New Jersey § 17:9a-178

§ 17:9a-178.

A. As used in this section, (1) “ bonds of a public utility company ” and “ debentures or other bonds of a public utility company ” shall mean bonds or debentures, as the case may be, issued, guaranteed, assumed,

or otherwise agreed to be paid by a public utility company; (2) “ public utility company ” shall include constituent and predecessor companies, and shall mean: (a) a corporation at least eighty-five per centum (85%) of whose gross operating revenues

are derived within the United States from the sale or furnishing of one or more of

the following: (1) artificial gas, (2) natural gas to consumers over systems owned or leased by it, (3) a mixture of artificial and natural gas to consumers over systems owned or leased

by it, (4) electricity, (5) water, or (6) telephone, telegraph or other communication services, or any combination thereof,

and (b) except for the purposes of subsection B of this section, a corporation at least

a majority of whose gross operating revenues are derived within the United States

from furnishing telephone, telegraph or other communication services, or any combination

thereof; (3) “ net operating revenues available for fixed charges ” shall mean gross operating revenues less all operating expenses, but before deduction

for (a) renewals and depreciation and (b) State and Federal income and profits taxes; (4) “ fixed charges ” shall mean charges for (a) rentals, (b) interest on all outstanding mortgage debt,

and (c) regularly recurring charges for amortization of discount and expense allocable

to mortgage debt, but shall exclude intercompany items; (5) “ fixed assets ” shall mean real property, interests in real property, plants, equipment, transmission

or distribution systems, and other assets commonly accepted as fixed assets, and shall

include fixed assets leased to a public utility company and operated by it under a

lease expiring, by its terms, in not less than fifty years from the date an investment

is made pursuant to this section; (6) “ book value of fixed assets ” shall mean the value of such assets as shown on the books of the public utility

company, less reserves for depreciation and renewals. B. A savings bank may invest in (1) bonds of a public utility company (a) whose gross operating revenues, for the

five fiscal years next preceding the investment for which the necessary statistical

data is available or for five consecutive twelve-month periods ending within six months

of the time the investment is made, have averaged at least two million five hundred

thousand dollars ($2,500,000.00) for each such year or period, and (b) whose average

net operating revenues available for fixed charges for the last three of such years

or periods have equaled not less than two and one-half times the average annual requirement

for fixed charges for the same years or periods; (2) bonds of a public utility company (a) which derives at least ninety-five per centum

(95%) of its gross operating revenues from the sale of water, and (b) whose gross

operating revenues, for the five fiscal years next preceding the investment for which

the necessary statistical data is available or for five consecutive twelve-month periods

ending within six months of the time the investment is made, have averaged at least

five hundred thousand dollars ($500,000.00) for each such year or period, and (c)

whose average net operating revenues available for fixed charges for the last three

of such years or periods have equaled not less than one and three-quarters times the

average annual requirement for fixed charges during the same years or periods. C. Bonds invested in pursuant to subsection B of this section shall be secured by

a mortgage on fixed assets which is (1) a first mortgage or (2) a refunding mortgage

under which bonds may be issued for the retirement or refunding of all debts secured

by mortgages on all or any part of such fixed assets prior to the lien of such refunding

mortgage, or (3) a mortgage prior in lien to such a refunding mortgage, or (4) is

secured by the pledge of mortgage bonds constituting not less than ninety-five per

centum (95%) of all the outstanding mortgage debt secured by all or part of the fixed

assets which are subject to the mortgage securing such pledged bonds. The aggregate principal amount of all outstanding bonds secured (1) by the mortgage

securing the bonds so invested in, directly or by pledge of bonds, and by all other

mortgages equal or prior thereto in lien, to which all or any part of such fixed assets

are subject, or (2) by any such refunding mortgage inferior in lien to the mortgage

securing the bonds so invested in, directly or by pledge of mortgage bonds, and by

all other mortgages equal or prior in lien to such refunding mortgage to which all

or any part of such fixed assets are subject, shall not, at the time of the investment

exceed (1) sixty-six and two-thirds per centum (66 2 / 3 %) of the book value of such fixed assets, in the case of bonds invested in pursuant

to paragraph (1) of subsection B of this section, or (2) seventy per centum (70%)

of the book value of such fixed assets, in the case of bonds invested in pursuant

to paragraph (2) of subsection B of this section. D. A mortgage securing bonds shall satisfy the requirements of this section notwithstanding

that it is (1) subject to the lien of prior mortgages securing bonds which have been called for

redemption or which will otherwise mature within six months of the time of the investment,

and for the payment of which funds have been set aside in trust; and such bonds shall

not be deemed to be outstanding for the purpose of computing the sixty-six and two-thirds

per centum (66 2 / 3 %) and the seventy per centum (70%) limitations prescribed by subsection C of this

section; (2) subject to the lien of current taxes or assessments not past due; (3) subject to the lien of past due taxes or assessments which are bona fide contested; (4) subject to construction or other liens arising out of operations common to public

utility companies of similar character and size. E. A savings bank may invest in debentures or other bonds of a public utility company

notwithstanding that such bonds or debentures are unsecured, or, if secured, that

the mortgages securing them do not satisfy the requirements of subsection C of this

section; provided, (1) that the gross operating revenues within the United States

of the public utility company, for the five fiscal years next preceding the investment

for which the necessary statistical data is available, or for five consecutive twelve-month

periods ending within six months of the time the investment is made, have averaged

not less than twenty million dollars ($20,000,000.00) for each such year or period;

and (2) that the average net operating revenues of the public utility company available

for fixed charges, including charges on all outstanding funded debt, whether secured

or unsecured, for the last three of such years or periods have equaled not less than

four times the average annual requirement for fixed charges for the same years or

periods. F. No savings bank shall make an investment pursuant to this section at any time when

the total of all such investments exceeds, or if the making of such an investment

would cause such total to exceed, forty per centum (40%) of the deposits. G. No savings bank shall make an investment pursuant to this section in any obligation

for the payment of which any one public utility company is primarily liable, at any

time when the total of all of its investments in such obligations of such company

exceeds, or if the making of such an investment would cause such total to exceed,

two per centum (2%) of its deposits. The acquisition of any such obligation as a result of a refunding or other refinancing

or exchange of such obligations theretofore invested in shall not be considered the

making of an investment for the purposes of this subsection. H. A savings bank may invest in debentures or other bonds of a public utility company

within the meaning of subparagraph (b) or paragraph (2) of subsection A of this section,

notwithstanding that such debentures or other bonds do not satisfy the requirements

of subsection E of this section, or, if secured, that the mortgages securing them

do not satisfy the requirements of subsection C of this section; provided, (1) that

the gross operating revenues within the United States of the public utility company,

for the five fiscal years next preceding the investment for which the necessary statistical

data is available, or for five consecutive twelve-month periods ending within six

months of the time the investment is made, have averaged not less than twenty million

dollars ($20,000,000.00) for each such year or period; and (2) that the average net

income of the public utility company for the last three of such years or periods,

after adding to the net income for each of such three years or periods (a) charges

for renewals and depreciation, (b) State and Federal income and profits taxes, and

(c) interest charges and regularly recurring charges for amortization of debt discount

and expense, deducted in computing the net income for such year or period, has equaled

not less than four times the average annual requirement for interest charges and regularly

recurring charges for amortization of debt discount and expense for the same years

or periods.