-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SAR8LPnbDcp5/EQvn9dSkIxHuswlr7Eenbo0CLqd9FQ85yHgApqS3r/ckOvnAR99 25TU+wpAOXkSg1+v+l16ng== 0000950131-97-005346.txt : 19970912 0000950131-97-005346.hdr.sgml : 19970912 ACCESSION NUMBER: 0000950131-97-005346 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19970829 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMEREN CORP CENTRAL INDEX KEY: 0001002910 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 431723446 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1/A SEC ACT: SEC FILE NUMBER: 070-08945 FILM NUMBER: 97673026 BUSINESS ADDRESS: STREET 1: 1901 CHOUTEAU AVE CITY: ST LOUIS STATE: MO ZIP: 63103 BUSINESS PHONE: 3146213222 MAIL ADDRESS: STREET 1: 1901 CHOUTEAU AVE CITY: ST LOUIS STATE: MO ZIP: 63103 U-1/A 1 AMENDMENT #3 TO FORM U-1 As filed with the Securities and Exchange Commission on August 29, 1997 File No. 70-8945 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------- AMENDMENT NO. 3 TO FORM U-1 APPLICATION/DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 ----------------- Ameren Corporation 1901 Chouteau Avenue St. Louis, Missouri 63103 (Name of company filing this statement and address of principal executive offices) None (Name of top registered holding company) William E. Jaudes Registered Agent Ameren Corporation 1901 Chouteau Avenue St. Louis, Missouri 63103 (Names and addresses of agents of service) The Commission is requested to send copies of all notices, orders and communications in connection with this Application to: James J. Cook William J. Harmon William Niehoff Jones, Day, Reavis & Pogue Union Electric Company 77 West Wacker, Suite 3500 1901 Chouteau Avenue Chicago, Illinois 60601-1692 P.O. Box 149 St. Louis, Missouri 63166 A. Introduction This Application/Declaration, originally filed October 31, 1996 and amended through Amendment No. 2 (the "Application"), seeks approvals relating to the proposed business combination transaction among Ameren Corporation ("Ameren"), Union Electric Company ("UE") and CIPSCO Incorporated ("CIPSCO"), by which UE and CIPSCO's utility subsidiary, Central Illinois Public Service Company ("CIPS"), will become wholly owned subsidiaries of Ameren, a new Missouri holding company (the "Transaction"). Following the consummation of the Transaction, Ameren will register with the Securities and Exchange Commission (the "Commission") as a holding company under the Public Utility Holding Company Act of 1935 (the "Act"). Ameren submits this Amendment No. 3 (i) to refer to a recently issued Commission decision which demonstrates significant support for granting the relief sought in this docket, (ii) to file additional information regarding the retention by Ameren of the non-utility investments of UE and CIPSCO Investment Company ("CIPSCO Investment") and (iii) to file certain Exhibits hereto as described below. B. The Recent New Century Energies Decision On August 1, 1997, the Commission issued its decision in New Century Energies, Inc., Release No. 35-26748 (Aug. 1, 1997) approving the acquisition by New Century Energies of the electric and gas operations of Public Service Company of Colorado and Southwestern Public Service Company in a transaction which will result in New Century Energies becoming a registered holding company under the Act. In this decision the Commission recognized that circumstances in the utility industry have changed significantly since the decisions in the New England Electric System cases finding that a gas utility operation could not be retained under the A-B-C Clauses by a holding company whose principal system was electric. In New Century Energies, the Commission affirmed the traditional analysis that increased costs attributable to separation of an additional system from the principal integrated system may be considered as "lost economies" under Clause A of Section 11(b)(1) of the Act. In an important change from prior decisions, however, the Commission found that other benefits of separation assumed to exist in previous cases, i.e., the benefits of increased competition resulting from separation of gas and electric businesses, should no longer be considered applicable. In addition to the lost economies resulting from increased costs of operating the additional system independently, the Commission recognized in New Century Energies that "separation of gas and electric businesses may cause the separated entities to be weaker competitors than they would be together. This factor adds to the quantifiable loss of economies caused by increased costs." Release 35-26748 at 31 (slip op.) (emphasis added). Further, the Commission held that "[i]ncreased expenses of separate operation may no longer be offset, as they were in New England Electric System, by a gain of qualitative competitive benefits, but rather may be compounded by a loss of such benefits, as the Commission finds in this matter." Id. at 32. The Commission found in New Century Energies that the lost economies, as a percentage of total gas operating revenues, total gas expense, gross gas income and net gas income presented in that case were within the range of similar losses in cases where the Commission had permitted 2 retention of the additional gas system. As demonstrated by the Supplemental Analysis of the Economic Impact of a Divestiture of the Gas Operations of UE and CIPS filed as Exhibit K-1.1, the lost economies that would be incurred by a separation of the combined gas operations of UE and CIPS into a separate entity would exceed the losses found sufficient to allow retention in other Commission decisions. The finding of New Century Energies that the effect on competition caused by separation of the gas business would increase the lost economies (not decrease them as previously assumed) is equally applicable to this case as has been pointed out in the Application and exhibits filed thereto. Accordingly, New Century Energies provides strong support for the conclusion sought by Ameren in this docket, i.e., that the gas operations of CIPS and UE may be retained as an additional integrated utility system under Clause A of Section 11 (b)(1) of the Act. As will be demonstrated in Part C below, the New Century Energies decision also supports retention by Ameren of the non-utility investments of UE and CIPSCO Investment. C. Retention of Non-Utility Investments The applicants in New Century Energies operated a number of non-utility business and held non-utility investments. The Commission noted that such business and investments were required to be necessary or appropriate in the public interest or for the protection of investors or consumers and not detrimental to the proper functioning of the integrated system under Section 11(b)(1) and 10(c)(1) of the Act. All the various non-utility interests (which are described in Appendix A to the decision) were found to satisfy the statutory requirements. Release 35-26748 at 38 (slip op.). New Century Energies also found that the existing investments, as of the date of the consummation of the merger in that case, should be disregarded for purposes of calculating the dollar limitation upon investment in energy-related companies under new Rule 58. Id. Ameren respectfully requests that the amount invested, or approved to be invested, in its approved non-utility investments, as of the date of the Merger, also be disregarded for purposes of Rule 58. The Commission reached its conclusion regarding the retention of the non- utility investments in New Century Energies in view of the fact that the merger partners were not subject to the restrictions that Section 11(b)(1) and the Commission's precedent thereunder places upon the non-utility investments of registered system companies. Id. As noted in Item 1.b.1. of the Application, UE and CIPSCO are each exempt public utility holding companies and, as such, are not subject to the limitations of the Act applicable to registered holding companies. The non-utility investments of UE and CIPSCO are well within the general guidelines of what is appropriate for an exempt holding company under the Act./1/ - ---------------- /1/ As noted in New Century Energies, the Commission has never determined the limits upon diversification by exempt holding companies. Release 35-26748 at 39, n. 73 (slip op.). 3 Ameren files herewith, as Exhibit K-4, an updated description of each of the non-utility investments of UE and CIPSCO Investment. This exhibit provides additional detail regarding the activities of the investments and notes applicable Commission precedent as to retainability. D. Additional or Updated Exhibits. The Exhibits filed herewith include Exhibits F-1.1 and F-2.1, opinions of counsel, G-1.2, an updated financial schedule, and I-5.2 and I-6.2, quarterly reports. As noted, new Exhibit K-4 detailing non-utility investments is also filed. 4 Item 6. Exhibits and Financial Statements A. Exhibits The following Exhibits are filed with this Amendment No. 3: F-1.1 Preliminary Opinion of Counsel (William E. Jaudes) F-2.1 Preliminary Opinion of Counsel (Jones, Day, Reavis & Pogue) G-1.2 Financial Data Schedule (June 1997) (Electronic filing only) I-5.2 UE Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 (Incorporated by reference) I-6.2 CIPSCO and CIPS Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 (Incorporated by reference) K-4 Description of Non-Utility Investments B. Financial Statements FS-3.2 CIPSCO Consolidated Balance Sheets as of June 30, 1997 (see Quarterly Report of CIPSCO on Form 10-Q for the quarter ended June 30, 1997 (Exhibit I-6.2 hereto), at p. 5) FS-5.2 CIPS Balance Sheets as of June 30, 1997 (see Quarterly Report of CIPS on Form 10-Q for the quarter ended June 30, 1997 (Exhibit I-6.2 hereto), at p. 8) FS-7.2 UE Consolidated Balance Sheet as of June 30, 1997 (see Quarterly Report of UE on Form 10-Q for the quarter ended June 30, 1997 (Exhibit I-5.2 hereto), at p. 2) 5 SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned company has duly caused this Amendment No. 3 to Application/Declaration to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 29, 1997 AMEREN CORPORATION /s/ William E. Jaudes --------------------------------------------- By: William E. Jaudes Secretary 6 Exhibit Index to Amendment No. 3 A. Exhibits
Form of Exhibit No. Description Transmission - ----------- ----------- ------------ F-1.1 Preliminary Opinion of Counsel (William E. Jaudes) Electronic F-2.1 Preliminary Opinion of Counsel (Jones, Day, Reavis Electronic & Pogue) G-1.2 Financial Data Schedule (June 1997) (Electronic Electronic filing only) I-5.2 UE Quarterly Report on Form 10-Q for the quarter By Reference ended June 30, 1997 (Incorporated by reference) I-6.2 CIPSCO and CIPS Quarterly Report on Form 10-Q By Reference for the quarter ended June 30, 1997 (Incorporated by reference) K-4 Description of Non-Utility Investments Electronic
B. Financial Statements
Form of Exhibit No. Description Transmission - ----------- ----------- ------------ FS-3.2 CIPSCO Consolidated Balance Sheets as of June 30, By Reference 1997 (see Quarterly Report of CIPSCO on Form 10-Q for the quarter ended June 30, 1997 (Exhibit I-6.2 hereto), at p. 5). FS-5.2 CIPS Balance Sheets as of June 30, 1997 (see By Reference quarter ended June 30, 1997 (Exhibit I-6.2 hereto), at p. 8) FS-7.2 UE Consolidated Balance Sheet as of June 30, 1997 By Reference (see Quarterly Report of UE on Form 10-Q for the quarter ended June 30, 1997 (Exhibit I-5.2 hereto), at p. 2)
7 EX-99.F.1.1 2 PRELIMINARY OPINION OF COUNSEL - WILLIAM E. JAUDES EXHIBIT F-1.1 PRELIMINARY OPINION OF COUNSEL (WILLIAM E. JAUDES) EXHIBIT F-1.1 AMEREN CORPORATION 1901 Chouteau Avenue St. Louis, Missouri 63166 314-621-3222 August 29, 1997 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Ameren Corporation Form U-1 Application-Declaration (File No. 70-8945) Dear Sirs: I refer to the Form U-1 Application/Declaration, as amended (the "Application"), under the Public Utility Holding Company Act of 1935, as amended (the "Act"), filed with the Securities and Exchange Commission (the "Commission") by Ameren Corporation ("Ameren"), a Missouri corporation. Capitalized terms used in this letter without definition have the meanings ascribed to such terms in the Application. The Application seeks approvals relating to the proposed business combination transaction among Ameren, Union Electric Company ("UE") and CIPSCO Incorporated ("CIPSCO"), by which UE and Central Illinois Public Service Company ("CIPS"), will become wholly owned subsidiaries of Ameren and Ameren will acquire all of the issued and outstanding common stock of UE and CIPS and acquire indirectly 60% of the outstanding common stock of Electric Energy, Inc. ("EEI") (the "Merger Transaction"). In the Application, Ameren also requests that the Commission approve the following actions or transactions (which, together with the Merger Transaction, are referred to as the "Transactions"): (i) the establishment of Ameren Services Corp. ("Ameren Services") in accordance with Rule 88 under the Act and the acquisition by Ameren of all of the outstanding voting securities of Ameren Services; (ii) the execution of the General Services Agreement; (iii) the issuance of Ameren Common Stock in connection with the Transaction; (iv) the issuance by Ameren (and/or the acquisition by or on behalf of Ameren in open market transactions) of up to 19 million shares of Ameren Common Stock, over the period ending five years after the date of the Commission's approving order in this docket, for purposes of certain employee benefit and dividend reinvestment plans of UE, CIPSCO, CIPS and Ameren; (v) the solicitation of proxies from the holders of Ameren Common Stock for approvals deemed necessary or desirable in connection with the establishment or amendment of employee benefit plans referred to in (iv); (vi) the acquisition by Ameren of all of the outstanding voting securities of CIPSCO Investment Company (currently a wholly owned subsidiary of CIPSCO) ("CIPSCO Investment"), which serves as a holding company for certain nonutility investments; (vii) the retention by Ameren of the gas properties of UE and CIPS and the continued operation of UE and CIPS as combination utilities; (viii) the retention by Ameren of the nonutility activities, businesses and investments of UE and CIPSCO Investment; (ix) the retention by Ameren of the nonutility activities, businesses and investments of UE and CIPSCO Investment and the making of certain similar investments over a period ending five years after the date of the Commission's approving order in this docket; (x) the continuation of all outstanding intrasystem debt, guaranties and support agreements; and (xi) the transfer by UE to CIPS of the Transferred Utility Facilities located in Illinois. I have acted as counsel for Ameren in connection with the Application and, as such counsel, I am familiar with the corporate proceedings taken by Ameren, UE and CIPSCO in connection with the Transactions as described in the Application. I have examined originals, or copies certified to my satisfaction, of such corporate records of Ameren, UE, CIPSCO, CIPS and CIPSCO Investment, certificates of public officials, certificates of officers and representatives of Ameren, UE, CIPSCO, CIPS and CIPSCO Investment, and other documents as I have deemed it necessary to examine as a basis for the opinions hereinafter expressed. In such examination I have assumed the genuineness of all signatures and the authenticity of all documents submitted to me as originals and the conformity with the originals of all documents submitted to me as copies. As to various questions of fact material to such opinions I have, when relevant facts were not independently established, relied upon certificates of 2. officers of Ameren, UE, CIPSCO, CIPS and CIPSCO Investment and other appropriate persons and statements contained in the Application and the exhibits thereto. The opinions expressed below are subject to the following further assumptions and conditions: a. The authorization and approval of the Transactions, by the Boards of Directors and shareholders of Ameren, UE and CIPSCO and subsidiaries thereof remain in full force and effect. b. All required approvals, authorizations, consents, certificates, and orders of, and all filings and registrations with, all applicable federal and state commissions and regulatory authorities with respect to the Transactions shall have been obtained or made, as the case may be, and shall remain in effect (including the approval and authorization of the Commission under the Act, the Federal Energy Regulatory Commission under the Federal Power Act, as amended, and the rules and regulations thereunder, the Nuclear Regulatory Commission under the Atomic Energy Act, the Missouri Public Service Commission under the applicable laws of the State of Missouri, and the Illinois Commerce Commission under the applicable laws of the State of Illinois), and the Transactions shall have been accomplished in accordance with all such approvals, authorizations, consents, certificates, orders, filings and registrations. c. The Commission shall have duly entered an appropriate order or orders with respect to the Transactions as described in the Application granting and permitting the Application to become effective under the Act and the rules and regulations thereunder. d. No stop order shall have been entered with respect to the S-4 Registration Statement (File No. 33-64165), which has become effective pursuant to the Securities Act of 1933, as amended, with respect to the shares of Ameren Common Stock to be issued in connection with the Transactions; and the issuance of shares of Ameren Common Stock in connection with the Transactions shall have been consummated in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder. e. The applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder shall have expired. f. With respect to those Transactions occurring after Ameren shall have become subject to registration pursuant to Section 5 of the Act and the rules of the Commission thereunder, Ameren shall have duly registered with the Commission as a holding company pursuant to Section 5 of the Act and the rules of the Commission thereunder. 3. g. Instruments of merger shall have been duly and validly filed with the Secretary of State of Missouri and Illinois, and such other corporate formalities as are required by the laws of such states for the consummation of the mergers contemplated by the Transactions shall have been taken; and such mergers shall have become effective in accordance with the laws of Missouri and Illinois. h. The parties shall have obtained all consents, waivers and releases, if any, required for the Transactions under all applicable governing corporate documents, contracts, agreements, debt instruments, indentures, franchises, licenses and permits. i. No act or event other than as described herein shall have occurred subsequent to the date hereof which would change the opinions expressed herein. j. The Transactions shall have been consummated as described in the Application and under the supervision of the General Counsel of Ameren Services Company acting for Ameren and Jones, Day, Reavis & Pogue and all legal matters incident thereto shall be satisfactory to each of us. k. For purposes of this opinion, with respect to all matters governed by the laws of Illinois, I have relied upon the opinion of even date of Jones, Day, Reavis & Pogue, Chicago, Illinois, filed as an Exhibit to the Application. Based upon the foregoing, and subject to the assumptions and conditions set forth herein, and having regard to legal considerations which I deem relevant, I am of the opinion that, in the event that the proposed Transactions are consummated in accordance with the Application: 1. All laws of the State of Missouri applicable to the proposed Transactions will have been complied with. 2. Each of Ameren, UE and Arch Merger is validly organized and duly existing under the laws of the State of Missouri. 3. The shares of Ameren Common Stock to be issued in connection with the proposed Transactions will be validly issued, fully paid and nonassessable, and the holders thereof will be entitled to the rights and privileges appertaining thereto set forth in the Restated Articles of Incorporation of Ameren. The shares of common stock of UE to be converted into shares of Ameren Common Stock in connection with the Transactions are validly issued, fully paid and nonassessable, and Ameren, as the holder thereof, will be entitled to the rights and privileges appertaining thereto set forth in the Restated Articles of Incorporation of UE. The shares of common stock of Arch Merger to be issued to Ameren in connection with the establishment of Arch Merger will be validly issued, fully paid and nonassessable, and Ameren, as the holder thereof, will be entitled to the 4. rights and privileges appertaining thereto set forth in the Articles of Incorporation of Arch Merger. 4. Ameren will legally acquire (a) the shares of common stock of UE that will be acquired by Ameren in connection with the merger of Arch Merger with and into UE, (b) the shares of common stock of CIPS as a result of the merger of CIPSCO with and into Ameren, and (c) the shares of Arch Merger that will be issued to Ameren in connection with the organization of Arch Merger. 5. The consummation of the proposed Transaction will not violate the legal rights of the holders of any securities issued by Ameren or any associate company of Ameren. I hereby consent to the use of this opinion as an exhibit to the Application. Very truly yours, William E. Jaudes 5. EX-99.F.2.1 3 PRELIMINARY OPINION OF COUNSEL - JONES, DAY EXHIBIT F-2.1 PRELIMINARY OPINION OF COUNSEL (JONES, DAY, REAVIS & POGUE) EXHIBIT F-2.1 JONES, DAY, REAVIS & POGUE 77 West Wacker Drive Suite 3500 Chicago, Illinois 60601-1692 312-782-3939 August 29, 1997 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Ameren Corporation Form U-1 Application-Declaration (File No. 70-8945) Dear Sirs: We refer to the Form U-1 Application/Declaration, as amended (the "Application"), under the Public Utility Holding Company Act of 1935, as amended (the "Act"), filed with the Securities and Exchange Commission (the "Commission") by Ameren Corporation ("Ameren"), a Missouri corporation. Capitalized terms used in this letter without definition have the meanings ascribed to such terms in the Application. The Application seeks approvals relating to the proposed business combination transaction among Ameren, Union Electric Company ("UE") and CIPSCO Incorporated ("CIPSCO"), by which UE and Central Illinois Public Service Company ("CIPS"), will become wholly owned subsidiaries of Ameren and Ameren will acquire all of the issued and outstanding common stock of UE and CIPS and acquire indirectly 60% of the outstanding common stock of Electric Energy, Inc. ("EEI") (the "Merger Transaction"). In the Application, Ameren also requests that the Commission approve the following actions or transactions (which, together with the Merger Transaction, are referred to as the "Transactions"): (i) the establishment of Ameren Services Corp. ("Ameren Services") in accordance with Rule 88 under the Act and the acquisition by Ameren of all of the outstanding voting securities of Ameren Services; (ii) the execution of the General Services Agreement; (iii) the issuance of Ameren Common Stock in connection with the Transaction; (iv) the issuance by Ameren (and/or the acquisition by or on behalf of Ameren in open market transactions) of up to 19 million shares of Ameren Common Stock, over the period ending five years after the date of the Commission's approving order in this docket, for purposes of certain employee benefit and dividend reinvestment plans of UE, CIPSCO, CIPS and Ameren; (v) the solicitation of proxies from the holders of Ameren Common Stock for approvals deemed necessary or desirable in connection with the establishment or amendment of employee benefit plans referred to in (iv); (vi) the acquisition by Ameren of all of the outstanding voting securities of CIPSCO Investment Company (currently a wholly owned subsidiary of CIPSCO) ("CIPSCO Investment"), which serves as a holding company for certain nonutility investments; (vii) the retention by Ameren of the gas properties of UE and CIPS and the continued operation of UE and CIPS as combination utilities; (viii) the retention by Ameren of the nonutility activities, businesses and investments of UE and CIPSCO Investment; (ix) the retention by Ameren of the nonutility activities, businesses and investments of UE and CIPSCO Investment and the making of certain similar investments over a period ending five years after the date of the Commission's approving order in this docket; (x) the continuation of all outstanding intrasystem debt, guaranties and support agreements; and (xi) the transfer by UE to CIPS of the Transferred Utility Facilities located in Illinois. We have acted as counsel for CIPSCO in connection with the Application and, as such counsel, we are familiar with the corporate proceedings taken by Ameren, UE and CIPSCO in connection with the Transactions as described in the Application. We have examined originals, or copies certified to our satisfaction, of such corporate records of Ameren, UE, CIPSCO, CIPS and CIPSCO Investment, certificates of public officials, certificates of officers and representatives of Ameren, UE, CIPSCO, CIPS and CIPSCO Investment, and other documents as we have deemed necessary to examine as a basis for the opinions hereinafter expressed. In such examination we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. As to various questions of fact material to such opinions we 2. have, when relevant facts were not independently established, relied upon certificates of officers of Ameren, UE, CIPSCO, CIPS and CIPSCO Investment and other appropriate persons and statements contained in the Application and the exhibits thereto. The opinions expressed below are subject to the following further assumptions and conditions: a. The authorization and approval of the Transactions by the Boards of Directors and shareholders of Ameren, UE and CIPSCO and subsidiaries thereof remain in full force and effect. b. All required approvals, authorizations, consents, certificates, and orders of, and all filings and registrations with, all applicable federal and state commissions and regulatory authorities with respect to the Transactions shall have been obtained or made, as the case may be, and shall remain in effect (including the approval and authorization of the Commission under the Act, the Federal Energy Regulatory Commission under the Federal Power Act, as amended, and the rules and regulations thereunder, the Nuclear Regulatory Commission under the Atomic Energy Act, the Missouri Public Service Commission under the applicable laws of the State of Missouri, and the Illinois Commerce Commission under the applicable laws of the State of Illinois), and the Transactions shall have been accomplished in accordance with all such approvals, authorizations, consents, certificates, orders, filings and registrations. c. The Commission shall have duly entered an appropriate order or orders with respect to the Transactions as described in the Application granting and permitting the Application to become effective under the Act and the rules and regulations thereunder. d. No stop order shall have been entered with respect to the S-4 Registration Statement, which has become effective pursuant to the Securities Act of 1933, as amended, with respect to the shares of Ameren Common Stock to be issued in connection with the Transactions; and the issuance of shares of Ameren Common Stock in connection with the Transactions shall have been consummated in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder. e. The applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder shall have expired. f. With respect to those Transactions occurring after Ameren shall have become subject to registration pursuant to Section 5 of the Act and the rules of the Commission thereunder, Ameren shall have duly registered with the Commission as a holding company pursuant to Section 5 of the Act and the rules of the Commission thereunder. 3. g. Instruments of merger shall have been duly and validly filed with the Secretary of State of Missouri and Illinois, and such other corporate formalities as are required by the laws of such states for the consummation of the mergers contemplated by the Transactions shall have been taken; and such mergers shall have become effective in accordance with the laws of Missouri and Illinois. h. The parties shall have obtained all consents, waivers and releases, if any, required for the Transactions under all applicable governing corporate documents, contracts, agreements, debt instruments, indentures, franchises, licenses and permits. i. No act or event other than as described herein shall have occurred subsequent to the date hereof which would change the opinions expressed herein. j. The Transactions shall be consummated as described in the Application and under the supervision of Jones, Day, Reavis & Pogue and the General Counsel of Ameren and all legal matters incident thereto shall be satisfactory to each of us. Based upon the foregoing, but subject to the assumptions, qualifications and limitations set forth herein, we are of the opinion that, in the event that the proposed Transactions are consummated in accordance with the Application: 1. All laws of the State of Illinois applicable to the proposed Transactions will have been complied with. 2. Each of CIPSCO and CIPS is validly organized and duly existing under the laws of the State of Illinois. 3. The shares of common stock of CIPSCO to be converted into shares of Ameren Common Stock in connection with the Transactions will be validly issued, fully paid and nonassessable. The shares of common stock of CIPS to be acquired by Ameren as a result of the Merger of CIPSCO into Ameren will be validly issued, fully paid and nonassessable, and Ameren, as the holder thereof, will be entitled to the rights and privileges appertaining thereto set forth in the Restated Articles of Incorporation of CIPS. We hereby consent to the use of this opinion as an exhibit to the Application. Respectfully yours, Jones, Day, Reavis & Pogue 4. EX-99.G.1.2 4 FINANCIAL DATA SCHEDULE EXHIBIT G-1.2 FINANCIAL DATA SCHEDULE EXHIBIT G-1.2 AMEREN CORPORATION UNAUDITED PRO FORMA COMBINED FINANCIAL DATA SCHEDULE UT (Thousands of Dollars Except Per Share Amounts) Six Months Ended June 30, 1997
Pro Forma Pro Forma Caption Heading UE CIPSCO Adjustments Combined --------------- --------- --------- ----------- --------- 1 Total net utility plant 5,403,626 1,468,982 103,237 6,975,845 2 Other property and investments 112,578 117,798 0 230,376 3 Total current assets 487,358 199,634 57,312 744,304 4 Total deferred charges 36,186 28,946 (3,775) 61,357 5 Balancing amount for total assets 836,784 169,838 0 1,006,622 6 Total assets 6,876,532 1,985,198 156,774 9,018,504 7 Common stock 510,619 356,812 (866,059) 1,372 8 Capital surplus, paid in 716,879 0 866,059 1,582,938 9 Retained earnings 1,093,678 296,923 0 1,390,601 10 Total common stockholders equity 2,321,176 653,735 0 2,974,911 11 Preferred stock subject to mandatory redemption 0 0 0 0 12 Preferred stock not subject to mandatory redemption 155,197 80,000 0 235,197 13 Long term debt, net 1,861,800 570,379 115,556 2,547,735 14 Short term notes 68,000 0 0 68,000 15 Notes payable 0 0 0 0 16 Commercial paper 0 55,481 0 55,481 17 Long term debt-current portion 0 0 14,444 14,444 18 Preferred stock-current portion 0 0 0 0 19 Obligations under capital leases 81,386 0 0 81,386 20 Obligations under capital leases-current portion 32,734 0 0 32,734 21 Balancing amount for capitalization and liabilities 2,356,239 625,603 26,774 3,008,616 22 Total capitalization and liabilities 6,876,532 1,985,198 156,774 9,018,504 23 Gross operating revenue 1,037,212 420,261 96,842 1,554,315 24 Federal and state income taxes expense 69,628 16,165 4,136 89,929 25 Other operating expenses 797,913 356,661 81,859 1,236,433 26 Total operating expenses 867,541 372,826 85,995 1,326,362 27 Operating income (loss) 169,671 47,435 10,847 227,953 28 Other income (loss), net (1,011) (109) (5,925) (7,045) 29 Income before interest charges 168,660 47,326 4,922 220,908 30 Total interest charges 67,388 17,684 4,922 89,994 31 Net income 96,863 27,800 0 124,663 32 Preferred stock dividends 4,409 1,842 0 6,251 33 Earnings available for common stock 96,863 27,800 0 124,663 34 Common stock dividends 129,697 35,773 8,794 174,264 35 Total annual interest charges on all bonds* 0 0 0 0 36 Cash flow from operations 193,403 5,063 20,992 219,458 37 Earnings per share-primary $0.95 $0.82 0 $0.91 38 Earnings per share-fully diluted $0.95 $0.82 0 $0.91 *Required on fiscal year-end only
EX-99.K.4 5 DESCRIPTION OF NON-UTILITY INVESTMENTS EXHIBIT K-4 DESCRIPTION OF NON-UTILITY INVESTMENTS EXHIBIT K-4 DESCRIPTION OF NON-UTILITY INVESTMENTS As a result of the Transaction, the nonutility businesses and interests of UE and CIPSCO described in Item l.B.3 of the Application will become businesses and interests of Ameren. The total assets of all nonutility investments of UE and CIPSCO at June 30, 1997 ($144.5 million) constituted less than 1.6% of pro forma consolidated assets of Ameren or about 2.4% of pro forma consolidated capitalization. From UE, Ameren will hold the following nonutility subsidiaries, investments or businesses: 1. Steam heating operations of UE. The steam heating business of UE will continue to be owned and operated by UE. This operation, which is located exclusively in its service territory and limited to Jefferson City, Missouri, serves the needs of the Missouri State Capitol complex. The steam is supplied by a plant formerly used by UE to generate electricity for its system. The retention of this business will further Ameren's ability to be an energy service company providing consumers with additional options to meet their energy needs, thereby allowing Ameren to compete more effectively in the energy-service business./1/ 2. Union Electric Development Corporation ("UEDC") Ownership of energy related or civic and community development related investments in the UE service area. All of UE's nonutility investments are made through UEDC (with one exception noted below). At June 30, 1997, the total amount invested in such nonutility investments was $19.1 million. Except as noted below, all of these investments are passive - --------------- /1/ In re General Public Utility Corp., 32 SEC 807, 840-841 (Dec. 28, 1951) (Commission authorized retention of steam heating systems. Steam from such systems was used to generate electricity and sold to customers for heating purposes.) See also In re The North American Co., 11 SEC 194 (Apr. 14, 1942) (Commission authorized retention of steam heating operations which provided steam heat to customers and was used in the generation of electricity.) In CINergy Corp., 61 SEC Docket 823 (Feb. 20, 1996) (Release No. 35-26474), the Commission found a district heating and cooling business which also provided steam to be functionally related to the utility business. Since the Commission has determined that steam heating operations, whether used for internal generation purposes or for direct sale to customers, are reasonably incidental to the operation of an electric utility system, this business may be retained. The production, conversion and distribution of thermal energy products, including process steam and chilled water, is also permitted by proposed Rule 58. Thus, the production and distribution of thermal energy is reasonably incidental to Ameren's utility operations and may be retained. investments in entities in which neither UE nor any of its affiliates participates in management or exercises control. As noted in the Application, UE has authority from the ICC to invest up to $100 million in UEDC "for the purpose of benefitting and improving" its business and/or service area and for charitable purposes. (ICC Docket No. 94-0237, Sept. 24, 1994). Missouri law does not require prior approval to make non-utility investments. Ameren requests authority to continue the investments listed below and to make additional investments in UEDC up to the $100 million authorized by the ICC and to have such investment disregarded for purpose of Rule 58. These investments are categorized as follows: a. Energy/Utility Related Gateway Energy Alliance -- At June 30, 1997, $429,792 was invested in a 50% interest in this limited liability corporation, which is proposing to develop a chilled water/steam project in the St. Louis, Missouri area. In addition, this corporation is exploring other non-electric or gas utility related activities in St. Louis./2/ CellNet, Inc. -- At June 30, 1997, $9.9 million was invested (representing 1.3% of the equity) in this corporation, which is developing an automated meter reading system for UE as well as other utility companies./3/ EnviroTech Investment Fund LLC -- At June 30, 1997, $700,000 was invested in or committed directly by UE (not UEDC) to a 6% interest in this limited liability corporation, which will make investments in various companies developing alternative and renewable energy technologies, environmental and waste treatment technologies and services, energy efficiency technologies, and other technologies related to improving the generation, transmission and delivery of electricity. In addition, a UE pension fund over which UE exercises investment discretion holds a 9% interest in EnviroTech, with $3 million invested or committed. One UE officer is one of a 10-member advisory board of EnviroTech, which is empowered to approve investments that fall outside of the types specifically approved by EnviroTech's charter documents./4/ - --------------- /2/ See cases cited in Note 1. UEDC, through a joint venture limited liability company, is negotiating with a municipal utility to construct a new generating unit to be owned and operated by the municipal utility. See, e.g., Southern Co., Release No. 22132 (July 17, 1981); American Electric Power Co., Inc., Release No. 22468 (Apr. 28, 1982) (consulting services). See also Release 26667 (Adoption of Rule 58) at Part II,A,1,b.(7). /3/ Central and South West Corp. Release No. 35-26250 (Mar. 14, 1995) (develop and provide meter reading services to non-affiliated companies). /4/ Several other registered holding companies have received approval to invest in EnviroTech partnerships. See, e.g., Southern Co., Release No. 35-26240 (Feb. 28, 1995). 2 On-Call Appliance Plan -- UEDC operates an appliance warranty program where, for a fee, it provides warranty coverage for certain appliances including heating and cooling equipment and water heaters. UEDC has invested less than $500,000 in this business./5/ Demand Side Management -- UEDC has engaged in providing energy audit and energy management services to enable a client to modify its facilities and energy usage to reduce energy consumption./6/ Gateway Energy Systems, L.C. -- At June 30, 1997, UEDC had invested $125,000 in a 49% interest in a limited liability company which seeks to develop new markets for the provision of energy services. Individual projects developed through this entity would in most cases be performed by separate limited liability companies of which UEDC will be an investor./7/ b. Community and Civic Development/Venture Capital Civic Ventures LLC -- At June 30, 1997, $200,000 was committed, of which $20,000 was invested, in a 4.67% interest in this limited liability corporation, which is a venture capital fund for minority business development. It is expected that such venture capital investments will primarily be made in enterprises in Missouri and Illinois./8/ - ---------------- /5/ Appliance sales, installation and servicing businesses have been approved. See, e.g., Consolidated Natural Gas, Release No. 36-26234 (Feb. 23, 1995). /6/ See, e.g., Eastern Utilities Associates, Release No. 35-26232 (Feb. 15, 1995). /7/ See Notes 4 and 6. /8/ The Commission has on numerous occasions permitted investments in various economic development activities. In UE's case, the Commission approved an investment in 1962 (at which time UE was a registered holding company) in a Civic Center Redevelopment Corporation, which was sponsored by a group of citizens of St. Louis and supported by newspapers, banks, department stores, manufacturers, merchants, labor unions, and public utility companies in metropolitan St. Louis. This venture was to assist in the complete redevelopment of an area of 31 blocks of about 82 acres in the main business district of St. Louis. Union Electric Co., Release No. 35-14608 (Mar. 22, 1962). See also, Appalachian Power Co., Release No. 35-25266 (growth capital in new and expanding small, rural firms to improve local economy); Missouri Power & Light Co., Release No. 35-12524 (June 3, 1954) (industrial enterprises supported by community businesses to fulfil civic responsibility). See also, e.g., East Ohio Gas Co., 45 SEC Docket 766 (Feb. 27, 1990) (authorizing $500,000 investment in limited partnerships engaged in financing development of urban real estate projects aimed at "impact[ing] favorably upon urban blight"); Ohio Power Co., 52 SEC Docket (continued...) 3 Gateway National Bank -- At June 30, 1997, approximately $60,000 was invested in preferred stock of this corporation, which specializes in minority business development lending activities and residential mortgages in minority areas. It is expected that such business development loan activities will be made primarily in enterprises in Missouri or Illinois./9/ Laclede's Landing Redevelopment -- At June 30, 1997, $10,000 was invested in a less than 5% limited partnership interest in this limited partnership, which is engaged in neighborhood commercial redevelopment projects in St. Louis, Missouri./10/ Kiel Investments -- At June 30, 1997, $5.86 million was invested in a 7% limited partnership interest in limited partnerships that own and operate the Kiel Center, a 20,000-seat multipurpose arena located two blocks from UE's headquarters in St. Louis, Missouri. The partnership also owns the St. Louis Blues Hockey Club. In addition, a charitable trust over which UE exercises investment discretion holds a 1.37% limited partnership interest with a $650,000 investment. These investments were made to further economic development of downtown St. Louis. The Kiel Center provides substantial economic and civic benefits to the St. Louis area. In addition to professional hockey, the Kiel Center hosts professional soccer, college basketball, concerts, meetings, conventions and other similar events. Kiel Center is a unique facility in the region and is a major stimulator of economic activity in the downtown area. - ---------------- /8/ (...continued) 919 (Aug. 11, 1992) (authorizing loan to non-profit corporation for construction of building in service territory); Northeast Utilities, 40 SEC Docket 412 (Feb. 24, 1988) ($250,000 investment in locally focused venture capital fund); Consolidated Natural Gas Co., 33 SEC Docket 1192 (Aug. 20, 1985) ($100,000 investment in fund formed to encourage and finance local entrepreneurial ventures). Further, the Commission has approved investments in limited partnerships formed to make venture capital investments within the affiliated utility's service area. See, e.g., Georgia Power Co., 55 SEC Docket 1860 (Dec. 15, 1993) (limited partnership formed to provide venture capital to high- technology companies within utility's service territory); Hope Gas, Inc., 53 SEC Docket 633 (Jan. 26, 1993) (venture capital partnership designed to provide venture capital to local business); The Potomac Edison Co., 48 SEC Docket 1409 (May 14, 1991) (risky, for-profit, economic development corporation created to stimulate and promote growth and retain jobs). See also Middle South Utilities, Inc., 26 SEC Docket 1693 (Jan. 11, 1983) (authorizing the creation of a nonutility subsidiary to investigate new business opportunities). /9/ See Notes 7 and 10. /10/ See Note 7. 4 The partnership that constructed and now owns Kiel Center consists of the largest corporations operating in the St. Louis area. Ownership of the St. Louis Blues is incidental to and as a result of ownership of the Kiel Center. Consolidating ownership of the Blues and the Kiel Center in one group was accomplished in part to provide financial stability to the Kiel Center and thus support the existence of space for other civic and community purposes. The financial stability of the Kiel Center is vital to the success of its overall economic development purposes. Furthermore, the Blues presence in St. Louis makes a positive contribution to the image and economic well-being of the region. Retaining local ownership of the hockey teams assures that these benefits will continue. UE's Kiel investments, though relatively small, are extremely important to the continued ability of the partnership to provide the essential community benefits described above. Shareholders and customers also benefit because the Kiel Center is located in UE's service territory and is a significant electric customer. Any impairment of UE's continued participation in Kiel investments would have an extremely negative impact on UE's ability to fulfill its necessary and beneficial civic obligations. Moreover, the partnerships are structured so that it would be very difficult for UE to withdraw therefrom./11/ St. Louis Equity Fund -- At June 30, 1997, $2.59 million was invested in or committed to be invested in varying percentages (not greater than 23%) of limited partnership interests or limited liability interests in eight limited partnerships or limited liability corporations that own low-income housing in the St. Louis, Missouri area. Such investments produce low-income housing federal and state income tax credits for UE. Such investments have been made or committed each year since 1989 in an amount not in excess of $600,000 in any year. An officer of UE and Ameren acts as chairman of the board of the Fund and an officer of UE is on the investment policy committee of the Fund. More than 30 major St. Louis corporations are investors and also participate in various committees./12/ - ---------------- /11/ See the cases cited in Note 9 for decisions approving economic development and civic responsibility investments. In addition, the Commission has allowed investments in other businesses which clearly had no connection to the utility business in special circumstances. In National Fuel Gas Co. Release No. 23466 (Nov. 1, 1984), the Commission approved an investment in a venture capital firm whose sole investment was to be a regional commercial airline company which provided air service to the utility's headquarters city. It appears from the decision that the utility was concerned that vital air service would be lost to the community without the support of the venture capital investment. UE's support of the Kiel Center, together with that of other community leaders, was instrumental in the success of the project which is providing significant economic development advantages to St. Louis. /12/ Georgia Power Co., Release No. 35-26220 (Jan. 24, 1995) (limited partnership investments in low-income housing projects that qualify for low- income housing tax credit under (continued...) 5 Housing Missouri -- At June 30, 1997, $34,003 was invested in or committed to a 14% interest in this limited liability corporation, which owns low income housing in Missouri outside the St. Louis area. Such investments produce low income housing federal income tax credits for UE./13/ One officer of UE is on the board of directors and investment policy committee of Housing Missouri. Other Activities -- UEDC is involved in certain other activities including acting as a finder for bank or other lender financing for capital improvement projects within UE's service territory; offering inspection and maintenance services for electric distribution systems on the customers' side of the meter;/14/ providing energy audits and consulting regarding energy efficiency equipment and practices./15/ c. Other Activities ---------------- Marketing -- UE and UEDC have applied for a power marketing license from FERC. No power marketing activities have yet been undertaken and no significant investment has been made./16/ From CIPSCO, Ameren will hold the following nonutility subsidiaries and investments: 3. CIPSCO Investment Company ("CIPSCO Investment") - ---------------- /12/(...continued) Section 42 of the Internal Revenue Code). UEDC's investments in limited partnerships which are engaged in providing low income housing are distinguishable from the situation in Michigan Consolidated Gas Co., 44 SEC 361, aff'd, 444 F.2d 913 (D.D.C. 1971) ("Michigan Consolidated"). In that case, the registered holding company, through wholly owned subsidiaries, was actively engaged in the development, financing, construction and other aspects of the business of providing low income housing. The Commission found that this business was not functionally related to the utility business and could not be retained. Here, UEDC is a passive, limited partner investor in a number of low income housing projects developed and managed by non-affiliated entities. UEDC's investments in these limited partnerships are for the purposes of obtaining federal and state income tax credits and fulfilling UE's civic responsibilities in the communities it serves. UEDC's investments appear to be substantially identical to those approved in Georgia Power referred to above. /13/ See Note 11. /14/ See Note 3. /15/ See Note 4. /16/ Wholesale and retail power and energy marketing activities have been approved for several registered holding companies. See, e.g., SEI Holdings, Release No. 35-26581 (Sept. 26, 1996). 6 CIPSCO Investment manages CIPSCO's nonutility investments and has four first-tier subsidiaries: CIPSCO Securities Company, CIPSCO Leasing Company, CIPSCO Energy Company, and CIPSCO Venture Company. CIPSCO Investment has no other direct investments or business./17/ At June 30, 1997, the total amount invested through CIPSCO Investment and its subsidiaries was $125.4 million as follows: a. CIPSCO Securities Company. Invests in marketable securities./18/ At June 30, 1997 $54.1 million was invested in hedged portfolios of preferred and common stocks and other marketable securities. Of this amount, approximately $26.2 million relates to common and preferred stock of utility companies. All of these investments are made through mutual funds or investment managers. In no case does CIPSCO Securities (together with any of its affiliates) own more than 5% of any class of securities of any issuer thereof. Details regarding the marketable securities investments are as follows: 1. Flaherty & Crumrine Preferred Stock Portfolio -- A portfolio of adjustable rate, sinking fund, and perpetual preferred stock hedged with financial futures and options. Flaherty & Crumrine acts as investment manager pursuant to investment guidelines established by CIPSCO Securities. CIPSCO Securities is beneficial owner of the portfolio of securities but all buy and sell orders are made by the investment manager. Investment guidelines include limitations on amounts invested in any one issue and exposure to any issuer as well as minimum ratings. Initial Investment Cost: $12,000,000 in June 1991. Market Value as of June 30, 1997: $20,360,761. Investment in utility preferred stock: 52%, $10.7 million. - ---------------- /17/ Certain of the marketable securities described below as being held by CIPSCO Securities and the Illinois Equity Fund Limited Partnerships described below as being held by CIPSCO Venture Company (see Note 23) are held directly by CIPSCO Investment. /18/ Under Section 9(c)(2) and Rule 40(a)(1), registered holding company systems are permitted to acquire marketable securities. Substantially all the investments of CIPSCO Securities qualify for this exception (except to the extent non-debt securities do not fall under such Rule). To the extent any holdings are not marketable, the Commission will view the "functional relationship" requirement of Section 9(c)(3) less strictly when the investment at issue--as here--evolved in connection with the system's utility business, is not significant in relation to the utility system's total financial resources, and has potential to benefit investors and/or consumers. See Jersey Central Power & Light Co., 37 SEC Docket 1243 (Mar. 18, 1987). CIPSCO Securities Company's investments (including the common and preferred stocks) are all highly liquid temporary investments or readily marketable securities that are held pending application to long-term investment opportunities. Such opportunities could include investments in UE or CIPS to the extent necessary and appropriate and as approved, to the extent required, by regulators. 7 2. Spectrum Preferred Stock Portfolio -- A portfolio of high quality fixed-dividend, utility sinking fund and perpetual preferred stocks hedged with financial futures and options. Spectrum acts as investment manager pursuant to investment guidelines established by CIPSCO Securities. CIPSCO Securities is beneficial owner of the portfolio of securities but all buy and sell orders are made by the investment manager. Investment guidelines include limitations on amounts invested in any one issue and exposure to any issuer as well as minimum ratings. Initial Investment Cost: $10,000,000 in June 1991. Market Value as of June 30, 1997: $15,685,593. Investment in utility preferred stock: 99%, $15.5 million. 3. Gateway Index Risk Adjusted Program -- A portfolio consisting of substantially all common stocks represented in the S&P 100 Index and hedged with S&P 100 and S&P 500 Index options. Gateway acts as investment manager pursuant to investment guidelines established by CIPSCO Securities. CIPSCO Securities is beneficial owner of the portfolio of securities but all buy and sell orders are made by the investment manager. Investment guidelines limit investment to no more than 2% of the outstanding amount of any class of equity security of an issuer. Total exposure to any issuer is limited to 10% of the portfolio. Initial Investment Cost: $5,200,000 in September 1990. Market Value as of June 30, 1997: $9,091,774. Since this fund is meant to match the S&P 100, those utilities included in the S&P 100 Index will be proportionally included (approximate June 30, 1997 value: $47,100). 4. Mesirow Alternative Strategies Fund, L.P. -- A multi-manager investment partnership that seeks to achieve a superior long-term return in equity securities with a lower degree of volatility than the S&P 500 Index. CIPSCO Securities holds a limited partnership interest. The partnership is beneficial owner of all securities but all buy and sell orders are made by the investment manager. Initial Investment Cost: $2,900,000 in March of 1995. Market Value as of June 30, 1997: $3,916,522. This investment is in liquidation which is to be completed in September, 1997. 5. Genesee Eagle Fund -- A multi-manager investment partnership that seeks to achieve a superior long-term return with a lower degree of volatility than the S&P 500 Index through equity and other investments. CIPSCO Securities holds a limited partnership interest. The partnership is beneficial owner of all securities but all buy and sell orders are made by the investment manager. Initial Investment Cost: $2,900,000 in July 1994. Market Value as of June 30, 1997: $4,583,553. This investment is in liquidation which is to be completed in September, 1997. In addition, at June 30, 1997, CIPSCO Securities had $2.0 million of temporary marketable investments in the Dreyfus Treasury Prime Cash Management Fund, a money market mutual fund designed for institutional investors with the objective of preserving capital and maintaining liquidity. This fund invests only in securities issued or guarantied by the U.S. Government. 8 b. CIPSCO Leasing Company. Passive, financial investments in long-term leveraged lease transactions. At June 30, 1997, $34.7 million was invested pursuant to four holdings in leased assets consisting of a commercial jet aircraft, an interest in a natural gas liquids plant, natural gas processing equipment and retail department store properties./19/ c. CIPSCO Energy Company. Passive, financial energy-related investment opportunities. Turbine Leases. At June 30, 1997, $23.5 million was invested in leases, or interests in such leases, for nine combustion turbine generating units leased to five investor-owned utilities in the United States./20/ Cogeneration. At June 30, 1997, $5.5 million was invested in a 24.75 percent interest in Appomattox Cogeneration Limited Partnership, which owns a power sales agreement for electricity produced at a 40-MW cogeneration facility at Hopewell, Virginia./21/ d. CIPSCO Venture Company. - ---------------- /19/ Central and South West Corp. Release No. 35-23578 (Jan. 22, 1985 (investment in equipment, manufacturing or processing equipment for lease to nonaffiliate for term of years on a net basis through leveraged lease structure). Leveraged lease transactions provide tax benefits to the investor in the property and provide a method of financing for the lessee. In this case the Commission found that the holding company did not acquire an ownership interest in the leased property sufficient to make it an "owner" in the variety of large business which would seek lease financing of this type. Thus, the nature of the property subject to the lease is immaterial to the conclusion that leveraged lease investments are permitted under the Act. CIPSCO Leasing has only 4 leveraged lease investments and each is substantially identical to the lease transaction of Central and South West Corp. Details regarding the leveraged lease transactions are presented in Attachment 1 to this Exhibit K-4. /20/ Each of these investments is in the form of a leveraged lease like those referred to in Note 19. Although the turbines which are subject of the leases would constitute electric utility facilities under Section 2(a)(3), by virtue of Rule 7(d), the entities that hold title to the turbines are not "electric utility companies." In each of these transactions the appropriate certificate on Form U-7D has been filed. Additional details, including the docket number of the Form U-7D filing, are included in Attachment 1 to this Exhibit K-4. /21/ The cogeneration facility is a qualifying facility under PURPA pursuant to FERC determination in docket QF 87-250-000. See Attachment 1 to this Exhibit K- 4 for details. 9 Invests within the CIPS service territory. These investments are the civic and economic development investments of CIPSCO important to the fulfillment of CIPSCO's responsibilities as a good corporate citizen. In addition, enhancement of economic development in the CIPS service territory is beneficial to CIPS's customers and to shareholders./22/ At June 30, 1997, $3,250,000 was invested or committed as follows: CIPSCO Venture Company (CVC) Total current asset book value $3 million. 1. Effingham Development Building II Limited Liability Company -- A 40% equity investment in a $6.5 million Limited Liability Corporation which owns a manufacturing facility leased to an industrial customer of CIPS. CVC is not the managing member of this LLC, but has certain voting rights up to the percent of equity ownership in the LLC. (September 1994) The facility is a 267,056 square foot manufacturing facility located in an Effingham, Illinois industrial park. 2. Mattoon Enterprise Park -- A 20% equity investment in a Limited Liability Company which owns 231 acres of farmland to be used for development of an industrial park within the boundaries of the City of Mattoon and CIPS service territory. CVC's share of the investment is $165,200. This site is currently being improved to be ready for resale to another LLC of which CEC may be a participant. 3. Illinois Equity Fund Limited Partnerships -- The funds are real estate investment funds that finance rental housing developments in Illinois outside the six-county Chicagoland area. They consist of limited partnerships that develop low income housing so that they can receive tax savings generated by the Section 42 federal low-income housing tax credits. There are three separate funds: 1992, 1994 and 1996. The Investment Company's commitment to those funds is: $2.5 million./23/ August 1997 - ---------------- /22/ See Notes 8, 9, 11 and 12. /23/ See Note 12. 10 Attachment 1 to Exhibit K-4 Additional Information on CIPSCO Leveraged Leases and Turbine Investments CIPSCO Leasing Company (CLC) Total current asset book value $34.7 million. 1. CIPSCO Leasing Company (KN Energy) Transaction: A 17.5% undivided interest in a leveraged lease financing of a natural gas liquids plant. All operations are the responsibility of lessee. (November 1991) Equipment Description: The plant removes natural gas liquids and moisture from natural gas thereby improving the operational efficiency of the natural gas pipeline. The equipment consists of gas processing and related equipment; lean oil absorption unit, turbo expander, fractionist unit, helium unit, and truck rack. Lessee: KN Energy (with guarantee from original lessee, ENRON Corp.) Lease Term: 21 years (subject to certain lessee purchase or renewal options) Lease Termination Date: May 25, 2012 2. CLC Leasing Company A (Amoco) Transaction: An equity investment in a leveraged lease financing of various oil and gas production treating and processing equipment with Amoco Corporation. This investment represents 25% of a $63 million lease transaction. All operations are the responsibility of lessee. (December 1991) Equipment Description: New oil and gas production, treating and processing equipment such as pumping units, pressure vessels, tanks, compressors and related equipment. The equipment is located in various locations within five southwestern states. Lessee: Amoco Equipment Leasing Company Lease Term: 18 years (subject to certain lessee purchase or renewal options) Lease Termination Date: June 18, 2009 3. CLC Aircraft Leasing Company (Delta) Transaction: An equity investment in a leveraged lease financing of one new McDonnell Douglas MD-88 aircraft for lease to Delta Airlines. All operations are the responsibility of lessee. (September 1991) Equipment Description: One (1) McDonnell Douglas MD-88 narrow body aircraft, primarily used on Delta's domestic routes and on a limited basis, outside the U.S. Lessee: Delta Airlines, Inc. Lease Term: 22 years (subject to certain lessee purchase and renewal options) Lease Termination Date: September 23, 2013 4. CLC Leasing Company B Properties: A sale/leaseback of 15 Wal-Mart stores in six states. The properties were completed in 1991 or early 1992. Wal-Mart retains ownership of the underlying land and grants a site lease for the term of the lease and any renewals thereof. All operations are the responsibility of lessee. (December 1992) Structure: There are individual leases on each store in the package. The lease is a triple net lease with lessee responsible for maintenance, insurance and most taxes. Lease Term: 20 years (subject to certain lessee purchase and renewal options) Lease Termination Date: December 21, 2012 CIPSCO Energy Company (CEC) Total current asset book value $29 million. 1. Beaver Generating Station Combustion Turbine Units Lessee: Portland General Electric Company Transaction: 51% interest in a Partnership which owns two turbine generators currently serving Portland General Electric. Lessee has full responsibility for operation and maintenance of the equipment. All units are currently connected to a 150 MW combined cycle system with individual HRSGs, which are owned by the lessee. These units are currently operated as base to intermediate load units. CEC is the general partner of the Partnership. (August 1993) 2 Location: Beaver Generating Station, Units 5 & 6 Beaver, Oregon. Original Delivery Date: August 8, 1974. Lease Termination Date: August 8, 1999 (subject to certain lessee purchase and renewal options). SEC U-7D: #32-334, 9/21/93 2. Blytheville Generating Station Combustion Turbine Units Transaction: 51% interest in a Partnership which owns three combustion turbines currently serving Arkansas Power & Light (Entergy). The units are currently used as peaking units. Lessee has full responsibility for operation and maintenance of the equipment. CEC is the general partner of the Partnership. (August 1993) Location: Blytheville Generation Station, Units 1, 2 & 3 Blytheville, Arkansas. Original Delivery Date: August 28, 1974. Lease Termination Date: August 28, 1999. SEC U-7D: #32-341, 9/21/93 3. Whitehorn Station Combustion Turbine Units Transaction: 51% interest in a Partnership which owns two combustion turbines which drive one power generator (twin pac) currently serving Puget Sound Power & Light Company. Lessee has full responsibility for operation and maintenance of the equipment. The unit is gas fired and has black start capability. It is currently used for peaking capacity. CEC is the general partner of the Partnership. Location: Whitehorn, Washington. Original Delivery Date: December 11, 1974. Lease Termination Date: December 11, 1999 (subject to certain lessee purchase and renewal options). SEC U-7D: # not known, but filed, 9/21/93 4. Greenwood Energy Center Combustion Turbine Units Transaction: 28.5% interest in a Partnership which owns two gas fired combustion turbines currently serving Missouri Public Service, a subsidiary of Utilicorp. Lessee has full responsibility for operation and maintenance of the equipment. The units are currently used as peaking units. CEC is the general partner of the Partnership. Location: Jackson County, Missouri. Original Delivery Date: June 30, 1975. Lease Termination Date: June 30, 2000 (subject to certain lessee purchase and renewal options). SEC U-7D: #32-345, 6/21/94 3 5. Mickleton Plant Combustion Turbine Unit Transaction: 100% interest in a Partnership which owns a single turbine generator with dual fuel capability, currently serving Atlantic City Electric. Unit is currently run as a peaking unit and for voltage support. Lessee has full responsibility for operation and maintenance of the equipment. Lease includes additional equipment such as transmission transformer, black start equipment and fuel tanks. CEC is the general partner of the Partnership. (July 1995). Location: Near Paulsboro, New Jersey. Original Delivery Date: July 2, 1974. Lease Termination Date: July 2, 1999 (subject to certain lessee purchase and renewal options). SEC U-7D: #32-338, 8/3/94 6. Appomattox Cogeneration Limited Partnership (ACLP) Description: A 24.75% limited partnership interest in a limited partnership which owns a Power Sales Agreement associated with a 40 MW cogeneration facility. Term: Through October 2004. Power Purchase Agreement: ACLP sells the net electrical output from this Qualifying Facility to Virginia Electric Power Company under an agreement expiring in 2004. Volume is approximately 3500 MW per year. Qualifying Facility: QF87-250-000 4 -----END PRIVACY-ENHANCED MESSAGE-----