U-1 1 gulfborru1.txt SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM U-1 APPLICATION OR DECLARATION under The Public Utility Holding Company Act of 1935 GULF POWER COMPANY 500 Bayfront Parkway Pensacola, Florida 32501 (Name of company or companies filing this statement and addresses of principal executive offices) THE SOUTHERN COMPANY (Name of top registered holding company parent of each applicant or declarant) Warren E. Tate Vice President, Corporate Secretary and Treasurer Gulf Power Company 500 Bayfront Parkway Pensacola, Florida 32501 (Names and addresses of agents for service) The Commission is requested to mail signed copies of all orders, notices and communications to the above agent for service and to: Thomas A. Fanning John D. McLanahan, Esq. Executive Vice President, Chief Troutman Sanders LLP Financial Officer and Treasurer 600 Peachtree Street, N.E. The Southern Company Suite 5200 270 Peachtree Street, N.W. Atlanta, Georgia 30308-2216 Atlanta, Georgia 30303 INFORMATION REQUIRED Item 1. Description of Proposed Transactions. 1.1 Gulf Power Company ("Gulf"), a wholly-owned subsidiary of The Southern Company ("Southern"), a registered holding company under the Public Utility Holding Company Act of 1935, as amended (the "Act"), proposes to issue and sell from time to time, prior to July 1, 2007, short-term and/or term-loan notes to lenders, commercial paper to or through dealers and/or issue non-negotiable promissory notes to public entities for their revenue anticipation notes in an aggregate principal amount at any one time outstanding of up to $600,000,000. 1.2 Gulf proposes to effect borrowings from certain banks or other lending institutions. Such institutional borrowings will be evidenced by notes to be dated as of the date of such borrowings and to mature in not more than seven years after the date of issue, or by "grid" notes evidencing all outstanding borrowings from each lender to be dated as of the date of the initial borrowing and to mature not more than seven years after the date of issue. Gulf proposes that it may provide that any note evidencing such borrowings may not be prepayable, or that it may be prepaid with payment of a premium that is not in excess of the stated interest rate on the borrowing to be prepaid. The form of note applicable to this paragraph is filed herewith as Exhibit A-1. Borrowings will be at the lender's prevailing rate offered to corporate borrowers of similar quality. Such rates will not exceed the lender's prime rate or (i) LIBOR plus up to 3% or (ii) a rate not to exceed the prime rate to be established by bids obtained from the lenders prior to a proposed borrowing. - 2 - Compensation for the credit facilities may be provided by fees of up to 1% per annum of the amount of the facility. Compensating balances may be used in lieu of fees to compensate certain of the lenders. 1.3 Gulf also may effect short-term borrowings hereunder in connection with the financing of certain pollution control facilities through the issuance by public entities of their revenue bond anticipation notes. Under an agreement with each such public entity, the entity would effectively loan to Gulf the proceeds of the sale of such revenue bond anticipation notes, having a maturity of not more than one year after date of issue, and Gulf may issue its non-negotiable promissory note therefor. Such note would provide for payments thereon to be made at times and in amounts which shall correspond to the payments with respect to the principal of, premium, if any, and interest on, which shall not exceed the prime rate, such revenue bond anticipation notes, whenever and in whatever manner the same shall become due, whether at stated maturity, upon redemption or declaration or otherwise. Gulf requests that the Commission reserve jurisdiction over the issuance by Gulf of its non-negotiable promissory notes pursuant to this Item 1.3 pending completion of the record with respect thereto. 1.4 Gulf also proposes that it will have authority to issue and sell commercial paper to or through dealers from time to time prior to July 1, 2007. Such commercial paper will be in the form of promissory notes with varying maturities not to exceed 390 days. Actual maturities will be determined by market conditions, the effective interest costs and Gulf's anticipated cash flow, including the proceeds of other borrowings, at the time of issuance. The - 3 - commercial paper notes will be issued in denominations of not less than $50,000. The form of commercial paper note is filed herewith as Exhibit A-2. The commercial paper will be sold by Gulf directly to or through a dealer or dealers (the "dealer"). The discount rate (or the interest rate in the case of interest-bearing notes), including any commissions, will not be in excess of the discount rate per annum (or equivalent interest rate) prevailing at the date of issuance for commercial paper of comparable quality of the particular maturity sold by issuers thereof to commercial paper dealers. No commission or fee will be payable in connection with the issuance and sale of commercial paper, except for a commission not to exceed 1/8 of 1% per annum payable to the dealer in respect of commercial paper sold through the dealer as principal. The dealer will reoffer such commercial paper at a discount rate of up to 1/8 of 1% per annum less than the prevailing interest rate to Gulf or at an equivalent cost if sold on an interest-bearing basis. Each certificate under Rule 24 with respect to the issue and sale of commercial paper will include the name or names of the commercial paper dealers, the amount of commercial paper outstanding as of the end of each quarter and information with respect to the discount rate and interest rate. 1.5 Pursuant to an order of the Commission, Gulf has authority to effect short-term borrowings prior to January 1, 2004 as set forth in Commission File No. 70-8947 (HCAR No. 35-26628, dated December 13, 1996). Pursuant to another order of the Commission, Gulf has authority to effect any such short-term borrowings through a Southern consolidated commercial paper program prior to June 30, 2004 as set forth in Commission File No. 70-9631 (HCAR No. 35-27273, dated November 8, 2000). According to such authorizations, any - 4 - borrowings pursuant to each order must be aggregated and may not exceed the total amount authorized in File No. 70-8947. At August 11, 2003, Gulf did not have any borrowings outstanding pursuant to such authorizations. Gulf proposes that the authorization sought in this file would supersede and replace, with respect to Gulf, the authorization in File No. 70-8947 effective immediately upon the date of the Commission's order herein but would not otherwise affect the authorization in File No. 70-9631. 1.6 The proceeds from the proposed borrowings will be used by Gulf for working capital purposes, including the financing in part of its construction program. 1.7 Except as may be otherwise authorized by the Commission, any short-term or term-loan borrowings of Gulf outstanding hereunder after June 30, 2007 and June 30, 2014, respectively, will be retired from internal cash resources, the proceeds of equity financings or the proceeds of short or long-term debt. 1.8 Gulf represents that it will maintain its common equity as a percentage of capitalization (inclusive of short-term debt) at no less than thirty percent. Gulf will not publicly issue any of the securities for which authorization by the Commission is requested herein unless such securities are rated (to the extent that they are rated at the time of issuance) at the investment grade level as established by at least one "nationally recognized statistical rating organization", as that term is used in paragraphs (c)(2)(vi)(E), (F) and (H) of Rule 15c3-1 under the Securities Exchange Act of 1934, as amended. Gulf requests that it be permitted to issue a security that does not satisfy the foregoing condition if the requirements of Rule 52(a)(i) and Rule 52(a)(iii) are met and the issue and sale of the security have been expressly authorized by the Florida Public Service Commission. - 5 - 1.9 With respect to the financing transactions proposed hereunder, Gulf hereby requests authority to file certificates of notification under Rule 24 on a quarterly basis (within 45 days following the close of each calendar quarter). Item 2. Fees, Commissions and Expenses. ------------------------------ The fees, commissions and expenses paid or incurred or to be paid or incurred in connection with the proposed transactions (in addition to those described in Item 1 hereof) of this Application or Declaration are estimated not to exceed $10,000. Item 3. Applicable Statutory Provisions. ------------------------------- 3.1 Gulf considers that the issuance and sale of the short-term notes and commercial paper notes are currently subject to the provisions of Sections 6(a) and 7 of the Act to the extent not exempt therefrom pursuant to the first sentence of Section 6(b). With respect to the term-loan borrowings and the issuance of notes as described in Item 1.3, Gulf considers that the provisions of Sections 6(a) and 7 of the Act are applicable to the proposed transactions. 3.2 The proposed transactions will be carried out in accordance with the procedure specified in Rule 23 and pursuant to an order of the Commission with respect thereto. 3.3 Rule 54 Analysis: The proposed transactions are also subject to Rule 54, which provides that, in determining whether to approve an application which does not relate to any "exempt wholesale generator" ("EWG") or "foreign utility company" ("FUCO"), the Commission shall not consider the effect of the capitalization or earnings of any such EWG or FUCO which is a subsidiary of a - 6 - registered holding company if the requirements of Rule 53(a), (b) and (c) are satisfied. Southern currently meets all of the conditions of Rule 53(a). At March 31, 2003, Southern's "aggregate investment," as defined in Rule 53(a)(1), in EWGs and FUCOs was approximately $275.9 million, or 5.71% of Southern's "consolidated retained earnings," also as defined in Rule 53(a)(1), as of March 31, 2003 ($4.835 billion).1 In addition, Southern has complied, and will continue to comply, with the record-keeping requirements of Rule 53(a)(2), the limitation under Rule 53(a)(3) on the use of operating company personnel to render services to EWGs and FUCOs and the requirements of Rule 53(a)(4) concerning the submission of copies of certain filings under the Act to retail rate regulatory commissions. Further, none of the circumstances described in Rule 53(b) has occurred. ________________________ 1 As discussed in Southern's Application on Form U-1 (File No. 70-9727) relating to the spin-off of Mirant Corporation ("Mirant"), Southern and Mirant reorganized certain energy-related and FUCO activities and Mirant completed a tax-free distribution to Southern of these activities on March 5, 2001 (the "Mini-Spin"). On April 2, 2001, Southern completed the spin-off of its remaining ownership interest in Mirant to Southern's shareholders. Therefore, the four indirect subsidiaries (EPZ Lease, Inc., Dutch Gas Lease, Inc., GAMOG Lease, Inc. and NUON Lease, Inc.) obtained through the Mini-Spin are the only remaining FUCO investments held by Southern. Although Southern now owns all of the equity in these companies as a result of the Mini-Spin, Southern has no direct or indirect investment or any aggregate investment within the meaning of Rule 53 in these FUCOs, including any direct or indirect guarantees or credit positions related to any capital or financing leases. Furthermore, the only remaining EWG investment held by Southern after the Mini-Spin is Southern Company-Florida LLC, which was organized during the first quarter of 2001. Southern has executed limited keep-well commitments whereby Southern would be required to make capital contributions to Southern Energy Finance Capital Corp. or to Southern Energy Finance Company, Inc. in the event of a shortfall in the scheduled debt service resulting from certain changes in the payments due from Southern under the Southern Company Income Tax Allocation Agreement. The maximum potential capital contribution required under these commitments is the unamortized balance of the related loans, which totaled approximately $422 million as of March 31, 2003. - 7 - Item 4. Regulatory Approval. The proposed issuance by Gulf of its notes to institutions and the proposed issuance and sale of its commercial paper notes will have been expressly authorized by the Florida Public Service Commission, which has jurisdiction over the issuance of securities by public utility companies operating in Florida. Such transactions are not subject to the jurisdiction of any federal commission other than the Commission. Item 5. Procedure. Gulf hereby requests that the Commission issue its order with respect to these transactions as soon as the rules allow and requests that there be no 30-day waiting period between the issuance of the Commission's order and the date on which it is to become effective. Gulf hereby waives a recommended decision by a hearing officer or other responsible officer of the Commission and hereby consents that the Division of Investment Management may assist in the preparation of the Commission's decision and/or order in this matter unless such Division opposes the matters covered hereby. Item 6. Exhibits and Financial Statements. (a) Exhibits. A-1 - Form of note. A-2 - Form of commercial paper note. - 8 - A-3 - Restated Articles of Incorporation of Gulf and amendments thereto through February 9, 2001. (Designated in Registration No. 33-43739 as Exhibit 4(b)-1, in Form 8-K dated January 15, 1992, File No. 0-2429, as Exhibit 1(b), in Form 8-K dated August 18, 1992, File No. 0-2429, as Exhibit 4(b)-2, in Form 8-K dated September 22, 1993, File No. 0-2429, as Exhibit 4 and in Form 8-K dated November 3, 1993, File No. 0-2429, as Exhibit 4, in Gulf Power's Form 10-K for the year ended December 31, 1997, File No. 0-2429, as Exhibit 3(d)2 and in Gulf Power's Form 10-K for the year ended December 31, 2000, File No. 0-2429, as Exhibit 3(d)2.) A-4 - By-laws of Gulf as amended effective July 26, 2002, and as presently in effect. (Designated in Form 10-K for the year ended December 31, 2002, File No. 0-2429, as Exhibit 3(d)2.) B - None. C - None. D - None. E - None. F - Opinion of Beggs & Lane, counsel for Gulf. G - Form of Notice. Exhibits heretofore filed with the Commission designated as set forth above are hereby incorporated herein by reference and made a part hereof with the same effect as if filed herewith. (b) Financial Statements. Balance Sheet of Gulf at March 31, 2003. (Designated in Gulf's Form 10-Q for the quarter ended March 31, 2003, File No. 0-2429.) Statements of Income of Gulf for the period ended March 31, 2003. (Designated in Gulf's Form 10-Q for the quarter ended March 31, 2003, File No. 0-2429.) Since March 31, 2003, there have been no material adverse changes, not in the ordinary course of business, in the financial condition of Gulf from that set forth in or contemplated by the foregoing financial statements. - 9 - Item 7. Information as to Environmental Effects. (a) As described in Item 1, the proposed transactions are of a routine and strictly financial nature in the ordinary course of business. Accordingly, the Commission's action in this matter will not constitute any major federal action significantly affecting the quality of the human environment. (b) No other federal agency has prepared or is preparing an environmental impact statement with regard to the proposed transactions. - 10 - SIGNATURES Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned company has duly caused this statement to be signed on its behalf by the undersigned thereunto duly authorized. Dated: August 12, 2003 GULF POWER COMPANY By /s/Wayne Boston Wayne Boston Assistant Secretary