Exhibit 26(b)
MISSISSIPPI POWER COMPANY
_____________________________
TERMS AND CONDITIONS
Relating to Proposals for the Purchase of
First Mortgage Bonds and Depositary Preferred Shares
November 28, 1995
MISSISSIPPI POWER COMPANY (the "Company") hereby invites proposals,
subject to the terms and conditions hereof, for the purchase from it of its
First Mortgage Bonds, to mature on a date or dates to be determined as
provided in Section 4 hereof, and Depositary Preferred Shares, each
representing one-fourth of a share of Preferred Stock, cumulative from the
date of issuance by the Company, par value $100 per share, aggregating up to
$71,596,000 in principal amount or par value, as the case may be. Such First
Mortgage Bonds and such Depositary Preferred Shares (and such underlying
Preferred Stock) (collectively, the "Securities") each may be issued and sold
by the Company in one or more series. As used herein, the terms "Bonds",
"Depositary Shares" and "Stock" mean, respectively, the First Mortgage Bonds,
Depositary Preferred Shares or Preferred Stock of each such series. A brief
summary of the terms of the Securities is contained in the Registration
Statement and Prospectus referred to below.
1. INFORMATION RESPECTING THE COMPANY AND
THE SECURITIES
Prospective bidders may examine, at the office of Southern Company
Services, Inc., One Wall Street, 42nd Floor, New York, N.Y. 10005, at any
time during business hours, the following:
(a) the form of proposed Supplemental Indenture, between the Company and
Bankers Trust Company, New York, New York, as Trustee, under which the Bonds
are to be issued and secured;
(b) the articles of incorporation of the Company, and amendments thereto
(including proposed amendments authorizing and creating the Stock), under
which the Stock is to be issued;
(c) the form of the proposed Deposit Agreement among the Company, the
Depositary to be named therein and the holders of Depositary Receipts issued
thereunder, under which Depositary Receipts evidencing the Depositary Shares
are to be issued;
(d) the Registration Statement (including exhibits) with respect to the
Securities, in the form in which it has become effective, and the related
Prospectus (including the documents incorporated therein by reference pursuant
to Item 12 of Form S-3);
(e) the separate forms of proposal, to be used by bidders in offering to
purchase the Bonds and the Depositary Shares (each a "Form of Proposal"),
which include the forms of contract for the purchase of the Bonds and the
Depositary Shares (each a "Purchase Contract");
(f) the form of questionnaire, to be used by prospective bidders in
furnishing information to the Company and the Trustee and, in the case of a
group of bidders, in designating the Representative of the members of such
group, referred to in Section 2 hereof;
(g) the statement on Form U-1 (including exhibits) as filed with the
Securities and Exchange Commission under the Public Utility Holding Company
Act of 1935, as amended, with respect to the Securities, and the order or
orders of the Securities and Exchange Commission with respect thereto; and
(h) memorandum by Reid & Priest LLP (referred to in Section 9 hereof)
with respect to the necessity for the qualification of the Securities for sale
under the securities or "blue sky" laws of various jurisdictions.
Copies of said documents in reasonable quantities (except certain
exhibits to the Registration Statement and statement on Form U-1) will be
supplied on request, so long as available, to prospective bidders. The
Company reserves the right to amend or supplement such Registration Statement,
Prospectus (including the documents incorporated therein by reference pursuant
to Item 12 of Form S-3) and statement on Form U-1, and to make changes in the
form of any documents relating to the issuance of the Securities. The Company
will furnish copies of such amendments, supplements or changes and of any
filing pursuant to Section 13 or 14 of the Securities Exchange Act of 1934, as
amended, to Reid & Priest LLP (referred to in Section 9 hereof) and, on
request, to any prospective bidder who shall have furnished a questionnaire to
the Company as provided in Section 2 hereof, or to the Representative of any
group of prospective bidders designated as provided in Section 2 hereof.
2. INFORMATION RESPECTING THE BIDDERS
TO BE FURNISHED THE COMPANY
No proposal will be considered unless the bidder (or, in the case of a
group of bidders, each bidder) shall have furnished to the Company in
triplicate, at the office of Southern Company Services, Inc., One Wall Street,
42nd Floor, New York, N.Y. 10005, not less than two hours prior to the time
for submission of proposals, the form of questionnaire referred to above,
properly filled out and signed. The Company, however, reserves the right to
waive any irregularity in any questionnaire and to extend, either generally or
in specific instances, the time for furnishing questionnaires and to permit
the furnishing of information required by the form of questionnaire by
telegram or other means of communication satisfactory to it. Notwithstanding
the furnishing of such questionnaires to the Company, any prospective bidder
or group of prospective bidders may thereafter determine not to bid, or any of
the several members of a group may withdraw therefrom and may thereafter
determine not to bid or determine to bid as a member of some other group. One
or more additional members may be included in a group, with the consent of the
Company, after the time (or any extended time) for furnishing questionnaires,
if the information required by the form of questionnaire as to each such
additional member is furnished to the Company, at or before the time fixed by
the Company for such purpose, by means of a questionnaire properly filled out
and signed or by such other means as the Company may have approved for such
purpose.
In the case of a proposal by a group of bidders, the several bidders in
the group shall act through a duly authorized representative or
representatives (the "Representative"), who may be included in such group, and
who shall be designated by each member of such group in, or in the manner
authorized by, the form of questionnaire furnished by such member. In case
the Representative so designated consists of two or more persons, the Company
shall be entitled to assume in all matters contemplated hereby that any one of
such persons is fully authorized to act on behalf of the Representative.
3. CONTENTS OF PROPOSALS
Each proposal must be for the purchase of all the Bonds or Depositary
Shares, as the case may be, designated by the Company as provided in Section 4
hereof and may be made by a single bidder or by a group of bidders. In case
the proposal of a group of bidders is accepted in writing by the Company, the
obligations of the members of the group shall be several, and not joint, to
purchase the respective principal amounts of the Bonds or numbers of
Depositary Shares, as the case may be, indicated in the proposal. No bidder
(including in such term for the purpose of this restriction any and all
affiliates of a specified bidder) may submit or participate in more than one
proposal for the purchase of a particular series of the Securities.
Each proposal for the purchase of Bonds shall specify the interest rate
(which shall be an integral multiple of .01% or 1/8 of 1%) and the price
(exclusive of accrued interest) to be paid to the Company for the Bonds (which
shall not be less than 98%, nor more than 101 3/4%, of the principal amount of
the Bonds proposed to be purchased). Accrued interest from the first day of
the calendar month during which the Bonds are issued to the date of payment
and delivery also will be paid to the Company by the purchaser or purchasers.
Each proposal for the purchase of Depositary Shares shall specify (a)
the annual dividend rate on the underlying Stock (which shall be an integral
multiple of .01%) or, if the Company shall have given notice as provided in
Section 4 hereof that the Stock will have an adjustable dividend rate, the
Applicable Rate Adjustment (hereinafter defined), (b) the price to be paid to
the Company for the Depositary Shares (which shall be not less than $25 per
Depositary Share nor more than $25.50 per Depositary Share), which shall also
be the price (exclusive of accrued dividends, if any) at which the Depositary
Shares shall be initially offered to the public, and (c) the amount per
Depositary Share to be paid by the Company as compensation to the
Representative for the accounts of the respective purchasers under the
Purchase Contract for their services in purchasing and making a public
offering of the Depositary Shares. The "Applicable Rate Adjustment" (which
shall be an integral multiple of .01%) is the premium or discount to be used
in calculating the Applicable Rate (as defined in a supplement to the
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Prospectus with respect to the Securities) from time to time in effect if the
Stock will have an adjustable dividend rate.
A proposal confirmed in writing as provided in Section 4 hereof on
behalf of a group of bidders shall give the names of the members in the group
but may, at the time of submission, omit the amounts or numbers of Securities
to be purchased by the members of such group; but, in the case of such
omission, the Representative, on behalf of the successful bidders, shall, and
by the submission of such proposal agrees to, insert promptly in Exhibit A to
the Form of Proposal, prior to its acceptance in writing by the Company and in
any event within one hour after the time fixed for the submission of
proposals, the respective amounts or numbers of Securities to be purchased
severally by such bidders, all with the same force and effect as if the same
had been included in such proposal at the time of the submission thereof.
The Representative submitting a successful proposal may, forthwith upon
discovery, correct any error which it has made in the proposal in specifying
the bidders or the amount or number of Securities to be purchased by any
bidder or bidders at a different amount or number than authorized by such
bidder or bidders; and if, after all such corrections, a proposal is accepted
which provides for the purchase of less than all or more than all of the
Securities, the Representative submitting such proposal shall be deemed to
have increased or decreased, as the case may be, to the extent of the
discrepancy, the amount or number of Securities offered to be purchased by it.
In case such Representative consists of two or more persons, such increase or
decrease in the amount or number of Securities shall be allocated between or
among them as they shall agree; provided that, if there shall be no such
agreement, then such increase or decrease shall be allocated between or among
them in proportion to the amount or number of Securities set forth opposite
their respective names in Exhibit A attached to the Form of Proposal. If in
the case of a decrease the discrepancy is greater than the amount or number of
Securities offered to be purchased by the Representative, then to the extent
that the discrepancy is greater than such amount or number, the amount or
number of Securities offered to be purchased by each other bidder shall be
proportionately reduced. Any correction or adjustment in the amount or number
of Securities or in the specification of any bidder made or provided for
hereunder shall, for all purposes of the Purchase Contract, be or be deemed to
have been reflected in Exhibit A attached to the Form of Proposal.
4. SUBMISSION OF PROPOSALS
All proposals must be submitted to the Company in accordance with such
procedures and at such time or times on such day or days as shall be
designated by the Company by notice in writing or by telephone, confirmed in
writing. The Company in its discretion may, but will not be obligated to,
give any such notice to any prospective bidder who shall have furnished a
questionnaire to the Company as provided in Section 2 hereof, or to the
Representative of any group of prospective bidders designated as provided in
Section 2 hereof, or to any other prospective bidders. The Company shall
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designate in each such notice the principal amount of Bonds or the number of
Depositary Shares, as the case may be, for which proposals are to be submitted
at such time. Each such notice with respect to Bonds will also designate the
term thereof, which shall be not more than 40 years. Each such notice with
respect to Depositary Shares also will state whether there will be any sinking
or purchase fund for the underlying Stock and, if so, the terms and conditions
thereof; and whether the Stock will have an adjustable dividend rate and, if
so, (a) the minimum and maximum dividend rates, (b) the "Base Rate" to be used
in calculating the "Initial Dividend Rate" and (c) the date through which the
"Initial Dividend Rate" shall be in effect. In the event that the Company
shall give notice that the Stock will have an adjustable dividend rate, the
"Initial Dividend Rate", applicable only through the date designated by the
Company in such notice, shall be the "Base Rate" so designated plus or minus
the Applicable Rate Adjustment specified in the successful proposal.
All proposals must be confirmed in writing on the appropriate Form of
Proposal, signed by the Representative on behalf of the members of a group of
bidders, or in the case of a single bidder by such bidder with appropriate
changes in the text of the Form of Proposal.
The Company reserves the right in its discretion from time to time to
postpone any time for submission of proposals designated as provided herein.
5. ACCEPTANCE OR REJECTION OF PROPOSALS
All proposals will be received by the Company in accordance with the
procedures and at the time or times designated as provided in Section 4
hereof. Within three hours after each time designated for the submission of
proposals, the Company (subject to the provisions of the next following
paragraph) will by announcement accept the proposal which results in the
lowest "annual cost of money" to it for the Bonds or Depositary Shares, as the
case may be, determined by the Company in accordance with the formulae set
forth in Section 6 hereof, and any proposal not so accepted within such time
shall be deemed to have been rejected. Each proposal will be accepted or
rejected in its entirety. In case the Company shall receive two or more
proposals resulting in an identical lowest "annual cost of money" for the
Bonds or Depositary Shares, as the case may be, the Company (subject to the
provisions of the next following paragraph) will forthwith afford to the
bidders making such identical proposals an opportunity to improve their bids.
Thereupon, if no improved bid shall be made, or if two or more proposals again
result in an identical lowest "annual cost of money" for the Bonds or
Depositary Shares, as the case may be, the Company may accept any one of such
proposals in its discretion. If in the case of identical proposals a bid is
not being improved, the proposal submitted by the bidder or group of bidders
making such proposal need not be resubmitted to be considered.
The Company reserves the right (a) to reject all proposals at or after
the submission thereof, and (b) to reject the proposal of any bidder or of any
group of bidders (i) if such bidder or any member of such group of bidders is
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in such relationship with Bankers Trust Company as would disqualify said bank
from acting as Trustee under the Company's Indenture dated as of September 1,
1941, as supplemented, if the proposal of such bidder or group of bidders
should be accepted; (ii) if the Company, in the opinion of its counsel, may
not lawfully sell the Bonds or Depositary Shares, as the case may be, to such
bidder or to any member of such group of bidders and, in either of such events
in the case of a group of bidders, if within one hour after the time at which
the bids are required to be submitted, the member or members of such group
causing such disqualification or illegality have not withdrawn from the group
and the remaining members, including substituted members, if any, have not
agreed to purchase the Bonds or Depositary Shares, as the case may be, which
such withdrawing member or members had proposed to purchase; (iii) if, in the
opinion of the Company, such bidder or group of bidders would not be able to
comply with the terms of the Purchase Contract if such proposal were accepted;
or (iv) if, in the opinion of counsel for the Company, the Company would not
be able to comply with the terms of the Purchase Contract if such proposal
were accepted. The proposal of any bidder or group of bidders rejected by the
Company by reason of clause (b) of this paragraph shall be disregarded solely
for the purpose of determining the proposal which results in the lowest
"annual cost of money" for the Bonds or Depositary Shares, as the case may be.
Prior to the acceptance by the Company of any proposal, the bidder or
bidders thereunder will be furnished a copy of a prospectus relating to the
Securities which meets the requirements of Section 10(a) of the Securities Act
of 1933, as amended, at that time.
6. DETERMINATION OF "ANNUAL COST OF MONEY"
The "annual cost of money" to the Company for the Securities will be
determined by the Company, such determination by the Company to be final, as
follows:
The "annual cost of money" with respect to each proposal for the
purchase of Bonds will be determined as twice the semi-annual rate necessary
to discount the semi-annual debt service payments (interest or interest and
principal, as due) to amounts which in the aggregate equal the purchase price
for the Bonds, exclusive of accrued interest. For this purpose the entire
principal amount of the Bonds shall be deemed to remain outstanding during the
term thereof designated by the Company as provided in Section 4 hereof. The
"annual cost of money" for each bid will be expressed as a percentage and will
be rounded to the fourth decimal place.
The "annual cost of money" with respect to each proposal for the
purchase of Depositary Shares shall be determined by dividing the annual
dollar amount of the dividend on the underlying fractional share of Stock
based upon the dividend rate specified in such proposal (or, if the Stock will
have an adjustable dividend rate, the annual dollar amount of the dividend on
the underlying fractional share of Stock based upon a rate equal to the "Base
Rate" designated by the Company plus or minus the Applicable Rate Adjustment
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specified in such proposal) by the price per Depositary Share specified in
such proposal to be paid to the Company after deducting the compensation per
Depositary Share to be paid by the Company.
7. DETERMINATION OF REDEMPTION PROVISIONS
As soon as practicable after the acceptance in writing of a successful
proposal for Bonds, the premiums payable upon redemption of the Bonds will be
determined by the Company, such determination by the Company to be final, as
follows:
(a) The term "redemption period" shall mean the twelve months'
period beginning on the first day of the calendar month during which the
Bonds are issued, beginning with the calendar year during which the
Bonds are issued, and ending on the last day of the preceding calendar
month of the next succeeding calendar year.
(b) The regular redemption price for the first redemption period
shall be the initial public offering price of the Bonds (stated as a
percentage of their principal amount) plus a percentage of their
principal amount equal to the interest rate of the Bonds, such
redemption price being hereinafter referred to as the "initial
redemption price"; and for each redemption period thereafter, the
regular redemption price, before any adjustment pursuant to paragraph
(d) below, shall be the initial redemption price decreased for each one
of such redemption periods by an amount equal to the Applicable Fraction
(as defined below) of the excess of the initial redemption price over
the principal amount until the redemption period, if any, for which the
regular redemption price shall be reduced to the principal amount of the
Bonds; provided that, if the regular redemption price for any redemption
period as so calculated would be less than the special redemption price
for the same redemption period calculated as hereinafter provided
(except for any redemption period for which the regular redemption price
would be reduced to the principal amount of the Bonds), then the regular
redemption price for such period shall be increased to and shall be the
same as the special redemption price for such period; in each case,
together with accrued interest to the date fixed for redemption;
provided, however, that, except as the Company may otherwise specify by
notice, none of the Bonds shall be redeemed at a regular redemption
price prior to a date five years from the first day of the calendar
month during which the Bonds are issued if such redemption is for the
purpose or in anticipation of refunding such Bond through the use,
directly or indirectly, of funds borrowed by the Company at an effective
interest cost to the Company (computed in accordance with generally
accepted financial practice) of less than the effective interest cost to
the Company of the Bonds. The term "Applicable Fraction", as used
herein, means a fraction the numerator of which is one and the
denominator of which is the lesser of (i) 20 and (ii) the term of the
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Bonds minus three; provided, however, that the denominator shall never
be less than four.
(c) The special redemption price for any redemption period shall
be such amount as will produce a yield from the first day of the period
to the date of maturity which will be equal to the yield to maturity
calculated on the initial public offering price, a term equal to the
term of the Bonds and the interest rate of the Bonds; provided that, if
the yield to maturity, as so computed, does not result in a multiple of
1/100th of 1%, it shall be reduced to the next lower such multiple; and
except that, for any redemption period for which the regular redemption
price shall be the principal amount of the Bonds, the special redemption
price for such period shall likewise be the principal amount of the
Bonds; and except that, if the initial public offering price of the
Bonds is the principal amount thereof or less, the special redemption
price during all redemption periods shall be the principal amount of the
Bonds; in each case, together with accrued interest to the date fixed
for redemption.
(d) For any period in which the excess of the redemption price
over the principal amount is a multiple of 1/100th of 1% (determined by
expressing the redemption price as a percentage and rounding to the
fourth decimal place), the excess shall be the redemption premium; for
each other period the excess increased to the next higher such multiple
of 1/100th of 1% shall be the redemption premium; provided that the
special redemption price shall never be more than the greater of the
principal amount of the Bonds or the initial public offering price of
the Bonds.
The initial public offering price of the Bonds for the purpose of the
above determinations shall be the price (exclusive of accrued interest) at
which the Bonds are to be initially offered for sale to the public by the
successful bidder or bidders as set forth in the Prospectus Supplement to be
prepared following the acceptance of a successful bid; provided, however, that
in the event the successful bidder or bidders shall specify at the time of
acceptance of the successful bid that they do not intend to make an immediate
public offering of the Bonds, the initial public offering price shall, for
this purpose, be deemed to be the price (exclusive of accrued interest) to be
paid by the successful bidder or bidders to the Company.
As soon as practicable after the acceptance in writing of a successful
proposal for Depositary Shares, the redemption prices of the underlying Stock
will be determined by the Company, such determination by the Company to be
final, and shall be an amount equal to the initial public offering price of
Depositary Shares representing a whole share of Stock, plus an amount per
share (expressed in dollars and cents) equal to (a) if the Stock will not have
an adjustable dividend rate, the annual dividend if the date of redemption is
on or prior to the fifth anniversary of the first day of the calendar month
during which the Stock is issued (the "Key Date"), and without premium for
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redemptions thereafter, or (b) if the Stock will have an adjustable dividend
rate, the annual dividend calculated based upon the "Initial Dividend Rate" if
the date of redemption is on or prior to the fifth anniversary of the Key
Date, and without premium for redemptions thereafter, to which shall be added
accrued dividends in each case to the date of redemption; provided, however,
that no share of the Stock shall be redeemed prior to the fifth anniversary of
the Key Date, if such redemption is for the purpose or in anticipation of
refunding such share directly or indirectly through the incurring of debt, or
through the issuance of stock ranking equally with or prior to the Stock as to
dividends or assets, if such debt has an effective interest cost to the
Company (computed in accordance with generally accepted financial practice) or
such stock has an effective dividend cost to the Company (so computed) of less
than the effective dividend cost to the Company of the Stock (if the Stock
will have an adjustable dividend rate, the effective dividend cost to the
Company of the Stock to be based upon the "Initial Dividend Rate"). If any
redemption price, as so computed, does not result in a multiple of one cent,
it shall be increased to the next higher such multiple.
The initial public offering price of the Depositary Shares for the
purpose of the above determinations shall be the price (exclusive of accrued
dividends, if any) at which the Depositary Shares are to be initially offered
for sale to the public by the successful bidder or bidders as set forth in the
Prospectus Supplement to be prepared following the acceptance of the
successful bid.
8. PURCHASE CONTRACT AND PROSPECTUS SUPPLEMENT
Forthwith upon the acceptance in writing of a proposal (a) the Purchase
Contract shall become effective without any separate execution thereof and
shall constitute the agreement between the Company and the successful bidder
or bidders; (b) the successful bidder, or, in the case of a proposal by a
group of bidders, the Representative on behalf of the successful bidders,
shall furnish to the Company in writing the information regarding the bidders
and the public offering, if any, as is required to complete a Prospectus
Supplement and any further information regarding the bidders and the public
offering, if any, as is required to complete the statement in respect of the
Securities filed by the Company under the Pubic Utility Holding Company Act of
1935, as amended; and (c) upon performance by the successful bidder or
bidders, and their Representative, of their obligations under Sections 3, 4
and 8 hereof, all rights of the Company and of the successful bidder or
bidders under an accepted proposal shall be determined solely in accordance
with the terms of the Purchase Contract.
9. OPINION OF COUNSEL FOR THE PURCHASERS
Reid & Priest LLP, 40 West 57th Street, New York, New York, have been
selected by the Company as counsel for the purchasers to give to each
successful bidder or bidders an opinion with respect to the Bonds or
Depositary Shares, as the case may be, substantially in the respective forms
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attached as Exhibit 3 to the Purchase Contract. Such counsel have
participated in the preparation of certain of the documents under which the
Securities are to be issued and have reviewed or will review the corporate
proceedings with respect to the Securities and the proceedings before the
Securities and Exchange Commission and the order or orders of said commission
with respect to the Securities. Their compensation and disbursements are,
under the terms of the Purchase Contract, to be paid by the successful bidder
or bidders, except as otherwise provided in the Purchase Contract. Such
counsel will, on request, advise any prospective bidder, or the Representative
of any group of prospective bidders, of the amount of such compensation and of
the estimated amount of such disbursements to be paid by the successful bidder
or bidders for the Securities.
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10. WAIVER OF IRREGULARITIES
The Company reserves the right to waive any failure on the part of any
bidder or group of bidders to comply with the terms and conditions hereof.
MISSISSIPPI POWER COMPANY
By DWIGHT H. EVANS
President and Chief Executive
Officer
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