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                    Document headings vary by document type but may contain                    the following:                  
                -                       the agency or agencies that issued and signed a document                    
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###### Securities and Exchange Commission

          - [Release No. 35-27254]

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 applicant(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 November 10, 2000, to the Secretary, Securities and Exchange Commission, Washington, DC 20549-0609, and serve a copy on the relevant application(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 November 10, 2000, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective.

## The Southern Company, et al. (70-9771)

                    The Southern Company (“Southern”), 270 Peachtree Street, NW., Atlanta, Georgia 30303, a registered holding company, and its wholly owned subsidiaries, Mobile Energy Services Holdings, Inc. (“Holdings”) and Mobile Energy Services Company, L.L.C. (“Mobile Energy”) [1]                                          both located at 900 Ashwood Parkway, Suite 500, Atlanta Georgia 30338 (collectively, “Applicants”), have filed an application-declaration (“Application”) under sections 6(a), 7, 11(f), 11(g), 12(a), 12(b), 12(d), 12(e), 12(f) and rules 45, 54, 63 and 64 of the Act.                
      ( print page 63270)    
                    Applicants propose that the Commission issue (1) an order under section 11(f) of the Act approving the amended Joint Plan or Reorganization (“Plan”) and certain related transactions under the Plan [2]                                          and (2) a report on the Plan under section 11(g) that may accompany a solicitation of creditors and any other interest holders for approval of the Plan in the bankruptcy proceedings.[3] 

The Application includes the Plan and disclosure statement for Mobile Energy and Holdings. On January 14, 1999, Mobile Energy and Holdings (collectively, “Debtors”) filed voluntary petitions in the Bankruptcy Court for the Southern District of Alabama (“Bankruptcy Court”) for protection under Chapter 11 of the Bankruptcy Code. Both entities filed as debtors in possession continuing their operations; as a result, no trustee or receiver has been appointed by the Bankruptcy Court. The original Plan was filed with the Bankruptcy Court on August 4, 2000. The disclosure statement and the amended Plan were filed with the Bankruptcy Court on September 15, 2000. Under section 1125 of the Bankruptcy Code, the Debtors may not solicit votes for acceptances of the Plan until the Bankruptcy Court approves a disclosure statement that contains information of a kind, and in sufficient detail, adequate to enable creditors to make an informed judgment whether to vote for acceptance or rejection of the Plan. A hearing is scheduled with the Bankruptcy Court for October 19, 2000, to determine whether the disclosure statement filed on September 15, 2000, meets the requirements of section 1125 of the Bankruptcy Code. Applicants state notice of the October 19, 2000 hearing has been provided in accordance with the Bankruptcy Code and the applicable Federal Rules of Bankruptcy Procedure.

Applicants state the purposes of the transactions described in the Plan are to: (1) Permit Mobile Energy and Holdings to reorganize and emerge from bankruptcy; (2) maximize the recovery of Mobile Energy's bondholders on their capital investment; (3) eliminate the direct and indirect equity ownership of Southern in Mobile Energy and Holdings; and (4) allow Mobile Energy to operate as a qualifying facility under the Public utility Regulatory Policies Act of 1978 after the effective date of the Plan, which will cause Mobile Energy and Holdings to no longer be subject to the Act. Certain transactions contemplated by the Plan require Commission authorization. The jurisdictional aspects of the Plan are summarized below.

### I. Overview of the Plan

Applicants request authorization for the solicitation regarding the Plan under sections 11(g) and 11(f) of the Act, and authorization under section 12(e) to solicit consents and approvals from the holders of the securities of Mobile Energy and Holdings, along with other ancillary and related authorizations to implement the Plan. The pre-petition shares of common stock issued by Holdings and held by Southern will not receive any distributions under the Plan, and the shares will be cancelled and extinguished on the effective date of the Plan. The entire equity interest in the reorganized Holdings will then be held by the existing bondholders.

Upon implementation of the Plan, the ownership interests of Southern and its affiliates in the Debtors will terminate. Applicants state Southern and its affiliates will have substantially reduced obligations going forward with respect to Mobile Energy and Holdings. Southern Energy Resources, Inc. (“SERI”) will continue to operate Mobile Energy's facilities through March 31, 2001 at the latest. Southern guaranteed certain of Mobile Energy's obligations to its existing customers in 1995, and these guarantees will remain in place but Mobile Energy will indemnify Southern against any liability under those guarantees. Southern Energy, Inc. (“Southern Energy”) will assign certain contract rights and obligations to Mobile Energy related to a combustion turbine being manufactured for it by general Electric Company (“GE”) and under a long term services agreement related to that turbine by General Electric International Inc. (“GEII”). Southern Energy will remain liable if Mobile Energy does not meet those obligations and Mobile Energy will indemnify Southern Energy against any of these costs.

                    The proponents of the Plan include a Bondholder Steering Committee which represents more than 70% of the current outstanding bondholders of the Debtors.[4]                                          The Bondholder Steering Committee includes First Union National Bank as the indenture trustees for each of the two bond issuances as an ex officio member. The indenture trustees represent all of the bondholders.                

                    The facilities at issue are located inside a large pulp, paper and tissue manufacturing complex in Mobile, Alabama. Some of the facilities now owned by Mobile Energy were originally constructed by the Scott Paper Company (“Scott”) in the early 1960s. Scott sold the energy facilities, black liquor recovery equipment, and related assets, permits and agreements (“Energy Complex”) to Holdings.[5]                                          Mobile Energy was formed as a limited liability company on July 13, 1995. Mobile Energy acquired ownership from Holdings of the Energy Complex on July 14, 1995. Mobile Energy owns and operates the Energy Complex which was constructed specifically to serve the Scott mill operations. In late 1995 Scott was merged into a subsidiary of Kimberly Clark Corporation and the resulting entity was renamed Kimberly Clark Tissue Company (“KCTC”). In 1998, KCTC notified Mobile Energy that KCTC would close its pulp mill and terminate its contract to purchase energy services from Mobile Energy. The consequences from the anticipated loss of the KCTC pulp mill contract and operations triggered the filing by Mobile Energy and Holdings of cases under Chapter 11 of the Bankruptcy Code.                

### II. Key Elements of the Plan

#### A. KCTC Settlement Agreement

                    The settlement agreement between the Debtors and KCTC (“KCTC Settlement Agreement”) encompasses certain transactions, some of which occurred soon after the Bankruptcy Court approved the settlement, and other transactions that will occur later if certain conditions are met. Particularly, on February 8, 2000, Mobile Energy and KCTC executed: (1) The New Tissue Mill ESA,[6]                                          which provides for electricity and steam processing services to be supplied by Mobile Energy to KCTC's tissue mill at market prices; and                           ( print page 63271)                        (2) an Option Agreement for Mobile Energy or its assignee to purchase KCTC's pulp mill and related assets to be used for a new 800 short ton per day pulp mill. On the closing date, if certain conditions are met, KCTC will pay Mobile Energy approximately $30.12 million, KCTC will transfer certain assets to Mobile Energy and Mobile Energy will transfer certain other assets to KCTC. KCTC and Mobile Energy will also enter into an agreement which will set out the respective rights and obligations of Mobile Energy and KCTC to operate and maintain the No. 6 Power Boiler and related facilities.                

#### B. Cogen Project

                    The Plan contemplates resumption, on a reduced scale, of pulp mill operations under different ownership, a more efficient use of resources (                    *e.g.,*                     recovery boiler), the possible expansion of electric generating capacity by purchasing a combustion turbine and developing a 165 megawatt facility (“Cogen Project”) [7]                                          and a revised agreement to provide energy services to the tissue mill within the industrial complex. The development of the Cogen Project will occur under the MESC Cogeneration Development Agreement dated February 9, 2000, between Mobile Energy, Holdings, Southern Energy, and SERI, as amended by Amendment No. 1 dated August 11, 2000 (“Development Agreement”). The Development Agreement provides, among other things, that: (1) Mobile Energy has an option to purchase from Southern Energy a combustion turbine being manufactured for Southern Energy by GE to be used to develop the Cogen Project at Southern Energy's cost and pay Southern Energy $2.9 million as an option fee; (2) Southern Energy will assign its rights under a long term services agreement related to that turbine with GEII to Mobile Energy; (3) Mobile Energy will terminate the Mobile Energy Operating Agreement no later than March 31, 2001; (4) Mobile Energy will pay one-half the actual cost of a retention and severance program implemented by SERI for its workers at Mobile Energy's facilities, up to a total of $2 million; (5) Southern, Southern Energy, SERI, Mobile Energy, Holdings, the indenture trustee and the collateral agent will exchange releases of claims; (6) Southern, Southern Energy, SERI, Mobile Energy and Holdings will provide certain indemnities to each other; and (7) Southern, Southern Energy and SERI will hold a first priority lien on the Debtor's assets and those of any affiliate set up to own the Cogen Project to secure performance of all obligations which may be owed to Southern, Southern Energy and SERI under the Development Agreement.                

Applicants state the Doctors will use the $30.12 million to be received from KCTC in part for the development of the Cogen Project. The balance of the cost of the Cogen Project will be funded through debt and/or equity financing in addition to the funds otherwise available to the Debtors.

#### C. The New Pulp Mill

                    The Plan contemplates that a new 800 short ton per day pulp mill will be developed at the Mobile facility under a term sheet agreed to by Jubilee Pulp, Inc. and Mobile Energy (“New Pulp Mill”). The transactions necessary to develop the New Pulp Mill include: (1) Consummation of the KCTC Settlement Agreement; (2) consummation of certain agreements with the Debtors to effect the distribution of the No. 8 Recovery Boiler by Mobile Energy to Holdings and its contribution by Holdings to a new limited liability company; [8]                                          and (3) new energy services agreements between Mobile Energy and the developer of the New Pulp Mill. Jubilee Pulp, Inc. and Mobile Energy also intend to execute the New Pulp Mill ESA under which Mobile Energy will provide electric power processing services, steam processing services and steam conditioning services to Jubilee Pulp, Inc.                

### III. Treatment of Claims Under the Plan

#### A. Unsecured Creditors; Others

Under the Plan, the claims of the general unsecured creditors and the claims of all other creditors, except Southern and its affiliates will be paid in full.

#### B. First Mortgage Bonds

The first mortgage bonds were issued by Mobile Energy on August 1, 1995, in the principal amount of $255,210,000 due January 1, 2017 and bearing annual interest at 8.665%. Under the Plan, the first mortgage bonds will be exchanged for new taxable bonds in an aggregate principal amount of $51,535,000 and bearing annual interest at 10%. In addition, the Plan contemplates 7,259,400 shares of new common stock of Holdings will be distributed to the holders of the first mortgage bonds. Each share of new common stock will be entitled to one vote per share. Certain holders of the first mortgage bonds will be entitled to registration rights.

#### C. Tax Exempt Bonds

In December 1983, the Industrial Development Board of Mobile, Alabama (“IDB”) issued tax-exempt bonds (“1983 Tax Exempt Bonds”) to finance the construction of the No. 7 Power Boiler and certain auxiliary systems. In December 1994 (“1984 Tax Exempt Bonds”), the IDB issued tax-exempt bonds to refund the 1983 Tax Exempt Bonds.

Refunding of the 1984 Tax Exempt Bonds occurred in 1995 by means of tax-exempt bonds in the original principal amount of $85,000,000 scheduled to mature January 1, 2000. Under the Plan, the tax-exempt bonds will be exchanged for new tax-exempt bonds in an aggregate principal amount of $20,035,000 (subject to increase of up to an additional $2,003,500 aggregate principal amount of new tax-exempt bonds if each holder of allowed tax-exempt bondholder receives additional new tax-exempt bonds rather than common stock of Holdings as described below) and bear interest at the rate of 8% per annum.

In addition, the Plan contemplates up to an aggregate of 2,740,600 shares of new common stock will be issued to the tax-exempt bondholders (based on the number of tax-exempt bondholders that elect to receive new common stock). Each share of new common stock will be entitled to one vote per share. Certain holders will be entitled to registration rights. Each of the tax-exempt bondholders may elect, in lieu of receiving any common stock in Holdings, to receive additional new tax-exempt bonds equal to 10% of the new bonds to be received by the holder from $20,035,000 principal amount of new tax-exempt bonds to be distributed to all these holders.

#### D. Southern's and Its Affiliates' Claims

Under the Plan, Southern and its affiliates will receive the treatment provided in the Development Agreement, described above, in full satisfaction of their claims.

      ( print page 63272)    
For the Commission, by the Division of Investment Management, under delegated authority.

Jonathan G. Katz,

Secretary.

# Footnotes

1.                             Mobile Energy is wholly owned limited liability company subsidiary of Holdings to which Holdings transferred all of its assets other than its equity interest in Mobile Energy in July 1995. Mobile Energy is an electric utility company within the meaning of section 2(a)(3) of the Act.                    
        Back to Citation      

2.                             Section 11(f) of the Act provides, in relevant part, that “a reorganization plan for a registered holding company, or any subsidiary thereof, * * * shall not become effective unless such plan shall have been approved by the Commission after opportunity for hearing prior to its submission to the court.”                    
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3.                             Section 11(g)(2) of the Act provides, in relevant part, that any solicitation for consents to or authorization of any reorganization plan of a registered holding company or any subsidiary company thereof shall be “accompanied or preceded by a copy of a report on the plan which shall be made by the Commission after an opportunity for a hearing on the plan and other plans submitted to it, or by an abstract of such report made or approved by the Commission.”                    
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4.                             Applicants state the Bondholder Steering Committee is currently composed of CS First Boston, Miller Anderson & Sherrerd, LLP; Pan American Life Insurance Company; Franklin Advisors, Inc.; Van Kampen Interest and Advisory Corp.; and First Union National Bank.                    
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5.                             On Dec. 13, 1994 the Commission authorized Southern to organize Holdings as a new subsidiary and acquire all of its common stock. HCAR No. 26815.                    
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6.                             As part of the settlement with KCTC a new contract to provide electric power and steam processing services, the “New Tissue Mill ESA,” was entered into between KCTC Mobile Energy.                    
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7.                             Applicants note the Cogen Project will be owned either by Mobile Energy or an affiliate which is an exempt wholesale generator as defined in section 32 of the Act.                    
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8.                             The No. 8 Recovery Boiler will be distributed by Mobile Energy to Holdings and then contributed by Holdings to Pulpco LLC whose members will be holdings and Jubilee Pulp, Inc. The original cost to Mobile Energy of the recovery boiler was $11,852,824, which has been amortized in part over the intervening years, an the net book value as of December 31, 2000 will be approximately $86,241,000.                    
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[FR Doc. 00-27132 Filed 10-20-00; 8:45 am]

BILLING CODE 8010-01-M