61000 Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Notices

1Scottish Power’s other operations have been

segregated under SPUK, which is a foreign utility

company within the meaning of section 33 of the

Act.

management and administration of any

separate account organized as a UIT or

of any Fund. These individuals will

continue to be subject to the automatic

disqualification provisions of Section

9(a).

3. In addition to the foregoing

conditions, applicants consent to the

following conditions and represent and

agree that if the exemptions requested

herein are granted, the Trust will not

sell shares of any Fund to a Qualified

Plan if such sale would result in the

Qualified Plan owning 10% or more of

that Fund’s outstanding shares unless

the Qualified Plan first enters into a

participation agreement with the Trust

containing provisions that require the

following:

a. The trustees or plan committees of

the Qualified Plan will: (a) Monitor the

Qualified Plan’s operations and those of

the Trust for the purpose of identifying

any material irreconcilable conflicts or

potential material irreconcilable

conflicts between or among the interests

of Qualified Plan participants, VA

Contract owners and VLI Contract

owners, (b) report any such conflicts or

potential conflicts to the Trust’s Board

of Trustees, (c) provide the Board, at

least annually, with all information

reasonably necessary for the Board to

consider any issues raised by such

existing or potential conflicts and any

other information and reports that the

Board may reasonably request, (d)

inform the Board whenever it (or

another fiduciary) disregards the voting

instructions of Qualified Plan

participants (of a Qualified Plan that

provides voting rights to its

participants), and (e) ensure that the

Qualified Plan votes Trust shares as

required by applicable law and

governing Qualified Plan documents.

The trustees or plan committees of the

Qualified Plan will carry out these

obligations with a view only to the

interests of Qualified Plan participants

in its Qualified Plan.

b. In the event that a material

irreconcilable conflict of interest arises

between Qualified Plan investors and

VA Contract owners, VLI Contract

owners or other investors in the Trust,

each Qualified Plan will, at its own

expense, take whatever action is

necessary to remedy such conflict as it

adversely affects that Qualified Plan or

participants in that Qualified Plan up to

and including (1) establishing a new

registered management investment

company, and (2) withdrawing

Qualified Plan assets subject to the

conflict from the Trust and reinvesting

such assets in a different investment

medium (including another Fund of the

Trust) or submitting the question of

whether such withdrawal should be

implemented to a vote of all affected

Quality Plan investors, and, as

appropriate, segregating the assets of

any group of such participants that

votes in favor of such withdrawal, or

offering to such participants the option

of making such a change. Each Qualified

Plan will carry out the responsibility to

take the foregoing action with a view

only to the interests of Qualified Plan

investors in its Qualified Plan.

Notwithstanding the foregoing, no

Qualified Plan will be obligated to

establish a new funding medium for any

group of participants or Qualified Plan

investors if an offer to do so has been

declined by a vote of a majority of the

Qualified Plan’s participants or

Qualified Plan investors adversely

affected by the conflict.

c. If a material irreconcilable conflict

arises because of a Qualified Plan

trustee’s (or other fiduciary’s) decision

to disregard the voting instructions of

Qualified Plan participants (of a

Qualified Plan that provides voting

rights to its participants) and that

decision represents a minority position

or would preclude a majority vote at any

shareholder meeting, then, at the

request of the Trust’s Board of Trustees,

the Qualified Plan will redeem the

shares of the Trust to which the

disregarded voting instructions relate.

No charge or penalty, however, will be

imposed in connection with such a

redemption.

4. Applicants also represent and agree

that if the exemptions requested herein

are granted, the Trust will not sell

shares of any Fund to a Qualified Plan

until the Qualified Plan executes an

application containing an

acknowledgment of the condition that

the Trust cannot sell shares of any Fund

to such Qualified Plan if such sale

would result in that Qualified Plan

owning 10% or more of that Fund’s

outstanding shares unless that Qualified

Plan first enters into a participation

agreement as described above.

Conclusion

For the reasons and upon the facts

stated above, Applicants assert that the

requested exemptions are appropriate in

the public interest and consistent with

the protection of investors and the

purposes fairly intended by the policy

and provisions of the Act.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–26279 Filed 10–12–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 35–27244]

Filings Under the Public Utility Holding

Company Act of 1935, as Amended

(‘‘Act’’)

October 6, 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 amendment(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 31, 2000, to the Secretary,

Securities and Exchange Commission,

Washington, D.C. 20549–0609, and

serve a copy on the relevant

application(s) and/or declaration(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

31, 2000, the application(s) and/or

declaration(s), as filed or as amended,

may be granted and/or permitted to

become effective.

Scottish Power plc, et al. (70–9669)

Scottish Power plc (‘‘Scottish

Power’’), a foreign registered public

utility holding company; Scottish Power

UK plc, a first-tier utility subsidiary of

Scottish Power (‘‘SPUK’’); 1 Scottish

Power NA 1 Limited, Scottish Power

NA 2 Limited, and NA General

Partnership (together, ‘‘Intermediate

Companies’’), each of which is a

subsidiary of Scottish Power, all located

at 1 Atlantic Quay, Glasgow G2 8SP,

Scotland, United Kingdom; PacifiCorp,

an electric utility subsidiary of Scottish

Power; and PacifiCorp’s nonutility

subsidiaries (‘‘PacifiCorp Subsidiaries’’),

Centralia Mining Company, Energy

Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Notices 61001

2Scottish Power field with the Commission a

Notification of Registration on Form U5A on

November 30, 1999, and a Registration Statement

on Form U5B on March 7, 2000.

3Capital stock includes common stock, preferred

stock, other preferred securities, options and/or

warrants convertible into common or preferred

stock, rights, and similar securities.

4PGHC is the holding company for PacifiCorp’s

principal subsidiaries. Through its subsidiary

companies, PGHC is engaged in the acquisition or

development of electrical power projects or systems

internationally, and leveraged lease tax-advantages

investments. Nevada Holdco will be authorized to

issue 1000 shares of common stock, par value $.01

per share. Nevada Holdco proposes to issue its

common shares to NA General Partnership and,

accordingly, NA General Partnership proposes to

acquire all of the outstanding common shares of

Nevada Holdco.

5Total Common Equity includes common stock,

retained earnings, and accumulated other

comprehensive income, presented in accordance

with U.S. generally accepted accounting practices

(‘‘U.S. GAAP’’).

6Total Capitalization means the sum of Total

Common Equity, preferred stock, short-term debt,

and long-term debt, including current maturities.

West Mining Company, Glenrock Coal

Company, Interwest Mining Company,

Pacific Minerals, Inc., PacifiCorp

Environmental Remediation Company,

PacifiCorp Investment Management,

Inc., PacifiCorp Group Holdings

Company (‘‘PGHC’’), New Energy

Holdings Inc., PACE Group, PacifiCorp

Energy, Inc., PacifiCorp Energy Services,

Inc., PacifiCorp Energy Ventures, Inc.,

PacifiCorp International Group Holdings

Company, PacifiCorp Power Marketing,

Inc., PacifiCorp Trans, Inc., PacifiCorp

Financial Services, Inc., Eastern

Investment Company, and Pan Pacific

Global Corporation, all located at Suite

2000, 825 N.E. Multnomah Street,

Portland, OR 97232 (collectively,

‘‘Applicants’’), have filed an

application-declaration under sections

6(a), 7, 9(a), 10, 12, 13(b) and 33 of the

Act and rules 42, 43, 45, 53, 54, 83, 87,

90, and 91 under the Act.

I. Introduction, Background and

Summary

Scottish Power registered as a holding

company under the Act following its

acquisition of PacifiCorp on November

29, 1999 (‘‘Merger’’).2 As discussed

more fully below, Scottish Power and

PacifiCorp, together with the

Intermediate Companies and the

PacifiCorp Subsidiaries, now request

authority to engage in a variety of

financing transactions. In summary,

Applicants seek authority to engage in

the following transactions through

March 31, 2004 (‘‘Authorization

Period’’): (1) External financings by

Scottish Power; (2) certain external

financings by PacifiCorp and the

PacifiCorp Subsidiaries (‘‘PacifiCorp

Group’’); (3) certain intrasystem

financings, including the creation of two

new PacifiCorp money pools (‘‘Money

Pools’’), and guarantees of the

obligations of the PacifiCorp

Subsidiaries and of the subsidiaries of

Scottish Power’s foreign utility

subsidiary, Scottish Power UK plc

(‘‘SPUK’’ and, together with its

subsidiaries, the ‘‘SPUK Group’’); (4) the

payment by the PacifiCorp Subsidiaries

and, in certain circumstances, by

PacifiCorp, of dividends out of capital

or unearned surplus; (5) increases in the

number of shares authorized by

PacifiCorp or by any of the PacifiCorp

Subsidiaries with respect to any capital

security 3 of the company, as well as

alteration of the terms of any capital

security, without further Commission

authorization; (6) the formation of

financing entities and the issuance by

such entities of securities otherwise

authorized to be issued and sold under

the authority requested in this filing; (7)

the formation of a holding company

(‘‘Nevada Holdco’’) to act as a pass

through entity regarding the shares of

both PacifiCorp and PGHC;4 and (8) the

execution of a system tax allocation

agreement. In addition, Applicants

propose to engage in various

intrasystem transactions. Applicants

further request that the Commission

reserve jurisdiction over certain

transactions, as described below.

Applicants state that the proceeds

from the sale of securities in external

financing transactions will be used for

the acquisition, retirement or

redemption of securities issued by

Scottish Power and its subsidiaries

(‘‘Scottish Power System’’), without the

need for prior Commission approval and

for necessary general corporate purposes

including: (a) The financing, in part, of

the capital expenditures of the Scottish

Power System; (b) the financing of

working capital requirements of the

Scottish Power System; and (iii) other

lawful general purposes. The proceeds

of external financings will be allocated

to companies in the Scottish Power

System in various ways through the

proposed intrasystem financing

discussed below.

In addition, Scottish Power seeks

authority to invest in exempt wholesale

generators (‘‘EWGs’’) and foreign utility

companies (‘‘FUCOs’’), as those terms

are defined in sections 32 and 33 of the

Act, respectively, up to an aggregate

outstanding amount equal to 154% of its

consolidated retained earnings at any

one time during the Authorization

Period. Further, Scottish Power seeks

authority to use its ordinary shares (or

associated American Depository Shares

(‘‘ADSs’’) or American Depositary

receipts (‘‘ADRs’’)) as consideration for

acquisitions that are otherwise

authorized under the Act or exempt

under the Act, and to provide shares for

various award and shareholder

investment programs.

II. General Terms and Conditions of

Financing

Financings by each Applicant will be

subject to the following general terms

and conditions (‘‘Financing

Conditions’’): (1) During the

Authorization Period, Scottish Power’s

total common equity (‘‘Total Common

Equity’’)5 will be at least 30% of its total

capitalization (‘‘Total Capitalization’’),6

and PacifiCorp’s total Common Equity

will be at least 30% of its Total

Capitalization; (2) Scottish Power will

maintain its and PacifiCorp’s long-term

debt ratings at an investment grade level

through the Authorization Period; (3)

the cost of money on debt financings of

Scottish Power at the date of issuance

will not exceed 300 basis points over

that for comparable term U.S. treasury

securities or government benchmark for

the currency concerned; (4) the cost of

money on preferred securities of

Scottish Power at the date of issuance

will not exceed 500 basis points over

that for comparable term U.S. treasury

securities or government benchmark for

the currency concerned; (5) the

aggregate amount of external debt and

equity issued by Scottish Power under

the authority requested in this

application-declaration will not exceed

$6 billion at any one time outstanding;

(6) Scottish Power’s aggregate

investment in EWGs and FUCOs, as

defined in rule 53 under the Act, will

not exceed, without prior Commission

approval, 154% of the consolidated

retained earnings of the Scottish Power

System; and (7) the proceeds from the

sale of securities in external financing

transactions will be used for the

acquisition, retirement or redemption of

securities issued by the Scottish Power

System, without the need for prior

Commission approval and for necessary

general corporate purposes including (i)

the financing, in part, of the capital

expenditures of the Scottish Power

System, (ii) the financing of working

capital requirements of the Scottish

Power System, and (iii) other lawful

general purposes.

Specifically, Applicants seek

authority for the following:

III. Existing Financing Arrangements

Applicants request Commission

authorization to maintain in effect

through the Authorization Period all

existing financing arrangements of

61002 Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Notices

7As of March 31, 2000, Scottish Power has

approximately $6.9 billion of long-term debt, $1.1

billion of short-term debt, and $11.2 billion in

common equity outstanding, calculated in

accordance with U.S. GAAP.

8PacifiCorp’s presently outstanding securities

include preferred stock, first mortgage bonds,

subordinated debt, pollution control revenue bond

financings, and short-term debt, including

commercial paper. Members of the PacifiCorp

Group also participate in a variety of interest rate

and currency exchange swap agreements.

9The Aggregate Limitation is in addition to

Scottish Power’s current outstanding equity and

debt securities, described above.

10This would include stock options or warrants

that Scottish Power may issue from time to time.

11Scottish Power also operates the Scottish Power

Executive Share Option Scheme which applies to

executive directors and certain senior managers. All

future grants under this plan have been replaced by

the company’s Long Term Incentive Plan. Existing

options remain exercisable.

12 In order for Scottish Power to provide ordinary

shares to participants in the U.K. Plans when they

are entitled to exercise their share options, Scottish

Power states that it must provide a loan to the

trustee, or equivalent (‘‘Trustee’’), of the employee

share plans to allow the Trustee to acquire Scottish

Power’s ordinary shares on the open market on

behalf of the eligible participants. On exercise of the

share options by the eligible participants, the option

price money payable by the share option holder is

applied by the Trustee to reduce the loan amount

from Scottish Power. Scottish Power proposes to

engage in these transactions, in order to provide

ordinary shares to its employees under the U.K.

Plans.

Scottish Power, the Intermediate

Companies and the PacifiCorp Group, to

the extent the Commission has

jurisdiction over these existing

arrangements.7 Applicants represent

that all existing PacifiCorp Group

financings qualify for exemptions from

the Act under rules 45(b) and 52.8

IV. Scottish Power External Financing

A. Introduction

Scottish Power proposes to issue

equity and debt securities, in amounts

that would not aggregate more than $6

billion at any one time outstanding

during the Authorization Period

(‘‘Aggregate Limitation’’). 9 These shares

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,

Scottish Power may enter into currency

and interest rate swaps as described

below.

Scottish Power proposes that the

various securities to be issued would

fall within the following limits, but

would not in the aggregate exceed the

Aggregate Limitation stated above:

Type of debt Amount

(In billions)

Equity, including options and

warrants ................................ $3.0

Preferred Stock ......................... 1.0

Bank Debt ................................. 1.0

Commercial Paper .................... 1.0

Bond Issues—Straight .............. 3.0

Bond Issues—Convertible ........ 3.0

B. Ordinary Shares

1. General

Scottish Power’s common equity

consists of ordinary shares, with a par

value of 50 pence each, that are listed

on the London Stock Exchange. Scottish

Power currently has a small number of

ADs in the U.S. that trade as ADRs, and

represent four ordinary shares each.

Scottish Power has established a

sponsored ADR program in the U.S. and

has its ADRs listed on the New York

Stock Exchange and registered under

the Securities Act of 1933, as amended.

As a result, Scottish Power has

registered under the Securities

Exchange Act of 1934, as amended, and

files the periodic disclosure reports

required of a foreign issuer with the

Commission. The request contained in

this application-declaration with respect

to ordinary shares refers to the issuance

of ordinary shares directly or through

the ADR program and, for purposes of

this request, the ADSs and ADRs are not

considered separate securities from the

underlying ordinary shares. Scottish

Power requests authority to issue up to

$3 billion in equity 10 through the

Authorization Period (‘‘Equity

Limitation’’).

Scottish Power 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 parent company equity

securities for securities of the company

being acquired in order to provide the

seller with certain tax advantages. The

Scottish Power ordinary shares to be

exchanged may, among other things, be

purchased on the open market under

rule 42 or may be original issue. For

purposes of the Aggregate Limitation,

Scottish Power ordinary shares used to

fund an acquisition of a company

through the exchange of Scottish Power

equity for securities being acquired

would be valued at market value based

upon the closing price of the ordinary

shares on the London Stock Exchange

on the day before closing of the sale or

issuance.

2. Employee Benefit Plans

In addition to other general corporate

purposes, the ordinary shares will be

used to fund employee benefit plans.

More particularly, Scottish Power

intends to issue ADRs to U.S. employees

through PacifiCorp’s Stock Incentive

Plan, Compensation Reduction Plan and

K Plus Employee Savings and Stock

Ownership Plan (‘‘U.S. Plans’’). Scottish

Power states that it may develop other

share-based plans to motivate and retain

key executives. Scottish Power also

intends to issue ordinary shares, or

certain conditional rights relating to

ordinary shares, to its U.K. personnel

through its Long Term Incentive Plan 11

and Scottish Power Sharesave Scheme

(‘‘U.K. Plans’’).12 Scottish Power

requests authority to issue

approximately 39.1 million ordinary

shares to employees under the U.S.

Plans, the U.K. Plans, and those

additional plans (‘‘Additional Plans’’,

and, together with the U.S. Plans and

the U.K. Plans, ‘‘Plans’’) that may be

developed for the purposes stated

above. All shares issued under the Plans

will be subject to the Aggregate

Limitation. Securities issued under the

Plans will be valued, if ordinary shares,

at market value based on the closing

price on the London Stock Exchange on

the day before the award. Securities

issued by Scottish Power that are not

ordinary shares will be valued based on

a reasonable and consistent method

applied at the time of the award.

Scottish Power requests that the

Commission reserve jurisdiction over

the Additional Plans, pending

completion of the record.

C. Preferred Stock

Scottish Power proposes to issue

preferred stock from time to time during

the Authorization Period. The aggregate

outstanding amount of preferred stock

would not exceed $1 billion. Any

issuance of preferred stock would have

dividend rates or methods of

determining dividend rates, redemption

provisions, conversion or put terms and

other terms and conditions as Scottish

Power may determine at the time of

issuance; provided, however, that the

cost of money on preferred stock of

Scottish Power, when issued, will not

exceed 500 basis points over that for

comparable term U.S. treasury securities

or government benchmark for the

currency concerned.

D. Debt

Scottish Power proposes to issue debt

securities from time to time during the

Authorization Period. Subject to the

following conditions, any issuance of

debt securities would have the

designation, aggregate principal amount,

interest rate(s) or method of determining

Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Notices 61003

13Scottish Power currently has approximately

$568 million in Guarantees outstanding. Applicants

state that the Scottish Power Guarantee Limitation

is in addition to these existing guarantees.

14The PacifiCorp Loan Agreement was approved

by the Oregon Public Utility Commission.

15Borrowings from PGHC will bear interest on the

outstanding principal amount thereof, for each day

from the date such borrowing is made until it

becomes due, at a rate per annum equal to the

prime rate for such day plus a margin (depending

on the ratings of the borrower) as agreed to from

time to time by PGHC and the borrower and set

forth in the ledger maintained by PGHC. However,

in no event will the borrower’s rate exceed PGHC’s

cost of short-term funds for such day plus 3⁄8%.

16Foreign EWGs, exempt telecommunications

companies (‘‘ETCs’’), as that term is defined in

section 34 of the Act, and FUCOs will not be

participants in the Utility Money Pool, and ETCs

and FUCOs will not participate in the Nonutility

Money Pool.

17The names of the PacifiCorp Subsidiaries

participating in each of the Money Pools are set

forth in Scottish Power’s application-declaration.

interest rate(s), terms of payment of

interest, redemption provisions, nonrefunding provisions, sinking fund

terms, conversion or put terms and

other terms and conditions as are

deemed appropriate at the time of

issuance.

The cost of money on debt financings

of Scottish Power will not exceed 300

basis points over that for comparable

term U.S. treasury securities or

government benchmark for the currency

concerned. The maturity of any debt

security will not exceed 50 years.

Parent-level debt may be issued for

the acquisition, retirement or

redemption of securities issued by a

Scottish Power System company, and

for necessary and urgent general and

corporate purposes, including the

financing of capital expenditures, the

financing of working capital

requirements, and other lawful general

corporate purposes.

E. Interest Rate and Currency Risk

Management Devices

In order to protect the Scottish Power

System from adverse interest rate

movements, the interest rate on the debt

portfolio is managed through the use of

fixed-rate debt, combined with interest

rate and cross currency swaps, options

and option-related instruments with a

view to maintaining a significant

proportion of fixed rates over the

medium term. Scottish Power seeks

authority to continue to engage in

interest rate and cross currency swaps,

options, option-related instruments,

forward exchange contracts, and similar

instruments through the Authorization

Period. Scottish Power states that these

transactions will meet the criteria

established by the Financial Accounting

Standards Board in order to qualify for

hedge-accounting treatment or will so

qualify under generally accepted

accounting principles in the United

Kingdom (‘‘U.K. GAAP’’). In the event

transactions in financial instruments or

products are qualified for hedge

accounting treatment under U.K. GAAP,

but not under U.S. GAAP, Scottish

Power’s financial statements filed in

accordance with Form 20–F will contain

a reconciliation of the difference

between the two methods of accounting

treatment.

F. Guarantees and Loans

Applicants request authorization to

enter into guarantees, obtain letters of

credit, enter into guaranty-type

agreements or otherwise provide credit

support with respect to the obligations

of the PacifiCorp Group, and of SPUK

and the SPUK Subsidiaries (‘‘SPUK

Group’’), as may be appropriate to

enable these system companies to carry

on their respective authorized or

permitted businesses. This credit

support may be in the form of

committed bank lines of credit.

Guarantees entered into by Scottish

Power would not be subject to the

Aggregate Limitation, but instead would

be subject to a separate $6 billion limit

(‘‘Scottish Power Guarantee

Limitation’’), based on the amount at

risk.13 Any guarantees and credit

support entered into by Scottish Power

that support obligations of the SPUK

Group will be included as part of

Scottish Power’s aggregate investment

in FUCOs and EWGs for purposes of

rule 53 under the Act.

Scottish Power also proposes to make

loans or capital contributions to the

SPUK Group from time to time up to an

aggregate principal amount of $3 billion

through the Authorization Period. Loans

made to the SPUK Group will be of a

short-term nature, payable on demand

and will carry an interest rate of Royal

Bank of Scotland Base plus one percent.

These loans and capital contributions

will be included as part of Scottish

Power’s aggregate investment in FUCOs

and EWGs, as that term is defined in

rule 53 under the Act.

V. PacifiCorp Group Financings

A. Existing Intercompany Loans

PacifiCorp and the PacifiCorp

subsidiaries currently participate in an

intercompany loan agreement

(‘‘PacifiCorp Loan Agreement’’)

allowing PacifiCorp to loan up to $200

million to certain of its subsidiaries, and

allowing these subsidiaries to loan

unlimited amounts to PacifiCorp.14

Loans made under the PacifiCorp Loan

Agreement are payable on demand, are

evidenced by notes and bear interest at

PacifiCorp’s short-term borrowing rate

whether the loan is to or from

PacifiCorp. PGHC also participates in an

intercompany borrowing agreement

(‘‘PGHC Loan Agreement’’, and,

collectively, ‘‘Loan Agreements’’)

allowing up to $350 million in loans to

be made among PGHC and its

subsidiaries, and among PGHC and

certain other direct subsidiaries of

PacifiCorp, including PacifiCorp

Environmental Remediation Company,

PacifiCorp Minerals, Inc., and

PacifiCorp Investment Management, Inc.

Loans made under the PGHC Loan

Agreement are payable on demand and,

if from PGHC, bear interest at a

negotiated rate 15 or at PGHC’s shortterm borrowing rate if the borrower is

PGHC. Since completion of the Merger,

all loans under both the PacifiCorp Loan

Agreement and the PGHC Loan

Agreement have been made on an

interest-free basis. Applicants request

authorization to maintain these Loan

Agreements through the Authorization

Period, to the extent the Loan

Agreements are not exempt under rule

52.

B. Intrasystem Non-Money Pool

Financing

Each of the Intermediate Companies is

seeking authorization to issue and sell

securities to, and acquire securities

from, its immediate parent, subsidiary

companies, and other Intermediate

Companies, respectively. Each of the

Intermediate companies and Scottish

Power is also seeking authorization to

issue guarantees and other forms of

credit support to direct and indirect

subsidiaries. In no case would the

Intermediate Companies or Scottish

Power borrow, or receive any extension

of credit indemnity from any of their

respective direct or indirect

subsidiaries.

C. Subsidiary Money Pools

In addition to the above-described

intercompany arrangements, Applicants

request authority to create two new

money pools that will be administered

by PacifiCorp. One money pool will be

exclusively for certain of the nonutility

subsidiaries of PGHC (‘‘Nonutility

Money Pool’’),16 and the second money

pool will be for PacifiCorp and certain

of the PacifiCorp Subsidiaries (‘‘Utility

Money Pool’’, and, together with the

Nonutility Money Pool, ‘‘Money

Pools’’).17 The funds available to the

Utility Money Pool will be loaned on a

short-term basis and will come from the

Utility Money Pool participants

61004 Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Notices

18PacifiCorp proposes to borrow up to $800

million under the Utility Money Pool.

19PacifiCorp recently completed the sale of its

FUCO investments in Australia. The requested

authority would allow the proceeds from any such

sale to be distributed by PacifiCorp to its

shareholders.

20As noted above, these securities include

common stock, preferred stock, other preferred

securities, options and/or warrants convertible into

common or preferred stock, rights, and similar

securities.

21Applicants request that the Commission

reserve jurisdiction over changes to the capital

stock of PacifiCorp.

themselves.18 Scottish Power and/or

PacifiCorp will make available shortterm funds from time to time to the

Utility Money Pool in amounts up to

$800 million. Scottish Power also will

make available short-term funds from

time to time for the Nonutility Money

Pool in amounts not to exceed $800

million. Applicants state that Scottish

Power will participate in the Money

Pools only to the extent that it has funds

available for lending. Under no

circumstances will Scottish Power

borrow from either of the Money Pools.

Funds will be made available from such

sources in such order as PacifiCorp, as

administrator of the Money Pools, may

determine will result in a lower cost of

borrowing, consistent with the

individual borrowing needs and

financial standing of the participating

Subsidiaries.

If at any time there are funds

remaining in the Money Pools after

satisfaction of the borrowing needs of

the participating Subsidiaries,

PacifiCorp, as the agent of the Money

Pools, will invest these funds

appropriately and consistent with

applicable state and federal regulations

and allocate the earnings on any of these

investments between or among those

participants within each respective

Money Pool according to the amount of

excess funds provided by each

respective participant. PacifiCorp will

administer the Money Pools on an ‘‘at

cost’’ basis. PacifiCorp will maintain

separate records for each Money Pool

and funds in each Money Pool will be

separately invested. Applicants request

that the Commission reserve jurisdiction

over the participation by future

companies formed or acquired by

Scottish Power in the relevant Money

Pool, until a specific post-effective

amendment is filed that seeks authority

to add any specific Subsidiary as a

participant in that Money Pool.

D. Short-term Debt

PacifiCorp requests authority to issue

commercial paper and promissory notes

in an aggregate amount not to exceed

$1.5 billion to be outstanding at any one

time during the Authorization Period.

Applicants state that this commercial

paper will be sold to or through dealers

at discount rates or bearing interest rates

per annum prevailing at the date of

issuance for commercial paper of

comparable quality and maturity.

VI. Payment of Dividends Out of

Capital or Unearned Surplus

Applicants state that there may be

situations in which one or more

PacifiCorp Subsidiaries will have

unrestricted cash available for

distribution in excess of current and

retained earnings. Accordingly,

Applicants propose that current and

future PacifiCorp Subsidiaries be

permitted to pay dividends out of

capital and unearned surplus through

the Authorization Period. Without

further approval of the Commission, no

PacifiCorp Subsidiary will declare or

pay any dividend out of capital or

unearned surplus if that PacifiCorp

Subsidiary derives any material part of

its revenues from the sale of goods,

services or electricity to PacifiCorp

(‘‘Non-Exempt PacifiCorp

Subsidiaries’’). Scottish Power requests

that the Commission reserve jurisdiction

over dividends paid by any Non-Exempt

PacifiCorp Subsidiary.

Applicants also request authority for

PacifiCorp to pay dividends out of

capital and unearned surplus up to the

lesser of $900 million or to the extent

of the proceeds it receives from the sale

of assets outside of its regulated utility

business.19

VII. Approval of Amended Tax

Allocation Agreement

Applicants request approval of an

amended agreement for the allocation of

consolidated tax among the

Intermediate Companies and the

PacifiCorp Group (‘‘Tax Allocation

Agreement’’). Applicants state that the

Tax Allocation Agreement will enable

Scottish Power to receive payment for

certain tax losses of subsidiary

companies in order to obtain

appropriate tax credits under United

Kingdom law for non-United Kingdom

taxes paid on subsidiary operations.

Accordingly, Applicants seeks an

exemption from the provisions of rule

45(c)(5) under the Act, which would

otherwise require that these losses be

retained by the subsidiary companies

without payment.

VIII. Changes in Capital Stock of

Subsidiaries

Applicants state that the portion of an

individual PacifiCorp Subsidiary’s

aggregate financing to be effected

through the sale of equity securities to

its immediate parent company during

the Authorization Period may in some

cases exceed the then authorized capital

stock of that PacifiCorp Subsidiary. In

addition, that PacifiCorp Subsidiary

may choose to use other forms of capital

securities.20 Each PacifiCorp Subsidiary

requests authority to increase the

amount or change the terms of any of its

authorized capital securities, without

additional Commission approval, as

needed to accommodate the sale of

additional equity.21 The terms that may

be changed include dividend rates,

conversion rates and dates, and

expiration dates. These proposed

changes to the terms of and increases in

the amounts of capital securities affect

only the manner in which financing is

conducted by the PacifiCorp

Subsidiaries and will not alter the terms

or limits proposed in the application.

IX. Financing Entities

Applicants seek authority, through

the Authorization Period, for Scottish

Power and the PacifiCorp Group to

organize new corporations, trusts,

partnerships or other entities

(‘‘Financing Entities’’) created for the

purpose of facilitating financings

through their issuance to third parties of

income preferred securities or other

securities authorized under this filing or

issued under an applicable exemption.

Applicants also seek authority for the

Financing Entities to issue these

securities to third parties in the event

these issuances are not exempt under

rule 52. In addition, authority is

requested for: (1) The issuance of

debentures or other evidences of

indebtedness by any of Scottish Power

or the PacifiCorp Group to a Financing

Entity in return for the proceeds of the

financing; (2) the acquisition by any of

Scottish Power or the PacifiCorp Group

of voting interests or equity securities

issued by the Financing Entity to

establish ownership of that Financing

Entity; and (3) the guaranty by the

Applicants of that Financing Entity’s

obligations in connection with its voting

interests or equity securities. Each of

Scottish Power and the PacifiCorp

Group also may enter into expense

agreements with its respective

Financing Entity, under which it would

agree to pay all expenses of that

Financing Entity.

Any amounts issued by a Financing

Entity to third parties under this

authorization will be included in the

Federal Register / Vol. 65, No. 199 / Friday, October 13, 2000 / Notices 61005

22Scottish Power has given commitments to

regulators in the U.K. regarding the reorganization

of SPUK and its subsidiaries, including the

incorporation of divisions of SPUK’s business.

23Applicants state that Scottish Power’s status as

a foreign company makes it commercially

impossible for it to comply fully with some of the

technical requirements of rule 53. In particular,

since Scottish Power has pre-existing foreign utility

operations, Applicants states that it would be

unreasonable to require that Scottish Power

maintain the books and records of its FUCOs in

accordance with U.S. GAAP, although it will

provide reconciliation as required in Form 20–F.

24As of March 31, 2000, the Scottish Power

System had an aggregate investment of $3,239

million in EWGs and FUCOs.

25All affiliate transactions among Scottish Power,

PacifiCorp, and the PacifiCorp Subsidiaries are

subject to review by all of the state utility

commissions that regulate PacifiCorp, including the

Idaho Public Utilities Commission, the Public

Service Commission of Utah, the Washington

Utilities and Transportation Commission, the

Public Service Commission of Wyoming, the

Oregon Public Utility Commission, and the

California Public Utilities Commission.

26 In the event that the market rate for these

service transactions is less than the cost of these

services, neither PacifiCorp nor the PacifiCorp

Subsidiaries will provide these services.

27Scottish Power estimates that the total charges

by SPUK to PacifiCorp for the provision of

anticipated services will be approximately $12

million annually.

proposed external financing limits

applicable to the immediate parent of

that Financing Entity. However,

Applicants request that the underlying

intrasystem mirror debt and parent

guaranty not be included in that

limitation or the separate Scottish

Power Guarantee Limitation.

X. Proposed Corporate Restructuring

Scottish Power proposes to engage in

corporate restructuring or reorganization

of the SPUK Group without prior

Commission approval.22 Scottish Power

further states that, as it continues to

review the combined operations of the

Scottish Power System, it may prove

prudent to reorganize its nonutility

companies to merge current FUCO

investments held in the PacifiCorp

Group with those of SPUK. Scottish

Power also requests authorization to

consolidate or otherwise reorganize a

nonutility subsidiary if the acquisition

of the securities of that nonutility

subsidiary is exempt from prior

Commission approval. Scottish Power

requests that the Commission reserve

jurisdiction, pending completion of the

record, over any other consolidation or

reorganization of its direct or indirect

ownership interests in any nonutility

company.

XI. EWG/FUCO-related Financings

As a general matter, Scottish Power

intends to fund its FUCO activities at

the level of its first-tier subsidiary,

SPUK, or at the level of the Intermediate

Companies. However, it may be

desirable from time to time for Scottish

Power to provide some investment

capital or credit support for FUCO

acquisitions or operations. To that end,

Scottish Power is seeking authority to

finance EWG and FUCO investments

and operations up to an amount equal

to 154% of its consolidated retained

earnings (‘‘CRE’’) at any one time

outstanding during the Authorization

Period.23 Applicants state that, as of

March 31, 2000, Scottish Power’s CRE

on a U.S. GAAP basis was $3,116

million. Applicants further state that, as

of March 31, 2000, the Scottish Power

System had an existing ‘‘aggregate

investment,’’ as that term is defined in

rule 53 under the Act, in EWGs and

FUCOs of an amount equal to 104% of

Scottish Power’s CRE, subject to an

adjustment based on the sale of

PacifiCorp’s Australian FUCO assets.24

Therefore, Scottish Power’s request for

an additional investment authorization

would result in an aggregate investment

of approximately 154% of Scottish

Power’s CRE, or approximately $4,797

million.

XII. Affiliate Transactions

A. Existing Intrasystem Arrangements

PacifiCorp has been providing

administrative, management, technical,

legal and other support services to its

subsidiaries for many years.25 In

addition, there have been occasions

when subsidiaries of PacifiCorp have

provided services to PacifiCorp or to

other PacifiCorp Subsidiaries.

Accordingly, PacifiCorp now proposes

to continue these arrangements, with

PacifiCorp providing services to the

PacifiCorp Subsidiaries and on occasion

the PacifiCorp Subsidiaries providing

services to PacifiCorp and other

associate companies in the Scottish

Power System. All service transactions

will be priced at cost in accordance with

section 13(b) of the Act and the rules

under the Act.26

In addition, SPUK, or another member

of the SPUK Group, proposes to

perform, on a limited basis, services for

the PacifiCorp Group. These services

may include: (1) Transition plan

preparation and implementation; (2)

network performance and customer

service improvements; and (3) corporate

services. These service transactions also

will be priced at cost in accordance with

section 13(b) of the Act and the rules

under the Act.27 Applicants state that

the costs of services provided by SPUK,

or a SPUK, Subsidiary, to the PacifiCorp

Group will be directly attributed to

PacifiCorp. In the alternative, whenever

it is possible to do so accurately, these

costs will be attributed to a specific

PacifiCorp Subsidiary.

Scottish Power further states that a

PacifiCorp Group member may provide

incidental services to SPUK or a SPUK

Subsidiary at other than cost in

compliance with rule 90(d)(1) under the

Act. The PacifiCorp Subsidiaries also

request authority to provide services

and sell goods to SPUK and the SPUK

Subsidiaries at fair market prices, under

certain circumstances, to any nonutility

associates company in the Scottish

Power System.

For the Commission by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–26379 Filed 10–12–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

24680; 812–12094]

Vanguard Index Funds, et al.; Notice of

Application

October 6, 2000.

AGENCY: Securities and Exchange

Commission (‘‘Commission’’).

ACTION: Notice of an application for an

order under section 6(c) of the

Investment Company Act of 1940

(‘‘Act’’) for exemption from sections

2(a)(32), 18(f)(1), 18(i), 22(d), and 24(d)

of the Act and rule 22c–1 under the Act,

and under sections 6(c) and 17(b) of the

Act for exemption from sections 17(a)(1)

and (a)(2) of the Act.

Summary of Application: Applicants

request an order that would permit each

of certain registered open-end

management investment companies

whose portfolios consist of the

component securities of certain indices

to issue a new class of shares with

limited redeemability. The requested

order would permit transactions in the

shares of the new classes at negotiated

prices in the secondary market and

would allow dealers to sell the shares to

secondary market purchasers

unaccompanied by a prospectus, when

prospectus delivery is not required by

the Securities Act of 1933. The

requested order also would permit

certain affiliated persons of the

investment companies to deposit

securities into, and receive securities

from, the investment companies in

connection with the purchase and

redemption of aggregations of shares of

the new classes.