[Federal Register: October 9, 2003 (Volume 68, Number 196)]
[Notices]
[Page 58367-58368]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09oc03-116]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-27733]
Filings Under the Public Utility Holding Company Act of 1935, as
Amended (``Act'')
October 3, 2003.
Notice is hereby given that the following filing(s) has/have been
made with the Commission pursuant to provisions of the Act and rules
promulgated under the Act. All interested persons are referred to the
application(s) and/or declaration(s) for complete statements of the
proposed transaction(s) summarized below. The application(s) and/or
declaration(s) and any amendment(s) is/are available for public
inspection through the Commission's Branch of Public Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in
writing by October 27, 2003, to the Secretary, Securities and Exchange
Commission, Washington, DC 20549-0609, and serve a copy on the relevant
applicant(s) and/or declarant(s) at the address(es) specified below.
Proof of service (by affidavit or, in the case of an attorney at law,
by certificate) should be filed with the request. Any request for
hearing should identify specifically the issues of facts or law that
are disputed. A person who so requests will be notified of any hearing,
if ordered, and will receive a copy of any notice or order issued in
the matter. After October 27, 2003, the application(s) and/or
declaration(s), as filed or as amended, may be granted and/or permitted
to become effective.
Gulf Power Company (70-10154)
Gulf Power Company (``Gulf''), One Energy Place, Pensacola, Florida
32520, a wholly owned electric utility subsidiary of The Southern
Company (``Southern''), 270 Peachtree Street, NW., Atlanta, Georgia
30303, a registered holding company, has filed an application-
declaration (``Application'') under sections 6(a), 7, 9(a), 10 and 12
(b) of the Act and rules 45, 52 and 54. Gulf proposes to organize one
or more subsidiaries for the purpose of effecting various financing
transactions involving the issuance and sale of an aggregate of
$150,000,000 of preferred securities, from time to time, through
December 31, 2006.
In connection with the issuance of the preferred securities, Gulf
proposes to organize one or more separate subsidiaries as a business
trust under the laws of the State of Florida or a statutory trust under
the laws of the State of Delaware or another comparable trust in any
jurisdiction, or any other entity or structure, foreign or domestic,
that is considered advantageous by Gulf (individually a ``Trust'' and
collectively the ``Trusts'').\1\ Gulf proposes that the Trusts will
issue and sell from time to time preferred securities, as described in
this Application (the ``Preferred Securities''), with a specified par
or stated value or liquidation amount or preference per security. Gulf
requests the Commission to reserve jurisdiction over the use of a
foreign entity as a Trust.
---------------------------------------------------------------------------
\1\ Applicants state that the ability to use trusts in financing
transactions can sometimes offer increased state and/or federal tax
efficiency. Increased tax efficiency can result if a trust is
located in a state or country that has tax laws that make the
proposed financing transaction more tax efficient relative to the
company's existing taxing jurisdiction. Decreasing tax exposure,
however, is usually not the primary goal when establishing a trust.
Use of a trust can provide potentially significant benefits to a
company, even without a net improvement in its tax position. Trusts
can increase a company's ability to access new sources of capital by
enabling it to undertake financing transactions with features and
terms attractive to a wider investor base. Trusts can be established
in jurisdictions or on terms favorable to the sponsoring company
and, at the same time, give targeted investors attractive incentives
to invest and so provide financing. Many of these investors would
not be participants in the company's bank group and, typically,
would not hold company bonds or commercial paper. Consequently, they
represent potential new sources of capital.
---------------------------------------------------------------------------
Gulf has a total amount of $115,000,000 of Preferred Securities
issued and outstanding through Trusts, as of June 30, 2003. The
outstanding Preferred Securities were issued through Trusts rather than
directly by Gulf as subordinated debt because certain rating agencies
recognize preferred securities of this kind, issued through trusts, as
having some equity content, rather than directly issued subordinated
debt, which has no equity content. Gulf states that transactions of the
Trusts are reported by Gulf on its financial statements and asserts
that it is desirable for Gulf to continue to maintain a degree of
similarity in its financial statements by issuing Preferred Securities
through the Trusts rather than directly issuing subordinated debt.\2\
---------------------------------------------------------------------------
\2\ Gulf notes that it reclassified $115,000,000 of outstanding
mandatorily redeemable Preferred Securities as liabilities,
effective July 1, 2003, pursuant to Financial Accounting Standards
Board (``FASB'') Statement No. 150 ``Accounting for Certain
Financial Instruments with the Characteristics of both Liabilities
and Equity.'' In May 2003, FASB issued Statement 150, which requires
reclassification of certain financial instruments within its scope,
including shares that are mandatorily redeemable as liabilities, and
Statement No. 150 is currently effective. Gulf states that the
reclassification as a result of implementation of Statement No. 150
did not have a material effect on its Statements of Income and Cash
Flows.
---------------------------------------------------------------------------
Gulf currently is authorized to issue Preferred Securities in an
aggregate amount of up to $30,000,000 through December 31, 2005,
pursuant to Commission orders dated January 16, 1998 and June 8, 2001
(HCAR No. 26817 and HCAR No. 27417, respectively). Gulf proposes that
this Application's authorization of $150,000,000 supersede and replace
the amounts remaining in these previous authorizations.
Gulf states that it will acquire all of the common stock of any
Trust for an amount not less than the minimum required by any
applicable law and not exceeding 21% of the total equity capitalization
from time to time of the Trust (i.e., the aggregate of the equity
accounts of such Trust).\3\ The aggregate of such investment by Gulf
hereafter is referred to as the ``Equity Contribution.'' Gulf may issue
and sell to any Trust, at any time or from time to time in one or more
series, subordinated debentures, promissory notes or other debt
instruments (individually a ``Note'' and collectively the ``Notes'')
governed by an indenture or other document. The Trust will apply both
the Equity Contribution made to it and the proceeds from the sale of
Preferred Securities by it, from time to time, to purchase Notes.
Alternatively, Gulf may enter into a loan agreement or agreements with
any Trust under which the Trust will lend Gulf (individually a ``Loan''
and collectively the ``Loans'') both the Equity Contribution to the
Trust and the proceeds from the sale of the Preferred Securities by the
Trust, from time to
[[Page 58368]]
time. Gulf will issue Notes, evidencing such borrowings, to the Trust.
---------------------------------------------------------------------------
\3\ The constituent instruments of each Trust, including its
Trust Agreement, will provide, among other things, that the Trust's
activities will be limited to the issuance and sale of Preferred
Securities, from time to time, and the lending to Gulf of (i) the
resulting proceeds, (ii) the Equity Contribution to the Trust, and
(iii) certain other related activities. Consequently, Gulf proposes
that a Trust's constituent instruments will not include any interest
or dividend coverage nor will a Trust have capitalization ratio
restrictions on its ability to issue and sell Preferred Securities.
Because each issuance will be supported by a Note and Guaranty,
capitalization ratio restrictions would not be relevant or necessary
to enable a Trust to maintain an appropriate capital structure.
Furthermore, each Trust's constituent instruments will state that
its common stock is not transferable (except to certain permitted
successors), that its business and affairs will be managed and
controlled by Gulf (or permitted successor), and that Gulf (or
permitted successor) will pay all expenses of the Trust.
---------------------------------------------------------------------------
Gulf also proposes to guarantee (individually a ``Guaranty'' and
collectively the ``Guaranties'') (i) payment of dividends or
distributions on the Preferred Securities of any Trust if, and to the
extent, the Trust has funds legally available, (ii) payments to the
Preferred Securities holders of amounts due upon liquidation of the
Trust or redemption of the Preferred Securities of such Trust and (iii)
certain additional amounts that may be payable by the Preferred
Securities. Gulf's credit would support any Guaranty.
Gulf states that each Note will have a term of up to fifty (50)
years. Prior to maturity, Gulf will pay interest only on the Notes at a
rate equal to the dividend or distribution rate on the related series
of Preferred Securities, which dividend or distribution rate may be
either fixed or adjustable, to be determined on a periodic basis by
auction or remarketing procedures, in accordance with a formula or
formulae based upon certain reference rates, or by other predetermined
methods.\4\
The interest payments will constitute each respective Trust's only
income and will be used by it to pay dividends or distributions on its
Preferred Securities and dividends or distributions on its common
stock. Dividend payments or distributions on the Preferred Securities
will be made on a monthly or other periodic basis and must be made to
the extent that the Trust issuing the Preferred Securities has legally
available funds and cash sufficient for such purposes. However, Gulf
may have the right to defer payment of interest on any issue of Notes
for five or more years. Each Trust will have the parallel right to
defer dividend payments or distributions on the related series of
Preferred Securities for five or more years, provided that, if
dividends or distributions on the Preferred Securities of any series
are not paid for eighteen (18) or more consecutive months, then the
holders of the Preferred Securities of such series may have the right
to appoint a trustee, special general partner or other special
representative to enforce the Trust's rights under the related Note and
Guaranty. The dividend or distribution rates, payment dates, redemption
and other similar provisions of each series of Preferred Securities
will be substantially identical to the interest rates, payment dates,
redemption and other provisions of the Notes issued.
---------------------------------------------------------------------------
\4\ The Preferred Securities of any series may be redeemable at
the option of the Trust issuing the series (with the consent or at
the direction of Gulf) at a price equal to their par or stated value
or liquidation amount or preference, plus any accrued and unpaid
dividends or distributions, (i) at any time after a specified date
not later than approximately ten (10) years from their date of
issuance, or (ii) upon the occurrence of certain events, among them
that (a) the Trust is required to withhold or deduct certain amounts
in connection with dividend, distribution or other payments or is
subject to federal income tax with respect to interest received on
the Notes issued to the Trust, or (b) it is determined that the
interest payments by Gulf on the related Notes are not deductible
for income tax purposes, or (c) the Trust becomes subject to
regulation as an ``investment company'' under the Investment Company
Act of 1940, as amended. The Preferred Securities of any series may
also be subject to mandatory redemption upon the occurrence of
certain events. Gulf also may have the right in certain cases, or in
its discretion, to exchange the Preferred Securities of any Trust
for the Notes or other junior subordinated debt issued to the Trust.
In addition, rather than issuing Preferred Securities of a Trust,
Gulf may instead issue Notes or other junior subordinated debt
directly to purchasers.
---------------------------------------------------------------------------
Gulf states that the Notes and related Guaranties will be
subordinate to all other existing and future unsubordinated
indebtedness for borrowed money of Gulf and will have no cross-default
provisions with respect to other indebtedness of Gulf (i.e., a default
under any other outstanding indebtedness of Gulf would not result in a
default under any Note or Guaranty). However, Gulf may be prohibited
from declaring and paying dividends on its outstanding capital stock
and making payments in respect of pari passu debt unless all payments
then due under the Notes and Guaranties (without giving effect to the
deferral rights discussed above) have been made.
The distribution rate to be borne by the Preferred Securities and
the interest rate on the Notes will not exceed the greater of (i) 300
basis points over U.S. Treasury securities having comparable maturities
or (ii) a gross spread over U.S. Treasury securities that is consistent
with similar securities issued by other companies having comparable
maturities and credit quality.
Gulf will use the proceeds from the sale of the securities in
connection with its ongoing construction program, to pay scheduled
maturities and/or refundings of its securities, to repay short-term
indebtedness to the extent outstanding and for other general corporate
purposes.
Gulf represents that it will maintain its common equity as a
percentage of capitalization (inclusive of short-term debt) at no less
than thirty (30) percent. Gulf further represents that no guaranties or
other securities may be issued in reliance upon the requested
authorization, unless (i) the security to be issued, if rated, is rated
investment grade; (ii) all outstanding securities of Gulf that are
rated are rated investment grade; and (iii) all outstanding securities
of Southern that are rated are rate investment grade. For purposes of
this provision, a security will be deemed to be rated ``investment
grade'' if it is rated investment grade 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,
nevertheless, be permitted to issue a security that does not satisfy
these conditions 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\ Gulf
also requests the Commission to reserve jurisdiction over any
guaranties or securities that do not satisfy these conditions.
---------------------------------------------------------------------------
\5\ Gulf is a Maine corporation doing business in the State of
Florida and does not do business in the State of Maine.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-25568 Filed 10-8-03; 8:45 am]
BILLING CODE 8010-01-P