File No. 070-10128 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM U-1/A POST-EFFECTIVE AMENDMENT NO. 17 TO APPLICATION/DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 CenterPoint Energy, Inc. 1111 Louisiana Houston, Texas 77002 Utility Holding, LLC 200 West Ninth Street Plaza Suite 411 Wilmington, Delaware 19801 CenterPoint Energy Resources Corp. 1111 Louisiana Houston, Texas 77002 (Name of companies filing this statement and address of principal executive offices) CenterPoint Energy, Inc. 1111 Louisiana Houston, Texas 77002 (Name of top registered holding company parent of each applicant or declarant)
Rufus S. Scott Vice President, Deputy General Counsel and Assistant Corporate Secretary CenterPoint Energy, Inc. 1111 Louisiana Houston, Texas 77002 (713) 207-7451 (Names and addresses of agents for service) The Commission is also requested to send copies of any communications in connection with this matter to: James R. Doty, Esq. Margo S. Scholin, Esq. Joanne C. Rutkowski, Esq. Baker Botts L.L.P. Baker Botts L.L.P. 3000 One Shell Plaza The Warner Houston, Texas 77002-4995 1299 Pennsylvania Avenue, N.W. (713) 229-1234 Washington, D.C. 20004-2400 (202) 639-7700
TABLE OF CONTENTS
CenterPoint Energy, Inc. ("CenterPoint" or the "Company"), Utility Holding, LLC and CenterPoint Energy Resources Corp. ("CERC") (together, the "Applicants") hereby file a post-effective amendment (the "Amendment") to their Application-Declaration asking the Securities and Exchange Commission (the "Commission") to release jurisdiction over the issuance by CERC of up to $150 million in incremental external debt securities.(1) ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION. A. REQUESTED AUTHORIZATION By order dated June 30, 2003 (HCAR No. 27692) (the "Omnibus Financing Order") and related supplemental orders, the Commission authorized CenterPoint and its Subsidiaries, including CERC, to engage in certain financing and related transactions through June 30, 2005 (the "Authorization Period").(2) In this Amendment, CERC requests a release of jurisdiction over an additional $150 million of the CERC Additional Debt Limit (as defined herein). As explained more fully below, the $150 million in authority would enable CERC to put in place a new $400 million revolving credit facility to replace its current $250 million credit facility, as described herein. The new credit facility is intended to provide greater liquidity and a lower cost source of working capital for CERC. CERC will continue to comply with all of the financing parameters in the Omnibus Financing Order, including the investment grade and equity capitalization criteria set forth in the Omnibus Financing Order.(3) B. BACKGROUND 1. Existing Financing Authority In the Omnibus Financing Order, the Commission authorized various financing and related transactions. Of interest here, the Omnibus Financing Order, by reference to the application: (i) Approved the continuation of existing financing arrangements, guarantees and hedging arrangements, as well as any transactions undertaken to extend the terms of or replace, refund or refinance existing obligations and the issuance of new obligations in exchange for existing obligations, provided in each case that the - ------------------- (1) CenterPoint holds its utility interests through Utility Holding, LLC, a Delaware limited liability company that is a conduit entity formed solely to minimize tax liability. (2) The term "Subsidiaries" refers to each existing direct or indirect subsidiary company of CenterPoint, as well as any direct or indirect subsidiary companies that CenterPoint may form with the approval of the Commission or in reliance on rules or statutory exemptions. (3) In particular, CERC would continue to maintain a minimum of 30% common equity capitalization, as required by the Omnibus Financing Order. As of December 31, 2004, CERC's common equity capitalization was 51.75%.
issuing entity's total capitalization is not increased as a result of such financing transaction; and (ii) Authorized CERC to issue or sell external long-term debt securities in an incremental amount of $500 million and external short-term debt securities in an incremental amount of $500 million, subject to an overall incremental limit of $500 million in long-term and short-term debt securities (the "CERC Additional Debt Limit") such that the total amount of CERC external debt will not exceed $3.037 billion at any one time outstanding during the Authorization Period (the "CERC Aggregate Debt Limit"), and reserved jurisdiction over the CERC Additional Debt Limit such that the amount of CERC external debt securities under the authorized CERC Aggregate Debt Limit will not exceed $2.537 billion at any one time outstanding during the Authorization Period. The authorized financing transactions were subject to certain terms and conditions, including the maintenance by CERC of a minimum of 30% common equity capitalization. The Omnibus Financing Order also noted that, during the Authorization Period, "the CenterPoint system's financing transactions will be largely limited to refinancing, replacing or extending the term of existing obligations." By order dated October 28, 2003 (HCAR No. 27743), the Commission released jurisdiction over the issuance of an incremental $50 million in external debt in connection with the refinancing of 6 3/8% Term Enhanced ReMarketable Securities (the "TERMS").(4) By order dated March 19, 2004 (HCAR No. 27818) the Commission released jurisdiction over the issuance of an additional incremental $50 million of the CERC Additional Debt Limit, such that the total amount of CERC external debt will not exceed $2.607 billion at any time outstanding during the Authorization Period. 2. Existing Financing Arrangements CERC's current dedicated revolving credit facility provides for an aggregate of $250 million in committed credit. The current credit facility terminates on March 23, 2007. Fully-drawn rates for borrowings under the current credit facility, including the facility fee, are London Interbank Offered Rate (LIBOR) plus 150 basis points based on current credit ratings and the applicable pricing grid. As of May 1, 2005, the current credit facility was not utilized. CERC has outstanding indebtedness that matures in mid-2005. - ------------------- (4) On November 3, 2003, CERC issued $160 million aggregate principal amount of its 5.95% senior notes due 2014. CERC used the proceeds to redeem $140 million aggregate principal amount of TERMS maturing in November and other costs relating to the issuance of the 5.95% notes. The remaining $30 million in incremental financing authority that was authorized in the October Order was not used. For purposes of this request, Applicants are assuming that the release of jurisdiction expired with respect to the unused portion of authority granted under the October Order. 2
C. PROPOSED FINANCING TRANSACTION The Applicants believe, on the basis of currently available information, including current interest rates and other factors, that it may be appropriate for CERC to replace its existing credit facility with a new revolving credit facility with a capacity of as much as $400 million. It is contemplated that the new facility would provide greater liquidity on more favorable terms and for a longer period than the existing facility. CERC seeks a release of jurisdiction in the amount of $150 million in this regard. By taking advantage of current market conditions, CERC expects to enhance its liquidity while locking in favorable rates and terms for five years. As noted above, all such financing transactions would be subject to the terms and conditions set forth in the Omnibus Financing Order. In particular, CERC will continue to comply with the requirement that at all times during the Authorization Period, it must maintain common equity of at least 30% of its consolidated capitalization (common equity, preferred stock, long-term debt and short-term debt) as reflected in the most recent Form 10-K or Form 10-Q filed with the Commission, and adjusted to reflect changes in capitalization since the balance sheet date therein, unless otherwise authorized. Additionally, no securities may be issued in reliance on the authority requested in this post-effective amendment unless: (i) the security to be issued, if rated, is rated investment grade by at least one nationally recognized statistical rating organization ("NRSRO") as that term is used in paragraphs (c)(2)(vi)(E), (F) and (H) of Rule 15c3-1 under the Securities Exchange Act of 1934; (ii) all outstanding rated securities of the issuer are rated investment grade by at least one NRSRO; and (iii) all outstanding rated securities of the top-level registered holding company are rated investment grade by at least one NRSRO. ITEM 2. FEES, COMMISSIONS AND EXPENSES. The fees, commissions and expenses paid or incurred or to be incurred in connection with this Amendment are estimated to be $20,000, plus the fees paid in connection with the new facility, which will comply with the requirements of the Omnibus Financing Order. ITEM 3. APPLICABLE STATUTORY PROVISIONS. A. APPLICABLE PROVISIONS Sections 6(a) and 7 of the Act and Rules 44 and 54 thereunder are considered applicable to the proposed transactions. To the extent that the proposed transactions are considered by the Commission to require authorizations, exemption or approval under any section of the Act or the rules and regulations thereunder other than those set forth above, request for such authorization, exemption or approval is hereby made. B. SECTIONS 6 AND 7 Section 6(a) requires the filing of a declaration with the Commission in connection with (i) an issuance and sale of any security by a registered holding company or subsidiary company or (ii) an exercise of "any privilege or right to alter the priorities, preferences, voting power or other rights of the holders of an outstanding security" of the 3
registered holding company or subsidiary. Commission approval of a declaration is subject to Section 7(c), which concerns the type of security and purpose for which it is issued. If the standards of Sections 7(c) and 7(g) (which concerns any necessary state approvals and is inapplicable in this matter) are met, the Commission "shall" permit a declaration to become effective, unless it makes certain findings described in Section 7(d) of the Act. The standards of Section 7(c) of the Act are satisfied because the proposed securities will be issued and sold solely for the purpose of "financing the business of the declarant as a public-utility company", as contemplated by Section 7(c)(2)(B). No adverse findings are required under Section 7(d) of the Act. In particular, no adverse finding is required under Section 7(d)(1) or (2) concerning the financing transaction. Among other things, Section 7(d) authorizes the Commission to authorize the issuance of a security unless it finds that: (a) "the security is not reasonably adapted to the security structure of the declarant and other companies in the same holding company system"; or (b) "the security is not reasonably adapted to the earning power of the declarant." CERC will continue to maintain a minimum of 30% common equity capitalization at all times during the Authorization Period and otherwise continue to comply with the terms and conditions of the Omnibus Financing Order. No adverse finding is required under Section 7(d)(3) of the Act, which concerns the necessity and appropriateness of a proposed financing to the economical and efficient operations of a registered system. As noted above, the Applicants believe that the proposed financing transactions are in the best interests of CERC and so provide for the economical and efficient operations of CERC. No adverse findings are required under Section 7(d)(4) because the fees, commissions and other remuneration to be paid in connection with the subject financing transactions will comply with the standards approved by the Commission in the Omnibus Financing Order. Finally, the terms and conditions of the proposed sale of securities are consistent with those approved by the Commission in the Omnibus Financing Order and so, are not detrimental to the public interest or the interest of investors or consumers. C. RULE 54 ANALYSIS. The proposed transactions are subject to Rule 54 under the Act, which refers to Rule 53. Rule 54 under the Act provides that in determining whether to approve certain transactions other than those involving exempt wholesale generators ("EWGs") or foreign utility companies ("FUCOs"), as defined in the Act, the Commission will not consider the effect of the capitalization or earnings of any subsidiary company which is an EWG or FUCO if Rule 53(a), (b) and (c) under the Act are satisfied. CenterPoint has no investments in FUCOs or EWGs. CenterPoint had negative retained earnings as of December 31, 2004, and so is not in compliance with Rule 53(a)(1). CenterPoint complies with, and will continue to comply 4
with, the record-keeping requirements of Rule 53(a)(2) under the Act, the limitation under Rule 53(a)(3) under the Act on the use of domestic public-utility company personnel to render services to EWGs and FUCOs, and the requirements of Rule 53(a)(4) under the Act concerning the submission of copies of certain filings under the Act to retail regulatory commissions. Further, none of the circumstances described in Rule 53(b) under the Act has occurred or is continuing. Rule 53(c) under the Act is by its terms inapplicable to the transactions proposed herein that do not involve the issue and sale of securities (including guarantees) to finance an acquisition of an EWG or FUCO. ITEM 4. REGULATORY APPROVAL. No state or federal commission other than the Commission has jurisdiction with respect to any of the proposed transactions described in this Amendment. ITEM 5. PROCEDURE. The Applicants request that the Commission's order be issued as soon as possible, and that there should not be a 30-day waiting period between issuance of the Commission's order and the date on which the order is to become effective. The Applicants hereby waive a recommended decision by a hearing officer or any other responsible officer of the Commission and consent that the Division of Investment Management may assist in the preparation of the Commission's decision and/or order, unless the Division opposes the matters proposed herein. ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS. A. EXHIBITS. G-1.2 Principal amount of external debt and trust preferred securities of CenterPoint and its Subsidiaries as of March 31, 2005. G-2 Quarterly Report of CenterPoint on Form 10-Q for the three months ended March 31, 2005 (File No. 1-31447) (filed with the Commission on May 9, 2005 and incorporated by reference herein). G-3 Quarterly Report of CenterPoint Energy Resources Corp. on Form 10-Q for the three months ended March 31, 2005 (File No. 1-13265) (filed with the Commission on May 11, 2005 and incorporated by reference herein). B. FINANCIAL STATEMENTS. FS-1 Consolidated Balance Sheets of CenterPoint as of December 31, 2004 and Statements of Consolidated Operations, Statements of Consolidated Comprehensive Income and Statements of Consolidated Cash Flows for the year ended December 31, 2004 (incorporated by reference to CenterPoint's Annual Report on Form 10-K for the year ended December 31, 2004 (File No. 1-31447)). 5
FS-7 Consolidated Balance Sheets of CenterPoint Energy Resources Corp. as of December 31, 2004 and Statements of Consolidated Income, Statements of Consolidated Comprehensive Income and Statements of Consolidated Cash Flows of CenterPoint Energy Resources Corp. for the year ended December 31, 2004 (incorporated by reference to CenterPoint Energy Resources Corp.'s Annual Report on Form 10-K for the year ended December 31, 2004 (File No. 1-13265)). FS-13.1 CenterPoint consolidated financials (forecasts through 2009) (to be filed by amendment). FS-14.1 CERC financials (forecasts through 2009) (to be filed by amendment). FS-18.1 CenterPoint equity percentages (forecasts through 2009) (to be filed by amendment). FS-19.1 CERC equity percentages (forecasts through 2009) (to be filed by amendment). ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS. The proposed transaction involves neither a "major federal action" nor "significantly affects the quality of the human environment" as those terms are used in Section 102(2)(C) of the National Environmental Policy Act, 42 U.S.C. Sec. 4321 et seq. No federal agency is preparing an environmental impact statement with respect to this matter. SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, as amended, the Applicants have duly caused this Amendment to be signed on their behalf by the undersigned thereunto duly authorized. Date: May 17, 2005 CENTERPOINT ENERGY, INC. and its Subsidiaries By: /s/ Rufus S. Scott ------------------ Rufus S. Scott Vice President, Deputy General Counsel and Assistant Corporate Secretary CenterPoint Energy, Inc. 6
. . . EXHIBIT G-1.2 CENTERPOINT ENERGY, INC. LONG-TERM DEBT AND TRUST PREFERRED SECURITIES MARCH 31, 2005