As filed with the Securities and Exchange Commission on
March 28, 2003
File No. 70-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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APPLICATION-DECLARATION
ON FORM U-1
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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UNITIL CORPORATION
FITCHBURG GAS AND ELECTRIC LIGHT COMPANY
Unitil Energy Systems, Inc.
UNITIL POWER CORP.
UNITIL REALTY CORP.
UNITIL RESOURCES INC.
UNITIL SERVICE CORP.
6 Liberty Lane West
Hampton, New Hampshire 03842-1720
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(Name of companies filing this statement and
address of principal executive offices)
UNITIL CORPORATION
6 Liberty Lane West
Hampton, New Hampshire 03842-1720
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(Name of top registered holding company parent)
Mark H. Collin
Senior Vice President, Chief Financial Officer & Treasurer
UNITIL CORPORATION
6 Liberty Lane West
Hampton, New Hampshire 03842-1720
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(Name and address of agent for service)
The Commission is requested to mail copies of
all orders, notices and communications to:
Sheri E. Bloomberg, Esq.
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, New York 10019
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS
Unitil Corporation, a New Hampshire corporation ("Unitil") and a registered
holding company under the Public Utility Holding Company Act of 1935, as amended
(the "Act"), and its wholly owned subsidiary companies, Fitchburg Gas and
Electric Light Company ("Fitchburg"), Unitil Energy Systems, Inc. ("Unitil
Energy"), Unitil Power Corp. ("Unitil Power"), Unitil Realty Corp. ("Unitil
Realty"), Unitil Resources, Inc. ("Unitil Resources") and Unitil Service Corp.
("Unitil Service" and, together with Fitchburg, Unitil Energy, Unitil Power,
Unitil Realty and Unitil Resources, the "Subsidiaries" or "Money Pool
Participants"),1 hereby submit this application-declaration on Form U-1 (the
"Application-Declaration") with the Securities and Exchange Commission (the
"Commission") for the authorization and approval under Sections 6(b), 7, 9(a),
10 and 12(b) of the Act and the Rules 43, 45 and 52 thereunder with respect to
the following transactions:
(a) short-term borrowing by Unitil through June 30, 2006 on a revolving
basis under current and proposed unsecured facilities from certain banks up
to an aggregate amount of $55 million for a period of time through June 30,
2006 to be used in connection with (i) loans or advances to Subsidiaries
through the Pooling Agreement (as defined below), (ii) payment of
indebtedness, (iii) short-term cash needs which may arise due to payment
timing differences, and (iv) other general purposes;
(b) short-term borrowings by Fitchburg2 through June 30, 2006 pursuant to
formal or informal credit lines up to $35 million; and
(c) in connection with the continued use of the system money pool ("Money
Pool") by Unitil and the Money Pool Participants,3 pursuant to the Cash
Pooling and Loan Agreement (the "Pooling Agreement") among Unitil and the
Money Pool Participants dated as of February 1, 1985, as amended (attached
hereto as Exhibit B-1), for the other Applicants to make loans to Fitchburg
in an amount not to exceed $35 million through June 30, 2006.
By order dated June 9, 2000, the Applicants are currently authorized to
make unsecured short-term borrowings in the amount of $45 million for Unitil and
$30 million for Fitchburg and
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1 For purposes of this Application-Declaration, Unitil and the Subsidiaries are
collectively referred to as the "Applicants."
2 Unitil Energy has obtained authorization for its short-term borrowings from
the New Hampshire Public Utilities Commission. Moreover, any such short-term
borrowings will be used solely for the purpose of financing its business at
interest rates and with maturity dates that would parallel such lender's
effective short-term cost of capital on any given date. Accordingly, such
short-term borrowings by Unitil Energy are exempt from the prior approval
requirements of Sections 6 and 9 of the Act under Rule 52(a) and (d).
3 Unitil Power, Unitil Realty, Unitil Resources and Unitil Services are
non-utility Subsidiaries of Unitil whose short-term borrowings will be used
solely for the purpose of financing their respective businesses at interest
rates and with maturity dates that would parallel such lender's effective
short-term cost of capital on any given date. Accordingly, such transactions are
exempt from the prior approval requirements of Section 6 of the Act under Rule
52(b).
to operate under the Money Pool, as more fully described in the joint
application-declaration on Form U-1, as amended, in File No. 70-09633, and the
Commission's order with respect thereto (HCAR No. 35-27182). In accordance with
the Commision's order of December 2, 2002 (HCAR No. 35-27609), Unitil's two New
Hampshire utilities, Concord Electric Company and Exeter & Hampton Electric
Company, merged to form Unitil Energy. Unitil Energy is a participant in the
Money Pool. Pursuant to Rule 52 under the Act, the continued operation of the
Money Pool does not require further Commission approval. In accordance with
Section 6(b) of the Act, none of the transactions contemplated herein will be
part of a public offering. The Applicants will continue to file reports on
short-term borrowings and Money Pool transactions on a quarterly basis within 30
days after the end of each calendar quarter, which shall contain, for each
company, (i) the maximum principal amount of short-term borrowings outstanding,
(ii) the average interest rate for the Money Pool borrowings for the period and
(iii) the maximum amount outstanding during the period for each source of
outside borrowings.
The Applicants are requesting an increase in the amount of short-term debt
authorization with respect to Unitil and Fitchburg in order to better ensure
that the system is able to meet it working capital and capital expenditure in
increasingly volatile markets, particularly with respect to the utilities' gas
and electric supply. In the winter of 2001 and again in the winter of 2003,
natural gas and oil commodity prices have both reached new highs and have been
extremely volatile. This combination of quick swings to high prices increases
the need for the Applicants to have rapid access to working capital. Other
factors that are expected to increase the Company's working capital requirements
in 2003 include increased power supply restructuring related cost recovery
deferrals and higher power supply related collateral and assurance requirements.
In addition, Unitil has a utility system construction program in place that is
expected to result in capital expenditures of over $21 million in 2003. This
construction spending principally relates to required system improvements and
customer growth projects that Unitil believes will benefit both its customers as
a result of improved service and shareholders as a result of growth in its core
operations.
The proposed transactions may be subject to Rules 53 and 54 under the Act.
Neither Unitil nor any Subsidiary thereof presently has, or as a consequence of
the proposed transactions will have, an interest in any exempt wholesale
generator ("EWG") or foreign utility company ("FUCO"), as those terms are
defined in Sections 32 and 33 of the Act, respectively. None of the proceeds
from the proposed transactions will be used to acquire any securities of, or any
interest in, an EWG or FUCO. Moreover, neither Unitil nor any of the
Subsidiaries is, or as a consequence of the proposed transactions will become, a
party to, and such entities do not and will not have any rights under, a
service, sales or construction contract with any affiliated EWGs or FUCOs except
in accordance with the rules and regulations promulgated by the Commission with
respect thereto. Consequently, all applicable requirements of Rule 53(a)-(c)
under the Act are satisfied as required by Rule 54 under the Act.
A. Bank Borrowing by Unitil
In this Application-Declaration, Unitil seeks to extend the authorization
through June 30, 2006 for its short-term bank borrowing arrangements and
increase its short-term borrowing limit to $55 million, as described herein.
2
As of March 2003 Unitil had three unsecured lines of credit: a $21 million
unsecured line of credit from Fleet National Bank (attached hereto as Exhibit
B-2), an $11 unsecured line of credit from Sovereign Bank (attached hereto as
Exhibit B-3), and a $13 million unsecured line of credit from Citizens Bank
(attached hereto as Exhibit B-4).
(i) Fleet National Bank
The $21 million unsecured line of credit is available to Unitil through
June 30, 2004. The interest rate for borrowing under the facility shall be
either (a) the rate of interest announced publicly by Fleet National Bank as its
Base Rate or (b) the Money Market Rate, as elected by Unitil. In addition to
this line of credit, Fleet National Bank has approved an informal money market
lending arrangement for minimum amounts of $500,000, at fixed rates out to
ninety days, that is available to Unitil through June 30, 2004. The unsecured
line of credit and the informal money market lending arrangement are each
available to Unitil subject to the bank's continued satisfaction with the
financial condition of Unitil and the Subsidiaries and to no substantive changes
in monetary or governmental regulations.
(ii) Sovereign Bank
The $11 million unsecured line of credit is available to Unitil through
June 30, 2004. The interest rate for borrowing under the facility is equal to
either (a) the rate of interest announced by Sovereign Bank as its Prime Rate or
(b) a fixed rate based on an index plus a margin to be determined by Sovereign
Bank, as elected by Unitil. This line is available to Unitil subject to the
bank's continued satisfaction with the financial condition of Unitil and the
Subsidiaries and to no substantive changes in monetary or governmental
regulations.
(iii) Citizens Bank New Hampshire
The $13 million unsecured line of credit is available to Unitil through
August 31, 2003. The interest rate for borrowing under the facility is equal to
either (a) the Wall Street Journal Prime rate, or (b) the London Interbank
Offered Rate ("LIBOR") as in effect on the date of the loan plus a margin to be
determined by Citizens Bank, as elected by Unitil. This line is available to
Unitil subject to the bank's continued satisfaction with the financial condition
of Unitil and the Subsidiaries and to no substantive changes in monetary or
governmental regulations.
The term "Base Rate," as used in the above discussion of Unitil's
short-term borrowing facilities, is synonymous with the prime rate, which is the
interest rate per annum from time to time announced and made effective by a bank
as the Base Rate, or as the case may be, the Base, reference or other similar
rate then designated by it for general commercial lending reference purposes, it
being understood that such rate is a reference rate, not necessarily the lowest,
established from time to time which serves as the basis upon which effective
rates of interest are calculated for loan making reference thereto.
The term "Money Market Rate," as used in the above discussion of Unitil's
short-term borrowing facilities, is the overnight or term money market
facilities interest rate per annum which is communicated to Unitil by a bank.
3
Money Market Rates are offered by certain banks at a given point in time
and will vary depending on a number of factors including: the availability of
bank funds, the bank's internal cost of funding, the creditworthiness of the
borrower, the term of the loan, the size of the loan and the degree of
competition among banks in a market. The Money Market Rate offered by a bank is
normally a lower rate with more favorable terms and conditions than it Base
Rate. Under its short-term bank borrowing facilities, Unitil borrows at Money
Market Rates when such rates are available and more favorable than Base Rates.
Any borrowings at Money Market Rates, under current facilities proposed below,
do not and will not exceed the Base Rate for unsecured loans by the same bank.
Unitil proposes to issue short-term notes pursuant to both formal and
informal lines of credit with lending institutions. Unitil's current borrowing
agreements, described above and attached as Exhibits B-2, B-3 and B-4 are
typical of the forms of short-term notes proposed to be used by Unitil.
Short-term unsecured promissory notes will be issued by Unitil to a particular
lending institution prior to the first borrowing under that promissory note.
Borrowings will be evidenced on a "grid" schedule, in the form attached to each
promissory note and will be recorded the day that the request for borrowing is
made. The bank holding the respective promissory notes will maintain the record
of borrowings and repayments without the necessity of issuing additional notes.
Unitil anticipates that the promissory notes used may vary from the forms
described above to reflect customary terms or particular lending practices and
policies of different lending institutions, but otherwise will be substantially
similar.
Unitil's present and proposed short-term borrowing arrangements provide,
and will provide, for borrowings at any of the rates described above and may be
subject to prepayment at the borrower's option, as the case may be. The
borrowing rate shall change as the base rate changes. Short-term notes may
provide informal borrowings at sub-prime rate or Money Market Rate which may be
made available under each credit line arrangement. Money Market Rates are fixed
rates. Under Unitil's current short-term borrowing arrangements, Money Market
Rate borrowings are not subject to prepayment. Money Market Rate borrowings
under the proposed facilities may or may not be subject to prepayment.
Borrowings under the proposed credit agreements will not exceed the shorter
of the term of the particular line of credit or nine months. Short-term notes
issued on a transactional basis, will be dated as of the date of issue, will
have a maximum term of nine months and will bear interest at the Base or Money
Market Rate, described above.
Unitil requests authority to secure both formal and informal credit lines
with a number of lending institutions. Formal credit lines under the proposed
facilities may be subject to compensating balances and/or fee requirements.
Compensating balance requirements will not exceed 5% of the committed credit
line amount, and fees will not exceed 50 basis points times the total line of
credit. Unitil may change its credit line arrangements and obtain additional
formal or informal credit lines over time. The continued availability of such
credit lines is subject to the continued review of the lending institutions. In
the future, the Company may choose to formalize its banking relationship with
its banks through a syndicated credit facility. A syndicated credit facility
would allow the Company to receive the administrative and economic efficiencies
of coordinated banking relationships. The duration of any such facility would
not exceed 365 days.
4
Unitil requests authority to renew and extend current short-term borrowings
under the existing and proposed facilities as such borrowings mature and/or
secure credit lines with other lending institutions under similar conditions, to
refund such short-term borrowings with other, similar short-term borrowings, to
repay such short-term borrowings or to increase their amount from time to time
up to an aggregate amount of $55 million. Unitil requests that the authority to
undertake new short-term borrowing be granted through June 30, 2006.
Unitil anticipates its working capital requirements to increase in the
future, due in part to unstable natural gas and purchase power prices, utility
capital construction expenditures, increased power supply restructuring cost
recovery deferrals and power supply-related and assurance costs. Unitil expects
to use the proceeds derived from short-term bank borrowings authorized by this
Commission pursuant to this application/declaration for: (i) loans or advances
to Subsidiaries through the Pooling Agreement, (ii) payment of indebtedness,
(iii) short-term cash needs which may arise due to payment timing differences,
and (iv) other general purposes
B. Short-Term Borrowing by Fitchburg - Pooling Agreement and Other
Fitchburg requests that it be authorized by the Commission to incur
short-term borrowings from any source, including the Money Pool, in an aggregate
principal amount at any one time outstanding not to exceed $35 million, and to
increase the amount it is authorized to have outstanding at any time under such
arrangements to $35 million, as described herein.
It is anticipated that most short-term borrowings by Fitchburg will be made
pursuant to the Pooling Agreement. However, Fitchburg may borrow from parties
outside of the Pooling Agreement. Accordingly, Fitchburg seeks Commission
authorization for short-term borrowings up to $35 million through the Pooling
Agreement and through direct borrowings from commercial banks.
Fitchburg will use the proceeds from its short-term borrowing primarily to
meet working capital requirements and provide interim financing for its utility
construction expenditures. In addition to construction and other physical
improvements, the funds will be used for permitted debt and preferred stock
sinking fund redemptions.
Any short-term borrowing from commercial banks undertaken by Fitchburg will
be under terms and conditions substantially similar to the terms and conditions
of the current short-term borrowing agreements between Unitil and its commercial
banks described above in Section A. Fitchburg proposes to issue short-term notes
pursuant to both formal and informal lines of credit with lending institutions.
Short-term promissory notes are expected to be issued to a particular lending
institution prior to the first borrowing under that promissory note from that
lender. Borrowings will be evidenced on a so called "grid" schedule, in the form
attached to each promissory note and will be recorded the day that the request
for borrowing is made. The bank holding the respective promissory notes will
maintain the record of borrowings and repayments without the necessity of
issuing additional notes. Fitchburg anticipates that the promissory notes used
may vary from the forms described above to reflect customary terms or particular
lending practices and policies of different lending institutions, but otherwise
will be substantially similar.
5
Short-term borrowing arrangements will provide for borrowings at the
so-called "Base Rate" or "prime rate" and will be subject to prepayment at the
borrower's option. In addition, short-term notes may provide informal borrowings
at alternate Base Rates, sub-prime rates or Money Market Rates which are to be
made available under the line of credit arrangements. Money Market Rates are
fixed rate loans and may or may not be subject to prepayment. Any borrowing at
Money Market Rates will be at a rate not to exceed the prime rate for unsecured
loans by the same bank.
Borrowings under credit agreements with commercial banks will not exceed
the shorter of the term of the particular line of credit or nine months.
Short-term notes issued on a transactional basis will be dated as of the date of
issue, will have a maximum term of nine months and will bear interest at the
Base or Money Market Rate described above.
Fitchburg requests authority to secure both formal and informal credit
lines with a number of lending institutions. Formal credit lines may be subject
to compensating balances and/or fee requirements. Compensating balance
requirements will not exceed 5% of the committed credit line amount, and fees
will not exceed 50 basis points times the total line of credit. Fitchburg may
change its credit line arrangements and obtain additional formal or informal
credit lines over time.
Pursuant to the requirements of Rule 24 under the Act, Unitil and its
Subsidiaries have filed a quarterly report on short-term borrowings and money
pool transactions as required by the Commission's order approving short-term
borrowings and the Unitil Money Pool. Pro Forma Balance Sheets and Income
Statements for Unitil and Fitchburg giving effect to requested maximum
borrowings are attached.
C. Pooling Agreement
All the Applicants currently participate in the Money Pool pursuant to the
Pooling Agreement among Unitil and the Money Pool Participants. The Pooling
Agreement allows Unitil and the Money Pool Participants to invest their surplus
funds and the Money Pool Participants to obtain advances (i.e., borrow funds)
from the System's Money Pool.4 Unitil Service administers the Money Pool for
Unitil and the other Money Pool Participants on an "at cost basis." This
arrangement is used to: (i) provide the Money Pool Participants with funds
supplied internally by Unitil and the Money Pool Participants (i.e., surplus
funds) and from external sources (i.e., bank borrowings), as described below;
and (ii) invest surplus funds of Unitil and the Money Pool Participants in
various short-term money market instruments. Any issuance of debt securities
under the Money Pool shall have a maximum term of nine months.
The Money Pool offers several advantages to Unitil and the Money Pool
Participants, including: lower overall short-term borrowing costs; a mechanism
for each Money Pool Participant to earn a higher return on interest from surplus
funds; and a decreased reliance on external funding sources. Lower borrowing
costs are derived from the elimination of the
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4 Unitil may incur short-term borrowings up to an aggregate amount of $55
million outstanding at any time which may be loaned or advanced to the Money
Pool Participants through the Pooling Agreement. Fitchburg may borrow up to an
aggregate amount of $35 million outstanding at any time.
6
additional banking fees that would be required if each Money Pool Participant
had to maintain its own lines of credit and borrow on its own, and from
reduction in the short-term cost of money when Unitil borrows, in the aggregate,
on behalf of the Money Pool Participants, as opposed to each Money Pool
Participant borrowing on its own. In addition, the Money Pool provides a
mechanism for each Money Pool Participant to earn short-term interest on surplus
funds that are loaned to other Money Pool Participants, at a rate normally
charged by Unitil's lead bank instead of at the prevailing short-term investment
rate. In addition to commercial paper, Unitil may invest surplus funds in
various institutional money market funds (as defined by the Investment Company
Act of 1940) or comparable interest bearing instruments which seek to obtain a
high level of current income while preserving principal and liquidity. Overall,
the Money Pool arrangement allows Unitil and the Money Pool Participants to
effectively maximize the use of internally generated funds and, thereby,
decrease the reliance on external funding sources.
In connection with the continued use of the Money Pool by Unitil and the
Money Pool Participants through June 30, 2006, Fitchburg seeks approval to make
loans to the other Money Pool Participants and incur borrowings from the other
Applicants, and the other Applicants seek approval to make loans to Fitchburg.
ITEM 2. FEES, COMMISSIONS AND EXPENSES
The fees, commissions and expenses of the Applicants expected to be paid or
incurred, directly or indirectly, in connection with the transactions described
above are estimated as follows:
Legal fees........................................... $6,000
Miscellaneous........................................ $3,000
Total....................................... $9,000
ITEM 3. APPLICABLE STATUTORY PROVISIONS
Sections 6(b), 7, 9(a), 10 and 12(b) of the Act, and Rules 43, 45 and 52
thereunder, are directly applicable to this Application-Declaration.
ITEM 4. REGULATORY APPROVALS
The Money Pool has already been approved by the Massachusetts Department of
Telecommunications and Energy with respect to Fitchburg and the New Hampshire
Public Utilities Commission with respect to Unitil, Unitil Energy and Unitil
Power. No state or federal agency other than the Commission has jurisdiction
with respect to any of the proposed transactions other than as described in this
item.
ITEM 5. PROCEDURE
It is requested that the Commission issue and publish no later than April
18, 2003 the requisite notice under Rule 23 with respect to this
Application-Declaration; such notice specifying a date not later than May 13,
2003 as the date after which an order granting and
7
permitting this Application-Declaration to become effective may be entered by
the Commission and that the Commission enter not later than May 14, 2003, an
appropriate order granting and permitting this Application-Declaration to become
effective.
No recommended decision by a hearing officer or other responsible officer
of the Commission is necessary or required in this matter. The Division of
Investment Management of the Commission may assist in the preparation of the
Commission's decision in this matter. There should be no thirty-day waiting
period between the issuance and effective date of any order issued by the
Commission in this matter, and it is respectfully requested that any such order
be made effective immediately upon the entry thereof.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
(a) Exhibits
Exhibit No. Description of Exhibit
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B-1 Cash Pooling and Loan Agreement, as amended (Filed with
the Commission as Exhibit A-1 to Form U-1 File No. 70-8623
and incorporated by reference herein).
B-1.1 Amendment No. 4 to Cash Pooling and Loan Agreement.
B-2 Line of Credit and Promissory Note from Fleet National
Bank (Amendment filed herewith; initial documents
previously filed).
B-3 Line of Credit and Promissory Note from Sovereign Bank
(Amendment filed herewith; initial documents previously
filed).
B-4 Line of Credit and Promissory Note from Citizens Bank
(Amendment filed herewith; initial documents previously
filed).
D-1 New Hampshire Public Utilities Commission Order No. 18,416
(Filed with the Commission as Exhibit D-3 to Form U-1
File No. 70-8066 and incorporated by reference herein).
D-2 New Hampshire Public Utilities Commission Order No. 24,072
(Filed with the Commission as Exhibit C-3 to Form U-1
File No. 70-10084 and incorporated by reference herein).
D-3 Massachusetts Department of Public Utilities Commission
Order No. MDPU 89-66 (Filed with the Commission as Exhibit
D-5 to Form U-1 File No. 70-8066 and incorporated by
reference herein).
8
F-1 Opinion of Counsel (To be filed by Amendment).
F-2 "Past Tense" Opinion of Counsel (To be filed by Amendment).
G-1 Proposed Form of Notice.
(b) Financial Statements
No. Description of Financial Statement
--- ----------------------------------
FS-1 Unitil Corporation and Subsidiary Companies Consolidated
Actual Balance Sheet and Statement of Earnings,
December 31, 2002 (Filed with the Commission with Unitil's
10-K for the year ended December 31, 2002 and
incorporated by reference herein).
FS-2 Unitil Corporation and Subsidiary
Companies Consolidated Pro Forma
Balance Sheet and Statement of
Earnings, December 31, 2002.
FS-3 Unitil Corporation (Company Only) Actual and Pro Forma
Balance Sheet and Statement of Earnings, December 31, 2002.
FS-4 Fitchburg Actual and Pro Forma Balance Sheet and Statement of
Earnings, December 31, 2002.
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS
None of the matters that are the subject of this Application-Declaration
involve a "major federal action" nor do they "significantly affect the quality
of the human environment" as those terms are used in Section 102(2)(C) of the
National Environmental Policy Act. None of the proposed transactions that are
the subject of this Application-Declaration will result in changes in the
operation of the Applicants that will have an impact on the environment. The
Applicants are not aware of any federal agency which has prepared or is
preparing an environmental impact statement with respect to the transactions
proposed herein.
9
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the Applicants have duly caused this Application-Declaration to be signed
on their behalf by the undersigned thereunto duly authorized.
Dated: March 28, 2003
UNITIL CORPORATION
By: /s/ Mark. H. Collin
Name: Mark H. Collin
Title: Senior Vice President, Chief Financial
Officer & Treasurer
10
FOURTH AMENDMENT TO
CASH POOLING AND LOAN AGREEMENT
This Fourth Amendment to the Cash Pooling and Loan Agreement is dated as of
December 2, 2002.
WHEREAS, Unitil Corporation, a New Hampshire corporation ("Unitil"),
Concord Electric Company, a New Hampshire Corporation ("Concord"), Exeter &
Hampton Electric Company, a New Hampshire corporation ("Exeter"), Fitchburg Gas
and Electric Light Company, a Massachusetts corporation ("FGE"), Unitil Power
Corp., a New Hampshire corporation ("UPC"), Unitil Realty Corp., a New Hampshire
corporation ("URC"), Unitil Resources, Inc., a New Hampshire Corporation ("URI")
and Unitil Service Corp., a New Hampshire corporation ("USC"), are parties to a
Cash Pooling and Loan Agreement dated as of February 1, 1985, as amended (the
"Cash Pooling Agreement"); and
WHEREAS, effective as of December 2, 2002, Exeter merged with and into
Concord and, on that same date, Concord succeeded, by operation of law, to all
of Exeter's rights and obligations under the Cash Pooling Agreement; and
WHEREAS, effective as of December 2, 2002, Concord changed its name to
Unitil Energy Systems, Inc. ("UES");
NOW, THEREFORE in consideration of the foregoing, the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency is hereby acknowledged by each party to the others, the parties
hereto agree as follows:
1. Each of Unitil, FGE, UPC, URC, URI and USC hereby acknowledges, agrees
and consents to the succession of UES to all of Exeter's rights and obligations
under the Cash Pooling Agreement, and all parties to the Cash Pooling Agreement
further agree that the Cash Pooling Agreement be hereby amended to delete all
references therein to Exeter and to change all references therein to Concord to
UES.
2. Except as described above, all provisions of the Cash Pooling Agreement
shall remain in full force and effect without amendment.
IN WITNESS WHEREOF, the parties have caused this Fourth Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
UNITIL CORPORATION
By: /s/ Michael J. Dalton
---------------------------------
Name: Michael J. Dalton
By: /s/ Mark H. Collin
---------------------------------
Name: Mark H. Collin, Treasurer
FITCHBURG GAS AND ELECTRIC LIGHT COMPANY
By: /s/ Michael J. Dalton
---------------------------------
Name: Michael J. Dalton
By: /s/ Mark H. Collin
---------------------------------
Name: Mark H. Collin, Treasurer
UNITIL ENERGY SYSTEMS, INC.
By: /s/ Michael J. Dalton
---------------------------------
Name: Michael J. Dalton
By: /s/ Mark H. Collin
---------------------------------
Name: Mark H. Collin, Treasurer
UNITIL POWER CORP.
By: /s/ David K. Foote
---------------------------------
Name: David K. Foote, President
By: /s/ Mark H. Collin
---------------------------------
Name: Mark H. Collin, Treasurer
UNITIL REALTY CORP.
By: /s/ Mark H. Collin
---------------------------------
Name: Mark H. Collin, Treasurer
By: /s/ Lawrence M. Brock
---------------------------------
Name: Lawrence M. Brock, Controller
UNITIL RESOURCES, INC.
---------------------------------
By: /s/ Robert G. Schoenberger
---------------------------------
Name: Robert G. Schoenberger, President
By: /s/ Mark H. Collin
---------------------------------
Name: Mark H. Collin, VP & Treasurer
UNITIL SERVICE CORP.
By: /s/ Mark H. Collin
---------------------------------
Name: Mark H. Collin, VP & Treasurer
By: /s/ Lawrence M. Brock
---------------------------------
Name: Lawrence M. Brock, Controller
AMENDMENT AGREEMENT
This Amendment Agreement ("Agreement") is entered into as of the 4th day of
March, 2003, by and among UNITIL CORPORATION, a New Hampshire corporation with a
principal place of business at 6 Liberty Lane West, Hampton, New Hampshire,
03842 (the "Borrower") (the Borrower and all other persons primarily or
secondarily liable hereunder or in respect hereto are sometimes referred to
herein as the "Obligor") and FLEET NATIONAL BANK, a national bank organized
under the laws of the United States with an office at 1155 Elm Street,
Manchester, New Hampshire 03101 (the "Bank").
W I T N E S S E T H
WHEREAS, the Bank and the Borrower entered into a certain Letter Agreement
dated as of September 13, 2000, as amended, modified and supplemented (the
"Letter Agreement"), establishing a line of credit in favor of the Borrower in
the original principal amount of up to Sixteen Million Dollars ($16,000,000)
(the "Line") and have executed and/or delivered certain documents and
instruments in connection therewith (all of the foregoing, including, without
limitation, the Letter Agreement, as the same have been and may hereafter be
amended, renewed and/or modified are hereinafter referred to collectively as the
"Loan Documents");
WHEREAS, the Borrower and the Bank have agreed to amend the Letter
Agreement and Loan Documents to, among other things, (i) conditionally increase
the maximum principal amount available under the Line to Twenty One Million
Dollars ($21,000,000); and (ii) amend the Loan Documents in certain other
respects.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements therein contained, the receipt and adequacy of which are hereby
acknowledged, the parties covenant, stipulate and agree as follows:
1. Representations and Warranties of the Borrower. The Borrower represents
and warrants to the Bank as follows:
(a) The representations, warranties and covenants of the Borrower made in
the Loan Documents remain true and accurate and are hereby reaffirmed as of the
date hereof.
(b) The Borrower has performed, in all material respects, all obligations
to be performed by it to date under the Loan Documents and no event of default
exists thereunder.
(c) The Borrower is a corporation duly organized, qualified and existing in
good standing under the laws of the state of its formation and in all other
jurisdictions in which the character of the property owned or the nature of the
existing business conducted by the Borrower require its qualification as a
foreign corporation.
(d) The execution, delivery and performance of this Agreement and the
documents relating hereto (the "Amendment Documents") are within the power of
the Borrower and are not in contravention of law, of the Borrower's Articles of
Incorporation, Bylaws or the terms of any other documents, agreements or
undertaking to which the Borrower is a party or by which the Borrower is bound.
No approval of any person, corporation, governmental body or other entity
1
not provided herewith is a prerequisite to the execution, delivery and
performance by the Borrower of the Amendment Documents or any of the documents
submitted to the Bank in connection with the Amendment Documents, or upon
execution by the Bank to ensure the validity or enforceability thereof.
(e) When executed on behalf of the Borrower, the Amendment Documents will
constitute valid and legally binding obligations of the Borrower, enforceable in
accordance with their terms.
2. Amendments to Letter Agreement. The Letter Agreement shall be amended as
follows:
(a) The first sentence of the first paragraph on page one of the Letter
Agreement is hereby amended by deleting the phrase "Sixteen Million Dollars
($16,000,000)" and replacing it with "Twenty One Million Dollars ($21,000,000)".
(b) The second sentence of the first paragraph on page one of the Letter
Agreement is hereby amended by deleting the date "June 30, 2001" and replacing
it with "June 30, 2004".
(c) The second sentence of the third paragraph on page one of the Letter
Agreement is hereby amended by deleting the phrase "of even or near date" and
replacing it with "dated September 18, 2000, as the same may be amended".
(d) The third paragraph on page one of the Letter Agreement is hereby
amended by adding the following at the end thereof:
"The Loan Documents together are intended by the parties as the final,
complete and exclusive statement of the transactions evidenced by this
Agreement and Loan Document. All prior or contemporaneous promises,
agreements and understandings, whether oral or written, are deemed to
be superceded by the Loan Documents, and no party is relying on any
promise, agreement or understanding not set forth in the Loan
Documents."
(e) The first sentence of the second full paragraph appearing on page two
of the Letter Agreement is hereby amended by inserting the following at the end
of said sentence before the period: "or any such individual as such officer
shall designate in writing who is authorized to borrow money from the Bank".
(f) The last sentence of the second full paragraph appearing on page two of
the Letter Agreement is hereby amended by deleting the phrase "minimum
increments" and replacing said phrase with "the minimum amount".
(g) The second sentence of the second full paragraph appearing on page
three of the Letter Agreement is hereby amended by deleting the amount
"$16,000,000" and replacing it with "$21,000,000".
3. Amendment to Line of Credit Promissory Note. The Line of Credit
Promissory Note in the original principal amount of Sixteen Million Dollars
($16,000,000) dated as of
2
September 18, 2000, as amended, made payable by the Borrower to the Bank (the
"Line of Credit Note") is hereby amended as follows:
(a) The amount "$16,000,000" appearing in the upper left hand corner on
page 1 of the Line of Credit Note is deleted and replaced with "$21,000,000".
(b) The amount "Sixteen Million Dollars ($16,000,000)" appearing on page 1
in the first paragraph of the Line of Credit Note is hereby deleted and replaced
with "Twenty One Million ($21,000,000)".
(c) The fourth paragraph appearing on page 1 of the Line of Credit Note is
hereby amended by deleting the amount "Sixteen Million Dollars ($16,000,000)"
appearing in the first sentence thereof and replacing it with "Twenty One
Million Dollars ($21,000,000)"
(d) All terms and conditions of the Line of Credit Note, except as amended
hereby, are hereby ratified and confirmed.
4. 4. Conditions Subsequent. The parties hereto acknowledge and agree that
the Bank's agreement to increase the maximum principal amount available under
the Line from Sixteen Million Dollars ($16,000,000) to Twenty One Million
Dollars ($21,000,000) and to extend the Annual Review Date (as defined in the
Letter Agreement) to June 30, 2004 is expressly conditioned upon the Bank, the
Borrower and the Borrower's other lending institutions (being Sovereign Bank and
Citizens Bank New Hampshire) entering into an Intercreditor Agreement acceptable
to the Bank in its sole discretion (the "Intercreditor Agreement") within ninety
(90) days of the date hereof. If the parties are unable to agree upon and fully
execute the Intercreditor Agreement within said ninety (90) day period, the
Annual Review Date shall automatically revert back to June 30, 2003, and the
Borrower shall make such principal reduction payments on the Line as are
necessary to reduce the outstanding principal balance thereof to be no more than
$16,000,000 and then the maximum principal amount available under the Line shall
automatically reduce to $16,000,000.
5. Conditions Precedent. The obligations of the Bank hereunder are subject
to the following conditions precedent:
(a) The Borrower shall deliver to the Bank this Agreement and the Amendment
Documents.
(b) The Bank shall have received certified copies of instruments evidencing
all corporate action taken by the Borrower to authorize this Agreement, the
borrowing hereunder, and the execution and delivery of the Amendment Documents
and shall have executed and delivered all of those documents and other matters
set forth in the Closing Agenda attached hereto as Exhibit A.
(c) The Borrower pay the Bank a fee in the amount of $500.
3
6. Loan Documents. The Borrower shall deliver this Agreement and the other
Amendment Documents to the Bank and these documents shall be included in the
term "the Loan Documents" in the Letter Agreement.
7. Future References. All references to the Loan Documents shall
hereinafter refer to such documents as amended.
8. Continuing Effect. The provisions of the Loan Document, as modified
herein, shall remain in full force and effect in accordance with their terms and
are hereby ratified and confirmed.
9. General.
(a) The Borrower shall execute and deliver such additional documents and do
such other acts as the Bank may reasonably require to implement the intent of
this Agreement fully.
(b) The Borrower shall pay all costs and expenses, including, but not
limited to, attorneys' fees incurred by the Bank in connection with this
Agreement. The Bank, at its option, but without any obligation to do so, may
advance funds to pay any such costs and expenses that are the obligation of the
Borrower and all such funds advanced shall bear interest at the highest rate
provided in the Loan Documents.
(c) This Agreement and Amendment Documents may be executed in several
counterparts by the Borrower, the Bank and any obligor or guarantor of the
Letter Agreement, each of which shall be deemed an original but all of which
together shall constitute one and the same Agreement
IN WITNESS WHEREOF, the parties have executed this agreement by their duly
authorized parties as of the date set forth above.
FLEET NATIONAL BANK
/s/ By: /s/ Daniel M. Gillespie
- -------------------------------- ---------------------------------------
Witness Daniel M. Gillespie, Its Duly
Authorized Assistant Vice President
UNITIL CORPORATION
/s/ By: /s/ Michael J. Dalton
- -------------------------------- ---------------------------------------
Witness Michael J. Dalton, Its Duly
Authorized President
UNITIL CORPORATION
/s/ By: /s/ Mark H. Collin
- -------------------------------- ---------------------------------------
Witness Mark H. Collin, Its Duly
Authorized Treasurer
4
STATE OF NEW HAMPSHIRE
COUNTY OF HILLSBOROUGH
The foregoing instrument was acknowledged before me this 5th day of
March, 2003, by Daniel M. Gillespie, duly authorized Assistant Vice President of
FLEET NATIONAL BANK, a national bank organized under the laws of the United
States, on behalf of the same.
/s/ Diane A. Brodeur
-----------------------------------
Justice of the Peace/Notary Public
My Commission Expires:
Notary Seal ------------
STATE OF NEW HAMPSHIRE
COUNTY OF ROCKINGHAM
The foregoing instrument was acknowledged before me this 4th day of
March, 2003, by Michael J. Dalton, duly authorized President of UNITIL
CORPORATION, a New Hampshire corporation, on behalf of the same.
/s/ Sandra L. Whitney
-----------------------------------
Justice of the Peace/Notary Public
My Commission Expires:
Notary Seal ------------
5
STATE OF NEW HAMPSHIRE
COUNTY OF ROCKINGHAM
The foregoing instrument was acknowledged before me this 4th day of
March, 2003, by Mark H. Collin, duly authorized Treasurer of UNITIL CORPORATION,
a New Hampshire corporation, on behalf of the same.
/s/ Sandra L. Whitney
Justice of the Peace/Notary Public
My Commission Expires:
Notary Seal -----------
6
[LOGO]
SOVEREIGN BANK NEW ENGLAND
A Division of Sovereign Bank
March 12, 2003
Mr. Mark Collin
Chief Financial Officer
Unitil
7 Liberty Lane West
Hampton, New Hampshire 03862
Re: Line of credit increase and renewal
Dear Mark,
This letter is to confirm the approval of a $2 million increase in the
company's Revolving Line of credit to $11 million. The line will next be due for
review on June 30, 2004. You will continue to be billed on a quarterly basis for
the unused commitment fee of .25%. In connection with the increase in the line,
the annual renewal fee has been increased to $5500, due July 15, 2003.
I expect to have modification documents completed within the next week, and
will contact you to schedule a convenient time to sign the documentation.
Please contact me at 882-3040 or via email at jreams@sovereignbank.com
should you have any questions.
Sincerely,
/s/ Janis C. Reams
Janis C. Reams
Vice President
100 Middle Street
[LOGO] Portland, ME 04101-4100
December 4, 2002
Mr. Mark Collin
Treasurer
UNITIL CORP.
6 Liberty Lane West
Hampton, New Hampshire 03842
Dear Mark:
This letter agreement sets forth the terms under which Citizens Bank of New
Hampshire (the "Bank") will make available to UNITIL Corporation (the
"Borrower") an unsecured Line of Credit (the "Line") for up to $13,000,000. This
Line will be reviewed again on August 31, 2003 (the "Annual Review Date").
Any loan under the Line will bear interest (computed on a 360 day per year
basis) of either:
(1) Wall Street Journal Prime rate ("WSP") as it may vary; or
(2) A fixed rate for each loan based on the London Interbank Offered Rate
("LIBOR" for the term of the loan [Not to exceed ninety (90) days] as
in effect on the date of the loan plus a margin to be determined by
the Bank from time to time. If the LIBOR rate is selected, the rate
will be determine by the Bank by 10:00 a.m. on the day of the
requested borrowing. Each borrowing under this line by you must
specify the amount of the loan requested, the rate requested and the
maturity requested.
Each loan must be not less than $500,000.00. This Line is available subject
to the Bank's continued satisfaction with the financial condition of Borrower
and its subsidiaries and to no substantive changes in monetary or governmental
regulations. Borrower shall deliver to Bank: annual report and 10K report by
April 30; and 10Q by ninety (90) days after the close of each calendar quarter.
The Borrower shall maintain and fund an account with the Bank which the
Bank may debit for payments due, quarterly fees, and other amounts due. Loan
advances will be made upon telephone request by offers designated in writing by
Borrower and shall be deposited by Bank into the account.
Loans will be evidenced by a Promissory Note in the form attached hereto.
Each loan and the corresponding information [date, amount, maturity date
(subject to Bank's right to demand payment at any time) and interest rate] will
be recorded on the date of the telephone request. Bank's corresponding advices
of credit and debit will be additional evidence of loans in the format described
above, and the Borrower agrees that absent manifest error, this record shall be
conclusive and binding.
In consideration for the availability of this Line and until expiration or
earlier written termination of the Line, Borrower will pay Bank a quarterly fee
on or before ten (10) days after the close of each fiscal quarter (with fiscal
quarters closing on March 31, June 30, September 30, and December 31, [with a
final payment due ten (10) days after expiration or earlier written termination
of the Line], equal to the product of .0025 multiplied by the "Daily Average
Unused Portion of the Line" during the preceding fiscal quarter. "Daily Average
Unused Portion of the Line" is determined by summing the "Unused Portion of the
Line" for each day of the relevant fiscal quarter and dividing that sum by the
number of days in the relevant fiscal quarter. "Unused Portion of the Line"
means $13,000,000 minus the amount outstanding on the Line as of the Bank's
close of business on that day. Interest and fees are calculated on the basis of
the actual days elapsed over a 360 day banking year.
Bank may, at any time, demand payment in full of all loans made under the
Line and interest and other charges due hereunder.
Borrower acknowledges that bank has disclosed the following finances
charges in connection with this loan: quarterly fees as set forth above and
interest rate set forth above and in the Note.
If the foregoing satisfactorily sets forth the terms and conditions of this
lending arrangement, please indicate your acceptance thereof by executing and
returning the attached copy of this letter and the attached Promissory Note.
We are pleased to provide this Line of Credit and look forward to the
ongoing development of our relationship.
Sincerely,
CITIZENS BANK OF NEW HAMPSHIRE
By: /s/
------------------------------------
Its: Vice President
AGREED AND ACCEPTED:
UNITIL CORPORATION
By: /s/ Mark H. Collin
-----------------------------------------
Mark H. Collin, Treasurer
By: /s/ Anthony Baratta
-----------------------------------------
Anthony Baratta, Chief Financial Officer
EXHIBIT FS-2
UNITIL CORPORATION
CONSOLIDATED BALANCE SHEETS (000's) (A)
ASSETS: (Audited)
December 31,
2002 Adjustments Pro Formed
------------ ------------ ----------
Utility Plant
Electric $193,152 $193,152
Gas 44,796 44,796
Common 27,573 27,573
Construction Work in Progress 5,658 19,010 (E) 24,668
--------- --------- ---------
Utility Plant 271,179 19,010 290,189
Less: Accumulated Depreciation 82,587 82,587
--------- --------- ---------
Net Utility Plant 188,592 19,010 207,602
--------- --------- ---------
Miscellaneous Property & Investments 651 651
--------- --------- ---------
Current Assets:
Cash 7,160 7,160
Accounts Receivable 19,513 19,513
Refundable Taxes 4,851 76 (B) 4,927
Materials and Supplies 2,323 2,323
Prepayments 1,735 1,735
Accrued Revenue 4,842 4,842
--------- --------- ---------
Total Current Assets 40,424 76 40,500
Noncurrent Assets:
Regulatory Assets 244,011 244,011
Debt Issuance Costs, net 1,755 1,755
Other Noncurrent Assets 5,350 5,350
--------- --------- ---------
Total Noncurrent Assets 251,116 251,116
--------- --------- ---------
TOTAL $480,783 19,086 $499,869
======== ========= ========
(The accompanying Notes are an integral part of these statements.)
CONSOLIDATED BALANCE SHEETS (000's) (A)
CAPITALIZATION AND LIABILITIES: (Audited)
December 31,
2002 Adjustments Pro Formed
----------- ----------- ----------
Capitalization:
Common Stock Equity $74,350 ($131)(D) $74,219
Preferred Stock, Non-Redeemable 225 225
Preferred Stock, Redeemable 3,097 3,097
Long-term Debt, Less Current Portion 104,226 104,226
------- ------- -------
Total Capitalization 181,898 (131) 181,767
Current Liabilities:
Long-term Debt, Current Portion 3,243 3,243
Capitalized Lease, Current Portion 800 800
Accounts Payable 14,221 14,221
Short-Term Debt 35,990 19,010 (F) 55,000
Dividends Declared and Payable 77 77
Refundable Customer Deposits 1,336 1,336
Interest Payable 1,311 207 (C) 1,518
Other Current Liabilities 9,062 9,062
----- ------- -----
Total Current Liabilities 66,040 19,217 85,257
Deferred Income Taxes 47,332 47,332
------ ------- ------
Noncurrent Liabilities
Power Supply Contract Obligations 175,657 175,657
Capitalized Leases, Less Current Portion 2,534 2,534
Other Deferred Credits 7,322 7,322
----- ------- -----
Total Noncurrent Liabilities 185,513 185,513
-------- ------- --------
TOTAL $480,783 $19,086 $499,869
======== ======= ========
(The accompanying Notes are an integral part of these statements.)
UNITIL CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS (000's) (A)
(Audited)
Year Ended
December 31,
2002 Adjustments Pro Formed
----------- ----------- ----------
Operating Revenues:
Electric 167,317 167,317
Gas 20,283 20,283
Other 786 786
Total Operating Revenues 188,386 188,386
Operating Expenses:
Fuel and Purchased Power 114,598 114,598
Gas Purchased for Resale 11,143 11,143
Operating and Maintenance 25,667 25,667
Restructuring Charge 1,598 1,598
Depreciation and Amortization 14,911 14,911
Provisions for Taxes:
Local Property and Other 4,731 4,731
Federal and State Income 2,490 (76)(B) 2,414
----- --- -----
Total Operating Expenses 175,138 (76) 175,062
------- --- -------
Operating Income 13,248 76 13,324
Non-Operating Expenses:
Gain on Non-Utility Investments, net of tax (82) (82)
Other Non-Operating Expenses 185 185
--- --- ---
Non-operating Expense 103 103
--- --- ---
Income Before Interest Expense 13,145 76 13,221
Interest Expense, Net 7,057 207 (C) 7,264
----- --- -----
Net Income 6,088 (131)(D) 5,957
Less Dividends on Preferred Stock 253 253
--- --- ---
Earnings Applicable to Common Shareholders $5,835 ($131) $5,704
====== ===== ======
(The accompanying Notes are an integral part of these statements.)
UNITIL CORPORATION
Notes to Pro Forma Consolidated Financial Statements
(A) These statements have been pro formed to reflect an increase in Short- Term
Debt to the requested borrowing limit and the corresponding impact on
expenses and Earnings.
(B) The reduction in taxes reflect the rise in interest expense which reduced
income for tax purposes.
(C) The cost of this increase in Short-Term Debt is reflected in higher
interest costs for the twelve months period.
(D) Lower Earnings and Common Equity (e.g. Retained Earnings) reflects the
impact of higher interest expense.
(E) Assumes all borrowings are made to fund capital additions to plant.
(F) Relects the incremental increase in Short-Term Debt to reach the borrowing
limit.
EXHIBIT FS-3
UNITIL CORPORATION (COMPANY ONLY)
BALANCE SHEETS (000's) (A)
ASSETS December 31,
2002 Adjustments Pro Formed
----------- ----------- ----------
Other Property and Investments
Investment in Associate Companies $87,366 19,010 (E) $106,376
------- ------- ---------
Current Assets:
Cash 1,466 1,466
Accounts Receivable 53 53
Due from Affiliates 1,675 207 (B) 1,882
Refundable Taxes 3,500 3,500
Prepayments 6 6
------ ------- --------
Total Current Assets 6,700 207 6,907
Noncurrent Assets 134 134
------- ------- --------
TOTAL $94,200 $19,217 $113,417
======= ======= ========
(The accompanying Notes are an integral part of these statements.)
UNITIL CORPORATION (COMPANY ONLY)
BALANCE SHEETS (000's) (A)
December 31,
CAPITALIZATION AND LIABILITIES: 2002 Adjustments Pro Formed
----------- ----------- ----------
Capitalization:
Common Stock Equity $58,138 $58,138
------- ------- --------
Total Capitalization 58,138 58,138
Current Liabilities:
Short-Term Debt 35,990 19,010 (D) 55,000
Account Payable 11 11
Dividends Declared and Payable 17 17
Interest Payable 44 207 (B) 251
------- ------- --------
Total Current Liabilities 36,062 19,217 55,279
------- ------- --------
TOTAL $94,200 19,217 $113,417
======= ======= ========
(The accompanying Notes are an integral part of these statements.)
UNITIL CORPORATION (COMPANY ONLY)
STATEMENT OF EARNINGS (000's) (A)
Year Ended
December 31,
2002 Adjustments Pro Formed
----------- ----------- ----------
Operating Expenses:
Operating Expenses, Other $152 $152
Provisions for Taxes:
Other Taxes 24 $24
Federal and State Income (247) (247)
------- ------- -------
Total Operating Expenses (71) (71)
------- ------- -------
Operating Income 71 71
Non-operating Income 6,692 207 (B) 6,899
------- ------- -------
Income Before Interest Expense 6,763 207 6,970
Interest Expense, Net 207 (C) 207
------- ------- -------
Earnings $6,763 $6,763
======= ======= =======
(The accompanying Notes are an integral part of these statements.)
UNITIL CORPORATION (Company Only)
Notes to Pro Forma Financial Statements
(A) These statements have been pro formed to reflect an increase in Short- Term
Debt to the requested borrowing limit and the corresponding impact on
Interest Expenses and Non-operating Income.
(B) Assumes interest costs will be billable through the Cash Pool to the client
companies and will become a receivable.
(C) The cost of this increase in Short-Debt is reflected in higher interest
costs for the twelve months period.
(D) Reflects the incremental increase in Short-Term Debt to reach the borrowing
limit.
(E) Assumes all borrowed funds are reflected as an temporary investment in
affiliates through the operations of the Cash Pool.
EXHIBIT FS-4
FITCHBURG GAS AND ELECTRIC LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS (000's) (A)
(Audited)
December 31,
ASSETS 2002 Adjustments Pro Formed
------------ ------------ ----------
Utility Plant (at cost):
Electric $68,947 $68,947
Gas 44,796 44,796
Common 7,258 7,258
Construction Work in Progress 2,631 10,441 (E) 13,072
--------- --------- ---------
Utility Plant 123,632 10,441 134,073
Less: Accumulated Depreciation 32,842 32,842
--------- --------- ---------
Net Utility Plant 90,790 10,441 101,231
--------- --------- ---------
Other Property and Investments 18 18
--------- --------- ---------
Current Assets:
Cash 971 971
Accounts Receivable 10,023 10,023
Due from Affiliates 1 1
Taxes Refundable 411 43 (B) 454
Materials and Supplies (at average cost) 1,741 1,741
Prepayments 747 747
Accrued Revenue 2,312 2,312
--------- --------- ---------
Total Current Assets 16,206 43 16,249
Noncurrent Assets
Regulatory Assets 128,084 128,084
Unamortized Debt Expense 656 656
Other 4,036 4,036
--------- --------- ---------
Total Noncurrent Assets 132,776 132,776
--------- --------- ---------
TOTAL $239,790 $10,484 $250,274
========= ========= =========
(The accompanying Notes are an integral part of these statements.)
FITCHBURG GAS AND ELECTRIC LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS (000's) (A)
(Audited)
December 31,
CAPITALIZATION AND LIABILITIES 2002 Adjustments Pro Formed
------------ ------------ ----------
Capitalization:
Common Stock Equity 35,057 (71)(D) 34,986
Preferred Stock, Redeemable 2,164 2,164
Long-term Debt, Less Current Portion 48,000 48,000
------- ------- -------
Total Capitalization 85,221 (71) 85,150
Current Liabilities:
Long-term Debt, Current Portion 3,000 3,000
Capitalized Lease Obligations 49 49
Short-Term Debt 24,559 10,441 (F) 35,000
Accounts Payable 4,893 4,893
Due to Affiliate 1,146 1,146
Dividends Declared and Payable 1,107 1,107
Refundable Customer Deposits 269 269
Interest Payable 729 114 (C) 843
Other Current Liabilities 4,138 4,138
------- ------- -------
Total Current Liabilities 39,890 10,555 50,445
Deferred Income Taxes 27,828 27,828
------- ------- -------
Noncurrent Liabilities:
Power Supply Contract Obligations 81,117 81,117
Capitalized Lease Obligations 1,653 1,653
Other Noncurrent Liabilities 4,081 4,081
------- ------- -------
Total Noncurrent Liabilities 86,851 86,851
TOTAL $239,790 $10,484 $250,274
======== ======= ========
(The accompanying Notes are an integral part of these statements.)
FITCHBURG GAS AND ELECTRIC LIGHT COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS (000's) (A)
(Audited)
Year Ended
December 31,
2002 Adjustments Pro Formed
------------ ------------ ----------
Operating Revenues:
Electric $53,313 $53,313
Gas 20,284 20,284
------- ------- -------
Total Operating Revenues 73,597 73,597
------- ------- -------
Operating Expenses:
Fuel and Purchased Power 32,119 32,119
Gas Purchased for Resale 11,143 11,143
Operating Expenses, Other 11,580 11,580
Maintenance 1,663 1,663
Depreciation and Amortization 8,107 8,107
Provisions for Taxes:
Federal and State Income 1,444 (43)(B) 1,401
Local Property and Other 1,561 1,561
------- ------- -------
Total Operating Expenses 67,617 (43) 67,574
Operating Income 5,980 43 6,023
Non-operating Expense 43 43
------- ------- -------
Income Before Interest Expense 5,937 43 5,980
Interest Expense, Net 2,638 114 (C) 2,752
------- ------- -------
Net Income 3,299 ($71)(D) 3,228
Less Dividends on Preferred Stock 146 146
------- ------- -------
Earnings Applicable to Common Shareholder $3,153 ($71) $3,082
======= ======= =======
(The accompanying Notes are an integral part of these statements.)
FITCHBURG GAS AND ELECTRIC LIGHT COMPANY
Notes to Pro Forma Financial Statements
(A) These statements have been pro formed to reflect an increase in Short- Term
Debt to the recently authorized borrowing limit and the corresponding
impact on expenses and Earnings.
(B) The reduction in taxes reflect the rise in interest expense which reduced
income for tax purposes.
(C) The cost of this increase in Short-Term Debt is reflected in higher
interest costs for the twelve months period.
(D) Lower Net Income and Common Equity (e. g. Retained Earnings) reflects the
impact of higher interest expense.
(E) Assumes all borrowings are made to fund additions to Utility Plant.
(F) Reflects the incremental increase in Short-Term debt to reach the borrowing
limit.
PROPOSED FORM OF NOTICE
Exhibit G-1
SECURITIES AND EXCHANGE COMMISSION
(Release No. - )
Filings Under the Public Utility Holding Company Act of 1935, as amended ("Act")
Unitil Corporation et al. (70- )
Unitil Corporation ("Unitil"), 6 Liberty Lane West, Hampton, New Hampshire,
03842-1270, a registered holding company under the Act, and its wholly owned
subsidiary companies, Fitchburg Gas and Electric Light Company ("Fitchburg"),
Unitil Energy Systems, Inc., Unitil Power Corp., Unitil Realty Corp., Unitil
Resources, Inc. and Unitil Service Corp. (the "Subsidiaries" or "Money Pool
Participants" and together with Unitil the "Applicants") have filed an
application-declaration under Sections 6(b), 7, 9(a), 10 and 12(b) of the Act
and Rules 43 and 45 thereunder.
By order dated June 9, 2000 (HCAR No. 27182), Applicants were authorized to make
unsecured short-term borrowings and to operate a systems money pool ("Money
Pool") through Jun 30, 2003. The Applicants now request authority to make
additional short-term borrowings and extend the operation of the Money Pool
through June 30, 2006 ("Authorization Period").
Unitil requests authorization for short-term borrowing on a revolving basis
under current and proposed unsecured facilities from certain banks up to an
aggregate amount of $55,000,000 for a period of time through June 30, 2006.
In addition, Fitchburg requests authorization for short-term borrowings from any
source, including the Money Pool, in an aggregate principal amount at any one
time outstanding not to exceed $35,000,000 for a period of time through June 30,
2006.
Unitil believes that an increase to its borrowing authority is beneficial
because it will allow the company to respond to increased working capital
requirements as a result of commodity volatility and restructuring charges, as
well as necessary facility system improvements and growth.
Unitil's existing and proposed borrowing arrangements will provide for
borrowings at (1) "base" or "prime" rates publicly announced by a bank as the
rate charged on loans to its most creditworthy business firms; or (2) "money
market" rates (market-based rates that are generally lower than base or prime
rates, made available by banks on an offering or "when available" basis). In
addition, borrowings may be based on the daily federal funds rate. Borrowings
under the credit arrangements will mature not more than nine months from the
date of issue. In the future, the Company may choose to formalize its banking
relationship with its banks through a
syndicated credit facility. The duration of any such facility would not exceed
365 days. Unitil expects to use the proceeds from the requested borrowings for
(1) loans or advances to subsidiaries through the money pool; (2) payment of
outstanding indebtedness; (3) short-term cash needs that may arise due to
payment timing differences; and (4) other general corporate purposes.
Any of the proposed short-term borrowings by Fitchburg from commercial banks
will be under terms and conditions substantially similar to those of the
borrowing arrangements between Unitil and its commercial bank lenders, described
above. Fitchburg will use the proceeds from these borrowings to meet working
capital requirements, provide interim financing for construction expenditures,
and to meet debt and preferred stock sinking fund requirements.
In connection with the continued use of the Money Pool by the Applicants
pursuant to the Cash Pooling and Loan Agreement ("Pooling Agreement") among
Unitil and the Money Pool Participants dated as of February 1, 1985, as amended,
Fitchburg requests authorization to make loans to the other Money Pool
Participants and incur borrowings from Unitil and the other Money Pool
Participants, and the Applicants request authorization to make loans to
Fitchburg, both through June 30, 2006. Under the Pooling Agreement, Unitil and
the Subsidiaries invest their surplus funds, and the Subsidiaries borrow funds,
from the money pool. Unitil Service administers the money pool on an "at cost"
basis. The purpose of the Money Pool is to provide the Subsidiaries with
internal and external funds and to invest surplus funds of Unitil and the
Subsidiaries in short-term money market instruments. The Applicants state that
the Money Pool provides the Subsidiaries with lower short-term borrowing costs
due to elimination of banking fees; a mechanism to earn a higher return on
interest from surplus funds that are loaned to other Subsidiaries; and decreased
reliance on external funding sources.
For the Commission, by the Division of Investment Management, pursuant to
delegated authority.