Evening star., 1939-08-20
Work on Reshapinq
Wi||kie Utility Setup
Reported Under Way
. Inteerotion to Conform
: To Death Sentence and
Refinineine Expected
~ the Associated Press.

~ the Associated Press.
NEW YORK. Aug. 19.-Utility
sources said today that settlement
of the long controversy between
Commonwealth e. Southern Corp
and the Tennessee Valley Authority
had paved the way for broad re-
shaping of the corporate structure
and refinancing of the $4,000, ,000,-
900 utility system, worlds second
largest.
! Experts for the company, it was
reported, have already undertaken
studies regarding integration under
the death sentence" clause of the
Holding Company Act, refinancing
of more than $300,00O,00O of bonds
and preferred stocks of Southern
subsidiaries, and possible merger of
all Southern subsidiary companies
into one or two.
: Action will probably be taken by
Wendell L. Willkie, president of c..
& S.. sometime in October. after he
completes a deferred vacation.
> Prime question in the integration
study is whether the Securities and
Exchange Commission will permit c.
& S. to continue to own two geo.
graphically separated distribution
systems-one centering about Con-
:cumers Power Co. in Michigan, the
other based on Alabama Power Co.
May Retain Northern System.
If C. & s is permitted to continue
to own only one geographically in
tegrated system, it is generally as
sumed in utility finance circles that
Mr.. Willkie will elect to retain the
northern system, adding to it, if pos
sible, Midland United. an insult
relic now in reorganization, and ad-
jacent odds and ends of other sys-
TENS, which would give Mr.. Willkie
a dominant position in the richest
agricultural and industrial centers
of the Middle West. Interested
bankers are reported comforting with
Mr.. Willkie regarding Midland
United.
1t is known. however. that Mr..
Willkie would be extremely reluctant
to yield up the Southern system,
which has witnessed striking growth
In recent years.
The S. E. c. has scheduled public
hearings for late September in what
utility experts generally assume to
be the test case covering the point
1nvolved-whether top holding
company can own more than one
geographically integrated distribu-
ton system.
This is the formal integration plan
Of American Gas e. Electric Co.,
filed last November 30. A. G. g. E.
proposed continuance of its three
existing systems-the central group
In Indiana, Ohio. West Virginia, Vir-
ginia and marginal areas Gts main
system), the Southen New Jersey
System and the Northeast Pennsyl-
vania System. The issue is generally
believed. by utility people, to be
fairly clear-cut in the A. G.. & E.
case, and big systems which have
not yet filed integration plans are
watching developments keenly. The
three A. G. g. E. systems are actually
connected by transmission lines. but
the distribution systems are sep
erated.
Refinancing May Follow.
Mr.. Willkie has long Indicated that
settlement of the T. V. A.-C. e. S.
controversy would make possible re-
hnancing and replanning of the re-
manning Southern properties in such
4 way as to be attractive to investors
and give high promise Of future de-
velopment.
Experts assumed the chief ref
nanclng operations at a propitious
time would include refunding of
S140,000,000 bonds and 100000 900
preferred stock of Georgia Power Co.,
S100,000000 bonds and $4,000. 900
preferred stock of Alabama Power
Co., and about sl2,00O,0O0 of bonds
and preferred stock of Mississippi
Power Co., all C. g. S. subsidiaries.
1t was assumed such operations
would await satisfactory market con-
ditions, especially reopening of the
equity markets, which would make
possible a somewhat greater pro-
portion of preferred stock to bonds
Other things being favorable it was
supposed action might be expected
from October on.
tn Snand GIG mn nm
The possibility of simplified cor
porate structure for greater oper-
ating efficiency and economies may
rest chiefly on amendments to ex-
listing laws in some States which
now require distributing utilities to
be locally incorporated.
Mr.. Willkie today announced C. e.
s. would spend S16,O0000O on new
capital construction over and above
its regular budget as a result of the
T. V. A. settlement, a generally
more favorable attitude by Congress
and other legislative bodies toward
business passage of the Booth bill
by the Alabama Legislature pro-
hibiting the duplication of utility IA
cilities, and the action of Congress
In limiting and ear-marking the
funds appropriated for T. V. A.