Filings Under the Public Utility Holding Company Act of 1935, as Amended (“Act”), 21477-21480 [05-8248]
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Federal Register / Vol. 70, No. 79 / Tuesday, April 26, 2005 / Notices
Registered Investing Fund by the
Advisor should be reduced to account
for reduced services provided to the
Registered Investing Fund by the
Advisor as a result of the Uninvested
Cash being invested in the Central
Funds. The minute books of the
Registered Investing Fund will record
fully the Board’s consideration in
approving the advisory contract,
including the considerations relating to
fees referred to above.
3. Each Registered Investing Fund
will invest Uninvested Cash in, and
hold shares of, the Central Funds only
to the extent that the Registered
Investing Fund’s aggregate investment
of Uninvested Cash in the Central Funds
does not exceed 25% of the Registered
Investing Fund’s total assets.
4. Investment by a Registered
Investing Fund in shares of the Central
Funds will be in accordance with the
Registered Investing Fund’s investment
restrictions and will be consistent with
the Registered Investing Fund’s
investment policies as set forth in its
prospectus and statement of additional
information. A Registered Investing
Fund that complies with rule 2a–7
under the Act will not invest its Cash
Balances in a Central Fund that does not
comply with rule 2a–7. A Registered
Investing Fund’s Cash Balances will be
invested in a particular Central Fund
only if that Central Fund has been
approved for investment by the
Registered Investing Fund and if that
Central Fund invests in the types of
instruments that the Registered
Investing Fund has authorized for the
investment of its Cash Balances.
5. Each Fund and Private Fund that
may rely on the order will be advised
by the Advisor. Each Registered
Investing Fund and Registered Money
Market Fund that may rely on the order
will be part of the same group of
investment companies (as defined in
section 12(d)(1)(G) of the Act).
6. No Central Fund will acquire
securities of any other investment
company or company relying on section
3(c)(1) or 3(c)(7) of the Act in excess of
the limits contained in section
12(d)(1)(A) of the Act.
7. The Non-Registered Central Funds
will comply with the requirements of
sections 17(a), (d), and (e), and 18 of the
Act as if the Non-Registered Central
Funds were registered open-end
investment companies. With respect to
all redemption requests made by an
Investing Fund, the Non-Registered
Central Funds will comply with section
22(e) of the Act. The Advisor will adopt
procedures designed to ensure that each
Non-Registered Central Fund complies
with sections 17(a), (d), and (e), 18 and
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22(e) of the Act. The Advisor will also
periodically review and update, as
appropriate, the procedures and will
maintain books and records describing
such procedures, and maintain the
records required by rules 31a–1(b)(1),
31a–1(b)(2)(ii), and 31a–1(b)(9) under
the Act. All books and records required
to be made pursuant to this condition
will be maintained and preserved for a
period of not less than six years from
the end of the fiscal year in which any
transaction occurred, the first two years
in an easily accessible place, and will be
subject to examination by the
Commission and its staff.
8. Each Private Money Market Fund
will comply with rule 2a–7 under the
Act. With respect to each Private Money
Market Fund, the Advisor will adopt
and monitor the procedures described
in rule 2a–7(c)(7) and will take such
other actions as are required to be taken
under those procedures. A Registered
Investing Fund may only purchase
shares of a Private Money Market Fund
if the Advisor determines on an ongoing
basis that the Private Money Market
Fund is in compliance with rule 2a–7.
The Advisor will preserve for a period
of not less than six years from the date
of determination, the first two years in
an easily accessible place, a record of
such determination and the basis upon
which the determination was made.
This record will be subject to
examination by the Commission and its
staff.
9. Each Investing Fund will purchase
and redeem shares of any NonRegistered Central Fund as of the same
time and at the same price, and will
receive dividends and bear its
proportionate share of expenses on the
same basis, as other shareholders of the
Non-Registered Central Fund. A
separate account will be established in
the shareholder records of each NonRegistered Central Fund for the account
of each Investing Fund that invests in
such Non-Registered Central Fund.
10. To engage in Interfund
Transactions, the Investing Funds and
Central Funds will comply with rule
17a–7 under the Act in all respects other
than the requirement that the parties to
the transaction be affiliated persons (or
affiliated persons of affiliated persons)
of each other solely by reason of having
a common investment adviser, or
investment advisers which are affiliated
persons of each other, common officers
and/or common directors, solely
because an Investing Fund and a Central
Fund might become affiliated persons
within the meaning of section 2(a)(3)(A)
and (B) of the Act.
11. The net asset value per share with
respect to shares of a Non-Registered
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Central Fund that is not a Private Money
Market Fund will be determined
separately for each such Non-Registered
Central Fund by dividing the value of
the assets belonging to that NonRegistered Central Fund, less the
liabilities of that Non-Registered Central
Fund, by the number of shares
outstanding with respect to that NonRegistered Central Fund.
12. Before a Registered Investing Fund
may participate in the Securities
Lending Program, a majority of the
Board (including a majority of the
Independent Trustees) will approve the
Registered Investing Fund’s
participation in the Securities Lending
Program. No less frequently than
annually, the Board also will evaluate,
with respect to each Registered
Investing Fund, any securities lending
arrangement and its results and
determine that any investment of Cash
Collateral in the Central Funds is in the
best interests of the Registered Investing
Fund.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–1973 Filed 4–25–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 35–27961]
Filings Under the Public Utility Holding
Company Act of 1935, as Amended
(‘‘Act’’)
April 20, 2005.
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
May 16, 2005, 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
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Federal Register / Vol. 70, No. 79 / Tuesday, April 26, 2005 / Notices
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 May 16, 2005, the
application(s) and/or declaration(s), as
filed or as amended, may be granted
and/or permitted to become effective.
Georgia Power Company (70–10269)
George Power Company (‘‘Georgia’’),
241 Ralph McGill Blvd., NE., Atlanta,
Georgia, 30308, a wholly owned electric
utility subsidiary of The Southern
Company (‘‘Southern’’), 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.
A. Description of the Proposed
Transactions
Georgia proposes to organize one or
more subsidiaries for the purpose of
effecting various financing transactions
involving the issuance and sale of up to
an aggregate of $1,100,000,000 of
preferred securities with a specified par
or stated value of liquidation amount of
preference per security (‘‘Preferred
Securities’’), from time-to-time, through
May 31, 2008. In connection with the
issuance of the Preferred Securities,
Georgia proposes to organize (1) one or
more separate subsidiaries as a business
trust under the laws of the State of
Georgia or a statutory trust under the
laws of the State of Delaware or other
comparable trust in any jurisdiction that
is considered advantageous by Georgia;
or (2) any other entity or structure,
foreign 1 or domestic, that is considered
advantageous by Georgia (individually a
‘‘Trust’’ and collectively the ‘‘Trusts’’).2
1 Georgia requests the Commission reserve
jurisdiction over the use of a foreign entity as a
Trust.
2 Georgia states 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. However, decreasing tax exposure is
usually not the primary goal when establishing a
trust. Because of the potential significant non-tax
benefits of these transactions, use of a trust can
benefit an issuer 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 and/or in forms
that have terms favorable to its sponsor and that,
at the same time, provide targeted investors
attractive incentives to invest and so provide
financing. Many of these investors would not be
participants in the sponsor’s bank group and they
typically would not hold sponsor bonds or
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Trusts sponsored by Georgia have
issued and outstanding a total of
$940,000,000 of preferred securities as
of December 31, 20043 Georgia currently
has authority to issue additional
preferred securities in an aggregate
amount of up to $150,000,000 prior to
October 31, 2005 pursuant to a
Commission order (‘‘Current Order’’)
dated October 23, 2003 (Holding
Company Act Release No. 27584).4
Georgia proposes that the authority
sought in the Application to issue up to
an aggregate of $1,100,000,000 of
preferred securities supersede and
replace the remaining authorization
contained in the Current Order.
Georgia 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.5 The aggregate
of such investment by Georgia hereafter
is referred to as the ‘‘Equity
Contribution.’’ Georgia 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
commercial paper. Thus they represent potential
new sources of capital.
3 Georgia notes that it reclassified $940,000,000 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.’’
Georgia 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.
4 The Current Order authorized Georgia to issue
up to $650,000,000 aggregate amount of preferred
securities. Under that order, Georgia has issued
$500,000,000 aggregate amount of preferred
securities.
5 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
Georgia of the (1) resulting proceeds and (2) Equity
Contribution to the Trust, and certain other related
activities. Accordingly, Georgia proposes that no
Trust’s constituent instruments include any interest
or dividend coverage or capitalization ratio
restrictions on its ability to issue and sell Preferred
Securities, as each issuance will be supported by a
Note and Guaranty, and such restrictions would not
be relevant or necessary for any Trust to maintain
an appropriate capital structure. Each Trust’s
constituent instruments will further state that its
common stock is not transferable (except to certain
permitted successors), that its business and affairs
will be managed and controlled by Georgia (or
permitted successor), and that Georgia (or permitted
successor) will pay all expenses of the Trust.
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and the proceeds from the sale of
Preferred Securities by it, from time to
time, to purchase Notes. Alternatively,
Georgia may enter into a loan agreement
or agreements with any Trust under
which the Trust will lend Georgia
(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
time, and Georgia will issue Notes,
evidencing such borrowings, to the
Trust. As of December 31, 2004, Georgia
had outstanding $969,073,000 of Notes
payable to trusts.
Georgia also proposes to guarantee
(individually a ‘‘Guaranty’’ and
collectively the ‘‘Guaranties’’) (1)
payment of dividends or distributions
on the Preferred Securities of any Trust
if, and to the extent, the Trust has funds
legally available; (2) payments to the
Preferred Securities holders of amounts
due upon liquidation of the Trust or
redemption of the Preferred Securities
of the Trust; and (3) certain additional
amounts that may be payable by the
Preferred Securities. Georgia’s credit
would support any Guaranty.
Georgia states that each Note will
have a term of up to fifty years. Prior to
maturity, Georgia 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.6
6 It is expected that Georgia’s interest payment on
the notes will be deductible for Federal income tax
purposes and that each Trust will be treated as a
passive grantor trust for Federal income tax
purposes. Consequently, holders of the Preferred
Securities and Georgia will be deemed to have
received distributions in respect of their ownership
interests in the respective Trust and will not be
entitled to any ‘‘dividends received deduction’’
under the Internal Revenue Code of 1986, as
amended. The Preferred Securities of any series,
however, may be redeemable at the option of the
Trust issuing the series (with the consent or at the
direction of Georgia) at a price equal to their par
or stated value or liquidation amount or preference,
plus any accrued and unpaid dividends or
distributions, (1) at any time after a specified date
into later than approximately ten years from their
date of issuance, or (2) 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 Georgia 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
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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 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, Georgia 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 up to
eighteen 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
right 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 by Georgia.
Georgia states that the Notes and
related Guaranties will be subordinate
to all other existing and future
unsubordinated indebtedness for
borrowed money of Georgia and will
have no cross-default provisions with
respect to other indebtedness of Georgia
(i.e., a default under any other
outstanding indebtedness of Georgia
would not result in a default under any
Note or Guaranty). However, Georgia
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.
If any Trust is required to without or
deduct certain amounts in connection
with dividend, distribution or other
payments, the Trust may also have the
obligation to ‘‘gross up’’ the payments
upon the occurrence of certain events that are
typical of a transaction of this type. Georgia 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, Georgia may
instead issue Notes or other junior subordinated
debt directly to purchasers.
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so that the holders of the Preferred
Securities issued by the Trust will
receive the same payment after the
withholding or deduction as they would
have received if no withholding or
deduction were required. In that event,
Georgia’s obligations under its related
Note and Guaranty may also cover the
‘‘gross up obligation.’’ In addition, if any
Trust is required to pay taxes with
respect to income derived from interest
payments on the Notes issued to it,
Georgia may be required to pay the
additional interest on the related Notes
as shall be necessary in order that net
amounts received and retained by the
Trust, after payment of the taxes, shall
result in the Trust’s having funds as it
would have had in the absence of the
payment of taxes.
For financial reporting purposes, each
Trust will be a variable interest entity.
On March 31, 2004, Georgia
prospectively adopted FASB
Interpretation No. 46R, ‘‘Consolidation
of Variable Interest Entities’’ which
requires the primary beneficiary of a
variable interest entity to consolidate
the related assets and liabilities (‘‘FIN
46R’’). The adoption of FIN 46R had no
impact on Georgia’s net income. Georgia
accounts for its investment in each
Trust under the equity method in
accordance with FIN 46R, since Georgia
does not meet the FIN 46R definition of
a primary beneficiary.7
The Notes that will be payable by
Georgia to the Trusts will be presented
as a separate line item on Georgia’s
balance sheet. Interest payable on the
Notes will be reflected as a separate line
item on Georgia’s income statement and
appropriate disclosures concerning the
Preferred Securities, Guaranties and
Notes will be included in the notes to
Georgia’s financial statements.
B. General Financing Parameters and
Use of Proceeds
1. Effective Cost of Capital
Georgia states that the effective cost of
capital on the Preferred Securities and
the interest rate on the Notes will not
exceed competitive market rates
available at the time of the issuance of
the securities having the same or
reasonably similar terms and conditions
7 The primary beneficiary under FIN 46R is the
enterprise ‘‘that will absorb a majority of the
entity’s expected losses, receive a majority of the
entity’s expected residual returns, or both.’’ If one
of the parties will absorb a majority of the entity’s
expected losses and another party receives a
majority of the expected residual returns, ‘‘the
enterprise absorbing a majority of the losses shall
consolidate the variable interest entity.’’ In the case
of Georgia’s Preferred Securities, the security
holders have the risk of absorbing the majority of
the losses through the default by Georgia or the
Trusts, and therefore are the primary beneficiaries.
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issued by companies of reasonably
comparable credit quality, provided
that, in no event will be effective cost
of capital exceed 300 basis points over
U.S. Treasury securities having
comparable maturities.
2. Issuance Expenses
Georgia states that the underwriting
fees, commissions or other similar
renumeration paid in connection with
the non-competitive issue, sale or
distribution of a security that is the
subject of the Application (not
including any original issue discount)
will not exceed 5% of the principal or
total amount of the security being
issued.
3. Common Equity Ratio
Georgia represents that it will
maintain its common equity as a
percentage of capitalization (inclusive of
short-term debt) at no less than thirty
percent.8 Georgia requests the
Commission to reserve jurisdiction over
any guarantees or securities that do not
satisfy these conditions.
4. Investment Grade Criteria
Georgia further represents that no
guaranties or other securities may be
issued in reliance upon any
authorization that may be granted by the
Commission pursuant to the
Application, unless upon original
issuance (1) the security to be issued, if
rates, is rated investment grade; (2) all
outstanding securities of Georgia that
are rated are rated investment grade;
and (3) 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.
Georgia requests that is be permitted to
issue a security that does not satisfy the
foregoing 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
Georgia Public Service Commission.
Georgia also requests the Commission to
reserve jurisdiction over any guaranties
or securities that do not satisfy these
conditions.
5. Use of Proceeds
Georgia will use the proceeds from
the sale of the securities in connection
8 In regard to a Trust maintaining a minimum
amount of common equity, see the discussion in
footnote 5, supra.
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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.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 05–8248 Filed 4–25–05; 8:45 am]
BILLING CODE 8010–01–M
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51579; File No. SR–FICC–
2005–08]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Expand the
Types of Securities Eligible for FICC’s
GCF Repo Service to Include TreasuryInflation Protected Securities
April 20, 2005.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 notice is hereby given that on
April 8, 2005, The Fixed Income
Clearing Corporation (‘‘FICC’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change described in Items
I, II, and III below, which items have
been prepared primarily by FICC. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested parties.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
FICC is seeking to amend the rules of
its Government Securities Division
(‘‘GSD’’) to expand the types of
securities eligible for the GCF Repo
service to include Treasury InflationProtected Securities (‘‘TIPS’’), a
Treasury security whose principal
amount is adjusted for inflation.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
FICC included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. FICC has prepared
1 15
U.S.C. 78s(b)(1).
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summaries, set forth in Sections (A), (B),
and (C) below, of the most significant
aspects of these statements.2
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
The GCF Repo service is a significant
alternative financing vehicle to the
delivery versus payment and tri-party
repo markets. Currently, most Treasury
securities, non-mortgage-backed agency
securities, and fixed and adjustable rate
mortgage-backed securities are eligible
for this service.3 FICC is expanding its
rules to also make eligible TIPS.
When the GCF Repo service was
implemented, TIPS were not generally
accepted as collateral in tri-party repo
arrangements and therefore were not
included in the service. Since then,
TIPS have gained considerable
acceptance in the marketplace for triparty and other trading practices. TIPS
are currently netting eligible for the
GSD’s delivery versus payment service,
and FICC has received requests from
members to make TIPS eligible for the
GCF Repo service. FICC has received an
endorsement from the Funding Practices
Committee of The Bond Market
Association with respect to this
proposal.4
TIPS, which are issued in terms of 5,
10, and 20 years, have the same basic
characteristics of other Treasury
securities and are generally considered
to be of the same low risk level.5 FICC
has determined that with respect to its
risk management processes, TIPS would
be subject to the same maturity ranges,
offset classes, margin rates, and
disallowance factors as are other
Treasury securities.6
For purposes of GSD Rule 20 (Special
Provisions for GCF Repo Transactions),
general references to U.S. Treasury bills,
2 The Commission has modified the text of the
summaries prepared by FICC.
3 Securities Exchange Act Release Nos. 40623
(October 30, 1998), 63 FR 59831 (November 5, 1998)
[File No. SR–GSCC–98–02] and 42996 (June 30,
2000), 65 FR 42740 [File No. SR–GSCC–00–04].
4 FICC has obtained the Generic CUSIP Number
necessary for the inclusion of TIPS as a ‘‘GCF Repo
Security’’ on its master file of eligible securities.
Upon effectiveness of this proposal, FICC will
effectuate the proposed change by listing this
Generic CUSIP Number on the master file. The date
of such listing will be announced to members by
Important Notice.
5 TIPS are issued through the auction process, are
direct obligations of the U.S. government, and are
backed by its full faith and credit.
6 As such, references to ‘‘GCF Treasury
Securities’’ or ‘‘GCF Treasuries’’ in the Margin
Factor and Offset Class Schedules and Disallowance
Percentage Schedules that are annexed to the GSD
Rules will include TIPS upon effectiveness of this
filing.
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notes, or bonds do not include TIPS.7
Therefore, TIPS could not be used
within the GCF Repo service to satisfy
obligations to post or return any other
type of collateral.8
FICC believes the proposed rule
change is consistent with the
requirements of Section 17A of the Act 9
and the rules and regulations
thereunder applicable to FICC because it
allows FICC to expand an important
service that provides members with a
continuing ability to engage in general
collateral trading activity in a safe and
efficient manner. As such, the proposed
rule facilitates the prompt and accurate
clearance and settlement of securities
transactions and assures the
safeguarding of securities and funds
which are in the custody or control of
FICC or for which it is responsible.
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
FICC does not believe that the
proposed rule change will have an
impact or impose any burden on
competition.
(C) Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were not solicited
or received. FICC will notify the
Commission of any written comments
received by FICC.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective upon filing pursuant to Section
19(b)(3)(A) of the Act10 and Rule 19b–
4(f)(4) 11 thereunder because the
proposed rule does not significantly
affect the respective rights or obligations
of the clearing agency or persons using
the service and does not adversely affect
the safeguarding of securities or funds
in the custody or control of FICC or for
which it is responsible. The rule change
will be implemented on the date FICC
lists the Generic CUSIP number for TIPS
as a ‘‘GCF Repo Security’’ on its master
file of eligible securities, which date
will be announced to members by
7 The proposed rule change also amends GSD’s
Rule 20 to make clear that reference to ‘‘U.S.
Treasury bills, notes or bonds’’ therein shall not
include Treasury Inflation-Protected Securities.
8 However, as is consistent with the existing GCF
Repo provisions, U.S. Treasury bills, notes, or
bonds (or cash) may generally be used to satisfy
obligations to post or return other collateral types
and therefore could be used to satisfy any such
obligations involving TIPS.
9 15 U.S.C. 78q–1.
10 15 U.S.C. 78s(b)(3)(A).
11 17 CFR 240.19b–4(f)(4).
E:\FR\FM\26APN1.SGM
26APN1
]]>Agencies
[Federal Register Volume 70, Number 79 (Tuesday, April 26, 2005)]
[Notices]
[Pages 21477-21480]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-8248]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-27961]
Filings Under the Public Utility Holding Company Act of 1935, as
Amended (``Act'')
April 20, 2005.
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 May 16, 2005, 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
[[Page 21478]]
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 May
16, 2005, the application(s) and/or declaration(s), as filed or as
amended, may be granted and/or permitted to become effective.
Georgia Power Company (70-10269)
George Power Company (``Georgia''), 241 Ralph McGill Blvd., NE.,
Atlanta, Georgia, 30308, a wholly owned electric utility subsidiary of
The Southern Company (``Southern''), 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.
A. Description of the Proposed Transactions
Georgia proposes to organize one or more subsidiaries for the
purpose of effecting various financing transactions involving the
issuance and sale of up to an aggregate of $1,100,000,000 of preferred
securities with a specified par or stated value of liquidation amount
of preference per security (``Preferred Securities''), from time-to-
time, through May 31, 2008. In connection with the issuance of the
Preferred Securities, Georgia proposes to organize (1) one or more
separate subsidiaries as a business trust under the laws of the State
of Georgia or a statutory trust under the laws of the State of Delaware
or other comparable trust in any jurisdiction that is considered
advantageous by Georgia; or (2) any other entity or structure, foreign
\1\ or domestic, that is considered advantageous by Georgia
(individually a ``Trust'' and collectively the ``Trusts'').\2\
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\1\ Georgia requests the Commission reserve jurisdiction over
the use of a foreign entity as a Trust.
\2\ Georgia states 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. However, decreasing tax
exposure is usually not the primary goal when establishing a trust.
Because of the potential significant non-tax benefits of these
transactions, use of a trust can benefit an issuer 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 and/or in
forms that have terms favorable to its sponsor and that, at the same
time, provide targeted investors attractive incentives to invest and
so provide financing. Many of these investors would not be
participants in the sponsor's bank group and they typically would
not hold sponsor bonds or commercial paper. Thus they represent
potential new sources of capital.
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Trusts sponsored by Georgia have issued and outstanding a total of
$940,000,000 of preferred securities as of December 31, 2004\3\ Georgia
currently has authority to issue additional preferred securities in an
aggregate amount of up to $150,000,000 prior to October 31, 2005
pursuant to a Commission order (``Current Order'') dated October 23,
2003 (Holding Company Act Release No. 27584).\4\ Georgia proposes that
the authority sought in the Application to issue up to an aggregate of
$1,100,000,000 of preferred securities supersede and replace the
remaining authorization contained in the Current Order.
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\3\ Georgia notes that it reclassified $940,000,000 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.'' Georgia 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.
\4\ The Current Order authorized Georgia to issue up to
$650,000,000 aggregate amount of preferred securities. Under that
order, Georgia has issued $500,000,000 aggregate amount of preferred
securities.
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Georgia 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.\5\ The aggregate of such investment by Georgia
hereafter is referred to as the ``Equity Contribution.'' Georgia 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, Georgia may enter into a loan agreement or agreements
with any Trust under which the Trust will lend Georgia (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 time, and Georgia will issue Notes,
evidencing such borrowings, to the Trust. As of December 31, 2004,
Georgia had outstanding $969,073,000 of Notes payable to trusts.
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\5\ 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 Georgia of the (1)
resulting proceeds and (2) Equity Contribution to the Trust, and
certain other related activities. Accordingly, Georgia proposes that
no Trust's constituent instruments include any interest or dividend
coverage or capitalization ratio restrictions on its ability to
issue and sell Preferred Securities, as each issuance will be
supported by a Note and Guaranty, and such restrictions would not be
relevant or necessary for any Trust to maintain an appropriate
capital structure. Each Trust's constituent instruments will further
state that its common stock is not transferable (except to certain
permitted successors), that its business and affairs will be managed
and controlled by Georgia (or permitted successor), and that Georgia
(or permitted successor) will pay all expenses of the Trust.
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Georgia also proposes to guarantee (individually a ``Guaranty'' and
collectively the ``Guaranties'') (1) payment of dividends or
distributions on the Preferred Securities of any Trust if, and to the
extent, the Trust has funds legally available; (2) payments to the
Preferred Securities holders of amounts due upon liquidation of the
Trust or redemption of the Preferred Securities of the Trust; and (3)
certain additional amounts that may be payable by the Preferred
Securities. Georgia's credit would support any Guaranty.
Georgia states that each Note will have a term of up to fifty
years. Prior to maturity, Georgia 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.\6\
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\6\ It is expected that Georgia's interest payment on the notes
will be deductible for Federal income tax purposes and that each
Trust will be treated as a passive grantor trust for Federal income
tax purposes. Consequently, holders of the Preferred Securities and
Georgia will be deemed to have received distributions in respect of
their ownership interests in the respective Trust and will not be
entitled to any ``dividends received deduction'' under the Internal
Revenue Code of 1986, as amended. The Preferred Securities of any
series, however, may be redeemable at the option of the Trust
issuing the series (with the consent or at the direction of Georgia)
at a price equal to their par or stated value or liquidation amount
or preference, plus any accrued and unpaid dividends or
distributions, (1) at any time after a specified date into later
than approximately ten years from their date of issuance, or (2)
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
Georgia 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 that
are typical of a transaction of this type. Georgia 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, Georgia may instead issue
Notes or other junior subordinated debt directly to purchasers.
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[[Page 21479]]
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 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, Georgia
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 up to eighteen 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 right 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 by Georgia.
Georgia states that the Notes and related Guaranties will be
subordinate to all other existing and future unsubordinated
indebtedness for borrowed money of Georgia and will have no cross-
default provisions with respect to other indebtedness of Georgia (i.e.,
a default under any other outstanding indebtedness of Georgia would not
result in a default under any Note or Guaranty). However, Georgia 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.
If any Trust is required to without or deduct certain amounts in
connection with dividend, distribution or other payments, the Trust may
also have the obligation to ``gross up'' the payments so that the
holders of the Preferred Securities issued by the Trust will receive
the same payment after the withholding or deduction as they would have
received if no withholding or deduction were required. In that event,
Georgia's obligations under its related Note and Guaranty may also
cover the ``gross up obligation.'' In addition, if any Trust is
required to pay taxes with respect to income derived from interest
payments on the Notes issued to it, Georgia may be required to pay the
additional interest on the related Notes as shall be necessary in order
that net amounts received and retained by the Trust, after payment of
the taxes, shall result in the Trust's having funds as it would have
had in the absence of the payment of taxes.
For financial reporting purposes, each Trust will be a variable
interest entity. On March 31, 2004, Georgia prospectively adopted FASB
Interpretation No. 46R, ``Consolidation of Variable Interest Entities''
which requires the primary beneficiary of a variable interest entity to
consolidate the related assets and liabilities (``FIN 46R''). The
adoption of FIN 46R had no impact on Georgia's net income. Georgia
accounts for its investment in each Trust under the equity method in
accordance with FIN 46R, since Georgia does not meet the FIN 46R
definition of a primary beneficiary.\7\
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\7\ The primary beneficiary under FIN 46R is the enterprise
``that will absorb a majority of the entity's expected losses,
receive a majority of the entity's expected residual returns, or
both.'' If one of the parties will absorb a majority of the entity's
expected losses and another party receives a majority of the
expected residual returns, ``the enterprise absorbing a majority of
the losses shall consolidate the variable interest entity.'' In the
case of Georgia's Preferred Securities, the security holders have
the risk of absorbing the majority of the losses through the default
by Georgia or the Trusts, and therefore are the primary
beneficiaries.
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The Notes that will be payable by Georgia to the Trusts will be
presented as a separate line item on Georgia's balance sheet. Interest
payable on the Notes will be reflected as a separate line item on
Georgia's income statement and appropriate disclosures concerning the
Preferred Securities, Guaranties and Notes will be included in the
notes to Georgia's financial statements.
B. General Financing Parameters and Use of Proceeds
1. Effective Cost of Capital
Georgia states that the effective cost of capital on the Preferred
Securities and the interest rate on the Notes will not exceed
competitive market rates available at the time of the issuance of the
securities having the same or reasonably similar terms and conditions
issued by companies of reasonably comparable credit quality, provided
that, in no event will be effective cost of capital exceed 300 basis
points over U.S. Treasury securities having comparable maturities.
2. Issuance Expenses
Georgia states that the underwriting fees, commissions or other
similar renumeration paid in connection with the non-competitive issue,
sale or distribution of a security that is the subject of the
Application (not including any original issue discount) will not exceed
5% of the principal or total amount of the security being issued.
3. Common Equity Ratio
Georgia represents that it will maintain its common equity as a
percentage of capitalization (inclusive of short-term debt) at no less
than thirty percent.\8\ Georgia requests the Commission to reserve
jurisdiction over any guarantees or securities that do not satisfy
these conditions.
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\8\ In regard to a Trust maintaining a minimum amount of common
equity, see the discussion in footnote 5, supra.
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4. Investment Grade Criteria
Georgia further represents that no guaranties or other securities
may be issued in reliance upon any authorization that may be granted by
the Commission pursuant to the Application, unless upon original
issuance (1) the security to be issued, if rates, is rated investment
grade; (2) all outstanding securities of Georgia that are rated are
rated investment grade; and (3) 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. Georgia requests that is be permitted to issue
a security that does not satisfy the foregoing 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 Georgia
Public Service Commission. Georgia also requests the Commission to
reserve jurisdiction over any guaranties or securities that do not
satisfy these conditions.
5. Use of Proceeds
Georgia will use the proceeds from the sale of the securities in
connection
[[Page 21480]]
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.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 05-8248 Filed 4-25-05; 8:45 am]
BILLING CODE 8010-01-M
