The next step is the proposal by the Wisconsin Company to issue $1,104,600 par value of its common stock to the Minneapolis Company in full payment for and to retire and cancel the $1,500,000 principal amount of first mortgage 5 percent gold bonds dated December 1, 1904, and the payment by the Wisconsin Company of one-half of the accrued interest thereon to the date of settlement. The next transaction involves the Lumbermen's Company and the Navigation Company. There is located on the St. Croix River, a short distance above the St. Croix Falls hydro project, a certain dam and reservoir commonly referred to as the "Nevers Dam." Like the St. Croix Falls hydro project, the ownership of the Nevers Dam is divided at the thread of the stream. The Lumbermen's Company owns that portion on the Wisconsin side and the Navigation Company owns that portion on the Minnesota side. The Lumbermen's Company operates this development and regulates and coordinates the stream flow with the operation of the St. Croix Falls hydro project. The Lumbermen's and Navigation Companies have outstanding a joint issue of $100,000 of first mortgage 5 percent gold bonds dated December 1, 1904, which matured on December 1, 1934, secured by a mortgage on the Nevers Dam property. Each company has paid one-half of the interest and recorded one-half of the obligation in its accounts. The bonds were not paid at maturity but interest on the indebtedness has continued to be paid at the 5 percent rate. The Lumbermen's Company has $120,300 of common stock outstanding and is indebted to the Minneapolis Company on open account and by a demand note in the sum of $107,715.32. The Navigation Company has $100,000 of common stock outstanding and has a receivable from the Minneapolis Company on open account in the sum of $65,119.25 which is proposed to be reduced to $63,768.88 prior to the acquisition of said account by the Wisconsin Company. The Wisconsin Company proposes to acquire from the Minneapolis Company all of the outstanding common stocks and bonds of the Lumbermen's and Navigation Companies and to assume the payment of their open accounts as shown in the following table I: The Wisconsin Company proposes to pay for the securities and open account indebtedness listed in table I, above, by issuing to the Minneapolis Company $277,000 par value of its common stock. The Lumbermen's and Navigation Companies will each pay one-half of the interest charge on the joint bond issue to the date when this transaction is effected. The applicant alleges that this settlement of $277,000 payable in its common stock is equivalent to the original cost to the Lumbermen's and Navigation Companies of the physical property constituting said Nevers Dam project after deducting depreciation reserves and net current liabilities. After the completion of the acquisition of the securities and obligations, as described in the preceding paragraph, the Wisconsin Company proposes to cause the Lumbermen's and Navigation Companies to convey to it all of their property and assets in consideration of the surrender and cancelation of said securities and obligations and the assumption of the current liabilities of said companies. The Wisconsin Company then proposes to record said property on its books at a cost of $282,225.91 and to record the net liabilities assumed at $5,225.91, thereby establishing the common stock equity of $277,000. Upon completion of all of the above transactions the applicant will hold title to and will own and operate the entire St. Croix Falls hydro project and the Nevers Dam. The transactions will be financed entirely by common stock in the aggregate amount of $1,652,600 in addition to the $500,000 of common stock now outstanding, or a total of $2,152,600. On March 21, 1939 we issued our certificate authorizing the Wisconsin Company to issue $750,000 par value of common stock for the purpose of paying and retiring $750,000 of the bonds issued jointly by the Wisconsin and Minnesota Companies coincidentally with the payment by the Minnesota Company of an equal amount of said bonds with its capital stock and the release of the applicant from all obligations under said joint mortgage. Because the present plan, as set forth in the pending application, does not contemplate the coincident payment by the Minnesota Company of an equal amount of bonds with its capital stock but rather the assumption and payment by the Wisconsin Company of the entire $1,500,000 of bonds, the applicant asks that the authority granted by the certificate dated March 21, 1939, in docket 2-SB-120, be amended so as to authorize such stock to be issued to complete the accomplishment of the purposes set forth in the pending proceeding. Inasmuch as the purposes to be accomplished by the applicant, in the manner set forth in the pending application, are similar to those set forth in our certificate of March 21, 1939 but differ only as to the form thereof, we see no objection to amending the certificate in accordance with that portion of the prayer of the pending application. Coincident with the filing of its application in docket 2-SB-137, the Wisconsin Company and Western Wisconsin Power Company filed a separate application to merge under the provisions of section 196.80, Statutes (2-U-1504). The disposition of this case is made by separate order of the commission but is referred to here since the statements that follow reflect the results of this merger. Appropriate reference to these data will be made in our decision in 2-U-1504. With the application in docket 2-SB-137 there was filed the actual and pro forma balance sheet of the Wisconsin Company as of June 30, 1939 showing the net effect of the transactions proposed to be accomplished as outlined in the two applications. This is shown below as table II: Table II Actual and Pro Forma Balance Sheets of In addition to the actual and pro forma balance sheets as of June 30, 1939, the applicant submitted journal entries showing the manner in which the proposed transactions will affect the accounts of the Wisconsin Company. These entries are shown below in table III: 15,217.35 15,217.35 17.95 162.40 190.81 713.69 162.40 713.69 21.63 611.29 $3,022,095.95 $117,319.92 $3,139,415.87 $ 500,000.00 $1,652,600.00 $2,152,600.00 169.29 3,472.67 7,057.23 7,057.23 622,991.52 (622,991.52) |