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and qualified intermediaries (QI) described below and the types of structures and entities used for pollution control or other industrial development authority types of financing. Similarly, for registered holding companies under PUHCA, our analysis indicates that these companies typically have broad generic financing orders that contain recitals about special purpose subsidiaries and tax-oriented financings, which are adequate without seeking further approvals from the Securities and Exchange Commission. Additionally, since the structures relate to a special section of the tax laws that create a set of protocols relevant only to taxes, the strictures and provisions of PUHCA that have bedeviled many creative structures and initiatives in the utility area are essentially inapplicable.
The final piece of the analysis, which is relevant to three party exchanges, is the use of financial intermediaries, essentially as escrow agents, to satisfy the requirements of the tax law. The key from the tax perspective is that the proceeds not reach the hands of the utility but remain in the intermediary's hands, which then acquires the property and transfers it to the utility, and vice versa, so that from the technical perspective, the utility and at least one counterparty has sold or bought property and received property back.
In transactions of this sort, there will ordinarily be two QIs and two EATs, special purpose entities which will serve respectively to acquire and dispose of the properties, so that there is a double layer of entities. Most financial institutions and title companies have or will create special purpose entities to serve as intermediaries or titleholders. Particularly given the 180-day window, the use of these intermediaries is crucial, but it is also well established. The fees are insignificant, both compared to the savings this method can produce and in an absolute sense as well.
Business News Bytes
Alabama Power Sold $200 Million In Senior Notes
Alabama Power Co. sold $200 million worth of senior notes, targeting the proceeds to redeem other notes and for general corporate purposes.
Alabama Power said it agreed with a group of underwriters, led by Morgan Stanley and Wachovia Securities, to issue the Series V 5.6 percent senior notes, due March 15, 2033.
With proceeds from the sale, the company said it plans to redeem its Series C 7 percent senior notes due March 31, 2048.
"The 5.60 coupon is one of the lowest for a long-term financing achieved by any company in the last 40 years. They chose to finance at a time when the benchmark 30-year treasury was at historic lows. Unlike in previous treasury market rallys, Alabama's borrowing cost improved as the treasury market rallied, reflecting the soundness of the company and investor's desire to hold high quality corporate bonds," according to Brad Hart, an executive director in Global Capital Markets at Morgan Stanley.
El Paso, California Reach $650 Million Settlement Deal
El Paso Corp. said it has reached an agreement in principle to end the investigation of allegations that it manipulated natural gas prices by as much as $3.3 billion during California's energy crisis. The Houston company said it expects the settlement, which