of Sections 6 (a) and 7 in respect of the new bonds and new common stock, it appears that all of the proposed security issues of Virginia satisfy the standards of Section 7. The record indicates that the bonds are to be secured by a first lien on the physical property of Virginia and, therefore, meet the requirements of Section 7 (c) (1). The bonds are to be issued for the purpose of refinancing the business of Virginia, the new common stock is to be issued in exchange for outstanding securities of Virginia, and both the new bonds and new common stock are to be issued in order to effectuate a reorganization of Virginia. Thus, the requirements of Section 7 (c) (2) are met in respect of such securities. Since the said indenture and articles of association are not before us, we shall reserve jurisdiction with respect to the issuance and sale of the new bonds and the new common stock of Virginia, until we have had an opportunity to determine whether the terms to be contained therein are acceptable under the standards we have found appropriate in other cases, although on the basis of facts and representations presently of record it appears that such standards will be satisfied.

The redemption of East Coast's presently outstanding bonds and the payment of Virginia's bank loan and Tidewater's First Mortgage Notes will be effected in accordance with the terms of such securities and, accordingly, such redemptions are exempt by virtue of the provisions of Rule U-42 (b) (2).

The proposed donation by East Coast of the open account advances and the acquisition by Virginia of all its presently outstanding bonds and common stock from East Coast are subject to the provisions of Section 12 and Rules U-42, U-43, U-44 and U-45. We find that no adverse findings are necessary under the applicable provisions of Section 12 of the Act and Rules promulgated thereunder.

The proposed acquisition by East Coast of Virginia's new bonds and new common stock in exchange for Virginia's presently outstanding bonds and common stock now held by East Coast, requires our approval under Section 10. The Amended Plan provides that East Coast will divest itself of Virginia's new bonds and new common stock, which it will receive under the plan, by the sale thereof at competitive bidding pursuant to the requirements of Rule U-50. Under the circumstances, we find that the requirements of Section 10 are satisfied.

FEES AND EXPENSES

The estimated fees and expenses to be paid in connection with the proposed plan, as amended, aggregate $68,260, of which East Coast is to bear $39,200 and Virginia $29,060, which latter amount is stated to be applicable to the issuance and sale of its new bonds. Our order

will reserve jurisdiction to consider the reasonableness of all fees and expenses in connection with the Amended Plan.

ENFORCEMENT OF AMENDED PLAN

East Coast does not propose to submit the Amended Plan to a vote of its stockholders. We have been requested, however, pursuant to Section 11 (e) of the Act, to apply to an appropriate District Court of the United States, in accordance with the provisions of Section 18 (f), to enforce and carry out the terms and provisions of the Amended Plan. This request will be granted.

TAX RECITALS

Applicants have requested that the Commission make appropriate recitals in its order approving the Amended Plan, for purposes of Section 1808 (f) of the Internal Revenue Code, as amended. As indicated above, it appears that the proposed transactions are necessary and appropriate to the simplification of East Coast's holding company system. Pending our final order with respect to the sale of the securities, our order presently to be entered will reserve jurisdiction with respect to this request.

CONCLUSION

Our order herein will approve the Amended Plan but will reserve jurisdiction with respect to the proposed issuance and sale by Virginia of new bonds and new common stock, the amount and allocation of fees and other compensation and expenses in connection with the plan, the request of applicants for appropriate recitals required by Section 1808 (f) of the Internal Revenue Code, and other appropriate proceedings, findings and further action in connection with the plan, as amended, and the consummation thereof. Jurisdiction will also be reserved on the Section 11 (b) (2) proceedings.

By the Commission (Chairman Caffrey and Commissioners McConnaughey and McEntire), Commissioners Hanrahan and McDonald being absent and not participating.

25 S. E. C.

APPENDIX A

APPENDIX B

EAST COAST PUBLIC SERVICE CO.

Balance sheet as of December 31, 1946, per books and pro forma reflecting the proposed transactions excluding actual sale of the new common stock of Virginia

• Represents book value of East Coast investment in common stock of Virginia which is to be sold at com. petitive bidding. This amount does not reflect cost or underlying value of such common stock.

APPENDIX C

Virginia East Coast Utilities, Inc., and Subsidiary Actual and Pro Forma Consolidated Balance Sheet as of Dec. 31, 1946