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PART III

PUBLIC UTILITY HOLDING COMPANY ACT OF 1935

ACQUISITION OF SECURITIES

Acquisition by newly created public utility subsidiary of registered holding company, pursuant to Section 10 of Public Utility Holding Company Act of 1935, of gas utility assets held by associate company, approved, despite absence of approval by a State commission in State in which the acquiring company operates, the Commission finding that compliance with State laws would be detrimental to carrying out of provisions of Section 11 * * * Page 129

Application pursuant to Section 10 of the Public Utility Holding Company Act of 1935 by registered holding company to acquire the securities of its newly organized non-utility subsidiary, approved, the Commission finding that the proposed operations of such subsidiary are reasonably incidental, or economically necessary or appropriate to the operations of the integrated publicutility system of the registered holding company and that no adverse findings are required ** * Page 149

Where a registered holding company proposes to purchase its non-redeemable preferred stock from time to time at such prices as may be determined by its management to be reasonable in relation to current market quotations and other factors, held, the proposed method of reducing its outstanding preferred stock would aggravate the unfair and inequitable distribution of voting power and, in the absence of a definite price and fixed purchase period, cannot be found to be fair; and the declaration, filed pursuant to Section 12(c) of the Public Utility Holding Company Act of 1935 and Rule 42 promulgated thereunder, will not be permitted to become effective * * * Page 276

Application by registered holding company pursuant to Section 10 of the Public Utility Holding Company Act of 1935 requesting approval of its acquisition of equity securities of non-affiliated natural gas pipeline company transporting gas from production area to distribution area of holding company system, granted, the Commission finding that such acquisition is not detrimental to the carrying out of the provisions of Section 11 and that no adverse findings are required under the applicable standards under the circumstances, including the intention of the holding company to acquire pipeline company's properties, its undertaking to sell the securities to the public if such properties are not acquired, and its undertaking not to vote any of the common stock to be acquired without Commission approval * * * Page 479

Application filed pursuant to Section 10 of the Public Utility Holding Company Act of 1935 for acquisition of securities of newly created electric utility company, granted, where acquisition will serve public interest by tending towards economical and efficient development of integrated public utility system and other applicable standards of Section 10 of the Act appear to be satisfied * * * Page 658

Application filed pursuant to Section 10 of Public Utility Holding Company Act of 1935 for acquisition of securities of newly created electric utility company, granted, the acquisition not being found to unduly complicate the capital structure of the holding-company system of the applicant despite fact that new company will have a capital structure of 3% of common stock equity and 97% of debt where funds for payment of interest and amortization requirements of 89% of such debt are assured by power contract with the Government of the United States * * * Page 658

Acquisition by newly created subsidiary of registered holding company of facilities of natural gas transportation company, held, not be detrimental to the carrying out of the provisions of Section 11(b) (1) of the Public Utility Holding Company Act of 1935 where the facilities of the transportation company being acquired are employed to transport the natural gas, produced or purchased by the holding company system, from its source of supply to the system's retail distribution properties, thereby bridging the gap between the source and the ultimate consumer * * Page 761

Acquisition by newly created subsidiary of registered holding company of facilities of natural gas transportation company in exchange for common stock of registered holding company, approved, the Commission not finding, under the provisions of Section 10 of the Public Utility Holding Company Act of 1935, that the consideration being paid is unreasonable * * * Page 761

Acquisition by newly created subsidiary of registered holding company of facilities of natural gas transportation company and its assumption of the first mortgage bonds thereof, approved, the Commission finding that the complication in system capital structure resulting from the assumption of such debt does not require adverse findings under Sections 10(b) (3) or 10(c) (1) of the Public Utility Holding Company Act of 1935 where the registered holding company commits itself to proceed diligently to take appropriate steps to eliminate the complexity within 1 year of the date of a Commission order approving the acquisition and, under the provisions of Section 11 (b) (2) of such act, the Commission is empowered to institute a proceeding to determine whether any undue or unnecessary complexity exists in the corporate structure of the registered holding company system, and, if so, to require its elimination * * * Page 761

DECLARATION OF STATUS

Termination of Registered Holding Company Status

Application by registered holding company pursuant to Section 5(d) of the Public Utility Holding Company Act of 1935 for an order declaring that it has ceased to be a holding company and that its registration as such shall cease to be in effect, granted, where the applicant no longer holds 10% or more of the voting securities of any public-utility or holding company and where there is no evidence to indicate that applicant exercises control or a controlling influence over any public-utility or holding company * * Page 586 Definition of Holding Company

Subsidiary of registered holding company which is itself a registered holding company and no longer holds 10% or more of the voting securities of any publicutility or holding company nor exercises control or a controlling influence over any such company, held, not to be a holding company for the purpose of determining whether parent company is entitled to an order under Section 5(d) of the Public Utility Holding Company Act of 1935 declaring it not to be a holding company * * * Page 586

A registered holding company, as, defined, under Section 2(a) (12) of the Public Utility Holding Company Act of 1935, is a company whose registration is in effect

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under Section 5 of that Act even though it has ceased to be a holding com-
pany * • • Page 586
Exception From Competitive Bidding

Exception from competitive bidding requirement of Rule 50 promulgated under
the Public Utility Holding Company Act of 1935 with respect to the sale by
subsidiary company of a registered holding company of the common stock of
such holding company in exchange for the physical assets of a natural gas
transportation company, granted, the Commission finding that compliance with
competitive bidding is not necessary or appropriate for the protection of in-
vestors or consumers to assure the receipt of adequate consideration or the
reasonableness of the fees or commissions to be paid with respect to such ex-
change * Page 761

Declaration by registered holding company under Section 12(d) of the Public
Utility Holding Company Act of 1935 and Rule 44 thereunder, with respect to
the sale of its holdings of common stock of a public utility company to a non-
affiliated company, permitted to become effective, where price was negotiated
at arm's length and no basis appeared for adverse findings under such section
and rule *** Page 658

Where Puerto Rican public-utility company, a subsidiary of a registered hold-
ing company, which has been granted an exemption pursuant to Section 3(b)
of the Public Utility Holding Company Act of 1935 as a subsidiary of the holding
company, including an exemption from Section 6 except with respect to the issue
and sale of securities within the United States, files declaration respecting pro-
posed issue and sale to institutional investor of bonds that will be non-redeem-
able for refunding at a lower interest rate for a period of 742 years, held, declara-
tion permitted to become effective under the provisions of Section 7 of the Act,
the Commission's policy against non-refundable issues not being applicable to the
proposed issue under the circumstances presented * * * Page 622

Declaration of registered holding company which is also a public-utility com-
pany for the issuance of additional shares of its par value common stock in
exchange for the common stock of non-affiliated public-utility company, permitted
to become effective, the Commission finding that the standards of Section
7(c)(1)(A) of the Public Utility Holding Company Act of 1935 are satisfied
and that no adverse findings need be made pursuant to Section 7(d)
thereof * • • Page 358
Assets Appropriate as Security for Bonds

Where registered holding company proposes to issue 25-year bonds secured by
common stock of subsidiaries which is junior to substantial amount of debt
and preferred stock of subsidiaries, held, such collateral is not of a type and
character appropriate under the circumstances in the public interest or for the
protection of investors * * * Page 728

Issue and sale by registered holding company of its own common stock in
exchange for common stock of newly created natural gas transportation com-
pany, permitted, the Commission finding, under Section 7 of the Public Utility
Holding Company Act of 1935, that the common stock of the registered holding
company has a par value and represents its sole voting security, thereby satis-
fying the provisions of Section 7(c)(1)(A) of such Act, and that no adverse
finding is required under Section 7(d) of such Act * * * Page 761
Exemption

Exemption of issue and sale by natural gas transportation company of its par
value common stock and of its assumption of first mortgage bonds of another

natural gas transportation company, granted, pursuant to the last clause of the
third sentence of Section 6(b) of the Public Utility Holding Company Act of
1935, the Commission not deeming it appropriate in the public interest or for the
protection of investors or consumers to impose any terms or conditions in con-
nection with granting such exemption * * * Page 761

EXTENSION OF CREDIT BY REGISTERED HOLDING COMPANY

Deposit of cash by registered holding company with a trust company for the
purpose of permitting its subsidiary to reduce its first mortgage bonds to a
principal amount not in excess of 60% of its total capitalization and surplus,
permitted, the Commission finding the standards of Section 12(b) of the Public
Utility Holding Company Act of 1935 and Rule 45 promulgated thereunder are
satisfied * * * Page 761

INTEGRATION OF HOLDING COMPANY SYSTEM

Where electric utility assets operated by a registered holding company system
are either physically interconnected or capable of physical interconnection
so that, under normal conditions, they may be economically operated as a
single interconnected and coordinated system and where, in other respects, such
assets satisfy the definition of an integrated public-utility system contained in
Section 2(a) (29) (A) of the Public Utility Holding Company Act of 1935, held,
such electric utility assets constitute a single integrated public utility system

* Page 193
Application of registered holding company which is also a public-utility com-
pany, pursuant to Section 10 of the Public Utility Holding Company Act of 1935,
for acquisition of voting securities of non-affiliated public utility company,
granted, the Commission finding that, although such acquisition would create a
complexity in the capital structure of the acquiring holding company system and
possibly an inequitable distribution of voting power by reason of the existence
of a publicly held minority stock interest in the acquired public-utility company,
contrary to the standards of Sections 10(b) (3) and 11(b) (2) of the Act, the
correction of the violation of such standards is mandatory under the standards
of the Act and a proceeding looking towards the correction thereof would be
instituted by the Commission unless within a reasonable period of time the
acquiring registered holding company itself files a plan for this purpose * * *
Page 358

Application of registered holding company which is also a public-utility
company, pursuant to Section 10 of the Public Utility Holding Company Act of
1935, for the acquisition of voting securities of a non-affiliated public-utility
company, granted, the Commission finding that the acquisition will serve the
public interest by tending towards the economical and efficient development of an
integrated public-utility system as required by Section 10(c) (2 ) of the Act * * *
Page 358

Where holding company, system which does not itself own full length of
transmission line connecting different parts of system, has the right to use the
section of such transmission lines owned by others, such lines having been
constructed by joint arrangement of applicant with other owners of the lines,
held, test of "integrated utility system” set forth in Section 2(a) (29) (A) of
the Public Utility Holding Company Act of 1935 satisfied insofar as it requires
that utility assets of such a system be interconnected or capable of physical
interconnection * Page 658

ISSUE AND SALE OF SECURITIES

Application for exemption, pursuant to Section 6(b) of the Public Utility
Holding Company Act of 1935, of issue and sale of securities (common stock
and installment notes) by newly organized non-utility subsidiary of registered
holding company to finance business of fractionating and marketing the heavier
hydrocarbons extracted from system's natural gas supply, granted, without the
imposition of any terms or conditions * • • Page 149
Issuance of Securities to Effect a Reorganization

Where registered holding company proposes to issue 25-year bonds and
advance proceeds to subsidiary for use in divesting gas properties of subsidiary
in compliance with Commission order under Section 11(b) (1), but subsidiary
is to return advance within period of 2 years and funds will be used by holding
company for investment in its subsidiaries, held, bonds not proposed to be
issued solely to effect reorganization and therefore not within exception to
Section 7(c)(1) provided by Section 7(c) (2) (A) * • • Page 728

Contention by registered holding company proposing to issue 25-year bonds
that such issue would be solely for the purpose of effecting a reorganization
within the meaning of Section 7(c)(2) (A) to the extent that it would offset
reduction in bonds of subsidiary in connection with divestment of subsidiary's
gas properties pursuant to Commission order under Section 11(b), rejected,
where amount of bonds previously permitted to be issued by holding company
as part of plan for compliance with such order exceeded the amount of such
reduction * * * Page 728
Issuance of Short Term Notes

Declaration of gas utility subsidiary of registered holding company under
Section 7 of the Public Utility Holding Company Act of 1935 respecting the
issuance of short term notes which issuer intends to retire within year by
permanent financing including common stock, permitted to become effective,
where standards of Section 7(c) are satisfied, and no adverse findings are
required under Section 7(a), and in particular, where inclusion of proposed
notes in the security structure of declarant and holding company system is not
found to violate standards of Section 7(d) (1) and where immediate issuance
of common stock as proposed by Commission's staff is not found so clearly more
appropriate than issuance of proposed notes as to require adverse finding under
Section 7(d) (3) that financing by issuance of such notes is not necessary or
appropriate to the economical and efficient operation of declarant's business
* * * Page 569
Necessity and Appropriateness of Bonds to Economical and Efficient Operation

of Holding Company

Where registered holding company proposes to issue 25-year bonds to permit
temporary advance to subsidiary and for investment of proceeds in subsidiaries
upon repayment of advance over 2-year period, held, issuance of bonds not
necessary or appropriate to economical and efficient operation of holding com-
pany within the meaning of Section 7(d)(3) since, to the extent that debt
securities of any type are permissible, the proposed temporary advance may
more appropriately be financed by short term loans than by the issuance of
25-year bonds, and financing for the purpose of investment in subsidiaries may
more appropriately be passed upon at the time the need for such funds arises
on the basis of facts existing at such time * * * Page 728

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