614/223-1648
Securities and Exchange Commission
450 Fifth Street, N.W.
ATTN: Filing Desk, Stop 1-4
Washington, D.C. 20549-1004
March 20, 1996
Re: Appalachian Power Company
Registration Statement on Form S-3
File No. 333-01049
Gentlemen:
Pursuant to Rule 424(b)(5) and on behalf of Appalachian Power
Company (the "Company"), submitted herewith is (1) a Prospectus
Supplement, dated March 18, 1996, to be used in connection with
the anticipated public offering by the Company of a series of
$100,000,000 aggregate principal amount of First Mortgage Bonds,
6-3/8% Series due 2001 and (2) a Prospectus Supplement, dated
March 18, 1996, to be used in connection with the anticipated
public offering by the Company of a series of $100,000,000
aggregate principal amount of First Mortgage Bonds, 6.80% Series
due 2006.
Very truly yours,
/s/ Thomas G. Berkemeyer
Thomas G. Berkemeyer
TGB/mms
PROSPECTUS SUPPLEMENT
(To Prospectus dated February 28, 1996)
$100,000,000
Appalachian Power Company
First Mortgage Bonds, 6-3/8% Series due 2001
Interest Payable March 1 and September 1
The New Bonds will be redeemable at the option of the
Company in whole or in part at any time upon not less than 30
days' notice at a redemption price equal to the greater of (i)
100% of the principal amount of the New Bonds and (ii) the sum of
the present values of the remaining scheduled payments of
principal and interest thereon discounted to the redemption date
on a semi-annual basis at the Treasury Rate plus 10 basis points.
The New Bonds are also redeemable at a special redemption price
equal to 100% of the principal amount thereof if redeemed by the
use of proceeds of released property or insurance. See
"Redemption Provisions" herein and "Description of New Bonds--
Release and Substitution of Property" in the accompanying
Prospectus.
The New Bonds will be issued in the form of one or more
global securities (the "Global Securities") registered in the
name of The Depository Trust Company ("DTC") or its nominee (the
New Bonds, so represented, being called a "Book-Entry Security").
Beneficial interests in the Global Securities will be shown on,
and transfers will be effected only through, records maintained
by DTC and its participants. Except as described herein, the New
Bonds will not be issued in definitive form. See "Supplemental
Description of New Bonds" herein.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Price to the Underwriting Proceeds to
Public(1) Discounts(2) Company(3)
Per Bond . . . 99.657% .250% 99.407%
Total . . . . . $99,657,000 $250,000 $99,407,000
(1) Plus accrued interest from March 1, 1996 to date of
delivery.
(2) The Company has agreed to indemnify the Underwriter against
certain liabilities under the Securities Act of 1933, as
amended. See "Underwriting" herein.
(3) Before deduction of estimated expenses of $191,144 payable
by the Company.
The New Bonds offered by this Prospectus Supplement are
offered by the Underwriter, subject to prior sale, to withdrawal,
cancellation or modification of the offer without notice, to
delivery to and acceptance by the Underwriter and to certain
further conditions. It is expected that delivery of the New
Bonds will be made in book-entry form through the facilities of
DTC on or about March 27, 1996.
LEHMAN BROTHERS
March 18, 1996
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICE OF THE NEW BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
_______________
SUPPLEMENTAL DESCRIPTION OF NEW BONDS
The following description of the particular terms of the New
Bonds supplements the description of the general terms and
provisions of the New Bonds set forth in the accompanying
Prospectus under the caption "Description of New Bonds". The
following description does not purport to be complete and is
qualified in its entirety by reference to the description in the
accompanying Prospectus and to the instruments referred to
therein.
Maturity, Interest and Payment
The New Bonds will mature on March 1, 2001 and will bear
interest from March 1, 1996 at the rate per annum shown in their
title, payable semi-annually on March 1 and September 1,
commencing September 1, 1996. Interest will, subject to certain
exceptions, be paid to holders registered at the close of
business on the 15th day of the calendar month next preceding the
applicable semi-annual interest payment date. Interest on the
New Bonds will be computed on the basis of a 360-day year of
twelve 30-day months.
Settlement by the Underwriter of the New Bonds will be made
in immediately available funds. The New Bonds will initially be
issued in the form of one or more fully registered securities,
representing the aggregate principal amount of the New Bonds,
that will be deposited with, or on behalf of, DTC, and registered
in the name of CEDE & Co., the nominee of DTC. All payments to
DTC of principal and interest on the New Bonds will be made in
immediately available funds. Should the New Bonds be issued
other than as a Global Security, interest (other than interest
payable at redemption or maturity) may, at the option of the
Company, be paid to the person entitled thereto by check mailed
to any such person. See "Global Securities" herein.
Redemption Provisions
The New Bonds are subject to redemption at any time, on not
less than 30 days' notice by mail prior to the redemption date,
either as a whole or in part at the option of the Company (A) at
a special redemption price equal to 100% of the principal amount
thereof, together with accrued interest to the date fixed for
redemption, if redeemed by the use of proceeds of released
property or the proceeds of insurance (see "Description of New
Bonds--Release and Substitution of Property" in the accompanying
Prospectus), or (B) at a redemption price equal to the greater of
(i) 100% of the principal amount of the New Bonds and (ii) the
sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the redemption date
on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate (as defined below)
plus 10 basis points, plus, in each case, accrued interest
thereon to the date of redemption.
"Treasury Rate" means, with respect to any redemption date,
the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, assuming a price for
the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such
redemption date.
"Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker as having a
maturity comparable to the remaining term of the New Bonds to be
redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the
remaining term of the New Bonds.
"Comparable Treasury Price" means, with respect to any
redemption date, (i) the average of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) on the third business day
preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the
Federal Reserve Bank of New York and designated "Composite 3:30
p.m. Quotations for U.S. Government Securities" or (ii) if such
release (or any successor release) is not published or does not
contain such prices on such third business day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations or (B) if the Trustee is unable to
obtain four such Reference Treasury Dealer Quotations, the
average of all such Reference Treasury Dealer Quotations so
obtained.
"Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the Company and acceptable to the
Trustee.
"Reference Treasury Dealer" means a primary U.S. Government
Securities Dealer in New York City selected by the Company and
acceptable to the Trustee.
"Reference Treasury Dealer Quotations" means, with respect
to each Reference Treasury Dealer and any redemption date, the
average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case
as a percentage of its principal amount) quoted in writing to the
Trustee by such Treasury Reference Dealer at or before 5:00 p.m.,
New York City time, on the third business day preceding such
redemption date.
Global Securities
Except under the circumstances described below, the New
Bonds will be issued in whole or in part in the form of one or
more Global Securities that will be deposited with, or on behalf
of, DTC, or such other depository as may be subsequently
designated (the "Depository"), and registered in the name of a
nominee of the Depository.
Book-Entry Securities represented by a Global Security will
not be exchangeable for Certificated Securities and, except under
the circumstances described below, will not otherwise be issuable
as Certificated Securities.
So long as the Depository, or its nominee, is the registered
owner of a Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner of the
individual Book-Entry Securities represented by such Global
Security for all purposes under the Mortgage. Payments of
principal of and premium, if any, and any interest on individual
Book-Entry Securities represented by a Global Security will be
made to the Depository or its nominee, as the case may be, as the
Owner of such Global Security. Except as set forth below, owners
of beneficial interests in a Global Security will not be entitled
to have any of the individual Book-Entry Securities represented
by such Global Security registered in their names, will not
receive or be entitled to receive physical delivery of any such
Book-Entry Securities and will not be considered the Owners
thereof under the Mortgage, including, without limitation, for
purposes of consenting to any amendment thereof or supplement
thereto.
If the Depository is at any time unwilling or unable to
continue as depository and a successor depository is not
appointed, the Company will issue individual Certificated
Securities in exchange for the Global Security or Securities
representing the corresponding Book-Entry Securities. In
addition, the Company may at any time and in its sole discretion
determine not to have the New Bonds represented by one or more
Global Securities and, in such event, will issue individual
Certificated Securities in exchange for the Global Securities
representing the corresponding Book-Entry Securities. In any
such instance, an owner of a Book-Entry Security represented by a
Global Security will be entitled to physical delivery of
individual Certificated Securities equal in principal amount to
such Book-Entry Security and to have such Certificated Securities
registered in its name. Individual Certificated Securities so
issued will be issued as registered New Bonds in denominations,
unless otherwise specified by the Company, of $1,000 and integral
multiples thereof.
DTC has confirmed to the Company the following information:
1. DTC will act as securities depository for the Global
Securities. The New Bonds will be issued as fully-registered
securities registered in the name of Cede & Co. (DTC's partner-
ship nominee). One fully-registered Global Security will be
issued for the New Bonds, each in the aggregate principal amount
of such series, and will be deposited with DTC.
2. DTC is a limited-purpose trust company organized under
the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is owned by a
number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the
DTC system is also available to others such as securities brokers
and dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The
Rules applicable to DTC and its Participants are on file with the
Securities and Exchange Commission.
3. Purchases of New Bonds under the DTC system must be
made by or through Direct Participants, which will receive a
credit for the New Bonds on DTC's records. The ownership
interest of each actual purchaser of each New Bond ("Beneficial
Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchase, but Beneficial
Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of
their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the New Bonds are to be
accomplished by entries made on the books of Participants acting
on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in
New Bonds, except in the event that use of the book-entry system
for the New Bonds is discontinued.
4. To facilitate subsequent transfers, all New Bonds
deposited by Participants with DTC are registered in the name of
DTC's partnership nominee, Cede & Co. The deposit of New Bonds
with DTC and their registration in the name of Cede & Co. effect
no change in beneficial ownership. DTC has no knowledge of the
actual Beneficial Owners of the New Bonds; DTC's records reflect
only the identity of the Direct Participants to whose accounts
such New Bonds are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC
to Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect Partici-
pants to Beneficial Owners will be governed by arrangements among
them, subject to any statutory or regulatory requirements as may
be in effect from time to time.
6. Redemption notices shall be sent to Cede & Co. If less
than all of the New Bonds are being redeemed, DTC's practice is
to determine by lot the amount of the interest of each Direct
Participant in such issue to be redeemed.
7. Neither DTC nor Cede & Co. will consent or vote with
respect to the New Bonds. Under its usual procedures, DTC mails
an Omnibus Proxy to the Company as soon as possible after the
record date. The Omnibus Proxy assigns Cede & Co.'s consenting
or voting rights to those Direct Participants to whose accounts
the New Bonds are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
8. Principal and interest payments on the New Bonds will
be made to DTC. DTC's practice is to credit Direct Participants'
accounts on the date on which interest is payable in accordance
with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on such
date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in
bearer form or registered in "street name", and will be the
responsibility of such Participant and not of DTC, or the
Company, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal and
interest to DTC is the responsibility of the Company or the
Trustee, disbursement of such payments to Direct Participants
shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of
Direct and Indirect Participants.
9. DTC may discontinue providing its services as
securities depository with respect to the New Bonds at any time
by giving reasonable notice to the Company and the Trustee.
Under such circumstances, in the event that a successor
securities depository is not obtained, Certificated Securities
are required to be printed and delivered.
10. The Company may decide to discontinue use of the system
of book-entry transfers through DTC (or a successor securities
depository). In that event, Certificated Securities will be
printed and delivered.
The information in this section concerning DTC and DTC's
book-entry system has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility
for the accuracy thereof.
None of the Company, the Trustee or any agent for payment on
or registration of transfer or exchange of any Global Security
will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial
interests in such Global Security or for maintaining, supervising
or reviewing any records relating to such beneficial interests.
UNDERWRITING
Subject to the terms and conditions set forth in the
Purchase Contract, effective March 18, 1996, the Company has
agreed to sell to Lehman Brothers Inc. (the "Underwriter"), and
the Underwriter has agreed to purchase the New Bonds.
The Purchase Contract provides that the obligations of the
Underwriter thereunder are subject to approval of certain legal
matters by counsel and to various other conditions. The nature
of the Underwriter's obligations are such that the Underwriter is
committed to purchase all of the New Bonds if any are purchased.
The Company has been advised by the Underwriter that it
proposes initially to offer the New Bonds to the public at the
public offering price set forth on the cover page of this
Prospectus Supplement, and to certain dealers at such price less
a concession not in excess of .200% of the principal amount of
the New Bonds. The Underwriter may allow and such dealers may
reallow a concession not in excess of .100% of such principal
amount. After the initial public offering, the public offering
price and such concessions may be changed.
The Company has agreed to indemnify the Underwriter against
certain liabilities, including liabilities under the Securities
Act of 1933.
The Company has been advised by the Underwriter that it
intends initially to make a market in the New Bonds but is not
obligated to do so and may discontinue any market making at any
time without notice. No assurance can be given as to the
liquidity of the trading market for the New Bonds offered hereby.
The Underwriter engages in transactions with and performs
services for the Company and its affiliates in the ordinary
course of business.
PROSPECTUS SUPPLEMENT
(To Prospectus dated February 28, 1996)
$100,000,000
Appalachian Power Company
FIRST MORTGAGE BONDS, 6.80% SERIES DUE 2006
Interest payable March 1 and September 1
The New Bonds will be redeemable at the option of the
Company in whole or in part at any time upon not less than 30
days' notice at a redemption price equal to the greater of (i)
100% of the principal amount of the New Bonds and (ii) the sum of
the present values of the remaining scheduled payments of
principal and interest thereon discounted to the redemption date
on a semi-annual basis at the Treasury Rate plus 10 basis points.
The New Bonds are also redeemable at a special redemption price
equal to 100% of the principal amount thereof if redeemed by the
use of proceeds of released property or insurance. See
"Redemption Provisions" herein and "Description of New Bonds--
Release and Substitution of Property" in the accompanying
Prospectus.
The New Bonds will be issued in the form of one or more
global securities (the "Global Securities") registered in the
name of The Depository Trust Company ("DTC") or its nominee (the
New Bonds, so represented, being called a "Book-Entry Security").
Beneficial interests in the Global Securities will be shown on,
and transfers will be effected only through, records maintained
by DTC and its participants. Except as described herein, the New
Bonds will not be issued in definitive form. See "Supplemental
Description of New Bonds" herein.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PRICE 99.473% AND ACCRUED INTEREST
Price to the Underwriting Proceeds to
Public(1) Discounts and Company(3)
Commissions(2)
Per Bond . . . 99.473% .247% 99.226%
Total . . . . . $99,473,000 $247,000 $99,226,000
(1) Plus accrued interest from March 1, 1996.
(2) The Company has agreed to indemnify the Underwriter against
certain liabilities, including liabilities, under the
Securities Act of 1933, as amended.
(3) Before deduction of estimated expenses of $191,144 payable
by the Company.
The New Bonds are offered, subject to prior sale, when, as
and if delivered to and accepted by the Underwriter and subject
to approval of certain legal matters by Dewey Ballantine, counsel
for the Underwriter. It is expected that delivery of the New
Bonds will be made, on or about March 27, 1996, at the office of
Morgan Stanley & Co. Incorporated, New York, N.Y., against
payment therefor in immediately available funds.
MORGAN STANLEY & CO.
Incorporated
March 18, 1996
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICE OF THE NEW BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
_______________
SUPPLEMENTAL DESCRIPTION OF NEW BONDS
The following description of the particular terms of the New
Bonds supplements the description of the general terms and
provisions of the New Bonds set forth in the accompanying
Prospectus under the caption "Description of New Bonds". The
following description does not purport to be complete and is
qualified in its entirety by reference to the description in the
accompanying Prospectus and to the instruments referred to
therein.
Maturity, Interest and Payment
The New Bonds will mature on March 1, 2006 and will bear
interest from March 1, 1996 at the rate per annum shown in their
title, payable semi-annually on March 1 and September 1,
commencing September 1, 1996. Interest will, subject to certain
exceptions, be paid to holders registered at the close of
business on the 15th day of the calendar month next preceding the
applicable semi-annual interest payment date. Interest on the
New Bonds will be computed on the basis of a 360-day year of
twelve 30-day months.
Settlement by the Underwriter of the New Bonds will be made
in immediately available funds. The New Bonds will initially be
issued in the form of one or more fully registered securities,
representing the aggregate principal amount of the New Bonds,
that will be deposited with, or on behalf of, DTC, and registered
in the name of CEDE & Co., the nominee of DTC. All payments to
DTC of principal and interest on the New Bonds will be made in
immediately available funds. Should the New Bonds be issued
other than as a Global Security, interest (other than interest
payable at redemption or maturity) may, at the option of the
Company, be paid to the person entitled thereto by check mailed
to any such person. See "Global Securities" herein.
Redemption Provisions
The New Bonds are subject to redemption at any time, on not
less than 30 days' notice by mail prior to the redemption date,
either as a whole or in part at the option of the Company (A) at
a special redemption price equal to 100% of the principal amount
thereof, together with accrued interest to the date fixed for
redemption, if redeemed by the use of proceeds of released
property or the proceeds of insurance (see "Description of New
Bonds--Release and Substitution of Property" in the accompanying
Prospectus), or (B) at a redemption price equal to the greater of
(i) 100% of the principal amount of the New Bonds and (ii) the
sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the redemption date
on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate (as defined below)
plus 10 basis points, plus, in each case, accrued interest
thereon to the date of redemption.
"Treasury Rate" means, with respect to any redemption date,
the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, assuming a price for
the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such
redemption date.
"Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker as having a
maturity comparable to the remaining term of the New Bonds to be
redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the
remaining term of the New Bonds.
"Comparable Treasury Price" means, with respect to any
redemption date, (i) the average of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) on the third business day
preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the
Federal Reserve Bank of New York and designated "Composite 3:30
p.m. Quotations for U.S. Government Securities" or (ii) if such
release (or any successor release) is not published or does not
contain such prices on such third business day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations or (B) if the Trustee is unable to
obtain four such Reference Treasury Dealer Quotations, the
average of all such Reference Treasury Dealer Quotations so
obtained.
"Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the Company and acceptable to the
Trustee.
"Reference Treasury Dealer" means a primary U.S. Government
Securities Dealer in New York City selected by the Company and
acceptable to the Trustee.
"Reference Treasury Dealer Quotations" means, with respect
to each Reference Treasury Dealer and any redemption date, the
average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case
as a percentage of its principal amount) quoted in writing to the
Trustee by such Treasury Reference Dealer at or before 5:00 p.m.,
New York City time, on the third business day preceding such
redemption date.
Global Securities
Except under the circumstances described below, the New
Bonds will be issued in whole or in part in the form of one or
more Global Securities that will be deposited with, or on behalf
of, DTC, or such other depository as may be subsequently
designated (the "Depository"), and registered in the name of a
nominee of the Depository.
Book-Entry Securities represented by a Global Security will
not be exchangeable for Certificated Securities and, except under
the circumstances described below, will not otherwise be issuable
as Certificated Securities.
So long as the Depository, or its nominee, is the registered
owner of a Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner of the
individual Book-Entry Securities represented by such Global
Security for all purposes under the Mortgage. Payments of
principal of and premium, if any, and any interest on individual
Book-Entry Securities represented by a Global Security will be
made to the Depository or its nominee, as the case may be, as the
Owner of such Global Security. Except as set forth below, owners
of beneficial interests in a Global Security will not be entitled
to have any of the individual Book-Entry Securities represented
by such Global Security registered in their names, will not
receive or be entitled to receive physical delivery of any such
Book-Entry Securities and will not be considered the Owners
thereof under the Mortgage, including, without limitation, for
purposes of consenting to any amendment thereof or supplement
thereto.
If the Depository is at any time unwilling or unable to
continue as depository and a successor depository is not
appointed, the Company will issue individual Certificated
Securities in exchange for the Global Security or Securities
representing the corresponding Book-Entry Securities. In
addition, the Company may at any time and in its sole discretion
determine not to have the New Bonds represented by one or more
Global Securities and, in such event, will issue individual
Certificated Securities in exchange for the Global Securities
representing the corresponding Book-Entry Securities. In any
such instance, an owner of a Book-Entry Security represented by a
Global Security will be entitled to physical delivery of
individual Certificated Securities equal in principal amount to
such Book-Entry Security and to have such Certificated Securities
registered in its name. Individual Certificated Securities so
issued will be issued as registered New Bonds in denominations,
unless otherwise specified by the Company, of $1,000 and integral
multiples thereof.
DTC has confirmed to the Company the following information:
1. DTC will act as securities depository for the Global
Securities. The New Bonds will be issued as fully-registered
securities registered in the name of Cede & Co. (DTC's partner-
ship nominee). One fully-registered Global Security will be
issued for the New Bonds, each in the aggregate principal amount
of such series, and will be deposited with DTC.
2. DTC is a limited-purpose trust company organized under
the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include
securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is owned by a
number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the
DTC system is also available to others such as securities brokers
and dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The
Rules applicable to DTC and its Participants are on file with the
Securities and Exchange Commission.
3. Purchases of New Bonds under the DTC system must be
made by or through Direct Participants, which will receive a
credit for the New Bonds on DTC's records. The ownership
interest of each actual purchaser of each New Bond ("Beneficial
Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchase, but Beneficial
Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of
their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the New Bonds are to be
accomplished by entries made on the books of Participants acting
on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in
New Bonds, except in the event that use of the book-entry system
for the New Bonds is discontinued.
4. To facilitate subsequent transfers, all New Bonds
deposited by Participants with DTC are registered in the name of
DTC's partnership nominee, Cede & Co. The deposit of New Bonds
with DTC and their registration in the name of Cede & Co. effect
no change in beneficial ownership. DTC has no knowledge of the
actual Beneficial Owners of the New Bonds; DTC's records reflect
only the identity of the Direct Participants to whose accounts
such New Bonds are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC
to Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect Partici-
pants to Beneficial Owners will be governed by arrangements among
them, subject to any statutory or regulatory requirements as may
be in effect from time to time.
6. Redemption notices shall be sent to Cede & Co. If less
than all of the New Bonds are being redeemed, DTC's practice is
to determine by lot the amount of the interest of each Direct
Participant in such issue to be redeemed.
7. Neither DTC nor Cede & Co. will consent or vote with
respect to the New Bonds. Under its usual procedures, DTC mails
an Omnibus Proxy to the Company as soon as possible after the
record date. The Omnibus Proxy assigns Cede & Co.'s consenting
or voting rights to those Direct Participants to whose accounts
the New Bonds are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
8. Principal and interest payments on the New Bonds will
be made to DTC. DTC's practice is to credit Direct Participants'
accounts on the date on which interest is payable in accordance
with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on such
date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in
bearer form or registered in "street name", and will be the
responsibility of such Participant and not of DTC, or the
Company, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal and
interest to DTC is the responsibility of the Company or the
Trustee, disbursement of such payments to Direct Participants
shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of
Direct and Indirect Participants.
9. DTC may discontinue providing its services as
securities depository with respect to the New Bonds at any time
by giving reasonable notice to the Company and the Trustee.
Under such circumstances, in the event that a successor
securities depository is not obtained, Certificated Securities
are required to be printed and delivered.
10. The Company may decide to discontinue use of the system
of book-entry transfers through DTC (or a successor securities
depository). In that event, Certificated Securities will be
printed and delivered.
The information in this section concerning DTC and DTC's
book-entry system has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility
for the accuracy thereof.
None of the Company, the Trustee or any agent for payment on
or registration of transfer or exchange of any Global Security
will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial
interests in such Global Security or for maintaining, supervising
or reviewing any records relating to such beneficial interests.
UNDERWRITING
Under the terms and subject to the conditions of the
Purchase Contract effective March 18, 1996, Morgan Stanley & Co.
Incorporated (the "Underwriter") has agreed to purchase, and the
Company has agreed to sell to the Underwriter, the New Bonds.
The nature of the Underwriter's obligation is such that it is
committed to take and pay for all of the New Bonds, if any are
taken.
The Company has been advised by the Underwriter, as follows:
The Underwriter is offering part of the New Bonds
directly to the public at the public offering price set
forth on the cover page of this Prospectus Supplement
and part to dealers at a price which represents a
concession of .225% of the principal amount under the
public offering price. The Underwriter may allow and
such dealers may reallow a concession of not in excess
of .150% of the principal amount to certain other
dealers who have entered into a Dealer Agreement.
After the initial public offering, the public offering
price and concessions may be changed.
The Company has agreed to indemnify the Underwriter against
certain liabilities, including liabilities under the Securities
Act of 1933, as amended.
There is presently no trading market for the New Bonds and
there is no assurance that a market will develop. Although it is
under no obligation to do so, the Underwriter presently intends
to act as a market maker for the New Bonds in the secondary
trading market, but may discontinue such market making at any
time in its sole discretion.
The Underwriter engages in transactions with and performs
services for the Company and its affiliates in the ordinary
course of business.