File No. 070-10128
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1/A
POST-EFFECTIVE AMENDMENT NO. 8 TO
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
CenterPoint Energy, Inc.
1111 Louisiana
Houston, Texas 77002
Utility Holding, LLC
200 West Ninth Street Plaza
Suite 411
Wilmington, Delaware 19801
CenterPoint Energy Resources Corp.
1111 Louisiana
Houston, Texas 77002
(Name of companies filing this statement and
address of principal executive offices)
CenterPoint Energy, Inc.
1111 Louisiana
Houston, Texas 77002
(Name of top registered holding company parent
of each applicant or declarant)
Rufus S. Scott
Vice President, Deputy General Counsel and
Assistant Corporate Secretary
CenterPoint Energy, Inc.
1111 Louisiana
Houston, Texas 77002
(713) 207-7451
(Names and addresses of agents for service)
The Commission is also requested to send copies
of any communications in connection with this matter to:
James R. Doty, Esq. Margo S. Scholin, Esq.
Joanne C. Rutkowski, Esq. Baker Botts L.L.P.
Baker Botts L.L.P. 3000 One Shell Plaza
The Warner Houston, Texas 77002-4995
1299 Pennsylvania Avenue, N.W. (713) 229-1234
Washington, D.C. 20004-2400
(202) 639-7700
TABLE OF CONTENTS
PAGE
----
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION............................ 1
A. REQUESTED AUTHORIZATION.................................... 1
B. BACKGROUND................................................. 1
C. REFINANCING................................................ 2
ITEM 2. FEES, COMMISSIONS AND EXPENSES................................. 3
ITEM 3. APPLICABLE STATUTORY PROVISIONS................................ 3
A. APPLICABLE PROVISIONS...................................... 3
B. SECTIONS 6 AND 7........................................... 3
C. RULE 54 ANALYSIS........................................... 4
ITEM 4. REGULATORY APPROVAL............................................ 5
ITEM 5. PROCEDURE...................................................... 5
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.............................. 5
A. EXHIBITS................................................... 5
B. FINANCIAL STATEMENTS....................................... 5
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS........................ 6
CenterPoint Energy, Inc. ("CenterPoint" or the "Company"), Utility
Holding, LLC and CenterPoint Energy Resources Corp. ("GasCo") (together, the
"Applicants") hereby file a post-effective amendment (the "Amendment") to their
Application-Declaration asking the Commission to release jurisdiction over the
issuance by GasCo of up to $50 million in incremental external debt
securities.(1)
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
A. Requested Authorization
By order dated June 30, 2003 (HCAR No. 27692 (the "Omnibus Financing
Order")), the Securities and Exchange Commission (the "Commission") authorized
CenterPoint and its Subsidiaries to engage in certain financing and related
transactions through June 30, 2005 (the "Authorization Period").(2) In this
Amendment, GasCo requests a release of jurisdiction over up to $50 million of
the GasCo Additional Debt Limit as defined in the Omnibus Financing Order, such
that the total amount of GasCo external debt will not exceed $2.607 billion at
any time outstanding during the Authorization Period.
B. Background
1. Existing Financing Authority
In the Omnibus Financing Order, the Commission authorized various
financing and related transactions. Of interest here, the Omnibus Financing
Order, by reference to the application:
(i) Approved the continuation of existing financing arrangements,
guarantees and hedging arrangements, as well as any
transactions undertaken to extend the terms of or replace,
refund or refinance existing obligations and the issuance of
new obligations in exchange for existing obligations, provided
in each case that the issuing entity's total capitalization is
not increased as a result of such financing transaction; and
(ii) Reserved jurisdiction over a request by GasCo to issue or sell
external long-term debt securities in an incremental amount of
$500 million and external short-term debt securities in an
incremental amount of $500 million, subject to an overall
incremental limit of $500 million in long-term and short-term
debt securities (the "GasCo Additional Debt Limit") such that
the total amount of GasCo external
----------------
(1) CenterPoint holds its utility interests through Utility Holding, LLC,
a Delaware limited liability company that is a conduit entity formed solely to
minimize tax liability.
(2) The term "Subsidiaries" refers to each existing direct or indirect
subsidiary company of CenterPoint, as well as any direct or indirect subsidiary
companies that CenterPoint may form with the approval of the Commission or in
reliance on rules or statutory exemptions.
debt will not exceed $3.037 billion at any one time outstanding
during the Authorization Period (the "GasCo Aggregate Debt Limit").
The authorized financing transactions were subject to certain terms and
conditions, including the maintenance by GasCo of a minimum of 30% common equity
capitalization.(3) The Omnibus Financing Order also noted that, during the
Authorization Period, "the CenterPoint system's financing transactions will be
largely limited to refinancing, replacing or extending the term of existing
obligations."
By order dated October 28, 2003 (HCAR No. 27743) (the "October
Order"), the Commission released jurisdiction over the issuance of an
incremental $50 million in external debt in connection with the refinancing of 6
3/8% Term Enhanced ReMarketable Securities (the "TERMS").(4)
2. Existing Financing Arrangements
GasCo has a revolving credit facility (the "Facility") that provides
for an aggregate of $200 million in committed credit. As of December 31, 2003,
$63 million was borrowed under this Facility.(5) The Facility terminates on
March 23, 2004. Rates for borrowings under this facility, including the facility
fee, are London interbank offered rate (LIBOR) plus 250 basis points based on
current credit ratings and the applicable pricing grid.
C. Proposed Financing Transaction
The Applicants believe, on the basis of currently available
information, including current interest rates and other factors, that it would
be in the best interest of GasCo to replace the Facility with a three-year
revolving credit facility that provides for an aggregate of up to $250 million
in committed credit if market conditions support those terms. The purpose of the
revolving credit facility is to provide GasCo with short-term liquidity. By
extending the term of the revolving facility and increasing its size, GasCo will
be afforded greater liquidity in the coming months. While that increased
capacity has not been required in recent months, the longer term makes it
prudent to increase the size of the facility in the currently favorable markets.
If conditions over the next three years were to require greater reliance on
revolving
---------------
(3) As of December 31, 2003, GasCo's common equity capitalization was
47.4%.
(4) On November 3, 2003, GasCo issued $160 million aggregate principal
amount of its 5.95% senior notes due 2014. GasCo used the proceeds to redeem
$140 million aggregate principal amount of TERMs maturing in November and other
costs relating to the issuance of the 5.95% notes. The remaining $30 million in
incremental financing authority that was authorized in the October Order was not
used. For purposes of this request, Applicants are assuming that the release of
jurisdiction expired with respect to the unused portion of authority granted
under the October Order.
(5) Audited results from December 31, 2003, indicate that borrowings of
$63 million were outstanding under the facility at that date.
2
credit, the capacity would not need to be renegotiated annually, as it is now.
The greater capacity would also protect against changing needs that might
require a renegotiation for additional capacity. As noted above, the rates for
borrowings under the existing facility, including the facility fee, are LIBOR
plus 250 basis points based on current credit ratings and the applicable
pricing grid. Applicants expects that rates will not be higher under the new
facility.
GasCo requests the Commission to release jurisdiction over $50
million of the GasCo Additional Gas Limit such that the amount of GasCo external
debt securities under the authorized GasCo Aggregate Debt Limit will not exceed
$2.607 billion at any one time outstanding during the Authorization Period.
As noted above, all such financing transactions would be subject to
the terms and conditions set forth in the Omnibus Financing Order. In
particular, GasCo will continue to comply with the requirement that at all times
during the Authorization Period, it must maintain common equity of at least 30%
of its consolidated capitalization (common equity, preferred stock, long-term
debt and short-term debt) as reflected in the most recent Form 10-K or Form 10-Q
filed with the Commission, and adjusted to reflect changes in capitalization
since the balance sheet date therein, unless otherwise authorized. Additionally,
no securities may be issued in reliance on the authority requested in this
post-effective amendment unless: (i) the security to be issued, if rated, is
rated investment grade by at least one nationally recognized statistical rating
organization ("NRSRO") 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; (ii) all
outstanding rated securities of the issuer are rated investment grade by at
least one NRSRO; and (iii) all outstanding rated securities of the top-level
registered holding company are rated investment grade by at least one NRSRO.
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
The fees, commissions and expenses paid or incurred or to be
incurred in connection with this Amendment are estimated to be $20,000, plus the
fees paid in connection with the new facility, which will comply with the
requirements of the Omnibus Financing Order.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
A. Applicable Provisions
Sections 6(a) and 7 of the Act and Rules 44 and 54 thereunder are
considered applicable to the proposed transactions. To the extent that the
proposed transactions are considered by the Commission to require
authorizations, exemption or approval under any section of the Act or the rules
and regulations thereunder other than those set forth above, request for such
authorization, exemption or approval is hereby made.
B. SECTIONS 6 AND 7
Section 6(a) requires the filing of a declaration with the
Commission in connection with (1) an issuance and sale of any security by a
registered holding company or subsidiary company or (2) an exercise of "any
privilege or right to alter the priorities, preferences, voting power or other
rights of the holders of an outstanding security" of the registered holding
company or subsidiary. Commission approval of a declaration is subject to
Section 7(c), which concerns the type of security and purpose for which it is
issued. If the standards of Sections 7(c) and 7(g) (which concerns any necessary
state approvals and is inapplicable in this matter) are met, the Commission
"shall" permit a declaration to become effective, unless it makes certain
findings described in Section 7(d) of the Act.
3
The standards of Section 7(c) of the Act are satisfied because the
proposed securities will be issued and sold solely for the purpose of "financing
the business of the declarant as a public-utility company", as contemplated by
Section 7(c)(2)(B).
No adverse findings are required under Section 7(d) of the Act. In
particular, no adverse finding is required under Section 7(d)(1) or (2)
concerning the financing transaction. Among other things, Section 7(d)
authorizes the Commission to authorize the issuance of a security unless it
finds that: (1) "the security is not reasonably adapted to the security
structure of the declarant and other companies in the same holding company
system"; or (2) "the security is not reasonably adapted to the earning power of
the declarant." GasCo will continue to maintain a minimum of 30% common equity
capitalization at all times during the Authorization Period and otherwise
continue to comply with the terms and conditions of the Omnibus Financing Order.
No adverse finding is required under Section 7(d)(3) of the Act,
which concerns the necessity and appropriateness of a proposed financing to the
economical and efficient operations of a registered system. As noted above, the
Applicants believe that the proposed financing transactions are in the best
interests of GasCo and so provide for the economical and efficient operations of
GasCo.
No adverse findings are required under Section 7(d)(4) because the
fees, commissions and other remuneration to be paid in connection with the
subject financing transactions will comply with the standards approved by the
Commission in the Omnibus Financing Order.
Finally, the terms and conditions of the proposed sale of securities
are consistent with those approved by the Commission in the Omnibus Financing
Order and so, are not detrimental to the public interest or the interest of
investors or consumers.
C. RULE 54 ANALYSIS.
The proposed transactions are subject to Rule 54 under the Act,
which refers to Rule 53. Rule 54 under the Act provides that in determining
whether to approve certain transactions other than those involving exempt
wholesale generators ("EWGs") or foreign utility companies ("FUCOs"), as defined
in the Act, the Commission will not consider the effect of the capitalization or
earnings of any Subsidiary which is an EWG or FUCO if Rule 53(a), (b) and (c)
under the Act are satisfied. As noted in the Omnibus Financing Order, the
Commission appropriately takes into account the capitalization and earnings of
all subsidiary companies of CenterPoint because, as a result of the
Restructuring authorized in the order dated July 5, 2002 (HCAR No. 27548 (the
"July Order")) (as such term is defined in the July Order), CenterPoint has
negative retained earnings. Thus, by reason of its ownership of an EWG, the
Company is not currently in compliance with the requirements of Rule 53(a)(1)
under the Act.(6)
---------------
(6) The Federal Energy Regulatory Commission has certified Texas Genco, LP
as an EWG. CenterPoint does not intend to seek any financing authority in this
regard.
4
CenterPoint complies with, and will continue to comply with, the
record-keeping requirements of Rule 53(a)(2) under the Act, the limitation under
Rule 53(a)(3) under the Act on the use of domestic public-utility company
personnel to render services to EWGs and FUCOs, and the requirements of Rule
53(a)(4) under the Act concerning the submission of copies of certain filings
under the Act to retail regulatory commissions. Further, none of the
circumstances described in Rule 53(b) under the Act has occurred or is
continuing. Rule 53(c) under the Act is by its terms inapplicable to the
transactions proposed herein that do not involve the issue and sale of
securities (including guarantees) to finance an acquisition of an EWG or FUCO.
ITEM 4. REGULATORY APPROVAL.
No state or federal commission other than the Commission has
jurisdiction with respect to any of the proposed transactions described in this
Amendment.
ITEM 5. PROCEDURE.
The Applicants request that the Commission's order be issued as soon
as possible, and that there should not be a 30-day waiting period between
issuance of the Commission's order and the date on which the order is to become
effective. The Applicants hereby waive a recommended decision by a hearing
officer or any other responsible officer of the Commission and consent that the
Division of Investment Management may assist in the preparation of the
Commission's decision and/or order, unless the Division opposes the matters
proposed herein.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
A. EXHIBITS.
B-1 Indenture, dated as of February 1, 1998, between NorAm Energy Corp. and
Chase Bank of Texas, National Association, as Trustee (incorporated by reference
to NorAm Energy Corp.'s Current Report on Form 8-K filed February 10, 1998 (File
No. 1-3265)).
G-1.2 Principal amount of external debt and trust preferred securities of
CenterPoint and its Subsidiaries as of December 31, 2003 (incorporated by
reference to CenterPoint's Current Report on Form 8-K filed March 3, 2004).
B. Financial STATEMENTS.
FS-1 Consolidated Balance Sheets of CenterPoint as of December 31, 2003 and
Statements of Consolidated Operations, Statements of Consolidated Comprehensive
Income and Statements of Consolidated Cash Flows for the year ended December 31,
2003 (incorporated by reference to CenterPoint's Annual Report on Form 10-K for
the year ended December 31, 2003 (File No. 1-31447)).
FS-7 Consolidated Balance Sheets of CenterPoint Energy Resources Corp. as of
December 31, 2003 and Statements of Consolidated Income, Statements of
Consolidated Comprehensive Income and Statements of Consolidated Cash Flows of
CenterPoint Energy Resources Corp. for the year ended December 31, 2003
(incorporated by reference to CenterPoint Energy Resources
5
Corp.'s Annual Report on Form 10-K for the year ended December 31, 2003 (File
No. 1-13265)).
FS-13.1 CenterPoint consolidated financials (forecasts through 2007) (filed in
connection herewith with a request for confidential treatment).
FS-14.1 GasCo financials (forecasts through 2007) (filed in connection herewith
with a request for confidential treatment).
FS-18.1 CenterPoint equity percentages (forecasts through 2007) (filed in
connection herewith with a request for confidential treatment).
FS-19.1 GasCo equity percentages (forecasts through 2007) (filed in connection
herewith with a request for confidential treatment).
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
The proposed transaction involves neither a "major federal action"
nor "significantly affects the quality of the human environment" as those terms
are used in Section 102(2)(C) of the National Environmental Policy Act, 42
U.S.C. Sec. 4321 et seq. No federal agency is preparing an environmental impact
statement with respect to this matter.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, as amended, the Applicants have duly caused this Amendment to be
signed on their behalf by the undersigned thereunto duly authorized.
Date: March 19, 2004
CENTERPOINT ENERGY, INC.
and its Subsidiaries
By: /s/ Rufus S. Scott
---------------------------
Rufus S. Scott
Vice President, Deputy General
Counsel and Assistant
Corporate Secretary
CenterPoint Energy, Inc.
6