-----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, N5ENjBRhHzhs59bWHeHJsqqB6BpBEm2YwxyWxUsJZi97z9p1oypSgeoTFlmLJVkj Ed6LeN4RG654JafBEpU4dA== 0000092122-99-000065.txt : 19991224 0000092122-99-000065.hdr.sgml : 19991224 ACCESSION NUMBER: 0000092122-99-000065 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19991223 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: U-1/A SEC ACT: SEC FILE NUMBER: 070-09557 FILM NUMBER: 99779773 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 FORM U-1 File No. 70-9557 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 Amendment No. 2 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 ALABAMA POWER COMPANY SOUTHERN COMMUNICATIONS SERVICES, INC. 600 North 18th Street 5555 Glenridge Connector, Suite 500 Birmingham, Alabama 35291 Atlanta, Georgia 30342 GEORGIA POWER COMPANY SOUTHERN COMPANY ENERGY SOLUTIONS, INC. 241 Ralph McGill Boulevard, N.E. 241 Ralph McGill Boulevard, N.E. Atlanta, Georgia 30308 Atlanta, Georgia 30308 GULF POWER COMPANY SOUTHERN COMPANY SERVICES, INC. One Energy Place 241 Ralph McGill Boulevard, N.E. Pensacola, Florida 32520 Atlanta, Georgia 30308 MISSISSIPPI POWER COMPANY SOUTHERN ENERGY RESOURCES, INC. 2992 West Beach 900 Ashwood Parkway, Suite 500 Gulfport, Mississippi 39501 Atlanta, Georgia 30338 SAVANNAH ELECTRIC AND POWER COMPANY SOUTHERN NUCLEAR OPERATING COMPANY, INC. 600 East Bay Street 40 Inverness Center Parkway Savannah, Georgia 31401 Birmingham, Alabama 35242 (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 William E. Zales, Jr., Vice President Tommy Chisholm, Secretary and Corporate Secretary Southern Communications Services, Inc. Alabama Power Company 5555 Glenridge Connector, Suite 500 600 North 18th Street Atlanta, Georgia 30342 Birmingham, Alabama 35291 Judy M. Anderson, Vice President Tommy Chisholm, Secretary and Corporate Secretary Southern Company Energy Solutions, Inc. Georgia Power Company 241 Ralph McGill Boulevard, N.E. 241 Ralph McGill Boulevard, N.E. Atlanta, Georgia 30308 Atlanta, Georgia 30308 Warren E. Tate, Secretary Tommy Chisholm, Vice President and Treasurer and Secretary Gulf Power Company Southern Company Services, Inc. One Energy Place 241 Ralph McGill Boulevard, N.E. Pensacola, Florida 32520 Atlanta, Georgia 30308 Michael W. Southern, Vice President, Tommy Chisholm, Vice President Chief Financial Officer, Secretary and Secretary and Treasurer Southern Energy Resources, Inc. 2992 West Beach 900 Ashwood Parkway, Suite 500 Gulfport, Mississippi 39501 Atlanta, Georgia 30338 Kirby R. Willis, Vice President, Sherry A. Mitchell, Corporate Secretary Treasurer and Chief Financial Officer Southern Nuclear Operating Company, Inc. Savannah Electric and Power Company 40 Inverness Center Parkway 600 East Bay Street Birmingham, Alabama 35242 Savannah, Georgia 31401 (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 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 2. Fees, Commissions and Expenses. The additional fees, commissions and expenses paid or to be incurred in connection with the issuance and sale of the Plan Stock are estimated not to exceed $5,000, which includes the fees of counsel. Item 3. Applicable Statutory Provisions. (a) Southern considers that the proposed issuance and sale of the Plan Stock are subject to the provisions of Sections 6(a), 7, 32 and 33 of the Act and Rules 53 and 54 thereunder. Southern considers that any purchases of Southern's common stock by the Employing Companies pursuant to the ESOP prior to contributing such stock to the ESOP Trust are subject to the provisions of Sections 9(a) and 10 of the Act. 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. (b) 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 EWG or 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 criteria of Rule 53(a), except for clause (1). At October 31, 1999, Southern's "aggregate investment," as defined in Rule 53(a)(1), in EWGs and FUCOs was approximately $2.969 billion, or approximately 74.09% of Southern's "consolidated retained earnings," also as defined in Rule 53(a)(1), for the four quarters ended September 30, 1999 ($4.008 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 Nos. 26501 and 26646, dated April 1, 1996 and January 15, 1997, respectively. 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 issuance of the Plan Stock as proposed 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 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 September 30, 1999, was 44.5% equity, 55.5% debt including all non-recourse debt, and 57.1% equity and 42.9% debt excluding all non-recourse debt. On a pro forma basis, taking into consideration the transactions contemplated hereby, such ratios are 48.6% and 51.4%, respectively, for equity and debt. The common equity component of Southern's pro forma consolidated capitalization represents 39.2% of total capitalization at September 30, 1999. Both are within accepted industry ranges and within the limits set by independent rating agencies (such as Standard and Poor's) for "A" rated utilities. 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 evidenced by the continued "A" corporate credit rating of Southern. Specifically, in January 1997 Standard & Poor's assigned Southern 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 affiliated operating companies, which have a strong influence on the Southern corporate rating, are all "A+" or better. As a point of reference, the percentage of debt in the total capital structure of the Southern domestic operating utility companies was 43.7% at September 30, 1999, which is lower than the average for Standard & Poor's "A" rated vertically integrated utilities. At year end 1998, according to Standard & Poor's, the average total debt (both long-term and short-term) for "A" rated electric utilities was 50.4% of total capitalization. Southern's consolidated retained earnings grew on average approximately 5.5% per year over the last five years. Excluding the $111 million one-time windfall profits tax imposed on SWEB in 1997 and the write down of assets in 1998, the average growth would be 7.2%. In 1998, consolidated retained earnings increased approximately $36 million, or slightly less than 1%. Southern's interests in EWGs and FUCOs have made a positive contribution to earnings in the three calendar years ending after the issuance of 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 any adverse impact on Southern's financial integrity. Item 6. Exhibits and Financial Statements. (a) Exhibits F- Opinion of Troutman Sanders LLP, counsel for Southern. SIGNATURES Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned companies have duly caused this amendment to be signed on their behalf by the undersigned thereunto duly authorized. Dated: December 22, 1999 THE SOUTHERN COMPANY By: /s/Tommy Chisholm ______________________________________ Tommy Chisholm Secretary ALABAMA POWER COMPANY By: /s/Wayne Boston _______________________________________ Wayne Boston Assistant Secretary GEORGIA POWER COMPANY By: /s/Wayne Boston _______________________________________ Wayne Boston Assistant Secretary GULF POWER COMPANY By: /s/ Wayne Boston ________________________________________ Wayne Boston Assistant Secretary MISSISSIPPI POWER COMPANY By: /s/Wayne Boston _______________________________________ Wayne Boston Assistant Secretary SAVANNAH ELECTRIC AND POWER COMPANY By: /s/Wayne Boston _______________________________________ Wayne Boston Assistant Secretary SOUTHERN COMMUNICATIONS SERVICES,INC. By: /s/Tommy Chisholm _______________________________________ Tommy Chisholm Secretary SOUTHERN COMPANY ENERGY SOLUTIONS, INC. By: /s/Tommy Chisholm _______________________________________ Tommy Chisholm Secretary SOUTHERN COMPANY SERVICES, INC. By: /s/Wayne Boston _______________________________________ Wayne Boston Assistant Secretary SOUTHERN ENERGY RESOURCES, INC. By: /s/Tommy Chisholm _______________________________________ Tommy Chisholm Secretary SOUTHERN NUCLEAR OPERATING COMPANY, INC. By: /s/Wayne Boston _______________________________________ Wayne Boston Assistant Secretary EX-99 2 EXHIBIT F Exhibit F Troutman Sanders LLP 600 Peachtree Street, N.E., Suite 5200 Atlanta, Georgia 30308 December 22, 1999 Securities and Exchange Commission Washington, DC 20549 RE: The Southern Company, et al. Statement on Form U-1 File No. 70-9557 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 issuance and sale by The Southern Company ("Southern") of additional shares of its common stock, par value $5 per share, pursuant to the Southern Investment Plan, The Southern Company Employee Savings Plan and The Southern Company Employee Stock Ownership Plan (collectively, the "Plans"), 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 respective Plans 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 Plans 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 (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 Troutman Sanders LLP -----END PRIVACY-ENHANCED MESSAGE-----