19981211Decison Memo.doc

DECISION MEMORANDUM

TO: COMMISSIONER HANSEN
COMMISSIONER NELSON
COMMISSIONER SMITH
MYRNA WALTERS
TONYA CLARK
RITA SCOTT
DON HOWELL
STEPHANIE MILLER
JOE CUSICK
WAYNE HART
TERRI CARLOCK
DAVID SCOTT
WORKING FILE

FROM: BRAD PURDY

DATE: DECEMBER 11, 1998

RE: CASE NO. CTC-T-98-5; APPLICATION OF CITIZENS UTILITY COMPANY FOR TRANSFER OF OWNERSHIP CONTROL

On December 7, 1998, the Citizens Utility Company (CUC) filed an Application for transfer of control with respect to its telecommunications business. CUC is a diversified, publicly held company providing telecommunications, electric, gas, water and waste water services throughout the country. CUC provides these services through many subsidiaries divided into two primary businesses: (1) the public services sector including all of CUCs utility businesses which provide electric, gas, water and waste water services, and (2) the communications sector including all of CUCs communications-related businesses including local exchange, long distance and competitive communications subsidiaries.
Through this filing, CUC and its subsidiaries request Commission approval of the separation of the CUC into two separate, independent companies and the transfer by CUC of all communications stock and ownership control to a new holding company to be known as Citizens Newco Company.

CUC contends that the only effect of its proposal will be to transfer control over the communications sectors subsidiaries from CUC to a new entity to which the capital stock can be transferred to complete the split. After the separation, CUC will remain the holding company for the utility businesses. Citizens Newco Company is a newly created holding company to which CUC will transfer all outstanding stock in its communications businesses. CUC states that it is not anticipated that there will be any changes in the day to day operations of the local communications subsidiaries as a result of the pro forma transfer of control from one holding company to another. The proposed transaction, CUC purports, does not involve a purchase, sale or transfer of assets or a merger or acquisition. It is simply dividing the two business sectors of one company into two separate companies.
In summary, CUC proposes the following: Citizens Newco Company will split its capital stock; CUC will transfer all its capital stock and control of CUCs wholly-owned two Idaho Communications Subsidiaries and CUCs ownership of 83% of the common stock of Electric Lightwave, Inc. to Citizens Newco, and CUC will transfer the capital stock of Citizens Newco to CUCs shareholders.
CUC has requested that its Application be processed under Modified Procedure without hearings. The Commission Staff agrees that this matter would best be processed under Modified Procedure.
Commission Decision
Does the Commission wish to issue a Notice of Modified Procedure soliciting comments in response to CUCs Application?

Brad Purdy

bp:M:CTC-T-98-5

DECISION MEMORANDUM 1