APPENDIX B MIDDLE SOUTH UTILITIES, INC. AND SUBSIDIARIES Consolidating statement of income, twelve months ended December 31, 1952 IN THE MATTER of PHILADELPHIA COMPANY DUQUESNE LIGHT COMPANY File No. 54-204. Promulgated March 23, 1953. (Public Utility Holding Company Act of 1935-Section 11 (e)) SIMPLIFICATION OF HOLDING COMPANY SYSTEM Plan Under Section 11 (e) Necessity-Fairness and Equity Plan filed under Section 11 (e) of the Act by registered holding company ordered by Commission to dissolve and by its public utility subsidiary providing for the sale by the holding company of an office building property pursuant to competitive bidding with the simultaneous lease of the property to the public utility subsidiary, approved, the Commission finding the plan to be an appropriate step in compliance with the liquidation order and therefore necessary to effectuate the provisions of Section 11 (b) and the terms of the sale and lease not unreasonable and therefore fair and equitable to the security holders of the holding company and its public utility subsidiary. SALE BY REGISTERED HOLDING COMPANY OF NON-UTILITY ASSETS Maintenance of Competitive Conditions Plan filed under Section 11 (e) of the Act by registered holding company ordered by Commission to dissolve and by its public utility subsidiary providing for the sale by the holding company of an office building property pursuant to competitive bidding with the simultaneous lease of that property to the public utility subsidiary, held, that, although the procedure would have been improved by more definite written specifications, under the circumstances there was sufficient maintenance of competitive conditions to satisfy the statutory requirements, the Commission noting that the application of a competitive bidding procedure to a sale-lease transaction of this kind was novel, competition had been invited in good faith, and other criteria apart from the judgment of the market as expressed in the bidding established that the terms of the offer accepted were not unreasonable. APPEARANCES: Paul D. Miller and Samuel 8. Jennings of Mudge, Stern, Williams & Tucker, and Henry G. Wasson, Jr., for Philadelphia Company and Duquesne Light Company. John B. Dawson of Wood, King & Dawson, for Norman Barnes, Barnes Investing Corporation and Thomas S. Christo. Leo M. Mittelman, for Common Stockholders Committee of Standard Gas and Electric Company. Harold Weinstock, for the Division of Public Utilities of the Commission. 35 S. E. C.-35-11766 FINDINGS AND OPINION OF THE COMMISSION Philadelphia Company ("Philadelphia"), a registered holding company, and Duquesne Light Company ("Duquesne"), a public utility subsidiary of Philadelphia, have applied for approval of a plan filed pursuant to Section 11 (e) of the Public Utility Holding Company Act of 1935 ("the Act"). The plan provides, in substance, for the sale by Philadelphia of certain real estate, known as the Central Building property, to the Mellon National Bank and Trust Company ("Mellon”) of Pittsburgh, Pennsylvania, and the lease of such property by Mellon to Duquesne. After appropriate notice a public hearing was held. Norman Barnes and Barnes Investing Corporation ("Barnes"), unsuccessful joint bidders for the property,' and Thomas S. Christo, a real estate broker through whom the Barnes bid was submitted, appeared in opposition to the plan, contending that competitive conditions were not maintained in connection with the proposed sale and lease of the property. Our Division of Public Utilities ("the Division") filed a recommended decision urging that we find that competitive conditions had not been maintained and suggesting that new offers for the property should be invited. Thereafter, the participants filed briefs and we heard oral argument. On the basis of our independent consideration of the record, we make the following findings. I. DESCRIPTION OF THE COMPANIES AND PRIOR PROCEEDINGS Philadelphia is a subsidiary of Standard Gas and Electric Company, which in turn is a subsidiary of Standard Power and Light Corporation, both registered holding companies. Pursuant to Section 11 (b) of the Act we ordered the liquidation and dissolution of Philadelphia, which has taken various steps to comply with that order. Philadelphia's only remaining utility subsidiary is Duquesne, which engages in the generation, transmission and distribution of electric energy in Pittsburgh and surrounding communities in Pennsylvania. At the time the instant plan was filed, Philadelphia owned all of Duquesne's outstanding common stock, which is the sole voting stock, and all the outstanding 550,000 shares of its 4% series Preferred Stock, $50 par value. As a result of steps recently taken by Phila 1 While Barnes is the nominal bidder for the property, the Continental Assurance Company, of Chicago, Illinois, has agreed to purchase the building and lease from Barnes in the event he obtains the property from Philadelphia. * Philadelphia Company, 28 S. E. C. 35 (1948), aff'd Philadelphia Company and Standard Gas and Electric Company v. 8. E. C., 177 F. 2d 720 (C. A. D. C., 1949). 'See Philadelphia Company, 33 S. E. C. 190 (1952) and 34 S. E. C. 485 (1952), for a description of the steps heretofore taken. |