Northern Indiana Public Service Company - Page 6

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            would be due October 15, 1988.  This same day, petitioner's                               
            executive and finance committee authorized and approved the                               
            issuance of a $70 million note to Finance.                                                
                  On October 15, 1981, Finance issued notes in the Eurobond                           
            market in the amount of $70 million, at an interest rate of 17-                           
            1/4 percent.  The notes were listed on the stock exchange of the                          
            United Kingdom and the Republic of Ireland.  The timely payment                           
            of the principal amount and the interest was unconditionally                              
            guaranteed by petitioner, and the notes contained a call option                           
            in 1985 for a 1.5-percent premium, and in 1986 for a .75-percent                          
            premium.  Also on October 15, 1981, petitioner issued a $70                               
            million, 18-1/4 percent note due on October 15, 1988, to Finance,                         
            and pursuant thereto, Finance remitted the net proceeds of the                            
            Euronote offering of $68,525,000 to petitioner.3                                          
                  Petitioner and Finance issued a prospectus in connection                            
            with the Euronote offering that was dated October 7, 1981.  The                           
            prospectus provided that prior to the Euronote issuance,                                  
            petitioner was to contribute to Finance "cash or property in an                           
            aggregate amount sufficient to bring total stockholder's equity                           
            to $28,000,000."                                                                          


            3Finance's Euronotes were issued at a discount of                                         
            $1,475,000, which Finance amortized over the term of the notes.                           
            The discount consisted of $875,000 (1.25 percent) original                                
            issuance discount, $262,500 (.375 percent) broker/manager                                 
            commission, $262,500 (.375 percent) underwriter commission, and                           
            $75,000 for broker/manager out-of-pocket legal fees and expenses.                         





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