-----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, HRTPotrDX15aLCuBIfdloTTqtm5Imnjhq75gjTPQoG1v3Rv7dmO0M8Fev44cctoU lVajzKWyG6Aj97zEI+ykig== 0000092122-97-000047.txt : 19970702 0000092122-97-000047.hdr.sgml : 19970702 ACCESSION NUMBER: 0000092122-97-000047 CONFORMED SUBMISSION TYPE: POS AMC PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19970701 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN CO CENTRAL INDEX KEY: 0000092122 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 580690070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AMC SEC ACT: 1935 Act SEC FILE NUMBER: 070-08733 FILM NUMBER: 97633546 BUSINESS ADDRESS: STREET 1: 270 PEACHTREE ST CITY: ATLANTA STATE: GA ZIP: 30303 BUSINESS PHONE: 7703930650 MAIL ADDRESS: STREET 1: 270 PEACHTREE STREET CITY: ATLANTA STATE: GA ZIP: 30303 POS AMC 1 AMENDMENT NO. 9 (PE NO.6) File No. 70-8733 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 9 (Post-Effective Amendment No. 6) to APPLICATION OR DECLARATION on FORM U-1 under
The Public Utility Holding Company Act of 1935 THE SOUTHERN COMPANY SOUTHERN MOBILE ENERGY SERVICES 270 Peachtree Street, N.W. ENERGY, INC. HOLDINGS, INC. Atlanta, Georgia 30303 900 Ashwood Parkway 900 Ashwood Parkway Suite 500 Suite 450 SOUTHERN ENERGY Atlanta, Georgia 30338 Atlanta, Georgia 30338 NORTH AMERICA, INC. SEI HOLDINGS, INC. 900 Ashwood Parkway 900 Ashwood Parkway SEI EUROPE, INC. Suite 500 Suite 500 900 Ashwood Parkway Atlanta, Georgia 30338 Atlanta, Georgia 30338 Suite 500 Atlanta, Georgia 30338 SOUTHERN ENERGY INTERNATIONAL, INC. 900 Ashwood Parkway Suite 500 Atlanta, Georgia 30338 (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 Thomas G. Boren, President The Southern Company SEI Holdings, Inc. 270 Peachtree Street, N.W. 900 Ashwood Parkway Atlanta, Georgia 30303 Suite 500 Atlanta, Georgia 30338 (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 Thomas G. Boren, President Financial Vice-President SEI Holdings, Inc. The Southern Company 900 Ashwood Parkway 270 Peachtree Street, N.W. Suite 500 Atlanta, Georgia 30303 Atlanta, Georgia 30338 John D. McLanahan, Esq. Troutman Sanders LLP 600 Peachtree Street, N.E. Suite 5200 Atlanta, Georgia 30308-2216
INFORMATION REQUIRED Item 1. Description of Proposed Transaction. Item 1.1 as filed in Amendment No. 8 (Post-Effective No. 5) is hereby amended to read as follows: 1.1 Background. SEI Holdings, Inc. ("Holdings") is a wholly-owned non-utility subsidiary of The Southern Company ("Southern"), a registered holding company under the Act. Through Holdings and other direct and indirect subsidiaries of Holdings, Southern has acquired and currently holds interests in "exempt wholesale generators" ("EWGs"), as defined in Section 32, and "foreign utility companies" ("FUCOs"), as defined in Section 33. By order dated February 2, 1996 (Holding Company Act Release No. 26468) (the "Initial Order") in this proceeding, Holdings is currently authorized, among other things, to acquire the securities of one or more special-purpose subsidiaries (called "Intermediate Subsidiaries") organized exclusively for the purpose of acquiring and holding one or more EWGs or FUCOs or subsidiaries (called "Energy-Related Companies") which derive or will derive substantially all of their revenues from the ownership and/or operation of certain categories of non-utility businesses, namely: "qualifying facilities" (as defined in the Public Utility Regulatory Policies Act of 1978, as amended); steam production, conversion and distribution; and brokering and marketing of electricity and other energy commodities.1 Holdings is also authorized to acquire and hold certain other kinds of non-utility subsidiaries.2 1 The Initial Order, as it pertained to power marketing subsidiaries of Holdings, was modified by order dated September 26, 1996 (Holding Company Act No. 26581) in File No. 70-8823. Further, certain aspects of the Initial Order, as it pertains to "Energy-Related Companies," may be superseded upon the effectiveness of new Rule 58, 17 C.F.R. P. 250.58. 2 By supplemental order dated July 17, 1996 (Holding Company Act Release No. 26543) in this proceeding (the "Supplemental Order"), Holdings and its subsidiaries were authorized to pay dividends to their parent companies from time to time through June 30, 1997, out of capital and unearned surplus (including revaluation reserve) to the extent permitted by applicable law. The Commission reserved jurisdiction over the payment of dividends out of capital or unearned surplus by subsidiaries of Holdings that are Energy-Related Companies which derive substantially all of their revenues from brokering or marketing of energy and by other categories of Energy-Related Companies that Holdings may be authorized to acquire by subsequent rule.3 The Supplemental Order also granted Southern, Holdings, Southern Energy and Mobile Energy Services Holdings, Inc. ("Mobile Energy"), also a wholly-owned subsidiary of Southern, an extension through June 30, 1997, in which to consummate certain other proposed transactions relating to (i) the transfer of Southern Energy's common stock to Holdings, (ii) the transfer of the stock of certain subsidiaries of Southern Energy to other direct or indirect subsidiaries of Holdings, and (iii) the issuance by Mobile Energy to Southern of one or more series of preferred stock and the contribution thereof by Southern to Holdings. Although the transactions described in (i) and (ii), above, 2 Specifically, one subsidiary of Holdings, Southern Energy North America, Inc. (formerly Southern Electric Wholesale Generators, Inc.) ("Domestic Holdings" in the Initial Order) is the umbrella company for Holdings' domestic operations, and another subsidiary, Southern Energy International, Inc. (formerly SEI Newco 1, Inc.) ("Foreign Holdings" in the Initial Order) is the umbrella company for Holdings' international operations. Holdings was also authorized to acquire from Southern the shares of Southern Energy, Inc. (formerly Southern Electric International, Inc.) ("Southern Energy"), and to acquire the securities of one or more direct or indirect subsidiaries (called "Special Purpose Subsidiaries") organized to engage in any of those activities or businesses in which Southern Energy has previously been authorized to engage. 3 At the time the Supplemental Order was issued, the Commission was considering a rule proposal, recently adopted as Rule 58, that conditionally exempts the acquisition of securities of certain categories of "energy-related" companies. Also pending was an application filed by Holdings to restate its authority with respect to investments in power and energy brokering and marketing subsidiaries, which was approved by order dated September 26, 1996 (Holding Company Act Release No. 26581). 3 have been consummated or are expected to be consummated prior to June 30, 1997, MESH has not yet issued any shares of preferred stock, and, for various business reasons, may not be in a position to do so prior to June 30, 1997. Item 1.2 as filed in Amendment No. 8 (Post-Effective No. 5) is hereby amended to read as follows: 1.2 Proposed Modification to Supplemental Order. Holdings now requests a modification of and an extension to the Supplemental Order which would permit Holdings and each current and future subsidiary of Holdings to pay dividends with respect to the securities of such companies, from time to time through June 30, 2000, out of capital or unearned surplus (including revaluation reserve), to the extent permitted under applicable law. Holdings requests that the Commission reserve jurisdiction over the payment of dividends out of capital or unearned surplus by any current or future subsidiary company of Holdings that derives any material part of its revenues from the sale of goods, services, electricity or natural gas to any of Southern's five domestic electric utility subsidiaries4 or to Southern Company Services, Inc. The applicants also respectfully request a further extension through June 30, 1998 to consummate the proposals relating to Mobile Energy's preferred stock and request authority for Southern or Holdings to contribute the preferred stock of Mobile Energy referred to in Item 1.1 herein to Southern Energy North America, Inc. In all other respects, these transactions will be 4 These include Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, and Savannah Electric and Power Company. 5 Currently, capitalization ratios, including short-term debt, for "A" rated vertically integrated electric utilities have a median total debt to total capital ratio of 45% as noted by Standard & Poor's in May 1997 for companies rated both publicly and confidentially. Prior to issuing this rating standard, the Standard & Poor's total debt to total capital benchmark for an "A" rated vertically integrated investor-owned-utility having an average business position was 47%. 4 carried out in accordance with the terms and conditions contained in the Initial Order and the Supplemental Order. Item 2. Fees, Commissions and Expenses. Item 2 as filed in Amendment No. 8 (Post-Effective Amendment No. 5) is hereby amended to read as follows: The additional fees, commissions and expenses to be paid or incurred in connection with the transactions proposed in this Post-Effective Amendment are estimated not to exceed $2,000. Item 3. Applicable Statutory Provisions. Item 3 is hereby amended by replacing the Rule 54 Analysis filed in Amendment No. 8 (Post-Effective Amendment No. 5) with the following: 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 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), except for clause (1). At May 31, 1997, Southern's "aggregate investment," as defined in Rule 53(a)(1), in EWGs and FUCOs was approximately $2.117 billion, or about 56.78% of Southern's "consolidated retained earnings," also as defined in Rule 53(a)(1), for the four quarters ended March 31, 1997 ($3,728 million). With respect to Rule 53(a)(1), however, the Commission has determined that Southern's 5 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. 16501, 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 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. 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 is 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 (viz. certain transactions by the Applicants as described in Item 1.1 herein) 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 6 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). As of year-end 1996, that ratio was 52.9% equity and 47.1% debt (including $1.74 billion of long-term, non-recourse debt and short-term debt related to EWGs and FUCOs); and as of March 31, 1997, following completion of Southern's acquisition of a controlling interest in Consolidated Electric Power Asia Ltd., the comparable ratio was 48.7% equity and 51.3% debt (including $3.82 billion of long-term, non-recourse debt and short-term debt related to EWGs and FUCOs). On a pro forma basis, the proposed transactions contemplated in the instant filing have no effect on consolidated capitalization. The common equity component of Southern's pro forma consolidated capitalization represents 37.7% of total capitalization at March 31, 1997. Thus, since the date of the Rule 53(c) Order, there has been no material change in Southern's consolidated capitalization ratio, which remains within acceptable ranges and limits of rating agencies as evident by the continued "A" corporate credit rating of Southern Company. Specifically, in January 1997 Standard & Poor's assigned Southern Company its corporate credit rating of "A" which was consistent with the implied corporate rating previously held by Southern. This implied rating had been in effect since May 1995. Therefore, since the April 1996 issue of the Rule 53(c) Order, the Southern consolidated credit rating has remained at "A" thereby demonstrating Southern's continued strong financial integrity. In addition, the underlying ratings of the 7 affiliated operating companies, which have a strong influence on the Southern Company corporate rating, are all "A+". As a point of reference, the consolidated pro forma percentage of debt in the total capital structure of the Southern domestic operating utility companies is 42.8%, which is solidly below the median total debt ratio of the Standard & Poor's "A" rated vertically integrated utilities.5 Southern's consolidated retained earnings grew on average approximately 8.8% per year from 1991 through 1995. In 1996, consolidated retained earnings increased $280,365,000, or slightly more than 8%. The small reduction in the rate of earnings growth was primarily attributable to reduced domestic utility sales due to mild weather conditions throughout most of 1996 in the southeastern United States. Earnings attributable to Southern's investments in EWGs and FUCOs continued to contribute modestly to consolidated retained earnings. Accordingly, since the date of the Rule 53(c) Order, the capitalization and earnings attributable to Southern's investments in EWGs and FUCOs has not had any adverse impact on Southern's financial integrity. Reference is made to Exhibit I filed herewith which reflects capitalization at March 31, 1997 and the Statement of Income for the twelve months ended March 31, 1997 for The Southern Company and subsidiaries consolidated. In addition, the exhibit is adjusted to give effect to certain transactions proposed by Georgia Power Company and Gulf Power Company. 8 Item 6. Exhibits and Financial Statements. (a) Exhibits: F - Opinion of Troutman Sanders LLP. I - Capitalization and Income Statement of The Southern Company and Subsidiary Companies after giving effect to certain transactions. SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, each of the undersigned companies has duly caused this statement to be signed on its behalf by the undersigned thereunto duly authorized. Dated: June 30, 1997 THE SOUTHERN COMPANY By:/s/ Tommy Chisholm Tommy Chisholm Secretary MOBILE ENERGY SERVICES HOLDINGS, INC. By: /s/ Tommy Chisholm Tommy Chisholm Secretary SOUTHERN ENERGY, INC. By: /s/ Tommy Chisholm Tommy Chisholm Vice President and Secretary (Signatures Continued on Next Page) 9 SEI HOLDINGS, INC. By: /s/ Tommy Chisholm Tommy Chisholm Secretary SOUTHERN ENERGY NORTH AMERICA, INC. By: /s/ Tommy Chisholm Tommy Chisholm Secretary SEI EUROPE, INC. By: /s/ Tommy Chisholm Tommy Chisholm Secretary SOUTHERN ENERGY INTERNATIONAL, INC. By: /s/ Tommy Chisholm Tommy Chisholm Secretary 10 EX-99 2 TROUTMAN SANDERS OPINION Exhibit F TROUTMAN SANDERS LLP 600 PEACHTREE STREET, NE ATLANTA, GEOEGIA 30308-2216 June 30, 1997 Securities and Exchange Commission Washington, D.C. 20549 Re: The Southern Company, et al. - Application or Declaration on Form U-1 (File No. 70-8733), as amended Ladies and Gentlemen: We are familiar with the statement on Form U-1 referred to above, as amended by Amendment No. 8 (Post-Effective No. 5) and Amendment No. 9 (Post-Effective No. 6), and are furnishing this opinion with respect to the transactions proposed therein. We are of the opinion that Southern, Southern Energy, Mobile Energy, Holdings, and the other named applicants are each a validly organized and duly existing corporation under the laws of the State of its incorporation and that, upon the issuance of your order or orders herein, and in the event that the proposed transactions are consummated in accordance with such statement on Form U-1, as amended, and your order or orders: (a) all state laws applicable to the proposed transactions will have been complied with; (b) the Preferred Stock will be validly issued, fully paid and non-assessable, and the holder thereof will be entitled to the rights and privileges appertaining thereto set forth in Mobile Energy's articles of incorporation; and (c) the consummation of the transactions described above will not violate the legal rights of the holders of any securities issued by Southern, Southern Energy Mobile Energy, Holdings or any associate company of any of the foregoing. 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 Troutman Sanders LLP EX-99 3 EXHIBIT I Exhibit I
THE SOUTHERN COMPANY AND SUBSIDIARY COMPANIES Capitalization Ratios at March 31, 1997 Consolidated Pro Forma per 10-Q Amounts (C) Equity Debt ---------------- ------------- ---------------- --------------- Capitalization (in thousands of dollars): Common stock ..................................... $3,405,594 $0 $3,405,594 Paid-in capital................................... 2,125,534 0 2,125,534 Retained earnings................................. 3,730,782 0 3,730,782 Preferred stock .................................. 833,372 200,000 (A) 1,033,372 Capital & preferred securities.................... 1,353,500 189,250 (A) 1,542,750 Long-term debt.................................... 9,699,757 400,000 (A) $10,099,757 Preferred due within one year..................... 116,155 0 116,155 Long-term debt due within one year................ 466,515 0 466,515 Notes payable & commercial paper.................. 2,024,235 0 2,024,235 ---------------- -------------- ---------------- Total (Incl Amts Due in 1 Year) $23,755,444 $789,250 $11,954,187 $12,590,507 ================ ============= ================ =============== Actual Amounts in Millions of Dollars....................$23,756 $11,565 $12,191 Actual Capitalization Ratios.................................100.0% 48.7% 51.3% Pro Forma Amounts in Millions of Dollars.................$24,545.. $11,954 $12,591 Pro Forma Capitalization Ratios..............................100.0% 48.7% 51.3% Pro Forma Consolidated Statements of Income (Unaudited) (Stated in Thousands of Dollars) For the Twelve Months Ended March 31, 1997 Pro Forma (C) As Adjusted OPERATING REVENUES $ 10,512,948 $ - $ 10,512,948 ---------------- ------------ ---------------- OPERATING EXPENSES: Operation-- Fuel 2,228,043 - 2,228,043 Purchased power 1,289,336 - 1,289,336 Other 1,834,924 - 1,834,924 Maintenance 786,664 - 786,664 Depreciation and amortization 1,041,171 - 1,041,171 Amortization of deferred Plant Vogtle costs 140,518 - 140,518 Taxes other than income taxes 617,085 - 617,085 Income taxes 732,834 (16,281)(B) 716,553 ---------------- ------------ ---------------- Total operating expenses 8,670,575 (16,281) 8,654,294 ---------------- ------------ ---------------- OPERATING INCOME 1,842,373 16,281 1,858,654 OTHER INCOME: Allowance for equity funds used during construction 3,862 - 3,862 Interest income 66,245 - 66,245 Other, net 34,269 - 34,269 Income taxes applicable to other income (2,764) - (2,764) ---------------- ------------ ---------------- INCOME BEFORE INTEREST CHARGES 1,943,985 16,281 1,960,266 ---------------- ------------ ---------------- INTEREST CHARGES AND OTHER: Interest on long-term debt 542,498 27,500 (B) 569,998 Allowance for debt funds used during construction (18,357) - (18,357) Interest on notes payable 113,778 - 113,778 Amortization of debt discount, premium and expense, net 27,733 - 27,733 Other interest charges 48,100 - 48,100 Minority interest in subsidiaries 29,258 - 29,258 Distributions on capital and preferred securities of subsidiary companies 39,597 14,667 (B) 54,264 Preferred dividends of subsidiary companies 80,178 14,000 (B) 94,178 ---------------- ------------ ---------------- Interest charges and other, net 862,785 56,167 918,952 ---------------- ------------ ---------------- CONSOLIDATED NET INCOME $ 1,081,200 $ (39,886) $ 1,041,314 ================ ============ ================
(See Notes on Following Page) NOTES (A) To give effect to (i) the issuance by Georgia Power Capital Trust III of $189,250,000 of preferred securities, and (ii) the proposed issuance by Gulf Power Company of $200,000,000 of first mortgage bonds, $200,000,000 of preferred stock and $200,000,000 of pollution control obligations. (B) To give effect to (i) the issuance by Georgia Power Capital Trust III of $189,250,000 of preferred securities at an annual rate of 7.75% and (ii) the proposed issuance by Gulf Power Company of $200,000,000 of first mortgage bonds at an assumed rate of 7.75%, $200,000,000 of preferred stock at an assumed rate of 7%, and $200,000,000 of pollution control obligations at an assumed rate of 6%. (C) The amounts and types of the securities to be issued by Gulf Power Company will be dependent upon, among other things, market conditions prevailing at the time of issuance. The amounts estimated to be issued are the maximum amounts requested in the subject application and are used solely for the purpose of illustrating the effect upon Southern Company consolidated capitalization and earnings. In addition, no assumptions are made in connection with possible refundings. -----END PRIVACY-ENHANCED MESSAGE-----