North Carolina Administrative Code › Title 04 - COMMERCE › Chapter 11 - UTILITIES COMMISSION › Chapter 1 › Section 11 R01-16 - PLEDGING ASSETS, ISSUING SECURITIES, ASSUMING OBLIGATIONS

Current through Register Vol. 39, No. 2, July 15, 2024
(a)
				No public utility except Payphone Service Providers, Competing Local Providers,
				and utilities providing only intraLATA long distance service, interLATA long
				distance service and/or long distance operator service, and local exchange
				carriers that have elected regulation pursuant to
				G.S.
				62-133.5(h) or (m) shall
				pledge its assets, issue securities, or assume liabilities of the character
				specified in G.S. 62 161, except after application to and approval by the
				Commission. Such applications shall be made under oath, filed with the
				Commission with twenty (20) copies, and shall contain the following specific
				information:
(1) The existing conditions
				relied upon to support the Commission in making the specific findings required
				by G.S.
				62-161. The application shall set forth the
				particular facts and circumstances showing that the proposed issuance of
				securities, pledging of assets, or assumption of liabilities and obligations
				(i) is for some lawful object within the corporate purposes of the public
				utility, (ii) is compatible with the public interest, (iii) is necessary or
				appropriate for or consistent with the public performance by such utility of
				its service to the public, (iv) will not impair its ability to perform that
				service, and (v) is reasonably necessary and appropriate for the purposes for
				which it is issued.
(2) The class
				and principal amount or par value of any securities to be issued or
				assumed.
(3) An estimate of the
				expenses to be incurred in connection with the pledging of assets, the issuance
				and sale of securities, or the assumption of liabilities.
(4) In case of the sale of securities,
				whether the sale will be to the public, to institutional investors, or
				otherwise, and whether the sale will be consummated by means of public bidding
				or by means of a negotiated transaction. If the sale is by means of a
				negotiated transaction, the application shall contain the proposed unit sale
				price of any securities to be issued together with the interest or dividend
				rate (common stock excepted) to be incurred thereon.
(5) The purpose or purposes to which the
				proceeds obtained are to be used. If the purpose or purposes for which the
				proceeds obtained are to be used is to refinance or pay off short term
				indebtedness as defined in
				G.S.
				62-167 and not heretofore approved by order
				of the Commission, the application shall set forth the purpose or purposes for
				which said outstanding indebtedness was incurred, and if said original
				indebtedness was spent on construction, the application shall list amounts by
				the major construction accounts and the total construction expenditures for
				which the proceeds of the original indebtedness were expended.
(6) A balance sheet and an income statement
				for a recent representative period. The application shall also include a pro
				forma balance sheet and income statement showing the balance sheet and the
				income statement as they would be after the issuance of said
				security.
(7) In any case where the
				applicant has filed or subsequently files a prospectus or other similar
				document with the Securities and Exchange Commission or with prospective
				investors for private placement in connection with said issue, eleven copies of
				such prospectus or document shall be filed with the North Carolina Utilities
				Commission at the time the application is filed with the Securities and
				Exchange Commission or with private investors.
(8) A statement of the source and application
				of funds, sometimes referred to as cash flow, showing the amounts available
				from all sources since the last finance application, to meet any part of the
				purposes or projects for which the financing or issue is required, including
				contributions from customers or others, salvage proceeds, depreciation reserve
				accruals, any unused balances in prior financing applications, and retained
				earnings, as available for payment of construction expenditures reported under
				subsection (a)(5).
(9) In the case
				of the sale of securities through private placement or the entering into an
				agreement for the sale and lease-back of assets or any other financing
				transaction for which the effective date of the consummation and/or
				implementation of the transaction is expected to take place as much as three
				months after the negotiation of the interest cost or other financing cost of
				the transaction is determined, that the utilities shall file with the
				Commission for approval of the proposed transaction as soon as the rates of
				interest and/or other financing costs are tentatively agreed on. All the other
				requirements under R1-16 are applicable to this particular type transaction and
				are to be included in the filing with a special emphasis on supporting the
				basis for the proposed rates of interest and financing the cost for which
				approval is sought.