-----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, Cj3qlx8CsEjUltwqO2WhRBBEz33X7DiMA7DzIHp9k+e+hVJfELjG2maaDLSyXH3B mxOKjTMjAd8RT7IAiYbn0Q== /in/edgar/work/20000905/0000092122-00-500037/0000092122-00-500037.txt : 20000922 0000092122-00-500037.hdr.sgml : 20000922 ACCESSION NUMBER: 0000092122-00-500037 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20000905 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN CO CENTRAL INDEX KEY: 0000092122 STANDARD INDUSTRIAL CLASSIFICATION: [4911 ] IRS NUMBER: 580690070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1/A SEC ACT: SEC FILE NUMBER: 070-09035 FILM NUMBER: 716481 BUSINESS ADDRESS: STREET 1: 270 PEACHTREE ST CITY: ATLANTA STATE: GA ZIP: 30303 BUSINESS PHONE: 4045065000 MAIL ADDRESS: STREET 1: 270 PEACHTREE STREET CITY: ATLANTA STATE: GA ZIP: 30303 U-1/A 1 am1_9035.txt File No. 70-9035 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 1 to FORM U-1 APPLICATION OR DECLARATION under The Public Utility Holding Company Act of 1935 THE SOUTHERN COMPANY 270 Peachtree Street, N.W. Atlanta, Georgia 30303 (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) Tommy Chisholm, Secretary The Southern Company 270 Peachtree Street, N.W. Atlanta, Georgia 30303 (Names and addresses of agents for service) The Commission is requested to mail signed copies of all orders, notices and communications to: W. L. Westbrook John D. McLanahan, Esq. Financial Vice President Troutman Sanders LLP The Southern Company 600 Peachtree Street, N.E. 270 Peachtree Street, N.W. Suite 5200 Atlanta, Georgia 30303 Atlanta, Georgia 30308-2216 INFORMATION REQUIRED Item 3. Applicable Statutory Provisions Item 3 is hereby amended by adding thereto the following: "Rule 53 Analysis: The proposed transactions are subject to Rule 53, which provides that, in determining whether to approve the issue or sale of a security for purposes of financing the acquisition of an exempt wholesale generator ("EWG") or "foreign utility company" ("FUCO"), the Commission shall not make certain adverse findings if the conditions set forth in Rule 53(a)(1) through (a)(4) are met, and are not otherwise made inapplicable by reason of the existence of any of the circumstances described in Rule 53(b). Southern currently meets all of the conditions of Rule 53(a), except for clause (1). At June 30, 2000, Southern's "aggregate investment," as defined in Rule 53(a)(1), in EWGs and FUCOs was approximately $2.746 billion, or about 63.84% of Southern's "consolidated retained earnings," also as defined in Rule 53(a)(1), for the four quarters ended June 30, 2000 ($4.302 billion). With respect to Rule 53(a)(1), however, the Commission has determined that Southern's financing of investments in EWGs and FUCOs in an amount greater than the amount that would otherwise be allowed by Rule 53(a)(1) would not have either of the adverse effects set forth in Rule 53(c). See The Southern Company, Holding Company Act Release No. 26501, dated April 1, 1996 (the "Rule 53(c) Order"); and Holding Company Act Release No. 26646, dated January 15, 1997 (order denying request for reconsideration and motion to stay). 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 domestic utility subsidiary 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. Moreover, even if the effect of the capitalization and earnings of EWGs and FUCOs in which Southern has an ownership interest upon the Southern holding company system were considered, there would be no basis for the Commission to withhold or deny approval for the proposal made in this Application-Declaration. The action requested in the instant filing would not, by itself, or even considered in conjunction with the effect of the capitalization and earnings of Southern's EWGs and FUCOs, have a material adverse effect on the financial integrity of the Southern system, or an adverse impact on Southern's public-utility subsidiaries, their customers, or the ability of State commissions to protect such public-utility customers. The Rule 53(c) Order was predicated, in part, upon an assessment of Southern's overall financial condition which took into account, among other factors, Southern's consolidated capitalization ratio and the recent growth trend in Southern's retained earnings. As of December 31, 1995, the most recent fiscal year preceding the Rule 53(c) Order, Southern's consolidated capitalization consisted of 49.3% equity (including mandatorily redeemable preferred securities) and 50.7% debt (including $1.68 billion of long-term, non-recourse debt and short-term debt related to EWGs and FUCOs). Southern's consolidated capitalization as of June 30, 2000 was 39.8% equity, 60.2% debt including all non-recourse debt, and 54.3% equity and 45.7% debt excluding all non-recourse debt. On a pro forma basis, taking into consideration the transactions contemplated hereby, such ratios are 42.2% and 57.8%, respectively, for equity and debt. The common equity component of Southern's pro forma consolidated capitalization represents 33.3% of total capitalization at June 30, 2000. 2 Since the date of the Rule 53(c) Order, there has been a reduction in Southern's consolidated equity capitalization ratio; however, it remains within acceptable ranges and limits of rating agencies for strong investment grade corporate credit ratings. In addition, the affiliated operating companies, which have a significant influence on the Southern corporate rating, continue to show strong financial statistics as measured by the rating agencies. The following table presents the senior secured ratings history for each as rated by S&P, Moody's and Fitch:
- -------------------- --------------------- ------------- ------------- -------------- ------------- ------------- Company Agency 1995 1996 1997 1998 19991 - -------------------- --------------------- ------------- ------------- -------------- ------------- ------------- - -------------------- --------------------- ------------- ------------- -------------- ------------- ------------- Alabama S&P A+ A+ A+ A+ A+ Moody's A1 A1 A1 A1 A1 Fitch A+ AA- AA- AA- AA- - -------------------- --------------------- ------------- ------------- -------------- ------------- ------------- - -------------------- --------------------- ------------- ------------- -------------- ------------- ------------- Georgia S&P A+ A+ A+ A+ A+ Moody's A1 A1 A1 A1 A1 Fitch AA- AA- AA- AA- AA- - -------------------- --------------------- ------------- ------------- -------------- ------------- ------------- - -------------------- --------------------- ------------- ------------- -------------- ------------- ------------- Gulf S&P A+ A+ AA- AA- AA- Moody's A1 A1 A1 A1 A1 Fitch A+ AA- AA- AA- AA- - -------------------- --------------------- ------------- ------------- -------------- ------------- ------------- - -------------------- --------------------- ------------- ------------- -------------- ------------- ------------- Mississippi S&P A+ A+ AA- AA- AA- Moody's Aa3 Aa3 Aa3 Aa3 Aa3 Fitch AA- AA- AA- AA- AA- - -------------------- --------------------- ------------- ------------- -------------- ------------- ------------- - -------------------- --------------------- ------------- ------------- -------------- ------------- ------------- Savannah S&P A+ A+ AA- AA- AA- Moody's A1 A1 A1 A1 A1 Fitch Not rated Not rated Not rated Not rated Not rated - -------------------- --------------------- ------------- ------------- -------------- ------------- -------------
Southern's consolidated retained earnings grew on average approximately 5.9% per year over the last five years. Excluding the $111 million one-time windfall profits tax imposed on SWEB in 1997, the $221 million write down of assets in 1998, the $69 million write down of the Mobile Energy investment in 1999 and the $78 million gain on the sale of the SWEB supply business in 1999, the average growth would be 7.4%. In 1999, consolidated retained earnings _________________________________________ 1 In April 2000, Moody's and Duff & Phelps (now known as Fitch) reaffirmed their ratings; however, S&P placed the ratings of Southern and its affiliates on credit watch with negative implications. 3 increased $354 million, or 9.1%. Southern's interests in EWGs and FUCOs have made a positive contribution to earnings over the four calendar years ending after the Rule 53(c) Order. Accordingly, since the date of the Rule 53(c) Order, the capitalization and earnings attributable to Southern's investments in EWGs and FUCOs have not had an adverse impact on Southern's financial integrity. Item 6. Exhibits and Financial Statements (a) Exhibits. A-1 - Draft of Southern Company Performance Stock Plan. (Previously Filed.) A-2 - Composite Certificate of Incorporation of Southern reflecting all amendments to date. (Designated in Registration No. 33-3546 as Exhibit 4(a), in Certificate of Notification, File No. 70-7341, as Exhibit A and in Certificate of Notification, File No. 70-8181, as Exhibit A.) A-3 - By-Laws of Southern as amended effective October 21, 1991, and presently in effect. (Designated in Form U-1, File No. 70-8181, as Exhibit A-2.) B - None. C - None. D - None. E - None. F - Opinion of Troutman Sanders LLP. G-1 - Draft of notice of annual meeting of stockholders. (Previously Filed.) G-2 - Draft of statement relating to the Plan to be included in the proxy statement for the annual meeting. (Previously Filed.) G-3 - Draft of form of proxy for the annual meeting. (Previously Filed.) 4 H - Form of Notice and Order permitting the solicitation of proxies. (Previously Filed.) Exhibits heretofore filed with the Securities and Exchange Commission and 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. Financial statements are omitted since they are not deemed relevant or necessary for a proper disposition of the proposed transactions by the Commission. SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned company has duly caused this amendment to be signed on its behalf by the undersigned thereunto duly authorized. Dated: September 5, 2000 THE SOUTHERN COMPANY By: /s/ Tommy Chisholm Tommy Chisholm Secretary 5 EX-99 2 am1_9035xf.txt EXHIBIT F Exhibit F Troutman Sanders LLP Attorneys At Law Bank of America Plaza 600 Peachtree Street, N.E., Suite 5200 Atlanta, Georgia 30308 404-885-3000 September 5, 2000 Securities and Exchange Commission Washington, DC 20549 RE: The Southern Company Statement on Form U-1 File No. 70-9035 Ladies and Gentlemen: We are familiar with the statement on Form U-1 referred to above and are furnishing this opinion with respect to the proposed granting of Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights and Restricted Stock and the issuance and sale by The Southern Company ("Southern") of additional shares of its common stock, par value $5 per share, pursuant to the Southern Company Performance Stock Plan (the "Plan"), as described in such statement on Form U-1. We are of the opinion that Southern is a validly organized and duly existing corporation under the laws of the State of Delaware and that, upon the issuance of your order or orders herein and upon compliance with the applicable provisions of the Securities Act of 1933, as amended, and the securities or "Blue Sky" laws of any jurisdiction applicable thereto and in the event that the proposed transactions by Southern are consummated in accordance with the terms of the Plan and such order or orders: (a) all State laws applicable to the proposed transactions by Southern will have been complied with; (b) the shares of common stock of Southern which are proposed to be issued and sold pursuant to the Plan will be validly issued, fully paid and non-assessable shares of common stock of Southern and the holders thereof will be entitled to the rights and privileges appertaining thereto set forth in the Certificate of Incorporation of Southern, as amended, defining such rights and privileges; and Securities and Exchange Commission September 5, 2000 Page 2 (c) the consummation of the proposed transactions by Southern will not violate the legal rights of the holders of any securities issued by Southern or any associate company thereof. We hereby consent to the use of this opinion in connection with the filing of such statement on Form U-1. Very truly yours, /s/ Troutman Sanders LLP -----END PRIVACY-ENHANCED MESSAGE-----