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Securities Issued and Sold for Cash to the Public and Financial Institutions by Active Registered Holding Companies and Their Subsidiaries—Fiscal Year 1971 (In Millions of Dollars)

Holding-company systems

Allegheny Power System, Inc.
Monongahela Power Co.

Potomac Edison Co.

West Penn Power Co.

American Electric Power Co., Inc.
Appalachian Power Co.

Indiana & Michigan Electric Co.

Ohio Power Co.

American Natural Gas Co.

Michigan Wisconsin Pipe Line Co.

Wisconsin Gas Company

Central & South West Corporation
Central Power & Light Co.

Columbia Gas System Inc., The
Consolidated Natural Gas Co.
Delmarva Power & Light Co.

Eastern Utilities Associates

Blackstone Valley Electric Co.

General Public Utilities Corp.

Jersey Central Power & Light Co.

Pennsylvania Electric Co.

Middle South Utilities, Inc.
Arkansas Power & Light Co.
Louisiana Power & Light Co.
Mississippi Power & Light Co.
National Fuel Gas Co.

New England Electric System
Massachusetts Electric Co.
Narragansett Electric Co.
New England Power Co.
Northeast Utilities

Connecticut Light & Power Co.

Ohio Edison Company

Southern Company, The

Alabama Power Company

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Georgia Power Company

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Gulf Power Company

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Statutory utility subsidiaries of Northeast Utilities and New England Electric System.

rate of 10-14 percent, which was sold pursuant to a rights offering to its common stockholders at principal amount. All of the common stock was issued and sold at competitive bidding except for 597,909 shares issued by Delmarva Power & Light Company, 3,800,000 shares issued by The Southern Company, and 3,000,000 shares issued by GPU. These shares were sold pursuant to rights offerings to common stockholders with the compensation to standby underwriters determined by competitive bidding except for GPU whose rights offering was not underwritten.

This unprecedented volume of financing was accompanied by continuing high interest and preferred dividend rates and the

preferred dividends. For the calendar year 1970, the 17 registered electric and gas holding-company systems earned their income deductions plus preferred dividend requirements an average 2.19 times (after taxes) as compared to 2.93 times in 1966 and 3.07 times in 1955.26

26 The ratios for 1966 and 1970 were computed from annual reports filed

with the Commission. The 1955 computation is for 16 holding-company systems cited in Hearings Before the Subcommittee of the Committee on Interstate and Foreign Commerce of the Senate, 84th Cong., 2nd Sess., S. 2643, p. 399 (1956).

PART VII

PARTICIPATION IN CORPORATE REORGANIZATIONS

The Commission's role under Chapter X of the Bankruptcy Act, which provides a procedure for reorganizing corporations in the United States district courts, differs from that under the various other statutes which it administers. The Commission does not initiate Chapter X proceedings or hold its own hearings, and it has no authority to determine any of the issues in such proceedings. The Commission participates in proceedings under Chapter X in order to provide independent, expert assistance to the courts, the participants, and investors in a highly complex area of corporate law and finance. It pays special attention to the interests of public security holders who may not otherwise be represented effectively.

Where the scheduled indebtedness of a debtor corporation exceeds $3 million, Section 172 of Chapter X requires the judge, before approving any plan of reorganization, to submit it to the Commission for its examination and report. If the indebtedness does not exceed $3 million, the judge may, if he deems it advisable to do so, submit the plan to the Commission before deciding whether to approve it. When the Commission files a report, copies or a summary must be sent to all security holders and creditors when they are asked to vote on the plan. The Commission has no authority to veto a plan of reorganization or to require its adoption.

The Commission has not considered it necessary or appropriate to participate in every Chapter X case. Apart from the excessive administrative burden, many of the cases involve only trade or bank creditors and few public investors. The Commission seeks to participate principally in those proceedings in which a substantial public investor interest is involved. However, the Commission may also participate because an unfair plan has been or is about to be proposed, public security holders are not represented adequately, the reorganization proceedings are being conducted in violation of important provisions of the Act, the facts indicate that the Commission can perform a useful service, or the judge requests the Commission's participation.

For purposes of carrying out its functions under Chapter X,

the Commission has divided the country into five geographic areas. The New York, Chicago, San Francisco and Seattle regional offices of the Commission each have responsibility for one of these areas. Supervision and review of the regional offices' Chapter X work is the responsibility of the Division of Corporate Regulation of the Commission, which, through its Branch of Reorganization, also serves as a field office for the fifth area.

SUMMARY OF ACTIVITIES

In the fiscal year 1971, the Commission entered its appearance in 19 new proceedings involving companies with aggregate stated assets of approximately $373.4 million and aggregate indebtedness of approximately $267.4 million. The corporations involved in these proceedings were engaged in a variety of businesses, including, among others, those manufacturing such diverse items as ice cream, furniture, education devices, soft drinks, data processing equipment and shoes, as well as such businesses as producing oil and gas, renting uniforms, refining beet sugar, providing computer services, leasing trucks, operating an insurance holding company, a school, nursing homes, automobile race tracks and helicopter and commercial airlines, and engaging in commercial finance and real estate development.

Including the new proceedings, the Commission was a party in a total of 114 reorganization proceedings during the year.1 The stated assets of the companies involved in these proceedings totaled approximately $1.4 billion and their indebtedness totaled approximately $1.1 billion. The proceedings were scattered among district courts in 36 states and the District of Columbia as follows: 12 in California; 11 in New York; 9 in Arizona; 7 in Pennsylvania; 6 in Texas; 5 each in Florida, Illinois, Indiana, and New Jersey; 4 each in Louisiana and North Carolina; 3 in Oklahoma; 2 each in Arkansas, Colorado, Hawaii, Kansas, Michigan, Nevada, Ohio, South Dakota, and Utah; 1 each in Connecticut, District of Columbia, Georgia, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, Montana, Missouri, North Dakota, Tennessee, Virginia, West Virginia and Wisconsin.

During the year, 13 proceedings were closed. As of the end of the fiscal year the Commission was a party in 101 reorganization proceedings.

1 Appendix Table 16 lists reorganization proceedings in which the Com

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