We further find that the extension of unlisted trading privileges to all of the above-enumerated 10 securities would otherwise be appropriate in the public interest and for the protection of investors.

On the basis of the data given for the purchase warrants for $2.50 par capital stock of Pan American Airways Corporation, we cannot find that the applicant exchange has established the existence within its vicinity of sufficiently widespread public distribution and sufficient public trading activity to render the extension of unlisted trading privileges to the purchase warrants on such exchange necessary or appropriate in the public interest or for the protection of investors. Accordingly, the application with respect to the warrants must be denied.

An appropriate order will be issued in accordance with this opinion. By the Commission: (Commissioners Healy, Pike, McConnaughey, and Caffrey) Chairman Purcell being absent and not participating. Summary pertaining to applications by the Pittsburgh stock exchange to extend unlisted trading privileges to 11 stocks

• Total number of shares held by member firms of applicant exchange and by 8 Pittsburgh banks for customers residing in the vicinity of the exchange.

(•)

(•)

26, 534 46, 414

559

13

21

(•)

9,722 4,619

54

•.45

547

11, 746

15, 083

213

5,890, 161 571, 227 8, 551

13,627

10, 978

295

3.8

• Distribution figures are for western Pennsylvania, eastern Ohio, and West Virginia.

• Percent of trading on the New York Curb Exchange.

* 47,950 shares held by 432 holders in the city of Pittsburgh.

Not available.

IN THE MATTER OF

PUBLIC SERVICE COMPANY OF INDIANA, INC.
INDIANA GAS & WATER COMPANY, INC.

File Nos. 70-1101 and 70-1102. Promulgated April 4, 1946

(Public Utility Holding Company Act of 1935-Sections 6 (a), 6 (b) and 12 (e) )

APPEARANCES:

Harold Griffin, of the Public Utilities Division of the Commission. Edmond W. Hebel of Evans & Hebel on behalf of Public Service Company of Indiana, Inc.

SUPPLEMENTAL FINDINGS AND OPINION OF THE COMMISSION

Public Service Company of Indiana, Inc. (Service Company), a subsidiary of The Middle West Corporation, a registered holding company, has filed applications and declarations pursuant to the Public Utility Holding Company Act of 1935. Such applications and declarations are in the form of amendments to the above-entitled matter and relate to the issue, sale and redemption of preferred stocks by Service Company, as set forth below.

The Commission has heretofore approved transactions in this matter involving, among other things, a refinancing of Service Company's first mortgage bonds and preferred stock and the issuance and sale of serial notes by Service Company together with the sale of gas, water and ice properties to a newly formed subsidiary, Indiana Gas & Water Company, Inc. (Gas-Water), all as more fully set forth in the findings and opinion issued with our order of September 5, 1945.1 Among the applications and declarations approved were those proposing the issue and sale by Service Company, through competitive bidding, of 150,000 shares of its cumulative preferred stock and the redemption of its 148,185.9 shares of presently outstanding Series A preferred stock. The proposed issue and sale of preferred stock was not to be consummated until the results of competitive bidding pursuant to Rule U-50 had been made a matter of record and a further order entered in

1 Public Service Company of Indiana, Inc., et al., 20 S. E. C. 440 (1945) 22 S. E. C.-35- -6530

the light of the record so completed. Service Company, accordingly, notified the Commission that bids had been received on the preferred stock but that, due to the high cost of money to the company resulting from such bids, no bid was accepted. Inasmuch as Service Company desired to reoffer its preferred stock when market conditions were more favorable, the Commission has successively extended to May 15, 1946 the date by which Service Company could, under Rule U-24, issue and sell said 150,000 shares of its cumulative preferred stock and retire its presently outstanding preferred stock.2

Service Company now proposes to reoffer such preferred stock through competitive bidding under a program differing slightly from that originally proposed.

The public hearing in this proceeding was reopened and reconvened after appropriate notice and, having considered the record as supplemented, the Commission makes the following findings.

In reoffering its preferred stock, Service Company proposes to issue and sell through competitive bidding 150,000 shares of its cumulative preferred stock having a par value of $100 per share. Prospective bidders will designate the dividend rate as well as the price to be paid the company. Service Company, for a period of 10 days after acceptance of a bid, will offer to the holders of its presently outstanding 148,185.9 shares of cumulative preferred stock, Series A, the right to exchange such stock for the new cumulative preferred stock on the following basis: for each share of old stock exchanged the company will offer one share of the new preferred stock together with a cash payment equal to the difference between the price paid to the company by the successful bidder, which will also be the price to the public in the event of a public offering of shares not required for exchange purposes, and $105 (the redemption price of the old preferred stock) plus an adjustment for accrued dividends.

The public invitation for bids will require that the bidders specify their compensation for effecting exchanges under the exchange offer and the purchase of shares not required for exchange purposes, the dividend rate for the new preferred stock, which shall be a multiple of one-tenth of 1 percent and not in excess of 4.2 percent, and the price to be paid the company for shares not required for exchange purposes, which shall be not less than $100 nor more than $102.75 (plus accrued dividend from March 1, 1946). The successful bidder

• Public Service Company of Indiana, Inc., Holding Company Act Releases Nos. 6188 and 6438. 'Public Service Company of Indiana, Inc., Holding Company Act Release No. 6492.

The company representatives have stated on the record that the company will undertake the mailing of notices to its preferred stockholders after its registration statement has become effective, which will state the approximate date on which an exchange offer will be mailed them.

will agree to purchase all shares of the new preferred stock not required for exchange purposes as above and will also agree to use his best efforts to obtain acceptances of the company's exchange offer."

With the exception of the call premium on the new preferred stock, which will be determined in connection with the bidding, the provisions of said stock are the same as those proposed originally herein and are similar to those which we have heretofore found adequate for the protection of preferred stockholders. For a full discussion of these provisions, as well as a detailed description of Service Company and its operations, reference should be made to our previous findings in this matter.

Balance sheets of Service Company, corporate, and consolidated Gas-Water, as of February 28, 1946, per books, and pro forma to reflect the proposed preferred stock refinancing, are attached hereto as Appendix A.

Capitalizations and financial ratios of Service Company derived from such balance sheets are set forth on page 476.

The plant account of Service Company (corporate) as at February 28, 1946, was stated at gross original cost of $104,871,391 plus net plant acquisition adjustments (Account 100.5)' of $4,615,137. Depreciation reserve totaling $10,643,710 represented 10.1 percent of gross original cost of utility plant.

Attached hereto as Appendix B are pro forma income statements of Service Company, corporate, and consolidated with Gas-Water, for the years 1942 through 1945, as submitted by the company.

Following are statements of income of Service Company for the 12 months ended February 28, 1946, corporate, and consolidated with Gas-Water as prepared by the company. The corporate per books column includes the income from and expenses of gas, ice and water operations only to dates of disposition of such properties in 1945. The pro forma columns, in addition to reflecting the company's assumption of a dividend rate of 3.8 percent on the new preferred stock, also are adjusted to present income from and expenses of present operations, interest requirements on presently outstanding debt, and income taxes which would have been payable had such debt and preferred stock been outstanding for the entire period.

'Any payments to dealers for services in soliciting exchanges will be made by the successful underwriter and disbursements for such purposes will not be made directly by the company.

•The redemption premium will be an amount equal to the excess over $100 of the offering price, exclusive of accrued dividends, plus $3 per share if redeemed prior to March 1, 1951, $2 per share thereafter prior to March 1, 1956, $1 per share thereafter prior to March 1, 1961 and without any additional amount thereafter, plus accrued dividends. 'Presently being amortized over a period ending in 1958.

TABLE I