Federal Register / Vol. 66, No. 108 / Tuesday, June 5, 2001 / Notices 30237

are being made in the types of any

effluents that may be released off site,

and there is no significant increase in

occupational or public radiation

exposure. Therefore, there are no

significant radiological environmental

impacts associated with the proposed

action.

With regard to potential

nonradiological impacts, the proposed

action does not involve any historic

sites. It does not affect nonradiological

plant effluents and has no other

environmental impact. Therefore, there

are no significant nonradiological

environmental impacts associated with

the proposed action.

Accordingly, the NRC concludes that

there are no significant environmental

impacts associated with the proposed

action.

Alternatives to the Proposed Action

As an alternative to the proposed

action, the staff considered denial of the

proposed action (i.e., the ‘‘no-action’’

alternative). Denial of the application

would result in no change in current

environmental impacts. The

environmental impacts of the proposed

action and the alternative action are

similar.

Alternative Use of Resources

This action does not involve the use

of any different resources than those

previously considered in the Final

Environmental Statement for St. Lucie

Unit 2 (NUREG–0842).

Agencies and Persons Consulted

In accordance with its stated policy,

on May 17, 2001, the staff consulted

with the Florida State official, William

Passetti, of the Bureau of Radiation

Control, regarding the environmental

impact of the proposed action. The State

official had no comments.

Finding of No Significant Impact

On the basis of the environmental

assessment, the NRC concludes that the

proposed action will not have a

significant effect on the quality of the

human environment. Accordingly, the

NRC has determined not to prepare an

environmental impact statement for the

proposed action.

For further details with respect to the

proposed action, see the licensee’s letter

dated November 27, 2000. Documents

may be examined, and/or copied for a

fee, at the NRC’s Public Document

Room, located at One White Flint North,

11555 Rockville Pike (first floor),

Rockville, Maryland. Publicly available

records will be accessible electronically

from the ADAMS Public Library

component on the NRC Web site, http:/

/www.nrc.gov (the Public Electronic

Reading Room).

Dated at Rockville, Maryland, this 30th day

of May 2001.

For the Nuclear Regulatory Commission.

Brendan T. Moroney,

Project Manager, Section 2, Project

Directorate II Division of Licensing Project

Management Office of Nuclear Reactor

Regulation

[FR Doc. 01–14093 Filed 6–4–01; 8:45 am]

BILLING CODE 7590–01–P

NUCLEAR REGULATORY

COMMISSION

Sunshine Act Meeting

AGENCY HOLDING THE MEETING: Nuclear

Regulatory Commission.

DATES: Weeks of June 4, 11, 18, 25, July

2, 9, 2001.

PLACE: Commissioners’ Conference

Room, 11555 Rockville Pike, Rockville,

Maryland.

STATUS: Public and Closed.

MATTERS TO BE CONSIDERED: 

Week of June 4, 2001

Tuesday, June 5, 2001

9:25 a.m.—Affirmation Session (Public

Meeting) (if needed)

2:00 p.m.—Discussion of Management

Issues (Closed-Ex. 2)

Wednesday, June 6, 2001

10:30 a.m.—All Employees Meeting

(Public Meeting)

1:30 p.m.—All Employees Meeting

(Public Meeting)

Week of June 11, 2001—Tentative

Thursday, June 14, 2001

9:55 a.m.—Affirmation Session (Public

Meeting) (If needed)

10:00 a.m.—Meeting with Nuclear

Waste Technical Review Board

(Public Meeting)

1:30 p.m.—Briefing on License Renewal

Program (Public Meeting) (Contact:

David Solorio, 301–415–1973)

Week of June 18, 2001—Tentative

There are no meetings scheduled for

the Week of June 18, 2001.

Week of June 25, 2001—Tentative

Wednesday, June 27, 2001

9:25 a.m.—Affirmation Session (Public

Meeting) (If needed)

Week of July 2, 2001—Tentative

There are no meetings scheduled for

the Week of July 2, 2001.

Week of July 9, 2001—Tentative

Monday, July 9, 2001

1:25 p.m.—Affirmative Session (Public

Meeting) (If needed)

*The schedule for Commission meetings is

subject to change on short notice. To verify

the status of meetings call (recording)—(301)

415–1292. Contact person for more

information: David Louis Gamberoni, (301)

415–1651.

The NRC Commission Meeting

Schedule can be found on the Internet

at: http://www.nrc.gov/SECY/smj/

schedule.htm

This notice is distributed by mail to

several hundred subscribers; if you no

longer wish to receive it, or would like

to be added to the distribution, please

contact the Office of the Secretary,

Washington, D.C. 20555 (301–415–

1969). In addition, distribution of this

meeting notice over the Internet system

is available. If you are interested in

receiving this Commission meeting

schedule electronically, please send an

electronic message to dkw@nrc.gov.

Dated: May 31, 2001.

David Louis Gamberoni,

Technical Coordinator, Office of the

Secretary.

[FR Doc. 01–14257 Filed 6–1–01; 2:03 pm]

BILLING CODE 7590–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 35–27409]

Filings Under the Public Utility Holding

Company Act of 1935, as Amended

(‘‘Act’’)

May 29, 2001.

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

June 22, 2001, to the Secretary,

Securities and Exchange Commission,

Washington, DC 20549–0609, and serve

a copy on the relevant applicant(s) and/

or declaration(s) at the address(es)

specified below. Proof of service (by

30238 Federal Register / Vol. 66, No. 108 / Tuesday, June 5, 2001 / Notices

1M&N Management is 12.5% owned by NSP

Management and the remainder is owned by

nonaffiliates. M&N Management is also the general

partner of and owns a 1.25% interest in Maritimes

and Northeast Pipeline Limited Partnership (‘‘M&N

Limited Partnership’’). M&N Management operates

and manages the Canadian portion of the Maritimes

and Northeast Pipeline, a natural gas pipeline with

its origin in Nova Scotia and its terminus near

Boston.

2M&N Limited Partnership is 12.375% owned by

NSP Pipeline and 1.25% owned by M&N

Management. Nonaffiliates own the remainder.

M&N Limited Partnership owns the Canadian

portion of the Maritimes and Northeast Pipeline.

3NSP US Holdings wholly owns a financing

subsidiary, NSP Investments Inc., which was

established to acquire the interest in M&N L.L.C.

M&N L.L.C is 12.5% owned by Scotia Power U.S.

Ltd. and the remainder is owned by nonaffiliates.

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 June 22, 2001, the

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

filed or as amended, may be granted

and/or permitted to become effective.

Emera Incorporated, et al. (70–9787)

Emera Incorporated (‘‘Emera’’), a

holding company formed under the

laws of the Province of Nova Scotia

Canada; Nova Scotia Power Inc.

(‘‘NSPI’’), Emera’s wholly owned

electric utility subsidiary company, both

located at P.O. Box 910, Halifax, Nova

Scotia, Canada B3J2W5; Bangor HydroElectric Company (‘‘BHE’’), a Maine

electric public utility company and a

holding company currently exempt by

order under section 3(a)(1) of the Act;

and Bangor Var Co., Inc. (‘‘Bangor Var’’),

a wholly owned subsidiary of BHE, both

located at 33 State Street, P.O. Box 1599,

Bangor, Maine 04402–0932

(‘‘Applicants’’) have filed an

application-declaration (‘‘Application’’)

under sections 2(a)(7), 2(a)(8), 3(a)(1), 6,

7, 9, 10, 11, 12, 13(b), 32, and 33 and

rules 45, 52, 53, 54, and 80–92 under

the Act.

I. Summary of Proposal

Emera proposes to acquire the

outstanding common stock of BHE and

its public utility subsidiary companies

(‘‘Merger’’). In connection with the

proposed Merger, Emera has undertaken

that NSPI will qualify for an exemption

as a foreign utility company (‘‘FUCO’’)

within the meaning of section 33 of the

Act. Emera will register as a holding

company under the Act after completion

of the Merger as will the to-be formed

intermediate holding companies US

HoldCo and Acquisition Co. No.1 (‘‘Acq.

Co 1’’ (collectively, ‘‘Intermediate

HCs’’). BHE and Bangor Var request an

exemption from registration under

section 3(a)(1). In addition, Applicants

request authority for financing, creation

of a service company, associate

company transactions, and other

intrasystem authorizations. For

purposes of identifying what entities in

this application are requesting

authority, the term ‘‘Subsidiaries’’

includes all companies of which Emera

holds 10% or more of the voting

securities, but specifically excludes

NSPI, and the term ‘‘Nonutility

Subsidiaries’’ refers to all Subsidiaries

other than BHE, MEPCO, Chester SVC

Partnership (‘‘Chester SVC’’ and Bangor

Var Emera, the Subsidiaries, and NSPI

are referred to as the Emera system

(‘‘Emera System’’).

II. The Applicants

A. Emera

Emera is a corporation that was

formed under the laws of the Province

of Nova Scotia, Canada in 1998. Emera’s

common stock is listed and traded on

the Toronto Exchange (‘‘TSE’’). Emera is

subject to TSE’s rules and regulations

and files public disclosures in SEDAR,

TSE’s version of the Commission’s

EDGAR system. The securities

commissions of each of the provinces of

Canada regulate securities issuances by

Emera.

Emera is the parent of NSPI, a

Canadian electric utility company that

owns and operates a vertically

integrated electric utility system in

Nova Scotia. NSPI serves 440,000

customers in Nova Scotia with 2, 183

MW of generating capacity,

approximately 5,200 km of transmission

lines, 24,000 km of distribution lines,

associated substations, and other

facilities. NSPI has no retail gas

distribution facilities. NSPI’s electric

generation, transmission and

distribution facilities are located

exclusively within Nova Scotia.

NSPI is subject to regulation by the

Nova Scotia Utility and Review Board

(‘‘UARB’’). The UARB has supervisory

powers over NSPI’s operations and

expenditures. The UARB also regulates

NSPI’s electricity rates and capital

structure.

NSPI’s transmission assets are used

primarily to transmit power within

Nova Scotia and, on a limited basis, to

transmit power for sale to customers in

New Brunswick and beyond. In 2000,

NSPI generated 11,432 GWh of

electricity and sold 10,656 GWh of

electricity. Of the amount sold, 10,475

GWh was consumed in the province of

Nova Scotia and 181 GWh was exported

using the international lines of New

Brunswick Power Corporation (‘‘NB

Power’’). NB Power’s principal

interconnection with the U.S. is with

the transmission facilities of Maine

Electric Power Company, Inc.

(‘‘MEPCO’’), in which BHE, then to be

acquired domestic utility, has a

minority interest of 14.2%. Currently,

NSPI is not authorized to transmit

power and energy within the U.S., and

all purchasers of energy from NSPI

purchase the energy within Canada for

export by the purchaser across the

international border for transmission via

ISO-New England facilities.

Emera requests that the Commission

find that all of Emera’s nonutility

subsidiaries, directly or indirectly held,

are retainable interests under section

11(b)(1) and include the following: NS

Power Services Ltd. (‘‘NS Power’’),

which is inactive, but provided energy

services, and owns 50% of NSP Trigen

Inc. that is also inactive; Enercom Inc.

(‘‘Enercom’’), which is a holding

company that wholly owns Emera Fuels

Inc. that is engaged in the supply of

furnace and fuel oil, lubricants, diesel,

and gasoline products; Stellarton Basin

Coal Gas Inc. (‘‘Stellarton’’), which

participates in a joint venture to explore

and develop methane gas reserves in

Nova Scotia; Strait Energy Inc. (‘‘Strait

Energy’’), which sells steam energy in

Nova Scotia; 510845 N.B. Inc. (‘‘510845

NB’’), which engages in the supply and

maintenance of electric transformers

and wholly owns Cablecom Ltd. that

wholly owns Fibretek Inc. (both are

engaged in the design, engineering,

project management, construction,

structured cabling, maintenance and

installation of fiber optic and wireless

communications applications); 1447585

Ontario Ltd. (‘‘1447585’’), which was

formed for the merger, will not be used,

and is currently inactive; 3054167 Nova

Scotia Ltd. (‘‘3054167’’), which holds

the Sable Offshore Energy Project; NSP

Pipeline Management Ltd. (‘‘NSP

Management’’), which owns a 12.5%

interest in Maritimes and Northeast

Pipeline Management Ltd (‘‘M&N

Management)’’1 NSP Pipeline Inc.

(‘‘NSP Pipeline’’), which owns a

12.375% interest in M&N Limited

Partnership;2 and NSP US Holdings Inc.

(‘‘NSP US Holdings’’),3 which indirectly

owns a 12.5% interest in Maritimes and

Northeast Pipeline L.L.C. (‘‘M&N

L.L.C.’’), which owns the U.S. portion of

the Maritimes and Northeast Pipeline

through these holding companies:

Scotia Holdings Inc.; Nova Power

Holdings Inc., and Scotia Power U.S.

Ltd. Emera wholly owns these direct

Nonutility Subsidiaries: NS Power,

Enercom, Stellarton, Strait Energy,

Federal Register / Vol. 66, No. 108 / Tuesday, June 5, 2001 / Notices 30239

4The closing price of BHE’s common stock on

June 29, 2000, the day prior to the Merger

announcement, was $15.13 per share.

510845 NB, 1447585, 3054167, NSP

Management, NSP Pipeline, and NSP

US Holdings.

On February 6, 2001, Emera offered to

purchase 8.4% of the Sable Offshore

Energy Project (‘‘SOEP’’) infrastructure

assets for approximately $60.6 million.

The offer is subject to certain rights of

first refusal, and other approvals. The

SOEP infrastructure assets comprise a

gas processing plant at Goldboro, Nova

Scotia; a natural gas liquids

fractionation plant at Point Tupper,

Nova Scotia; a natural gas liquids line

connecting the Goldboro and Point

Tupper operations; and offshore

production platforms and sub-sea

gathering pipelines. Applicants request

Commission authorization to acquire

the SOEP assets, if they have not been

acquired prior to Emera’s registrtion

under the Act, and to retain the SOEP

assets if they have already been

acquired when Emera registers.

For the twelve months ending

December 31, 2000, Emera had revenues

of approximately $604.4 million and

NSPI had operating revenues of

approximately $548.2 million. As of

December 31, 2000, Emera and NSPI

had assets approximately $1,989.0

million and $1,913.3 million,

respectively.

B. BHE

BHE is a public utility and holding

company currently exempt by order

dated October 25, 1999 (HCAR No.

27094) under section 3(a)(1) of the Act.

BHE provides the transmission and

distribution system for the delivery of

electricity to approximately 123,000

Maine customers. The Maine Public

Utility Commission (‘‘MPUC’’ regulates

BHE. Under Maine’s electric

restructuring laws, BHE exited the

power supply aspect of traditional

utility function as of March 1, 2000.

BHE holds a 14.2% equity interest in

MEPCO, a Maine utility that owns and

operates electric transmission facilities

from Wiscasset, Maine to the MaineNew Brunswick border. MEPCO is

owned jointly by Central Maine Power

Company (‘‘CMP’’) (78.3%), BHE (14.2)

and Maine Public Service Company

(7.5%). In addition, BHE owns a 50%

general partnership interest in Chester

SVC through BHE’s wholly-owned

subsidiary Bangor Var. Chester SVC is a

single-purpose financing entity formed

to own a static var compensator,

electrical equipment that supports the

New England Power Pool (NEPOOL)/

Hydro Quebec Phase II transmission

line.

BHE requests that the Commission

find that all of BHE’s nonutility

subsidiaries, directly or indirectly held,

are retainable interests under section

11(b)(1) and include the following:

Bangor Energy Resale, Inc. (‘‘BE Energy

Resale’’), which permits BHE to use a

power sales agreement as collateral for

a bank loan; CareTaker, Inc. (‘‘Care

Taker’’), which provides security alarm

services; East Branch Improvement

Company (‘‘EBIC’’), which BHE owns

60% of the common stock and holds the

inactive subsidiaries, Godfrey’s Falls

Dam Company and The Sawtelle Brook

Dam & Improvement Company; The

Sebois Dam Company (‘‘Sebois’’), which

is an inactive subsidiary; The Pleasant

River Gulf Improvement Company

(‘‘Pleasant River’’), which is an inactive

subsidiary; Bangor Fiber Company, Inc.

(‘‘Bangor Fiber’’), which owns and

leases fiber optic communications cable;

and Bangor Line Company (‘‘Bangor

Line’’), which constructs and maintains

transmission and distribution lines and

provides engineering services. BHE

wholly owns BE Energy Resale, Care

Taker, Sebois, Pleasant River, Bangor

Fiber, and Bangor Line.

BHE also holds 7% of the outstanding

common stock of Maine Yankee Atomic

Power Company (‘‘Maine Yankee’’), a

company that owns and, prior to its

permanent closure in 1997, operated an

880 MW nuclear generating plant in

Wiscasset, Maine. Maine Yankee is

being decommissioned.

BHE is obligated to negotiate in good

faith to acquire a 50% interest in a joint

venture to develop a second 345 kV

transmission line to New Brunswick,

Canada, under a Memorandum of

Understanding with Penobscot Hydro,

LLC. The transmission line would

connect with BHE’s existing

transmission facilities. BHE’s

investment in the joint venture has not

been determined at this time but could

be approximately $25 million. In

addition, Applicants request that the

Commission reserve jurisdiction over

the acquisition of an interest in a joint

venture until the record is complete.

For the twelve months ending

December 31, 2000, BHE had $212

million of utility operating revenues. As

of December 31, 2000, BHE has

approximately $532 million in utility

assets.

III. The Proposed Merger and Financing

the Merger

A. The Proposed Merger

Under the terms of the merger

agreement entered into on June 29, 2000

(‘‘Merger Agreement’’ ), Merger Sub, a

to-be-formed Emera subsidiary

incorporated in the U.S., will merge

with and into BHE, with BHE surviving

(the ‘‘Surviving Corporation’’). Under

the terms of the Merger Agreement: (1)

Each outstanding share of common

stock of Merger Sub will be converted

into one share of common stock of the

Surviving Corporation; (2) each

outstanding share of preferred stock of

BHE (‘‘BHE Preferred Stock’’) will

remain outstanding as one share of

preferred stock of the Surviving

Corporation; and (3) each outstanding

share of common stock of BHE (‘‘BHE

Common Stock’’) other than Dissenting

Shares (as defined in the Merger

Agreement) or shares owned by BHE as

treasury shares, or by Emera, if any, will

be converted into the right to receive

$26.50 in cash (‘‘Per Share Amount’’),4

the amount may be adjusted in

accordance with the Merger Agreement

(the ‘‘Merger Consideration’’). Holders

of BHE’s warrants outstanding at the

effective time of the Merger will be

entitled to receive, upon exercise of

each warrant, the Merger Consideration

less the exercise price.

The total value of consideration that

BHE shareholders will receive in the

Merger, based on the number of BHE

shares of BHE common stock

outstanding on September 15, 2000

(7,363,424), is approximately $195

million. If the closing of the Merger does

not occur on or prior to June 29, 2001,

then the Per Share Amount shall be

increased by an amount equal to $0.003

for each day after June 29, 2001 up to

and including the day which is one day

prior to the closing of the Merger.

To effect the Merger, Emera will hold

its ownership interest in BHE through

one or more Intermediate HCs. The

Intermediate HC will be wholly owned,

directly or indirectly, by Emera and will

have no public or private institutional

equity or debt holders. The Intermediate

HC will be capitalized with equity and/

or debt, all of which will be held either

by Emera or an Intermediate HC. The

only utility holdings of the Intermediate

HCs will be direct or indirect interests

in BHE and its utility subsidiaries.

Applicants further request that the

Commission authorize Emera to

reorganize the Intermediate HC

structure without seeking prior

Commission approval subject to the

following conditions: (1) The companies

in the intermediate structure would be

wholly owned directly or indirectly by

Emera; (2) the companies in the

intermediate structure would not issue

debt or equity to any company outside

the Emera System and would not

borrow from BHE or its subsidiaries; (3)

the changes will not have a material

30240 Federal Register / Vol. 66, No. 108 / Tuesday, June 5, 2001 / Notices

impact on the financial condition or

operations of BHE or its subsidiaries or

a material adverse effect on Emera; and

(4) the companies in the intermediate

structure would be organized in the

U.S., Canada, or a country in Europe.

Following the Merger, BHE will be

operated as a subsidiary of Emera. BHE

will retain its name and continue to

serve its customers under the terms of

its existing contracts and state and

federal requirements. Emera expects

that the President and CEO of BHE will

be a resident of Maine and a member of

BHE’s board. The Merger Agreement

requires that when the Merger is

consummated the Board of BHE postmerger must have at least nine

members, with at least four carry-over

from the prior BHE Board of Directors.

the merger Agreement provider that

BHE’s corporate headquarters will be

located in Maine for not less than ten

years following the Merger. BHE will

also retain local facilities for customer

service, maintenance and field work

operations.

B. Financing the Merger

Emera expects to use a combination of

its available cash deposits and credit

facility entered into with one or more

banks in the amount of up to $225

million to fund the Merger

consideration. The credit facility will

have a non-revolving term of 364 days

and at the borrower’s option an interest

rate of (1) the greater of (a) the Agent’s

Base Rate Canada, and (b) the Federal

Funds Effective Rate for overnight funds

(as published by the Federal Reserve in

the U.S.) plus 50 basis points per

annum, or (2) the London Interbank

Offered Rate (‘‘LIBOR’’) plus 75 to 90

basis points. Emera expects that this

credit facility will be replaced or

refinanced with longer-term debt, equity

or preferred securities in the future.

Also, Emera intends to use a wholly

owned special purpose financing entity

(‘‘ULC’’) to provide debt and non-voting

preferred financing to Acq. Co. 1 for the

purpose of partially funding the Merger

consideration. Applicant’s request for

financing authorization incorporates the

debt that will be issued to fund and

refinance the Merger.

IV. Post Merger Financing Request

Applicants seek Commission

authorization of the financing activities

of the Emera System for the period

through June 30, 2004 (‘‘Authorization

Period’’). Applicants propose that the

following general terms and conditions

(‘‘Financing Parameters’’) would apply,

where appropriate, to the requested

financing authorizations:

Investment Grade Credit Rating—

Emera commits that all long-term debt

issued by Emera to unaffiliated parties

under the authority requested in the

Application will, when issued, be rated

investment grade by a nationally

recognized statistical rating

organization.

Minimum Capitalization Ratio—

Emera, on a consolidated basis, and

BHE, individually, will maintain

common stock equity as a percentage of

total capitalization of at least 30%.

Effective Cost of Money on

Borrowings—The effective cost of

money on debt financings by Emera

under the authorizations requested in

the Application will not exceed the

competitive market rates available at the

time of issuance to companies with

comparable credit ratings with respect

to debt having similar maturities. The

effective cost of money on BHE’s shortterm debt will not at the time of

issuance exceed 300 basis points over

the comparable term LIBOR.

Maturity of Debt—The maturity of

debt will not exceed 50 years.

Effective Cost of Preferred Stock—The

dividend rate on preferred stock or other

types of preferred or equity-linked

securities will not exceed at the time of

issuance the rate generally obtainable

for preferred securities having the same

or reasonably similar terms and

conditions issued by utility holding

companies of reasonably comparable

credit quality, as determined by

competitive capital markets.

Issuance Expenses—The underwriting

fees, commissions and other similar

remuneration paid in connection with

the non-competitive issue, sale or

distribution of a security pursuant to

this Application would not exceed an

amount or percentage of the principal or

total amount of the security being issued

that would be charged to or paid by

other companies with a similar credit

rating and credit profile in a comparable

arm’s-length credit or financing

transaction with an unaffiliated person.

Emera’s ‘‘aggregate investment’’ as

defined in rule 53(a)(1)(i)—investment

in exempt wholesale generators

(‘‘EWG’’) and FUCOs will not exceed

$3.0 billion.

A. Emera’s External Financing

Emera proposes to issue long-term

equity and debt securities aggregating

not more than $3 billion at any one time

outstanding during the Authorization

Period, which includes the Merger

related financing. Securities could

include, but would not necessarily be

limited to, common stock, preferred

stock, options, warrants, long- and

short-term debt (including commercial

paper), convertible securities,

subordinated debt, bank borrowings and

securities with call or put options.

Emera may also issue guarantees and

enter into interest rate swaps and

hedges.

1. Common Stock. During the

Authorization Period, Emera requests

authorization to issue and sell from time

to time common stock, either: (a)

Through underwritten public offerings;

(b) in private placements; (c) under its

dividend reinvestment, stock-based

management incentive and employee

benefit plans; (d) in exchange for

securities or assets being acquired from

other companies; and (e) in connection

with redemptions of the Series C and

Series D shares. Emera also proposes to

issue and sell common stock or options,

warrants, or other stock purchase rights.

Emera may also buy back shares of

common stock during the Authorization

Period in accordance with rule 42 under

the Act. Common stock and securities

convertible into common stock will not

exceed $2 billion. Common stock sales

will be at rates or prices and under

conditions negotiated or based upon, or

otherwise determined by, competitive

capital markets.

Emera may seek to acquire securities

of companies engaged in energy-related

businesses as described in rule 58 under

the Act (‘‘Rule 58 Companies’’), exempt

telecommunications companies

(‘‘ETCs’’), EWGs and FUCOs. These

acquisitions may involve the exchange

of Emera stock for securities of the

company being acquired. The Emera

common stock to be exchanged may be

purchased on the open market under

rule 42, or may be original issue.

Original issue stock may be registered or

qualified under applicable securities

laws or unregistered and subject to

resale restrictions. Emera does not

intend to engage in any transaction

where original issue stock is not

registered or qualified while a public

offering is being made, other than a

public offering under a compensation,

dividend or stock purchase plan, or a

public offering of debt.

For purposes of calculating

compliance with the $3 billion external

financing limit, Emera’s common stock

would be valued at market value based

upon the closing price on the day before

closing of the sale or based upon

average high and low prices for a period

of 20 days prior to the closing of the

sale.

2. Preferred Stock. Emera may issue

preferred stock from time to time during

the Authorization Period, which will

not to exceed $500 million. Preferred

stock or other types of preferred or

equity-linked securities may be issued

Federal Register / Vol. 66, No. 108 / Tuesday, June 5, 2001 / Notices 30241

in one or more series with such rights,

preferences, and priorities as may be

designated in the instrument creating

the series, as determined by Emera’s

Board of Directors. All such securities

will be redeemed no later than 50 years

after the issuance. The dividend rate on

any series of preferred stock or other

preferred securities will not exceed at

the time of issuance the rate generally

obtainable for preferred securities

having the same or reasonably similar

terms and conditions issued by utility

holding companies of reasonably

comparable credit quality, as

determined by competitive capital

markets. Dividends or distributions on

preferred stock or other preferred

securities will be made periodically and

to the extent funds are legally available

for such purpose, but may be made

subject to terms that allow the issuer to

defer dividend payments for specified

periods. Preferred stock or other

preferred securities may be convertible

or exchangeable into shares of common

stock.

3. Long-Term Debt. Emera proposes to

issue long-term unsecured debt in

accordance with the conditions

described in the overall financing terms

and not to exceed $1.5 billion. Any

long-term debt security will have the

maturity, interest rates or methods of

determining the same, terms of payment

of interest, redemption provisions,

sinking fund terms and other terms and

conditions as Emera may determine at

the time of issuance. Prior to issuing

debt, preferred securities or equity,

Emera will evaluate the relevant

financial implications of the issuance,

including without limit, the cost of

capital, and select the security that

provides the most efficient capital

structure consistent with sound

financial practices and the capital

markets.

4. Short-Term Debt. Emera requests

authorization to issue short-term debt

including, but not limited to,

institutional borrowings, commercial

paper and bid notes; all in accordance

with the conditions described in the

overall financing terms. Short-term debt

will not exceed $1.5 billion. Proceeds of

any short-term debt issuance may be

used to refund pre-Merger short-term

debt and Merger-related debt, and to

provide financing for general corporate

purposes, working capital requirements

and Subsidiary capital expenditures

until long-term financing can be

obtained.

Emera may sell commercial paper,

from time to time, in established

domestic U.S. or European commercial

paper markets. The commercial paper

will be sold to dealers at the discount

rate or the coupon rate per annum

prevailing at the date of issuance for

commercial paper of comparable quality

and maturities sold to commercial paper

dealers generally. It is expected that the

dealers acquiring commercial paper

from Emera will reoffer the paper at a

discount to corporate, institutional and,

with respect to European commercial

paper, individual investors. Institutional

investors are expected to include

commercial banks, insurance

companies, pension funds, investment

trusts, foundations, colleges and

universities and finance companies.

Emera also proposes to establish bank

liens of credit, directly or indirectly

through one or more financing

subsidiaries. Loans under these liens

will have maturities of less than one

year from the date of each borrowing.

Emera may engage in other types of

short-term financing generally available

to borrowers with comparable credit

ratings as it may deem appropriate in

light of its needs and market conditions

at the time of issuance.

5. Hedges and Interest Rate Risk

Management. Emera requests authority

to enter into, perform, purchase and sell

financial instruments intended to

manage the volatility of interest rates,

including but not limited to interest rate

swaps, caps, floors, collars and forward

agreements or any other similar

agreements (‘‘Hedging Instruments’’).

Emera would employ Hedging

Instruments as a means of managing the

risk associated with any of its

outstanding debt issued under the

authority requested in this application

or an applicable exemption by, in effect,

synthetically (a) converting variable rate

debt to fixed rate debt, (b) converting

fixed rate debt to variable rate debt, (c)

limiting the impact of changes in

interest rates resulting from variable rate

debt and (d) providing an option to

enter into interest rate swap transactions

in future periods for planned issuances

of debt securities. Emera, states it will

not engage in ‘‘leveraged’’ or

‘‘speculative’’ transactions. Offexchange Hedging Instruments will be

entered into only with counterparties

whose senior debt ratings are

investment grade (‘‘Approved

Counterparties’’).

In addition, Emera requests

authorization to enter into Hedging

Instruments with respect to anticipated

debt offerings (‘‘Anticipatory Hedges’’),

subject to certain limitations and

restrictions. Anticipatory Hedges will

only be entered into with Approved

Counterparties, and will be used to fix

and/or limit the interest rate risk

associated with any new issuance

through (a) a forward sale of exchangetraded U.S. or Canadian Treasury

futures contracts, U.S. or Canadian

Treasury obligations and/or a forward

swap (‘‘Forward Sale’’), (b) the purchase

of put options on U.S. or Canadian

Treasury obligations (‘‘Put Options

Purchase’’), (c) a Put Options Purchase

in combination with the sale of call

options on U.S. or Canadian Treasury

obligations (‘‘Zero Cost Collar’’), (d)

transactions involving the purchase or

sale, including short sales, of U.S. or

Canadian Treasury obligations, or (e)

some combination of a Forward Sale,

Put Options Purchase, Zero Cost Collar

and/or other derivative or cash

transactions, including, but not limited

to structured notes, caps and collars,

appropriate for the Anticipatory Hedges.

Hedging Instruments may be executed

on-exchange (‘‘On-Exchange Trades’’)

with brokers through the opening of

futures and/or options positions traded

on the Chicago Board of Trade, the

opening of over-the-counter positions

with one or more counterparties (‘‘Off

Exchange Trades’’), or a combination of

On-Exchange Trades and Off-Exchange

Trades. Emera will determine the

optimal structure of each Hedging

Instrument transaction at the time of

execution. No gain or loss on hedging

transaction entered into by Emera or

Emera’s subsidiaries (except BHE and

BHE’s subsidiaries) will be allocated to

BHE or BHE’s subsidiaries, regardless of

the accounting treatment accorded to

the transaction.

To the extent such securities are not

exempt under rule 52(a), BHE requests

authorization to enter into Hedges on

the same terms as applicable to Emera.

6. Guarantees. Emera requests

authorization to enter into guarantees,

obtain letters of credit, enter into

expense agreements or otherwise

provide credit support (‘‘Guarantees’’)

with respect to the obligations of

Emera’s subsidiaries in an aggregate

principal amount not to exceed $500

million outstanding at any one time and

not taking into account obligations

exempt under rule 45. All debt

guaranteed will comply with the

Financing Parameters. Included in this

amount are Guarantees entered into by

Emera that were previously issued in

favor of Emera’s subsidiaries. The limit

on Guarantees is separate from the limit

on Emera’s external financing. Emera

proposes to charge each Subsidiary a fee

for each Guarantee provided on its

behalf that is not greater than the cost,

if any, of obtaining the liquidity

necessary to perform the guarantee.

30242 Federal Register / Vol. 66, No. 108 / Tuesday, June 5, 2001 / Notices

5Applicants note that as a FUCO, NSPI’s

financing would be exempt under section 33 and

because NSPI can offer creditors a direct claim on

its assets rather than the indirect claim that Emera’s

creditors are offered, NSPI generally finances its

capital needs independently of Emera.

6The MPUC exercises jurisdiction over the

securities issued by BHE with maturities of one year

or longer.

B. Subsidiary, Nonutility Subsidiary,

and Intermediate HCs Financing

Emera requests authorization to lend

funds to its Nonutility Subsidiaries at a

mark up to Emera’s cost of funds at any

time during the Authorization Period

without prior Commission

authorization. The authorization request

would not apply to BHE or any of BHE’s

subsidiaries or to NSPI. Applicants state

this is desirable as a risk management

measure and it avoids cross

subsidization of higher risk Subsidiaries

from lower risk subsidiaries. The

Nonutility Subsidiaries that will be

financed in this manner will not pass

any increased costs on to BHE or BHE’s

subsidiaries because they will not sell

goods or services or lend funds to BHE

or BHE’s subsidiaries.

Emera intends to finance BHE’s

capital needs at the lowest practical

cost. BHE will either finance its capital

needs through short, medium, and longterm borrowings authorized by the

MPUC and exempt under rule 52(a) or

through borrowings from Emera,

directly or indirectly, through the

Intermediate HC. BHE may also borrow

funds from NSPI,5 if NSPI has surplus

funds and the interest rate on the loan

would result in a lower cost of

borrowing for BHE. All borrowings by

BHE from an associate company would

be at the lower of Emera’s effective cost

of capital, NSPI’s effective cost of

capital (if NSPI is the lender) or BHE’s

effective cost of capital incurred in a

direct borrowing at that time from

nonassociates for a comparable term

loan. In addition, borrowings by BHE

from an associate company would be

unsecured (i.e., not backed by the

pledge of specific BHE assets as

collateral).

BHE requests Commission

authorization to issue and sell securities

with maturities of less than one year.6

The short-term debt will not exceed an

aggregate amount of $60 million

outstanding at any time during the

Authorization Period. BHE also requests

authorization to guarantee the

obligations of BHE’s subsidiaries in an

aggregate amount not to exceed $30

million. BHE may charge each of BHE’s

subsidiaries a fee for each guarantee

provided on its behalf that is not greater

than the cost, if any, of obtaining the

liquidity necessary to perform the

guarantee.

Each of the Intermediate HC’s

requests authorization to issue and sell

securities to the other Intermediate HC’s

and Emera, and to acquire securities

from their respective Intermediate HC

subsidiaries and BHE. Each of the

Intermediate HCs also seeks authority to

issue guarantees and other forms of

credit support to direct and indirect

Intermediate HCs and BHE. In no case

would the Intermediate HC borrow, or

receive any extension of credit or

indemnity from any of their respective

direct or indirect subsidiary companies.

Each of the Intermediate HCs intends to

function as a financial conduit to

facilitate Emera’s U.S. investments. The

terms and conditions of any

Intermediate HC’s financings will be on

arm’s length basis, as noted for

financings by BHE. The Intermediate

HC’s proposed financings would be

used to finance capital requirements of

BHE and any exempt or subsequently

authorized activity that is acquired in

the future. The Intermediate HC

financing will not be used by the

Intermediate HCs to carry on business or

investment activities within the

Intermediate HCs.

C. Use of Proceeds

The proceeds from the financings

authorized by the Commission under

this Application will be used for general

corporate purposes, including (1)

refinancing the Merger-related debt, (2)

financing, in part, investments by and

capital expenditures of Emera and its

Subsidiaries, (3) funding future

investments in EWGs, FUCOs and Rule

58 Companies, (4) repaying, redeeming,

refunding or purchasing any securities

issued by Emera or any Subsidiary, and

(5) financing the working capital

requirements of Emera and its

Subsidiaries.

Applicants represent that no

financing proceeds will be used to

acquire the equity securities of any

company unless such acquisition has

been approved by the Commission in

this proceeding, in a separate

proceeding, or in accordance with an

available exemption under the Act or

rules, including sections 32 and 33 and

rule 58. The proceeds of financing and

guarantees used to fund investments in

Rule 58 Companies will be subject to

the limitations of rule 58 under the Act.

D. Other Intrasystem Transactions

1. Changes in Capital Stock of wholly

Owned Subsidiaries. The portion of an

individual Subsidiary’s aggregate

financing to be effected through the sale

of stock to Emera or other immediate

parent company during the

Authorization Period pursuant to rule

52 and/or an order issued in this file is

unknown at this time. The proposed

sale of capital securities (i.e., common

stock or preferred stock) may in some

cases exceed the then authorized capital

stock of the Subsidiary. In addition, the

Subsidiary may choose to use capital

stock with no par value. As needed to

accommodate the proposed transactions

and to provide for future issues,

Applicants request authority to change

the terms of any wholly owned

Subsidiary’s authorized capital stock

capitalization by an amount deemed

appropriate by Emera or other

intermediate parent company.

The requested authorization is limited

to Emera’s wholly owned Subsidiaries

and will not affect the aggregate limits

or other conditions noted. A Subsidiary

would be able to change the par value,

or change between par value and no-par

stock, without additional Commission

approval. Any action by BHE or any

other public utility company will be

subject to and will only be taken upon

the receipt of any necessary approvals

by the MPUC or other public utility

commission with jurisdiction over the

transaction. BHE will maintain, during

the Authorization Period, a common

equity capitalization of at least 30%.

2. Payment of Dividends Out of

Capital or Unearned Surplus. To allow

BHE to pay dividends after the Merger,

BHE requests authorization to pay

dividends out of additional paid-incapital and to redeem its common stock

held by its associate company parent in

lieu of the payment of dividends to the

extent permitted by state law, provided

that in each case, BHE maintains the

required minimum 30% common equity

capitalization. In no case will dividends

be paid if BHE’s common stock equity

as a percentage of its total capitalization

is below 30%. Applicants anticipate

that BHE’s cash flow from operations

after the Merger will improve, because

BHE’s future earnings projections

include amortization of ‘‘legacy’’ assets

associated with its restructuring into a

pure ‘‘wires’’ company. Applicants

explain that when BHE collects the

revenue associated with these ‘‘legacy’’

assets, cash flows from operations

improve, generating operating cash in

excess of earnings. Applicants further

state, the legacy revenues produce cash

that is free and available for dividend

payments because it is derived from

BHE’s former role as a provider of

generation. BHE states that because it no

longer is in the generation business, it

does not need to reinvest these revenues

in generation activities to continue to

provide adequate services to customers.

Federal Register / Vol. 66, No. 108 / Tuesday, June 5, 2001 / Notices 30243

7The MPUC, which regulates BHE, has

prescribed a target common equity component not

exceeding 40% of total capitalization.

8Applicants represent that the regulatory agency,

Nova Scotia Utility and Review Board UARB, will

not regulate the conduct of business by Emera

Services.

Applicants predict that without removal

of the cash in the form of a dividend,

BHE’s common equity component of its

capital structure will grow. Therefore,

Applicants request that they merely use

dividends or common stock

redemptions to maintain BHE’s equity

level in the 30% to 40%7 total

capitalization band.

3. Financing Entities. Emera and the

Subsidiaries seek authorization to

organize new corporations, trusts,

partnerships or other entities that will

facilitate financings by issuing income

preferred securities or other securities to

third parties. To the extent not exempt

under rule 52, the financing entities also

request authorization to issue the

securities to third parties. In connection

with this method of financing, Emera

and the Subsidiaries may: (a) Issue

debentures or other evidences of

indebtedness to a financing entity in

return for the proceeds of the financing;

(b) acquire voting interests or equity

securities issued by the financing entity

to establish ownership of the financing

entity (the equity portion of the entity

generally being created through a capital

contribution or the purchase of equity

securities, ranging from one to three

percent of the capitalization of the

financing entity); and (c) guarantee a

financing entity’s obligations in

connection with a financing transaction.

Emera and the Subsidiaries also request

authorization to enter into expense

agreements with financing entities to

pay the expenses of any such entity.

Applicants represent that any amounts

issued by a financing entity to a third

party under this authorization will be

included in a overall external financing

limitation authorized for the immediate

parent of the financing entity; however,

the underlying intra-system mirror debt

and parent guarantee shall not be

included.

4. Tax Allocation Agreement.

Applicant ask the Commission to

approve an agreement among certain

Emera System companies to file a

consolidated tax return (‘‘Tax Allocation

Agreement’’). Applicants state the

Intermediate HCs are seeking to retain

the benefit of tax losses that have been

generated by it in connection with

Merger-related debt only. Applicants

state the Tax Allocation Agreement will

not give rise to the types of problems

(e.g., upstream loans) that the Act was

intended to address.

5. Direct Stock Purchase and

Dividend Reinvestment Plan, Incentive

Compensation Plans and Other

Employee Benefit Plans. Emera

proposes, from time to time during the

Authorization Period to issue and/or

acquire in open market transactions or

by some other method that complies

with applicable law and Commission

interpretations, then in effect, up to 5

million shares of Emera common stock

under Emera’s dividend reinvestment

plan, certain incentive compensation

plans and certain other employee

benefit plans currently existing or that

may be adopted in the future. Emera

currently maintains the flowing stock

based benefit plans for employees: (a)

Emera Senior Management Stock Option

Plan, which currently has 1,706,109

treasury shares reserved; (b) Emera

Common Share Purchase Plan, which

currently has 2,000,000 treasury shares

reserved; and (c) Emera Dividend

Reinvestment Plan. The plans will

remain in effect following

consummation of the Merger.

V. Intra-System Service Arrangements

Emera requests authorization to form

a service company, Emera Services, to

provide a variety of services to the

companies in the Emera System. The

individual system companies will

continue to perform certain functions

independently that are most efficiently

and effectively provided internally by

each company. Emera Services will offer

system-wide coordination and strategy

services, oversight services and other

services where economies can be

captured by centralization of personnel,

equipment, practice and procedures in

one organization. Emera Services will

also ensure adequate oversight and

realize economies of scale by

consolidating certain administrative and

service functions for the Emera System.

Applicants anticipate that the

following services may be offered by

Emera Services to system companies:

Rates and regulatory services; internal

auditing; strategic planning; external

relations; transmission and distribution

system management; legal services and

general legal oversight, as well as

corporate secretarial functions;

marketing; financial services;

information systems and technology;

executive services such as formulating

and executing general plans and

policies, including operations, issuances

of securities, appointment of executive

personnel, budgets and financing plans,

expansion of services, acquisitions and

dispositions of property, and public

relationships; investor relations;

customer services; employee services;

engineering; business support; power

procurement; purchasing; and facilities

management.

In accordance with the services

agreement, services provided by Emera

Services will be directly assigned if

possible or allocated as necessary by

activity, project, program, work order or

other appropriate basis. It is anticipated

that Emera Services will be staffed

primarily by transferring personnel from

Emera and, to a certain extent, with

personnel transferred from NSPI and

BHE. Emera Services’ accounting and

cost allocation methods and procedures

would be structured to comply with the

Commission’s standards for service

companies in a registered holding

company system.8

As compensation for services, the

services agreement will provide for

client companies to pay to Emera

Services the cost of such services,

computed in accordance with the

applicable rules and regulations

(including, but not limited to rules 90

and 91) under the Act and appropriate

accounting standards. Where more than

one company is involved in or has

received benefits from a service

performed, the services agreement will

provide that client companies will pay

their fairly allocated pro rata share in

accordance with the methods set out in

a schedule to the services agreement.

Charges for all services provided by

Emera Services to associate utility

companies, Nonutility Subsidiaries, and

Emera will be on an ‘‘at cost’’ basis as

determined under rules 90 and 91 of the

Act.

Emera proposes that, for a limited

period of time ending on March 31,

2002 (‘‘Transition Period’’), Emera will

continue to provide services and sell

goods to Emera System companies.

Emera will comply with the provisions

of rule 90 with respect to the

performance of services or construction

for associate companies on the basis of

cost and with the provisions of rule 92

with respect to the sale of goods

produced by the seller. Applicants state

the Transition Period will allow the

Emera holding company system to

implement the transition to Emera

Services as the principal provider of

services to the Emera System.

VI. Request for Authority To Reorganize

the Nonutility Subsidiaries

Applicants propose to restructure

Nonutility Subsidiaries. To do this,

Emera requests authorization to acquire,

directly or indirectly, the equity

securities of one or more intermediate

subsidiaries (‘‘Intermediate

30244 Federal Register / Vol. 66, No. 108 / Tuesday, June 5, 2001 / Notices

9Emera conducts various businesses in Canada

that would qualify as ‘‘energy-related’’ or ‘‘gasrelated’’ companies under rule 58, but for the fact

that the revenues from these companies are from

Canada. Emera requests that investment in these

companies be excluded from the investment limit

under rule 58 of the Act.

Subsidiaries’’) organized exclusively for

the purpose of acquiring, financing, and

holding the securities of one or more

existing or future Nonutility

Subsidiaries. The Intermediate

Subsidiaries would be organized for the

purpose of acquiring, holding and/or

financing the acquisition of the

securities of or other interest in one or

more EWGs, FUCOs, and Rule 58

Companies. Intermediate Subsidiaries

may also provide management,

administrative, project development,

and operating services to Nonutility

Subsidiaries.

Intermediate Subsidiaries may engage

in development activities

(‘‘Development Activities’’) and

administrative activities

(‘‘Administrative Activities’’) relating to

the permitted businesses of the

Nonutility Subsidiaries. Development

Activities will be limited to due

diligence and design review; market

studies; preliminary engineering; site

inspection; preparation of bid proposals,

including, in connection with, posting

of bid bonds; application for required

permits and/or regulatory approvals;

acquisition of site options and options

on other necessary rights; negotiation

and execution of contractual

commitments with owners of existing

facilities, equipment vendors,

construction firms, power purchasers,

thermal ‘‘hosts,’’ fuel suppliers and

other project contractors; negotiation of

financing commitments with lenders

and other third-party investors; and

such other preliminary activities as may

be required in connection with the

purchase, acquisition, financing or

construction of facilities or the

acquisition of securities of or interests

in new businesses. Administrative

Activities will include ongoing

personnel, accounting, engineering,

legal, financial, and other support

activities necessary to manage Emera’s

investments in Nonutility Subsidiaries.

Applicants state restructuring could

also involve the acquisition of one or

more new special-purpose subsidiaries

(‘‘SPSs’’). The SPS would acquire and

hold direct or indirect interests in any

or all of the Emera System’s existing or

future authorized nonutility businesses.

Applicants may transfer existing

Subsidiaries, or portions of existing

businesses, among the Emera associates

and/or the reincorporation of existing

Subsidiaries in a different jurisdiction.

Emera does not seek authorization to

acquire an interest in any nonassociate

company as part of the authority

requested and states that the

reorganization will not result in the

entry by the Emera System into a new,

unauthorized line of business.

VII. Request To Invest in Rule 58

Companies After the Merger

Applicants state Emera’s post-merger

investment in Canadian energy-related

and gas related companies will be

aggregated with its post-merger

investment in Rule 58 Companies for

purposes of calculating the 15% limit of

consolidated capitalization limit under

rule 58(a)(1)(ii).9

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–14025 Filed 6–4–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–24995; File No. 812–12226]

Sun Life Assurance Company of

Canada (U.S.), et al.

May 30, 2001.

AGENCY: Securities and Exchange

Commission (the ‘‘Commission’’).

ACTION: Notice of application for an

order pursuant to section 11(a) of the

Investment Company Act of 1940 (the

‘‘Act’’) approving the terms of an offer

of exchange and for an order pursuant

to section 6(c) of the Act granting

exemptions from sections 2(a)(32), 22(c)

and 27(i)(2)(A) of the Act and Rule 22c–

1 thereunder to permit the recapture of

certain bonus credits.

Applicants: Sun Life Assurance

Company of Canada (U.S.)(‘‘Sun Life’’),

Sun Life Assurance Company of Canada

(U.S.) Variable Account F (‘‘Variable

Account’’), and Clarendon Insurance

Agency, Inc. (‘‘Clarendon’’).

Summary of Application: Applicants

seek an order approving the terms of a

proposed offer of exchange of MFS

Regatta Choice, a new variable annuity

contract issued by Sun Life and made

available through the Variable Account

(the ‘‘New Contract’’), for MFS Regatta

Gold, an outstanding annuity contract

issued by Sun Life and made available

through the Variable Account (the ‘‘Old

Contract,’’ collectively with the New

Contract, the ‘‘Contracts’’). Applicants

also seek an order to permit the

recapture, from any New Contract

returned to Sun Life during the free look

period, of a 2% bonus payment credited

on amounts transferred to the New

Contract under the proposed offer of

exchange.

Filing Date: The application was filed

on August 16, 2000, and Amendment

No. 1 was filed on May 30, 2001.

Hearing or Notification of Hearing: An

order granting the application will be

issued unless the Commission orders a

hearing. Interested persons may request

a hearing by writing to the Secretary of

the Commission and serving Applicants

with a copy of the request, personally or

by mail. Hearing requests must be

received by the Commission by 5:30

p.m. on June 25, 2001, and should be

accompanied by proof of service on

Applicants in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the requester’s interest, the reason for

the request, and the issues contested.

Persons may request notification of a

hearing by writing to the Secretary of

the Commission.

ADDRESSES: Secretary, Securities and

Exchange Commission, 450 Fifth Street,

NW., Washington, DC 20549–0609.

Applicants: Sun Life Assurance

Company of Canada (U.S.), One Copley

Place, Boston, Massachusetts 02116.

FOR FURTHER INFORMATION CONTACT:

Kenneth C. Fang, Attorney, or Keith E.

Carpenter, Branch Chief, at (202) 942–

0670, Office of Insurance Products,

Division of Investment Management.

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application is

available for a fee from the

Commission’s Public Reference Branch,

450 Fifth Street, NW., Washington, DC

20549–0102 (tel. (202) 942–8090).

Applicants’ Representations

Applicants

1. Sun Life is a stock life insurance

company incorporated under the laws of

Delaware on January 12, 1970. Sun Life

does business in 49 states of the United

States, the District of Columbia and

Puerto Rico. Sun Life is an indirect

wholly-owned subsidiary of Sun Life

Assurance Company of Canada (‘‘Sun

Life (Canada)’’). Sun Life (Canada)

completed its demutualization on

March 22, 2000. As a result of the

demutualization, a new holding

company, Sun Life Financial Services of

Canada Inc. (‘‘Sun Life Financial’’), is

now the ultimate parent of Sun Life

(Canada) and Sun Life. Sun Life

Financial, a corporation organized in

Canada, is a reporting company under

the Securities Exchange Act of 1934

with common shares listed on the