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Filings Under the Public Utility Holding Company Act of 1935, as Amended (“Act”)

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Start Preamble April 6, 2001.

Notice is hereby given that the following filing(s) has/have been made with the Commission pursuant to provisions of the Act and rules promulgated under the Act. All interested persons are referred to the application(s) and/or declaration(s) for complete statements of the proposed transaction(s) summarized below. The application(s) and/or declaration(s) and any amendment(s) is/are available for public inspection through the Commission's Branch of Public Reference.

Interested persons wishing to comment or request a hearing on the application(s) and/or declaration(s) should submit their views in writing by May 1, 2001, to the Secretary, Securities and Exchange Commission, Washington, D.C. 20549-0609, and serve a copy on the relevant applicant(s) and/or declarant(s) at the address(es) specified below. Proof of service (by affidavit or, in the case of any attorney at law, by certificate) should be filed with the request. Any request for hearing should identify specifically the issues of facts or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in the matter. After May 1, 2001, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective.

GPU, Inc., et al. (70-7926)

GPU, Inc., (“GPU”), 300 Madison Avenue, Morristown, New Jersey 07962, a registered holding company, and its electric public utility subsidiaries, Jersey Central Power & Light Company (“JCP&L”), Metropolitan Edison Company (“Met-Ed”), and Pennsylvania Electric Company (“Penelec”), (collectively, “GPU Subsidiaries” or together with GPU, “Applicants”), each of 2800 Pottsville Pike, Reading, Pennsylvania 19640 have filed with this Commission a post-effective amendment under sections 6, 7, 9(a), 10 and 12(b) of the Act and rules 45 and 54 under the Act, to their declaration previously filed under the Act.

By orders dated December 15, 2000 (Holding Company Act Release (“HCAR”) No. 27302), June 22, 1999 (HCAR No. 27041), December 22, 1997 (HCAR No. 26801), and July 17, 1996 (HCAR No. 26544) (“Prior Orders”), the Commission, among other things, authorized through December 31, 2003 (“Authorization Period”): (1) the Applicants to issue, sell and renew from time to time their respective unsecured promissory notes, with maturity dates not more than nine months after issuance, to various commercial banks under loan participation arrangements and lines of credit (“Lines of Credit”); (2) the GPU Subsidiaries to issue and sell from time to time their unsecured promissory notes as commercial paper (“Commercial Paper”); (3) the Applicants to issue, sell and renew from time unsecured promissory notes to lenders other than commercial banks, insurance companies or similar institutions (“Other Short-Term Debt”) (borrowings under Lines of Credit, Commercial Paper and Other Short-Term Debt are collectively referred to as “Short-Term Borrowings”); (4) the Applicants to issue and sell from time to time unsecured promissory notes under an amended and restated credit agreement (“Credit Agreement”) in an aggregate amount of up to $250 million; and (5) GPU to issue and sell from time to time Commercial Paper in aggregate amount of up to $100 million. The authorized amounts of Short-Term Borrowings that may be outstanding at any one time for each Applicants are as follows: GPU, up to $250 million; JCP&L, up to the limitation on short-term indebtedness contained in its charter—$266 million as of December 31, 2000; Met-Ed, up to $150 million; and Penelec, up to $150 million (collectively, “Authorized Amounts”).

Applicants propose that the GPU Subsidiaries issue, sell and renew Other Short-Term Debt to GPU, in addition to Start Printed Page 19251the lenders authorized in the Prior Orders, from time to time through the Authorization Period. The Authorized Amounts would remain unchanged. Applicants state that the GPU Subsidiaries' first mortgage bond indentures, in general, prohibit the GPU Subsidiaries' from paying common stock dividends except to the extent they have credited amounts to earned surplus—i.e., retained earnings. Applicants state that Met-ed and Penelec currently have only limited amounts of retained earnings from which they may declare and pay common stock dividends to GPU as a result of this prohibition. Accordingly, Applicants stat that in order to provide the GPU Subsidiaries with an alternative source to fund temporary cash flow requirements, GPU would intend to make short-term loans to the GPU Subsidiaries from time to time subject to the Authorized Amounts. Proceeds from these loans will be used by the GPU Subsidiaries for general corporate purposes, but will not be used for the payments of dividends to GPU. Applicants state that the interest that the GPU Subsidiaries pay on the borrowings would not exceed GPU's own average cost of short-term bank borrowing during the period when the loan is outstanding.

In addition, the GPU Subsidiaries seek authority to secure borrowings made from time to time under the Lines of Credit, Other Short-Term Debt and the Credit Agreement. Under “provider of last resort” obligations of the New Jersey and Pennsylvania electric utility restructuring legislation, the GPU Subsidiaries are required to supply electricity to consumers who do not receive electricity from an alternative generation supplier. Applicants state that given the GPU Subsidiaries' obligations to offer “provider of last resort” supply to retail customers under their respective state restructuring orders, which establish retail rate caps, and the recent financial difficulties encountered by the California electric utilities, GPU is experiencing a significant tightening of its commercial bank and other credit sources. The Credit Agreement expires on May 6, 2001. As a result, Applicants are currently negotiating with the agent banks, The Chase Manhattan Bank and Citibank, N.A. (“Agent Banks”), under the Credit Agreement the possible terms and conditions of a renewal or extension of the Credit Agreement. Applicants state that the Agent Banks have advised GPU that it will be necessary for the GPU Subsidiaries to secure their respective future borrowings under the Credit Agreement (for example, by a pledge of Senior Notes and/or First Mortgage Bonds) in connection with any renewal or extension of its Credit Agreement. Applicants state that the GPU Subsidiaries would not however, secure the borrowings with assets, the disposition of which is subject to Commission approval under the Act, without prior Commission authorization.

Applicants also state that the Agent Banks under the Credit Agreement have advised GPU that it will be necessary to increase the level of certain fees and applicable margins used in the determination of interest rates upon borrowings in connection with any such renewal or extension. Applicants state that the applicable margin and the facility fee will be based upon the level corresponding to the relevant borrower's debt rating at the time of determination. As used in this notice, the term “Debt Rating” means, in GPU's case, the lower of the ratings issued by Standard & Poor's Corporation (“S&P”) and Moody's Investors Service, Inc. (“Moody's”) in respect of GPU's senior unsecured non-credit enhanced long-term debt and, in the case of each GPU Subsidiary, the lower of the ratings issued by S&P and Moody's in respect of each of the GPU Subsidiary's senior secured long-term debt. Also, as used in this notice, “D&P” means Duff & Phelps, Inc.

Notes issued under the current terms of the Credit Agreement have corresponding applicable margins used in the determination of interest rates as follows:

Level 1Level 2Level 3Level 4Level 5Level 6
S&PA− or betterBBB+BBBBBB−BB+BB or below*.
Moody'sA3 or betterBaa1Baa2Baa3Ba1Ba or below*.
D&PA− or betterBBB+BBBBBB−BB+BB or below*.
Basis Points Per Annum
Eurodollar Rate25.00 b.p.30.00 b.p.32.50 b.p.37.50 b.p.62.50 b.p.125.00 b.p.
Facility Fee10.00 b.p.12.50 b.p.15.00 b.p.20.00 b.p.37.50 b.p.50.00 b.p.
 *Or unrated.

The new fees and applicable margins used in the determination of interest rates will not be in excess of the following:

Level 1Level 2Level 3Level 4Level 5Level 6
S&PA or betterA-BBB+BBBBBB-BB+ or below *
Moody's Debt RatingA2 or betterA3Baa1Baa2Baa3Ba1 or below *
Applicable Eurodollar Rate46.50 basis points
Margin * *(“b.p.”)62.50 b.p.72.50 b.p.82.50 b.p.115.00 b.p.195.00 b.p.
Facility Fee18.50 b.p.20.00 b.p.22.50 b.p.25.00 b.p.30.00 b.p.50.00 b.p.
** The applicable margin for base rate advances will at all times be 100 basis points below the corresponding applicable margin for eurodollar rate advances (but will not be negative).

The co-agents under the Credit Agreement will each receive an agreement fee not in excess of $500,000 and each participating lender will receive an upfront fee not in excess of 22.5 basis points.

Applicants also propose to increase the aggregate principal amount of promissory notes that they may issue, sell and renew under the Credit Agreement to $500 million. In no event, however, would the aggregate outstanding amount of short-term debt issued by any Applicant at any time Start Printed Page 19252exceed its Authorized Amount through the Authorization Period.

Start Signature

For the Commission, by the Division of Investment Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

[FR Doc. 01-9145 Filed 4-12-01; 8:45 am]