DE 97-245
          Petition of Northland Telephone Company of Maine, Inc. 
           for Approval of Restructuring of all Debt to National
                           Bank for Cooperatives
                         Order Granting Petition 
                         O R D E R   N O.  22,822
                              January 6, 1998
         On November 26, 1997, Northland Telephone Company of
     Maine, Inc. (Northland or the Company), filed with the New
     Hampshire Public Utilities Commission (Commission) a petition
     seeking the Commission's approval and authority under RSA 369:1-4
     for the restructuring of all of Northland's debt to the National
     Bank for Cooperatives (Cobank) from direct obligations of
     Northland to direct obligations of Northland's parent company ST
     Enterprises, Ltd. (STE) guaranteed by Northland and further to
     mortgage its properties as security for the loan.
         Northland received Commission approval to commence
     operations in Docket No. DF 94-071 pursuant to the transactions
     involving the acquisition and division of Maine telephone
     exchanges of Contel of Maine, Inc.  Northland serves
     approximately 20,810 customers in Maine and approximately 300 in
     New Hampshire.  As part of DF 97-071 the Commission authorized
     Northland to issue debt securities and to mortgage its properties
     to Cobank.    
         Subject to the Commission's approval Northland's parent
     company STE proposes to transfer Northland's debt to STE, to be
     combined with other affiliates' loans into a master note
     agreement between STE and Cobank.  Northland will continue to
     guarantee and collateralize the existing loan.  The rates, terms
     and maturity of the existing debt will remain unchanged after the
     debt has been transferred to STE.  Upon consummation of the
     transaction, STE rather than Northland will be the "borrower" and
     will service the debt based on dividend income from its operating
     subsidiaries.  There will be no inter-company loan agreement
     supporting the respective debt between Northland and STE. 
     Northland will pledge utility assets until such time as STE
     retires the debt.  In addition to Northland, two other STE
     subsidiaries, Sunflower Telephone Company and Northland Telephone
     Company of Vermont, Inc. will enter into similar agreements with
     the parent company.
         Northland cites simplified administrative and reporting
     procedures at the STE level to be the primary benefit of the debt
     consolidation.  In addition, the Company claims that
     consolidating the debt will enhance the credit standing of the
     entire group, as additional cashflow support will be available on
     a consolidated basis.
         On December 12, 1997 the  Maine Public Utilities
     Commission (MPUC) in Docket No. 97-824 approved Northland's
     request for the interaffiliate agreement.  MPUC noted that the
     structure of the agreement would preclude the possibility of
     Northland being put in situations that would allow the company to
     be vulnerable to default based on actions of other out of state
     affiliates.  This is because the parent company, STE, will have a
     Master Loan Agreement with Cobank with separate loans (or notes)
     for each subsidiary and none of the notes will be cross-defaulted
     or cross-collateralized.  Therefore, Northland would not be in
     default if one of STE's other affiliates defaulted on an
     obligation for any reason.
         The Company submitted projected balance sheets and
     income statements detailing, both with and without the proposed
     financing, estimated expenses of financing and a Summary of Terms
     and Conditions of the proposed loan agreement.
         Staff has reviewed Northland's petition and all
     exhibits submitted therewith, and recommends approval.  Staff has
     also consulted MPUC Staff and reviewed MPUC's order in Docket No.
     97-824 and reviewed the conditions imposed on Northland in
     approving the petition.  MPUC ordered Northland to file its
     Annual Report with its balance sheet and income statement
     presented in both pre-transaction and post-transaction formats
     until the loan is retired.  MPUC further ordered Northland to
     utilize its best efforts to ensure the loan remains current with
     regard to its original repayment schedule and to provide
     confirming documentation in its Annual Report until the loan is
     retired. Northland is required to notify the MPUC immediately in
     the event that Northland determines that a scheduled payment is
     past due.  In any future rate case, MPUC Staff and Commission
     Staff would impute a level of debt in the Company's capital
          We find that the proposed restructuring of Northland's
     debt, based upon the terms presented in the proposed loan
     documents, is consistent with the public good.  The transaction
     should simplify administration and reporting procedures while
     keeping the cost of debt and liabilities of Northland unchanged.
         Based upon the foregoing, it is hereby
         ORDERED, that Northland is authorized to guarantee the
     STE master note in the amount that was previously approved in DF
     94-071 for Northland's loan with Cobank; and it is
         FURTHER ORDERED, that the mortgaging of Northland's
     Property to secure its obligations under the guarantee is
                   By order of the Public Utilities Commission of New
     Hampshire this sixth day of January, 1998.
        Douglas L. Patch    Bruce B. Ellsworth        Susan S. Geiger
            Chairman           Commissioner            Commissioner
     Attested by:
     Thomas B. Getz
     Executive Director and Secretary