[No. 1606] IN THE MATTER OF NORTH AMERICAN LIGHT & POWER COMPANY NORTH AMERICAN LIGHT & POWER COMPANY and THE NORTH AMERICAN COMPANY THE NORTH AMERICAN COMPANY, ET AL. File Nos. 54-50, 59-39, and 59-10. Promulgated July 31, 1942 (Public Utility Holding Company Act of 1935-Sections 10, 11, and 12) SIMPLIFICATION OF HOLDING COMPANY SYSTEM. Acquisition and Disposition of Interest by Registered Holding Company or Subsidiary. Application by a registered holding company and its subsidiaries whereby a nonutility subsidiary engaged in the production of natural gas proposes to sell all its property, except cash, for a cash consideration to a public utility subsidiary of such holding company, to thereafter transfer all of its assets to said holding company whereupon said nonutility subsidiary will be dissolved, approved, the Commission finding that the transaction is necessary to effectuate the provisions of Section 11 (b) of the Act and fair and equitable to the persons affected thereby, and not making any adverse findings under Sections 10 (b) (1), 10 (c) (1), and 12 (f) and Rule U-42 thereunder. Acquisition and Disposition of Securities by Registered Holding Company and Subsidiary. Acquisition and disposition of securities of utility company by registered holding company and its subsidiary incidental to consummation of plan under Section 11 (e) of the Act, approved, the Commission finding that the transaction is necessary to effectuate the provisions of Section 11 (b), is fair and equitable to the persons affected thereby and has the tendency required by Section 10 (c) (2); and not making any adverse findings under Sections 12 (d) and 12 (f), Rules U-43 and U-44 thereunder, or under Sections 10 (b) and 10 (c). MEMORANDUM FINDINGS, OPINION AND ORDER OF THE COMMISSION (Approving Applications No. 3 and No. 4) Pursuant to our order of December 30, 1941 in the matter entitled North American Light & Power Company, et al., 10 S. E. C. 924 (1941), requiring the liquidation of North American Light & Power Company (hereinafter referred to as "Light & Power") and the ter 11 S. E. C.-35-3708 mination of its existence, Light & Power, a registered holding company, and its wholly owned subsidiary, McPherson Oil & Gas Development Company (hereinafter referred to as "McPherson"), a nonutility company engaged in the production of natural gas, and Kansas Power and Light Company (hereinafter referred to as "Kansas"), a public utility company and a subsidiary of Light & Power, have jointly filed Application No. 3 and an amendment thereto, under Sections 10, 11 and 12 (f) of the Public Utility Holding Company Act of 1935 and Rule U-42 thereunder. Said filing requests our approval of (a) the sale of McPherson to Kansas of all of its property, except cash, for a cash consideration of $38,394.83 less depletion on account of natural gas sold after March 31, 1942 to the date of transfer of said property at the rate of 32 cents per mcf., (b) the transfer to Light & Power of all the assets of McPherson after consummation of said sale, and (c) the dissolution of McPherson. In the past all of the natural gas produced by McPherson has been sold to Kansas and the properties of the former are located in the service area of, and are operated by, the latter company. Light & Power and Kansas have also jointly filed Application No. 4 and an amendment thereto, under Sections 10, 11 and 12 of said Act and Rules U-42 and U-43 thereunder, requesting our approval of the sale by Light & Power to Kansas of 1,250 shares, or 50 percent of the outstanding, no par capital stock (stated value $68 per share) of The Blue River Power Company (hereinafter referred to as "Blue River") for a cash consideration of $30,500. All the shares of Blue River not owned by Light & Power are owned by a nonaffiliated interest. Blue River is an electric utility company owning hydroelectric generating facilities located in the area served by Kansas, and the latter purchases Blue River's entire output of electrical energy. A public hearing has been held on said applications after appr priate notice. Having examined the record, we find: (1) With respect to Application No. 3 that no adverse finding m necessary under Sections 10 (b) (1), 10 (c) (1) and 12 (f) e Act and Rule U-42 thereunder. (2) With respect to Application No. 4 that no adverse find necessary under Sections 12 (d) and 12 (f) of the Act, and U-44 thereunder, or under Sections 10 (b) and 10 (c) í Act and that the transaction therein proposed has t required by Section 10 (c) (2) of said Act; and (3) The transactions proposed in both application sary to effectuate the provisions of Section 11 (b) o . our order of December 30, 1941 and are fair and equi.. sons affected thereby. It is therefore ordered that the transaction proposed in Applica tion No. 3, as amended, be, and it hereby is, approved as submitted, subject, however, to the provisions of Rule U-24. It is further ordered that the transaction proposed in Applica tion No. 4, as amended, be, and it hereby is, approved as submitted, subject, however, to the provisions of Rule U-24. It is further ordered that North American Light & Power Company be, and it hereby is, directed to carry out with due diligence and expedition the transactions proposed in Applications No. 3 and No. 4, as amended. By the Commission: (Chairman Purcell and Commissioners Pike and O'Brien) Commissioners Healy and Burke being absent and not participating. 11 S. E. C. [No. 1607] IN THE MATTER OF JOHN H. RAUSCHER, W. D. COURTRIGHT, EARL W. HUNT- File No. 52-17. Promulgated July 31, 1942 REPORT OF THE COMMISSION ON A PLAN OF REORGANIZATION This is a report of the Commission on a plan of reorganization for Northwest Cities Gas Company (hereinafter referred to as "Northwest"). The report has been prepared under the provisions of the Public Utility Holding Company Act of 1935 to assist bondholders in determining whether to vote for or against the plan. The plan was submitted to us by John H. Rauscher, W. D. Courtright, Earl W. Huntley, Paul C. Harper and Frederick T. Sutton, as a "Bondholders' Advisory Committee" (hereinafter referred to as "Committee") for Northwest. Proceedings for the reorganization of Northwest under the Bankruptcy Act have taken place in the District Court of the United States for the Eastern District of Washington, Southern Division. The plan has been approved by the District Court, by the State Commissions of Oregon and Washington, and by this Commission. A copy of our findings and opinion approving the plan (See John H. Rauscher, et al., 11 S. E. C. 510 (1942)), which sets forth in greater detail our analysis of the plan, will be furnished without charge upon request addressed to the Secretary, Securities and Exchange Commission, 18th and Locust Streets, Philadelphia 3, Pa. The Bankruptcy Act requires that before the plan can become effective it must be accepted in writing by the holders of two-thirds of the first mortgage bonds, who have filed individual proofs of claim which have been allowed by the District Court. The plan, if confirmed by the District Court, would then be binding on all security holders. DESCRIPTION OF COMPANY Northwest is a Delaware corporation, having its principal business office in Walla Walla, in the State of Washington. The company owns and operates gas manufacturing plants and distribution systems in Walla Walla, Yakima and Clarkston in the State of Washington, in Astoria, Pendleton and Eugene in the State of Oregon; and in Lewiston in the State of Idaho. It also distributes manufactured gas in Springfield, Oreg., from its Eugene plant, in Asotin County, Wash., from the Clarkston plant, and in Yakima County, Wash., from the Yakima plant. The capital structure of the company and the holdings of its securities by its parent, Lone Star Gas Corporation, (hereinafter referred to as "Lone Star") are shown in the following table: First mortgage 6% gold bonds due July 1, 1949. Unpaid interest on above to Dec. 31, 1941. 6% income notes----- Open account____ Common stock, 100,000 shares no par--- Capital surplus arising from revaluation of assets. Earned surplus (deficit) as of Dec. 31, 1941. @ $1, 275, 000 344, 250 1,742,500 b 83, 486 b 100,000 653, 417 (936, 589) • $206,500 principal amount owned by Lone Star and balance by public. All held by Lone Star. 3,262, 064 It will be observed from the foregoing table that Lone Star holds all of the outstanding stock and all of the outstanding debt junior to the first mortgage bonds and $206,500 principal amount of first mortgage bonds. Thus, the only securities held by the public consist of $1,068,500 principal amount of first mortgage bonds, being about 84 percent of the total outstanding. Interest was last paid on the first mortgage bonds on July 1, 1937, and as of December 31, 1941, the accrued and unpaid interest thereon amounted to $344,250. SUMMARY OF PLAN Under the plan, only holders of first mortgage bonds are to be permitted to participate in the reorganized company; the debt junior thereto and the stock are to be canceled without issuance of any new securities or other consideration with respect thereto. The public holders of the first mortgage bonds will receive 10 shares of new common stock with a par value of $5 per share for each $1,000 bond and interest arrearages thereon. Lone Star is to sell to the company its holdings of first mortgage bonds for the sum of $5,000 in cash instead of receiving new common stock. This is all Lone Star is to receive under the plan. Thus, upon consummation of the plan, the security structure of the reorganized company will consist of 10,685 shares of common stock, having an aggregate par value of $53,425. The plan provides for an initial board of directors consisting of the following six persons: |