Federal Register / Vol. 63, No. 106 /Wednesday, June 3, 1998 / Notices 30273

1As of December 31, 1997, the NIPSCO gas

distribution system was comprised of

approximately 13,400 miles of distribution mains

and 729,400 customer meters. NIPSCO currently

purchases approximately 89% of its total system gas

requirements from production in the on-shore and

off-shore Texas and Louisiana producing areas, and

approximately 8% from production in the MidContinent (Oklahoma and Kansas), Permian (west

Texas) and San Juan (New Mexico) Basins. It is

anticipated, however, that, beginning as early as

1999, with the completion of construction of new

pipeline capacity from western Canada to the upper

Midwest markets, NIPSCO will begin to purchase

significant amounts of lower-cost gas produced in

the Western Canadian Sedimentation Basin (Alberta

and British Columbia). NIPSCO estimates that, by

2002, western Canadian gas could potentially

account for as much as 40% of its total system

supply. Currently, NIPSCO subsidiaries have

contracted for ‘‘firm’’ transportation capacity and

storage service on five different long-haul interstate

Continued

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–23225]

Allied Capital Financial Corporation

(file no. 811–3811) and Allied

Investment Corporation (File No. 811–

2707); Notice of Proposed

Deregistration

May 28, 1998.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of proposed

deregistration under section 8(f) of the

Investment Company Act of 1940 (the

‘‘Act’’).

SUMMARY OF NOTICE: The SEC proposes

to declare by order on its own motion

that the registrations of Allied Capital

Financial Corporation (‘‘Allied

Financial’’) and Allied Investment

Corporation (‘‘Allied Investment’’)

under the Act have ceased to be in effect

as of January 5, 1998, the date upon

which each elected to be regulated as a

business development company

(‘‘BDC’’).

HEARING OR NOTIFICATION OF HEARING: An

order will be issued unless the SEC

orders a hearing. Interested persons may

request a hearing by writing to the SEC’s

Secretary and serving the relevant

registrant with a copy of the request,

personally or by mail. Hearing requests

should be received by the SEC by 5:30

p.m. on June 23, 1998, and should be

accompanied by proof of service on the

registrant, in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 5th

Street, N.W., Washington, D.C. 20549.

Allied Financial and Allied Investment,

1666 K Street, N.W., 9th Floor,

Washington, D.C. 20006–2803.

FOR FURTHER INFORMATION CONTACT:

Elaine M. Boggs, Senior Counsel, at

(202) 942–0572, or Christine Y.

Greenlees, Branch Chief, at (202) 942–

0564 (Office of Investment Company

Regulation, Division of Investment

Management).

SUPPLEMENTARY INFORMATION:

Statement of Facts

1. Allied Financial and Allied

Investment, both Maryland corporations

and closed-end investment companies

registered under the Act, filed

Notifications of Registration under the

Act on July 21, 1983 and November 23,

1976, respectively. Both companies

were formed as wholly-owned

subsidiaries of Allied Capital

Corporation. Therefore, no public

offering of Allied Financial’s or Allied

Investment’s shares were made and they

were not required to register their shares

under the Securities Act of 1933.

2. Section 54(a) of the Act provides

that any company that satisfies the

definition of a BDC under sections

2(a)(48) (A) and (B) of the Act may elect

to be subject to the provisions of

sections 55 through 65 of the Act and be

regulated as a BDC by filing with the

SEC a notification of the election, if the

company: (i) has a class of its equity

securities registered under section 12 of

the Securities Exchange Act of 1934 (the

‘‘Exchange Act’’); or (ii) has filed a

registration statement pursuant to

section 12 of the Exchange Act for a

class of its equity securities. On January

5, 1998, Allied Financial and Allied

Investment each elected BDC status by

filing a Form N–54A and a registration

statement under the Exchange Act.

3. Section 8(a) of the Act, which

requires registration of investment

companies, does not apply to BDC’s.

After an existing registered investment

company has filed an election to be

regulated as a BDC, the SEC on its own

motion will declare by order under

section 8(f) that the company’s

registration under the Act has ceased to

be in effect. The order will be effective

retroactively, as of the date the SEC

received the company’s election. See

Investment Company Act Release No.

11703 (March 26, 1981).

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–14673 Filed 6–2–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 35–26878]

Filings Under the Public Utility Holding

Company Act of 1935, as Amended

(‘‘Act’’)

May 27, 1998.

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 is/are available for

public inspection through the

Commission’s Office of Public

Reference.

Interested persons wishing to

comment or request a hearing on the

application(s) and/or declaration(s)

should submit their views in writing by

June 22, 1998, to the Secretary,

Securities and Exchange Commission,

Washington, D.C. 20549, and serve a

copy on the relevant applicant(s) and/or

declarant(s) at the address(es) specified

below. Proof of service (by affidavit or,

in case of an attorney at law, by

certificate) should be filed with the

request. Any request for hearing should

identify specifically the issues of fact or

law that are disputed. A person who so

requests will be notified of any hearing,

if ordered, and will receive a copy of

any notice or order issued in the matter.

After June 22, 1998, the application(s)

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

amended, may be granted and/or

permitted to become effective.

NIPSCO Industries, Inc.

(70–9197)

NIPSCO Industries, Inc. (‘‘NIPSCO’’),

801 East 86th Avenue, Merrillville,

Indiana 46410, an Indiana public utility

holding company exempt under section

3(a)(1), under rule 2, from all provisions

of the Act except section 9(a)(2), has

filed an application under sections

9(a)(2) and 10 of the Act, in connection

with a proposed acquisition of Bay State

Gas Company (‘‘Bay State’’), a

Massachusetts public utility holding

company exempt under section 3(a)(2),

under rule 2, from all provisions of the

Act except section 9(a)(2).

NIPSCO owns all of the issued and

outstanding common stock of three

public utility subsidiary companies that

provide electric and retail natural gas 1

service exclusively within Indiana.
30274 Federal Register / Vol. 63, No. 106 /Wednesday, June 3, 1998 / Notices

pipelines (Tennessee Gas Pipeline Company

(‘‘Tennessee Gas’’), NGPL, ANR Pipeline Company,

Panhandle Eastern Pipeline Company and

Trunkline Gas Company).

2Northern Indiana owns and operates

underground gas storage facilities located at Royal

Center, Indiana, with a storage capacity of 6.75

billion cubic feet (Bcf), and a liquified natural gas

plant in LaPorte County, Indiana, having a storage

capacity of 4.0 Bcf, which is used for system

pressure maintenance and peak season (November–

March) deliveries. Northern Indiana also holds

under long-term contract storage capacity totaling

approximately 9.11 Bcf in the Markham, Moss Bluff

and Egan salt-dome storage caverns in Texas and

Louisiana. These facilities, which provide the

NIPSCO system with a significant amount of ‘‘high

deliverability’’ storage capacity are located at or

near major supply ‘‘hubs’’ which have formed at

locations where interstate pipelines serving the

upper Midwest, Northeast and Southwest markets

intersect.

3NIPSCO was originally incorporated in 1987 to

serve as the holding company for Northern Indiana

and various non-utility subsidiaries. NIPSCO was

authorized to acquire Kokomo Gas in 1992, Holding

Co. Act Release No. 25470 (February 3, 1992), and

NIFL in 1993, Holding Co. Act Release No. 25766

(March 25, 1993).

4See Crossroads Pipeline Company, 71 FERC

¶ 61,076 (April 21, 1995).

5Crossroads recently announced plans to

construct a 20-mile extension of its pipeline facility

in Ohio to a point of interconnection with a unit

of Consolidated Natural Gas Company. This

extension will form a link in a chain of interstate

pipeline projects that are designed to transport

natural gas from the Chicago area market to eastern

markets served by CNG Transmission Corp. and

Transcontinental Gas Pipe Line Corp. (‘‘Transco’’)

by late 1999.

6The other five subsidiaries of IWC Resources

Corporation, and each company’s principal

business are: (i) Utility Data Corporation (customer

billing and data processing services); (ii) IWC

Services, Inc. (waste water treatment); (iii)

Waterway Holdings, Inc. (real estate development);

(iv) SM&P Utility Resources, Inc. (utility location

and marking services); and (v) Miller Pipeline

Corporation (pipeline construction).

7As of December 31, 1997, the combined gas

system of bay State and Northern (together, the

‘‘Bay State System’’) consisted of 5,158 miles of

distribution mains; 29 miles of transmission lines,

together with associated pumping and regulating

stations; liquid natural gas liquefaction,

vaporization and storage facilities; propane storage

tanks; 270,108 customer service connections; and

306,446 customer meters. The Bay State System

purchases approximately 40% of its total system gas

requirements from the on-shore and off-shore Texas

and Louisiana producing areas and approximately

49% of its total system requirements from the

Western Canadian Sedimentation Basin. The Bay

State System has contracted for ‘‘firm’’

transportation capacity on four domestic long-haul

pipelines (Tennessee Gas, Transco, Texas Eastern

Transmission Corp. and Texas Gas Transmission

Corp.) as well as on TransCanada Pipe Line Corp.

and several regional pipelines. Like NIPSCO, the

Bay State System projects that it will purchase an

increasing amount of its gas requirements from the

Western Canadian Sedimentation Basin. This gas

will reach the Bay State service area directly via the

PNGTS pipeline (see below), which is scheduled to

be completed in late 1998, as well as indirectly by

means of any one of several different pipeline

expansions/extensions (including the Crossroads/

CNG expansions) that have been announced and

will provide the Bay State System with greater

access to supplies available in the Chicago area

market.

Northern Indiana Public Service

Company (‘‘Northern Indiana’’),

NIPSCO’s largest and dominant utility

subsidiary, is a combination gas and

electric utility company which operates

in 30 counties in the northern part of

Indiana, serving an area of about 12,000

square miles with a population of

approximately 2,200,000. Northern

Indiana distributes gas to approximately

662,500 residential, commercial and

industrial customers and generates,

purchases, transmits and sells electricity

to approximately 416,300 retail and

wholesale customers. Northern Indiana

also provides gas transportation service

to approximately 200 customers.2

Kokomo Gas and Fuel Company

(‘‘Kokomo Gas’’) supplies natural gas to

approximately 33,500 retail customers

in a six county area of north central

Indiana having a population of

approximately 100,000. The Kokomo

Gas service territory is contiguous to

Northern Indiana’s gas service territory.

Northern Indiana Fuel and Light

Company, Inc. (‘‘NIFL’’) supplies

natural gas to approximately 33,400

retail customers in five counties in the

northeast corner of Indiana having a

population of approximately 66,700.

The NIFL service territory is also

contiguous to Northern Indiana’s gas

service territory, and overlaps Northern

Indiana’s electric service territory.3

NIPSCO’s three utility subsidiaries

(collectively, ‘‘NIPSCO Operating

Companies’’) are subject to regulation by

the Indiana Utility Regulatory

Commission as to rates, service,

accounts, issuance of securities, and

other matters.

NIPSCO also owns all of the

outstanding common stock of

Crossroads Pipeline Company

(‘‘Crossroads’’), a non-utility natural gas

transportation company that was

certificated by the Federal Energy

Regulatory Commission (‘‘FERC’’) in

May 1995 to operate as an interstate

pipeline.4 Crossroads owns and operates

a 201-mile, 20-inch, pipeline that

extends from Schererville, in

northwestern Indiana, where it takes

delivery from the interstate pipeline

facilities of Natural Gas Pipeline

Company of America (‘‘NGPL’’), to

Cygnet, in northwestern Ohio, where it

interconnects with facilities owned by

Columbia Gas Transmission Corporation

(‘‘CGTC’’).5

NIPSCO’s other principal non-utility

subsidiaries include IWC Resources

Corporation which owns and operates

seven subsidiaries, including two

regulated water utility companies, the

Indianapolis Water Company and

Harbour Water Corporation, which

provide water service in Indianapolis,

Indiana and surrounding areas;6

NIPSCO Development Company, Inc.,

which holds various investments,

including investments in real estate and

venture capital enterprises; NI Energy

Services, Inc., which is engaged in

various energy-related activities, such as

retail gas marketing, energy efficient

lighting sales and installations, and gas

and electricity wholesale marketing;

Primary Energy, Inc., which arranges

energy-related projects with large

industrial customers; and NIPSCO

Capital Markets, Inc., which handles

financing for ventures of NIPSCO and

certain of its subsidiaries, other than

Northern Indiana.

For the year ended December 31,

1997, the NIPSCO Operating Companies

reported combined net income of $205.3

million on combined operating utility

income of $286.2 million. Gas sales of

the NIPSCO Operating Companies

(including revenues from transportation

only customers) of approximately $803

million and electric sales of

approximately $1 billion accounted for

approximately 44% and 56%,

respectively, of the NIPSCO Operating

Companies’ gross utility revenues of

approximately $1.8 billion for the year

ended December 31, 1997. Consolidated

assets of NIPSCO, its Operating

Companies and its non-utility

subsidiaries (collectively, ‘‘the NIPSCO

System’’) as of December 31, 1997, were

approximately $4.9 billion, consisting of

$3.1 billion in net utility plant and

associated facilities and $1.8 billion in

net non-utility plant and other nonutility assets. Consolidated operating

revenues, operating income and net

income for the NIPSCO System were

approximately $2.6 billion, $410 million

and $191 million, respectively, for the

year ended December 31, 1997.

Bay State, which is both a public

utility company and a holding

company, distributes natural gas at

retail in parts of Massachusetts and,

through a wholly owned subsidiary,

Northern Utilities, Inc. (‘‘Northern’’), in

contiguous areas of Maine and New

Hampshire.7

Bay State provides gas service to

approximately 261,000 residential,

commercial and industrial customers in

three separate areas of Massachusetts

covering approximately 1,344 square

miles and having a combined

population of approximately 1,340,000.

These include the greater Springfield

area in western Massachusetts, an area

southwest of Boston that includes the

cities of Attleboro, Brockton and

Taunton, and an area north of Boston

extending to the New Hampshire border

that includes the city of Lawrence. Bay
Federal Register / Vol. 63, No. 106 /Wednesday, June 3, 1998 / Notices 30275

8The restructuring charges, which related

primarily to retirement benefits and consulting fees,

totaled $11.4 million, and had the effect of reducing

the combined net utility income of Bay State and

Northern to approximately $14.7 million in 1997.

9The Merger Agreement is subject to the approval

of Bay State’s shareholders at a special meeting

called for that purpose to be held on May 27, 1998.

The affirmative vote of the holders of two-thirds of

the outstanding shares of Bay State is required for

approval. The Transaction is also subject to various

regulatory approvals in addition to the approval of

this Commission. Insofar as it relates to Bay State

and Northern, the Merger is subject to the

jurisdiction of the Massachusetts Department of

Telecommunications and Energy, the New

Hampshire Public Utilities Commission, and the

Maine Public Utilities Commission. In addition,

certain aspects of the Merger may be subject to the

jurisdiction of the Federal Energy Regulatory

Commission under the Federal Power Act. The

Merger is also subject to the notification and

reporting requirements of the Hart-Scott-Rodino

Act.

10Applicant states that the Merger Agreement

also provides for an ‘‘alternative merger’’

transaction which would be carried out in the event

that it is not possible to consummate the ‘‘preferred

merger’’ transaction. Applicant contends that the

‘‘alternative merger’’ transaction would not be

subject to Commission jurisdiction under the Act

and the request for approval made in its application

concerns only the ‘‘preferred merger’’ transaction.

11Applicant notes that, following the Merger, the

stock of Northern may be transferred to NIPSCO,

which would result in Northern becoming a direct

wholly-owned utility subsidiary of NIPSCO. If,

however, Northern is maintained as a subsidiary of

Bay State, Bay State will continue to claim exempt

holding company status under section 3(a)(2) and

rule 2.

12On a pro forma basis, based on the number of

Bay State Shares and NIPSCO Shares outstanding

on April 17, 1998, and assuming that 100% of the

outstanding Bay State Shares are converted into the

right to receive NIPSCO Shares at a conversion

price of $27.38 per share (the 20-day trading

average for the NIPSCO Shares determined as of

April 17, 1998), the current shareholders of Bay

State would effectively acquire, in exchange for

their Bay State Shares, about 13.7% of the issued

and outstanding NIPSCO Shares.

13Applicant states that the terms of the Merger

Agreement, including the Exchange Ratio, reflect

months of due diligence and analysis and

evaluation of the assets, liabilities and business

prospects of Bay State and were the product of

extensive and vigorous arm’s-length negotiations

between NIPSCO and Bay State. Applicant also

states that Bay State engaged SG Barr Devlin (‘‘Barr

Devlin’’) a nationally recognized investment

banking concern, to evaluate NIPSCO’s offer for Bay

Continued

State is subject to regulation by the

Massachusetts Department of

Telecommunications and Energy as to

rates, service, accounts, issuance of

securities, and other matters.

Northern provides gas service to

approximately 46,000 residential,

commercial and industrial customers in

an area of approximately 808 square

miles in New Hampshire and Maine

having a population of approximately

450,000. Northern’s service area extends

north from the Massachusetts-New

Hampshire border to the Portland/

Lewiston area in Maine. Northern is

subject to regulation by the New

Hampshire Public Utilities Commission

and Maine Public Utilities Commission

as to rates, service, accounts, issuance of

securities, and other matters.

Bay State has one direct wholly

owned non-utility subsidiary, Granite

State Gas Transmission, Inc. (‘‘Granite

State’’), which owns and operates a 105-

mile-6, to 12-inch diameter, interstate

pipeline that extends from Haverhill,

Massachusetts, where it interconnects

with the facilities of Tennessee Gas

Pipeline Company (‘‘Tennessee Gas’’),

in a northeasterly direction to a point

near Westbrook, Maine. Granite State

also leases a 166-mile, 18-inch diameter,

converted oil pipeline, which is used to

transport western Canadian gas to

Portland, Maine.

Through a wholly owned subsidiary,

Natural Gas Development, Inc. (‘‘NGD’’),

Granite State is a partner in the Portland

Natural Gas Transmission System

(‘‘PNGTS’’), which was formed to

construct a 292-mile, 24-inch diameter,

natural gas transmission line in

northern New England that will form

the northern link in a new gas

transmission system designed to bring

western Canadian gas supplies to the

New England market. When complete,

these facilities will interconnect with

the Tennessee Gas pipeline facilities

near Dracut, Massachusetts, and with

Granite State at locations in Maine and

New Hampshire.

In addition to NGD, Bay State also has

four other indirect non-utility

subsidiaries, all of which are wholly

owned subsidiaries of Granite State: (1)

EnergyUSA, Inc., a company organized

to provide unregulated energy products

and services, including water heater

rentals, insurance programs for heating

systems, and strategic energy supply

management; (2) EnergyEXPRESS, Inc.,

an unregulated natural gas, electricity,

propane and fuel oil marketer; (3) LNG

Development Corp., which was

established to invest in a proposed

liquefied natural gas storage facility in

Wells, Maine; and (4) Bay State Energy

Enterprises, Inc., which is inactive.

For the year ended December 31,

1997, the combined gas revenues

(including revenues for transportationonly customers), utility operating

income and net utility income of Bay

State and Northern (as adjusted to

eliminate the effect on earnings of a onetime write-off of restructuring costs)8

were approximately $441 million, $39.2

million and $21.6 million, respectively.

Consolidated assets of Bay State and its

subsidiaries as of December 31, 1997

were approximately $788 million,

consisting of $496.4 million in

combined net utility plant of Bay State

and Northern and $291.6 million in

non-utility plant and other non-utility

assets.

In accordance with an Agreement and

Plan of Merger dated December 18,

1997, as amended and restated as of

March 4, 1998 (the ‘‘Merger

Agreement’’), NIPSCO seeks

authorization to acquire all of the issued

and outstanding common stock of Bay

State (‘‘Merger’’).9 Under the terms of

the ‘‘preferred merger’’10 structure set

forth in the Merger Agreement, Bay

State would be merged with and into a

wholly-owned NIPSCO subsidiary to be

formed under the laws of Massachusetts

which, upon completion of the Merger,

would change its name to and operate

under the name of ‘‘Bay State Gas

Company.’’11 The Merger has been

structured to qualify as a tax-free

reorganization under section 368(a) of

the Internal Revenue Code of 1986, as

amended.

Under the Merger Agreement, upon

the effective date of the Merger, each

outstanding share of common stock of

Bay State (‘‘Bay State Shares’’) will be

converted into the right to receive

common shares of NIPSCO (‘‘NIPSCO

Shares’’), or at the election of any Bay

State shareholder and subject to certain

limitations, cash, in either case having

a value of $40.00 per share. The number

of NIPSCO Shares that would be issued

in exchange for each Bay State Share

(the ‘‘Exchange Ratio’’) would be

determined by dividing (i) $40.00 by (ii)

the NIPSCO Share Price, which is the

average of the closing prices of NIPSCO,

as reported in The Wall Street Journal’s

NYSE Composite Transactions Report,

for the 20 trading days immediately

preceding the second trading day prior

to the effective date of the merger.12 Bay

State shareholders may elect to receive

$40.00 in cash, without interest, for

some or all of their Bay State Shares

(‘‘Cash Election’’). The aggregate

number of Bay State Shares that will be

converted into the right to receive

$40.00 in cash in the Transaction (the

‘‘Cash Election Maximum)’’ may not

exceed an amount determined by

dividing (A) the dollar number equal to

the difference between (i) one-half of the

product of (x) $40.00 multiplied by (y)

the aggregate number of Bay State

Shares outstanding on the second day

prior to the effective date of the Merger

less (ii) the dollar amount of a special

dividend, if any, paid by Bay State prior

to the Merger and certain other cash

payments to be determined prior to such

time, by (B) $40.00. Further, cash

amounts paid to electing shareholders

would be subject to proration if the

aggregate number of Bay State Shares

covered by the Cash Election exceeds

the Cash Election Maximum.13
30276 Federal Register / Vol. 63, No. 106 /Wednesday, June 3, 1998 / Notices

State. Barr Devlin subsequently delivered a

‘‘fairness’’ opinion to the Bay State board of

directors to the effect that, based on certain

assumptions stated therein, the consideration

offered in connection with the Transaction is fair,

from a financial point of view, to the holders of Bay

State Shares. Applicant notes that a pro forma

analysis prepared by Barr Devlin indicates that the

Transaction would result in accretion to Bay State’s

shareholders in terms of earnings per share and that

NIPSCO’s shareholders would also realize accretion

in earnings per share (assuming NIPSCO’s shares

continue to trade at current levels).

14Post-merger, the NIPSCO System will provide

gas distribution service to approximately 1,036,400

residential, commercial and industrial customers in

a 14,152-square mile area in four states, as well as

electric service to approximately 416,300

customers, all in Indiana. On a pro forma basis, the

combined net utility plant (gas and electric) of

NIPSCO and Bay State as of December 31, 1997

would have totaled approximately $3,61 billion and

combined gross utility revenues for the twelve

months then ended would have totaled

approximately $2.3 billion.

1The NASD initially submitted this proposal on

March 16, 1998. However, a substantive

amendment was requested to clarify the

applicability of the proposed fee. The NASD filed

Amendment No. 1 on April 28, 1998. See letter

from Thomas P. Moran, Senior Attorney, Office of

General Counsel, The Nasdaq Stock Market, Inc., to

Mignon McLemore, Esq., Division of Market

Regulation, SEC, dated April 28, 1998.

On May 14, 1998, the Board filed another

substantive amendment modifying the proposed

rule language. See letter from Thomas P. Moran,

Senior Attorney, Office of General Counsel, The

Nasdaq Stock Market, Inc., to Katherine A. England,

Division of Market Regulation, SEC, dated May 14,

1998 (‘‘Amendment No. 2’’).

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

3 17 CFR 240.19b–4.

Following the Merger, the board of

directors of ‘‘new’’ Bay State will

consist of ten members, of whom three

will be officers of NIPSCO, three will be

officers of ‘‘old’’ Bay State, and four will

be current outside directors of ‘‘old’’

Bay State. The current officers of ‘‘old’’

Bay State will continue to serve in

similar capacities in ‘‘new’’ Bay State.

The Merger Agreement also provides

that NIPSCO shall nominate and

recommend for election to the NIPSCO

board of director one ‘‘new’’ Bay State

directors to be mutually determined by

NIPSCO and Bay State. ‘‘New’’ Bay State

will continue to maintain its principal

executive offices in Westborough,

Massachusetts.

Applicant states that, upon

consummation of the Merger, NIPSCO

will own an integrated gas utility system

comprised of its gas distribution system

in Indiana and Bay State’s gas

distribution system in Massachusetts,

Maine and New Hampshire, as well as

an integrated electric utility system in

Indiana.14

Applicant also states that the Merger

is expected to produce various benefits

to the public, investors and consumers

and will satisfy all of the applicable

standards under section 10 of the Act.

Among other things, applicant states

that, following the Merger, the

combined companies will be better

positioned to take advantage of

operating economies and efficiencies

through, among other measures, joint

management optimization of their

respective portfolios of gas supply,

transportation and storage assets.

Applicant also notes that the Merger is

expected to provide benefits in the form

of greater flexibility and capacity in

financing the operations of the

combining companies and an enhanced

ability to take advantage of future

strategic opportunities in the

competitive marketplace for energy and

energy services that is rapidly evolving

in New England.

Applicant contends that, after the

Merger, NIPSCO will remain

predominantly an intrastate (i.e.,

Indiana) holding company that will not

derive any material part of its income

from any out-of-state utility subsidiary

and has requested an order under

section 3(a)(1) declaring NIPSCO, after

consummation of the Merger, to be

exempt from all sections of the Act

except section 9(a)(2).

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–14623 Filed 6–2–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–40035; File No. SR–NASD–

98–25]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc. Relating to Fees for

Nasdaq Market Data Distributors or

Vendors

May 27, 1998.

On May 14, 1998,1 the Nasdaq Stock

Market, Inc. (‘‘Nasdaq’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’ or SEC’’) a proposed

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

Securities Exchange Act of 1934

(‘‘Act’’),2 and Rule 19b–4 thereunder.3

The proposed rule change is described

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

have been prepared by Nasdaq. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

Nasdaq is proposing to amend NASD

Rule 7010 to establish an annual, scaled

administrative fee, payable by Nasdaq

market data distributors or vendors, for

data usage monitoring costs and other

administrative expenses incurred by

Nasdaq. Once effective, Nasdaq will

suspend indefinitely is current

contractual requirement that Nasdaq

real-time data distributors or vendors

provide an annual accountant-certified

list of its subscribers who receive

Nasdaq data. Below is the text of the

proposed rule change. Proposed new

language is italicized.

7010. System Services

(a)–(n) No change

(o) Market Data Distributor or Vendor

Annual Administrative Fee

Nasdaq Market Data Distributors or

Vendors shall be assessed the following

annual administrative fee:

Delayed distributor ..............................$250.00

0–999 real-time terminals....................$500.00

1,000–4,999 real-time terminals.......$1,250.00

5,000–9,999 real-time terminals.....$2,250.000

10,000 + real-time terminals ............$3,750.00

* * * * *

II. Self-Regulatory Organizations

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

Nasdaq included statements concerning

the purpose of and basis for the

proposed rule change and discussed any

comments it received on the proposed

rule change. The text of these statenents

may be examined at the places specified

in Item IV below. Nasdaq has prepared

summaries, set forth in Sections A, B,

and C below, of the most significant

aspects of such statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

Nasdaq is proposing to establish an

annual, scaled fee for the Nasdaq realtime market data distributors or vendors

to cover the expenses Nasdaq incurs to

administer and monitor market data

usage. Currently, Nasdaq real-time

market data distributors or vendors are

annually required to submit a list,

certified by a public accountant paid for

by the distributor or vendor, of all

subscribers receiving real-time Nasdaq

data. Alternatively, a Nasdaq real-time

market data distributor or vendor may

elect to pay a generally lower fee and

have its service usage verified by an on-