ML20128R117

Forwards Recent Press Release Announcing Agreement Between Applicant & Toledo Edison Co to Combine Under Newly Formed Holding Company.Svc List Also Encl.Related Correspondence

ML20128R117
Person / Time
Site:	Perry
Issue date:	07/10/1985
From:	Glasspiegel H CLEVELAND ELECTRIC ILLUMINATING CO., SHAW, PITTMAN, POTTS & TROWBRIDGE
To:	Bright G, Gleason J, Kline J Atomic Safety and Licensing Board Panel
References
CON-#385-786 OL, NUDOCS 8507150167
Download: ML20128R117 (6)

Text

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SHAw, PITTMAN, PoTTs & TROWBRIDGE A PARTNER $MIP lNCLUDihG PROrtSSiCNAL CORPORATIONS 1800 M STREET. N. W.

TELgx WASHINGTON. D. C. 20036 TELEcopica 89-2693tsHAWLAW WSM) (202) 822-1099 & 822 H99 CA4LE *sMAwLAw' RAPIFAX IOO TELEPHONE (303)3333073

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HARRY H. GLASSPIEGEL D8CKETED July 10, 1985

'85 ~ JLL 12 All :08 James P. Gleason, Chairman Atomic Safety and. Licensing Board CFFICE OF SECRETARY 513 Gilmoure Drive DOCKET t & E9ViCT Silver Spring, Maryland 20910 Dr. Jerry R. Kline Atomic Safety and Licensing Board U. S. Nuclear Regulatory Commission Washington, D.C. 20555 Mr. Glenn O. Bright Atomic Safety and Licensing Board U. S. Nuclear Regulatory Commission Washington, D.C. 20555 Re: The Cleveland Electric Illuminating Company (Perry Nuclear Power Plant, Units 1 and 2)

Docket Nos. 50-440 and 50-441DL-Gentlemen:

For the Licensing Board's information, enclosed is a re-cent press release by The Cleveland Electric Illuminating Com-pany ("CEI"), announcing an-agreement between CEI and The Toledo Edison Company (" Toledo Edison") to combine under a newly formed holding company. As indicated in the press re-lease, both CEI and Toledo Edison will continue as local compa-nies under their existing Boards of Directors and management.

Sincerely, n

0 kfi 7 85073o M 050 Wr .  :: %

0 Harry H. Glasspiegel d Counsel for Applicants cc: Service List (attached) 350 c

1 UNITED STATES OF AMERICA NUCLEAR REGULATORY COMMISSION BEFORE THE ATOMIC SAFETY AND LICENSING BOARD In the Matter of )

)

THE CLEVELAND ELECTRIC ) Docket Nos. 50-440 ILLUMINATING COMPANY ) 50-441 *

)

(Perry Nuclear Power Plant, )

Units 1 and 2) )

SERVICE LIST James P. Gleason, Chairman Atomic Safety and Licensing 513 Gilmoure Drive Appeal Board Panel Silver Spring, Maryland 20901 U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Mr. Jerry R. Kline Docketing and Service Section Atomic Safety and Licensing Board Office of the Secretary U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Washington, D.C. 20555 Mr. Glenn O. Bright Colleen P. Woodhead, Esquire Atomic Safety and Licensing Board Office of the Executive Legal U.S. Nuclear Regulatory Commission Director Washington, D.C. 20555 U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Christine N. Kohl, Chairman Atomic Safety and Licensing Terry Lodge, Esquire Appeal Board Suite 105 U.S. Nuclear Regulatory Consission 618 N. Michigan Street Washington, D.C. 20555 Toledo, Ohio 43624 Dr. W. Reed Johnson Donald T. Ezzone, Esquire

. Atomic Safety and Licensing Assistant Prosecuting Attorney

Appeal Board Lake County Administration U.S. Nuclear Regulatory Commission Center Washington, D.C. 20555 105 Center Street Painesville, Ohio 44077 Gary J. Edles, Esquire Atomic Safety and Licensing Atomic Safety and Licensing Appeal Board Board Panel U.S. Nuclear Regulatory Commission U.S. Nuclear Regulatory Commission Washington, D.C. 20555 Washington, D.C. 20555 John G. Cardinal, Esquire Ms. Sue Hiatt Pros'ecuting Attorney 8275 Munson Avenue Ashtabula County Courthouse Mentor, Ohio 44060 Jefferson, Ohio 44047 i

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,, June 25, 1985 N-37 FOR IMMEDIATE RELEASE THE ILLUMINATING COMPANY PUBLIC INFORMATION P.O. Box 5000 Cleveland. Ohio 44101 (216)623-1060 l

CEI-T912d9 EdlE9D 6DD9EDsg Combinat19n Elgog i

l The Cleveland Electric Illuminating Company and The Toledo Edi-l 4

l son Company today jointly announced signing of a definitive agree-i ment to combine under a newly formed holding company that will provide overall management, planning and policy making for the two' electric utilities.

The announcement was made simultaneously in Cleveland by CEI Chairman Robert M. Ginn and President Richard A. Miller and in Toledo by Toledo Edison Chairman John P. Williamson. The announce-ment came following approval of the definitive agreement by each company's Board of Directors.

, Terms of the agreement call for owners of Toledo Edison stock to receive 1 share of the new holding company for each TE common share l

l held. CEI share owners will receive 1.11 holding company shares for 4

each CEI common share held.

Although any dividend will be established by the new company's Board of Directors, the annual dividend on the new company's shares j is expected to be $2.56 a share. The current indicated annual rate on both CEI and Toledo Edison common stock is $2.52 a share.

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Other than common stock, no other securities or financial obli-l gations of_the two companies will be affected.

Directors of the new company will be Williamson, Ginn, Miller and nine "outside directors," three from Toledo Edison's current Board ~and six from CEI's.

Both Cleveland Electric and Toledo Edison will continue as local companies under their existing Boards of Directors and management.

The new company will have its home base in the Greater Cleveland area, but will be separate from CEI headquarters.

Koting that the affiliation will provide significant long-term benefits to the customers and share owners of both companies, the '

' executives said.they would seek prompt regulatory approval so that the affiliation plan could be submitted to share owners of both

. companies for approval by late fall. The companies hope to effect the combination by the end of 1985.

Under terms of the affiliation, Williamson will act as chairman of the new holding company, Ginn will be president and chief execu-tive officer, and Miller will be executive vice president.

"Under the affiliation," Ginn said, "each utility will retain its local identity and considerable autonomy. But coordination of generating facilities and transmission links will increase effi-l-

ciency and help hold down costs. Additionally, the larger corpora-tion will have better access to the capital markets, reducing future financing costs and helping to further hold down elect.ric rates."

! As explained by Williamson: " Electric rates will be lower than ~

would otherwise be the case and customers will be better assured an i

adequate and reliable supply of electricity. This can help retain industry in Northern Ohio and attract new industry."

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The new holding company will be among the nation's 20 largest electric utilities in terms of the market value of its common stock.

(CEI is now 27th largest and TE is 48th.) The two companies will

, have a combined common stock market value of about $2.4 billion and total assets of more than $8 billion.

. Together, the two companies own all of the Davis-Besse Nuclear

! Power Station, located 24 miles east of Toledo and operated by 1

! Toledo Edison; slightly more than 50 percent of the Perry Nuclear Power Plant Unit #1, nearing completion 35 miles east of Cleveland,

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to be operated by CEI; and about 44 percent of Beaver Valley Unit,

1. 2, being built by Duquesne Light Company and scheduled for comple-tion around the end of 1987.

Pooling CEI's nuclear team with Toledo Edison's will effect the i best possible quality in nuclear construction and operations.

Other potential benefits from affiliation cited by both com-panies include:

--Combined purchasing strength permitting savings in the .

cost of fuel and materials through volume purchasing, stan-

dardization and control of inventory.

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--Consolidation and eventual reduction of overall staff and ,

i e?ministrative functions, although both companies'said this would be achieved through attrition, not lay-offs.

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--Greater stability in industrial sales, which accounted for 37 percent of CEI's revenues last year and 36 percent i

of TE's. The diversity of the two service territories

would help reduce fluctuations in industrial demand during 4

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periods of economic downturn. Toledo Edison's major indus- l trial customers include refineries and glass makers while CEI serves many chemical companies. Both utilities serve the steel and auto industries.

--Broader capability in dealing with other utilities.- The .

two-company affiliation will permit coordination in buying and selling activities in bulk power markets. The combina- l tion will provide.for electricity transfers through one system crossing Ohio from Indiana and Michigan to Pennsylvania and on to the' East Coast. ,

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The holding company concept is not new to chio. Columbus and Southern Ohio Electric Company of Columbus and Ohio Power Company of Canton both are wholly-owned subsidiaries of American Electric Power, a holding company headquartered in Columbus.

"To sum it up," Williamson said, "the CEI-Toledo Edison affilia-tion will result in a streamlined, efficient, financially strong organization. An $8-billion company obviously will have more visi-bility and credibility in the marketplace. And, because electric rates will be held down, the ultimate beneficiary is every person who uses electricity in Northern Ohio.

CEI's financial advisor in the transaction is Morgan Stanley &

Co., Inc. Toledo Edison's is Merrill Lynch Capital Markets.

1 For further information contact:

l CEI Media Relations, (216) 623-1060 Toledo Edison Media Relations, (419) 249-5043 i

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