‘‘Merger

Application’’), Exelon has sought

authority to exchange its common stock

for the common stock of its parent,

PECO, followed by a merger of Unicom

with and into Exelon (‘‘Merger’’). Exelon

will establish Energy Delivery as an

intermediate holding company over

PECO and ComEd, and will also

establish Ventures as an intermediate

holding company over Genco, to which

generation assets of PECO and ComEd

will be transferred, and over Exelon’s

nonutility subsidiaries.28 In addition,

Exelon, Ventures, and Energy Delivery

will each register as a holding company

under the Act after the Merger.

In the instant filing, Applicants seek

authorization and approval with respect

to ongoing financing activities through

March 31, 2004, (‘‘Authorization

Period’’ and other matters relating to the

Merger.

I. Summary

Applicants seek authority for Exelon

and the Subsidiaries with respect to: (1)

The issuance of common stock,

guarantees, preferred debt and other

securities for cash and in connection

with various acquisitions, (2) the

issuance of 21 million shares of

common stock under dividend

reinvestment and stock-based

management incentive and employee

benefit plans, (3) the maintenance of

existing debt and guarantees, (4) the

payment of dividends out of capital or

unearned surplus, (5) hedging

transactions, (6) the establishment of a

utility money pool and a nonutility

money pool, (7) the retention,

establishment and use of specialpurpose financing entities, (8) changes

in the capital stock of certain

Subsidiaries in order to engage in

financing transactions with a parent

company and (9) the use of proceeds of

securities issuances to invest in exempt

wholesale generators (‘‘EWGs’’) and

foreign utility companies (‘‘FUCOs’’) in

amounts that exceed 50% of Exelon’s

consolidated retained earnings.

Applicants’ effective cost of money on

long-term debt borrowings under this

authorization will not exceed the greater

of (1) 350 basis points over the

comparable term U.S. Treasury

securities or (2) a gross spread over U.S.

Treasuries that is consistent with

similar securities of comparable credit

quality and maturities issued by other

companies. Applicants’ effective cost of

money on short-term debt borrowings

under this authorization will not exceed

the greater of (1) 350 basis points over

the comparable term London Interbank

Offered Rate (‘‘LIBOR’’) or (2) a gross

spread over LIBOR that is consistent

with similar securities of comparable

credit quality and maturities issued by

other companies. The dividend rate on

any series of preferred securities will

not exceed the greater of (1) 500 basis

points over the yield to maturity of a

U.S. Treasury security having a

remaining term equal to the term of

such series of preferred securities or (2)

a rate that is consistent with similar

securities of comparable credit quality

and maturities issued by other

companies. The maturity of

indebtedness will not exceed fifty years.

All preferred securities will be

redeemed no later than fifty years after

being issued.

The proceeds from the sale of

securities in external financing

transactions will be used for general

corporate purposes, including the

financing, in part, of the capital

expenditures and working capital

requirements of the Exelon system, for

the acquisition, retirement or

redemption of securities previously

issued by Exelon or the Subsidiaries,

and for authorized investments in rule

58 companies, EWGs, FUCOs, exempt

Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices 58131

29Exelon common stock issued in consideration

for the acquisition of a company under any of these

circumstances will be valued, for purposes of

determining compliance with the proposed

aggregate financing limitation, at its market value as

of the date of issuance (or, if appropriate, at the date

of a binding contract providing for the issuance of

common stock).

30Applicants state that Exelon will incur

approximately $500 million in debt to finance the

Merger, which it proposes to exclude from the

calculation of indebtedness for purposes of the

Exelon Financing Limit.

31Applicants note that a very small amount of

ComEd common stock will not be held by Exelon.

This stock has been and will be acquired on

conversion of certain outstanding warrants or on

conversion of ComEd convertible preferred stock.

Unicom has extended a standing offer to these

holders of ComEd common stock to exchange the

stock for Unicom common stock. Exelon wishes to

continue this program.

32These are described in Appendix A to the

notice.

33 In general, all securities issuances by ComEd

must be approved by the Illinois Commerce

Commission, other than indebtedness with a final

maturity of less than one year, renewable for a

period of not more than two years. Similarly, all

securities issuances by PECO must be approved by

the Pennsylvania Public Utility Commission, other

than securities with a maturity of one year or less

or having no fixed maturity but payable on demand.

Issuances of securities by Genco are not subject to

review by any state commission.

34These arrangements are described in Exhibit A

to the notice.

telecommunications companies

(‘‘ETCs’’) and for other lawful purposes.

II Exelon External Financing

A. Securities

Exelon requests authorization to

obtain funds externally through sales of

common stock, preferred securities,

long-term debt and short-term debt

securities. With respect to common

stock, Exelon also requests authority to

issue common stock, options, warrants

or stock purchase rights to third parties

in consideration for the acquisition by

Exelon or a Nonutility Subsidiary of

equity or debt securities of a company

being acquired in accordance with an

order of the Commission, under sections

32, 33 or 34 of the Act or rule 58 under

the Act.29 The aggregate amount of

financing requested will not exceed $8

billion (‘‘Exelon Financing Limit’’.30

Common stock financings may be

effected in accordance with

underwriting agreements of a type

generally standard in the industry.

Public distributions may be pursuant to

private negotiation with underwriters,

dealers or agents as discussed below or

effected through competitive bidding

among underwriters. In addition, sales

may be made through private

placements or other non-public

offerings to one or more persons. All

common stock sales will be at rates or

prices and under conditions negotiated

or based upon or otherwise determined

by, competitive capital markets.31

Preferred stock or other types of

preferred securities may be issued in

one or more series with such rights,

preferences, and priorities as may be

designated in the instrument creating

each such series, as determined by

Exelon’s board of directors. Dividends

or distributions on preferred securities

will be made periodically and to the

extent funds are legally available for

such purpose, but may be made subject

to terms which allow the issuer to defer

dividend payments for specified

periods. Preferred securities may be

convertible or exchangeable into shares

of Exelon common stock or

indebtedness.

Exelon’s long-term debt securities will

be comprised of bonds, notes, mediumterm notes or debentures under one or

more indentures or long-term

indebtedness under agreements with

banks or other institutional lenders.

Maturity dates, interest rates,

redemption and sinking fund

provisions, tender or repurchase and

conversion features, if any, with respect

to Applicants’ long-term securities, as

well as any associated placement,

underwriting or selling agent fees,

commissions and discounts, if any, will

be established by negotiation or

competitive bidding.

Exelon’s short-term debt will replace

pre-Merger letters or lines of credit or

commercial paper and would provide

financing for general corporate purposes

working capital requirements and

temporary financing of capital

expenditures. Any short-term debt

outstanding or credit facility of Unicom

existing at the time of the Merger may

be assumed by Exelon.32 Exelon’s shortterm debt may include commercial

paper, which would be sold at the

discount rate or the coupon rate per

annum prevailing at the date of issuance

of commercial paper of comparable

quality and maturities sold to

commercial paper dealers generally. In

addition, Exelon may, without counting

against the Exelon Financing Limit,

maintain back up lines of credit in

connection with a commercial paper

program in an aggregate amount not to

exceed the amount of authorized

commercial paper.

B. Hedging Transactions

Exelon requests authority to enter

into, perform, purchase and sell

financial instruments intended to

reduce or manage the volatility of

interest rates, including but not limited

to interest rate swaps, caps, floors,

collars and forward agreements,

structured notes or transactions

involving the purchase or sale of U.S.

Treasury or Agency obligations or

LIBOR based swap instruments for fixed

periods and stated national amounts

(‘‘Hedge Instruments’’). Exelon will not

engage in speculative transactions

unassociated with its financing needs

and activities, and will only enter into

agreements with counterparties having

senior debt ratings, as published by a

national rating agency, greater than or

equal to ‘‘BBB’’ or an equivalent rating

(‘‘Approved Counterparties’’).

Exelon and its subsidiaries also

request authorization to enter into

interest rate hedging transactions with

respect to anticipated debt offerings

(‘‘Anticipatory Hedges’’). Anticipatory

Hedges would only be entered into with

Approved Counterparties, and would be

utilized to fix and/or limit the interest

rate risk associated with any new

issuance through (1) a forward sale of

exchange-traded Hedge Instruments, (2)

the purchase of put options on Hedge

Instruments (‘‘Put Options Purchase’’),

(3) a Put Options Purchase in

combination with the sale of call

options, (4) transactions involving the

purchase or sale, including short sales

of Hedge Instruments, or (5) some

combination of the above and/or other

derivative or cash transactions,

including, but not limited to, structured

notes, caps and collars, appropriate for

the Anticipatory Hedges. The same

limitations on the creditworthiness of

counterparties described immediately

above would also apply to Anticipatory

Hedges.

III. Subsidiary External Financing

A. All Utility Subsidiaries

Rule 52 provides an exemption from

the prior authorization requirements of

the Act for most sales and issuances of

securities by the Utility Subsidiaries.33

Applicants have also requested,

however, authority for certain Utility

Subsidiaries to engage in external

financings beyond the scope of the rule

52 exemption.

Applicants seek authority for ComEd,

PECO and Genco to issue commercial

paper and establish and borrow under

credit lines in the aggregate amount of

$2.7 billion outstanding at any one time

during the Authorization Period

(‘‘Utility Financing Limit’’). In addition,

ComEd and PECO have existing

financing arrangements in place which

they propose to maintain.34 ComEd,

PECO and Genco may also, without

counting against this limit, maintain

back up lines of credit in connection

with a commercial paper program in an

aggregate amount not to exceed the

58132 Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices

35For example, as one of the founding members

of the Midwest System Operator (‘‘MISO’’), Unicom

issued guaranties to creditors on behalf of MISO to

assist MISO’s start-up operations.

36Existing guaranties of Unicom are described in

Exhibit A to this notice.

37Existing PECO guaranties are described in

Exhibit A to this notice.

amount of authorized commercial

paper.

Additionally, to the extent not exempt

under rule 52, the Utility Subsidiaries

request authority to enter into and

perform under Hedge Instruments and

Anticipatory Hedges. These transactions

will be entered into subject to the

limitations and requirements applicable

to Exelon’s Hedge Instruments and

Anticipatory Hedges.

B. Genco

Applicants request authority for

Genco to issue common stock, preferred

stock or other types of preferred

securities, as well as such long-term

debt securities as bonds, notes, mediumterm notes or debentures under one or

more indentures, or under agreements

with banks or other institutional

lenders, and to sell commercial paper

and establish credit lines. The maturity

dates, interest rates, redemption and

sinking fund provisions and conversion

features, if any, with respect to the longterm securities of Genco, as well as any

associated placement, underwriting or

selling agent fees, commissions and

discounts, if any will be established by

negotiation or competitive bidding. In

addition, Genco may, without counting

against the limits set forth above,

maintain back up lines of credit in

connection with a commercial paper

program in an aggregate amount not to

exceed the amount of authorized

commercial paper.

The aggregate amount of common

equity, preferred securities, long-term

debt and short-term debt financing to be

obtained by Genco during the

Authorization Period (excluding

indebtedness issued during the

Authorization period to refund then

outstanding indebtedness) will not

exceed $5.5 billion (‘‘Genco Financing

Limitation’’). Any issuance of securities

by Genco under the requested authority

will count against the Exelon Financing

Limit, except for borrowings from

associates where the lender’s own

borrowings count against the Exelon

Financing Limit.

Applicants also request authority for

Genco to assume approximately $369

million in pollution control loan

obligations PECO issued in connection

with facilities located at the generating

stations to be transferred to Genco as

part of the Merger. These assumptions

of indebtedness will be in addition to

the Genco Financing Limit.

IV. Intrasystem Transactions

A. Guaranties

Applicants request authority for

Exelon to enter into guaranties, obtain

letters of credit, enter into support or

expense agreements or otherwise

provide credit support with respect to

the obligations of the Subsidiaries as

may be appropriate or necessary to

enable the Subsidiaries to carry on in

the ordinary course of their respective

businesses, and to enter into guaranties

of third parties’ obligations in the

ordinary course of Exelon’s business

(‘‘Exelon Guaranties’’).35 Applicants

also request authority for Genco to enter

into guarantees and other forms of credit

support with respect to the obligations

of its subsidiaries (‘‘Genco Guaranties’’)

and for each Nonutility Subsidiary to

provide guarantees and other forms of

credit support to other Nonutility

Subsidiaries (together with the Exelon

Guaranties and the Genco Guaranties,

‘‘Guaranties’’).

The aggregate amount of the

Guaranties will not exceed $4.5 billion

outstanding at any one time (not taking

into account obligations exempt

pursuant to rule 45) (‘‘Guaranty Limit’’).

Included in this amount are existing

guaranties and other credit support

mechanisms entered into by Unicom 36

which will be assumed by Exelon and

those entered into by PECO 37 in favor

of their respective Subsidiaries.

The issuance of any Guaranties will

also be subject to the limitations of rule

53(a)(1) or rule 58(a)(1), as applicable.

Applicants propose that each Subsidiary

be charged a fee for each Guaranty

provided on its behalf that is

comparable to those obtainable by the

beneficiary of the Guaranty from third

parties.

B. Money Pools

Applicants request authority for

Exelon and the Utility Subsidiaries to

establish a money pool (‘‘Utility Money

Pool’’). In addition, Applicants request

authority for the Utility Subsidiaries, to

the extent not exempted by rule 52, to

make unsecured short-term borrowings

from the Utility Money Pool, to

contribute surplus funds to the Utility

Money Pool, and to lend and extend

credit to (and acquire promissory notes

from) one another through the Utility

Money Pool. In addition to the Utility

Subsidiaries, Applicants request

authority for existing utility related

financing entities, referred to below, to

participate in the Utility Money Pool as

a result of their financing relationship

with ComEd and PECO.

In addition, Exelon and the Nonutility

Subsidiaries request authorization to

establish a nonutility money pool

(‘‘Nonutility Money Pool’’). The

Nonutility Money Pool activities of all

of the Nonutility Subsidiaries are

exempt from the prior approval

requirements of the Act under rule 52.

Applicants request authorization of

Exelon to contribute its surplus funds

and to lend and extend credit to: (1) The

Utility Subsidiaries through the Utility

Money Pool and (2) the Nonutility

Subsidiaries through the Nonutility

Money Pool. The aggregate outstanding

amount of borrowings that each of

PECO, Genco and ComEd may incur

under the Utility Money Pool will count

against the Utility Financing Limit.

Utility Money Pool participants that

borrow would borrow pro rata from

each company that lends, in the

proportion that the total amount loaned

by each such lending company bears to

the total amount then loaned through

the Utility Money Pool. On any day

when more than one fund source (e.g.,

surplus treasury funds of Exelon and

other Utility Money Pool participants

(‘‘Internal Funds’’) and proceeds from

external financing (‘‘External Funds’’),

with different rates of interest, is used

to fund loans through the Utility Money

Pool, each borrower would borrow pro

rata from each such fund source in the

Utility Money Pool in the same

proportion that the amount of funds

provided by that fund source bears to

the total amount of short-term funds

available to the Utility Money Pool.

If only Internal Funds make up the

funds available in the Utility Money

Pool, the interest rate applicable and

payable to or by Subsidiaries for all

loans of such Internal Funds will be the

rates for high-grade unsecured 30-day

commercial paper sold through dealers

by major corporations as quoted in The

Wall Street Journal.

If only External Funds comprise the

funds available in the Utility Money

Pool, the interest rate applicable to

loans of such External Funds would be

equal to the lending company’s cost for

such External Funds (or, if more than

one Utility Money Pool participant had

made available External Funds on such

day, the applicable interest rate would

be a composite rate equal to the

weighted average of the cost incurred by

the respective Utility Money Pool

participants for such External Funds).

In cases where both Internal Funds

and External Funds are concurrently

borrowed through the Utility Money

Pool, the rate applicable to all loans

comprised of such ‘‘blended’’ funds

Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices 58133

38One of the special purpose subsidiaries already

in existence at PECO or Unicom, such as PECOEnergy Transition Trust (discussed below) or

ComEd Transitional Funding Trust, may be used for

these purposes as well.

would be a composite rate equal to the

weighted average of (1) the cost of all

Internal Funds contributed by utility

Money Pool participants (as determined

pursuant to the second-preceding

paragraph above) and (2) the cost of all

such External Funds (as determined

pursuant to the immediately preceding

paragraph above). In circumstances

where Internal Funds and External

Funds are available for loans through

the Utility Money Pool, loans may be

made exclusively from Internal Funds

or External Funds, rather than from a

‘‘blend’’ of such funds, to the extent it

is expected that such loans would result

in a lower of cost of borrowings.

Funds not required by the Utility

Money Pool to make loans (with the

exception of funds required to satisfy

the Utility Money Pool’s liquidity

requirements) would ordinarily be

invested in one or more short-term

investments including: (1) Interestbearing accounts with banks; (2)

obligations issued or guaranteed by the

U.S. government and/or its agencies and

instrumentalities, including obligations

under repurchase agreements; (3)

obligations issued or guaranteed by any

state or political subdivision, provided

that such obligations are rated not less

than ‘‘A’’ by a nationally recognized

rating agency; (4) commercial paper

rated not less than ‘‘A–1’’ or ‘‘P–1’’ or

their equivalent by a nationally

recognized rating agency; (5) money

market funds; (6) bank certificates of

deposit, (7) Eurodollar funds and (8)

such other investments are permitted by

Section 9(c) of the Act and rule 40

under the Act.

Each Applicant receiving a loan

through the Utility Money Pool would

be required to repay the principal

amount of such loan, together with all

interest accrued thereon, on demand

and in any event not later than one year

after the date of such loan. All loans

made through the Utility Money Pool

may be prepaid by the borrower without

premium or penalty.

The Nonutility Money Pool will be

operated on the same terms and

conditions as the Utility Money Pool,

except that Exelon funds made available

to the Money Pools will be made

available to the Utility Money Pool first

and thereafter to the Nonutility Money

Pool. Operation of the utility and

Nonutility Money Pools, including

record keeping and coordination of

loans, will be handled by Exelon

Service under the authority of the

appropriate officers of the participating

companies. Exelon Service will

administer the Utility and Nonutility

Money Pools on an ‘‘at cost’’ basis and

will maintain separate records for each

money pool.

C. Borrowings by Ventures and Exelon

Energy Delivery

Ventures and Exelon Energy Delivery

request authority to issue debt or equity

securities to Exelon for the purpose of

facilitating Exelon’s additional

investments in Genco, PECO, ComEd,

and Enterprises. Amounts borrowed by

Ventures and Exelon Energy Delivery

from Exelon for this purpose would not

count against the aggregate financing

limit proposed for Exelon.

D. Other Borrowings

The Nonutility Subsidiaries may

engage, from time to time, in other types

of security financing with associates

that are not exempt from prior

Commission approval. In the limited

circumstances where the Nonutility

Subsidiary making the borrowing is not

wholly owned by Exelon, directly or

indirectly, authority is requested under

the Act for Exelon or a Nonutility

Subsidiary, as the case may be, to make

such loans to such subsidiaries at

interest rates and maturities designed to

provide a return to the lending company

of not less than its effective cost of

capital. If such loans are made to a

Nonutility Subsidiary, such company

will not sell any services to any

associate Nonutility Subsidiary unless

such company falls within one of the

categories of companies to which goods

and services may be sold on a basis

other than ‘‘at cost,’’ as described in the

Merger Application.

V. Other Transactions

A. Financing Subsidiaries

Exelon and the Subsidiaries request

authority to acquire, directly and

indirectly, the equity securities of one or

more corporation, trusts, partnerships or

other entities (‘‘Financing Subsidiaries’’)

created specifically for the purpose of

facilitating the financing of the

authorized and exempt activities of

Exelon and the Subsidiaries through the

issuance of long-term debt preferred

securities or equity securities, to third

parties and the transfer of the proceeds

of such financings to Exelon or such

Subsidiaries.38

The parent of a Financing Subsidiary

may, if required, guarantee or enter into

support or expense agreements in

respect of the obligations of its

Financing Subsidiaries. Any amounts

issued by a Financing Subsidiary to

third parties will be included in the

proposed financing limit, if any,

applicable to its immediate parent.

However, any intrasystem borrowing by

the parent of the proceeds of those

issuances would not count against the

proposed aggregate financing

limitations, if any, applicable to the

parent and a guaranty by the parent

with respect to those issuances would

not count against the Guaranty Limit.

PECO currently has in place

Financing Subsidiaries related to its

securitization bonds. Under the terms of

PECO’s settlement of its 1998 electric

restructuring proceeding and the final

order of the Pennsylvania Commission

approving the settlement, issued on May

14, 1998, PECO is permitted to recover

$5.26 billion in stranded costs over a

twelve year period that began on

January 1, 1999. PECO’s stranded costs

are collected through a non-bypassable

transition charge (‘‘Transition Charge’’)

which must be paid by all of PECO’s

transmission and distribution

customers, regardless of whether the

customers continue to purchase their

electric capacity or energy from PECO.

The May 14, 1998 order authorized

PECO to securitize up to $4 billion of its

recoverable costs through the issuance

of transition bonds. On March 16, 2000,

the Pennsylvania Commission issued a

second order authorizing PECO to

securitize an additional $1 billion. In

order to accomplish the approved

securitization transactions, PECO

created an independent special purpose

entity named PECO Energy Transition

Trust (‘‘PETT’’) for the special purpose

of purchasing from PECO certain

property, including rights to the

Transition Charge (‘‘Transition

Property’’), issuing the transition bonds,

pledging its interest in the Transition

Property and other collateral to the bond

trustee to secure the transition bonds,

and performing activities that are

necessary and suitable to accomplish

these purposes.

The transition bonds have been issued

and, in accordance with the orders of

the Pennsylvania Commission, PECO is

utilizing the proceeds of the transition

bonds to retire higher cost debt and buy

back equity securities. The investment

of the transition bonds is being

accomplished through a series of

intercompany loans, contributions and

distributions involving nonutility

subsidiaries of PECO. Interest payments

and loan advances are being and will

continue to be made on a quarterly basis

among these nonutility subsidiaries

exempt under rule 52. The last of these

quarterly transactions is presently

expected to take place in May of 2010.

58134 Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices

39Applicants currently have no FUCO

investments. The only existing EWG investment is

PECO’s investment in AmerGen, which was

recorded at $51.4 million at March 31, 2000.

AmerGen, which is 50% owned by PECO, is an

EWG that owns the Clinton Power Station in

Illinois and the Three Mile Island Unit 1 Nuclear

Generating Facility in Pennsylvania. As noted

above, PECO also has issued letter agreements to

provide funding up to a total $100 million to be

available to AmerGen in connection with the

operation and maintenance of all the commercial

nuclear power reactors acquired or to be acquired

by AmerGen.

40One of the conditions to the use of the safe

harbor provisions of rule 53 is the requirement in

rule 53(a)(3) that no more than 2% of a registered

holding company’s utility subsidiaries employees

render services to the company’s EWGs or FUCOs.

Applicants request authority for PECO

to refinance and extend the maturity of

these obligations to lower interest costs.

No refinancing will extend the maturity

of the transition bonds past March 1,

2011.

B. Changes in Capital Stock of Majority

Owned Subsidiaries

It may happen that the sale by a

Subsidiary of capital securities (i.e,

common stock or preferred stock) may

in some cases exceed the thenauthorized capital stock of such

Subsidiary. In addition, the Subsidiary

may choose to use capital stock with no

par value. Accordingly, request is made

for authority to change the terms of any

50% or more owned Subsidiary’s

authorized capital stock capitalization

or other equity interest by an amount

deemed appropriate by Exelon or other

intermediate parent company. This

request for authorization is limited to

Exelon’s 50% or more owned

Subsidiaries and will not affect the

aggregate limits proposed in this

application. A Subsidiary would be able

to change the par value, or change

between par value and no-par stock,

without additional Commission

approval.

C. Payment of Dividends

1. Exelon and ComEd. As a result of

the application of the purchase method

of accounting to the merger, the current

retained earnings of ComEd will be

recharacterized as additional paid-incapital. In addition, the Merger will give

rise to a substantial level of goodwill. In

accordance with the Commission’s Staff

Accounting Bulletin No. 54, Topic 5J

(‘‘Staff Accounting Bulletin’’), the

goodwill will be ‘‘pushed down’’ to

Unicom’s subsidiaries, principally

ComEd and reflected as additional paidin-capital on ComEd’s financial

statements. As of the end of 1999,

ComEd had a retained earnings balance

of approximately $433 million.

However, the effect of these accounting

practices will be to leave ComEd with

no retained earnings, the traditional

source of dividend payment. In

addition, any dividend by ComEd of

amounts now recharacterized as capital

would be deemed a return of capital to

Exelon and not a distribution of

earnings. Accordingly, Applicants

request authority for Exelon and ComEd

to pay dividends out of capital up to the

amount of $500 million.

2. Nonutility Subsidiaries. The

Nonutility Subsidiaries propose to pay

dividends, from time to time through

the Authorization Period, out of capital

and unearned surplus (including

revaluation reserve), to the extent

permitted under state law.

D. EWGs and FUCOs

At March 31, 2000, the pro forma

consolidated amount of Exelon’s

aggregate investment in EWGs and

FUCOs, as those terms are defined in

rule 53, was $151.4 million.39

Applicants now request authority for

Exelon to use up $5.5 billion of the

proceeds of financings to acquire

additional investments in EWGs and/or

FUCOs. In addition, Exelon requests

that the limit on the use of Genco

employees imposed in rule 53(a)(3) in

connection with EWGs and FUCOs not

apply.40

Applicants note that pro forma

consolidated retained earnings of

Exelon as of March 31, 2000 were $14

million. Consequently, Exelon will not

satisfy the safe harbor requirement of

rule 53(a). Applicants state in this

regard that Exelon’s low level of

retained earnings are due to

extraordinary writeoffs related to

industry restructuring and the expected

recharacterization of ComEd’s retained

earnings as a result of the Merger.

E. Stock and Incentive Plans

Applicants propose for Exelon, from

time to time during the Authorization

Period, to issue up to 21 million shares

of Exelon common stock under the

employee benefit and incentive plans

described below and under a dividend

reinvestment plan Exelon anticipates

establishing after the Merger.

Upon completion of the Merger,

Exelon will assume all the obligations of

Unicom under the Unicom Stock Plans,

of PECO under the PECO Stock Plans,

the outstanding employee stock options

and stock appreciation rights granted

under those plans and the agreements

evidencing the grants of those options

and rights. In addition, each employee

or director benefit or compensation

plan, program or arrangement using

Unicom Common Stock or PECO

Common Stock, other than the Unicom

Stock Plans and the PECO Stock Plans,

will provide for issuance or purchase in

the open market only of Exelon

Common Stock rather than Unicom

Common Stock or PECO Common

Stock, as the case may be, after the

Merger. Further, Exelon anticipates that

it will adopt the PECO Energy Company

1989 Long-Term Incentive Plan for

purposes of making awards to

employees of Exelon and its

Subsidiaries following the Merger.

Appendix A—Existing Debt and

Guaranties

Unicom Debt and Guaranties

Unicorn is currently obligated under two

notes to an associate having an outstanding

aggregate principal amount of approximately

$627 million as of March 31, 2000. Unicom

also currently guaranties committed lines of

bank credit available to a Nonutility

Subsidiary for $400 million (from a group of

20 banks) which expire on December 15,

2000. In addition, as of March 31, 2000,

Unicom has authorized guaranties of $802

million including guarantees relating to

obligations of Unicom Thermal Technologies,

Unicom Energy, Inc., Unicom Energy Ohio,

Unicom Enterprises and the Midwest

Independent System Operator. Further,

ComEd and Unicom Investment, Inc. entered

into an intercompany agreement relating to

the sale of certain fossil generating stations

by ComEd under which Unicom Investment

executed a 12 year promissory note to ComEd

for $2.5 billion

Utility Subsidiary Debt and Guaranties

As of March 31, 2000, ComEd has several

issuances of debt outstanding, having various

maturities up to 2023, including first

mortgage bonds, sinking fund debentures,

pollution control obligations, medium term

notes, intercompany loans and purchase

contract obligations, in amounts aggregating

approximately $4.914 billion. ComEd also

has a commercial paper program in place

with outstanding principal debt aggregating

approximately $122 million. ComEd

Transitional Funding Trust has issued

several series of transition bonds, with

various maturities up to 2008, with an

aggregate outstanding principal amount of

approximately $3.0 billion. ComEd has

various other subsidiaries which will also

maintain existing financing arrangement in

transactions Applicants state are exempt

from Commission review under rule 52.

As of March 31, 2000, PECO has several

issuances of debt outstanding, having various

maturities up to 2014, including first

mortgage bonds, pollution control debt and

other secured obligations, sinking fund debt,

and medium term notes, in amounts

aggregating approximately $1.766 billion. In

addition, PETT has issued several series of

transition bonds having various maturities up

to 2009, in an aggregate outstanding principal

amount of approximately $4.9 billion.

Further, Susquehanna owes: Approximately

$60,000 under an intercompany note issued

to PECO.

Federal Register / Vol. 65, No. 188 / Wednesday, September 27, 2000 / Notices 58135

As of March 31, 2000, PECO has $110

million in outstanding guarantees or

commitments, including a $100 million

obligation in favor of AmerGen, an EWG, an

$10 million in favor of its Exelon

Infrastructure Services subsidiaries.

For the Commission by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–24732 Filed 9–26–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43313; File No. 265–22]

Advisory Committee on Market

Information; Establishment; Meeting

AGENCY: Securities and Exchange

Commission.

ACTION: Notice.

SUMMARY: The Chairman of the

Securities and Exchange Commission

(‘‘Commission’’), with the concurrence

of the other members of the

Commission, intends to establish the

Securities and Exchange Commission

Advisory Committee on Market

Information (‘‘Committee’’), which will

advise the Commission regarding issues

relating to the public availability of

market information in the equities and

options markets. The first meeting of the

Committee will be held on October 10,

2000, in the William O. Douglas Room,

at the Commission’s main offices, 450

Fifth Street, N.W., Washington, D.C.,

beginning at 1 p.m. The meeting will be

open to the public, and the public is

invited to submit written comments to

the Committee.

ADDRESSES: Written comments should

be submitted in triplicate and should

refer to File No. 265–22. Comments

should be submitted to Jonathan G.

Katz, Secretary, Securities and Exchange

Commissions, 450 Fifth Street, N.W.,

Washington, D.C. 20549–0609.

FOR FURTHER INFORMATION CONTACT:

Anitra Cassas, Attorney, Division of

Market Regulation, at 202–942–0089;

Securities and Exchange Commission,

450 Fifth Street, NW., Washington, DC

20549–1001.

SUPPLEMENTARY INFORMATION: In

accordance with the requirements of the

Federal Advisory Committee Act, 5

U.S.C. App., the Securities and

Exchange Commission has directed

publication of this notice that Chairman

Arthur Levitt, with the concurrence of

the other members of the Commission,

intends to establish the ‘‘Securities and

Exchange Commission Advisory

Committee on Market Information.’’

Chairman Levitt certifies that he has

determined that the creation of the

Committee is necessary and in the

public interest.

The Committee’s charter directs the

Committee to assist the Commission in

evaluating issues relating to the public

availability of market information in the

equities and options markets, including:

(1) The value of transparency to the

markets; (2) the ramifications of

electronic quote generation and

decimalization for market transparency;

(3) the merits of providing consolidated

market information to intermediaries

and customers; (4) alternative models

for consolidating and disseminating

information from multiple markets; (5)

how market information fees should be

determined, including the role of public

disclosure of market information costs,

fees, revenues, and other matters, and

how the fairness and reasonableness of

fees should be evaluated; and (6)

appropriate governance structures for

joint market information plans, as well

as issues relating to plan administration

and oversight.

To achieve the Committee’s goals,

members will be appointed that can

effectively represent the varied interests

affected by the range of issues to be

considered. The Committee’s

membership may include, among other,

persons who can represent investors,

markets, broker-dealers, vendors, and

other market participants, as well as the

public at large. The Commission expects

that the Committee’s members will

represent a variety of viewpoints and

have varying experience, and that the

Committee will fairly balanced in terms

of points of view, backgrounds and

tasks. The Chairman of the Committee

will be Joel Seligman, Dean of the

Washington University School of Law.

The Committee will conduct its

operations in accordance with the

provisions of the Federal Advisory

Committee Act. The duties of

Committee will be solely advisory.

Determinations of action to be taken and

policy to be expressed with respect to

matters upon which the Advisory

Committee provides advice or

recommendations shall be made solely

by the Commission.

The Committee will meet at such

intervals as are necessary to carry out its

functions. It is expected that meetings of

the full Committee generally will occur

no more frequently than six (6) times;

meetings of subgroups of the full

Advisory Committee will likely occur

more frequently. The Commission will

provide necessary support services to

the Committee.

The Committee will terminate on

September 15, 2001 unless, prior to

such time, its charter is renewed in

accordance with the Federal Advisory

Committee Act, or unless the Chairman,

with the concurrence of the other

members of the Commission,

determines that continuance of the

Committee is no longer in the public

interest.

Fifteen days after publication of this

notice in the Federal Register, a copy of

the charter of the Committee will be

filed with the Chairman of the

Commission, the Senate Committee on

Banking, Housing, and Urban Affairs,

and the House Committee on

Commerce. A copy of the charter will

also be furnished to the Library of

Congress and placed in the

Commission’s Public Reference Room

for public inspection.

Furthermore, upon establishment of

the Committee, and in accordance with

section 10(a) of the Federal Advisory

Committee Act, 5 U.S.C. App. 10a,

notice is hereby given that the first

meeting of the Committee will be held

on October 10, 2000 in the Willian O.

Douglas Room at the Commission’s

main offices, 450 Fifth Street, NW.,

Washington, DC, beginning at 1 p.m.

The meeting will be open to the public.

The purpose of this meeting will be to

discuss general organizational matters,

to plan the progression of the

Committee’s work, and to begin

discussion of the issues relating to the

public availability of market

information in the equities and options

markets.

Dated: September 20, 2000.

Jonathan G. Katz,

Secretary.

[FR Doc. 00–24798 Filed 9–26–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43305; File No. SR–Amex–

00–36]

Self-Regulatory Organizations; Order

Approving a Proposed Rule Change by

the American Stock Exchange LLC

Creating an Options Principal

Membership Seat Upgrade Program

September 19, 2000.

I. Introduction

On June 30, 2000, the American Stock

Exchange LLC (‘‘Exchange’’ or ‘‘Amex’’),

submitted to the Securities and

Exchange Commission (‘‘Commission’’),

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

Securities Exchange Act of 1934