Pacific Gas Transmission & Alberta Natural Make Stock Issue In Canada, Supply Far Short Of Demand

A total of 836,500 common Shares including 552,500 shares in PACIFIC GAS TRANSMISSION COMPANY and 284,000 shares in ALBERTA NATURAL GAS COMPANY was distributed to the Canadian public this week by investment houses across the nation. The supply fell far short of demand, it is understood, and only limited numbers of shares were allocated to the individual thousands of Canadians who submitted applications to their brokers. One result: an immediate secondary market at price levels 40% to 50% above the initial prices.

The shares of Pacific Gas Transmission, a California corporation, represent 25% of the total 2,210,000 shares now outstanding, with the other 75% being held by Pacific Gas & Electric Company and its associates in the project. Of the total, P.G. & E. holds 50%. All shares outstanding realized the same net $9.00 U.S. each to P. G. T. is treasury.

The shares of Alberta Natural Gas, a Special Act Canadian corporation, represent one third of the total 852,016 shares now outstanding, with one third of outstanding capital being owed by Pacific Gas Transmission, and one third by Westcoast Transmission Company Limited. All shares outstanding realized the same net $10.00 Canadian each to Alberta Natural's treasury.

The P. G. T. shares involved in the public issue went to Canadians at $9.47 Canadian each, while the Alberta Natural shares went to the Canadian public at $10.65 Canadian each. The Canadian underwriters of P. G. T. were Dominion Securities Corp. Limited and McLeod, Young, Weir & Company, Limited. These two firms, together with Wood, Gunny & Company, Limited and Nesbitt, Thomson & Company, Limited, were the Canadian underwriters of Alberta Natural.

The two companies are a part of the big Alberta California Gas Project, initiated over two years ago by Pacific Gas & Electric Company and its associates, which gained final Canadian government approvals in April and final American government approvals last August. Construction contracts for these two companies, and the related pipeline construction projects in Alberta and California have recently been let. Actual construction will be speeded through and the complete system of pipelines is expected to go into operation by the end of 1961.

Alberta Natural Gas Company is responsible for the British Columbia section of the system, involving 107 miles from a connection with Alberta Gas Trunk Line Limited near Coleman, in southwest Alberta, to a connection with Pacific Gas Transmission at Kingsgate on the Canadian American boundary. Estimated capital needs are just over $34,000,000 Canadian. Financing includes 852,016 shares sold for $8,520,160, plus First Mortgage PipeLine Bonds in the amount of $25,503,840. The Bond issue hasn't yet been finalized, so specific terms and conditions are not yet known.

The 36inch diameter Alberta Natural pipeline will carry initial maximum daily quantity of 461 Million cubic feet for account of Alberta & Southern Gas Co. Ltd. (whollyowned subsidiary of P. G. & E.) and 161 Million cubic feet for account of Westcoast Transmission. Under the gas transportation contract, Alberta G Southern and Westcoast will pay Alberta Natural a monthly costofservice charge allocated between the two on basis of their daily contract quantities. Such total cost of service shall equal the sum of operating expenses, depreciation, amortization, taxes (including income taxes) and a return (before interest on debt) at the rate of 71/2% annually on the Company's rate base, all as determined in the manner provided in the contract.

Pacific Gas Transmission and Westcoast, each owning 284,000 or onethird of Alberta Natural's shares, have entered into a Voting Trust with respect to the shares. Each nominates four of the eight directors of the company. Directors of Alberta Natural are: J. B. Black, San Francisco; S. M. Blair, Bolton, Ontario; A. P. Bowsher, Calgary; R. H. Gerdes, Piedmont, California; D. P. McDonald Q. C., Calgary; F. M. McMahon, Vancouver; George McMahon, Calgary; and N. R. Sutherland, San Francisco. Officers include J. B. Black, Board Chairman, S. M. Blair, Vicechairman; N. R. Sutherland, President; C. P. Smith, Vice-president & Manager; R. H. Gerdes, J. S. Moulton and E.H. Fisher, Vicepresidents; R. L. Winton, Secretary; K. C. Christensen, Treasurer.

Pacific Gas Transmission is responsible for the Idaho, Washington, Oregon section of the system, involving 614 miles of 36 inch diameter line from the international border at Kingsgate, across northwest Idaho, southeast corner of Washington, and through central Oregon, to the California border near Klammath Falls, Oregon, where it will link up with the California section to be built by Pacific Gas & Electric Company.

Estimated capital needs of P. G. T. are over $124,000,000 U.S, Financing includes the 2,210,000 shares now issued, for a total realization of $19,890,100 U.S. A further $13,300,000 U.S. will be provided by issue of Convertible Debentures to be made first to the company's shareholders in accordance with Preemptive rights attaching to all shares now outstanding. The remaining $90,879,000 U.S. of capital required is to be raised by First Mortgage Pipe Line Bonds in this amount, of which terms and conditions have yet to be established.

P. G. T. has entered into a longterm contract with Alberta G Southern Gas Co. Ltd. providing for purchase at the Canadian border of a daily contract quantity of 418 Million cubic feet of gas. This will be sold and delivered at the CaliforniaOregon. terminus of its proposed pipeline to Pacific Gas & Electric Company, under a longterm service agreement. Basically, this agreement provides for delivery of 415 Million cubic feet daily contract quantity on a costof service basis entitling P.G. T. to a return (before interest on debt) at the rate of 6 ¼ % annually on its rate base, less revenue received for transportation service rendered to El Paso Natural Gas Company and miscellaneous operating revenue. P. G. T. has also entered into a contract with El Paso covering the transmission to various delivery points in the Pacific Northwest States of up to 152 Million cubic feet of gas which El Paso his contracted to purchase from Westcoast Transmission Company.

Of the total 2,210,000 Shares of P. G. T. outstanding, Pacific Gas & Electric Company owns 1,105,000 or 50%, the Canadian public (through this week's issue) holds 552,500 or 25%. Other shareholders, holding a total of 2596, include those who shared with P.G. & E. the multimillion dollar risks in sponsoring the Alberta California project. They include the Bechtel Corporation directors and associates, 175,550 shares; Blyth & Co. Inc. 154,700 shares; International Utilities Corporation, 154,700 shares; the Montana Power Company 44,200 shares; and Canadian Bechtel Limited 23,350 shares.

P. G. T. Directors include: S. D. Bechtel, Oakland, California; S. D. Bechtel, Jr., Piedmont, California; J. B. Black, San Francisco; S.M. Blair, Bolton, Ontario; K. C. Christensen, San Francisco; J. E. Corette, Butte, Montana; E. H. Fisher, Orinda, California; R. H. Gerdes, Piedmont, California; H. R. Milner Q. C., Edmonton, Alberta; J. S. Moulton, Berkeley, California; C.O. Nickle, Calgary, Alberta; R. H. Peterson, San Francisco; C. P. Smith, San Mateo, California; and N. R. Sutherland, San Francisco.