(As filed on August 22, 2005)
File No. 70-8945
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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POS AMC
POST-EFFECTIVE AMENDMENT NO. 5
to
FORM U-1
APPLICATION OR DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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AMEREN CORPORATION
1901 Chouteau Avenue
St. Louis, Missouri 63103
CIPSCO INVESTMENT COMPANY
CIPSCO LEASING COMPANY
607 East Adams Street
Springfield, Illinois 62739
AMERENENERGY RESOURCES GENERATING COMPANY
300 Liberty Street
Peoria, Illinois 61602
(Names of companies filing this statement and
addresses of principal executive offices)
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AMEREN CORPORATION
(Name of top registered holding company parent)
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Steven R. Sullivan
Senior Vice President, General Counsel and Secretary
Ameren Services Company
1901 Chouteau Avenue
St. Louis, Missouri 63103
(Name and address of agent for service)
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The Commission is requested to send copies of all notices, orders and other
communications in connection with this Application/Declaration to:
Craig W. Stensland, William T. Baker, Jr., Esq.
Associate General Counsel Thelen Reid & Priest LLP
Ameren Services Company 875 Third Avenue
1901 Chouteau Avenue New York, New York 10022
St. Louis, Missouri 63103
ITEM 1. DESCRIPTION OF THE PROPOSED TRANSACTIONS.
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1.1 Background. Ameren Corporation ("Ameren"), whose principal business
address is at 1901 Chouteau Avenue, St. Louis, Missouri 63103, is a registered
holding company under the Public Utility Holding Company Act of 1935, as amended
(the "Act"). Ameren directly owns all of the issued and outstanding common stock
of Union Electric Company, d/b/a "AmerenUE," Central Illinois Public Service
Company, d/b/a "AmerenCIPS," and Illinois Power Company d/b/a "AmerenIP," and
indirectly through CILCORP Inc. ("CILCORP"), an exempt holding company, owns all
of the issued and outstanding common stock of Central Illinois Light Company,
d/b/a "AmerenCILCO." Together, AmerenUE, AmerenCIPS, AmerenIP and AmerenCILCO
provide retail and wholesale electric service to approximately 2.3 million
customers and retail natural gas service to approximately 935,000 customers in
parts of Missouri and Illinois. In addition, AmerenCILCO holds all of the
outstanding common stock of AmerenEnergy Resources Generating Company ("AERG"),
a non-exempt electric utility generating subsidiary to which AmerenCILCO
transferred substantially all of its generating assets in October 2003.
Ameren also directly owns all of the issued and outstanding common stock of
CIPSCO Investment Company ("CIPSCO Investment"), a non-utility subsidiary that
in turn owns all of the issued and outstanding common stock of, among other
subsidiaries, CIPSCO Leasing Company ("CIPSCO Leasing"). CIPSCO Leasing,
directly or through subsidiaries, invests in certain long-term leveraged lease
transactions. As relevant to this Post-Effective Amendment, CIPSCO Leasing's
wholly-owned subsidiary, CLC Aircraft Leasing Company ("CLC Aircraft"), holds a
100% interest as the owner participant in an MD-88 commercial passenger aircraft
that is leased to Delta Air Lines, Inc. ("Delta") (the "Aircraft Lease
Interest").
1.2 Prior Proceedings. By order dated December 30, 1997, in this
proceeding (Holding Co. Act Release No. 26809) (the "Merger Order"), the
Commission authorized Ameren to acquire all of the issued and outstanding common
stock of AmerenUE and CIPSCO Incorporated, which was then the parent company of
AmerenCIPS, to organize a service company subsidiary, and to issue and sell
common stock pursuant to certain stock plans. In addition, the Commission
authorized Ameren to retain the direct and indirect non-utility subsidiaries and
investments of AmerenUE and CIPSCO Incorporated, subject to certain
exceptions./1/ Specifically as it relates to this Post-Effective Amendment, the
Commission determined that the Aircraft Lease Interest was retainable under
Section 9(c)(3) of the Act./2/ The Commission noted that it has previously
authorized registered holding companies, pursuant to Section 9(c)(3) of the Act,
to make similar types of passive investments, citing Central and South West
Corporation, et al., 49 S.E.C. 323 (1985) ("CSW"). In CSW, the Commission
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1 By supplemental order in this proceeding dated June 27, 2001 (Holding Co.
Act Release No. 27421), the Commission determined that certain limited liability
company investments of CIPSCO Incorporated were retainable under the standards
of Section 11(b)(1) of the Act.
2 Under Section 9(c)(3) of the Act, the Commission may permit a registered
holding company to acquire securities "in the ordinary course of business" if
"not detrimental to the public interest or the interest of investors or
consumers."
authorized a registered holding company to make passive equity investments in
leveraged leases for the purpose of obtaining tax benefits in the form of
accelerated depreciation and investment credits.
More recently, in an unrelated proceeding (File No. 70-10078), the
Commission determined that a similar commercial aircraft lease interest held by
an associate company of CIPSCO Leasing (CIM Air Leasing, Inc.) is not retainable
under the standards of Section 11(b)(1) of the Act, since it is not reasonably
incidental or economically necessary or appropriate to the operations of
Ameren's integrated public utility business. Moreover, the Commission held the
aircraft lease interest (as well as certain other lease investments held by
associate companies of CIM Air Leasing, Inc.) are not retainable under Section
9(c)(3) of the Act noting, among other things, that CILCORP had already captured
substantially all of the tax benefits (in the form of accelerated depreciation)
available under the lease. Accordingly, the Commission directed Ameren to take
steps to cause CIM Air Leasing, Inc. to divest the aircraft lease investment.
See Ameren Corporation, et al., Holding Co. Act Release No. 27645 (Jan. 29,
2003).
1.3 Requested Findings under Section 11(b)(1) of the Act. Although the
Aircraft Lease Interest is a "passive" investment, CIPSCO Leasing has already
captured the tax benefits (in the form of accelerated depreciation) associated
with the leased equipment. Thus, this investment is no longer being held for the
purpose of obtaining the tax benefits, as was the case at the time of the Merger
Order. Ameren has concluded, therefore, consistent with the Commission's
subsequent findings in File No, 70-10078, that the Aircraft Lease Interest is
not retainable under the standards of either Section 11(b)(1) of the Act or
under Commission precedents interpreting Section 9(c)(3) of the Act.
If the Commission concurs with Ameren's conclusion that the Aircraft Lease
Interest is not retainable, then it is requested that the Commission issue a
supplemental order in this proceeding to: (i) require Ameren to take the
appropriate actions to cause CIPSCO Leasing to sell or otherwise dispose of the
Aircraft Lease Interest; (ii) recite that such sale or disposition of the
Aircraft Lease Interest is necessary or appropriate to the integration or
simplification of the Ameren holding company system and to effectuate the
provisions of Section 11(b)(1); (iii) require that the net proceeds from such
sale or disposition be utilized within 24 months of the receipt thereof to
retire or cancel securities representing indebtedness of the transferor or
otherwise expended for property other than "nonexempt property" within the
meaning of section 1083 of the Internal Revenue Code, as amended (the "Code") or
invested as a contribution to the capital, or as paid-in surplus, of another
direct or indirect subsidiary of Ameren in a manner that satisfies the
nonrecognition provisions of Code section 1081; and (iv) recite that such
expenditure or investment by the transferor is necessary or appropriate to the
integration or simplification of the Ameren holding company system./3/
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3 Section 1081(f) of the Code specifies that in order for section
1081 to apply to an exchange, investment, distribution or sale, the order of the
Commission in obedience to which such transaction was made must recite that such
transaction is necessary or appropriate to effectuate the provisions of Section
11(b) of the Act and specify and itemize the stock and securities and other
property which are ordered to be acquired, transferred, received or sold.
2
1.4 Summary of Relevant Provisions of the Code. Code section 1081(b)(1)
provides for the nonrecognition of gain or loss from a sale or exchange of
property made in obedience to a Commission order. Code section 1082(a)(2)
requires that any unrecognized gain under Code section 1081(b)(1) be applied to
reduce the basis of the transferor's remaining assets in a specified manner.
An exception from this nonrecognition treatment exists under Code section
1081(b)(2), which specifies that if property received in connection with any
sale or disposition is "nonexempt property,"/4/ then such "nonexempt property"
or an amount equal to the fair market value of such "nonexempt property" must,
within 24 months of the time of the transfer, in accordance with an order of the
Commission, be expended for property other than "nonexempt property" or invested
as a contribution to the capital, or as paid-in surplus, of another corporation,
and the Commission's order recites that such expenditure or investment by the
transferor corporation is necessary or appropriate to the integration or
simplification of the holding company system of which the transferor corporation
is a member. Code section 1081(b)(3) provides that an appropriate expenditure
for property other than "nonexempt property" for purposes of Code section
1081(b)(2) includes each of (1) a payment in complete or partial retirement or
cancellation of securities representing indebtedness of the transferor and (2)
the amount of any liability of the transferor that is assumed (or to which
transferred property is subject) in connection with any transfer of property in
obedience to a Commission order.
Code section 1081(d) provides for the nonrecognition of gain or loss from
certain intercompany transactions within the same system group if such
transactions are made in obedience to a Commission order.
1.5 Transactions Incident to Sale of the Aircraft Lease Interest. CIPSCO
Leasing intends to seek a buyer or buyers for the Aircraft Lease Interest in a
privately negotiated transaction. Alternatively, in the event of the bankruptcy
of Delta, CLC Aircraft, as owner participant under the lease, may forfeit its
beneficial interest in the leased aircraft if the indenture trustee, on behalf
of the debt holders, exercises its remedy to take title to the aircraft. Such
transfer of the beneficial interest in the leased aircraft to the indenture
trustee would be treated as a "sale" for federal income tax purposes for an
amount equal to the outstanding balance of the leveraged lease debt. In either
event, it is expected that such transfer will result in a significant amount of
gain for federal income tax purposes. Accordingly, CIPSCO Leasing will structure
any such transfer in a manner that will enable it to utilize the non-recognition
provisions of Code section 1081. In order to achieve this result, Ameren will
cause CIPSCO Leasing to engage in a series of essentially simultaneous
intercompany transactions the purpose of which is to structure the sale of the
Aircraft Lease Interest to occur from a subsidiary of Ameren (in this case AERG)
that has sufficient tax basis in similar classes of property to absorb the basis
reductions required by Code section 1082(b).
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4 The term "nonexempt property" is defined in Code section 1083(e) to
include, among other things, cash and indebtedness of the transferor that is
cancelled or assumed by the purchaser in the exchange.
3
More specifically, CIPSCO Leasing intends to engage in the following
transactions (the "Proposed Transactions"):
1. On or prior to the closing date with respect to the sale of the
Aircraft Lease Interest (the "Closing Date"), CIPSCO Leasing will
transfer the stock of CLC Aircraft to AERG in exchange for a
promissory note in the form of Exhibit B-7 hereto (the "AERG Note")
and/or cash (together, the AERG Note and the cash are referred to
herein as the "AERG Consideration").
2. On or prior to the Closing Date, Ameren will cause CLC Aircraft to
convert into a Delaware limited liability company./5/
3. On the Closing Date, AERG will either sell the CLC Aircraft membership
interest and/or the leased assets either to a buyer or buyers in
exchange for consideration (which is expected to be nominal) or
transfer the CLC Aircraft membership interest and/or the leased assets
to the indenture trustee for the benefit of the debt holders in the
existing leveraged lease structure, which, for federal income tax
purposes, will be treated as a deemed sale of the Aircraft Lease
Interest.
4. Within 24 months after such Closing Date, AERG will expend the
consideration received from the buyer or buyers to reduce the AERG
Note or will otherwise expend or invest such cash in accordance with
Code section 1081(b)./6/
As indicated, the Proposed Transactions are intended to allow Ameren to
match the unrecognized gain from the sale of the Aircraft Lease Interest under
Code section 1081(b) to AERG since AERG is one of the subsidiaries of Ameren
that has a sufficiently high tax basis in other similar classes of property such
that the unrecognized gain can be fully absorbed by the basis reductions
required by Code section 1082(a)(2).
1.6 Relief Requested. To the extent required, Ameren requests that the
Commission authorize AERG to issue the AERG Note to CIPSCO Leasing in
consideration for the stock of CLC Aircraft./7/
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5 By order dated December 18, 2003 (Holding Co. Act Release No. 27777) (the
"December 2003 Order"), the Commission authorized Ameren and its non-utility
subsidiaries to, among other things, convert the capital structure of
non-utility subsidiaries from one business form to another.
6 It is contemplated that the retirement of the AERG Note will occur on or
shortly after the Closing Date.
7 Although the issuance of the AERG Note by AERG and the acquisition of the
stock of CLC Aircraft by AERG are not exempt under the Act, or otherwise
approved under the terms of the December 2003 Order, such transactions are
merely transitory steps in the sale of the CLC Aircraft membership interest or
of the leased equipment and will have no permanent effect on the business or
capital structure of AERG.
4
In addition, in accordance with Code section 1081(f), Ameren requests that
the Commission's supplemental order in this proceeding confirm that (1) the
proposed disposition of the Aircraft Lease Interest through the Proposed
Transactions will be a disposition for cash or cash equivalents in compliance
with the supplemental order, (2) the application of the net proceeds to retire
all or part of the AERG Note will be a complete or partial retirement of
securities representing indebtedness of AERG, (3) the amount of liabilities
assumed and the amount of liabilities to which transferred property is subject
upon the disposition of the Aircraft Lease Interest through the Proposed
Transactions will be an expenditure for property other than "nonexempt property"
in compliance with the supplemental order, and (4) accordingly, each of the
Proposed Transactions is necessary or appropriate to the integration or
simplification of the Ameren holding company system and will effectuate the
provisions of Section 11(b)(1) of the Act./8/
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
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The additional fees, commissions and expenses paid or incurred and to be
paid or incurred in connection with the preparation and filing of this
Post-Effective Amendment are estimated not to exceed $5,000.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
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Sections 6(a), 7, 9(a),10, 11(b)(1) and 12(b) and (f) of the Act and Rule
45 thereunder are or may be applicable to AERG's issuance of the AERG Note and
the acquisition thereof by CIPSCO Leasing and to the acquisition by AERG of the
stock of CLC Aircraft. As previously noted, these interrelated transactions are
merely transitory and will have no permanent impact on the business or capital
structure of AERG and therefore should be disregarded. The sole purpose of these
transactions is to match the unrecognized gain from the sale of the Aircraft
Lease Interest to AERG, a subsidiary of Ameren that has a sufficiently high tax
basis in other similar classes of property such that the unrecognized gain can
be fully absorbed by the basis reductions required by Code section 1082(a)(2).
The Proposed Transactions are also subject to Rule 54. Rule 54 provides
that, in determining whether to approve the issue or sale of any securities for
purposes other than the acquisition of an "exempt wholesale generator" ("EWG")
or "foreign utility company" ("FUCO") or other transactions unrelated to EWGs or
FUCOs, the Commission shall not consider the effect of the capitalization or
earnings of subsidiaries of a registered holding company that are EWGs or FUCOs
if Rule 53(a), (b) and (c) are satisfied. Under Rule 53(a), the Commission shall
not make certain specified findings under Sections 7 and 12 in connection with a
proposal by a holding company to issue securities for the purpose of acquiring
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8 The Commission has issued orders making similar tax recitals in connection
with other divestitures of non-utility properties in compliance with orders
under Section 11(b)(1) of the Act. See, e.g., Progress Energy, Inc., et al.,
Holding Co. Act Release No. 27444 (Sept. 26, 2001); NiSource Inc., et al.,
Holding Co. Act Release No. 27525 (Apr. 29, 2002); and KeySpan Corporation, et
al., Holding Co. Act Release No. 27541 (June 19, 2002).
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the securities of or other interest in an EWG, or to guarantee the securities of
an EWG, if each of the conditions in paragraphs (a)(1) through (a)(4) thereof
are met, provided that none of the conditions specified in paragraphs (b)(1)
through (b)(3) of Rule 53 exists. These standards are met.
Rule 53(a)(1): Ameren's "aggregate investment" (as defined in Rule
53(a)(1)) in EWGs as of June 30, 2005 was $492,760,725, or approximately 25.6%
of Ameren's "consolidated retained earnings" (also as defined in Rule 53(a)(1))
for the four quarters ended June 30, 2005 ($1,928,016,038). Ameren does not
currently hold an interest in any FUCO.
Rule 53(a)(2): Ameren will maintain books and records enabling it to
identify investments in and earnings from each EWG and FUCO in which it directly
or indirectly acquires and holds an interest. Ameren will cause each domestic
EWG in which it acquires and holds an interest, and each foreign EWG and FUCO
that is a majority-owned subsidiary, to maintain its books and records and
prepare its financial statements in conformity with U.S. generally accepted
accounting principles. All of such books and records and financial statements
will be made available to the Commission, in English, upon request.
Rule 53(a)(3): No more than 2% of the employees of Ameren's domestic
utility subsidiaries will, at any one time, directly or indirectly, render
services to EWGs and FUCOs.
Rule 53(a)(4): Ameren will submit a copy of each Application/Declaration
relating to investments in EWGs and FUCOs and copies of any related Rule 24
certificates, as well as a copy of Ameren's Form U5S, to each of the public
service commissions having jurisdiction over the retail rates of Ameren's
domestic utility subsidiaries.
In addition, Ameren states that the provisions of Rule 53(a) are not made
inapplicable to the authorization herein requested by reason of the occurrence
or continuance of any of the circumstances specified in Rule 53(b). Rule 53(c)
is inapplicable by its terms.
ITEM 4. REGULATORY APPROVAL.
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The Proposed Transactions are not subject to the jurisdiction of any state
commission or of any federal commission other than this Commission.
ITEM 5. PROCEDURE.
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The applicants request that the Commission issue a notice of filing of this
Post-Effective Amendment as soon as possible and that the Commission issue a
supplemental order in this proceeding as soon as practicable after the end of
the notice period. The applicants further request that there be no thirty-day
waiting period between the issuance of the Commission's order and the date on
which it is to become effective. The applicants hereby waive a recommended
decision by a hearing officer or other responsible officer of the Commission and
consent to the participation of the Division of Investment Management in the
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preparation of the Commission's decision and/or order in the proceeding unless
such Division opposes the matters covered hereby.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
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a. Exhibits.
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B-7 - Form of AERG Note.
J-2 - Form of Federal Register Notice.
b. Financial Statements.
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FS-1 - Ameren Consolidated Balance Sheet as of December 31, 2004,
and Consolidated Statement of Income and Consolidated
Statement of Cash Flows for the year ended December 31, 2004
(incorporated by Reference to Ameren's Annual Report on Form
10-K for the year ended December 31, 2004) (File No.
1-14756).
FS-2 - Ameren Consolidated Balance Sheet as of June 30, 2005, and
Consolidated Statement of Income and Consolidated Statement
of Cash Flows for the six months ended June 30, 2005
(incorporated by Reference to Ameren's Quarterly Report on
Form 10-Q for the period ended June 30, 2005) (File No.
1-14756).
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
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The Commission's action in this matter will not constitute a major federal
action significantly affecting the quality of the human environment. No other
federal agency has prepared or is preparing an environmental impact statement
with regard to the Proposed Transactions.
7
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, as amended, the undersigned companies have duly caused this amended and
restated Post-Effective Amendment to be signed on their behalves by the
undersigned thereunto duly authorized.
AMEREN CORPORATION
AMERENENERGY RESOURCES GENERATING
COMPANY
By: /s/ Steven R. Sullivan
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Name: Steven R. Sullivan
Title: Senior Vice President,
General Counsel and Secretary
CIPSCO INVESTMENT COMPANY
CIPSCO LEASING COMPANY
By: /s/ Steven R. Sullivan
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Name: Steven R. Sullivan
Title: Secretary
Date: August 22, 2005
8