Filed Pursuant to Rule 424(b)(5)
Registration Nos. 333-108156
333-108156-01
333-108156-02
Prospectus Supplement
(To Prospectus dated September 3, 2003)
$40,000,000
[LOGO] MISSISSIPPI POWER
(A SOUTHERN COMPANY)
Series F Floating Rate Senior Notes
due March 9, 2009
Mississippi Power Company will pay interest on the Series F Senior Notes on the
9th day of each March, June, September and December, beginning June 9, 2004.
The per annum interest rate on the Series F Senior Notes for each quarterly
interest period will be reset quarterly based on the three-month LIBOR rate
plus 0.18%; however, under certain circumstances set forth in this Prospectus
Supplement, the interest rate on the Series F Senior Notes will be determined
without reference to LIBOR.
The Series F Senior Notes are not redeemable prior to maturity.
See "RISK FACTORS" beginning on page S-3 of this Prospectus Supplement for a
description of certain risks associated with investing in the Series F Senior
Notes.
The Series F Senior Notes will be direct, unsecured and unsubordinated
obligations and will rank equally with all other unsecured and unsubordinated
obligations of Mississippi Power Company. The Series F Senior Notes will be
issued only in registered form in denominations of $1,000 and any integral
multiple thereof.
The Series F Senior Notes should be delivered on or about March 9, 2004 through
the book-entry facilities of The Depository Trust Company.
- --------------------------------------------------------------------------------
Proceeds to
Public Mississippi
Offering Underwriting Power
Price Discounts Company
-------------------------------------------------------------
Per Series F Senior Note 100.00% 0.50% 99.50%
Total................... $40,000,000 $200,000 $39,800,000
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this Prospectus Supplement or the accompanying Prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
JPMorgan
March 3, 2004
In making your investment decision, you should rely only on the information
contained or incorporated by reference in this Prospectus Supplement and the
attached Prospectus. We have not authorized anyone to provide you with any
other information. If you receive any unauthorized information, you should not
rely on it.
We are offering to sell the Series F Senior Notes only in places where sales
are permitted.
You should not assume that the information contained or incorporated by
reference in this Prospectus Supplement or the attached Prospectus, including
information incorporated by reference, is accurate as of any date other than
its respective date.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SERIES F SENIOR NOTES
OFFERED HEREBY, INCLUDING OVER-ALLOTMENT AND SHORT-COVERING TRANSACTIONS IN THE
SERIES F SENIOR NOTES. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
-----------------
TABLE OF CONTENTS
Page
----
Prospectus Supplement
Risk Factors............................ S-3
The Company............................. S-3
Selected Financial Information.......... S-4
Use of Proceeds......................... S-5
Description of the Series F Senior Notes S-5
Experts................................. S-9
Underwriting............................ S-10
Page
----
Prospectus
About this Prospectus....................... 2
Risk Factors................................ 2
Available Information....................... 2
Incorporation of Certain Documents by
Reference................................. 3
Mississippi Power Company................... 3
Selected Information........................ 4
The Trusts.................................. 5
Accounting Treatment of the Trusts.......... 5
Use of Proceeds............................. 5
Description of the New Stock................ 6
Description of Depositary Shares............ 7
Description of the Senior Notes............. 10
Description of the Junior Subordinated Notes 14
Description of the Preferred Securities..... 20
Description of the Guarantees............... 20
Relationship Among the Preferred Securities,
the Junior Subordinated Notes and the
Guarantees................................ 23
Plan of Distribution........................ 24
Legal Matters............................... 25
Experts..................................... 25
S-2
RISK FACTORS
Investing in the Series F Floating Rate Senior Notes due March 9, 2009 (the
"Series F Senior Notes") involves risk. Please see the risk factors in
Mississippi Power Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2003, which is incorporated by reference in this Prospectus
Supplement and the accompanying Prospectus. Before making an investment
decision, you should carefully consider these risks as well as other
information contained or incorporated by reference in this Prospectus
Supplement and the accompanying Prospectus. The risks and uncertainties not
presently known to Mississippi Power Company or that Mississippi Power Company
currently deems immaterial may also impair its business operations, its
financial results and the value of the Series F Senior Notes.
THE COMPANY
Mississippi Power Company (the "Company") was incorporated under the laws of
the State of Mississippi on July 12, 1972, was admitted to do business in
Alabama on November 28, 1972 and, effective December 21, 1972, by the merger
into it of the predecessor Mississippi Power Company, succeeded to the business
and properties of the latter company. The predecessor Mississippi Power Company
was incorporated under the laws of the State of Maine on November 24, 1924 and
was admitted to do business in Mississippi on December 23, 1924 and in Alabama
on December 7, 1962. The Company has its principal office at 2992 West Beach
Boulevard, Gulfport, Mississippi 39501, telephone number (228) 864-1211. The
Company is a wholly owned subsidiary of The Southern Company ("Southern").
The Company is engaged in the generation and purchase of electric energy and
the distribution and sale of such energy within 23 counties of southeastern
Mississippi, at retail in 123 communities (including Biloxi, Gulfport,
Hattiesburg, Laurel, Meridian and Pascagoula), as well as in rural areas, and
at wholesale to one municipality, six rural electric distribution cooperative
associations and one generating and transmitting cooperative.
S-3
SELECTED FINANCIAL INFORMATION
The following selected financial data for the years ended December 31, 1999
through December 31, 2003 has been derived from the Company's audited financial
statements and related notes, incorporated by reference in this Prospectus
Supplement and the accompanying Prospectus. The information set forth below is
qualified in its entirety by reference to and, therefore, should be read
together with management's discussion and analysis of results of operations and
financial condition, the financial statements and related notes and other
financial information incorporated by reference in this Prospectus Supplement
and the accompanying Prospectus.
Year ended December 31,
--------------------------------------------
1999 2000 2001 2002 2003
-------- -------- -------- -------- --------
(Thousands, except ratios)
Operating Revenues........................... $633,004 $687,602 $796,065 $824,165 $869,924
Earnings Before Income Taxes................. 90,939 91,457 106,391 120,905 120,827
Net Income After Dividends on Preferred Stock 54,809 54,972 63,887 73,013 73,499
Ratio of Earnings to Fixed Charges(1)........ 3.96 3.97 5.05 6.58 8.15
Capitalization as of
December 31, 2003
------------------------------
Actual As Adjusted(2)
-------- ------------------
(Thousands, except percentages)
Common Stock Equity......................... $532,489 $532,489 63.1%
Cumulative Preferred Stock.................. 31,809 33,421 4.0
Senior Notes................................ 90,000 130,000 15.4
Mandatorily Redeemable Preferred Securities. 35,000 35,000 4.1
Other Long-Term Debt........................ 112,488 112,488 13.4
-------- -------- -----
Total, excluding amounts due within one year $801,786 $843,398 100.0%
======== ======== =====
- --------
(1) This ratio is computed as follows: (i) "Earnings" have been calculated by
adding to "Earnings Before Income Taxes" "Interest expense," "Distributions
on mandatorily redeemable preferred securities" and the debt portion of
allowance for funds using during construction; and (ii) "Fixed Charges"
consist of "Interest expense," "Distributions on mandatorily redeemable
preferred securities" and the debt portion of allowance for funds used
during construction.
(2) Reflects: (i) the proposed issuance in April 2004 of 1,200,000 Depositary
Shares ($30,000,000 aggregate stated value), Each Representing One-Fourth
of a Share of the Company's 5.25% Series Preferred Stock, Cumulative, Par
Value $100 Per Share; (ii) the proposed redemption in April 2004 of 49,840
shares ($4,984,000 aggregate par value) of the Company's 7% Preferred Stock
(Par Value $100 Per Share); (iii) the proposed redemption in April 2004 of
600,000 Depositary Shares ($15,000,000 aggregate stated value), Each
Representing One-Fourth of a Share of the Company's 6.32% Series Preferred
Stock, Cumulative (Par Value $100 Per Share); (iv) the proposed redemption
in April 2004 of 336,160 Depositary Shares ($8,404,000 aggregate stated
value), Each Representing One-Fourth of a Share of the Company's 6.65%
Series Preferred Stock, Cumulative (Par Value $100 Per Share); and (v) the
proposed issuance of the Series F Senior Notes offered hereby.
S-4
USE OF PROCEEDS
The net proceeds from the sale of the Series F Senior Notes, together with
other monies of the Company, will be applied by the Company to repay
$80,000,000 aggregate principal amount of its Series D Floating Rate Senior
Notes due March 12, 2004 at maturity.
DESCRIPTION OF THE SERIES F SENIOR NOTES
Set forth below is a description of the specific terms of the Series F
Senior Notes. This description supplements, and should be read together with,
the description of the general terms and provisions of the Senior Notes set
forth in the accompanying Prospectus under the caption "Description of the
Senior Notes." The following description does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the description
in the accompanying Prospectus and the Senior Note Indenture dated as of May 1,
1998 (the "Senior Note Indenture") between the Company and Deutsche Bank Trust
Company Americas (formerly known as Bankers Trust Company), as trustee (the
"Senior Note Indenture Trustee").
General
The Series F Senior Notes will be issued as a series of senior notes under
the Senior Note Indenture. The Series F Senior Notes will be initially issued
in the aggregate principal amount of $40,000,000. The Company may, without the
consent of the holders of the Series F Senior Notes, issue additional notes
having the same ranking and the same interest rate, maturity and other terms
(except for the issue price and issue date) as the Series F Senior Notes. Any
additional notes having such similar terms, together with the Series F Senior
Notes, will constitute a single series of senior notes under the Senior Note
Indenture.
The entire principal amount of the Series F Senior Notes will mature and
become due and payable, together with any accrued and unpaid interest thereon,
on March 9, 2009. The Series F Senior Notes are not subject to any sinking fund
provision. The Series F Senior Notes are available for purchase in
denominations of $1,000 and any integral multiple thereof.
Interest
Each Series F Senior Note shall bear interest from the date of original
issuance, payable quarterly in arrears on March 9, June 9, September 9 and
December 9, as applicable, to the person in whose name such Series F Senior
Note is registered at the close of business on the 15th calendar day prior to
such payment date (whether or not a Business Day). The initial interest payment
date is June 9, 2004. The amount of interest payable will be computed on the
basis of the actual number of days elapsed over a 360-day year. If any interest
payment date would otherwise be a day that is not a Business Day, the interest
payment date will be the next succeeding Business Day.
The Series F Senior Notes will bear interest for each quarterly Interest
Period at a per annum rate determined by the Calculation Agent, subject to the
maximum interest rate permitted by New York or other applicable state law, as
such law may be modified by United States law of general application. The
interest rate applicable during each quarterly Interest Period will be equal to
LIBOR on the Interest Determination Date for such Interest Period plus 0.18%;
provided, however, that in certain circumstances described below, the interest
rate will be determined without reference to LIBOR. Promptly upon such
determination, the Calculation Agent will notify the Company and the Senior
Note Indenture Trustee, if the Senior Note Indenture Trustee is not then
serving as the Calculation Agent, of the interest rate for the new Interest
Period. The interest rate determined by the Calculation Agent, absent manifest
error, shall be binding and conclusive upon the beneficial owners and holders
of the Series F Senior Notes, the Company and the Senior Note Indenture Trustee.
S-5
If the following circumstances exist on any Interest Determination Date, the
Calculation Agent shall determine the interest rate for the Series F Senior
Notes as follows:
(1) In the event no Reported Rate (as defined below) appears on Telerate
Page 3750 (as defined below) as of approximately 11:00 a.m., London time, on
an Interest Determination Date, the Calculation Agent shall request the
principal London offices of each of four major banks in the London interbank
market selected by the Calculation Agent (after consultation with the
Company) to provide a quotation of the rate (the "Rate Quotation") at which
three-month U.S. dollar deposits in amounts of not less than $1,000,000 are
offered by it to prime banks in the London interbank market, as of
approximately 11:00 a.m., London time, on such Interest Determination Date,
that is representative of single transactions at such time (the
"Representative Amounts"). If at least two Rate Quotations are provided, the
interest rate will be the arithmetic mean of the Rate Quotations obtained by
the Calculation Agent, plus 0.18%.
(2) In the event no Reported Rate appears on Telerate Page 3750 as of
approximately 11:00 a.m., London time, on an Interest Determination Date and
there are fewer than two Rate Quotations, the interest rate will be the
arithmetic mean of the rates quoted at approximately 11:00 a.m., New York
City time, on such Interest Determination Date, by three major banks in New
York City selected by the Calculation Agent (after consultation with the
Company), for loans in Representative Amounts in U.S. dollars to leading
European banks, having a maturity of three months for a period commencing on
the second London Business Day immediately following such Interest
Determination Date, plus 0.18%; provided, however, that if fewer than three
banks selected by the Calculation Agent are quoting such rates, the interest
rate for the applicable Interest Period will be the same as the interest
rate in effect for the immediately preceding Interest Period.
Upon the request of a holder of the Series F Senior Notes, the Calculation
Agent will provide to such holder the interest rate in effect on the date of
such request and, if determined, the interest rate for the next Interest Period.
Certain Definitions
The following definitions apply to the Series F Senior Notes:
"Business Day" means a day other than (i) a Saturday or Sunday, (ii) a day
on which banks in New York, New York are authorized or obligated by law or
executive order to remain closed, or (iii) a day on which the Senior Note
Indenture Trustee's corporate trust office is closed for business.
"Calculation Agent" means Deutsche Bank Trust Company Americas, or its
successor appointed by the Company, acting as calculation agent.
"Interest Determination Date" means the second London Business Day
immediately preceding the first day of the relevant Interest Period.
"Interest Period" means the period commencing on an interest payment date
for the Series F Senior Notes (or, with respect to the initial Interest Period
only, commencing on the issue date for the Series F Senior Notes) and ending on
the day before the next succeeding interest payment date for the Series F
Senior Notes.
"LIBOR" for any Interest Determination Date will be the offered rate for
deposits in U.S. dollars having a maturity of three months for a period
commencing on the second London Business Day immediately following the Interest
Determination Date in amounts of not less than $1,000,000, as such rate appears
on Telerate Page 3750 or a successor reporter of such rates selected by the
Calculation Agent and acceptable to the Company, at approximately 11:00 a.m.,
London time, on the Interest Determination Date (the "Reported Rate").
S-6
"London Business Day" means a day that is a Business Day and a day on which
dealings in deposits in U.S. dollars are transacted, or with respect to any
future date are expected to be transacted, in the London interbank market.
"Telerate Page 3750" means the display designated on page 3750 on Moneyline
Telerate, Inc. (or such other page as may replace the 3750 page on that service
or such other service as may be nominated by the British Bankers' Association
for the purpose of displaying London interbank offered rates for U.S. dollar
deposits).
Ranking
The Series F Senior Notes will be direct, unsecured and unsubordinated
obligations of the Company and will rank equally with all other unsecured and
unsubordinated obligations of the Company. The Series F Senior Notes will be
effectively subordinated to all secured debt of the Company, including its
first mortgage bonds, aggregating approximately $30,000,000 outstanding at
December 31, 2003. The Senior Note Indenture contains no restrictions on the
amount of additional indebtedness that may be incurred by the Company.
Redemption
The Series F Senior Notes will not be redeemable at the option of the
Company prior to maturity.
Book-Entry Only Issuance--The Depository Trust Company
The Depository Trust Company ("DTC") will act as the initial securities
depositary for the Series F Senior Notes. The Series F Senior Notes will be
issued only as fully registered securities registered in the name of Cede &
Co., DTC's nominee, or such other name as may be requested by an authorized
representative of DTC. One or more fully registered global Series F Senior
Notes certificates will be issued, representing in the aggregate the total
principal amount of Series F Senior Notes, and will be deposited with the
Senior Note Indenture Trustee on behalf of DTC.
DTC, the world's largest depository, is a limited-purpose trust company
organized under 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, as amended. DTC holds and provides
asset servicing for over 2 million issues of U.S. and non-U.S. equity issues,
corporate and municipal debt issues and money market instruments from over 85
countries that DTC's participants ("Direct Participants") deposit with DTC. DTC
also facilitates the post-trade settlement among Direct Participants of sales
and other securities transactions, in deposited securities through electronic
computerized book-entry transfers and pledges between Direct Participants'
accounts. This eliminates the need for physical movement of securities
certificates. Direct Participants include both U.S and non-U.S. securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. DTC is wholly-owned subsidiary of the Depository Trust &
Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct
Participants of DTC and members of the National Securities Clearing
Corporation, Government Securities Clearing Corporation, MBS Clearing
Corporation and Emerging Markets Clearing Corporation (NSCC, GSCC, MBSCC and
EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange,
Inc., the American Stock Exchange LLC and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as both U.S. and non-U.S. securities brokers and dealers, banks, trust
companies and clearing corporations that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The
DTC rules applicable to its Participants are on file with the Securities and
Exchange Commission. More information about DTC can be found at www.dtcc.com.
S-7
Purchases of Series F Senior Notes under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Series F
Senior Notes on DTC's records. The ownership interest of each actual purchaser
of Series F Senior Notes ("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. Beneficial Owners, however,
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the Direct
or Indirect Participants through which the Beneficial Owner entered into the
transaction. Transfers of ownership interests in the Series F Senior Notes are
to be accomplished by entries made on the books of Direct and Indirect
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in Series F Senior
Notes, except in the event that use of the book-entry system for the Series F
Senior Notes is discontinued.
To facilitate subsequent transfers, all Series F Senior Notes deposited by
Direct Participants with the DTC are registered in the name of DTC's
partnership nominee, Cede & Co., or such other name as may be requested by an
authorized representative of DTC. The deposit of Series F Senior Notes with DTC
and their registration in the name of Cede & Co. or such other DTC nominee do
not effect any change in beneficial ownership. DTC has no knowledge of the
actual Beneficial Owners of the Series F Senior Notes; DTC's records reflect
only the identity of the Direct Participants to whose accounts such Series F
Senior Notes are credited, which may or may not be the Beneficial Owners. The
Direct and Indirect Participants will remain responsible for keeping account of
their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants 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.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will itself consent
or vote with respect to Series F Senior Notes, unless authorized by a Direct
Participant in accordance with DTC's procedures. 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 Series F Senior Notes are
credited on the record date (identified in a listing attached to the Omnibus
Proxy).
Payments on the Series F Senior Notes will be made to Cede & Co., or such
other nominee as may be requested by an authorized representative of DTC. DTC's
practice is to credit Direct Participants' accounts upon DTC's receipt of funds
and corresponding detail information from the Company or the Senior Note
Indenture Trustee, on the payable date in accordance with their respective
holdings shown on DTC's records. Payments by Participants to Beneficial Owners
will be governed by standing instructions and customary practices, as is the
case with securities held for the account of customers in bearer form or
registered in "street name," and will be the responsibility of such Participant
and not of DTC, its nominee or the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment to Cede
& Co. (or such nominee as may be requested by an authorized representative of
DTC) is the responsibility of the Company, disbursement of such payments to
Direct Participants is the responsibility of DTC and disbursement of such
payments to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
Except as provided herein, a Beneficial Owner of a global Series F Senior
Note will not be entitled to receive physical delivery of Series F Senior
Notes. Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the Series F Senior Notes. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of securities in definitive form. Such laws may impair the ability to
transfer beneficial interests in a global Series F Senior Note.
DTC may discontinue providing its services as securities depositary with
respect to the Series F Senior Notes at any time by giving reasonable notice to
the Company or the Senior Note Indenture Trustee. Under such circumstances, in
the event that a successor securities depositary is not obtained, Series F
Senior Notes
S-8
certificates are required to be printed and delivered. Additionally, the
Company may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depositary). In that event, certificates for the
Series F Senior Notes 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. The Company has
no responsibility for the performance by DTC or its Direct or Indirect
Participants of their respective obligations as described herein or under the
rules and procedures governing their respective operations.
EXPERTS
The Company's financial statements and the related financial statement
schedule as of and for the years ended December 31, 2003 and 2002 incorporated
by reference in this Prospectus Supplement have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports (which report on
the financial statements expresses an unqualified opinion and includes an
explanatory paragraph referring to the Company's change in its method of
accounting for asset retirement obligations), which are incorporated herein by
reference, and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
Certain of the Company's financial statements incorporated by reference in
this Prospectus Supplement have been audited by Arthur Andersen LLP
("Andersen"), independent public accountants, as indicated in their reports
with respect to the financial statements, and are incorporated by reference in
this Prospectus Supplement, in reliance upon the authority of Andersen as
experts in giving such reports. On March 28, 2002, Southern's Board of
Directors, upon recommendation of its Audit Committee, decided not to engage
Andersen as the Company's principal public accountants. The Company has not
obtained a reissued report from Andersen and has been unable to obtain, after
reasonable efforts, Andersen's written consent to incorporate by reference
Andersen's reports on the financial statements. Under these circumstances, Rule
437a under the Securities Act of 1933, as amended (the "1933 Act"), permits
this Prospectus Supplement to be filed without a written consent from Andersen.
The absence of such written consent from Andersen may limit a holder's ability
to assert claims against Andersen under Section 1l(a) of the 1933 Act for any
untrue statement of a material fact contained in the financial statements
audited by Andersen or any omissions to state a material fact required to be
stated in the financial statements.
S-9
UNDERWRITING
The Company and J.P. Morgan Securities Inc. (the "Underwriter") have entered
into an underwriting agreement with respect to the Series F Senior Notes.
Subject to certain conditions, the Underwriter has agreed to purchase the
entire principal amount of Series F Senior Notes.
The Underwriter is committed to take and pay for all of the Series F Senior
Notes being offered, if any are taken.
The Underwriter proposes to offer the Series F Senior Notes in part directly
to the public at the initial public offering price set forth on the cover page
of this Prospectus Supplement and in part to certain securities dealers at such
price less a concession not in excess of 0.30% per Series F Senior Note. The
Underwriter may allow, and such dealers may reallow, a concession not in excess
of 0.20% per Series F Senior Note to certain brokers and dealers. After the
Series F Senior Notes are released for sale to the public, the initial public
offering price and other selling terms may from time to time be varied by the
Underwriter.
The Series F Senior Notes are a new issue of securities with no established
trading market. The Company has been advised by the Underwriter that the
Underwriter intends to make a market in the Series F Senior Notes but is not
obligated to do so and may discontinue market making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
the Series F Senior Notes.
In connection with the offering of the Series F Senior Notes, the
Underwriter may purchase and sell Series F Senior Notes in the open market.
These transactions may include short sales, stabilizing transactions and
purchases to cover positions created by short sales. Short sales involve the
sale by the Underwriter of a greater number of Series F Senior Notes than it is
required to purchase in the offering. Stabilizing transactions consist of
certain bids or purchases made for the purpose of preventing or retarding a
decline in the market price of the Series F Senior Notes while the offering of
the Series F Senior Notes is in progress.
These activities by the Underwriter may stabilize, maintain or otherwise
affect the market price of the Series F Senior Notes. As a result, the price of
the Series F Senior Notes may be higher than the price that otherwise might
exist in the open market. If these activities are commenced, they may be
discontinued by the Underwriter at any time. These transactions may be effected
in the over-the-counter market or otherwise.
The Company expects that its expenses related to the offering of the Series
F Senior Notes, excluding underwriting discounts and commissions, will be
approximately $225,000.
Delivery of the Series F Senior Notes is expected to occur four Business
Days after the pricing of the offering.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the 1933 Act.
The Underwriter and its affiliates engage in transactions with and perform
services for the Company in the ordinary course of business and have engaged,
and may in the future engage, in investment banking and commercial banking
transactions with the Company or its affiliates.
S-10
PROSPECTUS
$350,000,000
Mississippi Power Company
Preferred Stock
Cumulative, Par Value $100 Per Share
Depositary Preferred Shares,
each representing one-fourth of a share of Preferred Stock
Senior Notes
Junior Subordinated Notes
-----------------
Mississippi Power Capital Trust III
Mississippi Power Capital Trust IV
Trust Preferred Securities
Fully and unconditionally guaranteed, as set forth in this Prospectus, by
Mississippi Power Company
a subsidiary of The Southern Company
-----------------
We will provide the specific terms of these securities in supplements to
this Prospectus. You should read this Prospectus and the applicable prospectus
supplement carefully before you invest.
See "Risk Factors" on page 2 for information on certain risks related to the
purchase of securities offered by this Prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this Prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
September 3, 2003
ABOUT THIS PROSPECTUS
This Prospectus is part of a registration statement filed with the
Securities and Exchange Commission (the "Commission") using a "shelf"
registration process under the Securities Act of 1933, as amended (the "1933
Act"). Under the shelf process, Mississippi Power Company (the "Company") may
sell, in one or more transactions,
. preferred stock (the "new Stock")
. depositary preferred shares (the "Depositary Shares")
. senior notes (the "Senior Notes")
. junior subordinated notes (the "Junior Subordinated Notes")
and Mississippi Power Capital Trust III and Mississippi Power Capital Trust IV
(individually, a "Trust" and collectively, the "Trusts") may sell
. trust preferred securities or capital securities (the "Preferred
Securities")
in one or more offerings up to a total dollar amount of $350,000,000. This
Prospectus provides a general description of those securities. Each time the
Company sells securities, the Company will provide a prospectus supplement that
will contain specific information about the terms of that offering ("Prospectus
Supplement"). The Prospectus Supplement may also add, update or change
information contained in this Prospectus. You should read this Prospectus and
the applicable Prospectus Supplement together with additional information under
the heading "Available Information."
RISK FACTORS
Investing in the Company's securities involves risk. Please see the risk
factors described in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2002, which is incorporated by reference in this Prospectus.
Before making an investment decision, you should carefully consider these risks
as well as other information contained or incorporated by reference in this
Prospectus. The risks and uncertainties described are not the only ones facing
the Company. Additional risks and uncertainties not presently known to the
Company or that the Company currently deems immaterial may also impair its
business operations, its financial results and the value of its securities.
AVAILABLE INFORMATION
The Company and the Trusts have filed with the Commission a combined
registration statement on Form S-3 (the "Registration Statement," which term
encompasses any amendments of the Registration Statement and exhibits to the
Registration Statement) under the 1933 Act. As permitted by the rules and
regulations of the Commission, this Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto, to which reference is made.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance with the
1934 Act files reports and other information with the Commission. Such reports
and other information can be inspected and copied at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Information on the operation of the Public Reference Room may be obtained by
calling the Commission at 1-800-SEC-0330. The Commission maintains a Web site
that contains reports, proxy and information statements and other information
regarding registrants including the Company that file electronically at
http://www.sec.gov. In addition, reports and other material concerning the
Company can be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
No separate financial statements of any Trust are included in this
Prospectus. The Company considers that such statements would not be material to
holders of the Preferred Securities because each Trust has no
2
independent operations and exists for the sole purpose of investing the
proceeds of the sale of its Trust Securities (as defined below) in Junior
Subordinated Notes.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission pursuant to the
1934 Act and are incorporated by reference in this Prospectus and made a part
of this Prospectus:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2002;
(b) the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2003 and June 30, 2003; and
(c) the Company's Current Reports on Form 8-K dated April 21, 2003, April
24, 2003 and May 21, 2003.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference in this Prospectus and made a part of this Prospectus
from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained in this Prospectus or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference in this Prospectus modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all documents incorporated herein by reference in this
Prospectus (other than the exhibits to such documents unless such exhibits are
specifically incorporated by reference in this Prospectus). Such requests
should be directed to Vicki L. Pierce, Corporate Secretary, Mississippi Power
Company, 2992 West Beach Boulevard, Gulfport, Mississippi 39501, telephone:
(228) 864-1211.
MISSISSIPPI POWER COMPANY
The Company was incorporated under the laws of the State of Mississippi on
July 12, 1972, was admitted to do business in Alabama on November 28, 1972 and,
effective December 21, 1972, by the merger into it of the predecessor
Mississippi Power Company, succeeded to the business and properties of the
latter company. The predecessor Mississippi Power Company was incorporated
under the laws of the State of Maine on November 24, 1924, and was admitted to
do business in Mississippi on December 23, 1924 and in Alabama on December 7,
1962. The Company has its principal office at 2992 West Beach Boulevard,
Gulfport, Mississippi 39501, telephone number (228) 864-1211. The Company is a
wholly owned subsidiary of The Southern Company ("Southern").
The Company is engaged in the generation and purchase of electric energy and
the distribution and sale of such energy within 23 counties of southeastern
Mississippi, at retail in 123 communities (including Biloxi, Gulfport,
Hattiesburg, Laurel, Meridian and Pascagoula), as well as in rural areas, and
at wholesale to one municipality, six rural electric distribution cooperative
associations and one generating and transmitting cooperative.
3
SELECTED INFORMATION
The following material, which is presented in this Prospectus solely to
furnish limited introductory information regarding the Company, has been
selected from, or is based upon, the detailed information and financial
statements appearing in the documents incorporated in this Prospectus by
reference or elsewhere in this Prospectus, is qualified in its entirety by
reference to those documents and, therefore, should be read together with those
documents.
Mississippi Power Company
Business.................... Generation, transmission, distribution and sale
of electric energy
Service Area................ Approximately 1,200 square miles in the 23
counties of southeastern Mississippi, containing
an aggregate area of approximately 11,500 square
miles
Customers at December 31,
2002...................... 192,246
Generating Capacity at
December 31, 2002
(kilowatts)............... 3,155,976
Sources of Generation during
2002 (kilowatt-hours)..... Coal (57%), Gas (43%)
Certain Ratios
The following table sets forth the Ratios of Earnings to Fixed Charges and
Earnings to Fixed Charges Plus Preferred Dividend Requirements (Pre-Income Tax
Basis) for the periods indicated.
Six
Months
Year Ended December 31, Ended
------------------------ June 30,
1998 1999 2000 2001 2002 2003(3)
---- ---- ---- ---- ---- --------
Ratio of Earnings to Fixed Charges(1)..................... 4.47 3.96 3.97 5.05 6.58 14.88
Ratio of Earnings to Fixed Charges Plus Preferred Dividend
Requirements (Pre-Income Tax Basis)(2).................. 4.00 3.60 3.59 4.51 5.76 12.64
- --------
(1)This ratio is computed as follows: (i) "Earnings" have been calculated by
adding to "Earnings Before Income Taxes" "Interest Expense, Net of Amounts
Capitalized," "Distributions on Preferred Securities of Subsidiary" and the
debt portion of allowance for funds used during construction and (ii) "Fixed
Charges" consist of "Interest Expense, Net of Amounts Capitalized,"
"Distributions on Preferred Securities of Subsidiary" and the debt portion
of allowance for funds used during construction.
(2)In computing this ratio, "Preferred Dividend Requirements" represent the
before tax earnings necessary to pay such dividends, computed at the
effective tax rates for the applicable periods.
(3)The Ratio of Earnings to Fixed Charges and the Ratio of Earnings to Fixed
Charges Plus Preferred Dividend Requirements (Pre-Income Tax Basis)
increased for the six months ended June 30, 2003, when compared to previous
years, due to the one-time revenues of $62 million from the termination of a
purchase power agreement with Dynegy, Inc. See Management's Discussion and
Analysis--"Results of Operations" and Note (M) to the Condensed Financial
Statements in the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2003 for further information.
4
THE TRUSTS
Each Trust is a statutory trust created under Delaware law pursuant to the
filing of a certificate of trust with the Delaware Secretary of State on
January 7, 1998 with respect to Mississippi Power Company Capital Trust III and
August 15, 2003 with respect to Mississippi Power Company Capital Trust IV.
Each Trust's business is defined in a trust agreement, executed by the Company,
as Depositor, and the Delaware Trustee of each Trust. This trust agreement of
each Trust will be amended and restated in its entirety substantially in the
form filed as an exhibit to the Registration Statement of which this Prospectus
forms a part (the "Trust Agreement"). Each Trust Agreement will be qualified as
an indenture under the Trust Indenture Act of 1939, as amended (the "1939
Act"). The Company will own all of the common securities (the "Common
Securities" and, together with the Preferred Securities, the "Trust
Securities") of each Trust. The Trust Securities represent undivided beneficial
interests in the assets of the respective Trusts. Each Trust exists for the
exclusive purposes of (i) issuing its Trust Securities representing undivided
beneficial interests in the assets of such Trust, (ii) investing the gross
proceeds of its Trust Securities in a related series of Junior Subordinated
Notes, and (iii) engaging in only those other activities necessary,
appropriate, convenient or incidental to these purposes. The payment of
periodic cash distributions on the Preferred Securities of each Trust and
payments on liquidation and redemption with respect to the Preferred Securities
of each Trust, in each case to the extent each Trust has funds legally and
immediately available for these purposes, will be guaranteed by the Company
(individually, a "Guarantee" and collectively, the "Guarantees") to the extent
set forth under "Description of the Guarantees."
Each Trust's business and affairs will be conducted by its trustees, which
shall be appointed by the Company as the holder of the Common Securities: two
officers of the Company as Administrative Trustees; Deutsche Bank Trust Company
Americas as Property Trustee; and Deutsche Bank Trust Company Delaware as
Delaware Trustee (collectively, the "Securities Trustees"). The Property
Trustee of each Trust will act as the indenture trustee with respect to such
Trust for purposes of compliance with the provisions of the 1939 Act.
The principal place of business of each Trust shall be c/o the Company, 2992
West Beach Boulevard, Gulfport, Mississippi 39501, telephone (228) 864-1211,
Attn: Treasurer.
Reference is made to the Prospectus Supplement relating to the Preferred
Securities of a Trust for further information concerning such Trust.
ACCOUNTING TREATMENT OF THE TRUSTS
For financial reporting purposes, the Trusts will be treated as subsidiaries
of the Company and, accordingly, the accounts of the Trusts will be included in
the consolidated financial statements of the Company. The Preferred Securities
will be presented as a separate line item in the consolidated balance sheet of
the Company, and appropriate disclosures concerning the Preferred Securities,
the Guarantees and the Junior Subordinated Notes will be included in the notes
to the consolidated financial statements. For financial reporting purposes, the
Company will record distributions payable on the Preferred Securities as an
expense.
USE OF PROCEEDS
Each Trust will invest the proceeds received from the sale of its Preferred
Securities in Junior Subordinated Notes. Except as may be otherwise described
in an applicable Prospectus Supplement, the net proceeds received by the
Company from such investment and any proceeds received from the sale of its new
Stock, Depositary Shares, Senior Notes or other sales of its Junior
Subordinated Notes will be used in connection with its ongoing construction
program, to pay scheduled maturities and/or refundings of its securities, to
repay short-term indebtedness to the extent outstanding and for other general
corporate purposes.
5
DESCRIPTION OF THE NEW STOCK
Set forth below is a description of the general terms of the new Stock. The
statements in this Prospectus concerning the new Stock are an outline and do
not purport to be complete. Such statements make use of defined terms and are
qualified in their entirety by express reference to the cited provisions of the
articles of incorporation of the Company, as amended (the "articles"), a copy
of which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part or incorporated by reference in the Registration
Statement. The general provisions which apply to the preferred stock of the
Company of all classes, which are now or may later be authorized or created,
are set forth in the articles.
General: The new Stock is to be established by resolutions of the Board of
Directors of the Company (the "Resolutions"), a copy of which is an exhibit to
the Registration Statement (or incorporated by reference in the Registration
Statement) to which reference is made.
At June 30, 2003, the Company had outstanding 318,090 shares of Preferred
Stock which have a par value of $100 per share. Each share of Preferred Stock
shall have the relative voting rights described in "Voting Rights" below.
The new Stock will not be subject to further calls or to assessment by the
Company.
Any proposed listing of the new Stock on a securities exchange will be
described in the Prospectus Supplement.
Transfer Agent and Registrar: Unless otherwise indicated in the applicable
Prospectus Supplement, the new Stock will be transferable at the office of
Southern Company Services, Inc., 270 Peachtree Street, N.W., Atlanta, Georgia
30303, which will also serve as the registrar.
Dividend Rights and Provisions: The holders of the Preferred Stock of each
series are entitled to receive cumulative dividends, payable when and as
declared by the Board of Directors, at the rates determined for the respective
series, before any dividends may be declared or paid on the Company's Common
Stock (the "Common Stock"). Dividends on the Preferred Stock must have been or
be contemporaneously declared and set apart for payment, or paid, on the
Preferred Stock of all series for all dividend periods terminating on the same
or on an earlier date (Articles--General Provisions (A) and (B)).
The Prospectus Supplement will set forth the dividend rate provisions of the
new Stock, including the payment dates and the rate or rates, or the method of
determining the rate or rates (which may involve periodic dividend rate
settings through remarketing or auction procedures or pursuant to one or more
formulae, as described in the Prospectus Supplement). Dividends on the new
Stock will be cumulative from the date of original issue.
Redemption Provisions: The redemption provisions applicable to the new
Stock will be described in the Prospectus Supplement.
The articles provide that so long as any shares of the Preferred Stock
originally issued after January 2, 1973, or originally issued in exchange for
shares of Preferred Stock originally issued after December 31, 1955, are
outstanding, the Company shall not redeem, purchase or otherwise acquire any
shares of the Preferred Stock, if, at the time of such redemption, purchase or
other acquisition, dividends payable on the Preferred Stock of any series shall
be in default in whole or in part, unless, prior to or concurrently with such
redemption, purchase or other acquisition, all such defaults shall be cured or
unless such action has been ordered, approved or permitted by the Commission,
or by any successor commission thereto, under the Public Utility Holding
Company Act of 1935, as amended (Articles--General Provisions (D)).
6
Voting Rights: At the election of directors at each annual meeting of the
shareholders, the holders of the Preferred Stock shall have full voting rights
with the holders of the Common Stock, all voting together as a single class.
Each share of Preferred Stock will have one-half vote and each share of Common
Stock will have one vote. On all other matters, except as otherwise provided by
law or in the articles, the exclusive right to vote is vested in the holders of
the Common Stock; provided, however, that, if and so long as four quarterly
dividends payable on the Preferred Stock of any series shall be in default, the
holders of the Preferred Stock of all series shall have the exclusive right,
voting separately and as a single class, to elect the smallest number of
directors which shall constitute a majority of the then authorized number of
directors and one vote per share on all other matters (Voting Powers).
Cumulative voting is permitted at all elections of directors
(Articles--Voting Powers).
Under the articles, the affirmative vote of the holders of 66 2/3% of the
outstanding shares of Preferred Stock is required for--
(a) the issue (within 180 days after such vote) of any kind of stock
preferred as to dividends or assets over the Preferred Stock or any security
convertible into any such kind of stock or the creation of any kind of stock
preferred as to dividends or assets over the Preferred Stock or a change in
any of the rights and preferences of the outstanding Preferred Stock in any
manner so as to affect adversely the holders of Preferred Stock; or
(b) the issue of shares of Preferred Stock if the total number of shares
of Preferred Stock to be outstanding would exceed 244,139, or the issue of
any senior or equally ranking stock, or the reissue of any shares of
Preferred Stock or of any senior or equally ranking stock which have been
redeemed, purchased or otherwise acquired by the Company, unless (i) net
income available for dividends for a period of twelve consecutive calendar
months within the fifteen preceding calendar months is at least equal to two
times the annual dividend requirements on all shares of Preferred Stock and
senior or equally ranking stock to be outstanding; (ii) gross income
available for interest for a period of twelve consecutive calendar months
within the fifteen preceding calendar months is at least equal to 1 1/2
times the aggregate of annual interest requirements and annual dividend
requirements on all shares of Preferred Stock and senior or equally ranking
stock to be outstanding; and (iii) the aggregate of Common Stock capital and
surplus is not less than the aggregate amount payable upon involuntary
liquidation on all shares of Preferred Stock and senior or equally ranking
stock to be outstanding (Articles--General Provisions (E)).
Liquidation Rights: Upon voluntary or involuntary liquidation, the holders
of the Preferred Stock of each series, without preference between series, are
entitled to receive the amount specified to be payable on the shares of such
series (which, in the case of the new Stock, is $100 per share on involuntary
liquidation or an amount equivalent to the then current redemption price per
share on voluntary liquidation, plus accrued dividends in each case) before any
distribution of assets may be made to the holders of the Common Stock.
Available assets, if insufficient to pay such amounts to the holders of the
Preferred Stock, are to be distributed pro rata to the payment, first of $100
per share, second of accrued dividends and third of any premium
(Articles--General Provisions (C)).
Sinking Fund: The terms and conditions of a sinking or purchase fund, if
any, for the benefit of the holders of the new Stock will be set forth in the
Prospectus Supplement.
Other Rights: The holders of the new Stock do not have any pre-emptive or
conversion rights, except as otherwise described in the Prospectus Supplement.
DESCRIPTION OF DEPOSITARY SHARES
Set forth below is a description of the general terms of the Depositary
Shares. The statements in this Prospectus concerning the Depositary Shares and
the Deposit Agreement (as defined below) are an outline and do not purport to
be complete. Such statements make use of defined terms and are qualified in
their entirety by express reference to the Deposit Agreement (which contains
the form of Depositary Receipt (as defined below)), a form of which is an
exhibit to the Registration Statement of which this Prospectus forms a part or
incorporated by reference to the Registration Statement.
7
General: The Company may, at its option, elect to offer Depositary Shares,
each of which represents one-fourth of a share of new Stock. The Depositary
Shares will be deposited under a Deposit Agreement, to be dated as of the first
day of the calendar month during which the Depositary Shares are issued (the
"Deposit Agreement"), among the Company, the Depositary named in the Deposit
Agreement (the "Depositary") and all holders from time to time of the
depositary receipts (the "Depositary Receipts") issued under the Deposit
Agreement. Subject to the terms of the Deposit Agreement, each owner of a
Depositary Share is entitled, proportionately, to all the rights, preferences
and privileges of the new Stock (including dividend, voting and liquidation
rights) and subject, proportionately, to all of the limitations of the new
Stock contained in the articles summarized under "Description of New Stock" in
this Prospectus. The Depositary Shares are evidenced by Depositary Receipts
issued pursuant to the Deposit Agreement.
Any proposed listing of the Depositary Shares on a securities exchange will
be described in the Prospectus Supplement.
Issuance of Depositary Receipts: Immediately following the issuance of the
new Stock, the Company will deposit the new Stock with the Depositary, which
will then execute and deliver the Depositary Receipts to the Company. The
Company will, in turn, deliver the Depositary Receipts to the underwriters or
purchasers. Depositary Receipts will be issued evidencing only whole Depositary
Shares.
Withdrawal of New Stock: Upon surrender of Depositary Receipts at the
corporate trust office of the Depositary, the owner of the Depositary Shares
evidenced by such Depositary Receipts is entitled to delivery at such office of
certificates evidencing the number of shares of new Stock (but only in whole
shares of new Stock) represented by such Depositary Shares. If the Depositary
Receipts delivered by the holder evidence a number of Depositary Shares in
excess of the number of whole shares of new Stock to be withdrawn, the
Depositary will deliver to such holder at the same time a new Depositary
Receipt evidencing such excess number of Depositary Shares. The Company does
not expect that there will be any public trading market for the new Stock,
except as represented by the Depositary Shares.
Redemption of Depositary Shares: The Depositary Shares will be redeemed,
upon not less than 15 nor more than 60 days' notice, using the cash proceeds
received by the Depositary resulting from the redemption, in whole or in part,
at the Company's option, but subject to the applicable terms and conditions, of
shares of new Stock held by the Depositary. The redemption price per Depositary
Share will be equal to one-fourth of the redemption price per share applicable
to the new Stock. Whenever the Company redeems shares of the new Stock held by
the Depositary, the Depositary will redeem as of the same redemption date the
number of Depositary Shares representing the shares of new Stock so redeemed.
If less than all the outstanding Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected pro rata (as nearly as may
be) or by lot or by such other equitable method as the Depositary may
determine. See "Description of New Stock--Redemption Provisions" in this
Prospectus.
Dividends and Other Distributions: The Depositary will distribute all cash
dividends or other cash distributions received in respect of new Stock to the
record holders of Depositary Receipts in proportion, insofar as practicable, to
the number of Depositary Shares owned by such holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Receipts
entitled to such property, unless the Depositary determines that it is not
feasible to make such distribution, in which case the Depositary may, with the
approval of the Company, adopt such method as it deems equitable and
practicable for the purpose of effecting such distribution, including the sale
(at public or private sale) of such property and distribution of the net
proceeds from such sale to such holders.
8
The amount distributed in any of the foregoing cases will be reduced by any
amounts required to be withheld by the Company or the Depositary on account of
taxes or otherwise required pursuant to law, regulation or court process.
Record Date: Whenever (i) any cash dividend or other cash distribution
shall become payable, any distribution other than cash shall be made, or any
rights, preferences or privileges shall be offered with respect to the new
Stock or (ii) the Depositary shall receive notice of any meeting at which
holders of new Stock are entitled to vote or of which holders of new Stock are
entitled to notice, the Depositary shall in each such instance fix a record
date (which shall be the record date fixed by the Company with respect to the
new Stock) for the determination of the holders of Depositary Receipts who
shall be entitled to (y) receive such dividend, distribution, rights,
preferences or privileges or the net proceeds of such sale or (z) give
instructions for the exercise of voting rights at such meeting or receive
notice of such meeting.
Voting New Stock: Upon receipt of notice of any meeting at which the
holders of new Stock are entitled to vote, the Depositary will mail the
information contained in such notice of meeting to the record holders of
Depositary Receipts. The record holders of Depositary Receipts on the record
date (which will be the same date as the record date for the new Stock) will be
entitled to instruct the Depositary as to the exercise of the voting rights
pertaining to the amount of new Stock represented by their respective
Depositary Receipts. The Depositary will endeavor insofar as practicable to
vote or cause to be voted the amount of new Stock represented by such
Depositary Receipts in accordance with such instructions, and the Company has
agreed to take all action which may be deemed necessary by the Depositary in
order to enable the Depositary to do so. The Depositary will abstain from
voting the new Stock to the extent it does not receive specific instructions
from the holders of the Depositary Receipts.
Amendment and Termination of Deposit Agreement: The form of the Depositary
Receipts and any provisions of the Deposit Agreement may at any time and from
time to time be amended or modified in any respect by agreement between the
Company and the Depositary. Any amendment which imposes any fees or charges
(other than taxes, fees and charges provided for in the Deposit Agreement) on
the holders of Depositary Receipts, or which otherwise prejudices any
substantial existing right of holders of Depositary Receipts, will not become
effective as to outstanding Depositary Receipts until the expiration of 90 days
after notice of such amendment shall have been given to the record holders of
outstanding Depositary Receipts. Every holder of an outstanding Depositary
Receipt at the time any such amendment so becomes effective shall be deemed, by
continuing to hold such Depositary Receipt, to consent and agree to such
amendment and to be bound by the Deposit Agreement as amended. In no event may
any amendment impair the right of the holder of any Depositary Receipt, subject
to the conditions of the Deposit Agreement, to surrender such Depositary
Receipt and receive the new Stock represented by such Depositary Receipt,
except in order to comply with mandatory provisions of applicable law.
Whenever so directed by the Company, the Depositary will terminate the
Deposit Agreement by mailing notice of such termination to the record holders
of all Depositary Receipts then outstanding at least 30 days prior to the date
fixed in such notice for such termination. The Depositary may likewise
terminate the Deposit Agreement if at any time 60 days shall have expired after
the Depositary shall have delivered to the Company a written notice of its
election to resign and a successor depositary shall not have been appointed and
accepted its appointment. If any Depositary Receipts remain outstanding after
the date of termination, the Depositary will discontinue the transfer of
Depositary Receipts, will suspend the distribution of dividends to the holders
of Depositary Receipts and will not give any further notices (other than notice
of such termination) or perform any further acts under the Deposit Agreement
except that the Depositary will continue to collect dividends and other
distributions pertaining to the new Stock and deliver new Stock together with
such dividends and distributions and the net proceeds of any sale of any
rights, preferences, privileges or other property in exchange for Depositary
Receipts surrendered. At any time after the expiration of two years from the
date of termination, the Depositary may sell the new Stock then held by it at
public or private sale at such place or places and upon such terms as its deems
proper and may thereafter hold the net proceeds of any such sale, together with
any other cash
9
then held by it, without liability for interest, for the pro rata benefit of
the holders of Depositary Receipts which have not been surrendered. Any such
moneys unclaimed by the holders of Depositary Receipts more than two years from
the date of termination of the Deposit Agreement will, upon request of the
Company, be paid to it, and after such payment, the holders of Depositary
Receipts entitled to the funds so paid to the Company shall look only to the
Company for payment without interest. The Company does not intend to terminate
the Deposit Agreement or to permit the resignation of the Depositary without
appointing a successor depositary.
Charges of Depositary: The Company will pay all charges of the Depositary
including charges for the initial deposit of the new Stock and delivery of
Depositary Receipts and withdrawals of new Stock by the holders of Depositary
Receipts, except for taxes (including transfer taxes, if any) and such charges
as are expressly provided in the Deposit Agreement to be at the expense of the
persons depositing new Stock or holders of Depositary Receipts.
Miscellaneous: The Depositary will make available for inspection by holders
of Depositary Receipts at its corporate trust office any reports and
communications received from the Company which are made generally available to
the holders of new Stock by the Company.
Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Depositary and
the Company under the Deposit Agreement are limited to performance in good
faith of their duties under the Deposit Agreement, and they are not obligated
to prosecute or defend any legal proceeding in respect of the new Stock, the
Depositary Receipts or the Depositary Shares unless satisfactory indemnity is
furnished. The Depositary and the Company may rely upon advice of or
information from counsel, accountants or other persons believed to be competent
and on documents believed to be genuine.
The Depositary may at any time resign or be removed by the Company,
effective upon the acceptance by its successor of its appointment.
DESCRIPTION OF THE SENIOR NOTES
Set forth below is a description of the general terms of the Senior Notes.
The following description does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the Senior Note Indenture,
dated as of May 1, 1998, between the Company and Deutsche Bank Trust Company
Americas (formerly known as Bankers Trust Company), as trustee (the "Senior
Note Indenture Trustee"), as to be supplemented by a supplemental indenture to
the Senior Note Indenture establishing the Senior Notes of each series (the
Senior Note Indenture, as so supplemented, is referred to as the "Senior Note
Indenture"), the forms of which are filed as exhibits to the Registration
Statement of which this Prospectus forms a part. The terms of the Senior Notes
will include those stated in the Senior Note Indenture and those made a part of
the Senior Note Indenture by reference to the 1939 Act. Certain capitalized
terms used in this Prospectus and not defined in this Prospectus are defined in
the Senior Note Indenture.
General
The Senior Notes will be issued as unsecured senior debt securities under
the Senior Note Indenture and will rank equally with all other unsecured and
unsubordinated debt of the Company. The Senior Notes will be effectively
subordinated to all secured debt of the Company including its first mortgage
bonds, aggregating approximately $30,000,000 outstanding at June 30, 2003. The
Senior Note Indenture does not limit the aggregate principal amount of Senior
Notes that may be issued under the Senior Note Indenture and provides that
Senior Notes may be issued from time to time in one or more series pursuant to
an indenture supplemental to the Senior Note Indenture. The Senior Note
Indenture gives the Company the ability to reopen a previous issue of Senior
Notes and issue additional Senior Notes of such series, unless otherwise
provided.
10
Reference is made to the Prospectus Supplement that will accompany this
Prospectus for the following terms of the series of Senior Notes being offered
by such Prospectus Supplement: (i) the title of such Senior Notes; (ii) any
limit on the aggregate principal amount of such Senior Notes; (iii) the date or
dates on which the principal of such Senior Notes is payable; (iv) the rate or
rates at which such Senior Notes shall bear interest, if any, or any method by
which such rate or rates will be determined, the date or dates from which such
interest will accrue, the interest payment dates on which such interest shall
be payable, and the regular record date for the interest payable on any
interest payment date; (v) the place or places where the principal of (and
premium, if any) and interest, if any, on such Senior Notes shall be payable;
(vi) the period or periods within which, the price or prices at which and the
terms and conditions on which such Senior Notes may be redeemed, in whole or in
part, at the option of the Company or at the option of the holder prior to
their maturity; (vii) the obligation, if any, of the Company to redeem or
purchase such Senior Notes; (viii) the denominations in which such Senior Notes
shall be issuable; (ix) if other than the principal amount of the Senior Notes,
the portion of the principal amount of such Senior Notes which shall be payable
upon declaration of acceleration of the maturity of such Senior Notes; (x) any
deletions from, modifications of or additions to the Events of Default or
covenants of the Company as provided in the Senior Note Indenture pertaining to
such Senior Notes; (xi) whether such Senior Notes shall be issued in whole or
in part in the form of a Global Security; and (xii) any other terms of such
Senior Notes.
The Senior Note Indenture does not contain provisions that afford holders of
Senior Notes protection in the event of a highly leveraged transaction
involving the Company.
Events of Default
The Senior Note Indenture provides that any one or more of the following
described events with respect to the Senior Notes of any series, which has
occurred and is continuing, constitutes an "Event of Default" with respect to
the Senior Notes of such series:
(a) failure for 10 days to pay interest on the Senior Notes of such
series, when due on an interest payment date other than at maturity or upon
earlier redemption; or
(b) failure to pay principal or premium, if any, or interest on the
Senior Notes of such series when due at maturity or upon earlier redemption;
or
(c) failure for three Business Days to deposit any sinking fund payment
when due by the terms of a Senior Note of such series; or
(d) failure to observe or perform any other covenant or warranty of the
Company in the Senior Note Indenture (other than a covenant or warranty
which has expressly been included in the Senior Note Indenture solely for
the benefit of one or more series of Senior Notes other than such series)
for 90 days after written notice to the Company from the Senior Note
Indenture Trustee or the holders of at least 25% in principal amount of the
outstanding Senior Notes of such series; or
(e) certain events of bankruptcy, insolvency or reorganization of the
Company.
The holders of not less than a majority in aggregate outstanding principal
amount of the Senior Notes of any series have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Senior Note Indenture Trustee with respect to the Senior Notes of such series.
If a Senior Note Indenture Event of Default occurs and is continuing with
respect to the Senior Notes of any series, then the Senior Note Indenture
Trustee or the holders of not less than 25% in aggregate outstanding principal
amount of the Senior Notes of such series may declare the principal amount of
the Senior Notes due and payable immediately by notice in writing to the
Company (and to the Senior Note Indenture Trustee if given by the holders), and
upon any such declaration such principal amount shall become immediately due
and payable. At any time after such a declaration of acceleration with respect
to the Senior Notes of any series has been made and before a judgment or decree
for payment of the money due has been obtained as provided in Article Five of
the Senior Note Indenture, the holders of not less than a majority in aggregate
outstanding principal amount of the Senior Notes of such
11
series may rescind and annul such declaration and its consequences if the
default has been cured or waived and the Company has paid or deposited with the
Senior Note Indenture Trustee a sum sufficient to pay all matured installments
of interest and principal due otherwise than by acceleration and all sums paid
or advanced by the Senior Note Indenture Trustee, including reasonable
compensation and expenses of the Senior Note Indenture Trustee.
The holders of not less than a majority in aggregate outstanding principal
amount of the Senior Notes of any series may, on behalf of the holders of all
the Senior Notes of such series, waive any past default with respect to such
series, except (i) a default in the payment of principal or interest or (ii) a
default in respect of a covenant or provision which under Article Nine of the
Senior Note Indenture cannot be modified or amended without the consent of the
holder of each outstanding Senior Note of such series affected.
Registration and Transfer
The Company shall not be required to (i) issue, register the transfer of or
exchange Senior Notes of any series during a period of 15 days immediately
preceding the date notice is given identifying the Senior Notes of such series
called for redemption, or (ii) register the transfer of or exchange any Senior
Notes so selected for redemption, in whole or in part, except the unredeemed
portion of any Senior Note being redeemed in part.
Payment and Paying Agent
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of any Senior Notes will be made only against surrender to the
Paying Agent of such Senior Notes. Principal of and interest on Senior Notes
will be payable subject to any applicable laws and regulations, at the office
of such Paying Agent or Paying Agents as the Company may designate from time to
time, except that, at the option of the Company, payment of any interest may be
made by wire transfer or by check mailed to the address of the person entitled
to an interest payment as such address shall appear in the Security Register
with respect to the Senior Notes. Payment of interest on Senior Notes on any
interest payment date will be made to the person in whose name the Senior Notes
(or predecessor security) are registered at the close of business on the record
date for such interest payment.
Unless otherwise indicated in an applicable Prospectus Supplement, the
Senior Note Indenture Trustee will act as Paying Agent with respect to the
Senior Notes. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agents or approve a change in the office
through which any Paying Agent acts.
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or interest on the Senior Notes of any series which remain
unclaimed at the end of two years after such principal or interest shall have
become due and payable will be repaid to the Company, and the holder of such
Senior Notes will from that time forward look only to the Company for payment
of such principal and interest.
Modification
The Senior Note Indenture contains provisions permitting the Company and the
Senior Note Indenture Trustee, with the consent of the holders of not less than
a majority in principal amount of the outstanding Senior Notes of each series
that is affected, to modify the Senior Note Indenture or the rights of the
holders of the Senior Notes of such series; provided, that no such modification
may, without the consent of the holder of each outstanding Senior Note that is
affected, (i) change the stated maturity of the principal of, or any
installment of principal of or interest on, any Senior Note, or reduce the
principal amount thereof or the rate of interest on any Senior Note or any
premium payable upon the redemption thereof, or change the method of
calculating the rate of interest of any Senior Note, or impair the right to
institute suit for the enforcement of any such payment on or after the stated
maturity of any Senior Note (or, in the case of redemption, on or after the
redemption date), or (ii) reduce the percentage of principal amount of the
outstanding Senior Notes of any series, the consent of whose
12
holders is required for any such supplemental indenture, or the consent of
whose holders is required for any waiver (of compliance with certain provisions
of the Senior Note Indenture or certain defaults under the Senior Note
Indenture and their consequences) provided for in the Senior Note Indenture, or
(iii) modify any of the provisions of the Senior Note Indenture relating to
supplemental indentures, waiver of past defaults, or waiver of certain
covenants, except to increase any such percentage or to provide that certain
other provisions of the Senior Note Indenture cannot be modified or waived
without the consent of the holder of each outstanding Senior Note that is
affected.
In addition, the Company and the Senior Note Indenture Trustee may execute,
without the consent of any holders of Senior Notes, any supplemental indenture
for certain other usual purposes, including the creation of any new series of
Senior Notes.
Consolidation, Merger and Sale
The Company shall not consolidate with or merge into any other corporation
or convey, transfer or lease its properties and assets substantially as an
entirety to any person, unless (1) such other corporation or person is a
corporation organized and existing under the laws of the United States, any
state in the United States or the District of Columbia and such other
corporation or person expressly assumes, by supplemental indenture executed and
delivered to the Senior Note Indenture Trustee, the payment of the principal of
(and premium, if any) and interest on all the Senior Notes and the performance
of every covenant of the Senior Note Indenture on the part of the Company to be
performed or observed; (2) immediately after giving effect to such
transactions, no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have happened and be
continuing; and (3) the Company has delivered to the Senior Note Indenture
Trustee an officers' certificate and an opinion of counsel, each stating that
such transaction complies with the provisions of the Senior Note Indenture
governing consolidation, merger, conveyance, transfer or lease and that all
conditions precedent to the transaction have been complied with.
Information Concerning the Senior Note Indenture Trustee
The Senior Note Indenture Trustee, prior to an Event of Default with respect
to Senior Notes of any series, undertakes to perform, with respect to Senior
Notes of such series, only such duties as are specifically set forth in the
Senior Note Indenture and, in case an Event of Default with respect to Senior
Notes of any series has occurred and is continuing, shall exercise, with
respect to Senior Notes of such series, the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provision, the Senior Note Indenture Trustee is under no obligation to
exercise any of the powers vested in it by the Senior Note Indenture at the
request of any holder of Senior Notes of any series, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which
might be incurred by the Senior Note Indenture Trustee. The Senior Note
Indenture Trustee is not required to expend or risk its own funds or otherwise
incur any financial liability in the performance of its duties if the Senior
Note Indenture Trustee reasonably believes that repayment or adequate indemnity
is not reasonably assured to it.
Deutsche Bank Trust Company Americas, the Senior Note Indenture Trustee,
also serves as Subordinated Note Indenture Trustee, as Property Trustee and as
Guarantee Trustee. The Company and certain of its affiliates maintain deposit
accounts and banking relationships with Deutsche Bank Trust Company Americas.
Deutsche Bank Trust Company Americas also serves as trustee under other
indentures pursuant to which securities of the Company and affiliates of the
Company are outstanding.
Governing Law
The Senior Note Indenture and the Senior Notes will be governed by, and
construed in accordance with, the internal laws of the State of New York.
13
Miscellaneous
The Company will have the right at all times to assign any of its rights or
obligations under the Senior Note Indenture to a direct or indirect
wholly-owned subsidiary of the Company; provided, that, in the event of any
such assignment, the Company will remain primarily liable for all such
obligations. Subject to the foregoing, the Senior Note Indenture will be
binding upon and inure to the benefit of the parties of the Senior Note
Indenture and their respective successors and assigns.
DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES
Set forth below is a description of the general terms of the Junior
Subordinated Notes. The following description does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the
Subordinated Note Indenture, dated as of February 1, 1997, between the Company
and Deutsche Bank Trust Company Americas (formerly known as Bankers Trust
Company), as trustee (the "Subordinated Note Indenture Trustee"), as to be
supplemented by a supplemental indenture to the Subordinated Note Indenture
establishing the Junior Subordinated Notes of each series (the Subordinated
Note Indenture, as so supplemented, is referred to as the "Subordinated Note
Indenture"), the forms of which are filed as exhibits to the Registration
Statement of which this Prospectus forms a part. The terms of the Junior
Subordinated Notes will include those stated in the Subordinated Note Indenture
and those made a part of the Subordinated Note Indenture by reference to the
1939 Act. Certain capitalized terms used in this Prospectus and not defined in
this Prospectus are defined in the Subordinated Note Indenture.
General
The Junior Subordinated Notes will be issued as unsecured junior
subordinated debt securities under the Subordinated Note Indenture. The
Subordinated Note Indenture does not limit the aggregate principal amount of
Junior Subordinated Notes that may be issued under the Subordinated Note
Indenture and provides that Junior Subordinated Notes may be issued from time
to time in one or more series pursuant to an indenture supplemental to the
Subordinated Note Indenture. The Subordinated Note Indenture gives the Company
the ability to reopen a previous issue of Junior Subordinated Notes and issue
additional Junior Subordinated Notes of such series, unless otherwise provided.
Reference is made to the Prospectus Supplement that will accompany this
Prospectus for the following terms of the series of Junior Subordinated Notes
being offered by such Prospectus Supplement: (i) the title of such Junior
Subordinated Notes; (ii) any limit on the aggregate principal amount of such
Junior Subordinated Notes; (iii) the date or dates on which the principal of
such Junior Subordinated Notes is payable; (iv) the rate or rates at which such
Junior Subordinated Notes shall bear interest, if any, or any method by which
such rate or rates will be determined, the date or dates from which such
interest will accrue, the interest payment dates on which such interest shall
be payable, and the regular record date for the interest payable on any
interest payment date; (v) the place or places where the principal of (and
premium, if any) and interest, if any, on such Junior Subordinated Notes shall
be payable; (vi) the period or periods within which, the price or prices at
which and the terms and conditions on which such Junior Subordinated Notes may
be redeemed, in whole or in part, at the option of the Company or at the option
of the holder prior to their maturity; (vii) the obligation, if any, of the
Company to redeem or purchase such Junior Subordinated Notes; (viii) the
denominations in which such Junior Subordinated Notes shall be issuable; (ix)
if other than the principal amount of the Junior Subordinated Notes, the
portion of the principal amount of such Junior Subordinated Notes which shall
be payable upon declaration of acceleration of the maturity of such Junior
Subordinated Notes; (x) any deletions from, modifications of or additions to
the Events of Default or covenants of the Company as provided in the
Subordinated Note Indenture pertaining to such Junior Subordinated Notes;
(xi) whether such Junior Subordinated Notes shall be issued in
14
whole or in part in the form of a Global Security; (xii) the right, if any, of
the Company to extend the interest payment periods of such Junior Subordinated
Notes; and (xiii) any other terms of such Junior Subordinated Notes. The terms
of each series of Junior Subordinated Notes issued to a Trust will correspond
to those of the related Preferred Securities of such Trust as described in the
Prospectus Supplement relating to such Preferred Securities.
The Subordinated Note Indenture does not contain provisions that afford
holders of Junior Subordinated Notes protection in the event of a highly
leveraged transaction involving the Company.
Subordination
The Junior Subordinated Notes are subordinated and junior in right of
payment to all Senior Indebtedness (as defined below) of the Company. No
payment of principal of (including redemption payments, if any), or premium, if
any, or interest on (including Additional Interest (as defined below)) the
Junior Subordinated Notes may be made if (a) any Senior Indebtedness is not
paid when due and any applicable grace period with respect to such default has
ended with such default not being cured or waived or otherwise ceasing to
exist, or (b) the maturity of any Senior Indebtedness has been accelerated
because of a default, or (c) notice has been given of the exercise of an option
to require repayment, mandatory payment or prepayment or otherwise. Upon any
payment or distribution of assets of the Company to creditors upon any
liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors, marshalling of assets or liabilities, or any bankruptcy,
insolvency or similar proceedings of the Company, the holders of Senior
Indebtedness shall be entitled to receive payment in full of all amounts due or
to become due on or in respect of all Senior Indebtedness before the holders of
the Junior Subordinated Notes are entitled to receive or retain any payment or
distribution. Subject to the prior payment of all Senior Indebtedness, the
rights of the holders of the Junior Subordinated Notes will be subrogated to
the rights of the holders of Senior Indebtedness to receive payments and
distributions applicable to such Senior Indebtedness until all amounts owing on
the Junior Subordinated Notes are paid in full.
The term "Senior Indebtedness" means, with respect to the Company, (i) any
payment due in respect of indebtedness of the Company, whether outstanding at
the date of execution of the Subordinated Note Indenture or incurred, created
or assumed, after the execution of the Subordinated Note Indenture (a) in
respect of money borrowed (including any financial derivative, hedging or
futures contract or similar instrument) and (b) evidenced by securities,
debentures, bonds, notes or other similar instruments issued by the Company
that, by their terms, are senior or senior subordinated debt securities
including, without limitation, all obligations under its indentures with
various trustees; (ii) all capital lease obligations; (iii) all obligations
issued or assumed as the deferred purchase price of property, all conditional
sale obligations and all obligations of the Company under any title retention
agreement (but excluding trade accounts payable arising in the ordinary course
of business and long-term purchase obligations); (iv) all obligations for the
reimbursement of any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction; (v) all obligations of the type
referred to in clauses (i) through (iv) above of other persons the payment of
which the Company is responsible or liable as obligor, guarantor or otherwise;
and (vi) all obligations of the type referred to in clauses (i) through (v)
above of other persons secured by any lien on any property or asset of the
Company (whether or not such obligation is assumed by the Company), except for
(1) any such indebtedness that is by its terms subordinated to or pari passu
with the Junior Subordinated Notes and (2) any unsecured indebtedness between
or among the Company or its affiliates. Such Senior Indebtedness shall continue
to be Senior Indebtedness and be entitled to the benefits of the subordination
provisions contained in the Subordinated Note Indenture irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
The Subordinated Note Indenture does not limit the aggregate amount of
Senior Indebtedness that may be issued by the Company. As of June 30, 2003,
Senior Indebtedness of the Company aggregated approximately $283,000,000.
15
Additional Interest
"Additional Interest" is defined in the Subordinated Note Indenture as (i)
such additional amounts as may be required so that the net amounts received and
retained by a holder of Junior Subordinated Notes (if the holder is a Trust)
after paying taxes, duties, assessments or governmental charges of whatever
nature (other than withholding taxes) imposed by the United States or any other
taxing authority will not be less than the amounts the holder would have
received had no such taxes, duties, assessments or other governmental charges
been imposed; and (ii) any interest due and not paid on an interest payment
date, together with interest on such interest due from such interest payment
date to the date of payment, compounded quarterly, on each interest payment
date.
Certain Covenants
The Company covenants in the Subordinated Note Indenture, for the benefit of
the holders of each series of Junior Subordinated Notes, that, (i) if at such
time the Company shall have given notice of its election to extend an interest
payment period for such series of Junior Subordinated Notes and such extension
shall be continuing, (ii) if at such time the Company shall be in default with
respect to its payment or other obligations under the Guarantee with respect to
the Trust Securities, if any, related to such series of Junior Subordinated
Notes, or (iii) if at such time an Event of Default under the Subordinated Note
Indenture with respect to such series of Junior Subordinated Notes shall have
occurred and be continuing, (a) the Company shall not declare or pay any
dividend or make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital
stock, and (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees other than the Guarantees) issued by the Company which
rank equally with or junior to the Junior Subordinated Notes. None of the
foregoing, however, shall restrict (i) any of the actions described in the
preceding sentence resulting from any reclassifications of the Company's
capital stock or the exchange or conversion of one class or series of the
Company's capital stock for another class or series of the Company's capital
stock, or (ii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged.
The Subordinated Note Indenture further provides that, for so long as the
Trust Securities of any Trust remain outstanding, the Company covenants (i) to
directly or indirectly maintain 100% ownership of the Common Securities of such
Trust; provided, however, that any permitted successor of the Company under the
Subordinated Note Indenture may succeed to the Company's ownership of such
Common Securities, and (ii) to use its reasonable efforts to cause such Trust
(a) to remain a statutory trust, except in connection with the distribution of
Junior Subordinated Notes to the holders of Trust Securities in liquidation of
such Trust, the redemption of all of the Trust Securities of such Trust, or
certain mergers, consolidations or amalgamations, each as permitted by the
related Trust Agreement, and (b) to otherwise continue to be classified as a
grantor trust for United States federal income tax purposes.
Events of Default
The Subordinated Note Indenture provides that any one or more of the
following described events with respect to the Junior Subordinated Notes of any
series, which has occurred and is continuing, constitutes an "Event of Default"
with respect to the Junior Subordinated Notes of such series:
(a) failure for 10 days to pay interest on the Junior Subordinated Notes
of such series, including any Additional Interest (as defined in clause (ii)
of the definition of Additional Interest in the Subordinated Note Indenture)
in respect of the Junior Subordinated Notes, when due on an interest payment
date other than at maturity or upon earlier redemption; provided, however,
that a valid extension of the interest payment period by the Company shall
not constitute a default in the payment of interest for this purpose; or
(b) failure for 10 days to pay Additional Interest (as defined in clause
(i) of the definition of Additional Interest in the Subordinated Note
Indenture); or
16
(c) failure to pay principal or premium, if any, or interest, including
Additional Interest (as defined in clause (ii) of the definition of
Additional Interest in the Subordinated Note Indenture), on the Junior
Subordinated Notes of such series when due at maturity or upon earlier
redemption; or
(d) failure for three Business Days to deposit any sinking fund payment
when due by the terms of a Junior Subordinated Note of such series; or
(e) failure to observe or perform any other covenant or warranty of the
Company in the Subordinated Note Indenture (other than a covenant or
warranty which has expressly been included in the Subordinated Note
Indenture solely for the benefit of one or more series of Junior
Subordinated Notes other than such series) for 90 days after written notice
to the Company from the Subordinated Note Indenture Trustee or the holders
of at least 25% in principal amount of the outstanding Junior Subordinated
Notes of such series; or
(f) certain events of bankruptcy, insolvency or reorganization of the
Company.
The holders of not less than a majority in aggregate outstanding principal
amount of the Junior Subordinated Notes of any series have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Subordinated Note Indenture Trustee with respect to the Junior
Subordinated Notes of such series. If a Subordinated Note Indenture Event of
Default occurs and is continuing with respect to the Junior Subordinated Notes
of any series, then the Subordinated Note Indenture Trustee or the holders of
not less than 25% in aggregate outstanding principal amount of the Junior
Subordinated Notes of such series may declare the principal amount of the
Junior Subordinated Notes due and payable immediately by notice in writing to
the Company (and to the Subordinated Note Indenture Trustee if given by the
holders), and upon any such declaration such principal amount shall become
immediately due and payable. At any time after such a declaration of
acceleration with respect to the Junior Subordinated Notes of any series had
been made and before a judgment or decree for payment of the money due has been
obtained as provided in Article Five of the Subordinated Note Indenture, the
holders of not less than a majority in aggregate outstanding principal amount
of the Junior Subordinated Notes of such series may rescind and annul such
declaration and its consequences if the default has been cured or waived and
the Company has paid or deposited with the Subordinated Note Indenture Trustee
a sum sufficient to pay all matured installments of interest (including any
Additional Interest) and principal due otherwise than by acceleration and all
sums paid or advanced by the Subordinated Note Indenture Trustee, including
reasonable compensation and expenses of the Subordinated Note Indenture Trustee.
A holder of Preferred Securities may institute a legal proceeding directly
against the Company, without first instituting a legal proceeding against the
Property Trustee or any other person or entity, for enforcement of payment to
such holder of principal of or interest on the Junior Subordinated Notes of the
related series having a principal amount equal to the aggregate stated
liquidation amount of the Preferred Securities of such holder on or after the
due dates specified in the Junior Subordinated Notes of such series.
The holders of not less than a majority in aggregate outstanding principal
amount of the Junior Subordinated Notes of any series may, on behalf of the
holders of all the Junior Subordinated Notes of such series, waive any past
default with respect to such series, except (i) a default in the payment of
principal or interest or (ii) a default in respect of a covenant or provision
which under Article Nine of the Subordinated Note Indenture cannot be modified
or amended without the consent of the holder of each outstanding Junior
Subordinated Note of such series affected.
Registration and Transfer
The Company shall not be required to (i) issue, register the transfer of or
exchange Junior Subordinated Notes of any series during a period of 15 days
immediately preceding the date notice is given identifying the Junior
Subordinated Notes of such series called for redemption, or (ii) register the
transfer of or exchange any Junior Subordinated Notes so selected for
redemption, in whole or in part, except the unredeemed portion of any Junior
Subordinated Note being redeemed in part.
17
Payment and Paying Agent
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of any Junior Subordinated Notes will be made only against
surrender to the Paying Agent of such Junior Subordinated Notes. Principal of
and interest on Junior Subordinated Notes will be payable, subject to any
applicable laws and regulations, at the office of such Paying Agent or Paying
Agents as the Company may designate from time to time, except that, at the
option of the Company, payment of any interest may be made by wire transfer or
by check mailed to the address of the person entitled to an interest payment as
such address shall appear in the Security Register with respect to the Junior
Subordinated Notes. Payment of interest on Junior Subordinated Notes on any
interest payment date will be made to the person in whose name the Junior
Subordinated Notes (or predecessor security) are registered at the close of
business on the record date for such interest payment.
Unless otherwise indicated in an applicable Prospectus Supplement, the
Subordinated Note Indenture Trustee will act as Paying Agent with respect to
the Junior Subordinated Notes. The Company may at any time designate additional
Paying Agents or rescind the designation of any Paying Agents or approve a
change in the office through which any Paying Agent acts.
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or interest on the Junior Subordinated Notes of any series which
remain unclaimed at the end of two years after such principal or interest shall
have become due and payable will be repaid to the Company, and the holder of
such Junior Subordinated Notes will from that time forward look only to the
Company for payment of such principal and interest.
Modification
The Subordinated Note Indenture contains provisions permitting the Company
and the Subordinated Note Indenture Trustee, with the consent of the holders of
not less than a majority in principal amount of the outstanding Junior
Subordinated Notes of each series that is affected, to modify the Subordinated
Note Indenture or the rights of the holders of the Junior Subordinated Notes of
such series; provided, that no such modification may, without the consent of
the holder of each outstanding Junior Subordinated Note that is affected, (i)
change the stated maturity of the principal of, or any installment of principal
of or interest on, any Junior Subordinated Note, or reduce the principal amount
of any Junior Subordinated Note or the rate of interest (including Additional
Interest) on any Junior Subordinated Note or any premium payable upon the
redemption thereof, or change the method of calculating the rate of interest on
any Junior Subordinated Note, or impair the right to institute suit for the
enforcement of any such payment on or after the stated maturity of any Junior
Subordinated Note (or, in the case of redemption, on or after the redemption
date), or (ii) reduce the percentage of principal amount of the outstanding
Junior Subordinated Notes of any series, the consent of whose holders is
required for any such supplemental indenture, or the consent of whose holders
is required for any waiver (of compliance with certain provisions of the
Subordinated Note Indenture or certain defaults under the Subordinated Note
Indenture and their consequences) provided for in the Subordinated Note
Indenture, or (iii) modify any of the provisions of the Subordinated Note
Indenture relating to supplemental indentures, waiver of past defaults, or
waiver of certain covenants, except to increase any such percentage or to
provide that certain other provisions of the Subordinated Note Indenture cannot
be modified or waived without the consent of the holder of each outstanding
Junior Subordinated Note that is affected, or (iv) modify the provisions of the
Subordinated Note Indenture with respect to the subordination of the Junior
Subordinated Notes in a manner adverse to such holder.
In addition, the Company and the Subordinated Note Indenture Trustee may
execute, without the consent of any holders of Junior Subordinated Notes, any
supplemental indenture for certain other usual purposes, including the creation
of any new series of Junior Subordinated Notes.
18
Consolidation, Merger and Sale
The Company shall not consolidate with or merge into any other corporation
or convey, transfer or lease its properties and assets substantially as an
entirety to any person, unless (1) such other corporation or person is a
corporation organized and existing under the laws of the United States, any
state of the United States or the District of Columbia and such other
corporation or person expressly assumes, by supplemental indenture executed and
delivered to the Subordinated Note Indenture Trustee, the payment of the
principal of (and premium, if any) and interest (including Additional Interest)
on all the Junior Subordinated Notes and the performance of every covenant of
the Subordinated Note Indenture on the part of the Company to be performed or
observed; (2) immediately after giving effect to such transactions, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing; and (3) the
Company has delivered to the Subordinated Note Indenture Trustee an officers'
certificate and an opinion of counsel, each stating that such transaction
complies with the provisions of the Subordinated Note Indenture governing
consolidation, merger, conveyance, transfer or lease and that all conditions
precedent to the transaction have been complied with.
Information Concerning the Subordinated Note Indenture Trustee
The Subordinated Note Indenture Trustee, prior to an Event of Default with
respect to Junior Subordinated Notes of any series, undertakes to perform, with
respect to Junior Subordinated Notes of such series, only such duties as are
specifically set forth in the Subordinated Note Indenture and, in case an Event
of Default with respect to Junior Subordinated Notes of any series has occurred
and is continuing, shall exercise, with respect to Junior Subordinated Notes of
such series, the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to such provision, the
Subordinated Note Indenture Trustee is under no obligation to exercise any of
the powers vested in it by the Subordinated Note Indenture at the request of
any holder of Junior Subordinated Notes of any series, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred by the Subordinated Note Indenture Trustee. The
Subordinated Note Indenture Trustee is not required to expend or risk its own
funds or otherwise incur any financial liability in the performance of its
duties if the Subordinated Note Indenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
Deutsche Bank Trust Company Americas, the Subordinated Note Indenture
Trustee, also serves as Senior Note Indenture Trustee, as Property Trustee and
as Guarantee Trustee. The Company and certain of its affiliates maintain
deposit accounts and banking relationships with Deutsche Bank Trust Company
Americas. Deutsche Bank Trust Company Americas also serves as trustee under
other indentures pursuant to which securities of the Company and affiliates of
the Company are outstanding.
Governing Law
The Subordinated Note Indenture and the Junior Subordinated Notes will be
governed by, and construed in accordance with, the internal laws of the State
of New York.
Miscellaneous
The Company will have the right at all times to assign any of its rights or
obligations under the Subordinated Note Indenture to a direct or indirect
wholly-owned subsidiary of the Company; provided, that, in the event of any
such assignment, the Company will remain primarily liable for all such
obligations. Subject to the foregoing, the Subordinated Note Indenture will be
binding upon and inure to the benefit of the parties to the Subordinated Note
Indenture and their respective successors and assigns.
19
DESCRIPTION OF THE PREFERRED SECURITIES
Each Trust may issue only one series of Preferred Securities having terms
described in the Prospectus Supplement relating to the Preferred Securities.
The Trust Agreement of each Trust will authorize the Administrative Trustees,
on behalf of the Trust, to issue the Preferred Securities of such Trust. The
Preferred Securities of each Trust will have such terms, including
distributions, redemption, voting, liquidation rights and such other preferred,
deferral or other special rights or such restrictions as shall be set forth in
the Trust Agreement of such Trust. Reference is made to the Prospectus
Supplement relating to the Preferred Securities of a Trust for specific terms,
including (i) the distinctive designation of such Preferred Securities; (ii)
the number of Preferred Securities issued by such Trust; (iii) the annual
distribution rate (or method of determining such rate) for Preferred Securities
of such Trust and the date or dates on which such distributions shall be
payable; (iv) whether distributions on such Preferred Securities shall be
cumulative and, in the case of Preferred Securities having cumulative
distribution rights, the date or dates, or method of determining the date or
dates, from which distributions on such Preferred Securities shall be
cumulative; (v) the amount or amounts that shall be paid out of the assets of
such Trust to the holders of the Preferred Securities of such Trust upon
voluntary or involuntary dissolution, winding-up or termination of such Trust;
(vi) the obligation, if any, of such Trust to purchase or redeem such Preferred
Securities and the price or prices at which, the period or periods within
which, and the terms and conditions upon which such Preferred Securities shall
be purchased or redeemed, in whole or in part, pursuant to such obligation;
(vii) the voting rights, if any, of such Preferred Securities in addition to
those required by law, including the number of votes per Preferred Security and
any requirement for the approval by the holders of Preferred Securities as a
condition to specified action or amendments to the Trust Agreement of such
Trust; (viii) the rights, if any, to defer distributions on the Preferred
Securities by extending the interest payment period on the related Junior
Subordinated Notes; and (ix) any other relative rights, preferences,
privileges, limitations or restrictions of such Preferred Securities not
inconsistent with the Trust Agreement of such Trust or applicable law. All
Preferred Securities offered by this Prospectus will be guaranteed by the
Company to the extent set forth under "Description of the Guarantees." Any
material United States federal income tax considerations applicable to an
offering of Preferred Securities will be described in the Prospectus Supplement
relating to the Preferred Securities.
DESCRIPTION OF THE GUARANTEES
Set forth below is a summary of information concerning the Guarantees that
will be executed and delivered by the Company for the benefit of the holders of
Preferred Securities of the respective Trusts from time to time. Each Guarantee
will be qualified as an indenture under the 1939 Act. Deutsche Bank Trust
Company Americas will act as indenture trustee under each Guarantee (the
"Guarantee Trustee") for purposes of the 1939 Act. The terms of the respective
Guarantees will be those set forth in such Guarantee and those made part of
such Guarantee by the 1939 Act. The following summary does not purport to be
complete and is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the Guarantees, the form of which is filed as
an exhibit to the Registration Statement of which this Prospectus forms a part,
and the 1939 Act. Each Guarantee will be held by the Guarantee Trustee for the
benefit of holders of the Preferred Securities to which it relates.
General
Pursuant to each Guarantee, the Company will irrevocably and unconditionally
agree, to the extent set forth in such Guarantee, to pay in full, to the
holders of the related Preferred Securities, the Guarantee Payments (as defined
below), to the extent not paid by, or on behalf of, the related Trust,
regardless of any defense, right of set-off or counterclaim that the Company
may have or assert against any person. The following payments or distributions
with respect to the Preferred Securities of any Trust to the extent not paid or
made by, or on behalf of, such Trust will be subject to the Guarantee related
to the Preferred Securities (without duplication): (i) any accrued and unpaid
distributions required to be paid on the Preferred Securities of such Trust but
if and only if
20
and to the extent that such Trust has funds legally and immediately available
for these distributions, (ii) the redemption price, including all accrued and
unpaid distributions to the date of redemption (the "Redemption Price"), with
respect to any Preferred Securities called for redemption by such Trust, but if
and only to the extent such Trust has funds legally and immediately available
to pay such Redemption Price, and (iii) upon a dissolution, winding-up or
termination of such Trust (other than in connection with the distribution of
Junior Subordinated Notes to the holders of Trust Securities of such Trust or
the redemption of all of the Preferred Securities of such Trust), the lesser of
(a) the aggregate of the liquidation amount and all accrued and unpaid
distributions on the Preferred Securities of such Trust to the date of payment,
to the extent such Trust has funds legally and immediately available for such
purpose, and (b) the amount of assets of such Trust remaining available for
distribution to holders of Preferred Securities of such Trust in liquidation of
such Trust (the "Guarantee Payments"). The Company's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Company to the holders of the related Preferred Securities or by causing
the related Trust to pay such amounts to such holders.
Each Guarantee will be a guarantee of the Guarantee Payments with respect to
the related Preferred Securities from the time of issuance of such Preferred
Securities, but will not apply to the payment of distributions and other
payments on such Preferred Securities when the related Trust does not have
sufficient funds legally and immediately available to make such distributions
or other payments. If the Company does not make interest payments on the Junior
Subordinated Notes held by the Property Trustee under any Trust, such Trust
will not make distributions on its Preferred Securities.
Subordination
The Company's obligations under each Guarantee to make the Guarantee
Payments will constitute an unsecured obligation of the Company and will rank
(i) subordinate and junior in right of payment to all other liabilities of the
Company, including the Junior Subordinated Notes, except those obligations or
liabilities made equal or subordinate by their terms, (ii) equal to the most
senior preferred or preference stock now issued by the Company or issued at a
later date by the Company and with any guarantee now entered into by the
Company or entered into at a later date by the Company in respect of any
preferred or preference securities of any affiliate of the Company, and (iii)
senior to all common stock of the Company. The terms of the Preferred
Securities will provide that each holder of Preferred Securities by acceptance
of Preferred Securities agrees to the subordination provisions and other terms
of the Guarantee related thereto. The Company has outstanding preferred stock
that ranks equal to the Guarantees and common stock that ranks junior to the
Guarantees.
Each Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly
against the guarantor to enforce its rights under the guarantee without first
instituting a legal proceeding against any other person or entity).
Amendments and Assignment
Except with respect to any changes that do not materially and adversely
affect the rights of holders of the related Preferred Securities (in which case
no consent will be required), each Guarantee may be amended only with the prior
approval of the holders of not less than 66 2/3% in liquidation amount of such
outstanding Preferred Securities. The manner of obtaining any such approval of
holders of the Preferred Securities will be as set forth in an accompanying
Prospectus Supplement. All guarantees and agreements contained in each
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the holders of
the related Preferred Securities then outstanding.
Termination
Each Guarantee will terminate and be of no further force and effect as to
the related Preferred Securities upon full payment of the Redemption Price of
all such Preferred Securities, upon distribution of Junior
21
Subordinated Notes to the holders of such Preferred Securities, or upon full
payment of the amounts payable upon liquidation of the related Trust. Each
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of the related Preferred Securities must restore
payment of any sums paid with respect to such Preferred Securities or under
such Guarantee.
Events of Default
An event of default under each Guarantee will occur upon the failure by the
Company to perform any of its payment obligations under such Guarantee. The
holders of a majority in liquidation amount of the Preferred Securities to
which any Guarantee relates have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Guarantee Trustee
in respect of such Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under such Guarantee. Any holder of the
related Preferred Securities may institute a legal proceeding directly against
the Company to enforce its rights under such Guarantee without first
instituting a legal proceeding against the Guarantee Trustee or any other
person or entity. The holders of a majority in liquidation amount of Preferred
Securities of any series may, by vote, on behalf of the holders of all the
Preferred Securities of such series, waive any past event of default and its
consequences.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, prior to the occurrence of any event of default with
respect to any Guarantee and after the curing or waiving of all events of
default with respect to such Guarantee, undertakes to perform only such duties
as are specifically set forth in such Guarantee and, in case an event of
default has occurred, shall exercise the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provisions, the Guarantee Trustee is under no obligation to exercise any
of the powers vested in it by any Guarantee at the request of any holder of the
related Preferred Securities, unless offered reasonable indemnity against the
costs, expenses and liabilities which might be incurred by the Guarantee
Trustee.
Deutsche Bank Trust Company Americas, the Guarantee Trustee, also serves as
Property Trustee, as Senior Note Indenture Trustee and as Subordinated Note
Indenture Trustee. The Company and certain of its affiliates maintain deposit
accounts and banking relationships with Deutsche Bank Trust Company Americas.
Deutsche Bank Trust Company Americas also serves as trustee under other
indentures pursuant to which securities of the Company and affiliates of the
Company are outstanding.
Governing Law
Each Guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
The Agreements as to Expenses and Liabilities
Pursuant to an Agreement as to Expenses and Liabilities to be entered into
by the Company under each Trust Agreement, the Company will irrevocably and
unconditionally guarantee to each person or entity to whom each Trust becomes
indebted or liable the full payment of any indebtedness, expenses or
liabilities of such Trust, other than obligations of such Trust to pay to the
holders of the related Preferred Securities or other similar interests in such
Trust the amounts due such holders pursuant to the terms of such Preferred
Securities or such other similar interests, as the case may be.
22
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR SUBORDINATED NOTES AND
THE GUARANTEES
As long as payments of interest and other payments are made when due on each
series of Junior Subordinated Notes issued to a Trust, such payments will be
sufficient to cover distributions and payments due on the related Trust
Securities of such Trust primarily because (i) the aggregate principal amount
of each series of Junior Subordinated Notes will be equal to the sum of the
aggregate stated liquidation amount of the related Trust Securities; (ii) the
interest rate and interest and other payment dates on each series of Junior
Subordinated Notes will match the distribution rate and distribution and other
payment dates for the related Preferred Securities; (iii) the Company shall pay
for all costs and expenses of each Trust pursuant to the Agreements as to
Expenses and Liabilities; and (iv) each Trust Agreement provides that the
Securities Trustees thereunder shall not cause or permit the Trust to, among
other things, engage in any activity that is not consistent with the purposes
of the Trust.
Payments of distributions (to the extent funds for such purpose are legally
and immediately available) and other payments due on the Preferred Securities
(to the extent funds for such purpose are legally and immediately available)
will be guaranteed by the Company as and to the extent set forth under
"Description of the Guarantees." If the Company does not make interest payments
on any series of Junior Subordinated Notes, it is not expected that the related
Trust will have sufficient funds to pay distributions on its Preferred
Securities. Each Guarantee is a guarantee from the time of its issuance, but
does not apply to any payment of distributions unless and until the related
Trust has sufficient funds legally and immediately available for the payment of
such distributions.
If the Company fails to make interest or other payments on any series of
Junior Subordinated Notes when due (taking into account any extension period as
described in the applicable Prospectus Supplement), the Trust Agreement
provides a mechanism that allows the holders of the related Preferred
Securities to appoint a substitute Property Trustee. Such holders may also
direct the Property Trustee to enforce its rights under the Junior Subordinated
Notes of such series, including proceeding directly against the Company to
enforce such Junior Subordinated Notes. If the Property Trustee fails to
enforce its rights under any series of Junior Subordinated Notes, to the
fullest extent permitted by applicable law, any holder of related Preferred
Securities may institute a legal proceeding directly against the Company to
enforce the Property Trustee's rights under such series of Junior Subordinated
Notes without first instituting any legal proceeding against the Property
Trustee or any other person or entity. Notwithstanding the foregoing, a holder
of Preferred Securities may institute a legal proceeding directly against the
Company, without first instituting a legal proceeding against the Property
Trustee or any other person or entity, for enforcement of payment to such
holder of principal of or interest on Junior Subordinated Notes of the related
series having a principal amount equal to the aggregate stated liquidation
amount of the Preferred Securities of such holder on or after the due dates
specified in the Junior Subordinated Notes of such series.
If the Company fails to make payments under any Guarantee, such Guarantee
provides a mechanism that allows the holders of the Preferred Securities to
which such Guarantee relates to direct the Guarantee Trustee to enforce its
rights under such Guarantee. In addition, any holder of Preferred Securities
may institute a legal proceeding directly against the Company to enforce the
Guarantee Trustee's rights under the related Guarantee without first
instituting a legal proceeding against the Guarantee Trustee or any other
person or entity.
Each Guarantee, the Subordinated Note Indenture, the Junior Subordinated
Notes of the related series, the related Trust Agreement and the related
Agreement as to Expenses and Liabilities, as described above, constitute a full
and unconditional guarantee by the Company of the payments due on the related
series of Preferred Securities.
23
Upon any voluntary or involuntary dissolution, winding-up or termination of
any Trust, unless Junior Subordinated Notes of the related series are
distributed in connection with such action, the holders of the Preferred
Securities of such Trust will be entitled to receive, out of assets legally
available for distribution to holders, a liquidation distribution in cash as
described in the applicable Prospectus Supplement. Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Property Trustee, as
holder of the related series of Junior Subordinated Notes, would be a
subordinated creditor of the Company, subordinated in right of payment to all
Senior Indebtedness, but entitled to receive payment in full of principal and
interest, before any stockholders of the Company receive payments or
distributions. Because the Company is guarantor under each Guarantee and has
agreed to pay for all costs, expenses and liabilities of each Trust (other than
the Trust's obligations to holders of the Preferred Securities) pursuant to the
related Agreement as to Expenses and Liabilities, the positions of a holder of
Preferred Securities and a holder of Junior Subordinated Notes of the related
series relative to other creditors and to stockholders of the Company in the
event of liquidation or bankruptcy of the Company would be substantially the
same.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Subordinated Note Indenture.
However, in the event of payment defaults under, or acceleration of, Senior
Indebtedness, the subordination provisions of the Junior Subordinated Notes
provide that no payments may be made in respect of the Junior Subordinated
Notes until such Senior Indebtedness has been paid in full or any payment
default of Senior Indebtedness has been cured or waived. Failure to make
required payments on the Junior Subordinated Notes of any series would
constitute an Event of Default under the Subordinated Note Indenture with
respect to the Junior Subordinated Notes of such series except that failure to
make interest payments on the Junior Subordinated Notes of such series will not
be an Event of Default during an extension period as described in the
applicable Prospectus Supplement.
PLAN OF DISTRIBUTION
The Company may sell the new Stock, Depositary Shares, Senior Notes and
Junior Subordinated Notes and the Trusts may sell the Preferred Securities in
one or more of the following ways from time to time: (i) to underwriters for
resale to the public or to institutional investors; (ii) directly to
institutional investors; or (iii) through agents to the public or to
institutional investors. The Prospectus Supplement with respect to each series
of new Stock, Depositary Shares, Senior Notes, Junior Subordinated Notes or
Preferred Securities will set forth the terms of the offering of such new
Stock, Depositary Shares, Senior Notes, Junior Subordinated Notes or Preferred
Securities, including the name or names of any underwriters or agents, the
purchase price of such new Stock, Depositary Shares, Senior Notes, Junior
Subordinated Notes or Preferred Securities and the proceeds to the Company or
the applicable Trust from such sale, any underwriting discounts or agency fees
and other items constituting underwriters' or agents' compensation, any initial
public offering price, any discounts or concessions allowed or reallowed or
paid to dealers and any securities exchange on which such new Stock, Depositary
Shares, Senior Notes, Junior Subordinated Notes or Preferred Securities may be
listed.
If underwriters participate in the sale, such new Stock, Depositary Shares,
Senior Notes, Junior Subordinated Notes or Preferred Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
Unless otherwise set forth in the Prospectus Supplement, the obligations of
the underwriters to purchase any series of new Stock, Depositary Shares, Senior
Notes, Junior Subordinated Notes or Preferred Securities will be subject to
certain conditions precedent and the underwriters will be obligated to purchase
all of such series of new Stock, Depositary Shares, Senior Notes, Junior
Subordinated Notes or Preferred Securities, if any are purchased.
24
Underwriters and agents may be entitled under agreements entered into with
the Company and/or the applicable Trust to indemnification against certain
civil liabilities, including liabilities under the 1933 Act. Underwriters and
agents may engage in transactions with, or perform services for, the Company in
the ordinary course of business.
Each series of new Stock, Depositary Shares, Senior Notes, Junior
Subordinated Notes or Preferred Securities will be a new issue of securities
and will have no established trading market. Any underwriters to whom new
Stock, Depositary Shares, Senior Notes, Junior Subordinated Notes or Preferred
Securities are sold for public offering and sale may make a market in such new
Stock, Depositary Shares, Senior Notes, Junior Subordinated Notes or Preferred
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. The new Stock,
Depositary Shares, Senior Notes, Junior Subordinated Notes or Preferred
Securities may or may not be listed on a national securities exchange.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of the Company and the Trusts by
Richards, Layton & Finger, P.A., Wilmington, Delaware, special Delaware counsel
to the Company and the Trusts. The validity of the new Stock, the Depositary
Shares, the Senior Notes, the Junior Subordinated Notes, the Guarantees and
certain matters relating to such securities will be passed upon on behalf of
the Company by Balch & Bingham LLP, Gulfport, Mississippi, and by Troutman
Sanders LLP, Atlanta, Georgia. Certain legal matters will be passed upon for
the Underwriters by Dewey Ballantine LLP, New York, New York.
EXPERTS
The financial statements and the related financial statement schedule as of
and for the year ended December 31, 2002 incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 2002 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated in the Prospectus by
reference, and has been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
Certain of the Company's financial statements incorporated by reference in
this Prospectus have been audited by Arthur Andersen LLP ("Andersen"),
independent public accountants, as indicated in their reports with respect to
the financial statements, and are incorporated by reference in this Prospectus,
in reliance upon the authority of Andersen as experts in giving such reports.
On March 28, 2002, Southern's Board of Directors, upon recommendation of its
Audit Committee, decided not to engage Andersen as the Company's principal
public accountants. The Company has not obtained a reissued report from
Andersen and has been unable to obtain, after reasonable efforts, Andersen's
written consent to incorporate by reference Andersen's reports on the financial
statements. Under these circumstances, Rule 437a under the 1933 Act permits
this Prospectus to be filed without a written consent from Andersen. The
absence of such written consent from Andersen may limit a holder's ability to
assert claims against Andersen under Section 11(a) of the 1933 Act for any
untrue statement of a material fact contained in the financial statements
audited by Andersen or any omissions to state a material fact required to be
stated in the financial statements.
25
$40,000,000
[LOGO] MISSISSIPPI POWER
(A SOUTHERN COMPANY)
Series F Floating Rate Senior Notes
due March 9, 2009
-----------------
PROSPECTUS SUPPLEMENT
Dated March 3, 2004
-----------------
JPMorgan