ML20235G740
| ML20235G740 | |
| Person / Time | |
|---|---|
| Site: | Beaver Valley |
| Issue date: | 09/28/1987 |
| From: | Doris Lewis DUQUESNE LIGHT CO., SHAW, PITTMAN, POTTS & TROWBRIDGE |
| To: | NRC OFFICE OF ADMINISTRATION & RESOURCES MANAGEMENT (ARM) |
| References | |
| NUDOCS 8709300195 | |
| Download: ML20235G740 (39) | |
Text
_
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i SHAW, PITTMAN, PoTTs & TROWBRIDGE f
A PARTNERSHIP iNCLuOeNG PFfCFESS80NAL CORPORATIONS t
2300 N STREET, N. W.
l TELEX /CasLE WASHINGTON. D. C. 20037 vlRGINIA OFFICE l
80 2693 (sHAWLAW WSH)
ISOf FARM CREDff drive ucLEAN, VIRGINIA 22:02 TELEPHONE (703)790-7900 (202) ess 8474 T E L E COPIE R (202) 223 37eo & 223 37si ZAP MAIL DA /lO R. LEWIS (202)775 033s 1
i September 28, 1987 ilAND DELIVERED i
U.S.
Nuclea r Regula tory Conuniss i on ATT'N: Document Control Desk 7920 Norfolk Avenue Bethesda, Blaryland 20814 In the Blatter of Duquesne Light Company et a1.
(Beaver Valley power Station, Unit 2)
Docket. No. 50-412 Ref: (n) Application for License Amendment and Approval in Connection with Sale and Leaseback Transact. ions by Ohio Ed i son Coropany (b) Application for License Amendment and Approval in Connection with Sale and Leasebank Transnetions by The Cleveland Electric Illuminating Company and The Toledo Ed i s ori Company (e) Letters from D.
Lewis to NRC (Sept. 18, 1987)
(d) Acandment. No.
1 to NPF-73 l
4 4
Dear Sir:
On July 14, 1987, Dutpiesne Light Company fi1ed, on behalf of Ohio Edison Company (OE), an Appliention for License Amendment.
and Approval in Connection wit.h Sale and Leaseback Transactions J
by OE.
On July 31, 1987, Duquesne Light Company filed on behalf
)
of The Cleveland Electric Illuminating Company (CET) and The Toledo Edison Company (TED), an Appliention far License Amendment and Approva1 in Conneetion uith Sa1e and Leaseback Transactions by CEI and TED.
The NRC published a S h o.l l y notice of these applientions on August 12, 1987 (52 Fed. Heg. 29,909, 29,915). By separate letters dat ed Sept ember 1R, 1987, OE and CEI/TFD identified potential equity investors t ha t.
might-participate in l
the transactions.
On September 23, 1987, the NRC approved the l
applientions.
The September 18 letters identiried, where possible, the names of subsidiaries which were believed would participate as e(luity i n ve s t.o rs, but because of the prospective nature of the transactions, the precise unbnidiarie, could not always be iden t. i f i ed.
Indeed, a new subsidiary is s ome t. i me s formed just. to pp 8709300195 070928 I
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PDR ADOCK 05000412
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SHAw. PITTM AN, PoTTs & TROWBRIDGE A PARTNERSHIP INCLUDING PROFES$ TONAL CORPORATIONS participate in such transactions.
Accordingly, for review and l
. approval purposes, the financial statements of the parent corporations of potential equity investors were submitted.
Thus, in OE's September 18 letter, Chase Manhattan Capital Markets Corporation was ident.ified as a subsidiary that might act as an equity investor, while the financial statemerts for its parent, the Chase Manhattan Corporation, were submitted for review and approval.
S imil arl y, in CEI/TED's September 18 letter, llousehold Finance Corporation was identified as a. subsidiary that might act as.a potential equit.y investor for its parent, liousehold International, and the finacial statements for llousehold International were provided for review and approval.
This Friday, Applicants learned that the equity investors above intend to vary the participation of their subsidiaries.
Chase Manhattan Corporat. ion will use another wholly owned subsidiary, Chase Manhattan Realty Leasing Corporation, as the equity investor, llousehold International will participate not only through Household Finance Corporation, but also through Alexander.ilumilton Life Insurance company, another wholiy cuned subsidiary.
This information should not affect the approval granted in Amendment 1 to NPF-73 or necessitate further NRC 1leensing action.
The parent corporations of the potential equity inyestors were idenLified in the September 18 subuittais through the provision of financial statements, and it was the information on the parent corporations that the NRC reviewed and found satisfactory before issuing the license amendment.
The September 18 letters indicated that subsidiaries of the parent corporations would act as the equit y investors, and NPF-73 aut horized such transactions.
Applicants bring this matt er to your attention only to ensure the accuracy of their re p re se n t a t. i ons.
In addit,lon to the above information, Applicants learned of one further change.
OE's S e p t.embe r 18 letter identified Trans Union Leasing Corporation or a subsidiary thereof as one of the pot ent ial equity investors.
OE has learned t h a t.
for tax purposes, it is necessary that an affiliate, not a subsidiary, of Trans Union Lensing Corporation net as the equity investor.
The newly formed affiliate that wishes to act as the equity investor is 11 0 Power Plant
'I n c., a member of the 11 Group lloiding Inc.
family of corporations.
A copy of the most. recent financial statement f or 11 Group IIol d i ng Inc. is provided as attachment 1.
Like Trans Union Leasing Corporat. ion, 11 0 Power Plant Inc. is neit.her a foreign corporation nor affiliated with an eieetric utility.
l I
l To accomodate this slight change, OE reque s t.s that the NRC consider ilG Power Plant lne. as one of the equity investors authorized to pa r t i c i pa t.o in the sale and leaseback transactions.
Two vehinles to accomplish this are suggested. First, the SRC i
could simply issue a letter stating that HG l' owe r Plant Inc. is authorized to participate.
Since lhi Power Plant Inc. would not becomo a licensee, since the transactions involve no transfer of
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SH Aw, PITTM AN, PoTTs & TROWB RIDGE l
4 PAnTNcese metuomo encressiowAL conaonArious l
control over the license, and since Amendment No. 1 to NPF-73 applies to "anyone who may acquire an interest under these t ran s ac t i o n s (making the conditions and limitations of the l
license fully appl.icable to HG Power Plant Inc.), it is submitted that the NRC need only issue a letter to authorize HG Power Plant Inc. to act as an equity investor.
A proposed. letter is provided as Attachment 2.
Alternatively, if the NRC feels that more formal licensing action is desirable, OE requests that the NRC issue an addendum to Amendment No. 1 to NPF-73, incorporating into the amendment proposed reference to this submittal. is a addendum.
The NRC could also issue amendment 2 to NPF-73, identical to amendment 1 but including reference to this letter.
With respect t.o either of these actions, no new Sholly notice would be necessary, because OE's proposed transactions have already been fully described in the NRC's Federal Register Not. ice of August 12.
As noted in OE's original appliention, the sale and leaseback transactions must be completed by September 30 to maximize the tax benefits of the transactions.
The closing date for OE's transactions is September 29.
OE therefore asks that the NRC act on this request by September 29.
OE recognizes that this is a ]ast minute request, but because of t he importance and benefits of these transactions, OE seeks the NRC's indulgence.
The potential investment o f IIG Power Plant. Inc. is up to $100 million, and f.inancial benefits of these transactions inure to OE's consumers and improve OE's financial strength and thus its ability to ensure IWPS Unit 2 is operated and maintained under the highest sa f eta st andards.
We appreciate your consideration of these matters.
Sincerely, 4
David R.
Lewis Counsel for Applicants Enelosures
.: SHAw, PITTM AN, PoTTs & TROWB RIDG E
- A PARTNERSMtP INCLVOING PROFESSIONAL CORPORATIONS Service List (Hand deliverv, indicated by asterisk) f
.U.S._NRC Regional Administrator Region I.
Att'n" Mr. Lowell Tripp 631 Park Avenue King of Prussia,.PA 1940G i
Mr. Jim Beall
.NRC Resident Inspector Beaver Valley Power Station, Unit 2 PO Box 181 Shippingport., PA 15077 l
- Steven A.
Varga Director of Reactor Projects I/II l
U.S.
Nuclear Regulatory Commission j
1 7920 Norfolk Avenue l
Bethesda, Maryland 20814 m
- Mr.
John Stoln Director, Project Directorate I-4 Division of Reactor Projects I/II U.S.
Nuclear Regulatory Commission 7920 Norfolk Avenue Bethesda, Maryland 20811
- Mr.
Peter S.
Tam Project Manager,. Project Directorate I-4 Division of Reactor Projects I/II U.S.
Nuclear Regulatory Commission 7920 Norfolk Avenue Bethesda, Maryland 20814
- George E.
Johnson, Esci.
Office of the General Counsel U.S.
Nuclear Regulat.ory Commission Marylan N a t. i ona l Bank Building j
d 7735 Oid Georgetown Roaci Bethesda, tiaryland 20814
- Joseph Seinto, Es(1 Office of the Genern1 Counse1 U.S.
Nuclear Regulatory Commission Washington, D.C.
20555 l
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I
H GROUP HOLDING, INC., AND SUBSIDIARIES YEARS ENDED JANUARY 31, 1987 AND 1986 l
.r H GROUP HOLDING, INC., AND SUBSIDIARIES YEARS ENDED JANUARY 31, 1987 AND 1986
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i CONTENTS i
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Page s
4 Accountants report j
1 Consolidated financial statements:
Balance sheets 2
Statements of income' 3
Statements of shareholders' equity 4
)
Statements of changes in financial position 5-6
', )
Notes to financial statements 7-23 i
' d 4 '
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I Ig Laventhol&Horwath
" sfa;"t*67601 i
Certified Public Accountants (312)648-0555 Board of Directors H Group Holding, Inc.
Chicago, Illinois We have examined the consolidated balance sheets of H Group Holding, Inc., and Subsidiaries as of January 31, 1987 and 1986, and.the related consolidated statements of income, shareholders' equity, and changes in financial position for the years then ended.
Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we con-sidered necessary in the circumstances.
We did not examine the financial statements of a consolidated subsidiary for 1987 and 1986, which statements reflect total assets constituting 37% and 36%,
respectively, of the consolidated total assets, and total income constituting 36% and 31%, respectively, of the consolidated total income.
These statements were examined by other auditors whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for this consolidated subsidiary, is based solely upon the reports of the other auditors.
In our opinion, based upon our examinations and the reports of the other auditors, the consolidated financial statements referred to above present fairly the financial position of H Group Holding, Inc., and Subsidiaries as of January 31, 1987 and 1986, and the results of the!_ r operations and the changes in their financial position for the years then ended, in conformity with generally accepted accounting principles applied on a
consistent basis.
keWkf i
May 11, 1987 1
A member of Horwath & Horwath International with aff hated offices worldwide.
" ' i.
H GROUP HOLDING, INC CONSOLIDATED BALANCE SHEETS (In thousands ASSETS 1987 1986 Current assets:
Cash, including temporary cash investments 186,731 213,311 Marketable securities (Note 2) 96,535 Due from securities brokers (Note 2) 35,245 Receivables 130,211 130,635 Inventories (Note 8) 72,729 99,666 Prepaid expenses 18,626 10,832 Other 11,852 10,990 Total current assets 551,929 465,434 Investments (Note 3) 49,777 36,218 Property and equipment (Notes 4, 7 and 8) 399,680 445,684 Other assets:
Net investment in leases (Note 12) 7,507 Marketable securities (Note 2) 5,461 12,739 Product lines (Note 4) 155,043 162,481 Excess cost of investment over equity in net assets acquired (Note 5) 60,685 45,244 Unamortized leasehold acquisition costs 2,189 2,268 Receivables, long-term portion (Note 6) 47,571 45,609 Deferred charges and other assets 34,064 24,386 305,013 300,234
$1,306,399
$1,247,570 See notes to consolidate
- ~
.s
, RND SUBSIDIARIES JANUARY 31, 1987 AND 1986 of dollars)
LIABILITIES AND SHAREHOLDERS' EQUITY 1987 1986 Current liabilities:
Current portion of long-tern debt, banks (Note 7) 2,811 11,293 Current portion of long-term debt, other (Note 8) 20,260 16,791 Accounts payable 107,103 46,568 Taxes, other than income taxes 15,367 15,598 Accrued expenses 125,555 89,471 Securities sold, not yet purchased 28,732 Margin account obligations (Note 2) 25,012 Total current liabilities 324,840 179,721 Long-term debt, banks, net of current portion (Note 7) 165,108 186,657 Long-term debt, other, net of current portion (Note 8) 522,242 583,889 Deferred income taxes (Note 9) 19,022 31,400 Minority interests in subsidiaries 16,738 26,840 Commitments and contingencies (Notes 10, 11 and 12)
Shareholders' equity:
Common stock, $1 par; authorized 2,000 shares; issued and outstanding 1,020 shares 1
1 Capital in excess of par 32,314 36,278 Net unrealized loss on marketable securities (Note 2)
(
2,261)
Retained earnings 226,134 205,045 258,449 239,063 TI S1,306,399 S1,247,570 APERTURE financial statements.
2 Also Available On Aperture Card c-,
H GROUP HOLDING, INC., AND SUBS 7. DIARIES CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED JANUARY 31, 1987 AND 1986 (In thousands of dollars)
' )
1987 1986 Income:
Net sales and other operating income
$1,182,254
$1,083,458 Management fee income 48,418 42,808 Loss from investments (Note 3)
(
11,034) (
6,673)
Other income 46,148 56,936
(
Total income 1,265,786 1,176,529 Costs and expenses:
Cost of sales and operating expenses 644,900 597,777 Selling, general and administrative 265,536 212,203 Rent (Note 11) 146,153 129,818 Taxes 41,291 41,777 Depreciation and amortization 54,784 43,852 Interest 95,157 61,276 Total costs and expenses 1,247,821 1,086,703 Income before income taxes and minority interests in subsidiaries 17,965 89,826 Minority interests in (income) losses of subsidiaries 3,891
(
11,940)
^
Income before income taxes 21,856 77,886 Income taxes (Note 9) 767 34,280 Net income 21,089 43,606
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See notes to consolidated financial statements.
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it.
h III I
H GROUP BOLDING, INC.
]$
CONSOLIDATED STATEMENTS 0.
YEARS ENDED JANUARY'
.c f
(In thousands >
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Common' stock Shares Amount Balance, January 31, 1985 1,020
$1 Net unrealized loss on.
marketable securities Net income for the year Balance, January 31, 1986 1,020 1
?
Contributions by a shareholder to a 33%-owned subsidiary (Note 3)
Acquisition of minority share of~a subsidiary Change in net unrealized loss on marketable securities Net. income for the year Balance, January 31, 1987 1,020
$1 t
i-I See notes to consolidated
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= =...
i AND SUBSIDIARIES
' PERTURE A
SHAREHOLDERS' EQUITY gj(}{g 1987 AND 1986 g
Also Available On Aperture Card i
Net unrealized Capital loss on in excess marketable Retained of par securities earnings Total
$36,278 S161,439
$197,718
($2,261)
(
2,261) 43,606 43,606 36,278
( 2,261) 205,045 239,063 632 632
(
4,596)
(
4,596) 2,261 2,261 21,089 21,089
$32,314 S
$226,134 S258,449
,nancial statements.
4 fr70 9 W / F - O k
H GROUP HOLDING, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION YEARS LNDED JANUARY 31, 1987 AND 1986 (In thousands of dollars) 1987 1986 Source of funds:
Net income S 21,089
$ 43,606 Add (deduct) items not affecting working capital:
Depreciation and amortization 54,784 43,852 Minority interests in income (losses)
F of subsidiaries
(
3,891) 11,940 Deferred income taxes
(
6,836) 29,375 Loss from investments 11,034 6,673 Gain from early termination of capital leases
(
5,602)
(Gain) loss from marketable securities transactions 3,929
(
11,447)
Gain from sale of investments
(
1,987) (
4,870)
Gain from sale of a subsidiary's assets
(
6,388)
Working capital provided from operations 72,520 112,741 Increase in long-term debt 75,908 390,602 I
Proceeds from marketable securities transactions 10,943 55,398 Reduction of long-term receivables 2,357 44,810 Proceeds from sale of a subsidiary's assets 7,000 Proceeds from sale of investments 2,421 6,402 Proceeds from sales of hotels, property and equipment, net of debt assumed by purchaser 82,881 4,635 Net proceeds'from sales of securities and partnership interests of subsidiaries 2,859 Distributions from investments 13,010 1,339 Decrease in product lines, goodwill and other intangibles 6,175 Decrease in net investment in leases 910 875
/
Contributions by a shareholder to a 33%-owned subsidiary 632 Decrease in working capital 58,624
^
$326,381
$626,661 Application of funds:
Acquisition of subsidiaries, net of working capital acquired
$270,897 Purchase of common stock of a subsidiary S 29,064 Purchase of property and equipment 138,931 90,931 Reduction of long-term debt 67,291 34,159 Increase in long-term receivables 37,922 19,767 Increase in investments 42,492 6,800 Acquisition of minority share of a subsidiary 4,596 Increase in deferred charges and other assets 6,085 289 Increase in working capital 203,818
$326,381
$626,661 (continued) 5
w H GROUP HOLDING, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION (CONTINUED)
~
YEARS ENDED JANUARY 31, 1987 AND 1986 (In thousands of dollars) 1987 1986 Summary of net change in working capital:
Increase (decrease) in current assets:
/ '
Cash
($ 2 6,580)
S 81,885 Marketable securities 96,535 Due from securities brokers 35,245 Receivables
(
424) 44,351 Inventories
(
26,937) 85,487 Prepaid expenses 7,794 6,711 Other 862
(
14) 86,495 218,420 Increase (decrease) in current liabilities:
Current portion of long-term debt, banks
(
8,482) 9,358 Current portion of long-term debt, other 3,469
(
976)
Accounts payable 60,535
(
1,234)
Taxes, other than income taxes
(
231) (
603)
Accrued expenses 36,084 8,057 Securities sold, not yet purchased 28,732 Margin account obligations 25,012 145,119 14,602 Increase (decrease) in working capital
($ 58,624)
$203,818 See notes to consolidated financial statements.
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H GROUP HOLDING, INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS I
YEARS ENDED JANUARY 31, 19 87 AND 19 86
'i 1.
Summary of significant accounting policies:
Principles of consolidation:
The consolidated financial statements include the accounts of H Group Holding, Inc., and its subsidiaries (individually and collectively referred to as the " Company") after elimination n
of all material intercompany balances and transactions.
The Company's primary operating subsidiaries are Hyatt Corpora-tion ("Hyatt"), Conwood Company, L.P.
("Conwood") (Note 5),
Braniff, Inc. and Dalfort Corporation ("Dalfort",
formerly Braniff Airways, Incorporated).
Certain amounts in 1986 have been reclassified to conform with the 1987 presentation.
Marketable securities:
The portfolio of marketable securities is stated at the lower of aggregate cost or market.
Inventories:
Inventories, consisting primarily of food, beverage, tobacco and aircraft parts and supplies, are stated at the lower of average cost or market.
Investments:
Investments in companies or partnerships in which the Company owns 20% but not more than 50% of the common stock or partner-ship interest are accounted for by the equity method.
Invest-ments in partnerships in which the Company owns less than 20%
are stated at cost.
Property and equipment and depreciation and amortization:
Property and equipment are stated at cost.
Depreciation and amortization are provided over the estimated useful lives of the assets, primarily by the straight-line method.
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H GROUP HOLDING, INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JANUARY 31, 1987 AND 1986 1.
Summary of significant accounting policies:
(continued)
Product lines:
Product lines of Conwood are being amortized by the straight-line method over their estimated economic useful lives of approximately 23 to 28 years.
Excess cost of investment over equity:
The-excess cost of investment over net assets acquired (Note 4) and in certain equity investments (Note 3) is being amortized by the straight-line method over periods ranging from 10 to 40 years.
Leasehold acquisition costs:
Costs of acquiring leasehold interests are deferred and amor-tized by the straight-line method over the life of the lease or 40 years, whichever is less.
Investment tax credit:
The Company follows the practice of treating investment tax credits as a reduction of the provision for income taxes in the year in which the related credit arises (flow-through method).
2.
Marketable securities:
The Company's portfolio of marketable securities consists of common and preferred stock, stock options, convertible bonds, publicly traded partnership units, and various types of fixed-income securities including government and corporate bonds.
Gain or loss on security sales is computed primarily on the first-in, first-out basis.
A summary of cost, market value, gains and losses is as follows:
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f H GROUP HOLDING, INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JANUARY 31, 1987 AND 1986 2.
Marketable securities:
(continued) 1987 1986 (In thousands of dollars)
Aggregate cost
$101,996
$15,878 Aggregate market valuo
$102,831
$12,739 Unrealized gain (loss)
S 835 (S 3,139)
Change in valuation allowance included in shareholders' equity, increase (decrease)
($
2,261)
S 2,261 Net realized gain (loss) included in net income (net of income taxes)
($
2,829)
S 8,242 Marketable securities aggregating approximately $37,376,000 and proceeds from securities sold, not yet purchased (short sales) of $35,245,000, are restricted and/or pledged as collateral for margin account obligations and regulatory requirements.
3.
Investments:
At January 31, 1987, the Company had an equity investment of
$10,235,000 in Roland International Corporation
("Roland"),
representing a 33% stock interest, after giving effect to con-tributions of assets made by a
shareholder for which no consideration was paid by Roland.
At December 31, 1986, Roland had assets of $98,943,000, liabilities of $75,576,000 and net loss for the year then ended of $2,529,000.
The Company's investment is $2,601,000 in excess of the underlying equity.
Amortization of the excess was
$109,000 in 1987 and 1986.
Investments at January 31, 1987, also include $39,542,000, rep-resenting the Company's investment in 27 hotel joint ventures and 10 non-hotel partnerships.
The Company's share of net income (losses) from these entities amounted to ($10,199,000) and S25,000 in 1987 and 1986, respectively.
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H GROUP HOLDING, INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED. JANUARY 31, 1987 AND 1986 4.
Property and equipment:
1987 1986 (In thousands of dollars)
Land S 14,150 1,928 Buildings and improvements 291,059 239,107 Equipment 209,564
'190,651 Construction in progress 130 79,486 i
514,903 511,172 Less accumulated depreciation 177,116 139,716 337,787 371,456 Capital leases:
Buildings and equipment 116,318 128,541 Equipment 5,542 7,018 121,860 135,559 Less accumulated amortization 59,967 61,331 61,893 74,228
$399,680
$44 5,6 8 4 The Company capitalized construction period interest in the amounts of approximately $4,980,000 in 1987 and S1,332,000 in 1986.
Amortization of capital leases was
$6,441,000 in 1987 and
$6,930,000 in 1986.
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5.
Acquisition:
On October 10,
- 1986, pursuant to an Agreement and Plan of Merger, a wholly-owned subsidiary of the Company acquired all of the remaining shares of Dalfort Corporation not held by the Company, for an aggregate purchase price of $29,064,000, or
$14.00 per share.
The acquisition and merger have been e
accounted for by the purchase method of accounting, and accordingly, the excess of $22,456,000 of acquisition price over the historical carrying value of minority interest has been recorded as goodwill.
Such goodwill is being amortized on a straight-line basis over a period of ten years.
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l' H GROUP HOLDING, INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JANUARY 31, 1987 AND 1986 5.
Acquisitions:
(continued)
On September 13, 1985, Dalfort purchased a 95% limited partner-ship interest in Conwood Company, L.P.
("Conwood"), a producer of smokeless tobacco products.
The acquisition was consummated at a purchase price of approximately $402,000,000.
Funding for the acquisition was obtained from the following sources:
(i) S62,000,000 from the cash of Conwood Corporation (the pre-decessor company); (ii) $20,000,000 from capital contributions of the partners of Conwood; (iii) S110,000,000 f rom a subordina-ted loan from a subsidiary of the Company; and (iv) $210,000,000 from a secured bank loan.
The purchase price exceeded the historical net book value of Conwood Corporation's assets at September 13, 198 5 by approximately $25 8,00 0,00 0.
The acquisition has been accounted for by the purchase method of accounting and, accordingly, the purchase price was allo-cated to the tangible and intangible assets acquired on the basis of their appraised fair value at September 13, 1985.
The excess purchase price remaining after such allocation of approximately $32,000,000 has been recorded as goodwill and is being amortized on a straight-line basis over a 40-year period.
On January 29, 1986, Conwood Capital Corporation (Capital"),
a wholly-owned subsidiary of Conwood, issued its 14 1/4% Senior Subordinated Debentures Due 1998
("the Debentures")
in the principal amount of $210,000,000 (Note 8).
The net proceeds f rom the sale of the Debentures have been applied to repay in full the $110,000,000 subordinated loan from a subsidiary of the Company and approximately $100,000,000 of the secured bank loan.
Concurrent with the sale of the Debentures, the remain-ing balance of indebtedness outstanding under the secured bank loan of approximately $110,000,000 was assigned to an affiliated partnership (Note 8).
11
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H GROUP HOLDING, INC., AND SUBSIDIARIES l
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JANUARY 31, 1987 AND 1986
')
6.
Receivables, long-term portion:
During the year ended January 31, 1987, the Company purchased participation in the amounts of $20,000,000 and $10,000,000, respectively, in bank loans made to an affiliated hotel partnership apd an unrelated company.
The $20,000,000 parti-cipation, which is secured by a second mortgage on a hotel property, bears interest at 1/2% over the prime rate and is payable in monthly installments of interest only, with a final maturity in June 1991.
The $10,000,000 participation bears interest at 13 1/2% and is payable in semiannual installments of interest only until 1994, with a final maturity in 1998.
At January 31, 1986, receivables, long-term portion, included the Company's participation amounting to approximately
$33,667,000 in a secured loan f rom a bank to Dalfort Corpora-tion (Note 7).
On December 24, 1986, at which time the unpaid principal balance had been reduced to an amount which equaled the Company's participation, the bank assigned all of its remaining rights under the loan agreement to the Company.
Accordingly, at January 31, 1987, the Company's participation and the note payable from Dalfort Corporation are deemed to be intercompany balances and have been eliminated from the courolidated financial statements.
W 12 e
H GROUP HOLDING, INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JANUARY 31, 1987 AND 1986 7.
Long-term debt, banks:
1987 1986 (In thousands of dollars)
Secured promissory note payable, collateralized by the related buildings, furniture and equignent, payable in monthly installments of interest only, at 1.5% above the lending bank's average monthly effective rate on 90-day certificates of deposit S 54,000
$ 54,000 Construction loans for hotel projects, payable il interest only during the construction period at variable rates, with maximum borrowings of
$77,000,000 in 1987 and $128,000,000 in 1986 69,316 61,210 Note payable, bearing interest at the prime rate plus 11/2%, collateralized by substantially all of the noncash assets of Dalfort Corporation, payable in varying amounts, maturing in 1993 36,149 Prime rate plus 1/2% loan payable, collateralized by the related leasehold improvements and equipnent, payable interest only until April 1987, then monthly installments of principal and interest based upon a 30-year amortization period, with a final balloon payment due March 1989 23,000 23,000 11% mortgage note payable, collateralized by building and equipnent, maturing in 2000 8,649 8,937 9.75% installment note payable, collateralized by leases, receivables ard equipnent, payable quarterly, matu*ing in 1992 5,866 15.7%-17.4% installment notes payable, collateralized by leases, receivables and equipment, payable in varying amounts, maturing through 1986 6,581
- f 7,088 8,073 167,919 197,950 Iass current portion 2,811 11,293
$165,108
$186,657 13
i H GROUP HOLDING, INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JANUARY 31, 1987 AND 1986 7.
Long-term debt, banks:
(continued)
The secured promissory note is due in December 1987, with options available, at the Company's election, to extend the maturity for an additional four years.
The aggregate maturities in each of the five years ending January 31, 1988 to 1992 (should the Company exercise the option to extend the maturity of the secured promissory note) are
$2,811,000, S3,578,000,
$26,651,000,
$3,922,000, and
$54,938,000, respectively.
8.
Long-term debt, other:
1987 1986 (In thousands of dollars) 14.25% senior subordinated debentures, interest payable semiannually, maturing on January 15, 1998
$202,230 S201,372 Secured loan payable to an affiliated partnership, collateralized by inventory, receivables, trademarks and other intangible assets of Conwood Company, L.P.,
payable in varying amounts and rates, maturing in 1990 58,250 110,000 6%-10.75% mortgage notes payable, collateralized by all related land, buildings, improvements and lease-holds, payable in varying amounts, maturing through 2015 114,260 117,935 8.5% subordinated note, payable in monthly installments of $231,000 including interest, through 2008 27,207 27,652 16.5% equipment trust certificates, payable in semiannual installments of $1,434,000 including interest through March 1997, collateralized by leases, receivables and equipment 14,095 14,577 11% promissory note payable, maturing in 2020 13,000 14
H GROUP HOLDING, INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED. JANUARY 31, 1987 AND 1986 l
8.
Long-term debt, other:
(continued) 1987 1986 (In thousands of dollars) 8% promissory note payable, maturing in 2010 4,244 4,244 Other 5,624 5,165 Obligations under capital leases:
7%-19.5% building and equipment leases, payable in varying amounts, maturing through 2021 101,397 115,962 9.0%-20.5% equipment leases, payable in varying amounts, maturing through 1994 2,195 3,773 542,502 600,680 Less current portion 20,260 16,791
$522,242
$583,889 The 14.25% senior subordinated debentures, issued by Capital, are secured by a senior subordinated note and the unconditional guarantee of Conwood.
Such note and guarantee are subordinated to all existing and future senior debt of Conwood, including the secured loan payable to an affiliated partnership, and are not secured by any assets, rights or properties of Conwood.
The Debentures are redeemable at the option of Capital, in whole or in part, at any time, together with accrued interest, at 114.25% of the principal amount, decreasing annually on each January 15 by 2.04% to 100% on or after January 15, 1993.
The Debentures are entitled to annual sinking fund payments of
$40,000,000 beginning January 15, 1994, which are calculated to retire approximately 76% of the Debentures prior to maturity.
The Debentures also have the benefit of an interest reserve fund, supported by a $40,000,000 irrevocable bank letter of credit issued for the account of Hyatt in favor of a third-party trustee.
The interest reserve fund will decline under certain circumstances and will terminate when Conwood has satisfied certain financial tests.
15
i H GROUP HOLDING, INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) l YEARS ENDED JANUARY 31, 1987 AND 1986 l
8.
Long-term debt, other:
(continued)
The secured loan payable to an affiliated partnership (" Secured Lo an" ) requires mandatory quarterly repayments aggregating
$11,250,000, $20,000,000 and $27,000,000 in the years ending January 31,
- 1988, 1989 and
- 1990, respectively.
Additional prepayments will also be required if certain levels of cash flow of Conwood, as defined, are achieved.
The Secured Loan agreement contains provisions pertaining to maintenance of minimum working capital levels, incurrence of additional debt, liens, security interests or similar encumbrances, distribu-tions or return of capital to partners and certain other restrictive covenants, all related to the activities of Conwood.
The aggregate maturities in each of the five years ending Janu-ary 31,19 88 to 19 92, are $ 20,2 60,000, $ 32,0 49,000, $ 3 8,815,000,
$9,171,000 and $10,308,000, respectively.
9.
Income taxes:
The provision for income taxes is comprised of the following:
1987 1986 (In thousands of dollars)
Current:
Federal
$ 3,978
$ 2,099 State 3,625 2,806 7,603 4,905 Deferred:
Federal
(
6,918) 29,399 State 82
(
24)
(
6,836) 29,375 767
$34,280 16
H GROUP HOLDING, INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JANUARY 31, 1987 AND 1986 l
9.
Income taxes:
(continued)
Deferred income taxes arise as a result of timing differences between financial statement and income tax reporting.
The sources of these differences and the tax effect of each are as follows:
1987 1986 (In thousands of dollars)
Accelerated depreciation for tax purposes S 1,324 S 6,214 Expenses not deductible for tax purposes in the year accrued
(
1,469) 2,195 Capitalized leases 9,164 7,872 Reserve for aircraft and equipment dispositions
(
3,300) 2,385 Minority interests in subsidiaries 1,993
(
4,815)
Adjustments arising from Internal Revenue Service examination (Note 10)
(
796)
Undistributed losses of equity investments
(
170) (
1,906)
Partnership losses (less than 20%
interest)
(
1,079) 2,352 Pension plan termination
(
5,169)
Utilization (recognition) of net operating losses and investment tax credit carryforwards
(
6,895) 14,960 Other
(
439) 118
( $ 6,836 )
$29,375 17
H GROUP HOLDING, INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JANUARY 31, 1987 AND 1986 9.
Income taxes:
(continued)
The following is a reconciliation of the normal expected federal income tax rate with the effective rates reported in the finan-cial statements:
1987 1986 Percentage Percentage of pretax of pretax Amount incane Amount incune (In thousands of dollars)
Expected federal income taxes
$10,053 46%
$35,828 46%
State incom taxes, net of federal tax benefit 2,001 9
1,503 2
Investment and jobs tax credits
(
2,864)
(13 )
(
2,610)
(3)
Adjustments arising from an Internal Revenue Service examination (Note 10) 1,765 8
1,840 3
Nontaxable income resulting from tax bases of certain assets differing from their bases for financial reporting purposes
( 4,453)
(20 )
(
3,298)
(4)
Realization of reacquisition net operating loss carryforwards of a subsidiary
(
5,091)
(23 )
Investment incom taxed at capital gains rates
( 1,026)
(5)
(
463)
(2)
Internal Revenue Code Section 936 exenption
( 1,003)
(5)
(
632)
(1)
Dividend income exclusion
(
129)
(
352)
(1)
Nondeductible amortization costs 1,435 7
637 1
Minimun tax on preference items 1,500 2
Other 79 327 1
767 4%
$34,280 44%
18
H GROUP HOLDING, INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JANUARY 31, 1987 AND 1986 9.
Income taxes:
(continued)
For tax reporting purposes, the Company has investment tax credit carryforwards of approximately $11,300,000 which expire in 1997 through 2001.
In
- addition, one of the Company's subsidiaries has substantial reacquisition net operating j
loss ~and investment tax credit carryforwards which expire in varying amounts through 1998.
10.
Commitments and contingencies:
The company covers certain qualified employees under various retirement and savings plans (defined contribution plans).
These plans allow employees to make voluntary contributions.
The Company's contributions to these plans an.ounted to
$7,500,000 and $6,100,000 for 1987 and 1986, respectively.
During 1987, one the Company's subsidiaries terminated one of its defined benefit plans and implemented a new, substantially identical plan.
In connection therewith, excess assets of the terminated plan of approximately $12,500,000 reverted to such subsidiary.
One of the Company's subsidiaries adopted a profit-sharing and stock ownership plan during the year ended January 31, 1985.
The Company's contribution to this plan amounted to approxi-mately $300,000 and $2,300,000 in 1987 and 1986, respectively.
The Company is a guarantor of several mortgage notes on hotels operated by the Company under leases where the Company is, in any event, obligated to pay sufficient rent to amortize these mortgage notes.
19
e H GROUP HOLDING, INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JANUARY 31, 1987 AND 1986 l
10.
Commitments and contingencies:
(continued)
The Company is a general partner in various partnerships owning hotel properties which are subject to mortgage indebtedness.
These mortgage agreements generally limit the lender's recourse to security interests in assets financed and/or other assets of the partnership and/or general partner (s) thereof.
It is k}
the opinion of Company management that the current market value of each of these hotel properties exceeds the related mortgage indebtedness.
The Company is committed, under certain conditions, to invest or loan up to approximately $73,200,000 to joint ventures and partnerships developing and constructing hotel properties.
The company has executed completion guarantees of approxi-s mately $11,500,000 for three hotels presently being construc-
~
ted.
The Company has guaranteed the repayment of indebtedness of an affiliated hotel company in an amount not to exceed
$13,500,000.
The Company has guaranteed performance of its responsibilities under management contracts and leases for the operation of various arenas and convention centers.
The total of such per-formance guarantees was
$3,500,000 at January 31, 1987.
The Company has guaranteed outstanding letters of credit aggre-gating approximately S11,500,000 at January 31, 1987.
The Company is a defendant in various legal actions.
The Company and its legal counsel are of the opinion that the actions will not result in any material liability.
- J w
l-20
H GROUP HOLDING, INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JANUARY 31, 1987 AND 1986 10.
Commitments and contingencies:
(continued)
The Internal Revenue Service has completed a field examination of the federal income tax returns of the Company for the years ended January 31, 1974 through 1982.
Certain issues were raised which have resulted in proposed adjustments.
The Company recently concluded settlement discussions with the Internal Revenue Service during which a substantial portion
=
of the proposed adjustments were resolved.
With regard to those adjustments which were accepted by the Company, a significant portion are
" timing adjustments",
that is, a
deduction disallowed for the year under
- audit, however, allowable in a subsequent year.
The remaining unaccepted adjustments will be contested by the Company, since it is the company's view, based on the opinion of legal counsel, that the positions taken by the Company are correct and will ultimately be sustained.
The Internal Revenue Service has recently commenced a field audit examination of the federal income tax returns of the Company for the years ended January 31, 1983 through 198 5.
While the Company cannot predict the results or actions which may be taken upon completion of the 1983-1985 examinations, it is the Compan y ' s view that the amounts provided for income tax liabilities and interest thereon are adequate.
11.
Leased assets and commitments:
The Company leases
- land, hotels,
- motels, aircraft, airport terminal facilities and equipment under both capital and operating leases.
Most of the leases for hotels and motels contain renewal options which enable the Company to retain use of the facilities in desirable operating areas and require the Company to pay executory costs, including taxes, maintenance and insurance.
Generally, the capital leases for hotels and motels provide for contingent rentals based on percentages of gross sales.
The operating leases for hotels base the rental payments, in most cases, upon profit before depreciation, debt service and income taxes.
Operating lease agreements covering aircraft provide for minimum and contingent rental payments.
No aircraft contingent rental was payable during 1987 and 1986.
21
i' H GROUP HOLDING, INC., AND SUBSIDIARIES 1
l NOTES TO CONSOLIDATED FINANCI.tL STATEMENTS (CONTINUED) l l
YEARS ENDED JANUARY 31, 1987 AND 1.986 11.
Leased assets and commitments:
(continued)
Future minimum lease payments are as follows:
Capital Operating Fiscal year leases leases (In thousands of dollars) 1988
$ 17,122
$ 38,469 1989 17,018 30,198 1990 16,397 18,649 1991 15,797 11,433 1992 15,797 10,549 Thereafter 115,368 244,765 h
Total minimun lease payments 197,499
$354,063 Less amount representing interest 93,907 Present value of net minimum capital lease payments
$103,592 The present value of net minimum capital lease payments includes approximately $90,257,000 payable to related parties.
In addition, payments of rent under capital leases (both minimum and contingent) to related parties were
$29,935,000 and
$27,500,000 in 1987 and 1986, respectively.
Total rent expense for all leases for 1987 and 1986 amounted to:
1987 1986 1
(In thousands of dollars)
N Operating leases:
Minimum rentals S 56,584
$ 52,486 Contingent rentals 76,412 66,987 132,996 119,473 Capital leases, contingent rentals 13,157 10,345
~
$146,153
$129,818 r
22
H GROUP HOLDING, INC.e AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) l YEARS ENDED JANUARY 31, 1987 AND 1986 12.
Lessor lease transactions:
Certain of the Company's subsidiaries lease equipment to third pa rties under operating leases, a direct financing lease and a leveraged lease.
The equipment under lease consists of an airplane, railroad cars and intermodal containers.
Lease revenues in all cases provide the Company with sufficient funds with which to meet its obligations with respect to the equipment.
The lease covering the railroad cars is with an affiliate of the Company.
Summarized financial information (in thousands of dollars) for the years ended January 31, 1987 and 1986, is as follows:
1987 1986 Property and equipment
$ 8,587
$ 9,601 Long-term lease receivables
$20,974
$21,953 Long-term debt
$18,496
$14,095 Lease revenues S 8,082
$11,354 Loss before income taxes S
364 458 23
UNITED STATES NUCLEAR. REGULATORY COMMISSION-Washington, D.C.
20555 September 29, 1987 Docket No. 50-412 Mr.
J.
J.
Carey, Senior-Vice President Nuclear Group Duquesne Light Company Post Office Box 4 Shippingport, PA 15077
Dear Mr. Carey:
SUBJECT:
SUPPLEMENTAL APPROVAL IN CONNECTION WITil SALE AND LEASEBACK TRANSACTIONS As requested by letter dated September 28, 1987, the Commission authorizes 11G Power Plant Inc. to participate in sale and leaseback transactions approved by Amendment No. 1 to NPF-73, subject to the conditions and limitations of the amendment.
Sincerel.y, i
Peter S.
Tam, Project Manager-Project Directorate I-4 Division of Reactor Projects I/II l
cc: See next page 1
.ak'
,t.
.I l
-i o
l a
.-.i Mr.
J.'J.
Carey Beaver Valley Power Station
{
Duquesne Light Company J
cc:
Gerald Charnoff, Esq.
Mr Kenneth Grada, Manager
' Jay E.
Silberg, Esq.
Safety and Licensing Shaw', Pittman, Potts.& Trowbridge _Duquesne Light, Company
.2300 N Street, N.W.
P.O. Box-4 Washington, D.C.
20037 Shippingport, PA 15077 Mr.
C.
W.
Ewing, Quality Pennsylvania Office of Assurance Manager Consumer Advocate Duquesne Light Company ATTN: Michael Bardee P.O.
Box 186 1425 Strawberry Square Shippingport, Pa 15077
.Harrisburg, PA 17120 Director, Pennsylvania Emergency M r '. John D.
- Burrows, P.E..
Management Agency Director of Utilities Room B-151 State of Ohio Transportation & Safety Building Public Utilities Commission Harrisburg, PA 17120 180 East Broad Street Columbus, Ohio 43266-0573 Mr..T.
J.
Lex Westinghouse Electric Corp.
Bureau of Radiation Protection Power Systems PA Department of Environmental P.O.
Box 355 Resources Pittsburgh, PA 15320 ATTN:
R.
Janati P.O.
Box 2063 Mr.
P.
RaySircar Harrisburg, PA 17120 Stone & Webster Engineering Corp.
4 P.O.
Box 2325 BVPS-2 Records Management Boston, Massachusetts 02107 Supervisor Duquesne Light Company Mr.
J.
Beall Post Office Box 4 U.S.
NRC Shippingport, PA 15077 j
{
P.O.
Box 18)
John A.
Lee, Esq j
Shippingport, PA 15077 Duquesne Light Company l
Regional Administrator, Region I 1 Oxford Centre j
U.S.
NRC 301 Grant Street 631' Park Avenue Pittsburgh, PA 15279 l
King of Prussia, PA 19406 1
t i
I
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W
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UNITED STATES J'
' NUCLEAR REGULATORY COMMISSION Washington, D.C.
20555 3
September 29,/1987 1
Dock t No. 50-412
/
r.
Mr.
J. f. Carey,~ Senior Vice President
~
. Nuclear' Group..
Duquesh'e Light' Company s
Post Office Box"4 Shippingport, PA 15077 Deni> Mr. Carey:
SUBJECT:
ADDENDUM TO LICENSE AMENDMENT
%s
~The Commission has issued the enclosed Addendum to Amendment'No; b
1_ t o Facility Operating License No. NPF-73 for the Beaver Valley Power. Station, Unit 2.
The Addendum adda to Amendment No. 1 Aceference to your letter dated September 28, 1987, and allows HO Power Plant Inc. to participate as an equity investor in Ohio Edison Company's sale and leaseback transactions.
Sincerel,/,
Peter S.
Tam, Project Manager Project Directorate I-4 Division of Reactor Projects I/II
Enclosure:
Addendum to Amendment No. 1 to NPF-73 cc w/ enclosure:
See next page l
l 1
Mr.
J.-J.
Carey Beaver Valley Piwer Station Duquesne Light Company ec:
Gerald Charnoff, Esq.
Mr Kenneth Grada, Manager Jay E.
Silberg, Esq.
Safety and Licensing Shaw, Pittman, Potts & Trowbridge Duquesne Light Company 2300-N Street,-N.W.
P.O. Box 4 Washington, D.C.
20037 Shippingport, PA 15077 Mr.
C.
W. Ewing, Quality Pennsylvania Office of Assurance Manager Consumer Advocate Duquesne Light Company ATTN: Michael _Bardee 1425 Strawberry Square P.O.
B.-
186
_ 15077 Harrisburg, PA 17120 Sh i ppin g.po rt, Pa Director, Pennsylvania Emergency Mr. John D. Burrows, P.E.
Management Agency Director of Utilities i
. Room B-151 State of Ohio Transportation & Safety Building Public Utilities Commission Harri sieurg, PA 17120 180 East Broad Street j
Columbus, Ohio 43266-0573 l
Mr. T.
J.
Lex
{
Westinghouse Electric Corp.
Bureau of Radiation Protection
-Power Systems PA Department of Environmental-P.O. Box 355 Resources Pittsburgh, PA 15320 ATTN:
R.
Janati P.O.
Box 2063 Mr.
P.
..aySircar Harrisburg, PA 17120 Stone & Webster Engineering Corp.
P.O. Box 2325 IWPS-2 Records Management Boston, Massachusetts 02107 Supervisor Duquesne Li ght Compar.y Mr.
J.
Beall Post Office Box 4 U.S.
NRC Shippingport, PA 15077 P.O.
Bok 181 Shippingport, PA 15077 John A.
Lee, Esq.
Duquesne Light Company Regional Administrator, Region I 1 Oxford Centre U.S.
NRC 301 Grant Street 631 Park Avenue Pittsburgh, PA 15279 King of Prussia, PA 19406 l
1 i
l
j.-
i UNITED STATES NUCLEAR REGULATORY COMMISSION Washington, D.C.
20555 DUQUESNE L1 Gilt COMPANY OHIO EDISON COMPANY TiiE CLEVEi,AND ELECTRIC ILLUMINATING COMPANY Tile-TOLEDO EDISON COMPANY 4
DOCKET NO. 50-412 BEAVER VALL3Y POWER STATION, UNIT 2 l
i ADDEt*DUM TO FACILITY OPERATING LICENSE AMENDMENT I
i i
Addendum Amendment No. 1 License No. NPF-73 l
1.
Amendment No. 1 to License No. NPF-73 is modifed to include, j
in license paragraph 2.B.(7), reference to the licensees' letter j
dated September 28, 1987.
FOR THE NUCLEAR REGULATORY COMMISSION Steven A.
Varga, Director Division of Reactor Projects I/II
Attachment:
Pages 3 and 3a of License Date of Issuance: September 29, 1987
.3-
-(2)
Pursuant Lo'the Act and'10 CFR Part.50, Ohio Edison Company',
The Cleveland Electric. Illuminating Company, and The Toledo
-Edison Company'to possess the facility at the designated location in Beaver County, Pennsylvania, in accordance with the. procedures and limitations set forth in the license; (3)
Pursuant to the Act and'10 CFR Part 70, Duquesne Light' Company to recolve, possess, and use at any time special nuclear material as reacto,r fuel, in accordance with the limitations for storage and amounts required for reactor operation, as described in the Final Safety Analysis Report, as supplemented and amended:
(4)
Pursuant to the Act and-10 CFR: Parts 30, 40, and 70, Duquesne Light Company to receive, possess, and use at any time any byproduct, source, and special nuclear material such as sealed neutron sources for reactor startup, sealed sources for~ reactor instrumentation and radiation monitoring equipment calibration, and as fission detectors in amounts as required; (5)
Pursuant to the Act and 10 CFR Parts 30, 40, and 70, Duquesne Light Comapny to receive, possess, and use in source or special nuclear amounts'as required any byproduct, material without restriction to chemical or physical form, for sample analysis or instrument calibrat. ion or other not.ivity associated with radioactive apparatus or components; (G)
Pursuant to the Act and 10 CFR Parts 30, 40, and 70,
-Duquesne Light Company to possess, but not s epa ra t.e, such as may be produced byproduct and special nuclear materials by the operation of the facility authorized herein.
(7)
(a) Duquesne Light Company, Ohio Edison Company, The Cleveland Electric Illuminating Company and The Toledo Edison Company are authorized to t.ransfer any portion of the.fr respective 13.74%, 41.88%, 24.47% and 19.91%
ownership interests in BVPS Unit 2 and a proportionate share of their ownership interests in the BVPS common facilities to certain potential investors identified in their submittals of July 14, 16, 22 and 31, and September 14, 17, 18 and 28, 1987, and at the same time to lease back from such purchasers such interest transferred in t.he BVPS Unit 2 facility. The term of the lease is for approximately 29-1/2 years subject to a right of renewal. Such sale and leaseback transactions are Admendment No. 1 i
(modified by addendum)
L
- 3a -
subject to.the representations and conditi'ons set forth in th'e aforementioned submittals. Specifically, a lessor and anyone else who may acquire an interest under these transactions are prohibited from exercising directly or indirectly any control over the license of BVPS Unit 2.
For purposes of:this condition the limitations in 10 CFR 50.81, as now in effect and as may be subsequently amended,'are' fully applicable to lessor and any successor in interest to that lessor au long as the license for BVPS Unit 2. remains in effect; these financial transactions shall have no effect on the license for the BVPS Unit 2 facility throughout the term of the license.
(b).Further, the -licensees are also. required to notify the NRC in writing prior to any change in: (i) the term or conditions of any lease agreements executed as part of these transactions, (ii) the BVPS Operating Agreement, (iii) the existing property insurance coverage for DVPS Unit 2, and (iv) any action by a lessor or others that may have an adverse effect on the safe operation of the facility.
C.
This license shall be deemed to contain and is subject to the conditions specified in the Commission's regulations set forth in 10 CFR Chapter I and is subject to all applicable provisions of the Act and to the rules, regulations, and orders of the Commission now or hereafter in effect; and is subject to the additional conditions specified or incorporated below:
(1) Maximum Power Level DLCo is authorized to operate the facility at reactor core power levels not in. excess of 2652 megawatts thermal (100 percent power) in accordance with the conditions i
specified herein.
(2! Technical Specifications and Environmental Protection Plan The Technical Specifications contained in Appendix A and the Environmental Protection plan contained in Appendix B,
both of which are attached hereto, are hereby incorporated into this license.
DLCo shal.1 operate the hacility in accordance with the Technical Specifications and the Environmental Protection Plan.
Amendment No. 1 (Modified by Addendum) l
_ _ _. _ _ _ _ _ _