of Section 12 (f) of the Act. Under the standards of this section, we observe no basis for adverse findings.

Applicants have requested that our order herein contain the recitals of the provisions necessary to meet the requirements of the Internal Revenue Code, as amended, including Section 1808 (f) and Supplement R thereof. Since our order of December 18, 1946 required American Gas to cause the merger of Indiana Service into Indiana & Michigan, our order herein will contain the requested recitals.

The record has not been completed with respect to the fees and expenses to be incurred in connection with this transaction, such matter to be considered in connection with the future financing of Indiana & Michigan. Accordingly, we shall reserve jurisdiction with respect to these matters.

We conclude that the application should be granted subject to the terms and conditions contained in Rule U-24 and subject to the reservations of jurisdiction heretofore noted. An appropriate order will issue.

By the Commission (Chairman Hanrahan and Commissioners McConnaughey, McEntire, McDonald, and Rowen).

302972 O-55-11

Indiana & Michigan Electric Company and Indiana Service Corporation per books and pro forma for Indiana & Michigan Electric Company giving effect to the proposed merger

INCOME STATEMENT--12 MONTHS ENDED APRIL 30, 1948

Indiana & Michigan Electric Company and Indiana Service Corporation per books and pro forma for Indiana & Michigan Electric Company giving effect to the proposed merger.

$29,073,498

Corporation

$6,336,282

PHILADELPHIA COMPANY, PITTSBURGH AND WEST VIRGINIA GAS COMPANY, EQUITABLE GAS COMPANY, FINLEYVILLE OIL AND GAS COMPANY

File No. 70-1633. Promulgated June 30, 1948

(Public Utility Holding Company Act of 1935--Sections 6 and 7)

ISSUANCE AND SALE OF SECURITIES BY SUBSIDIARY OF REGISTERED HOLDING COMPANY

Application and declaration pursuant to Sections 6 and 7 relative to issue and sale of First Mortgage Bonds, pursuant to competitive bidding, and issue and sale of Common Stock to parent by subsidiary of registered holding company, said Common Stock and the proceeds of said Bonds being paid as consideration for gas utility assets being acquired from parent, considered as declaration under Section 7 and permitted to become effective thereunder without decision on applicability of Section 6 (b), subject to reservation of jurisdiction with respect to results of competitive bidding and with respect to fees and expenses.

ACQUISITION OF SECURITIES BY REGISTERED HOLDING COMPANY

Application of parent holding company to acquire securities of one subsidiary and certain securities held by another of its subsidiaries, granted, the Commission finding that such acquisitions, as a temporary step, conform to applicable standards of Section 10, subject to condition that such securities shall be held subject to an outstanding divestment order.

ACQUISITION OF UTILITY ASSETS BY SUBSIDIARY OF REGISTERED HOLDING COMPANY Application of subsidiary to acquire gas properties of its parent and of an affiliate, granted, the Commission finding that such acquisitions conform to applicable standards of Section 10.

USE OF PROCEEDS BY REGISTERED HOLDING COMPANY

Application by parent holding company to apply $14,000,000 to be paid to it by subsidiary, as partial consideration for the transfer of gas utility assets, for redemption of certain preferred stock and retirement of certain of its debt, denied, the Commission finding such use inappropriate in the light of outstanding dissolution order under Section 11 (b) and in consideration of fact that proposed use of proceeds would unduly increase funded debt of system on consolidated basis.

Series of transactions involving reorganization of gas properties, issuance of securities, and related transactions, approved and permitted to become effective subject to condition, inter alia, that parent holding company apply $14,000,000 of proceeds of public sale of Bonds by subsidiary solely to retirement of parent company debt, jurisdiction being reserved to pass upon such application of proceeds.

ACCOUNTING

Proposed accounting entries relating to investment in subsidiary on books of parent and entries relating to certain charges and credits to surplus prior to January 1, 1940, permitted, subject to reservation of jurisdiction to require other and different treatment from that proposed, and accounting entries relating to transfer of portion of depreciation reserve to surplus on books of parent permitted, subject to condition that amounts proposed to be credited to surplus shall be not available for any purpose except pursuant to further order of this Commission.

APPEARANCES:

F. T. Ikeler and R. J. Dodds, Jr., of Reed, Smith, Shaw and McClay; Henry G. Wasson, Jr.; and J. R. Clerkin, of Flynn, Clerkin & Hanson for Applicants, Philadelphia Company,

et al.

28 S. E. C.--35----8326

Marcus Manoff, of Paxson, Kalish, Dilworth & Green, for Philadelphia Company 6% Cumulative Preferred Stockholders' Protective Committee.

William L. Fox, of White and Williams, for Protective Committee of Public Holders of Common Stock of Philadelphia Company, ("Olesnicki Committee'').

Robert S. Ingersoll, Jr., for Philadelphia Company Common Stockholders' Protective Committee.

Milton H. Cohen, of Pam, Hurd & Reichmann, for Protective Committee for the Standard Gas and Electric Company Prior Preference Stock, $7.00 and $6.00 Cumulative.

Howard S. Guttmann, for the Division of Public Utilities of the Commission.

FINDINGS AND OPINION

Philadelphia Company, a registered public utility holding company,' and certain of its subsidiaries, Pittsburgh and West Virginia Gas Company ("Pittsburgh and West Virginia''), Equitable Gas Company (Equitable"), and Finleyville Oil and Gas Company (Finleyville"), propose in an amended joint application-declaration the reorganization of the Pennsylvania gas properties in the Philadelphia Company holding company system, the recapitalization of and issuance of securities by Equitable, the dissolution of Finleyville, and the retirement of certain senior securities by Philadelphia Company.

Under this proposal, as amended, the natural gas properties of the Philadelphia Company system located in Pennsylvania, which are now owned by Philadelphia Company, Equitable and Finleyville, would be owned by one company, Equitable; Philadelphia Company would cease to occupy the dual status of a holding company and a gas utility company; Pittsburgh and West Virginia would cease to be a holding company as defined in the Act; and Finleyville would be dissolved. The amended proposal further provides for the recapitalization of the reorganized Equitable, its capital structure to consist of first mortgage bonds and common stock owned by Philadelphia Company. The bonds will be publicly sold, the proceeds, up to $14,000,000, being payable over to Philadelphia Company in part consideration for the assets to be transferred by that Company to Equitable, as more fully set forth below. Philadelphia Company proposes to use the proceeds from the sale of the Equitable bonds to redeem all of its outstanding $6 Cumulative Preferred Stock, aggregating 100,000 shares, at $110 per share, the balance of the proceeds to be employed in redemption of $2,900,000 principal amount of its 4-1/4% Collateral Trust Sinking Fund Bonds.

A comparative chart depicting the corporate relationships of the companies involved in these transactions as presently constituted, and pro forma follows:

Philadelphia Company is a subsidiary of Standard Gas and Electric Company and Standard Power and Light Corporation, both registered holding companies.