Mail Stop 3561
September 7, 2005
B. Keith Trent, Esq.
Group Vice President, General Counsel, and Secretary
Duke Energy Corporation
526 South Church Street
Charlotte, NC 28203
Re: Duke Energy Holding Corp.
Amendment No. 1 to Registration Statement on Form S-4
Filed August 23, 2005
File No. 333-126318
Dear Mr. Trent:
We have reviewed your amended filing and have the following
comments. Where indicated, we think you should revise your
document
in response to these comments. If you disagree, we will consider
your explanation as to why our comment is inapplicable or a
revision
is unnecessary. Please be as detailed as necessary in your
explanation. In some of our comments, we may ask you to provide
us
with information so we may better understand your disclosure.
After
reviewing this information, we may raise additional comments.
We welcome any questions you may have about our comments or
any
other aspect of our review. Feel free to call us at the telephone
numbers listed at the end of this letter. Please note that all
page
numbers refer to the courtesy marked copy of the registration
statement.
Summary, page 1
1. We note that in response to our prior comment 3, you revised
your
disclosure to reduce the length of the summary. It appears,
however,
that certain parts of the summary still contain excessive detail.
For example, we direct you to your disclosure under "Fairness
Opinions Presented..." and "Interest of Directors..." on page 8
and
under "Material U.S. Income Tax..." on page 12. Please revise
accordingly.
The Mergers, page 46
Background of the Mergers, page 46
2. We note your response to our prior comment 9. Please provide
us
with copies of the management report on synergy potentials and the
other reports referenced in your response.
Duke Energy`s Reasons for the Mergers..., page 56
3. We note your response to our prior comment 11, adding a
discussion
of the merger cost savings. Please further expand your disclosure
to
discuss the cost savings distribution, including a workforce
reduction of 1,500. In this regard, we note your disclosure on
slide
13 of the investor meeting slideshow presentation filed under the
cover of Form 425 on May 25, 2005.
Opinion of Cinergy`s Financial Advisor..., page 85
4. We note your response to our prior comment 14. Please note,
however, that our prior comment 14 was intended to apply to the
disclosure of Merrill Lynch`s opinion, as presented to Cinergy, as
well. Accordingly, please revise the summary of Merrill Lynch`s
opinion so that it is written in clear, understandable language.
Please avoid unnecessary financial terms that make the disclosure
very difficult to understand. Rather, please explain in clear,
concise, and understandable language what the financial advisor
did
and how the analysis and conclusion are relevant to stockholders
and
specifically to the consideration offered. As part of the
revisions,
please describe the purpose of each analysis and why particular
measures were chosen for analysis.
Material U.S. Federal Income Tax Consequences..., page 104
5. We note that you have described the tax consequences "in
general"
and characterized the related disclosure as a "summary." Please
note, however, that if you elect to use a short-form opinion, the
exhibit 8 short-form opinion and the prospectus both must state
clearly that the discussion in the tax consequences section of the
prospectus is counsel`s opinion. Please revise accordingly.
The Merger Agreement, page 120
Comparison of Shareholder Rights, page 152
6. We note your response to our prior comment 32, positing that
unbundling is not necessary or appropriate because Duke Energy
shareholders voted to declassify the board, thereby removing the
"core rationale" for the supermajority provision, and because the
remaining provisions of Article VIII of your certificate of
incorporation are not substantive protective measures. Although
we
appreciate your position, our concern is that a supermajority
voting
provision with respect to certain amendments to the charter is
being
eliminated and Duke Energy shareholders should be afforded the
opportunity to vote on this matter separately. Similarly, it also
appears that a supermajority voting provision relating to the
amendment of Cinergy`s governing documents will be eliminated as
well. Further, according to your disclosure, Cinergy currently
has a
classified board, while Duke Energy Holdings does not. These
matters
should be unbundled so that Duke Energy shareholders and Cinergy
shareholders can vote on these respective matters separately.
Please
revise accordingly.
Unaudited Pro Forma Condensed Combined Financial Information, page
139
7. We note your response to comment 19 of our letter dated July
29,
2005. We agree with your conclusion that the pro forma impacts of
the DEFS transaction are significant to each of your revenue and
expense line items. The transaction reduces non-regulated
electric
revenues by approximately 71% for the year ended December 31,
2004,
and total operating revenues by approximately 45% for the same
period. Furthermore, the transaction will reduce the combined
operating revenues of the new company by approximately 37%. In
this
regard, provide to us the quantitative impacts on each line item
of
your pro forma condensed combined statement of operations. This
transaction may not be significant under Rule 1-02(w) of
Regulation
S-X, however we believe that separate columnar disclosure of the
transaction should be presented pursuant to 11-01(a)(8) of
Regulation
S-X. If you do not agree, explain in detail the basis for your
position in light of the above top line effects.
8. Please be advised that the staff is considering the industry`s
apparent application of the valuation principles of SFAS no. 71 in
business combinations involving regulated entities as opposed to
fair
values concept as is customary under SFAS no. 141. Therefore, we
continue to evaluate your response to the comments 22 and 24.
9. We note your response to comment 25 of our letter dated July
29,
2005. Please provide us your preliminary assessment of the
reporting
units or operating segments of the combined company. In this
regard,
explain how management preliminarily intends to analyze the
financial
results of the company from the CODM`s perspective. In other
words,
will there be a change in or addition to the existing segment
presentation of the acquirer. Please explain to us if you intend
on
engaging an independent valuation firm to determine the allocation
of
goodwill. We may have further comment.
10. We note your response to comment 27 of our letter dated July
29,
2005. Given the significance of the emission credits to your
future
financial statements, please advise what disclosure you intend to
make regarding such assets. In this regard, please explain the
type
of asset you view such credits to represent; for example are they
investments or intangibles. Furthermore, given the price
volatility
you have indicated, it would appear possible that, in the future,
impairment could occur. In this regard, explain to us the model
you
intend to use to test for impairment.
11. We note your response to comment 30 of our letter dated July
29,
2005. We note you modified the discount rate assumption from
6.25%
reported in Cinergy`s 2004 Form 10-K to reflect your stated
discount
rate of 6%. Please explain to us the rational for using a
different
discount rate.
12. We note your response to comment 30 of our letter dated July
29,
2005. Please explain if you intend on retaining an independent
valuation firm to perform a detailed valuation analysis of
Cinergy`s
power supply and fuel contracts. Furthermore, help us understand
what portion of the forward market curves you developed are based
on
quoted market prices versus your internal projections. As you
know,
forward market energy curves can change materially with the price
of
the related commodities, therefore, you may want to consider
enhancing your footnote disclosure to provide a sensitivity
analysis
which would show the reader the magnitude of a given change in the
forward curve and the related contract value.
Exhibits
13. We note that you have filed the forms of the tax opinions.
Please note that prior to effectiveness, you must file signed and
dated tax opinions. Further, we note your disclosure in exhibit
8.1
that the opinion is expressed "as of the date hereof." Please
revise
to ensure that the opinion is expressed as of the effective date
of
the registration statement.
* * * *
As appropriate, please amend your registration statement in
response to these comments. You may wish to provide us with
marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
You may contact Robert Babula, Staff Accountant, at (202)
551-
3339 or Jim Allegretto, Senior Assistant Chief Accountant, at
(202)
551-3849 if you have questions regarding comments on the financial
statements and related matters. Please contact Kurt Murao,
Attorney
Adviser, at (202) 551-3338, David Mittelman, Branch Chief, at
(202)
551-3214 or me at (202) 551-3720 with any other questions.
Sincerely,
H. Christopher Owings
Assistant Director
cc: P. Gifford Carter, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Fax: (917) 777-3439
Jeremy D. London, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Fax: (202) 661-8299
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B. Keith Trent, Esq.
Duke Energy Holding Corp.
September 7, 2005
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