Evening star., 1942-07-22
SEC Orders Breakup
OF S6O0,0OO,0O0
Holding Company
Justification Held Locking
For Vast international
HydroeIectric System
Ey The Associated Press.

Ey The Associated Press.
PHILADELPHIA, July 22.-De-
claring there is a lack of justlf1ca-
ton for the existence of the Inter-
national Hydro Electric System, the
Securities and Exchange Commits
sion yesterday ordered dissolution OF
the holding company, which con-
trolls a $500, ,0O0,Oo0 utility empire in
five New England States and Can
ada.
The commission found that the
holding company system consists OF
four tiers of holding companies, also
in contravention of section IL %
(2l or corporate simpliflcation pro-
vision of the Holding Company Act.
I'VE also conclude" the SEC SAID
In it's 32-page opinion and order,
that voting power is unfairly and
inequitably distributed among Sc
curity holders.
Detailing the relationship OF HES
to it's subsidiaries which control 40
hydroelectric plants, the SEC SAID !:
"s We find that HES serves
no economic purpose and performs
no useful function as holding COM
pany with respect to its subsidiary
companies"
The SEC said I'VE are aware that
considerable work must be done IN
the system before such a program
(of liquidation) can be completed.
4" Hearings already have
i,een held with respect with compll-
slnce by the subsidiary holding COM
oanies of New England Power Asso-
citation with section II CD (2). AS
result thereof, adjustments in the
NEPA system will in all likelihood
be necessary. Other adjustments
are indicated with regard to the
companies constituting the New
York group of properties.
Action Now Held Necessary.
at may be necessary to work out
some or all of these adjustments
before HES is finally liquidated
and dissolved. However. these mat
tiers, and their proper timing, can be
worked out as part of the liquidation
program.
ut seems plain that the best
interests of all concerned lie in the
immediate formulation and instltu-
ton of liquidation program even
though certain of its details neces-
sarily must rest with the future"
At the present, the Public Utilities
Division of the SEC is studying the
record of hearings on corporate
simplification proceedings on several
HES units. These include Massa-
chusetts Power g. Light Associates
and the North Boston Lighting Prop
critics, direct subsidiaries of NEPA.
The SEC also noted there was
serious question as to the ability
of HES to meet interest payment
due October l, on its s26, ,568 600 OF
outstanding debentures, and that
obviously refunding OF the deben-
lures is not possible"
"We would seriously question, ;" the
SEC continued, "any treatment
which would force the extension OF
all or part of the claim OF such
creditors through any reorganlza-
ton looking toward continued opera
ton Of the enterprise under the
circumstances in the instant situa-
tion, where there is no valid reason
for the continued existence of the
company,
at would appear therefore that
the interest of debenture holders
can best be served by liquidation OF
HES"
HES capitalization Of s64,798. .744
as of last December 81 consisted OF
the 6 per cent debentures due 1874;
s7,139 $50 of $3.50 preferred stock,
par value $50; 21,417,959 Glass A
stock. par value SIS: $40. .084 PIT paid
in surplus; $2l ,567 capital surplus,
and an earned surplus deficit of
S10433 ,009.