[Federal Register Volume 60, Number 241 (Friday, December 15, 1995)]
[Notices]
[Pages 64459-64461]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30528]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26427]


Filings Under the Public Utility Holding Company Act of 1935, as 
Amended (``Act'')

December 8, 1995.
    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 thereunder. 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 thereto 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 January 2, 1996, to the Secretary, Securities and Exchange 
Commission, Washington, DC 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 
shall 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 said date, the application(s) and/or declaration(s), as 
filed or as amended, may be granted and/or permitted to become 
effective.

The Southern Company (70-8733)

    The Southern Company (``Southern''), 270 Peachtree Street, N.W., 
Atlanta, Georgia 30346, a registered holding company, and its 
subsidiaries, Mobile Energy Services Holdings, Inc. (``Mobile 
Energy''), Southern Electric International, Inc. (``Southern 
Electric''), SEI Holdings, Inc. (``Holdings''), Southern Electric 
Wholesale Generators, Inc. (``Domestic Holdings''), and SEI 

[[Page 64460]]
Europe, Inc. (``Foreign Holdings''), each of 900 Ashwood Parkway, 
Atlanta, Georgia 30338, have filed an application-declaration under 
sections 6(a), 7, 9(a), 10, 12(b), 12(f), 13, 32 and 33 of the Act and 
rules 43, 45, 53, and 54 thereunder.
Consolidation of Ownership of Exempt Projects
    Southern proposes to consolidate all of its direct and indirect 
ownership interests in all exempt wholesale generators (``EWGs'') and 
foreign utility companies (``FUCOs'', and, together with EWGs, ``Exempt 
Projects'') (each as defined in the Act), various intermediate 
subsidiaries through which it holds investments in EWGs and FUCOs 
(``Project Parents''), and activities and functions related to these 
projects, under one of its subsidiaries, Holdings.\1\

    \1\ The authorization of the transactions proposed in this file 
would supercede Southern's current authorization to organize Project 
Parents to hold investments in EWGs and FUCOs. Holding Co. Act 
Release Nos. 26096 (Aug. 3, 1994) and 26338 (July 25, 1995) 
(``Orders'').
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    Pursuant to the Orders and preliminary to the proposed 
reorganization, Southern organized and contributed to Holdings all of 
the outstanding stock of Domestic Holdings, an EWG that holds 
Southern's ownership interests in other domestic EWGs, and of Foreign 
Holdings, a Project Parent that holds Southern's interest in a FUCO in 
England. Southern will then contribute to Foreign Holdings its 
interests in other existing FUCOs, foreign EWGs, and Project Parents.
    In this proceeding, Southern proposes to take the following 
additional steps to effect the proposed reorganization: (1) Southern 
will contribute to Holdings the common stock of Southern Electric \2\, 
and Southern Electric will become a subsidiary of Holdings; (2) 
Southern Electric will sell to Foreign Holdings or its subsidiaries the 
securities of Southern Electric International-Asia, Inc., and Southern 
Electric international GmbH, two Southern electric subsidiaries that 
conduct preliminary project development activities in foreign 
countries\3\; (3) Southern Electric will transfer to Foreign Holdings 
all of the common stock of SEI Operadora de Argentina S.A., a FUCO\4\; 
and (4) Mobile Energy will create a new class of nonvoting preferred 
stock and distribute all outstanding shares of such stock to Southern; 
Southern will transfer such stock to Holdings, which, in turn, will 
transfer such stock to Domestic Holdings, as a capital contribution.\5\

    \2\ Southern Electric engages in preliminary project development 
activities and the sale of operating, construction, project 
management, administrative and other services to associates and 
nonassociates, pursuant to Holding Co. Act Release No. 26212 (Dec. 
30, 1994) (``December 1994 Order''). After the proposed 
reorganization, Southern Electric would continue to engage in these 
activities, and any additional investment in Southern Electric would 
be made indirectly through Holdings.
    \3\ The sales price for the shares will equal Southern 
Electric's investment in the two companies, which currently is less 
than $50,000 in the aggregate.
    \4\ Southern Electric will distribute the stock of this 
subsidiary to Holdings, and Holdings will concurrently transfer the 
stock to Foreign Holdings
    \5\ The purpose of these transactions is to direct some or all 
of the cash flow and income from Mobile Energy to support the 
operations and future financing by Holdings and Domestic Holdings. 
Mobile Energy holds a 99% interest in Mobile Energy Services 
Company, L.L.C., an Alabama limited liability company that owns a 
cogeneration complex in Mobile.
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    After the reorganization, Southern expects that future investments 
in power projects will be made through Holdings and its subsidiaries, 
and that Holdings and its subsidiaries will conduct all other related 
project activities. Holdings will use available funds, including the 
proceeds of financing by Southern and third-party borrowings that are 
guaranteed by Southern\6\, together with internally generated funds and 
proceeds of securities sold to third parties, to make these investments 
and to finance the costs of other authorized and permitted activities.

    \6\ The applicants state that Southern will make additional 
investments in Holdings from time to time, to finance the business 
of Holdings and its subsidiaries, pursuant to the exemptions in 
rules 52 and 45(b)(4), provided that (a) any additional investment 
in Holdings to enable Holdings to acquire directly or indirectly an 
interest in an Exempt Project will be subject to the limitations of 
rule 53 and any other applicable rules, and (b) the aggregate amount 
of financing provided to Holdings by Southern that will be invested 
directly or indirectly in energy-related companies will not exceed 
$300 million or such greater amount as may be permitted under a rule 
subsequently adopted by the Commission.
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Acquisition of Energy-Related Companies
    Holdings also requests authority to acquire, directly or indirectly 
through subsidiaries, in one or more transactions from time to time 
through December 31, 2000, the securities of or other interests in one 
or more companies that derive or will derive substantially all of their 
revenues from the ownership and/or operation of one or more of the 
following categories of energy-related businesses: (a) ``Qualifying 
facilities'', as defined under the Public Utility Regulatory Policies 
Act of 1978, as amended, and ownership and operation of incidental 
facilities; (b) production, conversion and distribution of thermal 
energy products; (c) brokering and marketing of energy commodities; and 
(d) other energy-related businesses to the extent that acquisition of 
interests in such businesses are exempt under a rule subsequently 
adopted by the Commission.\7\

    \7\ The Commission has proposed a rule that would exempt from 
the requirement of prior Commission approval under the Act 
acquisitions of securities of companies that derive all or 
substantially all of their revenues from specified activities 
closely related to the core utility business of a registered holding 
company system. See Holding Co. Act Release No. 26313 (June 20, 
1995), 60 FR 33642 (June 28, 1995).
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Formation of New Subsidiaries
    Holdings, Domestic Holdings and Foreign Holdings propose to 
organize one or more intermediate subsidiaries to make investments in 
Exempt Projects, other power projects, and energy-related companies and 
to provide project development and management services to projects and 
companies held by them (``Intermediate Subsidiaries''), and to organize 
one or more special purpose subsidiaries to engage in any of the 
activities in which Southern Electric is currently authorized to engage 
(``Special Purpose Subsidiaries'').\8\

    \8\ The activities of such special purpose subsidiaries would be 
subject to all terms, conditions and limitations in the December 
1994 Order that are applicable to Southern Electric.
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Financial Guaranties
    Southern has existing authorization with respect to guaranties of 
subsidiary obligations.\9\ Southern now requests an order that would 
supersede this guaranty authorization. Southern proposes to guaranty 
the securities of Holdings or any of its direct or indirect 
subsidiaries, from time to time through December 31, 2000, in an 
aggregate principal amount at any one time outstanding of not more than 
$1.2 billion, provided that the aggregate outstanding principal amount 
of such guaranties, when added to Southern's ``aggregate investment'', 
as defined in rule 53(a), in all Exempt Projects, shall not exceed 50% 
of Southern's ``consolidated retained earnings,'' as so defined.\10\

    \9\ Holding Co. Act Release No. 26349 (Aug. 3, 1995), 
authorizing guaranties of the securities of Exempt Projects from 
time to time through December 31, 1999, in an aggregate amount at 
any one time outstanding not to exceed $1.2 billion, subject to 
certain conditions and limitations.
    \10\ In a separate proceeding in File No. 70-8725, Southern has 
requested authorization to increase this limit to 100% of its 
``consolidated retained earnings''. The issuance of an order in that 
filing would amend Southern's guaranty authority as in effect at the 
date of issuance of such order.
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    Holdings, Domestic Holdings, Foreign Holdings and any Intermediate 
Subsidiary also propose to guaranty the securities issued by any of 
their direct or indirect subsidiaries (provided that the issue and sale 
of such securities are

[[Page 64461]]

exempt from the requirement of prior Commission approval under section 
6(a) of the Act), from time to time through December 31, 2000, in an 
aggregate amount not to exceed $1.2 billion at any one time 
outstanding.
    Guaranties may take the form of direct guaranties, standby equity 
funding commitments, obligations under capital maintenance agreements 
or reimbursement agreements in respect of bank letters of credit, or 
other similar financial instruments or undertakings.

Pledge of Securities

    Southern proposes to pledge the shares of Holdings, and Holdings, 
Domestic Holdings, Foreign Holdings and any Intermediate Subsidiary 
propose to pledge the shares of their respective subsidiaries, as 
security in connection with the sale of debt securities by Holdings and 
such subsidiaries.

Performance Guaranties

    Southern is currently authorized by the December 1994 Order to 
guaranty performance by or act as indemnitor or surety with respect to 
contractual obligations of Southern Electric, any subsidiary of 
Southern Electric or any project entity in which Southern directly or 
indirectly holds an interest, in an aggregate amount not to exceed $800 
million at any one time outstanding through December 31, 2003 \11\. 
Southern requests that this authorization be modified so that it may 
provide such performance guaranties on behalf of Holdings and any 
direct or indirect subsidiary of Holdings, including Southern Electric, 
any Exempt Project, other power project, energy-related company or 
Intermediate Subsidiary.

    \11\ The aggregate amount of such guarantees and indemnification 
of sureties is reduced by similar undertakings made or incurred by 
Southern in connection with activities of certain other 
subsidiaries.
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    Holdings, Domestic Holdings, Foreign Holdings and any Intermediate 
Subsidiary also propose to provide performance guaranties on behalf of 
any of their direct and indirect subsidiaries. The amount of these 
guaranties will be included in calculating the above maximum amount of 
performance guaranties provided by Southern only if they are supported 
by an agreement or undertaking of Southern.

Services and Goods

    The applicants propose that Special Purpose Subsidiaries of 
Holdings, Domestic Holdings or Foreign Holdings may render services or 
sell goods to associate companies. Such services will be rendered and 
goods will be sold at cost, in compliance with the Act and the rules 
thereunder, unless the Special Purpose Subsidiary complies with the 
conditions specified in the December 1994 Order with respect to 
Southern Electric, in which case services or goods may be sold at 
market prices.

Reporting

    The applicants propose that a single consolidated quarterly report 
be filed by Southern and Holdings pursuant to rule 24 with respect to 
all activities of Holdings and its subsidiaries authorized in this 
file. This report would replace the combined report currently being 
filed pursuant to the December 1994 Order and the Orders with respect 
to the activities of Southern Electric and the Project Parents.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-30528 Filed 12-14-95; 8:45 am]
BILLING CODE 8010-01-M