-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K1qHJLBB0ePkmp7NMldFt+0mrHoDFHNtrJDcch9EMgCUBjUvj/057hzulgdJbPcT OxPEO1+RvqICQSL+vQMEfA== 0000893220-96-001642.txt : 19961004 0000893220-96-001642.hdr.sgml : 19961004 ACCESSION NUMBER: 0000893220-96-001642 CONFORMED SUBMISSION TYPE: U-1 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19961003 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLUMBIA GAS SYSTEM INC CENTRAL INDEX KEY: 0000022099 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 131594808 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1 SEC ACT: 1935 Act SEC FILE NUMBER: 070-08925 FILM NUMBER: 96639030 BUSINESS ADDRESS: STREET 1: 12355 SUNRISE VALLEY DRIVE STREET 2: SUITE 300 CITY: RESTON STATE: VA ZIP: 20191-3458 BUSINESS PHONE: 7032950394 MAIL ADDRESS: STREET 1: 12355 SUNRISE VALLEY DRIVE STREET 2: SUITE 300 CITY: RESTON STATE: VA ZIP: 20191-3458 U-1 1 COLUMBIA GAS FORM U-1 1 File No. 70-_____ U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form U-1 JOINT APPLICATION-DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 THE COLUMBIA GAS SYSTEM, INC. COLUMBIA GAS SYSTEM SERVICE CORPORATION COLUMBIA LNG CORPORATION COLUMBIA ATLANTIC TRADING CORPORATION 12355 Sunrise Valley Drive Suite 300 Reston, VA 20191-3458 TRISTAR VENTURES CORPORATION TRISTAR CAPITAL CORPORATION TRISTAR PEDRICK LIMITED CORPORATION TRISTAR PEDRICK GENERAL CORPORATION TRISTAR BINGHAMTON LIMITED CORPORATION TRISTAR BINGHAMTON GENERAL CORPORATION TRISTAR VINELAND LIMITED CORPORATION TRISTAR VINELAND GENERAL CORPORATION TRISTAR RUMFORD LIMITED CORPORATION TRISTAR GEORGETOWN GENERAL CORPORATION TRISTAR GEORGETOWN LIMITED CORPORATION TRISTAR FUEL CELLS CORPORATION TVC NINE CORPORATION TVC TEN CORPORATION TRISTAR SYSTEM, INC. 205 Van Buren Herndon, VA 22070 COLUMBIA NATURAL RESOURCES, INC 900 Pennsylvania Avenue Charleston, WV 25302 COLUMBIA ENERGY SERVICES CORPORATION COLUMBIA ENERGY MARKETING CORPORATION COLUMBIA SERVICE PARTNERS, INC. 121 Hill Pointe Drive Suite 100 Canonsburg, PA 15317 COLUMBIA GULF TRANSMISSION COMPANY COLUMBIA GAS TRANSMISSION CORPORATION 1700 MacCorkle Avenue, S.E. Charleston, WV 25314 COLUMBIA NETWORK SERVICES CORPORATION 1600 Dublin Road Columbus, OH 43215-1082 COMMONWEALTH PROPANE, INC. COLUMBIA PROPANE CORPORATION 9200 Arboretum Parkway, Ste 140 Richmond, VA 23236 COLUMBIA GAS OF KENTUCKY, INC. COLUMBIA GAS OF OHIO, INC. COLUMBIA GAS OF MARYLAND, INC. COLUMBIA GAS OF PENNSYLVANIA, INC. COMMONWEALTH GAS SERVICES, INC. 200 Civic Center Drive Columbus, OH 43215 - -------------------------------------------------------------------------------- (Names of company or companies filing this statement and addresses of principal executive offices) THE COLUMBIA GAS SYSTEM, INC. - -------------------------------------------------------------------------------- (Name of top registered holding company parent of each applicant or declarant) J. W. Trost, Vice President COLUMBIA GAS SYSTEM SERVICE CORPORATION 12355 Sunrise Valley Drive Suite 300 Reston, VA 20191-3458 (Name and address of agent for service)(Other Agents for Service are Listed on the Reverse Side of the Front Cover) 2 Names and Addresses of Subsidiary Company Agents for Service: M. A. CHANDLER, Treasurer Columbia Natural Resources, Inc. 900 Pennsylvania Avenue Charleston, WV 25302 D. DETAR, Treasurer TriStar Ventures Corporation TriStar Pedrick Limited Corporation TriStar Pedrick General Corporation TriStar Binghamton Limited Corporation TriStar Binghamton General Corporation TriStar Vineland Limited Corporation TriStar Vineland General Corporation TriStar Rumford Limited Corporation TriStar Georgetown Limited Corporation TriStar Georgetown General Corporation TriStar Fuel Cells Corporation TVC Nine Corporation TVC Ten Corporation TriStar System, Inc. 205 Van Buren Herndon, VA 22070 S. T. MACQUEEN, Treasurer Columbia LNG Corporation 12355 Sunrise Valley Drive Suite 300 Reston, VA 20191-3458 J. W. TROST, Vice President Columbia Gas System Service Corporation 12355 Sunrise Valley Drive, Suite 300 Reston, VA 20191-3420 J. W. GROSSMAN, Treasurer TriStar Capital Corporation Columbia Atlantic Trading Corporation 12355 Sunrise Valley Drive Suite 300 Reston, VA 20191-3458 S. M. NORDIN, Treasurer Commonwealth Propane, Inc. Columbia Propane Corporation 9200 Arboretum Parkway, Ste 140 Richmond, VA 23236 D. L. GELBAUGH, Vice President Columbia Gas of Ohio, Inc. Columbia Gas of Kentucky, Inc. Commonwealth Gas Services, Inc. Columbia Gas of Pennsylvania, Inc. Columbia Gas of Maryland, Inc. 200 Civic Center Drive Columbus, OH 43215 N. C. Zola, Treasurer Columbia Gas Transmission Corporation Columbia Gulf Transmission Company 1700 MacCorkle Avenue,. S. E. Charleston, WV 25314 D. FURLANO, Treasurer Columbia Network Services 1600 Dublin Road Columbus, OH 43215-1082 ROBERT GUSTAFSON, Controller Columbia Energy Services Corporation Columbia Energy Marketing Corporation Columbia Service Partners, Inc. 121 Hill Pointe Drive Suite 100 Canonsburg, PA 15317 - -------------------------------------------------------------------------------- (Names and Addresses of Other Agents for Service) 3 Page 1 ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION (a) Furnish a reasonably detailed and precise description of the proposed transaction, including a statement of the reasons why it is desired to consummate the transaction and the anticipated effect thereof. If the transaction is part of a general program, describe the program and its relation to the proposed transaction. The Columbia Gas System, Inc. ("Columbia"), a Delaware Corporation, and a holding company registered with the U. S. Securities and Exchange Commission ("Commission") under the Public Utility Holding Company Act of 1935 ("the Act"), and the following wholly-owned subsidiary companies, are Joint Applicants-Declarants: Distribution Subsidiaries - Columbia Gas of Pennsylvania, Inc. ("Columbia Pennsylvania") Columbia Gas of Ohio, Inc. ("Columbia Ohio") Columbia Gas of Maryland, Inc. ("Columbia Maryland") Columbia Gas of Kentucky, Inc. ("Columbia Kentucky") Commonwealth Gas Services, Inc. ("Commonwealth Services") Transmission Subsidiaries - Columbia Gas Transmission Corporation ("Columbia Transmission") Columbia Gulf Transmission Company ("Columbia Gulf") Exploration and Production Subsidiary - Columbia Natural Resources, Inc. ("Columbia Natural") Other Subsidiaries - Columbia Energy Services Corporation ("Energy Services") Columbia Energy Marketing Corporation ("Energy Marketing") Columbia Service Partners, Inc. ("Service Partners") Columbia Gas System Service Corporation ("Service") 4 Page 2 Columbia Propane Corporation ("Columbia Propane") Commonwealth Propane, Inc. ("Commonwealth Propane") TriStar Ventures Corporation ("TriStar Ventures") TriStar Pedrick Limited Corporation ("Pedrick Limited") TriStar Pedrick General Corporation ("Pedrick General") TriStar Binghamton Limited Corporation ("Binghamton Limited") TriStar Binghamton General Corporation ("Binghamton General") TriStar Vineland Limited Corporation ("Vineland Limited") TriStar Vineland General Corporation ("Vineland General") TriStar Rumford Limited Corporation ("Rumford Limited") TriStar Georgetown Limited Corporation ("Georgetown Limited") TriStar Georgetown General Corporation ("Georgetown General") TriStar Fuel Cells Corporation ("Fuel Cells") TVC Nine Corporation ("TVC Nine") TVC Ten Corporation ("TVC Ten") TriStar System, Inc. ("TriStar System") TriStar Capital Corporation ("TriStar Capital") Columbia Atlantic Trading Corporation ("Columbia Atlantic") Columbia LNG Corporation ("Columbia LNG") Columbia Network Services Corporation ("Columbia Network Services") The foregoing named subsidiaries are principally engaged in one or more phases of the natural gas business or a related energy business. Columbia Pennsylvania, Columbia Ohio, Columbia Maryland, Columbia Kentucky and Commonwealth Services comprise the "Utility 5 Page 3 Subsidiaries". All subsidiary companies excluding the Utility Subsidiaries comprise the "Nonutility Subsidiaries". All subsidiary companies listed above are hereinafter referred to collectively as "the Subsidiaries." Columbia and the Subsidiaries are sometimes hereinafter collectively referred to as the "System". The System is seeking, as more fully described hereinafter, Commission authorization for: I. External financing by The Columbia Gas System, Inc., including requests for A) short-term financing in the form of borrowings under a revolving credit agreement, commercial paper and bid notes, B) long-term financing, C) authorization to hedge the interest risk associated with existing and to be issued fixed and floating rate debt from time to time, D) equity financing, and E) other securities. II. Intrasystem financing of Subsidiaries, including A) long-term debt, B) short-term debt (including continuation of the Money Pool), C) guarantees, D) paying dividends to the extent permitted by Delaware law from additional capital surplus, which arose from a reverse stock split, for certain subsidiaries incorporated in Delaware, and E) reincorporation of Columbia Natural in Delaware. III. External financing by nonutility subsidiaries and the formation of financing entities. It is Columbia's belief that precedent was established for all authorizations requested herein by order of the Commission In Re Consolidated Natural Gas Company, HCAR No. 26500 (March 28, 1996). IV. Financing for Exempt Wholesale Generators (EWGs) and Foreign Utility Companys (FUCOs). Columbia requests Commission authorization to finance the acquisition of EWGs and FUCOs in compliance with the standards set forth in Holding Company Act Rule 53. It is Columbia's belief that precedent was established for the authorization requested herein by order of the Commission In Re TriStar Ventures Corporation HCAR No. 35-29209. 6 Page 4 I. EXTERNAL FINANCING Columbia currently obtains funds externally through short-term debt financing under the $1 billion Credit Agreement dated as of November 28, 1995, between Columbia and a group of banks with Citibank, N.A. as Agent (the "Credit Facility"). The Credit Facility was authorized pursuant to the Order of the Commission dated August 25, 1995 (HCAR No. 26361; 70-8627). Columbia is herewith requesting authorization to issue from time to time prior to December 31, 2001, long-term securities aggregating not more than $5 billion and short-term debt aggregating no more than $1 billion outstanding at any one time. The securities that can be issued are any combination of debentures (which may be in the form of medium term notes), common stock, preferred stock, or other equity and debt securities as the case may be. Such securities may be issued and sold pursuant to underwriting agreements of a type generally standard in the industry. Public 7 Page 5 distributions can be pursuant to private negotiation with underwriters, dealers or agents, or effected through competitive bidding among underwriters. In addition, such securities may be issued and sold through private placements or other non-public offerings to one or more persons or distribution by dividend or otherwise to existing shareholders. All such debentures and stock sales will be at rates or prices and under conditions negotiated, or based upon, or otherwise determined by, competitive capital markets. Previously, Columbia registered $1 billion dollars of securities under a shelf registration statement filed pursuant to the Securities Act of 1933 (the "Securities Act"). That became effective under the Commission's order dated March 11, 1996. In March 1996, Columbia issued and sold $247,250,000 of common stock pursuant to the shelf registration. Such issuance and sale were authorized under the Act pursuant to the Orders of the Commission dated August 25, 1995 (HCAR No. 26361; 70-8627) and March 15, 1996 (HCAR No. 26494; 70-8627). The shelf registration statement remains effective for the issue of up to $752,750,000 of additional securities subject to the approval of the Commission on an offering-by-offering basis. Parameters for Authorization The Application makes requests for authority, without any additional prior Commission approvals, to engage in future financing transactions for which the specific terms and conditions are not at this time known. Accordingly, it is appropriate that certain conditions concerning the financial status of Columbia exist at the time of engaging in such activities. The general conditions for doing such financing activities without further prior approval are given directly below. 1. Columbia Debt of Investment Grade and Maintenance of Equity Ratio Columbia would be authorized to engage in the long-term financing activities described herein as long as: (i) its long-term debt rating is of investment grade as established by a nationally recognized statistical rating organization as that term is used in Rule 15c3- 1(c)(2)(vi)(F) under the Securities Exchange Act of 1934 (the "Exchange Act"), and (ii) its common equity (as reflected in its most recent Form 10-K or Form 10-Q, as the case may be) does not fall below 30% of its consolidated capitalization. The issuance of any long-term debt financing would occur over such a period of time and in a combination with equity such that it would not cause Columbia's common equity to fall below 30% of consolidated capitalization. 2. Effective Cost of Money on Borrowings 8 Page 6 The effective cost of money on debt borrowings occurring pursuant to the authorizations granted under the application will not exceed 300 basis points over comparable term U.S. Treasury securities. 3. Effective Cost of Money on Other Approved Securities The effective cost of money on preferred stock and other fixed income oriented securities will not exceed 500 basis points over 30-year term U.S. Treasury securities. 4. Maturity of Debt The maturity of indebtedness will not exceed 50 years. 9 Page 7 5. Issuance Expenses The underwriting fees, commissions, or other similar remuneration paid in connection with the non-competitive bid issue, sale or distribution of a security pursuant to the Application will not exceed 5% of the principal or total amount of the financing. 6. Aggregate Dollar Limit The aggregate amount of external, long-term debt and equity financing issued by Columbia during the approximate five-year period will not exceed $5 billion of long-term debt and equity financing or more than $1 billion of short-term borrowings outstanding at any one time. The proceeds from the sale of securities by Columbia in external financing transactions will be added to Columbia's treasury and used for general and corporate purposes including (i) the financing, in part, capital expenditures of Columbia and its Subsidiaries, (ii) the financing (in the case of short-term debt) gas storage inventories, other working capital requirements and capital spending of the System, and/or (iii) the acquiration, retirement, or redemption of securities of which Columbia is an issuer without the need for prior Commission approval pursuant to Rule 42 or a successor rule. On June 20, 1995, the Commission issued HCAR No. 26313 in which it published and solicited public comments on a proposed Rule 58 under the Act. This proposed rule would permit registered holding companies and their subsidiaries to acquire securities of companies engaged in specified nonutility activities without prior Commission approval. Accordingly, the proceeds of the financings proposed in this proceeding could also be used for these additional purposes to the extent provided for by the proposed Rule 58. To the 10 Page 8 extent the use of financing proceeds requested in the application are not covered under the proposed Rule 58, Columbia would seek Commission approval. The authorizations requested herein to engage in external or intrasystem financing without additional Commission approval do not apply in the case of any financing (other than through the use of internally generated funds and / or consolidated retained earnings) for the purpose of investing in either an EWG or a FUCO as defined in Sections 32 and 33 of the Act, respectively unless, such investment is in compliance with Rule 53 and Rule 54 (as described below). A. SHORT-TERM FINANCING To provide financing for general, corporate purposes, including financing gas storage inventories, other working capital requirements and construction spending until long-term financing can be obtained, Columbia requests authorization to have outstanding at any one time through December 31, 2001, up to $1 billion of short-term debt consisting of borrowings under the Credit Facility, the issuance of commercial paper, the sale of bid notes (as described below) and other forms of short-term financing generally available to borrowers with investment grade credit ratings. In order to consolidate all orders authorizing financings under one file, Columbia requests that the authorization for the Credit Facility (Order dated August 25, 1995, HCAR No-26361 be withdrawn and superseded by the order of the Commission sought herein. Columbia further requests authorization to amend the Credit Facility without further Commission authorization provided that the maturity date does 11 Page 9 not go beyond December 31, 2001, and the principal amount and borrowing margins do not increase. 1. Commercial Paper Commercial paper would be sold, from time to time, in established domestic or European commercial paper markets to dealers at the prevailing discount rate per annum, or at the prevailing coupon rate per annum, at the date of issuance for commercial paper of comparable quality and maturities sold to commercial paper dealers generally. It is expected that the dealers acquiring commercial paper from Columbia will re-offer such paper at a discount to corporate, institutional and, with respect to European commercial paper, to individual investors. It is anticipated that Columbia's commercial paper will be re-offered to investors such as commercial banks, insurance companies, pension funds, investment trusts, foundations, colleges and universities, finance companies and nonfinancial corporations. Backup bank lines of credit for 100% of the outstanding amount of commercial paper are generally required by credit rating agencies. The Credit Facility will serve as backup for Columbia's commercial paper program, thus negating the need for additional lines of credit. 2. Bid Notes Agreements Columbia requests approval to enter into individual agreements ("Bid Note Agreements") with one or more commercial banks which are lenders under the Credit Facility. The Bid Note Agreements would permit Columbia to negotiate with one or more banks ("Bid Note Lender[s]") on any given day for such Bid Note Lender, or any affiliate or subsidiary of such lender, to purchase promissory notes ("Bid Notes") directly from 12 Page 10 Columbia. Such notes would bear interest rates comparable to, or lower than, those available through other forms of short-term borrowing with similar terms requested in this Application. The maturity of the Bid Notes would not exceed 270 days, and the total amount of Bid Notes outstanding at any time, when added to the aggregate amounts of short-term borrowing outstanding under other forms of short-term borrowing contemplated in this Application, would not exceed the total amount of short-term debt for which authorization is requested. A form of the proposed Bid Note is attached hereto as Exhibit A-5; however, the exact form of the security will be negotiated separately with each of the Bid Note Lenders. 3. Other Securities Columbia may engage in other types of short-term financing as it may deem appropriate in light of its needs and market conditions at the time of issuance. Such short-term financing could include, without limitation, bank borrowings and medium-term notes issued under the Indenture dated as of November 28, 1995, between Columbia and Marine Midland Bank, Trustee, as amended (the "Indenture"). The Indenture provides that the specific terms of any securities issued be set by resolution of Columbia's Board of Directors. The Indenture was approved under the Act pursuant to the Order of the Commission dated August 25, 1995 (HCAR No. 26361). The maturities of such borrowings would not exceed one year. In no case will the outstanding balance of all short-term borrowings exceed $1 billion. B. LONG-TERM FINANCING Columbia requests Commission authorization through December 31, 2001, to issue long-term debt securities in an amount, when combined with the proceeds of issuances of 13 Page 11 common stock and preferred stock during the period (as discussed below), not to exceed $5 billion. Examples of such long-term debt securities would include, but not be limited to, debentures, convertible debt, subordinated debt, medium-term notes, bank borrowings, and securities with call or put options. Any long-term debt security would have such designation, aggregate principal amount, maturity, interest rate(s) or methods of determining the same, terms of payment of interest, redemption provisions, non-refunding provisions, sinking fund terms, conversion or put terms and other terms and conditions as Columbia may determine at the time of issuance. Debentures and medium-term notes would be issued under the Indenture. C. HEDGING In addition, Columbia requests authorization to enter into hedging transactions to be initiated prior to December 31, 2001, to convert all or a portion of existing floating rate debt from time to time to fixed rate debt or to convert all or a portion of existing fixed rate debt from time to time to floating rate debt using interest rate swaps or other derivative products designed for such purposes. 1. Interest Rate Swaps for Existing Debt Columbia is seeking authority to enter into one or more interest rate swaps ("Swaps"), and one or more derivative instruments, such as interest rate caps, interest rate floors and interest rate collars (collectively, "Derivative Transactions"), with one or more counterparties from time to time through December 31, 2001, in notional amounts aggregating not in excess of the amount of debt outstanding at any one time. The authorization being sought is similar to prior authorization granted to Consolidated Natural Gas Company. 14 Page 12 Columbia proposes to use two different swap strategies. Under one swap strategy, Columbia would agree to make payments of interest to a counterparty, payable periodically. The interest would be payable at a variable or floating rate index and would be calculated on a notional (i.e., principal) amount. In return, the counterparty would agree to make payments to Columbia based upon the same notional amount and at an agreed upon fixed interest rate. This would be a "floating-to-fixed swap" on Columbia's part. Under another swap strategy, Columbia and the counterparty may exchange roles. Columbia would pay a fixed interest rate and receive a variable interest rate on a notional amount. This would be a "fixed-to-floating swap" on Columbia's part. Columbia will enter into Swaps and/or Derivative Transactions only with creditworthy counterparties. All transactions entered into under the Hedge Program will be bona fide hedges of interest rate risk and will meet the criteria established by the Financial Accounting Standards Board in "Statement of Financial Accounting Standards ("SFAS") No. 80-Accounting for Futures Contracts." SFAS 80 establishes the criteria which must be satisfied in order to qualify for hedge accounting treatment,(1) and the financial disclosure requirements associated with hedging transactions. Columbia proposes to use two different swap strategies. Under one swap strategy, Columbia would agree to make payments of interest to a counterparty, payable periodically. The interest would be payable at a variable or floating rate index and would be calculated on a notional (i.e., principal) amount. In return, the counterparty would agree to make payments to Columbia based upon the same notional amount and at an agreed upon fixed interest rate. This would be a "floating-to-fixed swap" on Columbia's part. Under another swap strategy, Columbia and the counterparty may exchange roles. Columbia would pay a fixed interest rate and receive a variable interest rate on a notional amount. This would be a "fixed-to-floating swap" on Columbia's part. Columbia will enter into Swaps and/or Derivative Transactions only with creditworthy counterparties. Columbia also seeks authorization to enter into an interest rate hedging program (the "Hedge Program") within a limited time prior to the issuance of long-term debt securities. The Hedge Program would only be undertaken pursuant to the express approval of the Columbia Board of Directors and would only be authorized to occur within 90 days of the issuance of long-term debt securities. The Hedge Program would be utilized to fix and/or limit the interest rate risk exposure on the U.S. Treasury security component of any new issuance through (i) a forward sale of exchange-traded U.S. Treasury futures contracts, U.S. Treasury securities and/or a forward swap (each a "Forward Sale"), (ii) the purchase of put options on U.S. Treasury securities (a "Put Options Purchase"), (iii) a Put Options Purchase in combination with the sale of call options on U.S. Treasury securities (a "Zero Cost Collar"), or (iv) some combination of a Forward Sale, Put Options Purchase and/or Zero Cost Collar. The program may be executed on-exchange ("On-Exchange Trades") with brokers through the opening of futures and/or options positions traded on the Chicago Board of Trade ("CBOT"), the opening of over-the-counter positions with one or more counterparties ("Off-Exchange Trades") or a combination of On-Exchange Trades and off-Exchange Trades. Columbia will determine the optimal structure of the Hedge Program at the time of execution. Columbia may decide to lock in interest rates and/or limit its exposure to interest rate increases. All open positions under the Hedge Program will be closed on or prior to the date of the New Issuance and Columbia will not, at any time, take possession of the underlying U.S. Treasury securities. Further, no hedge position will be outstanding for more than 90 days. All transactions entered into under the Hedge Program will be bona fide hedges of interest rate risk and will meet the criteria established by the Financial Accounting Standards Board in "Statement of Financial Accounting Standards ("SFAS") No. 80-Accounting for Futures Contracts." SFAS 80 establishes the criteria which must be satisfied in order to qualify for hedge accounting treatment(1), and the financial disclosure requirements associated with hedging transactions. The Hedge Program is designed to reduce risk to Columbia. To prohibit the possibility of "speculative" transactions, each transaction (or set of transactions) under the Hedge Program must be approved by the Columbia Hedge Committee, consisting of senior executive officers, and authorized by resolution of Columbia's Board of Directors prior to its execution. Additionally, Columbia notes that the Commission approved an anticipatory hedge program for commodity price risk management with respect to SEI Holding, Inc. (HCAR No. 26581). Columbia seeks Commission approval of the entire Hedge program to ensure the maximal flexibility in structuring effective interest rate hedging strategies consistent with the authorization previously granted to Columbia by the Commission pursuant to the Order dated October 1, 1995 (HCAR No. 26385). 2. Hedging Interest Rate Risk for Anticipated Debt Issuance ____________________ (1) SFAS 80 requires that (i) the item to be hedged exposes the enterprise to price or interest rate risk, (ii) the hedging instrument reduces that exposure and is designated as a hedge, (iii) the significant characteristics and expected terms of the anticipated financial transaction are identified, and (iv) it is probable the expected transaction will occur. As such, hedging transactions should not result in an increased risk to Columbia. 15 Page 13 D. EQUITY FINANCING Columbia requests Commission authorization through December 31, 2001, to issue equity securities in an amount, when combined with long-term debt securities issued pursuant to this Application, not to exceed $5 billion. Such issuance would include common stock issued pursuant to the Long-Term Incentive Plan (HCAR No. 26515) where options to purchase up to 3,000,000 shares of common stock may be issued over a ten-year period through February 21, 2006, monthly or quarterly income preferred securities, rights, options and/or warrants convertible into common or preferred stock and common and/or preferred stock issued upon the exercise of convertible debt, rights, options, warrants and/or similar securities. From time to time in the future, other employee benefit plans may be adopted by Columbia or a dividend reinvestment plan or stock purchase plan may be adopted, providing for the issuances of common stock. For instance, a dividend reinvestment plan and direct stock purchase plan allowing sales to persons not already shareholders may be implemented. Columbia now proposes to issue and/or sell shares of common stock pursuant to the existing plan and similar plans or plan funding arrangements hereinafter adopted and to engage in other sales of its treasury shares, if any, for reasonable business purposes without any additional prior Commission order through December 31, 2001, except that the options to purchase shares under the Long-Term Incentive Plan may be issued from time to time until February 21, 2006. Stock transactions of this variety would thus be treated the same as other stock transactions permitted pursuant to this Application. Such authorization would supersede the Long-Term Incentive Plan authorization cited above. 16 Page 14 E. OTHER SECURITIES In addition to the specific securities for which authorization is sought herein, Columbia also proposes to issue other types of securities that it deems appropriate during the period ending December 31, 2001. Columbia requests that the Commission reserve jurisdiction over the issuance of additional types of securities. Columbia also undertakes to file a post-effective amendment which will describe the general terms of each such security and request a supplemental order of the Commission authorizing the issuance thereof by Columbia. Columbia further requests that each supplemental order be issued by the Commission without further time-consuming public notice. II. INTRASYSTEM FINANCING Under Rule 52, sales of certain listed securities are exempt when issued by a utility if certain conditions are met and the issue is approved by the state utility commission for the state in which the utility subsidiary operates and are exempt when issued by a nonutility if certain conditions are met. The Maryland Public Service Commission does not exercise jurisdiction over the issuance by Columbia Maryland of long- or short-term securities. The Kentucky, Ohio and Pennsylvania utility commissions do not exercise jurisdiction over the issuance of short-term debt. Commission authorization is, therefore, requested for the issuance, from time to time, prior to December 31, 2001, of short- term securities by Columbia Maryland, Columbia Kentucky, Columbia Ohio and Columbia Pennsylvania and for the issuance, from time to time, prior to December 31, 2001, of long-term securities by Columbia Maryland and the purchase, thereof, in each instance, by Columbia. 17 Page 15 A. LONG-TERM FINANCING 1. Utility Subsidiaries Columbia and Columbia Maryland are seeking Commission authorization for the sale of long-term debt securities ("Notes") by Columbia Maryland to Columbia or the sale of common stock by Columbia Maryland to Columbia in a cumulative amount not to exceed $30 million for the period through December 31, 2001. Columbia Maryland plans to finance part of its 1997-2001 capital expenditure programs with funds generated from the sale of Notes and common stock to Columbia for cash. The portion of the financing to be effected through the sale of stock cannot be ascertained at this time. Columbia would continue to finance Columbia Maryland to maintain a capital structure in a manner consistent with that of a company with an investment grade credit rating. The Notes will be dated the date of their issue, and will have other provisions as provided for in HCAR No. 26462, dated January 25, 1996, hereby incorporated by reference. The interest rate on the Notes will be the rate (including issuance costs) for the most recent long- term debt securities issued by Columbia during the previous calendar quarter. If no long-term debt securities were issued during the previous calendar quarter, the interest rate will be either the estimated new long-term rate that would be in effect if Columbia were to issue securities, as projected by a major investment bank, or the prevailing market rate for a newly-issued "A" rated utility bond as in the procedure previously approved by this Commission in Columbia's current authorization dated December 22, 1994 (HCAR No. 26201). The current rate on a newly issued "A" rated 25-30 year utility bonds is 8%. A default rate equal to 2% per annum in excess of the stated 18 Page 16 rate on unpaid principal or interest amounts would be assessed if any interest or principal payment becomes past due. The principal amount of the Notes will be repaid over a term not exceeding thirty years. The Notes will be issued under a loan agreement pursuant to the Order of the Commission dated January 25, 1996 (HCAR No. 26462). The loan agreement will provide for Columbia Maryland to issue either secured or unsecured debt securities to Columbia from time to time in exchange for cash. 2. Internal Non-Exempt Long-Term Financing by Nonutility Subsidiaries The Nonutility Subsidiaries propose to issue and Columbia proposes to acquire other types of securities which do not qualify for exemption under Rule 52 but which are considered appropriate during the period of authorization granted pursuant to this Application. Columbia and the Nonutility Subsidiaries request that the Commission reserve jurisdiction over the issuance of such additional types of securities. The parties will undertake to cause a post-effective amendment to be filed in this proceeding which will describe the general terms of each security and request a supplemental order of the Commission authorizing the issuance thereof by the subject Nonutility Subsidiary. Columbia and the Nonutility subsidiaries further request that each supplemental order be issued by the Commission without further time consuming public notice. Such authorization is consistent with authorizations previously granted by the Commission to Consolidated Natural Gas, HCAR No. 26500. B. CONTINUATION OF MONEY POOL/INTERNAL SHORT-TERM FINANCING The Subsidiaries require short-term funds to meet normal working capital requirements. For example, Utility Subsidiaries participate in storage services under which they pay for and 19 Page 17 store gas during the summer months and recover the cost of such gas when it is delivered to customers in the winter. It is proposed that the Subsidiaries borrow short-term funds from the Money Pool. The maximum amount of Money Pool borrowing outstanding for each Subsidiary will be determined by Columbia and the Subsidiaries in accordance with business needs. Actual short-term financing would be issued based on working capital requirements and any interim financing needed to bridge between issuances of long-term capital. The maximum short-term debt to be issued by Columbia Pennsylvania, Columbia Ohio, Columbia Maryland and Columbia Kentucky will not exceed 40% of their total capitalization. There is considerable seasonal and daily fluctuation in each Subsidiary's cash flow due to normal receipt and disbursement patterns. The patterns vary from company to company so that the companies which have excess cash and the companies which need cash vary from day to day. Accordingly, it is proposed that the Money Pool, the existence of which was last approved by the Commission in HCAR No. 26201 dated December 22, 1994, be continued for all parties to this Joint Application-Declaration through December 31, 2001. All short-term borrowing will be through the Money Pool with Service acting as agent. Columbia may invest in the Money Pool, but will not borrow from the Money Pool. Should there be insufficient funds in the Money Pool to meet subsidiaries' aggregate short-term needs for funds, Columbia will borrow or issue short- term securities and invest the proceeds in the Money Pool to fund the shortage. When Columbia and/or the subsidiaries generate cash in excess of their immediate cash requirements, such temporary excess cash may be invested in the Money Pool. Columbia and investing subsidiaries would be investors ("Investors") pursuant to a Money 20 Page 18 Pool evidence of deposit. Loans to Subsidiaries ("Borrowers") through the Money Pool will be made pursuant to a short-term grid note. Such short-term grid notes will be due upon demand by the Investor(s), but in any event will be repaid prior to May 1 of the following calender year after borrowing. Each Borrower's loans will be allocated to the Investors based on the proportion of each Investor's investment in the Money Pool to the aggregate of such investments. The Money Pool is designed to meet the following objectives: (i) reduction of Columbia's need to borrow from outside sources to meet the Subsidiaries' fluctuating cash needs; (ii) settlement of intrasystem obligations on a non-cash basis; and (iii) reduction of the Subsidiaries' net corporate interest expense by investment of the maximum funds available and the borrowing of a lower amount of funds in a more timely fashion than the Subsidiaries could otherwise achieve. The cost of money on all short-term advances and the investment rate for moneys invested in the Money Pool will be the lower of the interest rate per annum equal to the Money Pool's weighted average short-term investment rate or Columbia's short term borrowing rate. Should there be no Money Pool investments or Columbia borrowings, the cost of money will be the prior month's average Federal Funds rate as published in the Federal Reserve Statistical Release, Publication H.15 (519). A default rate equal to 2% per annum above the pre-default rate on unpaid principal or interest amounts will be assessed if any interest or principal payment becomes past due. Columbia requests authorization to continue the Money Pool through December 31, 2001. For Money Pool participation by new direct or indirect subsidiaries engaged in new lines of business, Columbia requests that the Commission reserve jurisdiction. 21 Page 19 C. GUARANTEES Columbia and the Nonutility Subsidiaries and any nonutility subsidiary established prior to December 31, 2001, request authorization to enter guarantee arrangements, obtain letters of credit, and otherwise provide credit support with respect to obligations of their respective Subsidiaries as may be needed and appropriate to enable them to carry on in the ordinary course of their respective businesses. The maximum aggregate limit on all such credit support by Columbia and by all Subsidiaries at any time will be $500 million. The $500 million of guarantees is in addition to any financing requested in this Application. Such authorization of Columbia to provide credit support would supersede and replace the requested authorization of Columbia to guarantee up to $100 million of obligations as set forth in the application noticed on August 2, 1996, HCAR No. 26550. Columbia would charge a cost-based fee for its credit support under the guarantee arrangement. D. REDUCTION OF AUTHORIZED SHARES To the extent that authorization is required, certain of the Subsidiaries (listed below) request authorization to reduce their authorized and outstanding shares of common stock to 3,000 shares or less via a reverse stock split. Each of the listed Subsidiaries is a Delaware corporation. The reverse stock split will be accomplished through an amendment to their respective certificates of incorporations. The State of Delaware assesses franchise taxes based on the number of authorized shares. By reducing the authorized shares to 3,000 or less via a reverse stock split, the Subsidiaries will each pay the minimum filing amount of $30 per year. Based on reducing their respective 22 Page 20 authorized shares to 3,000 or less, the Subsidiaries will save an estimated aggregate amount of $125,000 in franchise taxes each year. As a result of this transaction, additional capital surplus will be created. It is requested that each of the subsidiaries receive authorization to pay dividends from the surplus created by the reverse stock split transaction; however, no extraordinary dividends are anticipated at this time. Listed below are the Subsidiaries requesting a reduction in authorized and outstanding common shares:
INCREASE IN CURRENT SHARES PROJECTED SHARES PAID IN CAPITAL ------------------------- ------------------------ --------------- SUBSIDIARY AUTHORIZED OUTSTANDING AUTHORIZED OUTSTANDING ($000) ------------------------------ ---------- ----------- ---------- ----------- Columbia Atlantic 800,000 82,000 3,000 308 81 Columbia Gulf 9,000,000 5,977,951 3,000 1,993 59,760 Columbia Transmission 15,000,000 9,671,354 3,000 1,934 241,735 Columbia Maryland 420,000 283,686 3,000 2,026 7,041 Service 130,000 130,000 3,000 2,250 12,775 Columbia Propane 340,000 156,000 3,000 1,376 3,866 TriStar Capital 40,000 40,000 3,000 2,250 944 TriStar Ventures 1,000,000 611,704 3,000 1,835 15,247
E. REINCORPORATION OF COLUMBIA NATURAL For the reasons described below, Columbia Natural has decided to reincorporate in Delaware. Under a Plan of Reorganization and Merger, all of the assets and trade liabilities of Columbia Natural will be transferred to Columbia Natural (DE) in exchange for common stock of Columbia Natural (DE) which would simultaneously be transferred to Columbia in exchange for all outstanding shares of Columbia Natural, leaving Columbia Natural (DE) the surviving company. The merger will qualify as a tax-free reorganization 23 Page 21 under Sections 368(a)(1)(A) and (F) of the Internal Revenue Code of 1986, as amended. Columbia Natural (DE) will succeed to all of the rights and assets of Columbia Natural and will assume all of its liabilities and obligations. The officers and directors of Columbia Natural will become the officers and directors of Columbia Natural (DE). Columbia Natural's decision to reincorporate in Delaware is based on the following factors: 1) A majority of Columbia's subsidiaries are already incorporated in Delaware. See HCAR No. 26536 (reincorporation of Energy Services). Further, Delaware has followed a policy of encouraging incorporation in that state and, in furtherance of that policy, has adopted comprehensive, modern, and flexible corporation laws that are periodically updated and revised to meet changing business needs. Delaware courts have developed considerable expertise in dealing with corporate legal issues, and a substantial body of case law has developed construing the Delaware law and establishing public policy with respect to Delaware corporations. As a result, many major corporations have chosen Delaware for their initial domicile or have subsequently reincorporated in Delaware, in a manner similar to that proposed by Columbia Natural. 2) Texas, the current state of incorporation of Columbia Natural, restricts dividends on common stock to capital surplus, i.e., retained earnings and additional paid in capital. Whereas, Delaware law provides additional capacity for the return of and on capital where dividends can be paid out of current earnings as well as capital surplus. III. EXTERNAL FINANCING BY NONUTILITIES A. EXTERNAL NON-EXEMPT FINANCING BY NONUTILITY SUBSIDIARIES 24 Page 22 The Nonutility Subsidiaries are expected to be active in the development and expansion of energy-related, nonutility businesses in the System. They will be competing with large, well-capitalized companies in different sectors of the energy industry. In order to accomplish investments in such competitive arenas, it will be necessary for the Nonutility Subsidiaries to have the ability to engage in financing transactions which are commonly accepted for such types of investments. For example, the Nonutility Subsidiaries may issue and sell monthly and quarterly income preferred securities pursuant to Rule 52. The Nonutility Subsidiaries may engage in types of security financing with nonaffiliates which do not qualify for the application of Rule 52. The Nonutility Subsidiaries, therefore, request that the Commission reserve jurisdiction over the issuance of such additional types of securities. They also undertake to cause a post-effective amendment to be filed in this proceeding which will describe the general terms of each such security and request a supplemental order of the Commission authorizing the issuance thereof by the subject Nonutility Subsidiary. The Nonutility Subsidiaries further request that each supplemental order be issued by the Commission without further time-consuming public notice. 25 Page 23 B. FINANCING ENTITIES Columbia and the Nonutility Subsidiaries seek authority to organize new corporations, trusts, partnerships or other entities created for the purpose of facilitating financings through their issue to third parties of monthly and quarterly income preferred securities. Request is also made for these financing entities to issue such securities to third parties in the event such transactions may not be covered by exemptive Rule 52. Additionally, request is made for authorization with respect to (i) the issuance of debentures or other evidences of indebtedness by Columbia to a financing entity in return for the proceeds of the financing, and (ii) the acquisition by Columbia of voting interests or equity securities issued by the financing entity to establish Columbia's ownership of the financing entity. Columbia and the Nonutility Subsidiaries also request authorization to enter into expense agreements with their respective financing entities, pursuant to which they would agree to pay all expenses of such entity. IV FINANCING OF EWGS AND FUCOS Columbia currently owns no equity interests in either EWGs or FUCOs. However, as outlined in HCAR No. 35-26209, Columbia's wholly-owned subsidiary TriStar Ventures Corporation ("TVC") may expend internally generated funds on the development of such projects. In addition, TVC continuously seeks out and reviews investment opportunities which could lead to the acquisition of an interest in or the construction of EWGs or FUCOs. Sections 32 and 33 of the Act permit a registered holding company to acquire and maintain interests in one or more EWGs and FUCOs without the need to apply for or receive approval from the Commission. To the extent that funds for one or more projects are required in excess of internally generated funds, Columbia hereby requests Commission authorization to invest proceeds from the financings authorized hereby in EWGs and FUCOs in compliance with Holding Company Act Rule 53(a)(1) such that Columbia's aggregate investment at any one time during the period covered by this Application will not exceed 50% of its "consolidated retained earnings", as defined in Holding Company Act Rule 53(a)(1)(ii). Columbia may seek additional Commission authorization if one or more prospective transactions warrant additional financing. Columbia undertakes to maintain, or cause to be maintained to the extent reasonable under the circumstances, the books and records of any EWG, foreign EWG or FUCO in which it holds an interest in accordance with the requirements of Rule 53(a)(2). It is also anticipated that a minimal number of employees of Columbia's domestic public utility subsidiaries will render services, directly or indirectly, to EWGs and FUCOs in the Columbia Gas System, provided that the number of such employees shall not in any event exceed two percent (2%) of the total number of employees of such public utility companies. A copy of this application will be submitted to the Public Utility Commissions of the states of: (i) Kentucky, (ii) Maryland, (iii) Ohio, (iv) Pennsylvania, and (v) Virginia, which are the only regulators having jurisdiction over the retail rates of the public utility companies in the Columbia Gas System. In addition, Columbia will submit to each such Commission a copy of any Rule 24 certificate required hereunder as well as a copy of Columbia's Form U5S, including exhibits thereto. None of the conditions described in Rule 53(b) under the Act exists with respect to Columbia which would thereby make satisfying Rule 53(b) and Rule 53(c) inapplicable. Thus, in accordance with Rule 54, the requirements of Rule 53(a), (b), and (c) are fulfilled. FILING OF CERTIFICATES OF NOTIFICATION Transactions contemplated herein which occur pursuant to the authorization which may be granted by the Commission in this proceeding will be reported through quarterly Rule 24 certificates of notification which, in order to avoid duplication of reported information, may include cross-references to Columbia's filings with the Commission under the Securities Act and Securities Exchange Act. Rule 24 certificates of notification will be filed within 45 days after each of the first three calendar quarters and 90 days after the fourth quarter. With respect to Columbia's Hedge Program, within forty-five days following the close of each fiscal quarter, Columbia will submit a report to the Commission disclosing: 26 Page 24 the trade date; the type of hedge transaction traded; the notional principal amount; a description of the transaction and the material terms of the underlying instrument. SUMMARY OF AUTHORIZATIONS SOUGHT Columbia requests Commission authorization with this application for the following financing transactions without any additional Commission approvals required except as indicated. I. External financing by The Columbia Gas System, Inc. A) To have outstanding at any one time up through December 31, 2001, up to $1 billion of short-term debt consisting of borrowings under the Credit Facility, the issuance of commercial paper, the sale of bid notes and other forms of short-term financing generally available to borrowers with investment grade credit ratings. Authorization for the Credit Facility (Order dated August 25, 1995, HCAR No. 26361) to be withdrawn and superseded by the order of the Commission 27 Page 25 sought herein. Columbia further requests authorization to amend the Credit Facility without further Commission authorization provided that the maturity date does not go beyond December 31, 2001, and the principal amount and borrowing margins do not increase. B) Authorization through December 31, 2001, to issue long-term debt securities in an amount, when combined with the proceeds from the issuance of equity securities during the period, not to exceed $5 billion. C) Authorization to enter into hedging transactions to be initiated prior to December 31, 2001, to convert all or a portion of floating rate debt existing or to be issued from time to time to fixed rate debt or to convert all or a portion of existing fixed rate debt existing or to be issued from time to time to floating rate debt using interest rate swaps or other derivative products designed for such purposes. D) Authorization through December 31, 2001, to issue equity securities in an amount, when combined with long-term debt securities issued pursuant to this Application, not to exceed $5 billion. E) Authorization is also being sought to issue other types of securities that Columbia deems appropriate during the period ending December 31, 2001, for which the Commission would reserve jurisdiction over its issuance. II. Intrasystem financing A) Columbia and Columbia Maryland are requesting Commission authorization for the sale of long-term debt securities by Columbia Maryland to Columbia or the sale of common stock by Columbia Maryland to Columbia in an amount not to exceed $30 million on or before December 31, 2001. 28 Page 26 Authority is requested for the Nonutility Subsidiaries to issue, and Columbia would acquire, other types of securities which do not qualify for exemption under Rule 52 but which are considered appropriate during the period of authorization granted pursuant to this Application. Columbia and the Nonutility Subsidiaries request that the Commission reserve jurisdiction over the issuance of such additional types of securities and that each supplemental order be issued by the Commission without further time consuming public notice. B) Authorization is requested for the continuance of the Money Pool through December 31, 2001, where the maximum amount of Money Pool borrowing outstanding for each Subsidiary will be determined by Columbia and the Subsidiaries in accordance with business needs. Actual short-term financing would be issued based on working capital requirements and any interim financing needed to bridge between issuances of long-term capital. The maximum short-term debt to be issued by Columbia Pennsylvania, Columbia Ohio, Columbia Maryland and Columbia Kentucky would not exceed 40% of their total capitalization. C) Columbia and its existing Non-utility Subsidiaries and any non-utility subsidiary established prior to December 31, 2001, request authorization to enter guarantee arrangements, obtain letters of credit, and otherwise provide credit support with respect to obligations of their respective Subsidiaries as may be needed and appropriate to enable them to carry on in the ordinary course of their respective businesses. The maximum aggregate limit on all 29 Page 27 such credit support by Columbia and by all Subsidiaries at any time will be $500 million. The $500 million of guarantees is in addition to any financing requested in this Application. D) Columbia and certain of the Subsidiaries request authorization to effect a reverse stock split in order to reduce their authorized and outstanding shares to 3,000 shares or less and to pay dividends from any additional capital surplus, which arose from the reverse stock split. E) Authorization is also sought to reincorporate Columbia Natural in Delaware. III. External financing by Nonutilities A) The Nonutility subsidiaries request that the Commission reserve jurisdiction over the issuance of securities to nonaffiliates which do not qualify for the application of Rule 52. The Nonutility Subsidiaries further request that each supplemental order be issued by the Commission without further time-consuming public notice. B) Columbia and the Nonutility Subsidiaries seek authority to organize new corporations, trusts, partnerships or other entities created for the purpose of facilitating financings through their issue to third parties of monthly and quarterly income preferred securities. Request for authorization is also made for these financing entities to issue such securities to third parties in the event such transaction may not be covered by exemptive Rule 52. Additionally, request is made for authorization with respect to (i) the issuance of debentures or other evidences of indebtedness by Columbia to a financing entity in return for the proceeds of the financing, and (ii) the 30 Page 28 acquisition by Columbia of voting interests or equity securities issued by the financing entity to establish Columbia's ownership of the financing. Columbia and the Nonutility Subsidiaries also request authorization to enter into expense agreements with their respective financing entities, pursuant to which they would agree to pay all expenses of such entity. IV. Financing of EWGs and FUCOs. Columbia seeks Commission authorization for financing acquisitions of EWGs and FUCOs in compliance with the standards set forth in Rule 53. (b) Describe briefly, and where practicable state the approximate amount of, any material interest in the proposed transaction, direct or indirect, of any associate or affiliate of the applicant or declarant company or any affiliate of any such associate company. Not applicable. (c) If the proposed transaction involves the acquisition of securities not issued by a registered holding company or subsidiary thereof, describe briefly the business and property, present or proposed, of the issuer of such securities. Not applicable. (d) If the proposed transaction involves the acquisition or disposition of assets, describe briefly such assets, setting forth original cost, vendor's book cost (including the basis of determination) and applicable valuation and qualifying reserves. Not applicable. ITEM 2. FEES, COMMISSIONS AND EXPENSES 31 Page 29 (a) State (1) the fees, commissions and expenses paid or incurred, or to be paid or incurred, directly or indirectly, in connection with the proposed transaction by the applicant or declarant or any associate company thereof, and (2) if the proposed transaction involves the sale of securities at competitive bidding, the fees and expenses to be paid to counsel selected by applicant or declarant to act for the successful bidder. U.S. Securities and Exchange Commission Filing Fee . . . . . . . . . $2,000 Services of Columbia Gas System Service Corporation in connection with the preparation of the Application-Declaration . . . . . . . . . . . . . . . . . . . . . 20,000 -------- Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $22,000* =======
*The above fees do not include the expenses for the issuance of up to $2 billion of long-term debt and equity securities. As noted previously, Columbia proposes that such fees be capped at 5% of the issuance amount. (b) If any person to whom fees or commissions have been or are to be paid in connection with the proposed transaction is an associate company or an affiliate of the applicant or declarant, or is an affiliate of an associate company, set forth the facts with respect thereto. Service will perform certain services at cost as set forth in Item 2(a) above. ITEM 3. APPLICABLE STATUTORY PROVISIONS (a) State the section of the Act and the rules thereunder believed to be applicable to the proposed transaction. If any section or rule would be applicable in the absence of a specific exemption, state the basis of exemption. 32 Page 30 External Financing: The issuance of debt and equity securities by Columbia is subject to Sections 6 and 7 of the Act. Intrasystem Financing: Subject to the applicability of Rule 52 as discussed below, Sections 6, 7 and 12(b) and Rule 43 are applicable to the issuance and sale of common stock, Notes and short-term advances by the Subsidiaries and Sections 9, 10 and 12(b) and Rule 45 are applicable to the acquisition by Columbia of such securities. The State of Maryland does not regulate the issue of securities by Columbia of Maryland. Therefore, the Commission is requested to issue its order authorizing the issue by Columbia of Maryland and the acquisition by Columbia of short-term borrowings, common stock and Installment Notes. As set forth in Part (a) of Item 4 of this Application-Declaration, certain state regulatory commissions having jurisdiction will have authorized the sale of securities described herein. The acquisition by Columbia and the issuance by Columbia Ohio, Columbia Pennsylvania, Columbia Kentucky and Commonwealth Services of common stock and Notes will be exempt from Sections 6, 7, 9 and 10 under the terms of Rule 52. Rule 52 does not apply to short-term borrowings since such borrowings are exempt from state commission approval by provision of state law if certain criteria are met. These criteria will be met except in the state of Virginia where the short-term borrowings will exceed 5% of Commonwealth Services' total capitalization. The Commission is requested to issue an order authorizing the issue of short-term advances and Notes by Columbia Kentucky, Columbia Ohio and Columbia Pennsylvania. 33 Page 31 The Money Pool transactions are subject to Sections 6, 7, 9, 10 and 12(b) and (f) of the Act and Rule 45 thereunder. The requirements of such sections of the Act and Rule will be complied with if the Commission permits this Application-Declaration to become effective. Hedging: To the extent that the Hedge Program involves the jurisdictional acquisition of a "security" or an "extension of credit", Sections 6(a), 7, 9(a), 10 and 12(b) of the Act and Rules 23, 24 and 45 promulgated thereunder are applicable to the proposed transactions. Guarantees: The issuance by Columbia of a guarantee is subject to Section 12(b) of the Act and Rule 45 thereunder. To the extent that the transactions which are the subject matter of this Application-Declaration are considered by the Commission to require authorization, approval or exemption under any section of the Act or provision of the rules and regulations other than those specifically referred to herein, request for such authorization, approval or exemption is hereby made. Reduction of Authorized Shares: To the extent that Section 6 or any other section of the Act or the rules promulgated thereunder may be applicable to the reverse stock split proposed transactions, Columbia hereby requests appropriate orders thereunder as Section 12 (c) of the Act and Rule 46 promulgated thereunder apply to the payment of dividends. Columbia requests the appropriate orders with respect to the payment of future dividends from capital surplus following the reverse stock split and reduction of authorized shares. Financing of EWGs and FUCOs: The authorization to invest proceeds from the financings authorized hereby in EWGs and FUCOs is subject to Sections 32 and 33 of the Act and Rules 53 and 54 promulgated thereunder. (b) If any person to whom fees or commissions have been or are to be paid in connection with the proposed transaction is an associate company or an affiliate of any 34 Page 32 applicant or declarant, or is an affiliate of an associate company, set forth the facts with respect thereto. Not Applicable. ITEM 4. REGULATORY APPROVAL (a) State the nature and extent of the jurisdiction of any State commission or any Federal commission (other than the U. S. Securities and Exchange Commission) over the proposed transaction. The State Corporation Commission of Virginia has jurisdiction over the acquisition by Columbia and the sale by Commonwealth Services of short-term and long-term debt securities. Regulatory commissions in the states of Kentucky, Ohio and Pennsylvania exercise jurisdiction over the issuance and sale of common stock and Notes by Columbia Kentucky, Columbia Ohio and Columbia Pennsylvania, but do not exercise jurisdiction over the acquisition of those securities by Columbia. (b) Describe the action taken or proposed to be taken before any commission named in answer to paragraph (1) of this item in connection with the proposed transaction. An application will be made by the aforementioned subsidiary companies to their respective state regulatory commissions as set forth in answer to Item 3(a) above. ITEM 5. PROCEDURE (a) State the date when Commission action is requested. If the date is less than 40 days from the date of the original filing, set forth the reasons for acceleration. It is requested that the Commission issue its Notice by October 15 and its order on or before November 11. (b) State (i) whether there should be a recommended decision by a hearing officer, (ii) whether there should be a recommended decision by any other responsible officer of the Commission, (iii) whether the Division of Investment Management may assist in the preparation of the Commission's decision, and (iv) whether there should be a 30-day waiting period between the issuance of the Commission's order and the date on which it is to become effective. 35 Page 33 Applicants hereby (i) waive a recommended decision by a hearing officer, (ii) waive a recommended decision by any other responsible officer or the Commission, (iii) consent that the Division of Investment Management may assist in the preparation of the Commission's decision, and (iv) waive a 30-day waiting period between the issuance of the Commission's order and the date on which it is to become effective. ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
(a) Exhibits A-1 Form of Note for all Subsidiaries. A-2 Form of Subsidiary common stock certificate (Exhibit A-2 to Joint Application-Declaration File No. 70-7276 is hereby incorporated by reference). A-3 Form of Money Pool Evidence of Deposit. A-4 Form of Subsidiary Money Pool Short-Term Grid Note. A-5 Form of Proposed Bid Note. D-1 Plan of Reorganization and Merger for Columbia Natural (to be filed by Amendment). F Opinion of Counsel for Columbia and Subsidiaries (to be filed by Amendment). G Proposed Notice. H List of Acronyms used in exhibits and financial statements.
(b) Financial Statements The Columbia Gas System, Inc. and Subsidiaries: 36 Page 34 (1) Condensed Statements of Capitalization as of July 31, 1996 Actual and Pro Forma. There have been no material changes, not in the ordinary course of business, since the date of the financial statements filed herewith. ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS (a) Describe briefly the environmental effects of the proposed transaction in terms of the standards set forth in Section 102(2) (C) of the National Environmental Policy Act [42 U.S.C. 4232(2)(C)]. If the response to this term is a negative statement as to the applicability of Section 102(2)(C) in connection with the proposed transaction, also briefly state the reasons for that response. As more fully described in Item 1, the proposed transactions subject to the jurisdiction of this Commission relate only to the means of financing activities. The proposed transactions subject to the jurisdiction of this Commission have no environmental impact in and of themselves. (b) State whether any other federal agency has prepared or is preparing an environmental impact statement ("EIS") with respect to the proposed transaction. If any other federal agency has prepared or is preparing an EIS, state which agency or agencies and indicate the status of that EIS preparation. No federal agency has prepared or, to Columbia's knowledge, is preparing an EIS with respect to the proposed transaction. 37 Page 35 SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned companies have duly caused this Post- Effective Amendment to be signed on their behalf by the undersigned thereunto duly authorized. The signatures of the applicants and of the persons signing on their behalf are restricted to the information contained in this application which is pertinent to the application of the respective companies. THE COLUMBIA GAS SYSTEM, INC. DATE: October 3, 1996 BY: //s//M. W. O'Donnell ---------------------------------------------- M. W. O'Donnell, Senior Vice President & Chief Financial Officer COLUMBIA GAS OF OHIO, INC. COLUMBIA GAS OF KENTUCKY, INC. DATE: October 3, 1996 by: //s//R. C. Skaggs Jr. ---------------------------------------------- R. C. Skaggs Jr., President & Chief Executive Officer COLUMBIA GAS OF MARYLAND, INC. COLUMBIA GAS OF PENNSYLVANIA, INC. DATE: October 3, 1996 by: //s//G. J. Robinson ---------------------------------------------- G. J. Robinson, President & Chief Executive Officer COMMONWEALTH GAS SERVICES, INC. DATE: October 3, 1996 by: //s//T. E. Harris ----------------------------------------------- T. E. Harris, President & Chief Executive Officer 38 Page 36 COLUMBIA GULF TRANSMISSION COMPANY COLUMBIA GAS TRANSMISSION CORPORATION DATE: October 3, 1996 by: //s//M. P. O'Flynn ---------------------------------------------- M. P. O'Flynn, Senior Vice President & Chief Financial Officer COLUMBIA PROPANE CORPORATION COMMONWEALTH PROPANE, INC. DATE: October 3, 1996 by: //s//A. M. Brent ----------------------------------------------- A. M. Brent, President COLUMBIA GAS SYSTEM SERVICE CORPORATION DATE: October 3, 1996 by: //s//J. W. Trost ---------------------------------------------- J. W. Trost, Vice President COLUMBIA NATURAL RESOURCES, INC. DATE: October 3, 1996 by: //s//W. H. Harmon ---------------------------------------------- W. H. Harmon, President TRISTAR CAPITAL CORPORATION DATE: October 3, 1996 by: //s//J. W. Grossman ---------------------------------------------- J. W. Grossman, Treasurer COLUMBIA LNG CORPORATION COLUMBIA ATLANTIC TRADING CORPORATION DATE: October 3, 1996 by: //s//L. M. Bridges ---------------------------------------------- L. M. Bridges, President 39 Page 37 COLUMBIA ENERGY SERVICES CORPORATION COLUMBIA ENERGY MARKETING CORPORATION COLUMBIA NETWORK SERVICES CORPORATION COLUMBIA SERVICE PARTNERS, INC. DATE: October 3, 1996 by: //s//A. Trubisz, Jr. ----------------------------------------------- A. Trubisz, Jr., President TRISTAR VENTURES CORPORATION TRISTAR PEDRICK LIMITED CORPORATION TRISTAR PEDRICK GENERAL CORPORATION TRISTAR BINGHAMTON LIMITED CORPORATION TRISTAR BINGHAMTON GENERAL CORPORATION TRISTAR VINELAND LIMITED CORPORATION TRISTAR VINELAND GENERAL CORPORATION TRISTAR RUMFORD LIMITED CORPORATION TRISTAR FUEL CELLS CORPORATION TRISTAR GEORGETOWN GENERAL CORPORATION TRISTAR GEORGETOWN LIMITED CORPORATION TVC NINE CORPORATION TVC TEN CORPORATION TRISTAR SYSTEM, INC. DATE: October 3, 1996 BY: //s// D. DETAR ------------------------------------------- D. DETAR, TREASURER EX-99.A(1) 2 FORM OF NOTE FOR ALL SUBSIDIARIES 1 Exhibit A-1 PROMISSORY NOTE Date: FOR VALUE RECEIVED, the undersigned, ___________________________________, a ______________________ corporation (the "Company"), promises to pay to the order of The Columbia Gas System, Inc., ("Lender"), in lawful money of the United States of America and immediately available funds, the unpaid Principal Amount of each Borrowing made by the Lender to the Company pursuant to the Loan Agreement, dated August 21, 1996, between the Lender and the Company (the "Agreement"). The Company promises to pay interest on the unpaid Principal Amount on the Interest Payment Dates and at the rate or rates provided for on the schedule attached hereto (the "Schedule"). All Borrowings, including the date thereof, the principal balance, the interest on the unpaid principle balance, the rate of interest or method of determining such rate, the maturity date of such Borrowing and the Interest Payment Dates shall be recorded by the Lender on the attached Schedule. Any principal or interest not paid when due shall bear interest from maturity until paid in full at a default rate of interest as specified in the Agreement. Upon the happening of an Event of Default other than those specified in Section 6.01(6) or 6.01(7) of the Agreement, the Lender may declare the Principal Amount and all accrued and unpaid interest on the Note due and payable. Upon the happening of an Event of Default specified in Section 6.01(6) or 6.01(7) of the Agreement, the Principal Amount and all accrued and unpaid interest shall become and be immediately due and payable without any declaration or other act on the part of the Lender. The Company hereby authorizes the Lender to endorse on the Schedule the date, amount and maturity date of, and the interest rate with respect to, each Borrowing evidenced hereby and all payments thereof, provided that the failure to do so shall not affect the obligations of either the Company or the Lender. Additional Schedule pages may be attached hereto from time to time by Lender, as necessary. The Company hereby waives presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights. The Company hereby irrevocably constitutes and appoints the Lender and any officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in the place and stead of the Company and in the name of the Company or in its own name, from time to time in the Lender's discretion after the occurrence of an Event of Default or the Company's failure to provide adequate assurances in accordance with paragraphs (a) or (b) of Section 4.04 of the Agreement, for the purposes of carrying out the Agreement, to take any and all appropriate Page 38 2 action and to execute any and all documents and instruments which may be, in the Lender's sole judgement, necessary or desirable to accomplish the purpose of the Agreement, including, but not limited to, providing security to the Lender with respect to the Company's obligations under this Note or the Agreement. The powers conferred on the Lender hereunder are solely to allow the Lender to protect its interest in the Company's Property and shall not impose any duty upon the Lender to exercise any such powers. The Lender may assign this Note at any time without the consent of the Company. The terms of the Agreement are incorporated herein by reference. Any capitalized terms not defined herein shall have the meaning assigned to them in the Agreement. This Note shall be governed by and construed in accordance with the laws of the State of Delaware. _____________________________ Company By:__________________________ Authorized Officer And: ________________________ Secretary Page 39 EX-99.A(3) 3 FORM OF MONEY POOL EVIDENCE OF DEPOSIT 1 EXHIBIT A-3 COLUMBIA GAS SYSTEM INTRASYSTEM MONEY POOL EVIDENCE OF DEPOSIT $ (see attached schedule) Wilmington, Delaware ______________, 1994 The undersigned, Columbia Gas System Service Corporation, a Delaware corporation, ("Service"), in its capacity as Agent of the funds invested in Columbia Gas System's Intrasystem Money Pool (the "Money Pool"), hereby acknowledges receipt of the aggregate unpaid principal amount of all investments deposited in the Money Pool (that are posted on the schedule annexed hereto and made a part hereof) made by the investor to the undersigned pursuant to the short-term financing authorization approved by the Securities and Exchange Commission. Under the terms of Money Pool Borrowing, the subsidiaries pay interest on the unpaid principal amount hereof from time to time from the date hereof at the rate per annum equal to the Money Pool's weighted average short-term investment rate. Should there be no Money Pool investments, the rate will be the prior month's Federal Funds rate as published in the Federal Reserve Statistical Release, Publication H.15 (519). Interest shall be payable monthly in arrears and upon payment (including prepayment) in full of the unpaid principal amount hereof. Upon demand for payment, demand will be made of the borrowing Subsidiaries. IN WITNESS WHEREOF said Columbia Gas System Service Corporation pursuant to due authorization has caused this Evidence of Deposit to be executed on behalf of Columbia's Intrasystem Money Pool by its duly authorized officers, all as of the aforementioned Note Execution Date first above written. (Columbia Intrasystem Money Pool) By: _____________________________ Title: Page 40 EX-99.A(4) 4 FORM OF SUBSIDIARY MONEY POOL SHORT-TERM GRID NOTE 1 EXHIBIT A-4 COLUMBIA GAS SYSTEM INTRASYSTEM MONEY POOL ADVANCES As of _______________ _____________________ FOR VALUE RECEIVED, the undersigned, __________________________________, a __________________corporation, (the "Company"), hereby unconditionally promises to pay on demand or in any event by _______________ to the order of Columbia Gas System Service Corporation ("Service"), in its capacity as Agent of the Columbia Gas System Intrasystem Money Pool (the "Money Pool") and for the benefit of the Money Pool depositors, at the Office of Service located at 20 Montchanin Road, Wilmington, Delaware 19807, in lawful money of the United States of America and in immediately available funds, the principal amount of the aggregate unpaid principal amount of all Loans (that are posted on the schedule annexed hereto and made a part hereof) made by the Money Pool to the undersigned pursuant to the financing authorization approved by the Securities and Exchange Commission. The undersigned further agrees to pay interest in like money at such office on the unpaid principal amount hereof from time to time from the date hereof at the rate per annum equal to the Money Pool's weighted average short-term investment rate. Should there be no Money Pool investments, the cost of money will be the prior month's Federal Funds rate as published in the Federal Reserve Statistical Release, Publication H.15 (519). Interest shall be payable monthly in arrears and upon payment (including prepayment) in full of the unpaid principal amount hereof. If applicable, a default rate equal to 2% per annum above the pre-default rate on the unpaid principal amount will be assessed if any interest or principal payment becomes past due. This Note shall be governed by, and construed and interpreted in accordance with, the Laws of the State of Delaware without regard to conflicts of laws principles, except as preempted by Federal law. IN WITNESS WHEREOF said ______________________________ pursuant to due authorization has caused this Note to be executed in its name and on its behalf by its duly authorized officers, all as of the aforementioned Note Execution Date first above written. __________________________ Company By:__________________________ Title: Page 41 EX-99.A(5) 5 FORM OF PROPOSED BID NOTE 1 Exhibit A-5 CG LETTERHEAD Date _______________________________ Bank Name Address Attention: __________________________________ Bid Note Program Letter Agreement Ladies and Gentlemen: The Columbia Gas System, Inc. ("COLUMBIA" or the "COMPANY") hereby offers ________________________________________ (the "BANK") the opportunity to participate in an uncommitted credit facility for general corporate purposes. 1. Columbia may from time to time request advances ("ADVANCES") from the Bank, on the terms and conditions set forth below. This letter does not commit the Bank to lend but rather sets forth the procedures to be used in connection with Columbia's requests for Advances from the Bank from time to time on or prior to the termination hereof pursuant to paragraph 11 and, in the event that the Bank makes Advances to Columbia hereunder, the Company's obligations to the Bank with respect thereto. The Advances shall be evidenced by the unsecured "grid" promissory note executed by Columbia in substantially the form of Exhibit A hereto (the "NOTE"). 2. Each Advance shall be $1,000,000 and in integral multiples thereof and shall be made upon (i) Columbia's request to the Bank by telephone, telex or letter, given by any of the persons empowered to borrow by Columbia's Board of Directors and listed on Exhibit B hereto or otherwise designated by Columbia in writing ("DESIGNATED PERSONS"), that Columbia wishes to borrow money on a specified date, in a specified amount and for a specified term (which shall, in no event, be longer than 270 days); and (ii) our agreement with you, and your agreement with us, as to such date, amount and term, and as to the Quoted Rate (as defined in the Note) of interest per annum applicable to such Advance. The Bank agrees to transfer or wire funds only to accounts designated in writing by Designated Persons. Promptly after the date of each Advance, the Bank will send Columbia a written confirmation of such Advance and the amount and term thereof and the interest rate per annum applicable thereto. 3. Columbia will furnish the Bank, as soon as available, the Company's quarterly financial statements and annual audited financial statements, and other public information that you may from time to time reasonably request. The Bank may furnish to purchasers and prospective purchasers of participations in or assignments of any Advance copies of the foregoing statements, filings and other information. However, to the extent that the Page 42 2 bank requests proprietary and/or confidential information, Columbia may request the execution of an appropriate confidentiality agreement, if that information is provided, and in no event shall such information be provided to third parties. 4. Columbia's request for an Advance shall constitute: (i) a representation and warranty by us that no payment default has occurred and is continuing under any agreement or instrument relating to any of Columbia's indebtedness or would result after giving effect to such Advance and to the application of the proceeds therefrom (ii) a representation and warranty by Columbia that no Event of Default (as defined in the Note) or event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both and (iii) a representation and warranty by it that no event has occurred and no circumstance exists as a result of which the information which we have provided to the Bank pursuant to paragraph 3 would include an untrue statement of a material fact or omit to state any material fact or any fact necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading. 5. Columbia shall repay, and shall pay interest on, each Advance in accordance with the terms hereof and of the Note. Columbia shall have no right to prepay any unpaid amount of any Advance. 6. Columbia shall make each payment hereunder and under the Note on or before 3:00 P.M. (New York City time) on the day when due in lawful money of the United States of America to the Bank at its office at ______________________________________________________________________ _______________________________________________________________________, in same day funds. Columbia hereby authorizes the Bank, if and to the extent that payment is not made when due hereunder, to charge from time to time against any or all of Columbia's accounts with the Bank any amount so due. All computations of interest shall be made by the Bank on the basis of a year of 360 days, for the actual number of days (including the first day but excluding the last day) elapsed. 7. Whenever any payment to be made hereunder shall be stated to be due on a Saturday, a Sunday or a public or bank holiday in New York City (any other day being a "BUSINESS DAY"), such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest. 8. The Bank shall incur no liability to Columbia in acting upon any telephone, telex or letter request or other communication which the Bank believes in the absence of gross negligence to have been given by a Designated Person or in otherwise acting in good faith under this letter. Further, all documents required to be executed in conjunction with Advances under this letter may be signed by any Designated Person. 9. This letter shall remain in effect until terminated by either Columbia or the Bank by giving prior written notice of termination hereof to the other party hereto, but no such Page 43 3 termination shall affect Columbia's obligations with respect to the Advances outstanding at the time of such termination. 10. All written communications hereunder shall be mailed, telexed or delivered to the address specified below for Columbia and for the Bank, or as to each party, to such other address as shall be designated by such party in a written notice to the other party. If to Columbia, Mr. Edward D. Harvey, Jr. Assistant Treasurer Columbia Gas System Service Corporation Suite 300 Sunrise Valley Drive Reston, Virginia 20191-3458 Phone: (703) 295-0494 Fax: (703) 715-7916 If to the Bank, 11. The Bank may assign to one or more banks or other entities all or any part of, or may grant participations to one or more banks or other entities in or to all or any part of, any Advance or Advances hereunder and under the Note. Columbia may not assign its rights hereunder or any interest herein without the Bank's prior written consent and any such assignment without the Bank's consent shall be null and void. 12. Columbia agrees to pay on demand all reasonable costs and expenses, if any, incurred by the Bank in connection with the enforcement of this letter or the Note. 13. Columbia hereby represents and warrants that (i) the execution, delivery and performance by us of this letter and the Note are within our corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (x) our charter or by-laws or (y) law or any contractual restriction binding on or affecting us or any entity that controls us; (ii) no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery and performance by Columbia of this letter or the Note; and (iii) each of this letter and the Note has been duly executed and delivered by Columbia, and is its legal, valid and binding obligation, enforceable against Columbia in accordance with its terms. 14. This letter shall be governed by, and construed in accordance with, the laws of the State of New York. Page 44 4 15. Columbia and the Bank each hereby irrevocably waive all right to trial by jury in any action, proceeding or counterclaim (whether based upon contract, tort or otherwise) arising out of or relating to this letter or the Note or any Advances hereunder. If the terms of this letter are satisfactory to the Bank, please indicate your agreement and acceptance thereof by signing a counterpart of this letter and returning it to us. Very truly yours, THE COLUMBIA GAS SYSTEM, INC. By: _________________________________ Name: Title: Agreed and Accepted ____________________________________________ By: ______________________________________ Name: Title: Page 45 5 EXHIBIT A TO BID NOTE PROGRAM LETTER AGREEMENT DATED ________________ BETWEEN THE COLUMBIA GAS SYSTEM, INC. AND ______________________________________ SHORT-TERM NOTE Dated _______________ FOR VALUE RECEIVED, the undersigned (the "BORROWER"), HEREBY PROMISES TO PAY to the order of __________________________ (the "BANK") the principal amount of each Advance (as defined below) made by the Bank to the Borrower, on the date mutually agreed to by the Bank and the Borrower at the time of such Advance as the maturity date thereof; together with interest (computed on the basis of a year of 360 days for the actual number of days, including the first day but excluding the last day, elapsed) on the principal amount of each Advance outstanding from time to time from and including the date on which such Advance is made until the maturity date of such Advance, payable on the maturity date of such Advance at a rate quoted by the Bank and agreed to by the Borrower at the time of such Advance (the "QUOTED RATE"). If, in accordance with the Bid Note Program referred to below, the Borrower shall make a timely objection as to the Quoted Rate for any Advance, such Advance shall be payable on demand and shall bear interest at a fluctuating interest rate per annum in effect from time to time equal to 120% of the higher of: (a) the rate of interest announced publicly by the Bank in New York, New York, from time to time, as the Bank's base rate; or (b) 1/2 of one percent above the latest three-week moving average of secondary market morning offering rates (expressed as an annual rate) in the United States for three-month certificates of deposit of major United States money market banks, such three-week moving average being determined weekly on each Monday (or, if any such day is not a Business Day, on the next scheduled Business Day) for the three-week period ending on the previous Friday by the Bank on the basis of such rates reported by certificate of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publication shall be suspended or terminated, on the basis of quotations for such rates received by the Bank from three New York certificate of deposit dealers of recognized standing selected by the Bank, in either case adjusted to the nearest 1/4 of one percent or, if there is no nearest 1/4 of one percent, to the next higher 1/4 of one percent (the higher of (a) or (b) being the "BASE RATE"). Any overdue amount of principal, interest, fees or other amounts payable hereunder or under the Bid Note Program referred to below shall bear interest, payable on demand, at the Base Rate plus 2% per annum. Page 46 6 The Borrower shall have no right to prepay any unpaid amount of any Advance. If any of the following events shall occur and be continuing (each, and "EVENT OF DEFAULT"): (a) the Borrower shall fail to pay any principal of, or any interest on, any Advance when the same becomes due and payable; or (b) any representation or warranty made by the Borrower (or any of its officers) pursuant to the Bid Note Agreement shall prove to have been incorrect in any material respect when made; or (c) the Borrower shall, without the prior written consent of the Bank, merge or consolidate with or into, or convey, transfer, lease or dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets to, any person or entity; or (d) the Borrower shall fail to pay any principal of or premium or interest on any indebtedness (excluding indebtedness evidenced by this Note) in a principal amount of $30,000,000 in aggregate when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in such agreement or instrument relating to such indebtedness; or any other event shall occur or condition shall exist under any agreement of instrument relating to any such indebtedness and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such indebtedness; or any such indebtedness shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof; or (e) the Borrower shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or any substantial part of its property; and in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Borrower shall take any corporate action to authorize any of the actions set forth above in this subsection (e); Page 47 7 then, and in any such event, the Bank may declare this Note, all interest thereon and all other amounts payable hereunder to be forthwith due and payable, whereupon this Note, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which the Borrower hereby expressly waives; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under the Federal Bankruptcy Code, this Note, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. The Borrower shall make each payment of principal and interest hereunder prior to 3:00 P. M. (New York City time) on the day when due in lawful money of the United States of America to the Bank at its office at _____________________________________________________________________________ _______________________________________, in same day funds. Whenever any payment to be made hereunder shall be otherwise due on a Saturday, a Sunday or a public or bank holiday in New York City (any other day being a "BUSINESS DAY), such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest. The Borrower hereby authorizes the Bank to endorse on the grid attached hereto the date and amount of each Advance made by he Bank to the Borrower hereunder, the maturity date thereof, all payments made on account of principal thereof and the interest rate applicable thereto, provide that the failure to do so shall not affect the obligations of the Borrower to the Bank. The Borrower also agrees to pay on demand all reasonable costs and expenses (including fees and expenses of counsel) incurred by the Bank in enforcing this Note. This Note shall be governed by, and construed in accordance with, the laws of the State of New York. This Note is the Note referred to in, and is entitled to the benefits of, the Bid Note Program, dated _____________ (the "BID NOTE PROGRAM"), between the Borrower and the Bank, which Bid Note Program, among other things, sets forth procedures to be used in connection with the Borrower's periodic requests that the Bank make advances (the "ADVANCES) to it from time to time. Capitalized terms used herein but not defined in this Note shall have the meanings attributed to them in the agreement. THE COLUMBIA GAS SYSTEM, INC. By:__________________________ Title: Page 48 EX-99.G 6 PROPOSED NOTICE 1 EXHIBIT G SECURITIES AND EXCHANGE COMMISSION (Release No. ) The Columbia Gas System, Inc. and Subsidiaries Notice of Proposed External Financing by The Columbia Gas System, Inc., Intrasystem Financing of Subsidiaries and External Financing by Nonutility subsidiaries for the period January 1, 1996 through December 31, 2001. The Columbia Gas System, Inc. ("Columbia"), a Delaware corporation and registered holding company and subsidiaries: COLUMBIA GAS OF OHIO, INC. ("Columbia Ohio") COLUMBIA GAS OF PENNSYLVANIA, INC. ("Columbia Pennsylvania") COLUMBIA GAS OF KENTUCKY, INC. ("Columbia Kentucky") COLUMBIA GAS OF MARYLAND, INC. ("Columbia Maryland") COMMONWEALTH GAS SERVICES, INC. ("Commonwealth Services") 200 Civic Center Drive Columbia, Ohio 43215 COLUMBIA GAS TRANSMISSION CORPORATION ("Columbia Transmission") COLUMBIA GULF TRANSMISSION COMPANY ("Columbia Gulf") 1700 MacCorkle Avenue, S.E. Charleston, West Virginia 25314 COLUMBIA NATURAL RESOURCES, INC. ("Columbia Natural") 900 Pennsylvania Ave. Charleston, West Virginia 25302 COMMONWEALTH PROPANE, INC. ("Commonwealth Propane") COLUMBIA PROPANE CORPORATION ("Columbia Propane") 800 Moorefield Park Drive Richmond, Virginia 23236 COLUMBIA ENERGY SERVICES CORPORATION ("Energy Services") COLUMBIA SERVICE PARTNERS, INC. ("Service Partners") COLUMBIA ENERGY MARKETING CORPORATION ("Energy Marketing") 2581 Washington Road Upper Saint Clair, PA 15241 COLUMBIA GAS SYSTEM SERVICE CORPORATION ("Service") COLUMBIA LNG CORPORATION ("Columbia LNG") COLUMBIA ATLANTIC TRADING CORPORATION ("Columbia Atlantic") 12355 Sunrise Valley Drive Suite 300 Reston, VA 20191-3458 TRISTAR VENTURES CORPORATION ("TriStar Ventures") TRISTAR CAPITAL CORPORATION ("TriStar Capital") 205 VanBuren Herndon, VA 22070 Page 49 2 (the "Subsidiaries") have filed a joint application-declaration with this Commission pursuant to [Sections 6, 7, 9, 10, 12(b), 12(c) and 12(f) under the Public Utility Holding Company Act of 1935 (the "Act") and Rules 43, 45 and 52 thereunder]. Columbia proposes the following financing transactions without any additional Commission approvals required, except as noted: I. External financing by The Columbia Gas System, Inc. A) To have outstanding at any one time up through December 31, 2001, up to $1 billion of short-term debt consisting of borrowings under the Credit Facility*, the issuance of commercial paper, the sale of bid notes and other forms of short-term financing generally available to borrowers with investment grade credit ratings. Columbia further requests authorization to amend the Credit Facility, without further Commission authorization provided that the maturity date does not go beyond December 31, 2001, and the principal amount and borrowing margins do not increase. B) Authorization through December 31, 2001, to issue long-term debt securities in an amount, when combined with the proceeds from equity financings during the period, not to exceed $5 billion. C) Authorization to enter into hedging transactions to be initiated prior to December 31, 2001, to convert all or a portion of floating rate debt existing or to be issued from time to time to fixed rate debt or to convert all or a portion of fixed rate debt existing or to be issued from time to time to floating rate debt using interest rate swaps or other derivative products designed for such purposes. D) Authorization through December 31, 2001, to issue equity securities in an amount, when combined with long-term debt securities issued pursuant to this Application, not to exceed $5 billion. E) Authorization to issue other types of securities that Columbia deems appropriate during the period ending December 31, 2001, in an amount when combined with long-term debt securities and equity issued pursuant to this Application, not to exceed $5 billion subject to a reservation of jurisdiction over the terms of said securities. II. Intrasystem financing A) Columbia Maryland plans for the sale of long-term debt securities and common stock to Columbia in an amount not to exceed $30 million on or before December 31, 2001. Authority for the Nonutility Subsidiaries to issue, and Columbia to acquire, other types of securities which do not qualify for exemption under Rule 52 but which are considered appropriate during the period of authorization granted pursuant to this Application. Columbia and the Nonutility Subsidiaries propose that the Commission reserve jurisdiction over the issuance of such _____________ *Authorization for the Credit Facility (Order dated August 25, 1995, HCAR 35-26361; 70-8627) to be withdrawn and superseded by the order of the Commission sought herein. Page 50 3 additional types of securities and that each supplemental order be issued by the Commission without further time consuming public notice. B) Authorization for the continuance of the Money Pool through December 31, 2001, where the maximum amount of Money Pool borrowing outstanding for each Subsidiary will be determined in accordance with business needs. Actual short-term financing would be issued based on working capital requirements and any interim financing needed to bridge between issuances of long-term capital. The maximum short-term debt to be issued by Columbia Pennsylvania, Columbia Ohio, Columbia Maryland and Columbia Kentucky would not exceed 40% of their total capitalization. C) Columbia and its existing Nonutility Subsidiaries and any Nonutility Subsidiary established is seeking authorization to enter guarantee arrangements, obtain letters of credit, and otherwise provide credit support with respect to obligations of their respective Subsidiaries to third parties as may be needed and appropriate to enable them to carry on in the ordinary course of their respective businesses prior to December 31, 2001. The maximum aggregate limit on all such credit support by Columbia and by all Subsidiaries at any time will be $500 million. The $500 million of guarantees is in addition to any financing planned for in this Application. D) Columbia and certain of the Subsidiaries plan to reduce their authorized and outstanding shares to 3,000 shares or less in order to reduce franchise taxes. E) Authorization to reincorporate Columbia Natural in Delaware. III. External financing by Nonutilities A) The Nonutility Subsidiaries request that the Commission approve the issuance of securities to nonaffiliates which do not qualify for the application of Rule 52 but reserve jurisdiction over the terms of the securities. The Nonutility Subsidiaries further propose that each supplemental order be issued by the Commission without further time-consuming public notice. B) Columbia and the Nonutility Subsidiaries plan to organize new corporations, trusts, partnerships or other entities created for the purpose of facilitating financings through their issue to third parties of monthly and quarterly income preferred securities. Authorization is also being sought for these financing entities to issue such securities to third parties in the event such transactions involving financing by Columbia may not be covered by exemptive Rule 52. Additionally, authorization is required with respect to (I) the issuance of debentures or other evidences of indebtedness by Columbia to a financing entity in return for the proceeds of the financing entity, and (ii) the acquisition by Columbia of voting interests or equity securities issued by the financing entity to establish Columbia's ownership of the financing. Columbia and the Nonutility Subsidiaries also are seeking authorization to enter into expense agreements with their respective financing entities, pursuant to which they would agree to pay all expenses of such entity. IV. Financing of EWGs and FUCOs. Columbia seeks Commission authorization of EWGs and FUCOs in compliance with the standards set forth in Rule 53. Page 51 4 The joint application-declaration and any amendments thereto are available for public inspection through the commission's Office of Public Reference. Interested persons wishing to comment or request a hearing should submit their views in writing by December 15, 1994, to the Secretary, Securities and Exchange Commission, Washington, D.C. 20549, and serve a copy on the applicants-declarants at the address specified above. Proof of service (by affidavit or, in case of an attorney-at-law, by certificate) should be filed with the request. Any request for a hearing shall identify specifically the issues of fact or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in this matter. After said date, the joint application-declaration, as filed or as it may be amended, may be permitted to become effective. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Jonathan G. Katz Secretary Page 52 EX-99.H 7 LIST OF ACRONYMS USED IN EXHIBITS & FINANCIALS 1 EXHIBIT H LIST OF ACRONYMS FOR EXHIBITS AND FINANCIAL STATEMENTS
Company Acronym ------- ------- The Columbia Gas System, Inc. & Subsidiaries . . . . . . . . . . . CGS The Columbia Gas System, Inc. . . . . . . . . . . . . . . . . . . CG Columbia Gas System Service Corporation . . . . . . . . . . . . . CS Columbia Gulf Transmission Company . . . . . . . . . . . . . . . . CGT Columbia Energy Services Corporation . . . . . . . . . . . . . . . CES TriStar Ventures Corporation . . . . . . . . . . . . . . . . . . . TVC TriStar Capital Corporation . . . . . . . . . . . . . . . . . . . TCC Columbia LNG Corporation . . . . . . . . . . . . . . . . . . . . . CLG Columbia Coal Gasification Corporation . . . . . . . . . . . . . . CGC Columbia Gas of Kentucky, Inc. . . . . . . . . . . . . . . . . . . CKY Columbia Gas of Ohio, Inc. . . . . . . . . . . . . . . . . . . . . COH Columbia Gas of Maryland, Inc. . . . . . . . . . . . . . . . . . . CMD Columbia Gas of Pennsylvania, Inc. . . . . . . . . . . . . . . . . CPA Commonwealth Gas Services, Inc. . . . . . . . . . . . . . . . . . COS Commonwealth Propane, Inc. . . . . . . . . . . . . . . . . . . . . CPI Columbia Propane Corporation . . . . . . . . . . . . . . . . . . . CPC Columbia Atlantic Trading Corporation . . . . . . . . . . . . . . CAT Columbia Natural Resources, Inc. . . . . . . . . . . . . . . . . . CNR
Page 1 2 THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES UNAUDITED (b)(1) (1 of 2) CONDENSED STATEMENTS OF CAPITALIZATION ACTUAL and PRO FORMA As of July 31, 1996 ($000)
CGS* CG CS CGT CPC --------- --------- --------- --------- --------- ACTUAL CAPITALIAZTION Common Stock Equity Common stock .............................. 551,812 551,812 13,000 59,780 3,900 Additional paid in capital ................ 740,453 740,453 - 22,669 1,940 Retained earnings ......................... 213,716 213,716 (2,161) 21,142 (1,556) Unearned employee compensation ............ (1,459) (1,459) - - - --------- --------- --------- --------- --------- Total Common Stock Equity ................... 1,504,522 1,504,522 10,839 103,591 4,284 --------- --------- --------- --------- --------- Long-Term Debt Existing notes and other long-term debt ... 2,004,108 2,000,056 - - - Additional installment notes .............. - - 13,769 59,630 1,574 --------- --------- --------- --------- --------- Total Long-Term Debt ........................ 2,004,108 2,000,056 13,769 59,630 1,574 --------- --------- --------- --------- --------- TOTAL CAPITALIZATION ........................ 3,508,630 3,504,578 24,608 163,221 5,858 --------- --------- --------- --------- --------- =================================================================================================== ADJUSTMENTS TO CAPITALIZATION Common Stock Equity Common stock .............................. - - (12,775) (59,760) (3,866) Additional paid in capital ................ - - 12,775 59,760 3,866 Retained earnings ......................... - - - - - Unearned employee compensation ............ - - - - - --------- --------- --------- --------- --------- Total Common Stock Equity ................... - - - - - --------- --------- --------- --------- --------- Long-Term Debt Existing notes and other long-term debt ... - - - - - Additional installment notes .............. - - - - - --------- --------- --------- --------- --------- Total Long-Term Debt ........................ - - - - - --------- --------- --------- --------- --------- TOTAL CAPITALIZATION ........................ - - - - - --------- --------- --------- --------- --------- =================================================================================================== PRO FORMA CAPITALIZATION Common Stock Equity Common stock .............................. 551,812 551,812 225 20 34 Additional paid in capital ................ 740,453 740,453 12,775 82,429 5,806 Retained earnings ......................... 213,716 213,716 (2,161) 21,142 (1,556) Unearned employee compensation ............ (1,459) (1,459) - - - --------- --------- --------- --------- --------- Total Common Stock Equity ................... 1,504,522 1,504,522 10,839 103,591 4,284 --------- --------- --------- --------- --------- Long-Term Debt Existing notes and other long-term debt ... 2,004,108 2,000,056 - - - Additional installment notes .............. - - 13,769 59,630 1,574 --------- --------- --------- --------- --------- Total Long-Term Debt ........................ 2,004,108 2,000,056 13,769 59,630 1,574 --------- --------- --------- --------- --------- TOTAL CAPITALIZATION ........................ 3,508,630 3,504,578 24,608 163,221 5,858 --------- --------- --------- --------- --------- ===================================================================================================
* Consolidated Statement of Capitalization THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES UNAUDITED Page 2 3 (b)(1) (2 of 2) CONDENSED STATEMENTS OF CAPITALIZATION ACTUAL and PRO FORMA As of July 31, 1996 ($000)
TVC TCC CMD TCO CAT --------- --------- --------- --------- --------- ACTUAL CAPITALIAZTION Common Stock Equity Common stock .............................. 15,293 1,000 7,092 241,784 82 Additional paid in capital ................ 42,802 1,075 - 1,270,289 1,483 Retained earnings ......................... (16,962) (426) 12,867 (644,310) (901) Unearned employee compensation ............ - - - - - --------- --------- --------- --------- --------- Total Common Stock Equity ................... 41,133 1,649 19,959 867,763 664 --------- --------- --------- --------- --------- Long-Term Debt Existing notes and other long-term debt ... - - 63 600 - Additional installment notes .............. - - 11,994 643,000 - --------- --------- --------- --------- --------- Total Long-Term Debt ........................ - - 12,057 643,600 - --------- --------- --------- --------- --------- TOTAL CAPITALIZATION ........................ 41,133 1,649 32,016 1,511,363 664 --------- --------- --------- --------- --------- =================================================================================================== ADJUSTMENTS TO CAPITALIZATION Common Stock Equity Common stock .............................. (15,247) (944) (7,041) (241,735) (81) Additional paid in capital ................ 15,247 944 7,041 241,735 81 Retained earnings ......................... - - - - - Unearned employee compensation ............ - - - - - --------- --------- --------- --------- --------- Total Common Stock Equity ................... - - - - - --------- --------- --------- --------- --------- Long-Term Debt Existing notes and other long-term debt ... - - - - - Additional installment notes .............. - - - - - --------- --------- --------- --------- --------- Total Long-Term Debt ........................ - - - - - --------- --------- --------- --------- --------- TOTAL CAPITALIZATION ........................ - - - - - --------- --------- --------- --------- --------- =================================================================================================== PRO FORMA CAPITALIZATION Common Stock Equity Common stock .............................. 46 56 51 49 1 Additional paid in capital ................ 58,049 2,019 7,041 1,512,024 1,564 Retained earnings ......................... (16,962) (426) 12,867 (644,310) (901) Unearned employee compensation ............ - - - - - --------- --------- --------- --------- --------- Total Common Stock Equity ................... 41,133 1,649 19,959 867,763 664 --------- --------- --------- --------- --------- Long-Term Debt Existing notes and other long-term debt ... - - 63 600 - Additional installment notes .............. - - 11,994 643,000 - --------- --------- --------- --------- --------- Total Long-Term Debt ........................ - - 12,057 643,600 - --------- --------- --------- --------- --------- TOTAL CAPITALIZATION ........................ 41,133 1,649 32,016 1,511,363 664 --------- --------- --------- --------- --------- ===================================================================================================
THE COLUMBIA GAS SYSTEM, INC. AND SUBSIDIARIES UNAUDITED (b)(1) (3 of 3) CONDENSED STATEMENTS OF CAPITALIZATION ACTUAL and PRO FORMA Page 3 -----END PRIVACY-ENHANCED MESSAGE-----