ML18219B373

Indiana & Michigan Electric Co. Notice of Proposed Sale of Nuclear Plant to Newly-Organized Subsidiary Company and Related Transactions

ML18219B373
Person / Time
Site:	Cook   (DPR-074, DPR-058)
Issue date:	04/20/1971
From:	Schneider R US Securities & Exchange Commission, Division of Corporate Regulation
To:	US Atomic Energy Commission (AEC)
References
Download: ML18219B373 (3)

Text

MEMO ROUTE SLlP Form AEC-93 (Rcv. hfay 14, 1947) AECh( 0240 See me about thl6.

Note and return.

For concurre,.

For elgnature.

For action.

For Information.

TO (Name and unit)

C.

A. Lovejoy OGC To (Name and unit)

DISTRIBUTION:

Docket Pile (2)W DRL Reading PHR-2 Reading RCDeYoun To (Name and unit)

OGC M. Karman PlKaras (2)

MATaylor INITIALS DATE INITIAIS DATE INITIALS DATE REMARKS TcFO co ies of a recent notice FEDERAL REGXSTER are enclosed for your information.

36 F.R.

7488 DOCKET NOS. 50-315

& 50-316 Indiana

& Michi an Electric Com an REMARKs (Donald C.

Cook Nuclear Plant Units 1 and 2)

REMARKS F RO~(Namo and unit)

~+~~,.P~ gg~ ~(cia~

Prank M. Karas Licensing Asst.

PHR-2/DRL REMARKS PHONE HO.

DATE 7407 4/28/71 USE OTHER SIDE FOR ADGITIOHAI. HEIIARKS cpo: r666 0 t66 6le

4

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.POI(fi)1lsslM I70-50041 INDIANA& MICHIGAN ELECTRIC CO, Notice of Proposed Salo of Nuclear Plant to Newly-Organized Sub-sidiary Company and Related Transactions At RIL 13, 1971.

Notice is hereby given that Indiana &

Michigan Electric Co. (I&M), 2101 Spy Run Avenue, Fort Wayne, IN 46801, an electric utility subsldary company of American Electric Potvcr Co., Inc. (AEP),

a registered holding company, ltas flie an application-declaration and an amendment thereto with this Commis-sion pursuant to the Public UtilityHoM-ing Company Act of 1935 (Act), desig-nating sections 6, V, 9; 10, and 12 of tho Act as applicablo to tlto proposed trans-actions. All interested persons arc re-ferred to the application-declaration, which is summarized belo)v, for a com-plete statement of the proposed trans-

'ctions.

I&Mproposes to acquire for $VO mil-lion cash all of the common stock of In-diana &Michigan Potver Co. (Generating Company), a new company fncot>orated under the laws of Michigan for tlte pur-pose of (i) acquiring, completing the construction of, owning, and operating thc Donald C. Cook Nuclear Generating Plant (Nuclear Plant), which I&M is presently construct,ing at

Brfdgman, Mich., and (ii) selling, upon commence-ment of operation of thc Nuclear Plant, all of the electric power and energy gen>>

crated by that plant to I&hf.Generating Company will acquire from I&M, and I&Mwilltransfer and assign to, Generat-ing Company, (f) all of the property owned by I&Mat tltc Nuclear Plant and (ii) all of I&M's right, title, and fnterest h1 any contracts, agreements, and prop-erty in conncctlon with equipment or other facilities for thc Nuclear Plant. In exchange

therefor, I&M will acquire 1,500,000 shares of Generating Com-pany's common stock, par value $ 1, and such amount of interest-bearing notes as millaggregate, together with the $70 mil-lion of consideration for such 1,500,000 shares of common

stock, an amount

~, equal to tlto amount of IIs book in-vestment (mith appropriate recognition of contract retainagcs, accrued

taxes, and other liabilities assumed by Gener-ating Company) in the Nuclear Plant on the day the transfer is consutmnated.

The notes miff be subordinated to any securities subsequently issued by Gener-ating Company to banks, institutions, and

'he public, mill have a maturity of 10 years, wfff,bear interest at an annual rate equal to the primo commercial credit rate. of ManufactutLIE Ifanover'rust Co. in effect frotn time to time, and miff bc prepayable at any time without yremium or pettalty. Zt is presently con-templated that the notes will bo paid with cash available to Generating Com-pany from its oyerations or, subject to requisite regulatory authority, with tho 1

FEDERAL proceeds of cash capital contributions from I&M or of long-term financing.

Gcncrating Company will report the fs-suancc of its conunon stock on its bool's by recording the 1,500,000 shares of com-mon stock to bc'ssued to thc cxtcnt of

$ 1 pcr share as "Capital Stock-Com-mon Stock" and thc balance as "Capital Surplus-Premhmi on Commotf Stock."

The Nuclear Plant will bc made up of tmo 1,100,000-kilowatt nuclear generat-ing units and associated equipment and

.faciHties and is presently expected to cost a total of not less than $ 180 million.

Unit No. 1 is to be placed in commercial operation in 1973 and Unit No. 2 in 19V4.

It is presently contemplated that Gcn-crating Company will finance the com-pletion of thc Nuclear Plant through cash capital contributions or advances from 1&M and by means of thc issuanco of such securities to banks, lnstltutions, and to the public as this Cotnmission and tho Michigan Public Service Commission may authorize pursuant to applications to bc made at a later time. It fs stated that thc proposed transactions mflf permit Gcn-crating Company to provide a substantial portion of the necessary financhtg of the Nuclear'lant through the direct issu-ance of debt sccuritics.

All of the electric power and energy generated at the Nuclear Plant is to bc sold to I&M by Generating Company pursuant to a long-term power contract.

Pursuant to such contract, I&M would be entitled to all of the clcctrlc power and energy generated at the Nuclear Plant and, in consfderation for such en-titlement, Ivould obligate itself to Gen-erating Company to pay, from time to time for such power and energy, amounts which, when added to funds obtained by Generating Company from other sources, will enable Genera, ting Company to pay all of its operating and other expenses, inchtding (1) any amount whfch Gen-erating Company may bc required to pay on account of principal and,interest for debt securities and (il) such additional amount as is. necessary after any re-quired provision for taxes on, or meas-ured by, income to enable Generating Company to pay requhed dividends on any preferred stock itmay issue and such antount as will represent a fah return on the common stock investment in Generating Company as may be per-mitted.by regulatory authorities having jurisdiction.

I&M intends, upon acquiring the common stock of Generafing Company, to file under Rule 2 for an exemption from the Act as a holdhtg company on thc basis that it miff be predominantly a, public-utility company whose opera-tions as such do not extend beyond thc State in which it is organized and States contiguous thereto.

Tfm application-declaration states that the issuance and sale of the com-mon stoc!'f Generating Company is subject to the jurisdiction of thc Michi-gan Public Service Commission and that no other State or Federal commission, other titan this Commission, has jurisdic-tion over thc proposed transactions, cx-ccpt that (i) approvals of thc Atomic Energy -Commission, tho U.S.

Army REGISTER, VOL. 36, NO. 76 TUESDAY, APRIL 2 Xfccnsa.-),

< Z Q Si EQUITAIILE LIFE CON ENTERPi EPCO

-~p Notice iF'pificafion for a Uconso as

-a t,

'nter rise Small Ifusi-ness InvesTAfiiiff'Iitp

-An application for a lice to as a~i.. r~se EtffNf b'ILLtness 0, 1971 Corps of Engineers, and various other regulator authoritics miff be required in'onnection with the transfer from I&M to Generating Company of vari---

ous licenses', permits, and other authori-zations and (ii) thc long-term power contract between I&M and'encrathtg Company Ivill bc fllcd with, and made effective as a rate schedule by, the Fed-eral Power Commission.

It is stated that thc fees and expenses

to bc htcurred fn connection with the proposed transactions are estimated at

$52,000 for LMof which $50,000 rcprc-settts a Michigan transfer fee.

$17,000 for Generating Company of Ivhlch $15,-

000 represents legal expense, and $ 10,000 for American, Electric Power Scrvicc Corp.

Notice is furtltcr given that any in-terested person

may, not later. than May 4, 19V1, request fn writing that a hearing be held on such matter, stathtg the nature of hfs interest, thc reasons for such request,'nd the issues of fact or law 'raised by said application-declaration which he desires to contro-vert; or he may request that he bo noti-fied if the Commissfon should order a hearing thereon. Any such request should be addressed:

Secretary, Securities and, Exchange Commission, Washington, D.C.

20549. A copy of such request should bc served personally or by mail (airmail if thc person being served is located more <.

than 500 miles from the point of mailing) upon thc applicant-declarant't'hc above-stated address, and proof of serv-ice (by aGidavft or, fn case of an attorney at law, by certiflcate) should bo filed with tho request. At any tlmc after said date, tlto application-declaration, as amended or as it may be further amended, may be granted and permitted to become effec-.

tive as provided in Rule 23 of tho general rules and regulations promulgated under the Act, or thc Commission may grant "exemption from such rules as provided in Rules 20(a) and 100 thereof or take such other action as ft may deem appropriate.

Persons who request a hearing or advice as to Ivhether a hearing is ordered will

~

rcceivc notice of further developments in this matter, including the date of the=

hearing (if ordered) and any postpone-ments thereof.

For the Commission, by thc Division of Corporate Regulation, pursuant to dele-gated authority fsEhL3 RoshI IE F. SCIINEIDEA)

~

RccorrfIng Secretary.

IF'oc.71-5443 Pliect 4-10-71;8:47 am]