0000071297-95-000054.txt : 19950811 0000071297-95-000054.hdr.sgml : 19950811 ACCESSION NUMBER: 0000071297-95-000054 CONFORMED SUBMISSION TYPE: U-1 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19950810 SROS: BSE SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENGLAND ELECTRIC SYSTEM CENTRAL INDEX KEY: 0000071297 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 041663060 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1 SEC ACT: 1935 Act SEC FILE NUMBER: 070-08671 FILM NUMBER: 95560564 BUSINESS ADDRESS: STREET 1: 25 RESEARCH DR CITY: WESTBOROUGH STATE: MA ZIP: 01581 BUSINESS PHONE: 5083669011 U-1 1 File No. 70- SECURITIES AND EXCHANGE COMMISSION 450 Fifth Street, N.W. Washington, D.C. 20549 FORM U-1 APPLICATION/DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 NARRAGANSETT ENERGY RESOURCES COMPANY 280 Melrose Street Providence, Rhode Island 02901 NEW ENGLAND ELECTRIC SYSTEM 25 Research Drive Westborough, MA 01582 (Name of companies filing this statement and addresses of principal executive offices) NEW ENGLAND ELECTRIC SYSTEM (Name of top registered holding company parent of applicant) Michael E. Jesanis Kirk L. Ramsauer Treasurer Assistant General Counsel 25 Research Drive 25 Research Drive Westborough, MA 01582 Westborough, MA 01582 (Name and address of agents for service) Item 1. Description of Proposed Transaction ____________________________________________ Narragansett Energy Resources Company (the Company), incorporated under the laws of the State of Rhode Island, is a direct, wholly-owned subsidiary of New England Electric System (NEES), a holding company registered under the Public Utility Holding Company Act of 1935 (the Act). The Company is a general partner with a 20% interest in two partnerships owning the Ocean State Power Project (OSP). OSP is a two-unit combined cycle electric generating facility located in Burrillville, Rhode Island. Both units are currently in commercial operation. By prior orders, the Commission (i) approved the acquisition by the Company of a 20% equity interest in OSP, (ii) authorized NEES to fund the Company's obligation to contribute to the capital of OSP under the OSP partnership agreement and guarantee such obligation, and (iii) approved the construction financing of OSP. (HCAR No. 24727, dated October 13, 1988, and HCAR No. 24790, dated December 23, 1988.) As of June 30, 1995, total capitalization of the Company was approximately $34 million, 100% of which was in the form of common equity. By this Application/Declaration, the Company seeks authorization to refinance a portion of its outstanding common equity, on or before December 31, 1996, not in excess of an aggregate principal amount of $33 million, by issuing and selling one or more long-term notes (the Note). The Note would be collateralized through an assignment of the Company's OSP partnership interests which includes a security interest in OSP partnership distributions. By this Application/Declaration, NEES seeks authorization to pledge its stock in the Company (the Stock) to the purchaser(s) of the Note as limited security for the repayment of the Note. Proposed Issue and Sale of the Note ___________________________________ The Company proposes to issue and sell, on or before December 31, 1996, the Note in an aggregate principal amount not to exceed $33 million. The Note will be issued pursuant to a note agreement (the Note Agreement), the specific terms of which will be negotiated with a purchaser. The Note will have a maturity of up to 17 years from the time of issuance. The Note will bear interest at a fixed rate not to exceed 12% per annum. The Note Agreement may provide for a sinking fund or other mandatory pre-payments and limitations on callability or refundability, depending upon market conditions. The Company proposes that the Note will be redeemable at any time at its option, upon reasonable notice, at the then outstanding principal amount plus accrued interest and redemption premium, and may include a yield to maturity premium. The Note would be secured by an assignment of the Company's OSP partnership interests which also will give the purchaser(s) a first priority security interest in all distributions in the form of cash and other property received by the Company in respect to these partnership interests. The Company will propose to potential lenders that the terms and conditions of the financing be those listed in Exhibit A-1 hereto. The Company proposes that the security interest be given under the terms and conditions in the proposed Assignment and Security Agreement in Exhibit A-2 hereto. The proceeds from the proposed issue and sale of the Note will be applied by the Company to the retirement of subordinated notes issued by the Company to NEES in order to fund the Company's initial equity contributions to both OSP units. The Company has retained an experienced investment banking firm to assist it in finding potential lenders and placing the Note. Proposed Stock Pledge _____________________ NEES asks for authorization to give a first-priority pledge of all of the Stock to the purchaser(s) of the Note as collateral for the repayment of the Note. NEES proposes that the pledge of the Stock be under the terms and conditions in the proposed stock pledge agreement in Exhibit A-3 hereto. Except upon the occurrence of an event of default under the Note, NEES would be entitled to exercise all voting rights and receive and retain all dividends in respect of the pledged Stock. NEES would have no liability with respect to the repayment of the principal amount of the Note and interest thereon, except for the pledged Stock. The purpose of the pledge is to have the Note partially collateralized to obtain a more favorable interest rate on the Note. EWG or FUCO Ownership Interest ______________________________ Neither the Company nor NEES has an ownership interest in an exempt wholesale generator ("EWG") or foreign utility company ("FUCO"), as defined in Sections 32 and 33 of the Act. Additionally, neither the Company nor NEES is a party to, or has any rights under, a service, sales, or construction agreement with an EWG or FUCO. We understand that one or more of the other general partners in OSP has filed for and obtained the status of an EWG. None of the proceeds of the transaction proposed will be used by the Company, NEES, or any affiliated company for acquisition of an interest in an EWG or FUCO without further approval from the Commission. Item 2. Fees, Commissions and Expenses _______________________________________ The estimated fees plus expenses in connection with the proposed issue and sale of the Note, including the cost of services of an investment banking firm, are set forth in Exhibit G hereto. Certain services in connection with the proposed transactions, including services in connection with negotiating the terms of the Note with a potential investor, will be performed at the actual cost thereof by New England Power Service Company, an affiliated service company operating pursuant to Section 13 of the Act and the Commission's rules thereunder. The services of such company will also consist of services performed by the Executive and Administrative Department, the Corporate Department (including attorneys), the Treasury Department (including accountants), and the Office Services Department. Item 3. Applicable Statutory Provisions ________________________________________ 1. The proposed issue and sale of the Note is subject to Sections 6(a), 7, and 12 of the Act and Rule 42. 2. The proposed pledge of the Stock is subject to Sections 6(a), 7, and 12 of the Act and Rule 45(a). 3. The retirement of subordinated notes from the proceeds of the proposed financing is subject to Sections 9(a), 10 and 12 of the Act and Rule 42. Item 4. Regulatory Approval ____________________________ No State or Federal Commission (other than the Securities and Exchange Commission) has jurisdiction over the proposed transactions. Item 5. Procedure __________________ The Company and NEES request that the Commission take action with respect to this Application/Declaration without a hearing being held and that an order or orders be issued allowing this Application/Declaration to become effective as soon as practicable. Specifically, the Company and NEES request that the Commission issue an order approving the terms and conditions of the issue and sale of the Note and the issuance of the Stock pledge. The Company and NEES (i) do not request a recommended decision by a hearing officer, (ii) do not request a recommended decision by any other responsible officer of the Commission, (iii) hereby specify that the Division of Corporate Regulation may assist in the preparation of the Commission's decision, and (iv) hereby request that there be no 30-day waiting period between the date of issuance of the Commission's order and the date it is to become effective. Item 6. Exhibits and Financial Statements __________________________________________ (a) Exhibits *A-1 Proposed Draft Terms and Conditions of Note Agreement *A-2 Proposed Draft Assignment and Security Agreement *A-3 Proposed Draft Pledge Agreement *F Opinion of Counsel G Schedule of Fees and Expenses H Proposed Form of Notice *To be supplied by amendment (b) Financial Statements ** *1-a Balance sheet of Narragansett Energy Resources Company as of June 30, 1995, actual and pro forma. *1-b Balance sheet of NEES and subsidiaries consolidated as of June 30, 1995, actual and pro forma. *2-a Statement of Income and Retained Earnings of Narragansett Energy Resources Company for the twelve months ended June 30, 1995, actual and pro forma. *2-b Statement of Income and Retained Earnings of NEES and subsidiaries consolidated for the twelve months ended June 30, 1995, actual and pro forma. **Pro Forma effect of the issuance of a $33 million Note has been shown. (c) Financial Data Schedules *1 Financial Data Schedule for the Company as of June 30, 1995 *2 Financial Data Schedule for NEES as of June 30, 1995 Item 7. Statement of Effect on the Quality of the Human Environment ___________________________________________________________________ The transactions proposed by this Application/Declaration do not involve any major Federal action significantly affecting the quality of the human environment. SIGNATURES Pursuant to the requirements of the Public Utility Holding Company Act of 1935, each undersigned company has duly caused this statement to be signed on its behalf, as indicated, by the undersigned officer thereunto duly authorized by each such company. NARRAGANSETT ENERGY RESOURCES COMPANY s/John G. Cochrane By:_________________________________ John G. Cochrane Treasurer NEW ENGLAND ELECTRIC SYSTEM s/Michael E. Jesanis By:_________________________________ Michael E. Jesanis Treasurer Date: August 10, 1995 The name "New England Electric System" means the trustee or trustees for the time being (as trustee or trustees but not personally) under an agreement and declaration of trust dated January 2, 1926, as amended, which is hereby referred to, and a copy of which as amended has been filed with the Secretary of the Commonwealth of Massachusetts. Any agreement, obligation or liability made, entered into or incurred by or on behalf of New England Electric System binds only its trust estate, and no shareholder, director, trustee, officer or agent thereof assumes or shall be held to any liability therefor. EX-99 2 EXHIBIT INDEX Exhibit No. Description Page ----------- ----------- ---- A-1 Proposed Draft Terms and To be filed by Conditions of Note Agreement amendment A-2 Proposed Draft Assignment and To be filed by Security Agreement amendment A-3 Proposed Draft Pledge Agreement To be filed by amendment F Opinion of Counsel To be filed by amendment G Schedule of Estimated Fees Filed herewith and Expenses H Proposed Form of Notice Filed herewith Financial Statement No. Description Page ------------- ----------- ---- 1-a Balance sheet of Narragansett To be filed by Energy Resources Company as of amendment June 30, 1995, actual and pro forma 1-b Balance sheet of NEES and To be filed by subsidiaries consolidated as of amendment June 30, 1995, actual and pro forma 2-a Statement of Income and Retained To be filed by Earnings of Narragansett Energy amendment Resources Company for the twelve months ended June 30, 1995, actual and pro forma 2-b Statement of Income and Retained To be filed by Earnings of NEES and subsidiaries amendment consolidated for the twelve months ended June 30, 1995, actual and pro forma Financial Data Schedules Description Page -------------- ----------- ---- 1 Financial Data Schedule for the To be filed by Company as of June 30, 1995 amendment 2 Financial Data Schedule for NEES To be filed by as of June 30, 1995 amendment EX-99 3 EXHIBIT G EXHIBIT G _________ Schedule of Estimated Fees and Expenses in Connection with the Proposed Issue and Sale of $33 Million Narragansett Energy Resources Company Notes Fee for filing under the 1935 Act $ 2,000 Services of NEPSCO*: Executive and Administrative Department 1,000 Corporate Department (including attorneys) 17,500 Treasury Department (including accountants) 10,500 Other Departments 1,000 _________ $ 30,000 Fees and expenses of Financial Advisor 435,000 Fees and expenses of Counsel for the Purchasers 55,000 Rating Agency Fee 5,000 Miscellaneous 13,000 ========= Total $ 540,000 _______________________ * New England Power Service Company (NEPSCO) is an affiliated Service company operating pursuant to the provisions of Section 13 of the Act and the Commission's rules thereunder. The services of NEPSCO are performed at the actual cost thereof. EX-99 4 EXHIBIT H EXHIBIT H _________ PROPOSED FORM OF NOTICE ________________________ Narragansett Energy Resources Company (the Company), 280 Melrose Street, Providence, Rhode Island, a subsidiary company of New England Electric System (NEES), a registered holding company, and NEES have filed an Application/Declaration with this Commission pursuant to Sections 6(a), 7, 9(a), 10, and 12 of the Public Utility Holding Company Act of 1935 (the Act) and Rules 42 and 45 thereunder. The Company is a general partner with 20% interest in each of two partnerships owning the Ocean State Power Project (OSP). OSP owns a two-unit combined cycle electric generating facility located in Burrillville, Rhode Island. These units are currently in commercial operation. The Company proposes to issue and sell, on or before December 31, 1996, one or more long term notes in an aggregate principal amount not to exceed $33 million (the Note). The Note will be issued pursuant to a note agreement, the specific terms of which will be negotiated with the purchaser (the Note Agreement). The Note will have a maturity of up to 17 years, may provide for a sinking fund or other mandatory pre-payments, and may have limitations on callability or refundability depending upon market conditions. The Company proposes that the Note will be redeemable at any time at its option, upon reasonable notice, at the then outstanding principal amount plus accrued interest and redemption premium, and may include a yield to maturity premium. The interest rate for the Note will not exceed 12% per annum. The Note would be secured by an assignment of the Company's OSP partnership interests which will include a security interest in distributions to the Company from the OSP partnerships. NEES proposes to have the authorization to pledge its stock in the Company to the purchaser(s) of the Note as limited security for the Note. The proceeds from the proposed transactions will be applied by the Company to the retirement of subordinated notes issued by the Company to NEES in order to fund the Company's initial equity contributions to both OSP units. The Company has retained an experienced investment banking firm to assist in finding potential lenders and placing the Note.