IN THE MATTER OF AMERICAN & FOREIGN POWER COMPANY INC. ELECTRIC BOND AND SHARE COMPANY AMERICAN POWER & LIGHT COMPANY PACIFIC POWER & LIGHT COMPANY NATIONAL POWER & LIGHT COMPANY File Nos. 54-111, 59-12. Promulgated November 4, 1947. (Public Utility Holding Company Act of 1935) SIMPLIFICATION OF HOLDING COMPANY SYSTEM Plan Under Section 11 (e) — Necessity Plan filed by registered holding company pursuant to Section 11 (e) of the Public Utility Holding Company Act of 1935 held, necessary to effectuate the provisions of Section 11 (b) (2) of the Act, the Commission finding that the corporate structure of the company is unduly complicated and that voting power is inequitably distributed among its security holders. Plan Under Section 11 (e) Fairness Plan filed by registered holding company pursuant to Section 11 (e) of the Public Utility Holding Company Act of 1935 providing for reorganization whereby the existing corporate structure, consisting of two classes of debt securities, three series of preferred stock, common stock, and option warrants to purchase common stock, is to be recapitalized by the issuance and abstitution of two classes of debt securities and common stock, whereby existing publicly held debentures are to be retired by use of company cash and the proceeds of the sale of new debentures, whereby new debentures and common stock are to be allocated to all other existing security holders, and whereby allocations purport to provide for settlement and discharge of all sther claims asserted, held disapproved, the Commission finding that all classes of security holders would not receive the fair and equitable equivalent of the rights surrendered by them; but further held that such plan would be approved if the plan were amended to provide for specified changes in allocations among certain classes of stockholders. 212868-53-vol. 27-2 APPEARANCES: James L. Boone, Edwin D. Ford, Jr., and N. H. Powell of Reid & Priest, New York, N. Y., and Adrian L. Foley of White & Case, New York, N. Y., for American & Foreign Power Company, Inc. John F. MacLane and Benjamin C. Milner, of Simpson Thacher & Bartlett, New York, N. Y., for Electric Bond and Share Company. M'Cready Sykes and Herbert H. Klein of Stewart & Shearer, New York, N. Y., for Theodore V. D. Berdell and George C. Wintringer, Protective Committee for Holders of $7 and $6 Preferred Stock of American & Foreign Power Company, Inc. Percival E. Jackson, Theodore N. Tarlau and Joseph J. Bryer, New York, N. Y., John Vanneck, et al., holders of $6 Preferred Stock of American & Foreign Power Company, Inc. Albert J. Fleischmann, Baltimore, Md., and Claude L. Gonnet of Frank & Gonnet, New York, N. Y., for Norman Johnson Group of holders of $7 Second Preferred Stock of American & Foreign Power Company, Inc. Robert Bernstein, New York, N. Y., for Samuel J. Levinson, holder of $7 Second Preferred Stock of American & Foreign Power Company, Inc., and Weinstein & Levinson, New York, N. Y., appearing specially for Harriet E. Weinstein, holder of $7 Second Preferred Stock. Howard A. Golieb and Abraham M. Buchman of Daru, Vischi & Winter, New York, N. Y., for certain holders of $7 Second Preferred Stock of American & Foreign Power Company, Inc. Samuel Okin, New York, N. Y., pro se, common stockholder of Electric Bond and Share Company. Charles H. Kinnane and Emanuel Freiberg for the Public Utilities Division of the Commission. FINDINGS AND OPINION OF THE COMMISSION American & Foreign Power Company, Inc. ("Foreign Power"), a registered holding company, has filed an application, joined in by its parent, Electric Bond and Share Company ("Bond and Share"), also a registered holding company, requesting approval of an Amended Plan of reorganization of Foreign Power filed pursuant to Section 11 (e) of the Public Utility Holding Company Act of 1935 ("the Act"). The plan now before us is an amendment to a prior plan of reorganization of Foreign Power dated October 25, 1944. The stated purposes of the Amended Plan are (1) the simplification of the capital structure of Foreign Power; (2) the fair and equitable distribution of voting power among the security holders of Foreign Power; and (3) "the settlement and discharge of various claims and counterclaims asserted among Bond and Share, Foreign Power and their respective security holders." The proceedings on the application to approve the Amended Plan were consolidated with pending proceedings instituted by the Commission against Bond and Share and Foreign Power under Section 11 (b) (2) of the Act, and with proceedings on the original plan of reorganization. After appropriate notice, public hearings were held with respect to the provisions of the Amended Plan and all interested persons were given an opportunity to be heard. Various security holders of Foreign Power and of Bond and Share and a Preferred Stockholders Committee for the $6 and $7 Preferred Stock of Foreign Power appeared, expressed their views, introduced evidence, and examined witnesses. Briefs have been filed on behalf of Foreign Power, Bond and Share, the "Protective Committee of $6 and $7 Preferred Stockholders," a group of $6 preferred stockholders, the Norman Johnson Group (a group of public stockholders of $7 second preferred stock of Foreign Power), another group of second preferred stockholders, and an individual second preferred stockholder." The matter was also the subject of extensive oral argument before us. DESCRIPTION OF FOREIGN POWER Foreign Power, through direct or indirect ownership of securities, controls a large number of electric and gas utility companies operating in Cuba, Mexico, nine Central and South American countries, China and India. In addition, companies controlled by Foreign Power are engaged in the transportation, telephone, water and ice businesses in Latin America. Since January 31, 1943, the servicing of the subsidiaries has been conducted by Foreign Power through the medium of Ebasco International Corporation, a wholly owned subsidiary of Foreign Power. Appendix I, attached hereto, is a corporate chart of the Foreign Power system as of December 31, 1946, showing the interrelationship and capitalization of the system companies and showing the division of ownership of securities among the public, Foreign Power and Bond and Share. Appendix II shows the principal communities and estimated population served in the various countries in which the system operates and the classes of services rendered in the year 1946. Appendix III contains data concerning the physical plant and operations of the system for the years 1945 and 1946. The operating revenues of the system by countries, excepting China,1 for the years 1945 and 1946 are shown in Table I. Of the total operating revenues shown in Table I, the amounts derived from the various classes of services rendered for the years 1945 and 1946 are shown in Table II. 1 The amounts and percentages shown in Tables I and II are exclusive of the operation of the system's properties in Shanghai, China, which properties were recovered from the Japanese In the latter part of 1945. Because of the unsettled economic conditions which prevail in Shanghai and the continuing instability of the Chinese currency, the company has not consolidated the financial and operating reports of the China subsidiaries with the balance of the Foreign Power system and information is not presently available in the same form as shown for the other companies in Tables I and II. |