Finally, we are of the opinion that the capital income debentures, apart from their inadequacy as a substitute for the first mortgage bonds, are an unsound and deceptive type of security which should not be permitted to be issued. We are not convinced of the necessity for the issuance of this hybrid type of security, and believe that the first mortgage bondholders should be afforded the opportunity of passing upon a plan providing for a more appropriate capital structure with a more equitable allocation of securities to them.

Filed June 9, 1939, United States District Court for the Southern District of Ohio.

5 S. E. C.

Comments.-This is a consolidated balance sheet of The Griess-Pfleger Tanning Company and its three subsidiaries as at Mar. 31, 1939, and is based upon the condition as shown by the books of the various companies, after giving effect to the revaluation of certain assets and the adjustments contained in the proposed plan of reorganization. The amount of $510,909.82, shown as the value of the Waukegan Plant Buildings, is based upon the cost of the buildings, less depreciation at the rate of 2% per annum. The amount of $265,950.47, shown as the value of the Waukegan Plant Machinery and Equipment, is based upon the cost of the machinery and equipment, less depreciation at 63%% per annum, with a residual value of 10% on old machinery and equipment. No provision has been made on this balance sheet for reorganization expenses.

5 S. E. C.

[No. 768]

IN THE MATTER OF

MASSACHUSETTS UTILITIES ASSOCIATES

NEW ENGLAND POWER ASSOCIATION

File No. 46-132. Promulgated June 10, 1939

NEW ENGLAND GAS AND ELECTRIC ASSOCIATION

ELECTRIC ASSOCIATES, INC.

File No. 46-133. Promulgated June 10, 1939

ACQUISITION OF SECURITIES BY REGISTERED HOLDING COMPANY OR SUBSIDIARY.

Development of an Integrated Utility System.

Application, having been filed by a subsidiary holding company, pursuant to Section 10 of the Act for approval of the acquisition by the applicant of all the capital stock and certain indebtedness of a public utility company which serves territory contiguous to that of a subsidiary of applicant, in exchange for all of the capital stocks and certain indebtedness of two subsidiaries of applicant, and $210,438.80 in cash, approved, subject to certain conditions, the Commission finding that the acquisition will tend towards the economical and efficient development of an integrated public utility system and will not be detrimental to the carrying out of the provisions of Section 11 of the Act.

SALE OF PUBLIC UTILITY SECURITIES BY REGISTERED HOLDING COMPANY. Application having been filed by a registered holding company, pursuant to Rule U-12D-1 for approval of the sale of the securities of two utility companies, approved subject to certain conditions.

SALE OF PUBLIC UTILITY SECURITIES OR ASSETS TO ASSOCIATE COMPANIES OR AFFILIATES.

Application, having been filed by a subsidiary holding company, pursuant to Rule U-12F-1 promulgated under Section 12 of the Act, for approval of the sale of securities of two subsidiaries, approved, subject to certain conditions. ACQUISITION OF SECURITIES BY REGISTERED HOLDING COMPANY OR SUBSIDIARY.

Application, having been filed by a subsidiary of a registered holding company, pursuant to Section 10 of the Act for approval of the acquisition of the indebtedness of two public utility companies amounting to $190,000, together with $210,439 in cash, approved, subject to certain conditions.

FINDINGS AND OPINION OF THE COMMISSION

New England Power Association (hereinafter called "NEPA") and New England Gas and Electric Association (hereinafter called "NEGEA") are both registered holding companies. Massachusetts Utilities Associates (hereinafter called "MUA") is a subsidiary holding company of NEPA. Electric Associates, Inc. is subsidiary of NEGEA.

The above-entitled matter concerns the purchase by MUA of all the capital stock and certain indebtedness of Middlesex County Electric Company (hereinafter called "Middlesex"), a member of the NEGEA system, in exchange for all of the capital stocks and certain indebtedness of Marlborough-Hudson Gas Company (hereinafter called "Marlborough") and Milford Gas Light Company (hereinafter called "Milford"), present subsidiaries of MUA, and $210,438.80 in cash. That part of the transaction relating to the exchange of such capital stocks will take place between NEGEA and MUA; while that part of the transaction relating to the exchange of indebtedness and cash will take place between Electric Associates, Inc. and MUA.

The exchange above described is part of a proposed transaction between the NEPA and NEGEA systems which also involves the purchase by NEPA from NEGEA of voting trust certificates representing 47,400 common shares of MUA for $240,821.56 in cash, and the purchase by Massachusetts Power and Light Associates (hereinafter called "MPL") an intermediate holding company in the NEPA system, from NEGEA of 20,982 common shares of North Boston Lighting Properties (also an intermediate holding company in the NEPA system and a direct subsidiary of MPL) for the sum of $1,133,028 in cash.

In connection with such transaction the following applications have been filed:

MUA has filed an application pursuant to Section 10 of the Public Utility Holding Company Act of 1935 for approval of the acquisition of the securities of Middlesex.

NEPA has filed an application requesting approval of the sale of the securities of Marlborough and Milford if this Commission should deem this sale to involve a sale within the meaning of Section 12 (d) of the Act or Rule U-12D-1 promulgated thereunder. MUA has also filed an application requesting approval of such sale under Rule U-12F-1 if this Commission should deem the proposed exchange to involve a sale within the scope of that rule.

NEGEA has filed an application pursuant to Section 10 of the Act for approval of the acquisition of all the outstanding capital stock of Marlborough, and Milford from MUA. NEGEA has also filed an