HomeMy WebLinkAbout25961.docxBEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF)
PACIFICORP FOR AUTHORITY TO ISSUE)CASE NO. PAC-S-95-1
UP TO $125,000,000 AGGREGATE PRINCIPAL)
AMOUNT OF ITS JUNIOR SUBORDINATED)
DEBENTURES IN EXCHANGE FOR SHARES)
OF ITS OUTSTANDING PREFERRED STOCK.)
)ORDER NO. 25961
)
)
On March 13, 1995, PacifiCorp (Company) filed its Application, pursuant to Chapter 9, Title 61, of the Idaho Code and Rule 14 of the Commission's Rules of Practice and Procedure for authority to issue up to $125,000,000 aggregate principal amount of its junior subordinated debentures (Debentures) in exchange for shares of its outstanding $1.98 Series No Par Serial Preferred Stock, Series 1992 (Series 1992 Preferred Stock).
The Commission, having considered the application and appended exhibits, the information in its files concerning the Company, the applicable law, and being fully advised in the premises, FINDS and CONCLUDES:
FINDINGS OF FACT
The Company was incorporated under Oregon law in August 1987 for the purpose of facilitating consummation of a merger with Utah Power & Light Company, a Utah corporation, and changing the state of incorporation of PacifiCorp from Maine to Oregon. The Company uses the assumed business names of Pacific Power & Light Company and Utah Power & Light Company within their respective service territories located in the states of California, Idaho, Montana, Oregon, Utah, Washington and Wyoming.
Approximately 99 percent of the Company's direct utility revenues in 1994 were derived from its electric operations and approximately 5 percent of those revenues were derived from its Idaho operations.
The Company proposes to offer to exchange (Exchange Offer) up to $125,000,000 aggregate principal amount of Debentures for shares of the Series 1992 Preferred Stock. Exchanges will be made on a basis of $25 principal amount of Debentures (the minimum permitted denomination) for each share of Series 1992 Preferred Stock validly tendered and accepted for exchange in the Exchange Offer.
The principal purpose of the Exchange Offer is to improve the Company's after-tax cash flow by replacing the Series 1992 Preferred Stock with the Debentures. The potential cash flow benefit to the Company arises because interest payable on the Debentures should be deductible by the Company for federal income tax purposes, while dividends payable on the Series 1992 Preferred Stock are not deductible.
The Debentures will have a 30-year maturity and will bear interest at an annual rate of not more than 8.92% from the first day following the expiration date of the Exchange Offer or from the most recent interest payment date to which interest has been paid or duly provided for. Interest is expected to be paid quarterly or monthly in arrears, provided that, so long as the Company shall not be in default in the payment of interest on the Debentures, the Company shall have the right, upon prior notice by public announcement given in accordance with NYSE rules at any time during the term of the Debentures, to extend the interest payment period from time to time for a period not exceeding 20 consecutive calendar quarters. The Debentures will be subordinated to all existing and future senior indebtedness of the Company (as defined).
Holders of the Debentures will also be entitled to interest at a rate of 7.92% per annum from the last date through which dividends have been paid on the Series 1992 Preferred Stock through the expiration date of the Exchange Offer, payable at the time of the first interest payment on the Debentures.
The Company will accept for exchange Series 1992 Preferred Stock validly tendered and not withdrawn prior to the latest date and time to which the Exchange Offer is extended. Tenders of Series 1992 Preferred Stock pursuant to the Exchange Offer may be withdrawn at any time prior to the expiration date and, unless accepted for exchange by the Company, may be withdrawn at any time after 40 business days after the date of the Exchange Offer.
The Company will expressly reserve the right to (i) extend, amend or modify the terms of the Exchange Offer in any manner and (ii) withdraw or terminate the Exchange Offer and not accept for exchange any Series 1992 Preferred Stock, at any time for any reason.
The estimated expenses of the Exchange Offer are expected to be as follows:
ESTIMATED EXPENSES
Regulatory agency fees$ 1,000
Dealer/manager fees1,500,000
Broker/dealer fees2,500,000
Information agent fees25,000
Depositary/exchange agent fees25,000
Company's counsel fees30,000
Printing and engraving fees40,000
Miscellaneous Expenses 29,000
TOTAL$4,150,000
The Debentures will replace the Series 1992 Preferred Stock tendered in the Exchange Offer, which had originally been issued in furtherance of utility purposes. The Company will receive no cash proceeds in the transaction.
The proposed Exchange Offer is a part of an overall plan to finance the cost of the Company's facilities taking into consideration prudent capital ratios, earnings coverage tests, and market uncertainties as to the relative merits of the various types of securities the Company could sell.
The Company has paid the fees required by I.C. §61-129.
CONCLUSIONS OF LAW
The Company is an electrical corporation within the definition of I.C.§61-119 and is a public utility within the definition of Idaho Code §61-129.
The Idaho Public Utilities Commission has jurisdiction over this application pursuant to the provisions of Idaho Code §61-901 et. seq. and the Application reasonably conforms to Section 14 of the Commission's Rules of Practice and Procedure.
The method of issuance is proper.
The general purposes for the issuance are lawful purposes under the Public Utility Law of the State of Idaho and are compatible with the public interest. However, this general approval of the general purposes of the issuance is neither a finding of fact nor a conclusion of law that any particular construction program of the Company which may be benefitted by the approval of this Application has been considered or approved by this Order, and this Order shall not be construed to that effect.
The issuance of an Order authorizing the proposed transaction does not constitute agency determination/approval of the type of financing or the related costs for ratemaking purposes, which determination the Commission expressly reserves until the appropriate proceeding.
The Application should be approved.
ORDER
IT IS THEREFORE ORDERED that the application of PacifiCorp for authority to issue up to $125,000,000 aggregate principal amount of its junior subordinated debentures (Debentures) in exchange for shares of its outstanding preferred stock, is granted.
IT IS FURTHER ORDERED that this authorization is without prejudice to the regulatory authority of this Commission with respect to rates, service, accounts, valuation, estimates or determination of costs, or any other matter which may come before this Commission pursuant to its jurisdiction and authority as provided by law.
IT IS FURTHER ORDERED that nothing in this Order and no provision of Chapter 9, Title 61, Idaho Code, or any act or deed done or performed in connection with this Order shall be construed to obligate the State of Idaho to pay or guarantee in any manner whatsoever any security authorized, issued, assumed, or guaranteed under the provisions of Chapter 9, Title 61, Idaho Code.
IT IS FURTHER ORDERED that PacifiCorp shall file the following as they become available:
a)The "Report of Securities Issued" required by 18 CFR 34.10.
b)A schedule with documentation showing that the security issuance utilized will be a low-cost option compared to other issues. This information can be provided simultaneously with the “Report of Securities Issued.”
c)Verified copies of any agreement entered into pursuant to this Order.
IT IS FURTHER ORDERED that issuance of this Order does not constitute acceptance of PacifiCorp exhibits or other material accompanying the Application for any purpose other than the issuance of this Order.
THIS IS A FINAL ORDER. Any person interested in this Order (or in issues finally decided by this Order) or in interlocutory Orders previously issued in this Case No. PAC-S-95-1 may petition for reconsideration within twenty-one (21) days of the service date of this Order with regard to any matter decided in this order or in interlocutory Orders previously issued in this Case No. PAC-S-95-1. Within seven (7) days after any person has petitioned for reconsideration, any other person may cross-petition for reconsideration in response to issues raised in the petition for reconsideration. See Idaho Code §61-626.
DONE by Order of the Idaho Public Utilities Commission at Boise, Idaho,
this day of April 1995.
RALPH NELSON, PRESIDENT
MARSHA H. SMITH, COMMISSIONER
DENNIS S. HANSEN, COMMISSIONER
ATTEST:
MYRNA J. WALTERS, SECRETARY
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