SECURITIES AND EXCHANGE COMMISSION
(Release No. 35-27902; 70-9643)
Progress Energy, Inc
Supplemental Order Granting Extension Of Time To Divest Subsidiaries
October 19, 2004
Progress Energy, Inc. ("Progress"), a registered holding company under the Public Utility Holding Company Act of 1935, as amended ("Act"), Raleigh, North Carolina, has filed a post-effective amendment to its previously filed application ("Amendment") with the Securities and Exchange Commission ("Commission") under section 11(b)(1) of the Act and rule 54 under the Act. A notice of the Amendment was issued by the Commission on August 4, 2000 (Holding Co. Act Release No. 27208).
Progress requests an extension of time, until December 31, 2005, to divest, or convert to passive interests, two ownership interests it was ordered to divest on November 27, 2000 (Holding Co. Act Release No. 27284)("Merger Order"). In the Merger Order, the Commission authorized Progress, which was then an exempt holding company with two public-utility subsidiaries, to acquire all of the issued and outstanding common stock of Florida Progress Corporation ("Florida Progress"), an exempt holding company that owned all of the issued and outstanding common stock of Florida Power Corporation, in exchange for a combination of Progress Energy common stock, cash, and certain other securities. The transaction was consummated on November 30, 2000, and Progress Energy registered with the Commission as a holding company on the same day. Under the terms of the Merger Order, the Commission reserved jurisdiction under section 11(b)(1) of the Act over Progress' retention of certain direct and indirect, nonutility subsidiaries and investments of Progress and Florida Progress. Among these were Historic Property Management, LLC ("Historic Property") and Raleigh-CaroHome/WCK, LLC ("Raleigh-CaroHome"). Historic Property is involved with an historic building restoration project, Grove Arcade, in Asheville, North Carolina. Raleigh-CaroHome is involved with the development of affordable housing projects in the Raleigh area.
The Merger Order directed Progress to file a post-effective amendment not later than November 30, 2001, in which it would either set forth the legal basis upon which it is entitled to retain its ownership interest in the specified subsidiaries or, alternatively, commit to divest its interest in some or all of the specified subsidiaries prior to November 30, 2003.1 Progress filed Post-Effective Amendments No. 6 and No. 7 in which it requested, among other things, that the Commission grant Progress an extension of time (to November 1, 2004) to complete the sale of Historic Property and Raleigh-CaroHome or to cause the ownership interests in these entities to be converted into passive interests. By order dated October 21, 2003 (Holding Co. Act Release No. 27740), the Commission granted the requested extension until November 1, 2004.
Progress states that due to market conditions, slower-than-expected lease-up of housing units and commercial office space, and other factors beyond its control, the opportunities to sell or convert the interests in Historic Property and Raleigh-CaroHome have not materialized as quickly as expected over the past year, although negotiations have commenced in connection with both properties within the past few months. Progress does not expect to conclude these negotiations for a sale or conversion of these interests by November 1, 2004.
In support of the request for a time extension, Progress maintains that it has made substantial progress in selling or converting into passive interests the tax credit projects in which it held active interests at the time it became a registered holding company. Progress is in the process of seeking a new managing member for Historic Property and also intends to sell down its interest in Raleigh-CaroHome and bring in a new managing member. Progress has received a confidential, non-binding letter of intent for the purchase of its remaining ownership interest in Raleigh-CaroHome, and negotiations for the sale or conversion of its remaining interest in Historic Property have commenced.
During the past three years, construction of the Grove Arcade and Raleigh-CaroHome projects has been completed and the leasing activity commenced. Progress believes that the two properties will become easier to sell to third parties when leasing activity is substantially completed since that will mitigate the market risks associated with the projects. Progress currently projects that the Grove Arcade commercial building and residential space and the Raleigh-CaroHome project will be substantially leased by the first half of 2005 and that the negotiations described above can be concluded and the sale or conversion of Progress' interests can be closed by the third quarter of 2005.
The proposed transaction is subject to rule 54 under the Act, which provides that in determining whether to approve the issue or sale of a security by a registered holding company for purposes other than the acquisition of an exempt wholesale generator ("EWG") or a foreign utility company ("FUCO"), or other transactions by that registered holding company or its subsidiaries other than with respect to EWGs or FUCOs, the Commission shall not consider the effect of the capitalization or earnings of any EWG or a FUCO subsidiary on the registered holding company if paragraphs (a), (b) and (c) of rule 53 are satisfied. Applicants state that Progress meets that requirement.2
Fees, commissions and expenses incurred in connection with this Amendment are estimated to be no more than $5,000. Applicants state that no state or federal commission, other than this Commission, has jurisdiction over the proposed transaction.
Due notice of the filing of this Amendment 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. Based on the facts in the record, the Commission finds that the applicable standards of the Act and rules are satisfied and that no adverse findings are necessary.
IT IS ORDERED, under the applicable provisions of the Act and the rules under the Act, that the Amendment be granted and permitted to become effective immediately, subject to the terms and conditions prescribed in rule 24 under the Act.
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
Margaret H. McFarland
|Home | Previous Page||