SECURITIES AND EXCHANGE COMMISSION
(Release No. 35-27745; 70-9961)
E.ON AG, et al.
Supplemental Order Releasing Jurisdiction and Declaring Registrations Under the Act No Longer In Effect
October 28, 2003
E.ON AG ("E.ON"), Powergen Ltd., Powergen US Holdings Limited, Powergen US investments, Powergen Luxembourg Holdings sarl and Powergen Luxembourg sarl, Dusseldorf, Germany ("Applicants"), all registered holding companies under the Public Utility Holding Company Act of 1935, as amended, ("Act"), have filed post-effective amendments ("Application") under section 5(d) of the Act to their previously filed application with the Securities and Exchange Commission ("Commission"). The Commission issued a notice of that application on December 21, 2001 (HCAR No. 27482; International Release Series No. 1253).
Applicants request an order finding that Powergen US Holdings Limited, Powergen US Investments, Powergen Luxembourg Holdings sarl and Powergen Luxembourg sarl have ceased to be holding companies and declaring that their registrations under the Act are no longer in effect.
E.ON currently owns LG&E Energy Corp. ("LG&E Energy"), a public utility holding company that owns two public utility companies, Louisville Gas and Electric Company ("LG&E") and Kentucky Utilities Company ("KU"). E.ON holds these utility interests indirectly through a chain of Powergen registered holding companies: Powergen
US Holdings Limited, Powergen US investments, Powergen Luxembourg Holdings sarl and Powergen Luxembourg sarl ("Powergen Intermediate Holding Companies").
In an order dated June 14, 2002 (HCAR No. 27539) ("Merger Order"), the Commission authorized E.ON to acquire all of the issued and outstanding common stock of Powergen and, through the acquisition of Powergen, LG&E Energy and its public utility subsidiaries, LG&E and KU ("Acquisition"). On July 1, 2002, E.ON consummated the Acquisition and registered as a holding company under section 5 of the Act.
Under the Merger Order, E.ON was also authorized to conduct, following the Acquisition, a reorganization in which the ownership of Powergen US Investments Corps. (since renamed E.ON US Investments Corps. ("EUSIC")), an intermediate holding company of Powergen and the immediate parent company of LG&E Energy, would be transferred to E.ON U.S. Verwaltungs GmbH ("E.ON US"), a direct subsidiary of E.ON, in exchange for cash or a note. Following that reorganization, E.ON would hold all of the outstanding voting stock of LG&E Energy through E.ON US and EUSIC, and E.ON US would register as a holding company. EUSIC would remain a registered holding company under the Act by virtue of its indirect ownership interest in LG&E and KU, both public utility companies. The Powergen Intermediate Holding Companies would cease to hold, either directly or indirectly, voting interests in LG&E Energy; they would therefore no longer be holding companies of any public utility company. In the Merger Order, the Commission reserved jurisdiction over the proposed deregistration of the Powergen Intermediate Holding Companies until the completion of the reorganization.
Applicants state that since the Acquisition, the ownership of EUSIC has been transferred from Powergen Luxembourg Holdings sarl (10%) and Powergen Luxembourg Investments sarl (90%) to Powergen Luxembourg sarl. In addition, Powergen Luxembourg Investments sarl has been liquidated. On March 1, 2003, Powergen Luxembourg sarl transferred 99.5% of its shareholding in EUSIC to E.ON US for cash ("Transfer") as proposed in Amendment No. 3 to the Application-Declaration filed on June 11, 2002 ("Original Financing Application") and approved in the Commission's order of February 21, 2003 (HCAR No. 27654). Powergen Luxembourg sarl retained one (1) voting share that constitutes 0.5% of the ownership in EUSIC in order to preserve certain tax efficiencies under the laws of Luxembourg.
Applicants state that upon completion of the Transfer, the Powergen Intermediate Holding Companies ceased to have any ownership, direct or indirect, of any significant or material interests in EUSIC and LG&E Energy and its public utility subsidiaries. Applicants assert that E.ON's indirect ownership of less than 1% of the voting interest in EUSIC and, consequently, in LG&E Energy, is immaterial and does not affect the U.S. utility operations of LG&E Energy.
Applicants further state that the Powergen Intermediate Holding Companies were formed to effect Powergen's acquisition of LG&E Energy on a tax efficient basis and continue to serve as financing conduits, enabling E.ON and Powergen to preserve certain efficient financing arrangements since the Acquisition. Applicants state that these intermediary companies, including Powergen Luxembourg sarl, which holds a residual 0.5% in EUSIC, (i) cannot exert any influence over the management or policies of E.ON US, which directly holds the ownership interests of LG&E Energy and its public utility subsidiaries, and (ii) do not have authorization to issue securities externally. Thus, Applicants assert, Powergen Luxembourg sarl's indirect minority interest (through EUSIC) in a U.S. public utility company does not warrant finding Powergen Luxembourg sarl to be a holding company within the meaning of section 2(a)(7) of the Act.
Fees and expenses in the estimated amount of $25,000 are expected to be incurred in connection with the Application. Applicants state that no state or federal commission regulatory approval, other than the approval of this Commission, is required in connection with terminating the registration of the Powergen Intermediate Holding Companies.
Due notice of the filing of the Application has been given in the manner prescribed in rule 23 under the Act, and no hearing has been requested of or ordered by the Commission. On the basis of the facts in the record, it is hereby found that the applicable standards of the Act and rules thereunder are satisfied, that Powergen US Holdings Limited, Powergen US Investments, Powergen Luxembourg Holdings sarl and Powergen Luxembourg sarl have ceased to be holding companies, and that no adverse findings are necessary.
IT IS ORDERED that jurisdiction is released over Applicants' request for an order of the Commission finding that they are no longer holding companies and declaring that their registrations under the Act are no longer in effect.
IT IS FURTHER ORDERED, under the applicable provisions of the Act and the rules under the Act, that the Application, as amended, be, and hereby is, granted, effective immediately, subject to the terms and conditions prescribed in rule 24 under the Act, and that the registrations under the Act of Powergen US Holdings Limited, Powergen US Investments, Powergen Luxembourg Holdings sarl and Powergen Luxembourg sarl are no longer in effect.
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
Margaret H. McFarland