File No. 70-9729
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 2
TO
FORM U-1
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APPLICATION OR DECLARATION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
* * *
AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza, Columbus, Ohio 43215
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(Name of company or companies filing this statement
and address of principal executive office)
* * *
AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of top registered holding company
parent of each applicant or declarant)
* * *
A. A. Pena, Senior Vice President and Treasurer
American Electric Power Service Corporation
1 Riverside Plaza, Columbus, Ohio 43215
Susan Tomasky, General Counsel
American Electric Power Service Corporation
1 Riverside Plaza, Columbus, Ohio 43215
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(Names and addresses of agents for service)
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS
American Electric Power Company, Inc. ("AEP"), a registered holding
company under the Public Utility Holding Company Act of 1935, as amended (the
"Act") hereby amends and restates Post-Effective Amendment No. 1 in File No.
70-9729 to increase the aggregate amount of securities which may be issued
thereunder and to issue equity securities in the form of common stock.
Summary of Existing Authority
By order dated April 20, 2001 (HCAR No. 27382), the Commission
authorized AEP to organize and acquire all of the common stock or other equity
interests of one or more financing subsidiaries for the purpose of effecting
various financing transactions through June 30, 2004, involving the issuance and
sale of up to $1.5 billion unsecured (cash proceeds to AEP) in any combination
of preferred securities, debt securities, interest rate hedges, anticipatory
hedges, stock purchase contracts and stock purchase units, as well as stock
issuable under the stock purchase contracts and stock purchase units. AEP has
issued $1.25 billion debt under this Order. The Commission further authorized
AEP to effect directly such financing transactions involving preferred
securities, debt securities, stock purchase contracts or stock purchase units.
By supplemental order dated May 29, 2001 (HCAR No. 27408) the Commission
released jurisdiction and authorized the use of proceeds of the financings
authorized in HCAR No. 27382 for investment in Exempt Wholesale Generators and
Foreign Utility Companies.
Request For Additional Authority
Subject to all the limitations and conditions of this file, AEP
seeks to increase the aggregate amount of securities which may be issued from
$1.5 billion (cash proceeds to AEP) to $4.0 billion (cash proceeds to AEP) and,
in addition to the securities AEP is authorized to issue per this file, AEP
seeks to issue and sell its common stock (other than as a component or in
satisfaction of a Stock Purchase Contract or Stock Purchase Unit) ("Direct
Sales") (i) through solicitations of proposals from underwriters or dealers;
(ii) through negotiated transactions with underwriters or dealers; (iii)
directly to a limited number of purchasers or to a single purchaser; and/or (iv)
through agents. The price applicable to shares sold in any such transaction will
be based on several factors, including the current market price of the common
stock and prevailing capital market conditions. AEP is authorized under its
restated articles of incorporation to issue 600,000,000 shares of common stock
($6.50 par value), of which 322,024,714 were issued and outstanding as of
February 1, 2001. As of March 31, 2001, AEP's consolidated capitalization
consisted of 63.2% indebtedness, 0.7% preferred stock, 1.4% mandatorily
redeemable preferred securities and 34.7% common equity.
For purposes of determining compliance with the financing limitation set
out herein, with respect to Direct Sales Stock Purchase Contracts and/or Stock
Purchase Units, cash proceeds to AEP at time of issuance shall count against the
financing limitation.
Amendments to Existing Language
1. By amending and restating the first paragraph of Item 1 as follows:
American Electric Power Company, Inc. ("AEP") is a registered holding
company under the Public Utility Holding Company Act of 1935, as amended (the
"Act"). AEP proposes to organize and acquire all of the common stock or other
equity interests of one or more subsidiaries (collectively, the "Financing
Subsidiary") for the purpose of effecting various financing transactions from
time to time through June 30, 2004 involving the issuance and sale of up to an
aggregate of $4.0 billion (cash proceeds to AEP) in any combination of Common
Stock, Preferred Securities, Debt Securities, Stock Purchase Contracts and Stock
Purchase Units, as well as its common stock issuable pursuant to such Stock
Purchase Contracts and Stock Purchase Units, all as described herein. AEP
further proposes that it may effect directly (i.e., without the Financing
Subsidiary) any such transaction involving Common Stock, Preferred Securities,
Debt Securities, Stock Purchase Contracts or Stock Purchase Units as described
herein, provided that AEP shall not issue any secured indebtedness. No Finance
Subsidiary or Special Purpose Subsidiary, as defined below, shall acquire or
dispose of, directly or indirectly, any interest in any Utility Asset, as that
term is defined under the Act. Additionally, AEP's forecasted cash flow analysis
and capitalization forecast for the next two years (attached hereto as Exhibit
C), which forecasts assume the issuance of $1 billion of common stock out of the
$2.75 billion total remaining financing authority requested herein, indicate
that it is expected that AEP's common equity will remain above 30% of its
consolidated capitalization for each time period set forth in Exhibit C.
2. By amending and restating Paragraph 1.13 as follows:
1.13 It is proposed that AEP or the Financing Subsidiary may issue and
sell from time to time stock purchase contracts ("Stock Purchase Contracts"),
including contracts obligating holders to purchase from AEP and/or AEP to sell
to the holders, a specified number of shares or aggregate offering price of AEP
common stock at a future date. The consideration per share of common stock may
be fixed at the time the Stock Purchase Contracts are issued or may be
determined by reference to a specific formula set forth in the Stock Purchase
Contracts. The Stock Purchase Contracts may be issued separately or as part of
units ("Stock Purchase Units") consisting of a stock purchase contract and debt
and/or preferred securities of AEP and/or debt obligations of nonaffiliates,
including U.S. Treasury securities, securing holders' obligations to purchase
the common stock of AEP under the Stock Purchase Contracts. The Stock Purchase
Contracts may require holders to secure their obligations thereunder in a
specified manner.
3. By amending and restating Paragraph 1.15 as follows:
1.15 In addition, AEP requests authorization for it and/or the Financing
Subsidiary to enter into interest rate hedging transactions with respect to
anticipated debt offerings (the "Anticipatory Hedges"), subject to certain
limitations and restrictions. Such Anticipatory Hedges would only be entered
into with Approved Counterparties, and would be utilized to fix and/or limit the
interest rate risk associated with any new issuance through (i) a forward sale
of exchange-traded U.S. Treasury futures contracts, U.S. Treasury obligations
and/or a forward swap (each a "Forward Sale"); (ii) the purchase of put options
on U.S. Treasury obligations (a "Put Options Purchase"); (iii) a Put Options
Purchase in combination with the sale of call options on U.S. Treasury
obligations (a "Zero Cost Collar"); (iv) transactions involving the purchase or
sale, including short sales, of U.S. Treasury obligations; or (v) some
combination of a Forward Sale, Put Options Purchase, Zero Cost Collar and/or
other derivative or cash transactions, including, but not limited to structured
notes, options, caps and collars, appropriate for the Anticipatory Hedges.
Anticipatory Hedges may be executed on-exchange ("On-Exchange Trades") with
brokers through the opening of futures and/or options positions traded on the
Chicago Board of Trade or the Chicago Mercantile Exchange, the opening of
over-the-counter positions with one or more counterparties ("Off-Exchange
Trades"), or a combination of On-Exchange Trades and Off-Exchange Trades. AEP
and/or the Financing Subsidiary will determine the optimal structure of each
Anticipatory Hedge transaction at the time of execution. AEP may decide to lock
in interest rates and/or limit its exposure to interest rate increases. AEP
represents that each Interest Rate Hedge and Anticipatory Hedge will be treated
for accounting purposes under generally accepted accounting principles. AEP will
comply with the then existing financial disclosure requirements of the Financial
Accounting Standards Board associated with hedging transactions.1
ITEM 2. FEES, COMMISSIONS AND EXPENSES
The fees and expenses in connection with the proposed transactions (other
than those described in Item 1 hereof and other than underwriting discounts and
commissions) are estimated not to exceed $8 million. Underwriting discounts and
commissions will not exceed 7% of the amount of the securities issued. The
prospectus supplement relating to each offering will reflect the actual expenses
based upon the amount of the related offering.
ITEM 3. APPLICABLE STATUTORY PROVISIONS
The requested increase in financing authority is subject to Sections 6 and
7 of the Act and Rule 54 thereunder.
Rule 54 provides that, in determining whether to approve an application
which does not relate to any EWG or 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.
AEP consummated the merger with Central and South West Corporation on June
15, 2000 pursuant to an order issued June 14, 2000 (HCAR No. 27186), which
further authorized AEP to invest up to 100% of its consolidated retained
earnings, with consolidated retained earnings to be calculated on the basis of
the combined consolidated retained earnings of AEP and CSW (as extended pursuant
to HCAR No. 27316, December 26, 2000, the "Rule 53(c) Order").
AEP currently meets all of the conditions of Rule 53(a) and none of the
conditions set forth in Rule 53(b) exist or will exist as a result of the
transactions proposed herein.
Rule 53(a)(1) At June 30, 2001, AEP's "aggregate investment", as defined
in Rule 53(a)(1), in EWGs and FUCOs was approximately $1.315 billion, or about
40.6% of AEP's "consolidated retained earnings", also as defined in Rule
53(a)(1), for the four quarters ended June 30, 2001 ($3.242 billion).
Rule 53(a)(2) Each FUCO in which AEP invests will maintain books and
records and make available the books and records required by Rule 53(a)(2).
Rule 53(a)(3) No more than 2% of the employees of the electric utility
subsidiaries of AEP will, at any one time, directly or indirectly, render
services to any FUCO.
Rule 53(a)(4) AEP has submitted and will submit a copy of Item 9 and
Exhibits G and H of AEP's Form U5S to each of the public service commissions
having jurisdiction over the retail rates of AEP's electric utility
subsidiaries.
Rule 53(b) (i) Neither AEP nor any subsidiary of AEP is the subject of any
pending bankruptcy or similar proceeding; (ii) AEP's average consolidated
retained earnings for the four quarters ended June 30, 2001 ($3,242,159,000)
represented a decrease of approximately $302,490,000 (or 8.5%) in the average
consolidated retained earnings from the four quarters ended June 30, 2000
($3,544,649,000); and (iii) for the fiscal year ended December 31, 2000, AEP did
not report operating losses attributable to its direct or indirect investments
in EWGs and FUCOs.
AEP'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 AEP's investments in EWGs and FUCOs has not had an
adverse impact on AEP's financial integrity.
ITEM 4. REGULATORY APPROVAL
No State commission or any Federal commission (other than the U. S.
Securities and Exchange Commission) has jurisdiction over the proposed
transaction.
ITEM 5. PROCEDURE
It is requested that the Commission issue its order on or before August
15, 2001. Applicant hereby (i) waives a recommended decision by a hearing
officer; (ii) waive a recommended decision by any other responsible officer or
the Commission; (iii) consent that the Division of Investment Management may
assist in the preparation of the Commission's decision; and (iv) waive a 30-day
waiting period between the issuance of the Commission's order and the date on
which it is to become effective.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
The following are financial statements and exhibits filed as a part of
this application.
(a) Exhibits
C Cash flow analysis and capitalization forecast with a request
for confidential treatment (previously filed)
F Opinion of Counsel (to be filed by amendment)
G Draft Notice (previously filed)
(b) Financial Statements
Consolidated balance sheet of AEP at June 30, 2001. (Designated in AEP's
Form 10-Q for the period ended June 30, 2001, File No. 1-3525.)
Statements of income and cash flows of AEP at June 30, 2001. (Designated
in AEP's Form 10-Q for the period ended June 30, 2001, File No. 1-3525.)
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS
The proposed transactions subject to the jurisdiction of this Commission
have no environmental impact in and of themselves. No federal agency has
prepared or, to AEP's knowledge, is preparing an EIS with respect to the
proposed transaction.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this statement to be signed on its
behalf by the undersigned thereunto duly authorized.
AMERICAN ELECTRIC POWER COMPANY, INC.
By: /s/ Geoffrey S. Chatas__
Geoffrey S. Chatas
Assistant Treasurer
Dated: August 22, 2001
1 The proposed terms and conditions of the Interest Rate Hedges and Anticipatory
Hedges are substantially the same as the Commission has approved in other cases.
See Entergy Corporation, HCAR No. 27371 (April 3, 2001); New Century Energies,
Inc., et al., HCAR No. 27000 (April 7, 1999); and Ameren Corp., et al., HCAR No.
27053 (July 23, 1999).