Filings Under the Public Utility Holding Company Act of 1935 (``Act'')

SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-26063]

Filings Under the Public Utility Holding Company Act of 1935

(``Act'')

June 7, 1994.

Notice is hereby given that the following filing(s) has/have been

made with the Commission pursuant to provisions of the Act and rules

promulgated thereunder. All interested persons are referred to the

application(s) and/or declaration(s) for complete statements of the

proposed transaction(s) summarized below. The application(s) and/or

declaration(s) and any amendments thereto is/are available for public

inspection through the Commission's Office of Public Reference.

Interested persons wishing to comment or request a hearing on the

application(s) and/or declaration(s) should submit their views in

writing by July 1, 1994, to the Secretary, Securities and Exchange

Commission, Washington, DC 20549, and serve a copy on the relevant

applicant(s) and/or declarant(s) at the address(es) specified below.

Proof of service (by affidavit or, in case of any attorney at law, by

certificate) should be filed with the request. Any request for hearing

shall identify specifically the issues of fact or law that are

disputed. A person who so requests will be notified of any hearing, if

ordered, and will receive a copy of any notice or order issued in the

matter. After said date, the application(s) and/or declaration(s), as

filed or as amended, may be granted and/or permitted to become

effective.

CINergy Corp. (70-8427)

CINergy Corp. (``CINegy''), 139 East Fourth Street, Cincinnati,

Ohio 45202, a Delaware corporation not currently subject to the Act,

has filed an application-declaration under sections 5, 6(a), 7,

9(a)(1), 9(a)(2), 10, 13(b) and rules 80-91 and 93-94 thereunder.

The application-declaration seeks approvals relating to the

proposed combination of Cincinnati Gas & Electric Company (``CG&E''),

an Ohio combination electric and gas public-utility holding company

exempt from registration under section 3(a)(2) of the Act pursuant to

rule 2, and PSI Resources, Inc. (``PSI''), an Indiana public-utility

holding company exempt from registration under section 3(a)(1) of the

Act pursuant to rule 2, by which CG&E and PSI's electric public-utility

subsidiary, PSI Energy, Inc. (``Energy''), would become wholly owned

subsidiaries of CINergy. Following the transaction, CINergy would

register with the Commission under Section 5 of the Act. CINergy also

seeks approvals in connection with services to be rendered by CINergy

Services, Inc. (``Services''), CINergy's newly formed service company

subsidiary, the formation of a new CINergy subsidiary that will hold

certain of the CINergy system's non-utility assets, and the issuance of

shares of CINergy common stock for CINergy's dividend reinvestment and

employee benefit plans.

CG&E and its public-utility subsidiary companies are primarily

engaged in providing electric and gas service in the southwestern

portion of Ohio and adjacent areas in Kentucky and Indiana.\1\ The

service area covers approximately 3,000 square miles has an estimated

population of 1.8 million, and includes the cities of Cincinnati and

Middletown in Ohio, Covington and Newport in Kentucky, and Lawrenceburg

in Indiana. As of February 28, 1994, there were 88,458,656 shares of

CG&E common stock, par value $8.50 per share, and 3,300,000 shares of

CG&E cumulative preferred stock (400,000 of which were redeemed on

April 1, 1994) outstanding. CG&E's principal executive office is

located in Cincinnati, Ohio. On a consolidated basis, for the year

ended December 31, 1993, CG&E's operating revenues were approximately

$1.75 billion with consolidated assets of approximately $5.1 billion,

consisting of $3.28 billion in electric utility property, plant, and

equipment and $504 million in gas utility property, plant, and

equipment, and $1.36 billion in other corporate assets.

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\1\CG&E wholly owns four public-utility subsidiary companies--

The Union Light, Heat and Power Company, an electric and gas

subsidiary company, Miami Power Corporation, a subsidiary which owns

a 138 kV transmission line, The West Harrison Gas and Electric

Company, an electric subsidiary company, and Lawrenceburg Gas

Company, a gas subsidiary company. In addition, CG&E owns 9% of Ohio

Valley Electric Corp., an electric subsidiary company.

CG&E directly or indirectly owns all the issued and outstanding

common stock in five non-utility companies and minority interests in

five limited partnerships. Three are direct subsidiaries--Tri-State

Improvement Company, a real estate development company formed to

acquire and hold property for use in CG&E's utility operations, CGE

Corp., formed to hold CG&E's non-utility interests, and KO

Transmission Company, used to acquire an interest in an interstate

natural gas pipeline.

CGE Corp. has three wholly owned non-utility subsidiaries--

Enertech Associates International, Inc. (``Enertech''), CG&E

Resource Marketing, Inc. (``Resource Marketing''), and CGE ECK, Inc.

(``CGE ECK''). Enertech provides, among other things, consulting,

fuel brokering, operation and maintenance services, and demand-side

management services worldwide and also pursues investment

opportunities worldwide. Resource Marketing holds CG&E's 25%

interest in U.S. Energy Partners, a gas marketing partnership that

will compete with traditional regulated merchant service and will

broker gas to industrial and large commercial customers. CGE ECK

holds CG&E's 30-35% interest in a Czech limited liability company

which will own and operate a Czech generating facility.

The limited partnerships are North Rhine I Limited Partnership

(CG&E has a $300,000 commitment representing a 10.91% limited

partnership interest), North Rhine II Limited Partnership (CG&E has

a $300,000 commitment representing a 5.61% limited partnership

interest), Franciscan Homes II Limited Partnership (CG&E has a

$300,000 commitment representing a 2.07% limited partnership

interest), Blue Chip Capital Fund (CG&E has a $1 million commitment

representing 2.3% of the fund), and Blue Chip Opportunity Fund (CG&E

has a $500,000 commitment representing 4.1% of the fund). North

Rhine I and II and Franciscan Homes II Limited Partnerships provide

low income housing in CG&E's service territory. Blue Chip Capital

and Opportunity Funds promote community development through

investment in female and minority owned businesses in CG&E

territory.

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PSI owns all the issued and outstanding common stock of Energy, an

Indiana corporation engaged in the production, transmission,

distribution, and sale of electric energy in north central, central,

and southern Indiana.\2\ Energy services a population of approximately

1.9 million in 69 counties in Indiana. As of February 28, 1994 there

were 57,114,573 shares of PSI common stock outstanding. PSI has no

shares of preferred stock outstanding. As of February 28, 1994, there

were 5,118,335 preferred shares of Energy outstanding. PSI's principal

corporate office is located in Plainfield, Indiana. On a consolidated

basis, for the year ended December 31, 1993, PSI's operating revenues

were approximately $1.1 billion, and its total assets were

approximately $2.7 billion, of which $2.2 billion was electric utility

plant.

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\2\Energy has two subsidiaries, PSI Energy Argentina, Inc. and

South Construction Company, a company used to own real estate and

interests in real estate which are either not used and useful in the

conduct of Energy's business or which have some defect in title

which is unacceptable to Energy.

PSI either directly or indirectly owns PSI Argentina, Inc.

(``PSI Argentina'') and Costanera Power Corp. Through these

subsidiaries, PSI is a 10% shareholder of Argelec S.A., a 6%

shareholder of Central Costanera S.A., an Argentine electric

generating company, and an 8% shareholder in Distrilec Inversora

S.A. (``Distrilec''). Distrilec owns 51% of Edesur S.A., an electric

distribution system. PSI Argentina also wholly owns an inactive

subsidiary, Energy Services Inc. of Buenos Aires, formed to provide

operating and consulting services to foreign utilities.

PSI wholly owns three active non-utility subsidiaries, PSI

Recycling, Inc. (which recycles material from Energy and other

sources), PSI Investments, Inc. (``Investments'') (which oversees

investments in nonregulated businesses), and PSI Argentina.

Investments has two active subsidiaries, Power Equipment Supply Co.

(which sells equipment among other things) and Wholesale Power

Services, Inc. (``WPS'') (which activities include, among others,

power brokering, electricity futures, consulting services in

wholesale power related markets). WPS, also through a division,

formed International Power Exchange, an electronic bulletin board

for the bulk power market.

Investments has five inactive subsidiaries--PSI Power Resource

Operations Inc. and PSI Power Resource Development, Inc. (which

develop, construct, operate, maintain, and own independent power

producer/cogeneration projects), PSI Environmental Corp. (which

provides environmental services), PSI International, Inc. and PSI

Sunnyside, Inc. (both formed to develop, construct, operate, and own

cogenerating or power production facilities).

PSI also holds minority interests in five limited partnerships--

CID Partnership, L.P. ($350,000 investment at year-end 1993), CID

Ventures, L.P. (3.7% interest with a $1 million investment at year-

end 1993), CID Equity Capital III, L.P. (a 8.2% interest with a

$800,000 investment at year-end 1993), Cambridge Ventures, L.P. (a

7.6% interest with a $250,000 investment at year-end 1993), and

Circle Centre Mall (a $1.2 million commitment to be invested in mid-

1994 representing a 4.2% interest). CID Equity Partners is a private

venture capital partnership dedicated to building successful

companies through long-term investments in growing Indiana and other

midwestern businesses. Circle Centre Mall is a 700,000 square foot

shopping mall under construction in downtown Indianapolis.

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CINergy was incorporated in Delaware on June 30, 1993 to become a

holding company over CG&E and Energy following the proposed merger. At

present, the common stock of CINergy, which consists of 100 issued and

outstanding shares, is owned by PSI and by Tri-State Improvement

Company, a wholly owned non-utility subsidiary of CG&E. Each company

owns 50 shares.

CINergy Sub, Inc. (``CINergy Sub''), a subsidiary of CINergy, was

incorporated under the laws of Ohio on July 1, 1993. The authorized

capital stock of CINergy Sub consists of 100 shares of common stock, no

par value. CINergy has entered into a subscription agreement for all

such shares. No shares of CINergy Sub common stock have been issued.

CINergy Sub has and prior to the closing of the proposed merger will

have, no operations other than the activities necessary to accomplish

the proposed combination of CINergy Sub and CG&E as described below.

Pursuant to an Agreement and Plan of Reorganization, dated as of

December 11, 1992, as amended and restated on July 2, 1993 and as of

September 10, 1993 (``Merger Agreement''), PSI will be merged with and

into CINergy, with CINergy as the surviving corporation (``PSI

Merger''), and CINergy Sub will be merged with and into CG&E, with CG&E

as the surviving corporation (``CG&E Merger''). As a result of the PSI

Merger and the CG&E Merger, CG&E and Energy will become operating

subsidiaries of CINergy, and CINergy will be a holding company under

section 2(a)(7) of the Act.

Specifically, upon consummation of the proposed transaction: (1)

Each issued and outstanding share of CG&E common stock (other than

treasury and certain other shares which will be cancelled, and shares

held by holders who dissent in compliance with Ohio law) will be

converted into the right to receive one share of CINergy common stock,

par value $.01 per share (``CG&E Conversion Ratio''); (2) each issued

and outstanding share of PSI common stock (other than treasury and

certain other shares which will be cancelled, and shares held by

holders who dissent in compliance with Indiana law) will be converted

into the right to receive that number of shares of CINergy common stock

obtained by dividing $30.69 by the average closing sale price of the

CG&E common stock for the 15 consecutive trading days preceding the

fifth trading day prior to the PSI Merger; provided that, if the actual

quotient obtained thereby is less than .909, the quotient shall be

.909, and if the actual quotient obtained thereby is more than 1.023,

the quotient shall be 1.023 (``PSI Conversion Ratio''); (3) the

aggregate of all shares of CINergy Sub common stock issued and

outstanding prior to the transaction will be converted into the right

to receive that number of shares of CG&E common stock equivalent to the

aggregate number of shares of CG&E common stock issued and outstanding

immediately prior to the transaction; and (4) all shares of capital

stock of CINergy issued and outstanding immediately prior to the

transaction will be cancelled. Holders of PSI common stock entitled to

receive fractional shares of CINergy common stock will receive a cash

payment in lieu of such fractional shares. These cash payments will be

determined by multiplying the fractional share interest by the average

of the last reported sales price per share of CG&E common stock on the

consolidated tape for the ten business days prior to and including the

last business day on which CG&E common stock was traded on the New York

Stock Exchange, without any interest thereon.\3\ The outstanding shares

of preferred stock of CG&E and Energy will not be affected. CINergy

states that the transaction is expected to be tax-free to CG&E, PSI,

and Energy shareholders (except as to dissenters' rights and fractional

shares). Based on the capitalization of PSI and CG&E on February 28,

1994 and PSI Conversion Ratio of 1.023, the shareholders of PSI and

CG&E would own securities representing approximately 40% and 60%,

respectively, of the outstanding voting power of CINergy. CINergy

states that the proposed merger is a pure stock-for-stock exchange and

qualifies for treatment as a pooling of interests.

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\3\Fractional shares of CG&E and PSI common stock held in

accounts under the dividend reinvestment plans, the 401(k) savings

plans, and the employee benefit plans of CG&E and PSI will be

converted into the applicable number of shares (or fractional

shares) of CINergy common stock under the corresponding plans of

CINergy, CG&E, or PSI, in accordance with the appropriate CG&E or

PSI Conversion Ratio.

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Following the merger, CG&E's utility subsidiaries will remain

subsidiaries of CG&E, the non-utility subsidiaries of PSI will become

subsidiaries of CINergy, and the non-utility subsidiaries of CG&E will

remain subsidiaries of CG&E. The Merger Agreement provides that

CINergy's principal corporate office will be in Cincinnati, Ohio.

CINergy's board of directors, which will be classified into three

classes, will consist of a total of 19 directors, 10 of whom will be

designated by CG&E and 9 of whom will be designated by PSI.

CINergy requests authority to form a new subsidiary (``Holding

Company Sub'') to hold certain of the CINergy system's non-utility

interests. It is anticipated that Holding Company Sub will be

incorporated in Delaware, and that its capitalization will consist of

100 shares of common stock, par value $.01 per share, all of which will

be issued to, and acquired by, CINergy at a price not more than $1 per

share. CINergy expects that Holding Company Sub will acquire all the

outstanding capital stock of some or all of the following non-utility

subsidiaries: Enertech, Resource Marketing, CGE ECK, PSI Recycling,

Inc., PSI Argentia, Power Equipment Supply Company, WPS, PSI Power

Resource Development, Inc., PSI Power Resource Operations Inc., PSI

Environmental Corp., PSI International, Inc., and PSI Sunnyside, Inc.

CINergy also requests authorizations with respect to the activities

of Services, which was incorporated in Delaware on February 23, 1994 to

serve as the service company for the CINergy system after the proposed

merger. CINergy proposes that Services provide companies in the CINergy

system with a variety of administrative, management, and support

services. It is anticipated that Services will be staffed by transfer

of personnel from the current employee rosters of CG&E, PSI, and their

subsidiaries. CINergy states that Services' accounting and cost

allocation methods and procedures will comply with the Commission's

standards for service companies in registered holding-company systems,

and that Services' billing system will use the Commission's ``Uniform

System of Accounts of Mutual Service Companies and Subsidiary Service

Companies.'' Services' service agreement calls for pre-filing review by

state commissions of any amendment to its service agreement. For

CINergy's utility subsidiaries, Services proposes to provide services

at cost. For CINergy's non-utility subsidiaries, Services proposes that

charges be at fair market value and requests an exemption from the ``at

cost'' requirements of section 13(b).

In addition, CINergy requests authority through December 31, 1995

to issue and/or acquire in open market transactions an aggregate amount

up to 10 million shares of CINergy common stock for CINergy's

shareholder dividend reinvestment, stock purchase plan, stock-based

employee benefit plans, and the CG&E and Energy 401(k) plans. CINergy

has not finalized its dividend reinvestment plan (``CINergy DRIP'') but

anticipates that the terms will be the following. All holders of record

of shares of CINergy common stock, Energy cumulative preferred or

preference stock or CG&E cumulative preferred stock will be eligible to

participate in the CINergy DRIP. Full investment of funds will be

possible under the CINergy DRIP, subject to a minimum of $25 and a

maximum of $100,000 purchase limits. There will be no brokerage or

other fees on purchases. All costs of administration of the CINergy

DRIP will be paid by CINergy; however, charges will be incurred by

participants who direct the plan administrator to sell their shares on

withdrawal.

The shares of additional common stock purchased under the CINergy

DRIP with optional cash payments and reinvested dividends, if any, may

be, in the discretion of CINergy, authorized but unissued CINergy

common stock or shares of CINergy common stock purchased on the open

market by the plan administrator. CINergy will not change the source of

shares of common stock to open-market purchases unless capital needs or

market conditions warrant. When purchases of shares of CINergy common

stock under the CINergy DRIP come from authorized but unissued shares,

the purchase price of such shares will be the average of the high and

low prices (computed to four decimal places) of CINergy common stock,

as reported in the New York Stock Exchange Composite Transactions

section of The Wall Street Journal, for the appropriate investment

date, or if no trading in CINergy common stock occurs on such date, the

next preceding date on which such trading occurred. When CINergy common

stock purchased for each investment date comes from purchases on the

open market, the purchase price will be the weighted average price

(computed to four decimal places), excluding brokerage commissions, of

such shares acquired for the plan. CINergy will pay all administrative

costs of acquisition, including brokerage fees and commissions. It is

anticipated that there will be no discount program under the CINergy

DRIP.

A participant may sell or withdraw all or a portion of his/her

shares at any time. Sales of shares through the CINergy DRIP will not

be ``matched'' with other participants' purchases, but will be executed

without regard to such purchases. Proceeds from any sale, less

applicable brokerage commission, will be remitted to a participant

following settlement through the independent agent.

Whether the participant requests to sell the shares in his/her

account or elects to receive certificates for the full shares in his/

her account, the participant's interest in fractional shares will be

paid in cash on the basis of the price paid to the participant for his/

her whole shares. A participant will be entitled to request in writing

and receive a certificate representing the full shares of CINergy

common stock credited to his/her account.

CINergy proposes to use the proceeds from the sale of the newly-

issued shares of additional common stock for the repayment of

indebtedness, for working capital, or for other general corporate

purposes. CINergy will not, however, use such proceeds to acquire the

securities of or any interest in any exempt wholesale generators or in

any foreign utility company until such time as such investment shall be

approved by order or by regulation of the Commission, to the extent

such approval is required under the Act.

CG&E and PSI will discontinue their respective dividend

reinvestment plans following the consummation of the proposed merger.

CINergy proposes to adopt four stock-based plans--CINergy Stock

Option Plan (``Stock Option Plan''), CINergy Emplyee Stock Purchase and

Savings Plan (``ESOP''), CINergy Performance Shares Plan (``Performance

Plan''), and CINergy Directors' Deferred Compensation Plan

(``Directors' Plan''). Although the final terms of these plans have not

been established, the anticipated terms are set forth below.

The Stock Option Plan is a plan by which non-employee directors,

officers of CINergy or any of its subsidiaries, and employees who are

executive employees, employed in a significant executive supervisory,

administrative, operational or professional capacity, or who have the

potential to contribute to the future success of any participating

employer, may be granted incentive stock options, nonqualified stock

options, stock appreciation rights and/or cash awards granted in

connection with nonqualified stock options to reimburse an optionee for

the income taxes imposed upon the exercise of such an option. Each

outside director will receive an automatic grant of nonqualified stock

option to purchase 12,500 shares of CINergy common stock. This grant

vests at the rate of 20% per year beginning with the first anniversary

of the date of the grant.

The option price must be no less than 100% of the fair market value

of CINergy common stock on the date of the grant. The terms of

incentive stock options may not exceed ten years from the date of

grant. Each grantee will receive an agreement setting out the terms and

conditions of the grant. The Stock Option Plan will be administered by

the compensation committee of the CINergy board, which committee will

consist of outside directors.

Upon the consummation of the proposed merger, the PSI Stock Option

Plan will be merged into the Stock Option Plan.

The ESOP is an employee stock purchase plan in which eligible

employees of CINergy and its subsidiaries may be granted options to

purchase shares of CINergy common stock. All employees of CINergy or

its subsidiaries will be eligible to participate in the ESOP, except

part-time employees, employees who have not been employed by CINergy

or, in the case of the first offering, by Energy or CG&E, for at least

nine months as of the first date of the offering and any full officer

of Energy, CG&E, or any other participating employer.

Each offering under the plan consists of an offering period of 26

months. During the offering period, plan participants may make after-

tax contributions to a savings account under the plan in an aggregate

amount to up to ten percent of the participant's annual base salary

multiplied by 26/12ths. Amounts contributed to the savings account will

earn interest. The employee may terminate participation at any time,

but cannot renew participation prior to a new offering period. At the

end of the offering period, a participant may exercise his/her option

to purchase shares of CINergy common stock at a five percent discount

from the fair market value of the shares on the first day of the

offering period, receive the cash held in his/her savings account, or

receive a combination of both.

Upon consummation of the proposed merger, the PSI Stock Purchase

and Savings Plan will be merged into the ESOP.

The Performance Plan is a long-term incentive compensation plan.

Officers of CINergy or any of its subsidiaries, and employees who are

executive employees, employed in a significant executive supervisory,

administrative, operational or professional capacity, or who have the

potential to contribute to the future success of any participating

employer, may participate in the plan.

Employees who participate in the Performance Plan will be granted

awards payable in a combination of shares of CINergy common stock and

cash. The awards will be payable in two equal annual installments

following the end of a performance period. Awards will be based on a

percentage of a participant's annual base salary and the attainment of

the individual, group, and corporate goals established by each

participating employer's board of directors.

Upon consummation of the proposed transaction, the PSI and Energy

Performance Shares Plans will be merged into the Performance Plan.

The Director's Plan will allow each director of CINergy or any of

its subsidiaries to defer fees for serving as a director and to have

them accrued either in terms of cash or in terms of theoretical units

of shares of CINergy common stock. If deferred in theoretical units of

stock, the stock will be distributed to the director at the time he/she

retires from the appropriate board. Amounts deferred in cash will be

paid at the same time.

Upon the consummation of the proposed merger, the PSI Directors'

Deferred Compensation Plan will be merged into this plan. Directors

currently participating in that plan will make new elections prior to

such time to participate in, and transfer therein deferrals to, the

Directors' Plan.

In addition, CINergy proposes to maintain on substantially the same

terms, the CG&E and PSI 401(k) plans, except that shares of CINergy

common stock will be used instead of CG&E common stock and Energy

common stock. The CG&E plans are known as the savings Incentive Plan

(``CG&E SIP'') and the Deferred Compensation and Investment Plan

(``CG&E DCIP'') and are mirror 401(k) plans with savings features. All

non-exempt full-time employees of CG&E with one year of service are

eligible to participate in the CG&E SIP. All full-time exempt employees

of CG&E DCIP.

Both the CG&E SIP and the CG&E DCIP accept before-tax and after-tax

contributions from employees. Employee contributions are invested

according to employee instructions. CG&E matches $.55 per dollar of

employee contributions, through the first five percent of the

employee's salary. This match is made solely in CG&E common stock.

Shares acquired under the CG&E SIP and the CG&E DCIP are placed at the

average high and low price on the New York Stock Exchange on the

trading day immediately preceding their acquisition.

Energy has 401(k) plans for all of its eligible employees which

allow employees to make both before-tax and after-tax contributions.

Eligible employees can save up to 10% of their before-tax eligible

compensation and up to 10% of their after-tax compensation. The company

matches, in PSI common stock, employees' before-tax contribution in two

components: (1) A base match equal to $.70 for every dollar an eligible

employee contributes, up to the first four percent of compensation; and

(2) a potential incentive match equal to $.10 to $.30 for each dollar

contributed, up to the first four percent of compensation. The amount

of the incentive match depends on the level of corporate goals

achieved.

Shares may be purchased in the open market or may be issued by PSI

and are priced based on the closing price of PSI common stock as set

forth in the New York Stock Exchange Composite Transactions section of

the Wall Street Journal for the date on which the contributions are

invested.

For the Commission, by the Division of Investment Management,

pursuant to delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-14399 Filed 6-13-94; 8:45 am]

BILLING CODE 8010-01-M