As filed with the Securities and Exchange Commission on February 5, 2002
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ALLEGHENY ENERGY, INC. MARYLAND
ALLEGHENY CAPITAL TRUST I DELAWARE 13-5531602
ALLEGHENY CAPITAL TRUST II DELAWARE To Be Applied For
ALLEGHENY CAPITAL TRUST III DELAWARE To Be Applied For
(Exact name of registrant as (State or other jurisdiction To Be Applied For
specified in its charter) of incorporation or organization) (I.R.S. Employer Identification No.)
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10435 Downsville Pike
Hagerstown, MD 21740-1766
(301) 790-3400
(Address, including zip code, and telephone number, including
area code, of registrants' principal executive offices)
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Thomas K. Henderson, Esq.
Vice President and General Counsel
Allegheny Energy, Inc.
10435 Downsville Pike
Hagerstown, MD 21740-1766
(301) 790-3400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPIES TO:
Robert E. Buckholz, Jr., Esq. Raymond W. Wagner, Esq.
Sullivan & Cromwell Simpson Thacher & Bartlett
125 Broad Street 425 Lexington Avenue
New York, New York 10004-2498 New York, New York 10017-3954
(212) 558-4000 (212) 455-2000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement. If the only
securities being registered on this Form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
===================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(8)(9) UNIT(10)(11) PRICE(6)(8)(9)(10)(11) REGISTRATION FEE(12)
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Common Stock, par value $1.25 per share,
together with stock purchase rights,
if any, of Allegheny Energy, Inc. (1)(2)(3)(5)(6)
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Senior Debt Securities of Allegheny Energy, Inc. (1)(2)(6)
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Subordinated Debt Securities of Allegheny Energy, Inc. (1)(2)(6)
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Warrants of Allegheny Energy, Inc. (1)(2)(4)
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Stock Purchase Contracts of Allegheny Energy, Inc.. (1)(2)
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Units of Allegheny Energy, Inc. (1)(2)
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Preferred Securities of Allegheny
Capital Trust I, II and III (1)(2)(6)(7)
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Allegheny Energy, Inc. Guarantee of
Preferred Securities of Allegheny Capital
Trust I, II and III (1)(2)(7)
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TOTAL $1,500,000,000 100% $1,500,000,000 $138,000
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(1) Such indeterminate number, principal amount or liquidation amount of
senior debt securities, subordinated debt securities, common stock,
warrants, stock purchase contracts and units of Allegheny Energy, Inc.
and of the preferred securities of Allegheny Capital Trust I, Allegheny
Capital Trust II and Allegheny Capital Trust III and the related
guarantee of Allegheny Energy, Inc. as may from time to time be issued at
indeterminate prices. The securities registered hereunder shall not have
an aggregate offering price which exceeds $1,500,000,000 in United States
dollars or the equivalent in any other currency.
(2) Also includes such indeterminate number of senior debt securities,
subordinated debt securities, shares of common stock, warrants, stock
purchase contracts, units and preferred securities, and the related
guarantees, as may be issued upon conversion or exchange of any
securities that provide for that issuance. Also includes such
indeterminate amount of senior debt securities, subordinated debt
securities, warrants, stock purchase contracts and preferred securities
that may be issued in units.
(3) Includes stock purchase rights pursuant to the Stockholder Protection
Rights Agreement, dated as of March 2, 2000, between Allegheny Energy,
Inc. and ChaseMellon Shareholder Services L.L.C., as Rights Agent. Prior
to the occurrence of certain events, these rights will not be exercisable
or evidenced separately from the common stock and will be transferred
only with the common stock. The value attributable to such stock purchase
rights, if any, is reflected in the market price of the common stock.
(4) Warrants may be sold separately or with senior debt securities,
subordinated debt securities, common stock and preferred securities.
(5) Includes an indeterminate number of shares of common stock to be issuable
by Allegheny Energy, Inc. upon settlement of stock purchase contracts.
(6) No separate consideration will be received for the senior debt
securities, subordinated debt securities or common stock issuable upon
conversion of or in exchange for senior debt securities or subordinated
debt securities. In addition, no separate consideration will be received
for any preferred securities redeemed for subordinated debt securities in
lieu of cash.
(7) Includes the rights of holders of the preferred securities under the
guarantee of preferred securities and back-up undertaking, consisting of
obligations by Allegheny Energy, Inc., as set forth in the amended and
restated declaration of trust, the subordinated debt securities indenture
and any supplemental indenture thereto, in each case as further described
in the Registration Statement. No separate consideration will be received
for any guarantee or any back-up undertakings.
(8) In United States dollars or the equivalent thereof in any other currency,
currency unit or units, or composite currency or currencies.
(9) Such amount represents the principal amount of any senior debt
securities, subordinated debt securities or preferred securities issued
at their principal or liquidation amount, the issue price rather than the
principal or liquidation amount of any senior debt securities,
subordinated debt securities or preferred securities issued at an
original issue discount, the amount computed pursuant to Rule 457(c) for
any common stock, the issue price of any warrants and the exercise price
of any securities issuable upon exercise of warrants.
(10) Estimated solely for the purpose of computing the registration fee.
(11) Exclusive of accrued interest and distributions, if any.
(12) Calculated pursuant to Rule 457(o) of the rules and regulations under the
Securities Act.
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION,
DATED FEBRUARY 5, 2002
PROSPECTUS
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$1,500,000,000
ALLEGHENY ENERGY, INC.
COMMON STOCK
SENIOR DEBT SECURITIES
SUBORDINATED DEBT SECURITIES
WARRANTS
STOCK PURCHASE CONTRACTS
UNITS
ALLEGHENY CAPITAL TRUST I
ALLEGHENY CAPITAL TRUST II
ALLEGHENY CAPITAL TRUST III
PREFERRED SECURITIES
GUARANTEED AS DESCRIBED
IN THIS PROSPECTUS BY
ALLEGHENY ENERGY, INC.
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Allegheny Energy, Inc. may offer and sell common stock, senior debt
securities, subordinated debt securities, warrants, stock purchase contracts and
units. Allegheny Capital Trust I, Allegheny Capital Trust II and Allegheny
Capital Trust III may offer and sell preferred securities representing undivided
beneficial interests in the assets of such entity. We may offer these securities
from time to time in amounts, at prices and on other terms to be determined at
the time of offering. The total offering price of the securities offered to the
public will be limited to $1,500,000,000.
We will provide you with more specific terms of these securities in
supplements to this prospectus. You should read this prospectus and any
prospectus supplement, together with any and all documents incorporated by
reference herein and in any supplement, carefully before you invest.
The common stock of Allegheny Energy is listed on the New York Stock
Exchange, the Chicago Stock Exchange and the Pacific Exchange under the symbol
"AYE".
We may sell the securities to underwriters, through agents or directly to
other purchasers. The prospectus supplement will include the names of any
underwriters or agents.
INVESTING IN THESE SECURITIES INVOLVES RISKS. SEE THE SECTION ENTITLED
"RISK FACTORS" BEGINNING ON PAGE 5 FOR MORE INFORMATION.
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Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed upon the accuracy
or adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
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Prospectus dated , 2002
TABLE OF CONTENTS
PAGE
----
About This Prospectus ............................................................. 3
About Allegheny Energy, Inc. ...................................................... 3
About Allegheny Capital Trust I, Allegheny
Capital Trust II and Allegheny Capital Trust III.................................. 4
Risk Factors ...................................................................... 5
Forward-Looking Statements ........................................................ 14
Ratios of Earnings to Fixed Charges ............................................... 14
Use of Proceeds ................................................................... 15
Description of the Common Stock We May Offer ...................................... 15
Description of the Debt Securities We May Offer ................................... 17
Description of the Warrants We May Offer .......................................... 26
Description of the Stock Purchase Contracts We May Offer .......................... 27
Description of Units We May Offer ................................................. 28
Description of Preferred Securities That the Trusts May Offer ..................... 28
Description of Trust Guarantees ................................................... 35
Legal Ownership and Global Securities ............................................. 38
Plan of Distribution .............................................................. 39
Validity of the Securities ........................................................ 41
Experts ........................................................................... 41
Where You Can Find More Information ............................................... 42
2
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that we
filed with the SEC using a "shelf" registration or continuous process. Under
this shelf registration process, we may, from time to time, sell combinations of
the securities described in this prospectus in one or more offerings up to a
total dollar amount of $1,500,000,000. This prospectus provides you with a
general description of the securities that we may offer.
Each time we sell securities, we will provide a "prospectus supplement"
that will contain specific information about the terms of that offering. A
prospectus supplement may include a discussion of any risk factors or other
special considerations applicable to those securities or to us. A prospectus
supplement may also add, update or change information contained in this
prospectus. If there is any inconsistency between the information in this
prospectus and the applicable prospectus supplement, you should rely on the
information in the prospectus supplement. You should read both this prospectus
and any prospectus supplements together with the additional information
described in the section entitled "Where You Can Find More Information".
The registration statement containing this prospectus, including exhibits
to the registration statement, provides additional information about us and the
securities offered under this prospectus. The registration statement can be read
at the SEC web site or at the SEC offices mentioned under the heading "Where You
Can Find More Information".
When acquiring any securities discussed in this prospectus, you should rely
only on the information provided in this prospectus and in the applicable
prospectus supplement, including the information incorporated by reference.
Neither we, nor any underwriters or agents, have authorized anyone to provide
you with different information. We are not offering the securities in any state
where the offer is prohibited. You should not assume that the information in
this prospectus, any prospectus supplement, or any document incorporated by
reference, is truthful or complete as of any date other than the date mentioned
on the cover page of these documents.
We may sell securities to underwriters who will sell the securities to the
public on terms fixed at the time of sale. In addition, the securities may be
sold by us directly or through dealers or agents designated from time to time.
If we, directly or through agents, solicit offers to purchase the securities, we
reserve the sole right to accept and, together with any agents, to reject, in
whole or in part, any of those offers.
Any prospectus supplement will contain the names of the underwriters,
dealers or agents, if any, together with the terms of the offering, the
compensation of those underwriters and the net proceeds to us. Any underwriters,
dealers or agents participating in the offering may be deemed "underwriters"
within the meaning of the Securities Act of 1933.
ABOUT ALLEGHENY ENERGY, INC.
Allegheny Energy, Inc., incorporated in Maryland in 1925, is a diversified
utility holding company. We derive substantially all of our income
from the operations of our principal subsidiaries:
o Monongahela Power Company, The Potomac Edison Company and West
Penn Power Company, which are regulated utility operating
companies;
o Allegheny Energy Supply Company, LLC, which we refer to as
Allegheny Energy Supply, is a company that develops, owns and
operates electric generating facilities and supplies and trades
energy and energy-related commodities in selected domestic retail
and wholesale markets; and
o Allegheny Ventures, Inc., which provides and develops
telecommunications and energy-related products and services,
including natural gas and electricity consulting and management
services and natural gas supply and transportation services.
Our executive offices are located at 10435 Downsville Pike, Hagerstown,
Maryland 21740-1766, and our telephone number is (301) 790-3400.
3
ABOUT ALLEGHENY CAPITAL TRUST I, ALLEGHENY CAPITAL TRUST II AND
ALLEGHENY CAPITAL TRUST III
Allegheny Capital Trust I, Allegheny Capital Trust II and Allegheny Capital
Trust III, each a "Trust" and together the "Trusts", are each a statutory
business trust created under Delaware law. Each Trust exists for the exclusive
purposes of:
o issuing and selling the preferred securities, which represent
preferred undivided beneficial ownership interests in the Trust's
assets;
o issuing and selling the common securities, which represent common
undivided beneficial ownership interests in the Trust's assets, to
us in a total liquidation amount equal to at least 3% of the
Trust's total capital;
o using the proceeds from the issuances to buy our subordinated debt
securities;
o maintaining the Trust's status as a grantor trust for federal
income tax purposes; and
o engaging in only those other activities necessary, advisable or
incidental to these purposes.
Any subordinated debt securities we sell to each Trust will be the sole
assets of the Trust, and, accordingly, payments under the subordinated debt
securities will be the sole revenues of the Trust. We will acquire and own all
of the common securities of each Trust, which will have an aggregate liquidation
amount equal to at least 3% of the total capital of each Trust. The common
securities will rank on a parity with, and payments will be made on the common
securities PRO RATA with, the preferred securities, except that upon an event of
default under the amended and restated declaration of trust resulting from an
event of default under the subordinated debt securities, our rights as holder of
the common securities to distributions and payments upon liquidation or
redemption will be subordinated to the rights of the holders of the preferred
securities.
Each Trust has a term of 35 years, but may dissolve earlier as provided
in its amended and restated declaration of trust. Each Trust's business and
affairs are conducted by its trustees. The trustees for each Trust are Bank One
Trust Company, N.A., as institutional trustee, Bank One Delaware, Inc., as the
Delaware trustee, and two regular trustees, or "administrative trustees", who
are officers of Allegheny Energy. Bank One Trust Company, N.A., as institutional
trustee, will act as sole indenture trustee under the amended and restated
declaration of trust. Bank One Trust Company, N.A. will also act as guarantee
trustee under the guarantee and as indenture trustee under the subordinated debt
indenture.
The duties and obligations of each trustee are governed by the amended and
restated declaration of trust. As issuer of the subordinated debt securities to
be purchased by each Trust, we will pay all fees, expenses, debts and
obligations (other than the payment of distributions and other payments on the
preferred securities) related to each Trust and any offering of preferred
securities and will pay, directly or indirectly, all ongoing costs, expenses and
liabilities of each Trust. The principal executive office of each Trust is c/o
Allegheny Energy, Inc., 10435 Downsville Pike, Hagerstown, Maryland 21740-1766,
and each Trust's telephone number is (301) 790-3400.
4
RISK FACTORS
AN INVESTMENT IN ANY OF THE SECURITIES INVOLVES A NUMBER OF RISKS. THE
PERFORMANCE OF THESE SECURITIES WILL REFLECT THE PERFORMANCE OF OUR BUSINESS
RELATED TO, AMONG OTHER THINGS, COMPETITION AND GENERAL ECONOMIC, MARKET AND
INDUSTRY CONDITIONS. YOU SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS AND ANY
FACTORS PERTAINING TO THE SECURITIES DESCRIBED IN THE PROSPECTUS SUPPLEMENT
BEFORE INVESTING IN THE SECURITIES. IN REVIEWING INFORMATION CONTAINED IN THIS
PROSPECTUS, YOU SHOULD BEAR IN MIND THAT PAST EXPERIENCE IS NO INDICATION OF
FUTURE PERFORMANCE.
RISKS ASSOCIATED WITH REGULATION
THE BULK OF OUR BUSINESSES OPERATE IN CHANGING REGULATORY ENVIRONMENTS CREATED
BY RESTRUCTURING INITIATIVES AT BOTH STATE AND FEDERAL LEVELS. IF THE TREND
TOWARDS COMPETITIVE RESTRUCTURING OF THE ELECTRIC POWER INDUSTRY IS REVERSED,
DISCONTINUED OR DELAYED, OUR BUSINESS PROSPECTS AND FINANCIAL CONDITION COULD BE
MATERIALLY ADVERSELY AFFECTED.
The regulatory environment applicable to our generation, transmission and
distribution businesses has recently undergone substantial changes, on both the
federal and state levels. These changes have significantly affected the nature
of the power industry and the manner in which its participants conduct their
businesses. Moreover, existing statutes and regulations may be revised or
reinterpreted, new laws and regulations may be adopted or become applicable to
us or our facilities, and future changes in laws and regulations may have an
effect on our businesses in ways that we cannot predict. Some restructured
markets, like California's, have experienced interruptions of supply and price
volatility. These interruptions of supply and price volatility have been the
subject of a significant amount of press coverage, much of which has been
critical of the restructuring initiatives. In some of these restructured
markets, including California's, government agencies and other interested
parties have made proposals to re-regulate areas of these markets that have been
deregulated, and, in California, legislation has been passed placing a
moratorium on the sale of generating plants by regulated utilities. Proposals to
re-regulate the wholesale power market have been made at the federal level.
Proposals of this sort, and legislative or other attention to the electric power
restructuring process in the states in which we currently, or may in the future,
operate, may cause this process to be delayed, discontinued or reversed, which
could have a material adverse effect on our results of operations or our
strategies. The recent bankruptcy filing by Enron Corporation, and related
matters, may affect the regulatory and legislative process, perhaps in
unpredictable ways.
OUR REGULATED UTILITY SUBSIDIARIES HAVE "PROVIDER-OF-LAST-RESORT" OBLIGATIONS
AND OUR GENERATING SUBSIDIARY PROVIDES ELECTRICITY TO OUR REGULATED UTILITY
SUBSIDIARIES IN AMOUNTS SUFFICIENT TO SATISFY THESE OBLIGATIONS AT PRICES WHICH
MAY BE BELOW ITS COST AND IN AMOUNTS THAT MAY EXCEED ITS SUPPLY CAPACITY.
THE PROVIDER-OF-LAST-RESORT OBLIGATIONS MAY HAVE NO RELATIONSHIP TO OUR
ACTUAL COST TO SUPPLY THIS POWER.
Until the transition to full market competition is complete, our regulated
utility subsidiaries--West Penn Power Company, Monongahela Power Company with
respect to its Ohio customers and The Potomac Edison Company--are required to
provide electricity at capped rates, which may be below current market rates, to
retail customers that do not choose an alternative electricity generation
supplier. To satisfy this "provider-of-last-resort" obligation, these regulated
utility subsidiaries source power from Allegheny Energy Supply, our generating
subsidiary, under contract. The power sales agreements Allegheny Energy Supply
has with West Penn, Monongahela Power with respect to its Ohio customers and
Potomac Edison have a fixed price as well as a market-based pricing component.
These components may have little or no relationship to the cost of supplying
this power. This means that our generating subsidiary currently absorbs a
portion of the risk of fuel price increases and increased costs of environmental
compliance. We expect that there will be similar risks when customer choice is
implemented in West Virginia where Monongahela Power also has distribution
operations. Because the risk of fuel price increases and increased environmental
compliance costs cannot be completely passed through to customers during the
transition period absent regulatory approval, we, on a consolidated basis,
retain these risks.
5
AT TIMES, DEMAND FOR POWER FROM OUR GENERATION SUBSIDIARY COULD EXCEED ITS
SUPPLY CAPACITY.
From time to time the demand for power required to meet the
provider-of-last-resort contract obligations could exceed Allegheny Energy
Supply's available generation capacity. If this occurs, Allegheny Energy Supply
would have to buy power on the market. Although Allegheny Energy Supply could
charge West Penn, Monongahela Power with respect to its Ohio customers and
Potomac Edison these higher incremental costs, those companies might not be able
to pass the costs on to their retail customers, resulting in the possibility
that we could lose money on a consolidated basis. Since these situations most
often occur during periods of peak demand, it is likely that the market price
for power at that time would be very high. Unlike the cooler weather over the
summers of 2001 and 2000, the hotter-than-normal summers of 1999 and 1998 saw
market prices for electricity in regions in which our regulated utility
subsidiaries have provider-of-last-resort obligations peak in excess of $1,000
per megawatt hour. Utilities that did not own or purchase sufficient available
capacity during those periods incurred significant losses in sourcing
incremental power. Even if a supply shortage was brief, we could suffer
substantial losses that could have an adverse effect on our results of
operations. In addition, the electricity that is purchased from Allegheny Energy
Supply to meet the provider-of-last-resort obligations is not available for sale
at what most likely would be more favorable wholesale prices.
THE PROVIDER-OF-LAST-RESORT OBLIGATIONS DO NOT RESTRICT CUSTOMERS FROM
SWITCHING SUPPLIERS OF POWER.
While our regulated utility subsidiaries are required to provide
electricity to customers who do not choose an alternative supplier, customers
are entitled at any time to obtain service from an alternative supplier. As
customers elect to purchase electricity elsewhere, Allegheny Energy Supply's
sales of power may decrease. Alternatively, customers could switch back to the
regulated utility subsidiaries from alternative suppliers, which may increase
demand above our facilities' available capacity, some of which it may have
committed to sell to other customers. Thus, any such switching by customers
could have an adverse effect on our results of operations and financial
position.
THE DIFFERENT REGIONAL POWER MARKETS IN WHICH ALLEGHENY ENERGY SUPPLY COMPETES
OR WILL COMPETE IN THE FUTURE HAVE CHANGING REGULATORY STRUCTURES, WHICH COULD
AFFECT ITS PERFORMANCE IN THESE REGIONS.
Allegheny Energy Supply's results are likely to be affected by differences
in the market and regulatory structures in various regional power markets.
Problems or delays that may arise in the formation and operation of new regional
transmission organizations, or "RTOs", such as the proposed new RTO extending
across the entire Northeastern region of the United States, may adversely affect
Allegheny Energy Supply's ability to sell electricity produced by its generating
capacity to markets in New York or New England. The rules governing the various
regional power markets may also change from time to time which could affect
Allegheny Energy Supply's costs or revenues. Because it remains unclear which
companies will be participating in the various regional power markets, or how
RTOs will develop or what regions they will cover, we are unable to assess fully
the impact that these power markets may have on Allegheny Energy Supply's
business. Allegheny Energy Supply's operating results will also be affected by
the addition of generation or transmission capacity serving PJM-West and any
other power markets.
WE MAY NOT FULLY RECOVER OUR TRANSMISSION COST OF SERVICE IF WE ELECT TO PROCEED
WITH PJM-WEST.
Our plan to turn operational control of our transmission assets over to PJM
Interconnection, L.L.C. in the form of PJM-West includes the risk that we may
not fully recover our transmission cost of service. We have filed a proposal
with FERC for a transitional surcharge to recover the costs we expect to incur
as a result of participating in PJM-West. The FERC has accepted our proposal
subject to possible refunds after the outcome of an evidentiary hearing
inquiring into our transmission costs. Accordingly, if we decide to proceed with
PJM-West in light of FERC's order, there is a risk that we will be required to
pay significant refunds to our transmission customers, and that our future
transmission service revenues will be materially lower than they are today.
6
OUR BUSINESS IS SUBJECT TO REGULATION UNDER THE PUBLIC UTILITY HOLDING COMPANY
ACT. THAT ACT LIMITS OUR BUSINESS OPERATIONS, OUR ABILITY TO RECEIVE DIVIDENDS
FROM OUR SUBSIDIARIES, OUR ABILITY TO OBTAIN FINANCING AND OUR ABILITY TO
AFFILIATE WITH PUBLIC UTILITIES.
We continue to be subject to regulation under the Public Utility Holding
Company Act, or PUHCA. PUHCA limits our ability to acquire, own and operate
energy assets outside of our operating region and it limits the dividends that
our subsidiaries may pay from unearned surplus. In addition, we must obtain
prior approval from the SEC under PUHCA in order to raise financing or to
acquire the voting securities of any public utility or take any other action
that would result in our affiliation with another public utility.
CHANGES IN FEDERAL ENERGY REGULATORY COMMISSION, OR FERC, REGULATION MAY CAUSE
US TO LOSE THE BENEFITS OF OUR INTEGRATED UTILITY OPERATIONS.
The success of our business depends, in part, on the economic efficiencies
of integrated and coordinated utility operations between our electric
transmission, distribution, wholesale marketing and retail service businesses.
FERC has promulgated a rule that requires electric utilities to unbundle the
services they provide so as to separate electric transmission from wholesale
marketing activities. In particular, the rule requires employees with
operational responsibility for transmission and reliability services to function
independently from operating employees engaged in wholesale and unbundled retail
marketing activities (functional unbundling). FERC currently permits senior
officers and directors to have ultimate decision making authority for both
electric transmission and wholesale marketing businesses. FERC has, however,
proposed to expand this functional unbundling requirement to require employees
in all energy-related businesses to function independently from transmission
operating employees, which include senior management employees as well. If FERC
were to expand its policy in this fashion, it could result in duplicative
management responsibilities, loss of efficiencies and increased operating
expenses which could have a material adverse effect on our businesses. In
addition, FERC has requested comments on whether it should require full
corporate unbundling (E.G., divestiture) of electric transmission businesses
from other energy-related activities. If FERC were to adopt this more extreme
requirement, it could have a further material adverse effect on our businesses.
SOME LAWS AND REGULATIONS GOVERNING RESTRUCTURING OF THE WHOLESALE GENERATION
MARKET IN VIRGINIA AND WEST VIRGINIA HAVE NOT YET BEEN INTERPRETED OR ADOPTED
AND COULD HAVE A MATERIAL NEGATIVE IMPACT ON OUR BUSINESS, OPERATING RESULTS AND
FINANCIAL CONDITION.
While the electric restructuring laws in Virginia and West Virginia
established the general framework governing the retail electric market, the laws
required the utility commission in each state to issue rules and determinations
implementing the laws. Some of the regulations governing the retail electric
market have not yet been adopted by the utility commission in each state. These
laws, when they are interpreted and when the regulations are developed and
adopted, may have a negative impact on our business, results of operations and
financial condition.
RISKS ASSOCIATED WITH OUR ACQUISITION AND DEVELOPMENT ACTIVITIES
OUR ACQUISITION OF GENERATING FACILITIES AND DEVELOPMENT ACTIVITIES MAY NOT BE
SUCCESSFUL, WHICH WOULD IMPAIR OUR ABILITY TO GROW PROFITABLY.
OUR BUSINESS STRATEGY REQUIRES US TO IDENTIFY AND COMPLETE
DEVELOPMENT PROJECTS.
Our business strategy depends, in part, on our ability to identify and
complete acquisition, development and construction projects at appropriate
prices and within an appropriate time frame. If the assumptions underlying the
prices we pay for future acquisitions, development and construction projects
prove to be inaccurate, the financial performance of the particular facility and
our overall results of operations and financial position could be significantly
adversely affected. Moreover, if we are not able to access capital at
competitive rates, our growth will be adversely affected. A number of factors
could affect our ability to access capital, including general economic
conditions, capital market conditions, market prices for electricity and gas and
the overall health of the utility industry, our capital structure and
limitations imposed by PUCHA.
7
WE WILL BE REQUIRED TO SPEND SIGNIFICANT SUMS BEFORE ACQUISITION OR
CONSTRUCTION OF A FACILITY.
Before we can acquire a generation facility or commence construction, we
may be required to invest significant resources on preliminary engineering,
permitting, legal and other matters in order to determine the feasibility of the
project. Moreover, the process for obtaining initial environmental, siting and
other governmental and regulatory permits and approvals is complicated,
expensive and lengthy, and is subject to significant uncertainties. We may also
be required to obtain SEC approval for our financing arrangements. Obtaining
these permits and approvals can delay acquisition and construction. If for any
reason we are not able to obtain all required permits and approvals, or obtain
them in a timely manner, we may be prevented from completing an acquisition,
development or construction project. We also may not be able to obtain and
comply with all necessary licenses, permits and approvals for our existing
facilities that we seek to expand.
PLANT CONSTRUCTION IS COSTLY AND SUBJECT TO NUMEROUS RISKS.
We have announced construction plans for four generating facilities
totaling approximately 2,290 MW, and we intend to pursue our strategy of
developing and constructing other new facilities and expanding existing
facilities. Our completion of these facilities without delays or cost overruns
is subject to substantial risks, including:
o shortages and inconsistent quality of equipment, material and labor;
o work stoppages;
o permits, approvals and other regulatory matters;
o adverse weather conditions;
o unforeseen engineering problems;
o environmental and geological conditions;
o delays or increased costs to interconnect our facilities to
transmission grids;
o unanticipated cost increases; and
o our attention to other projects.
If we are unable to complete the development or construction of a facility,
we may not be able to recover our investment in it. In addition, construction
delays and contractor performance shortfalls can result in the loss of revenues
and may, in turn, adversely affect our results of operations and financial
position. Furthermore, if construction projects are not completed according to
specifications, we may incur liabilities, and suffer reduced plant efficiency,
higher operating costs and reduced earnings. Also, changes in market prices for
electricity from these projects may make them uneconomic.
SOME RISKS CANNOT BE COVERED BY INSURANCE.
While we maintain insurance, obtain warranties from vendors and obligate
contractors to meet specified performance standards, we remain substantially
exposed to the risks described above. Furthermore, the proceeds of such
insurance and the warranties or performance guarantees may not be adequate to
cover lost revenues, increased expenses or liquidated damages payments that we
may owe upon the realization of any of the risks described above.
WE HAVE MADE OR HAVE COMMITTED SUBSTANTIAL INVESTMENTS IN OUR RECENT
ACQUISITIONS, DEVELOPMENT AND CONSTRUCTION PROJECTS, AND OUR SUCCESS DEPENDS ON
OUR ABILITY TO SUCCESSFULLY INTEGRATE, OPERATE AND MANAGE THESE ASSETS.
We cannot assure you that the facilities we acquire or develop or our
construction projects will generate cash flows or revenue that provide
appropriate returns on our investments or that we will successfully:
o integrate acquired assets with our existing operations;
o develop our management and corporate infrastructure;
8
o negotiate favorable terms for the sale of electricity generated by
the facilities we acquire or develop; or
o operate our acquired facilities on an efficient, cost-effective
basis.
Our ability to successfully integrate assets will depend on, among other
things, the adequacy of our implementation plans, our ability to achieve desired
operating efficiencies, and favorable terms for the electricity that we
generate. If we are unable to successfully integrate these assets into our
operations, we could experience increased costs and losses on our investments.
WE MAY BE REQUIRED TO ASSUME LIABILITIES, INCLUDING ENVIRONMENTAL AND
EMPLOYEE-RELATED LIABILITIES, UNDER ACQUISITION AGREEMENTS.
Some of the acquisition agreements that we have entered into with third
parties have required that we assume specified pre-closing liabilities,
primarily related to environmental and employee matters. We are likely to be
required to assume these types of liabilities, as well as others, in connection
with future acquisitions. As a result, we may be liable for significant
environmental remediation costs and other liabilities arising from the operation
of our facilities by prior owners, which could have a significant adverse effect
on our cash flow and results of operations.
RISKS RELATED TO OUR BUSINESS OPERATIONS
CHANGES IN COMMODITY PRICES MAY INCREASE OUR COST OF PRODUCING POWER OR DECREASE
THE AMOUNT WE RECEIVE FROM SELLING POWER, ADVERSELY AFFECTING OUR FINANCIAL
PERFORMANCE.
We are heavily exposed to changes in the price and availability of coal
because most of our generating capacity is coal-fired. We have contracts of
varying durations for the supply of coal for most of our existing generation
capacity, but as these contracts end, we may not be able to purchase coal on
terms as favorable as the current contracts.
We are diversifying our dependence on coal-fired facilities through the
acquisition and construction of natural gas-fired facilities, which increases
our exposure to the more volatile market prices of natural gas. Almost all of
our announced construction and development plans for additional generating
capacity have involved natural gas-fired facilities.
Changes in the cost of coal or natural gas and changes in the relationship
between those costs and the market prices of electricity will affect our
financial results. Since the price we obtain for electricity may not change at
the same rate as the change in coal or natural gas costs, we may be unable to
pass on the changes in costs to our customers.
In addition, actual power prices and fuel costs will differ from those
assumed in financial models used to value our trading positions, and those
differences may be material. As a result, our financial results may be adversely
affected in the future as those positions are marked to market.
WE MAY NOT ALWAYS FULLY HEDGE AGAINST CHANGES IN COMMODITY PRICES.
To manage our financial exposure to commodity price fluctuations, we
routinely enter into contracts, such as electricity, coal and natural gas
purchase and sale commitments, to hedge our exposure to fuel supply and demand,
market effects due to weather and other energy-related commodities. However, we
do not necessarily hedge the entire exposure of our operations from commodity
price volatility. To the extent we fail to hedge against commodity price
volatility, our results of operations and financial position may be affected
either favorably or unfavorably.
OUR ENERGY TRADING, FUEL PROCUREMENT, POWER MARKETING AND RISK MANAGEMENT
POLICIES MAY NOT WORK AS PLANNED.
Our energy trading, fuel procurement, power marketing and risk management
procedures may not always be followed or may not work as planned. As a result,
we cannot predict the impact that our energy trading, fuel
9
procurement, power marketing and risk management decisions may have on our
business, operating results or financial position.
Our energy trading, fuel procurement, power marketing and risk management
activities, including our power sales agreements with counterparties, rely on
models that depend heavily on judgments and assumptions by management of factors
such as the future market prices and demand for electricity and other
energy-related commodities. These factors become more difficult to predict and
the models become less reliable the further into the future these estimates are
made. Even when our policies and procedures are followed and decisions are made
based on these models, there may nevertheless be an adverse impact on our
financial position and results of operations, if the judgments and assumptions
underlying those models prove to be wrong or inaccurate.
PARTIES WITH WHOM WE HAVE CONTRACTS MAY FAIL TO PERFORM THEIR OBLIGATIONS, WHICH
COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.
We purchase coal from a limited number of suppliers. In 2001, we purchased
in excess of 60% of our coal from one supplier. Any disruption in the delivery
of coal, including disruptions as a result of weather, labor relations or
environmental regulations affecting our coal suppliers, could adversely affect
our ability to operate our coal-fired facilities and thus our results of
operations.
Delivery of natural gas to each of our natural gas-fired facilities
typically depends on the natural gas pipeline or distributor for that location.
As a result, we are subject to the risk that a natural gas pipeline or
distributor may suffer disruptions or curtailments in its ability to deliver
natural gas to us or that the amounts of natural gas we request are curtailed.
These disruptions or curtailments could adversely affect our ability to operate
natural gas-fired generating facilities and thus our results of operations.
In addition, we are exposed to the risk that counterparties that owe us
money or energy will breach their obligations. Should the counterparties to
these arrangements fail to perform, we may be forced to enter into alternative
hedging arrangements or honor the underlying commitment at then-current market
prices. In that event, our financial results are likely to be adversely affected
and we might incur losses. Although our models take into account the expected
probability of default by a counterparty, our actual exposure to a default by a
counterparty may be greater than the models predict.
A BREACH OR A RENEGOTIATION OF OUR POWER SALES AGREEMENT WITH THE CALIFORNIA
DEPARTMENT OF WATER RESOURCES MAY HAVE A MATERIAL IMPACT ON OUR RESULTS OF
OPERATIONS.
Various parties have publicly urged the State of California to renegotiate
power sales agreements between the California Department of Water Resources and
suppliers of electricity, including us, on the grounds that the Department is
paying too high a price for too much power for too long a period. We have an
agreement with the Department to sell 70.1 million MWH at $61 per MWH for the
years 2002 through 2011, regardless of whether delivery is made at times of peak
demand or not, for a total notional value of approximately $4.3 billion. As of
December 31, 2001, the reported price for comparable delivery of power in
California during times of peak demand in 2004 (the last year with publicly
quoted prices) was $36.25 per MWH. If our agreement were renegotiated or if the
Department failed for any reason to meet its obligations under this agreement,
the value of the agreement as an asset might need to be reduced on our balance
sheet, with a corresponding charge reducing net income.
OUR FACILITIES MAY PERFORM BELOW EXPECTATIONS, REQUIRE COSTLY REPAIRS OR REQUIRE
US TO PURCHASE REPLACEMENT POWER.
The operation of power generation, transmission and distribution facilities
involves many risks, including the breakdown or failure of electrical generating
or other equipment, fuel interruption and performance below expected levels of
output or efficiency. In addition, weather-related incidents and other natural
disasters can disrupt generation, transmission and distribution facilities. If
our facilities operate below expectations, we may lose revenues or have
increased expenses, including replacement power costs. A significant portion of
our facilities were constructed many years ago. Older equipment, even if
maintained in accordance with good engineering practices, may require
significant capital expenditures on our part to keep operating at peak
efficiency and is also likely to require periodic upgrading and improvement.
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WE HAVE ONLY A LIMITED OPERATING HISTORY IN A MARKET-BASED COMPETITIVE
ENVIRONMENT.
Our power generation facilities have historically been operated within
vertically-integrated, regulated utilities that sold electricity to consumers at
prices based on predetermined rates set by state public utility commissions.
Most of these facilities are now owned by our unregulated operating subsidiary,
Allegheny Energy Supply. A portion of our power, capacity and ancillary services
is now sold at market rates and does not benefit from predetermined rates that
include a rate of return component. Also, Allegheny Energy Supply's revenues and
results of operations are likely to depend, in large part, upon prevailing
market prices for electricity in our regional markets and other competitive
markets, the volume of demand, capacity and ancillary services. We have a
limited operating history for these facilities in a market-based competitive
environment, and we may not be able to operate them successfully in such an
environment.
ALLEGHENY ENERGY SUPPLY RELIES ON POWER TRANSMISSION FACILITIES THAT IT DOES NOT
OWN OR CONTROL. IF THESE FACILITIES DO NOT PROVIDE IT WITH ADEQUATE TRANSMISSION
CAPACITY, ALLEGHENY ENERGY SUPPLY MAY NOT BE ABLE TO DELIVER ITS WHOLESALE
ELECTRIC POWER TO ITS CUSTOMERS.
Allegheny Energy Supply depends on transmission and distribution facilities
owned and operated by utilities and other power companies to deliver the
electricity it sells. This dependence exposes Allegheny Energy Supply to a
variety of risks. If transmission is disrupted, or transmission capacity is
inadequate, Allegheny Energy Supply may not be able to sell and deliver its
products. If a region's power transmission infrastructure is inadequate,
Allegheny Energy Supply's recovery of costs and profits may be limited. If
restrictive transmission price regulation is imposed, the transmission companies
may not have sufficient incentive to invest in expansion of transmission
infrastructure.
FERC has issued power and gas transmission initiatives that require
electric and gas transmission services to be offered unbundled from commodity
sales. Although these initiatives are designed to encourage wholesale market
transactions for electricity and gas, fair and equal access to transmission
systems may in fact not be available. Natural gas pipelines and transmitting
electric utilities have filed open access tariffs in response to these
initiatives, but these utilities may not fully comply with the terms of those
tariffs. We also cannot predict whether transmission facilities will be expanded
in specific markets to accommodate competitive access to the market.
CHANGES IN TECHNOLOGY MAY SIGNIFICANTLY AFFECT OUR BUSINESS BY MAKING OUR POWER
PLANTS LESS COMPETITIVE.
A key element of our business model is that generating power at central
power plants achieves economies of scale and produces electricity at relatively
low cost. There are other technologies that produce electricity, most notably
fuel cells, microturbines, windmills and photovoltaic (solar) cells. It is
possible that advances in technology will reduce the cost of alternative methods
of producing electricity to a level that is competitive with that of most
central power station electric production. If this were to happen and if these
technologies achieved economies of scale, our market share could be eroded, and
the value of our power plants could be significantly impaired. Changes in
technology could also alter the channels through which retail electric customers
buy electricity, thereby affecting our financial results.
OUR OPERATING RESULTS MAY FLUCTUATE ON A SEASONAL AND QUARTERLY BASIS.
Electrical power generation is generally a seasonal business. In many parts
of the country, demand for electricity peaks during the hot summer months, with
market prices also peaking at that time. In other areas, electricity demand
peaks during the winter. As a result, our overall operating results in the
future may fluctuate substantially on a seasonal basis. The pattern of this
fluctuation may change depending on the nature and location of facilities we
acquire and the terms of power sale contracts we enter into.
THE LOSS OF OUR KEY EXECUTIVES OR OUR FAILURE TO ATTRACT QUALIFIED MANAGEMENT
COULD LIMIT OUR GROWTH AND NEGATIVELY AFFECT OUR OPERATIONS.
The success of our business relies, in large part, on our ability to
attract and retain talented employees who possess the experience and expertise
required to manage our business and its growth. Our current key executives
11
have substantial experience in our industry. The unexpected loss of services of
one or more of these individuals could adversely affect us. Likewise, our
inability to attract employees of a similar caliber in the future could have a
material negative impact on our plans for continued growth and business success.
WE MAY NOT BE ABLE TO RESPOND EFFECTIVELY TO COMPETITION.
We may not be able to respond in a timely or effective manner to the many
changes in the power industry that may occur as a result of regulatory
initiatives to increase competition. These regulatory initiatives may include
deregulation of the electric utility industry in some markets and privatization
of the electric utility industry in others. To the extent that competition
increases, our profit margins may be negatively affected. Industry deregulation
and privatization may not only continue to facilitate the current trend toward
consolidation in the utility industry but may also encourage the disaggregation
of other vertically integrated utilities into separate generation, transmission
and distribution businesses. As a result, additional competitors in our industry
may be created, and we may not be able to maintain our revenues and earnings
levels or pursue our growth strategy.
While demand for electric energy services is generally increasing
throughout the United States, the rate of construction and development of new,
more efficient electric generation facilities may exceed increases in demand in
some regional electric markets. The start-up of new facilities in the regional
markets in which we have facilities could increase competition in the wholesale
power market in those regions, which could have a material negative effect on
our business, results of operations and financial condition. Also, industry
restructuring in regions in which we have substantial operations could affect
our operations in a manner that is difficult to predict, since the effects will
depend on the form and timing of the restructuring.
OUR COSTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS ARE SIGNIFICANT, AND THE COST OF
COMPLIANCE WITH FUTURE ENVIRONMENTAL LAWS COULD ADVERSELY AFFECT OUR CASH FLOW
AND PROFITABILITY.
Our operations are subject to extensive federal, state and local
environmental statutes, rules and regulations relating to air quality, water
quality, waste management, natural resources and health and safety. Compliance
with these legal requirements requires us to commit significant capital toward
environmental monitoring, installation of pollution control equipment, emission
fees and permits at all of our facilities. These expenditures have been
significant in the past and we expect that they will increase in the future.
Costs of compliance with environmental regulations, and in particular emission
regulations, could have a material impact on our industry, our business and our
results of operations and financial position, especially if emission limits are
tightened, more extensive permitting requirements are imposed, additional
substances become regulated and the number and types of assets we operate
increase.
WE ANTICIPATE THAT WE WILL INCUR CONSIDERABLE CAPITAL COSTS FOR COMPLIANCE.
We plan to install new emissions control equipment and may be required to
upgrade existing equipment, purchase emissions allowances or reduce operations.
During the years 2002 and 2003, we expect to spend approximately $244.7 million
in connection with the installation of emission control equipment at our
facilities. Moreover, environmental laws are subject to change, which may
materially increase our costs of compliance or accelerate the timing of these
capital expenditures.
WE MAY EXPERIENCE SHUT DOWNS IF WE ARE UNABLE TO OBTAIN ALL REQUIRED
ENVIRONMENTAL APPROVALS.
We may not be able to obtain or maintain all required environmental
regulatory approvals. If there is a delay in obtaining any required
environmental regulatory approval or if we fail to obtain or comply with any
such approval, the affected facilities could be delayed in becoming operational,
temporarily closed or subjected to additional costs. Further, at some of our
older facilities it may be uneconomical for us to install the necessary
equipment, which may lead us to shut down or reduce the operations at certain
individual generating units.
CHANGES IN LAWS AND REGULATIONS COULD APPLY TO US.
New environmental laws and regulations affecting our operations may be
adopted, and new interpretations of existing laws and regulations could be
adopted or become applicable to us or our facilities. For example, the
12
laws governing nitrogen oxide (NOx) and sulfur dioxide (SO2) emissions from
coal-burning plants are being re-interpreted by federal and state authorities.
These re-interpretations could result in limitations on these emissions
substantially more stringent than those currently in effect. Our compliance
strategy, although reasonably based on the information available to us today,
may not successfully address the relevant standards and interpretations of the
future.
In addition, the Environmental Protection Agency, or EPA, is developing new
policies concerning protection of endangered species and sediment contamination,
based on a new interpretation of the Clean Water Act. The scope and extent of
any resulting environmental regulations, and their effect on our operations, are
unclear.
GOVERNMENTAL AUTHORITIES MAY ASSESS PENALTIES ON US FOR FAILURES TO COMPLY
WITH ENVIRONMENTAL LAWS AND REGULATIONS.
If we fail to comply with environmental laws and regulations, even if
caused by factors beyond our control, our failure may result in the assessment
of civil or criminal liability and fines against us. Recent lawsuits by the EPA
and various states highlight the environmental risks faced by generating
facilities, in general, and coal-fired generating facilities, in particular. For
example, the Attorneys General of New York and Connecticut notified us in 1999
of their intent to commence civil actions against us for alleged violations of
the Clean Air Act Amendments. If these actions were filed and if they were
resolved against us, substantial modifications of our existing coal-fired power
plants would be required. Similar actions may be commenced by other governmental
authorities in the future.
In addition, a number of our coal-fired facilities have been the subject of
a formal request for information from the EPA. If an enforcement proceeding or
litigation in connection with this request, or in connection with any proceeding
for non-compliance with environmental laws, were commenced and resolved against
us, we could be required to invest significantly in new emission control
equipment, accelerate the timing of capital expenditures, pay penalties and/or
halt operations. Moreover, our results of operations and financial position
could suffer due to the consequent distraction of management and the expense of
ongoing litigation. Other parties have settled similar lawsuits.
WE ARE UNLIKELY TO BE ABLE TO PASS ON THE COST OF ENVIRONMENTAL COMPLIANCE
TO OUR CUSTOMERS.
Most of our contracts with customers do not permit us to recover additional
capital and other costs incurred by us to comply with new environmental
regulations. As a result, to the extent these costs are incurred prior to the
expiration of these contracts, these costs could adversely affect our
profitability.
OUR REGULATED SUBSIDIARIES ARE AND MAY BECOME SUBJECT TO LEGAL CLAIMS ARISING
FROM THE PRESENCE OF ASBESTOS OR OTHER REGULATED SUBSTANCES AT CERTAIN OF OUR
FACILITIES.
Our regulated subsidiaries have been named as defendants in pending
asbestos litigation involving multiple plaintiffs and multiple defendants. In
addition, asbestos and other regulated substances are still present and may in
the future continue to be located at our facilities where suitable alternative
materials are not available. As a result, the currently pending litigation and
the continued presence of these regulated substances, which could result in
additional claims being brought against us, may adversely affect our business
and results of operations.
WE ARE NEGOTIATING A COLLECTIVE BARGAINING AGREEMENT, AND WE MAY SUFFER WORK
INTERRUPTIONS.
Since May 2001, our largest union representing over 1,100 of our employees
has been working under an expired contract. While we are in negotiations with
the union covered by the expired agreement and we do not currently anticipate
any problems in reaching a new agreement, there is a risk that a new agreement
may not be entered into without work interruptions or other pressure tactics.
Any lengthy work interruptions could materially and adversely affect our
business and financial position.
13
RISKS ASSOCIATED WITH A CHANGING ECONOMIC ENVIRONMENT
In response to the occurrence of several recent events, including the
September 11, 2001 terrorist attack on the United States, the ongoing war
against terrorism by the United States, and the bankruptcy of Enron Corp., the
financial markets have been disrupted in general, and the availability and cost
of capital for our business and that of our competitors has been adversely
affected. In addition, following the bankruptcy of Enron, the credit ratings
agencies initiated a thorough review of the capital structure and earnings power
of energy companies, including us. These events could constrain the capital
available to our industry and could adversely affect our access to funding for
our operations. Our business is capital intensive, and achievement of our growth
targets is dependent, at least in part, upon our ability to access capital at
rates and on terms we determine to be attractive. If our ability to access
capital becomes significantly constrained, our financial condition and future
results of operations could be significantly adversely affected.
FORWARD-LOOKING STATEMENTS
This prospectus contains or incorporates by reference forward-looking
statements, including statements regarding our results of operations, assets and
liabilities and statements with respect to deregulation activities and movements
toward competition in states that are served by our operations, markets,
products, services, prices, results of operations, capital expenditures,
resolution and impact of litigation, regulatory matters, liquidity, capital
resources and accounting matters. Such statements are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. You can typically identify forward-looking statements by the use of
forward-looking words, such as "may", "will", "could", "project", "believe",
"anticipate", "expect", "estimate", "continue", "potential", "plan", "forecast"
and the like. We cannot assure you that our actual results will not differ
materially from expectations or estimates. Actual results have varied materially
and unpredictably from past expectations and estimates. Factors that could cause
our actual results to differ materially include those discussed under "Risk
Factors" as well as:
o the weather and other natural phenomena;
o political, economic and business conditions;
o changes in environmental and other laws and regulations to which we
and our subsidiaries are subject, or other external factors over which
we have no control;
o growth in opportunities for our business units, including growth in
industry capacity;
o loss of any significant customers or suppliers;
o changes in technology;
o litigation; and
o the effect of accounting policies issued periodically by accounting
standard-setting bodies.
RATIOS OF EARNINGS TO FIXED CHARGES
Our consolidated ratios of earnings to fixed charges for each of the fiscal
years ended December 31, 1996 through 2000 and the nine months ended September
30, 2001 are as follows:
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
- ------------------------------------------------------------------- -------------------
1996 1997 1998 1999 2000 2001
- --------- ----------- ----------- ----------- ---------- ------------------
2.82 3.35 3.29 3.32 3.11 3.80
The ratio of earnings to fixed charges is calculated by dividing earnings
by fixed charges. Earnings means net income from continuing operations before
adjustment for minority interest in consolidated subsidiaries and income from
equity investees, plus fixed charges, plus income taxes, plus amortization of
capitalized interest,
14
plus distributed income of equity investees, less interest capitalized. Fixed
charges means interest expenses, plus interest capitalized, plus amortization of
debt issuance costs, plus estimated interest component of rental expense.
USE OF PROCEEDS
Unless otherwise indicated in a prospectus supplement, we expect to use the
net proceeds from the sale of the securities for general corporate purposes,
which may include, among other things, working capital, capital expenditures and
the repayment of short-term and long-term borrowings. Unless otherwise indicated
in an accompanying prospectus supplement, the Trusts will use all proceeds
received from the sale of preferred securities to purchase our subordinated debt
securities.
DESCRIPTION OF THE COMMON STOCK WE MAY OFFER
In this section, we describe the material features and rights of the common
stock we may offer. This summary does not purport to be exhaustive and is
qualified in its entirety by reference to applicable Maryland law, our charter,
by-laws and the Allegheny Stockholder Protection Rights Agreement, each of which
is filed as an exhibit to the registration statement of which this prospectus
forms a part. See "Where You Can Find More Information" on page 42.
GENERAL. We are authorized to issue 260,000,000 shares of common stock,
having a par value of $1.25 per share. The common stock is the only class of our
capital stock authorized or outstanding. Each share of our common stock has the
same relative rights as, and is identical in all respects to, each other share
of our common stock. As of December 31, 2001, there were 125,276,479 shares of
our common stock outstanding, held by 37,644 holders of record.
All outstanding shares of our common stock are, and any common stock
offered by a prospectus supplement, will be, duly authorized, fully paid and
nonassessable.
DIVIDEND RIGHTS. As a Maryland corporation and a public utility holding
company, we are subject to statutory and regulatory limitations on the
authorization and payment of dividends. Subject to these restrictions, our board
of directors may declare dividends on our common stock, payable at such times as
the board of directors may determine, out of legally available retained earnings
or net income. Retained earnings available for dividends on our common stock
amounted to $1,664.3 million at December 31, 2000.
If we declare a dividend, the holders of our common stock are entitled to
receive and share ratably in it. We will pay a dividend declared on the common
stock to the record holders as they appear in the register on the record date
for that dividend. The record date will not be more than forty days before the
dividend payment date, as fixed by our board of directors.
LIQUIDATION RIGHTS. Upon our liquidation, dissolution or winding-up, the
holders of our common stock are entitled to receive a ratable portion of the
assets available for distribution to stockholders after the satisfaction in full
of all the prior rights of our creditors, including holders of our indebtedness
and all liabilities.
VOTING RIGHTS. The holders of our common stock possess exclusive voting
rights in Allegheny Energy, including the right to elect our board of directors
and act on any matters required to be presented to them under Maryland law or
otherwise presented to them by our board of directors. Holders of our common
stock are entitled to one vote per share, with the right to cumulative voting in
the elections of directors. Cumulative voting means that each stockholder
entitled to vote in the election of directors has the right to that number of
votes equal to the number of shares of stock held by that stockholder multiplied
by the number of directors to be elected. These votes may be cast for a single
director or for any two or more directors standing for election.
Under Maryland law and our charter, the number of directors comprising our
board of directors may only be fixed by a vote of the board of directors. The
members of our board of directors are divided into three classes, as equal in
size as possible. The members of each class of directors serve a three-year
term, and the terms of the classes are staggered so that only one class is
elected annually. Directors may only be removed
15
with cause by the affirmative vote of at least two-thirds of all the votes
entitled to be cast by the stockholders generally in the election of directors.
Vacancies on the board of directors are filled by the affirmative vote of a
majority of the remaining directors, and any director elected to fill a vacancy
holds office for the remainder of the term of the class to which he is elected.
Because our board is classified, it may be more time consuming and
difficult to replace incumbent directors. At least two annual meetings of
stockholders, instead of one, will generally be required to change a majority of
the board of directors. Moreover, the combination of the classified board and
cumulative voting in the election of directors may make it more difficult for
challengers to defeat incumbent directors. Thus, the classified board could
increase the likelihood that incumbent directors retain their positions. Also,
the staggered terms of the classes of directors may delay, defer or prevent a
tender offer or an attempt to change control of Allegheny Energy.
Under Maryland law, a person that acquires "control shares" of a Maryland
corporation has no voting rights with respect to those control shares unless the
acquisition of the control shares is approved by two-thirds of the stockholders,
not including the acquiror, officers or executive directors of the corporation.
Control shares are those voting shares of stock which, when aggregated with all
other shares of stock owned or controlled by the acquiror, give the acquiror
voting power within certain statutory ranges. The acquiror is not able to vote
shares within any range of voting power for which stockholder approval has not
been obtained.
The Maryland control share statute does not apply to shares acquired in a
merger, consolidation or share exchange in which the corporation is a party or
if the control share acquisition is approved or exempted by the charter or
by-laws of the corporation. By taking away the voting rights of a person
acquiring control shares, the control share statute makes it more difficult to
effect a takeover of our company without first obtaining the approval of our
stockholders.
PRE-EMPTIVE RIGHTS. No holder of our common stock is entitled as a matter
of right to subscribe to any new or additional shares of common stock, or any
security convertible into common stock, unless the new or additional common
stock is offered for money and other than by a public offering. If these
pre-emptive rights become available to the holders of our common stock, the
period during which they may be exercised may be limited by the board to no less
than ten days after the mailing of the notice announcing their availability.
The holders of our common stock have no conversion or redemption rights.
STOCKHOLDER PROTECTION RIGHTS AGREEMENT
GENERAL. Each share of our common stock has attached to it one right. This
right is represented by the same certificate representing the common stock (or
in the case of uncertificated common stock, by the registration of the
associated share of common stock on our stock transfer books). Until the
separation date, which we describe below, the rights are transferred only with
the common stock. The rights are not exercisable until after the separation date
and they are subject to redemption or exchange, as described below. The rights
have an exercise price of $100 per right, subject to antidilution adjustment.
The rights expire at the close of business on March 6, 2010, unless we redeem
them earlier. Holding unexercised rights gives you no rights as a stockholder,
including, without limitation, the right to vote or to receive dividends.
SEPARATION DATE; SEPARATION OF RIGHTS FROM THE COMMON STOCK. The rights
will separate from our common stock at the earlier of two possible times. The
first such time is ten business days following a public announcement that a
person or group of affiliated or associated persons (which we refer to as an
"acquiring person") has acquired, or has the right to acquire, the ownership of
15% or more of the outstanding shares of our common stock. This is referred to
as the "share acquisition date". The second possible time is ten business days,
or a later date if so determined by our board of directors prior to any person
becoming an acquiring person, following the commencement of a tender or exchange
offer which would result in an acquiring person owning 15% or more of the
outstanding shares of our common stock. This is referred to as the "Flip-In
Date".
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EXERCISE OF RIGHTS. If any person or group becomes an acquiring person, we
will provide that each holder of a right, other than rights beneficially owned
by the acquiring person, whose rights will then be null and void, will have the
right to receive, upon exercise of the right at the current exercise price, that
number of shares of our common stock having a market value of two times the
exercise price of the right. If we are acquired in a merger or other business
combination transaction in which the acquiring person is treated differently
from other stockholders, or is a party to the transaction, or if 50% or more of
our consolidated assets or earning power are sold after a person or group has
become an acquiring person, we will provide that each holder of a right will
have the right to receive, upon exercise of the right at the current exercise
price, that number of shares of common stock of the acquiring company which, at
the time of the transaction, have a market value of two times the exercise price
of the right.
REDEMPTION OR EXCHANGE OF RIGHTS. At any time prior to the tenth day after
a share acquisition date, we may redeem the rights in whole, but not in part, at
a price of $0.01 per right. The redemption of the rights may be made effective
at such time, on such basis and with such conditions as our board of directors
may establish in its sole discretion. At any time after a Flip-In Date and prior
to the time when an acquiring person beneficially owns more than 50% of our
outstanding common stock, we may exchange the rights, other than rights
beneficially owned by the acquiring person, whose rights will then be null and
void, for shares of common stock at the rate of one share per right, subject to
antidilution adjustment.
ANTI-TAKEOVER EFFECTS. The rights will not prevent a takeover of us.
However, the rights may substantially dilute the voting strength of a person or
group that acquires 15% or more of our common stock, unless the rights are first
redeemed. The rights should not interfere with a transaction that is in the best
interests of us and our stockholders because the rights can be redeemed on or
prior to the Flip-In Date, before the consummation of any transaction.
DESCRIPTION OF THE DEBT SECURITIES WE MAY OFFER
UNLESS THE CONTEXT OTHERWISE INDICATES, THE TERMS "WE", "US" OR "OUR" THAT
ARE USED IN THIS SECTION ARE REFERENCES ONLY TO ALLEGHENY ENERGY, INC. WITHOUT
ANY OF ITS CONSOLIDATED SUBSIDIARIES.
We may issue senior or subordinated debt securities. Neither the senior
debt securities nor the subordinated debt securities will be secured by any of
our property or assets. Thus, by owning a debt security, you are one of our
unsecured creditors.
The senior debt securities will constitute part of our senior debt, will be
issued under a senior debt indenture described below and will rank equally with
all of our other unsecured and unsubordinated debt, including our debt that was
issued and is currently outstanding under an indenture.
The subordinated debt securities will constitute part of our subordinated
debt, will be issued under a subordinated debt indenture described below and
will be subordinate in right of payment to all of our "senior indebtedness", as
defined in the subordinated debt indenture. Senior indebtedness will include our
debt currently outstanding under the indenture referenced in the previous
paragraph. The prospectus supplement for any series of subordinated debt
securities will indicate the approximate amount of senior indebtedness
outstanding as of the end of the most recent fiscal quarter. Neither indenture
limits our ability to incur additional senior indebtedness.
"Debt securities" in this prospectus refers to both the senior debt
securities and the subordinated debt securities.
The senior debt securities and the subordinated debt securities are each
governed by a document called an "indenture" -- the senior debt indenture, in
the case of the senior debt securities, and the subordinated debt indenture, in
the case of the subordinated debt securities. Each indenture is a contract
between us and Bank One Trust Company, N.A., which acts as trustee. The
indentures are substantially identical, except for the provisions relating to
subordination, which are included only in the subordinated debt indenture.
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Reference to an indenture or a trustee with respect to any debt securities
means the indenture under which those debt securities are issued and the trustee
under that indenture.
The trustee under the indentures has two main roles:
o FIRST, the trustee can enforce your rights against us if we default.
There are some limitations on the extent to which the trustee acts on
your behalf.
o SECOND, the trustee performs administrative duties for us, such as
sending you interest payments, transferring your debt securities to a
new buyer if you sell and sending you notices.
The indentures permit us to issue different series of securities from time
to time. We may issue securities in such amounts, at such times and on such
terms as we wish. The debt securities may differ from one another in their
terms.
Debt securities may be sold at prices substantially below their face value,
and may be denominated in foreign currencies. The prospectus supplement will
describe:
o any special United States federal income tax or other considerations,
with respect to debt securities sold at an original issue discount;
and
o any special United States federal income tax or other considerations
with respect to debt securities which are denominated in a currency or
currency unit other than United States dollars.
Unless otherwise indicated in the prospectus supplement, the covenants
contained in the indentures and the debt securities will not afford holders of
the debt securities protection in the event of a sudden decline in credit rating
that might, for example, result from a highly leveraged transaction.
The indentures do not limit the aggregate amount of debt securities that we
may issue, nor do they limit the aggregate amount of any particular series.
SUMMARY OF TERMS OF DEBT SECURITIES
Because this section is a summary, it does not describe every aspect of the
debt securities. The indentures, any supplemental indentures and the debt
securities contain the full legal text of the matters described in this section.
This summary is subject to and qualified in its entirety by reference to all the
provisions of the indentures, including definitions of some of the terms used in
the indentures. A copy of each indenture is filed or incorporated by reference
as an exhibit to the registration statement relating to the debt securities.
This summary also is subject to and qualified by reference to the description of
the particular terms of your series described in any prospectus supplement. See
"Where You Can Find More Information" on page 42 for information on how to
obtain a copy of the indentures.
This section summarizes the material terms that will apply generally to the
debt securities. Each particular debt security will have financial and other
terms specific to it, and the specific terms of each debt security will be
described in the applicable prospectus supplement. Those terms may vary from the
terms described here. As you read this section, therefore, please remember that
the specific terms of your debt security as described in your prospectus
supplement will supplement and, if applicable, may modify or replace the general
terms described in this section. The statements we make in this section may not
apply to your debt security.
IN THE REMAINDER OF THIS DESCRIPTION, "YOU" MEANS DIRECT HOLDERS AND NOT
"STREET NAME" OR OTHER INDIRECT HOLDERS OF DEBT SECURITIES. INDIRECT HOLDERS
SHOULD READ THE SECTION ON PAGE 38 ENTITLED "LEGAL OWNERSHIP AND GLOBAL
SECURITIES--LEGAL OWNERSHIP--`STREET NAME' AND OTHER INDIRECT HOLDERS".
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FORM, EXCHANGE AND TRANSFER
The debt securities will be issued:
o only in fully registered form;
o without interest coupons; and
o in denominations that are even multiples of $1,000. (Section 302)
You may have your debt securities broken into more debt securities of
smaller denominations or combined into fewer debt securities of larger
denominations, as long as the total principal amount is not changed. This is
called an "exchange".
You may exchange or transfer debt securities at the office of the entity
performing the role of maintaining the list of registered holders, known as the
"Security Registrar", or at the office of any transfer agent that we designate
for that purpose. (Section 305)
You will not be required to pay a service charge to transfer or exchange
debt securities, but you may be required to pay any tax or other governmental
charge associated with the exchange or transfer. The transfer or exchange will
only be made if the Security Registrar or transfer agent, as applicable, is
satisfied with your proof of ownership.
If the debt securities are redeemable and we redeem less than all of the
debt securities of a particular series, we may block the transfer or exchange of
debt securities during the period beginning 15 days before the day we mail the
notice of redemption and ending on the day of that mailing, in order to freeze
the list of holders to prepare the mailing. We may also refuse to register
transfers or exchanges of debt securities selected for redemption, except that
we will continue to permit transfers and exchanges of the unredeemed portion of
any debt securities being partially redeemed. (Section 305)
PAYMENT AND PAYING AGENTS
We will pay interest to you if you are a direct holder listed in the
records of the Security Registrar or of the transfer agent, as applicable, at
the close of business on a particular day in advance of each due date for
interest, even if you no longer own any debt securities on the interest due
date. That particular day, usually about two weeks in advance of the interest
due date, is called the "Regular Record Date" and will be stated in the
prospectus supplement. (Section 307)
Holders buying and selling debt securities must work out between them how
to compensate for the fact that we will pay all the interest for an interest
period to the one who is the registered holder on the Regular Record Date. The
most common manner is to adjust the sales price of the debt securities to pro
rate interest fairly between buyer and seller. This pro rated interest amount is
called "accrued interest".
We will pay interest, principal and any other money due on the debt
securities at the trustee's corporate trust office. You must make arrangements
to have your payments picked up at or wired from that office. We may also choose
to pay interest by mailing checks.
"STREET NAME" AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR
BROKERS FOR INFORMATION ON HOW THEY WILL RECEIVE PAYMENTS.
We may also arrange for additional payment offices and may cancel or change
these offices, including our use of the trustee's corporate trust office. These
offices are called "Paying Agents". We are required to maintain a Paying Agent
in each place of payment for the debt securities. We must notify you of changes
in the Paying Agents for your series of debt securities. (Section 1002)
All interest, principal and any other money due on the debt securities that
is paid by us to a Paying Agent and remains unclaimed for two years after the
date on which the payment was due will be repaid to us. The holder of this debt
security may then seek payment of the unclaimed amount only from us. (Section
1003)
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MERGERS AND SIMILAR EVENTS
We are generally permitted to consolidate or merge with another company or
firm and to sell substantially all of our assets to another firm or to buy
substantially all of the assets of another firm, provided we obtain the
necessary regulatory approvals. However, we may not take any of these actions
unless the following conditions, among others, are met:
o Where we merge out of existence or sell our assets, the other firm may
not be organized under a foreign country's laws (that is, it must be a
corporation, partnership, trust or other entity organized under the
laws of a State or the District of Columbia or under federal law) and
it must agree to be legally responsible for the debt securities.
o The merger, sale of assets or other transaction must not cause a
default on the debt securities, and we must not already be in default
(unless the merger or other transaction would cure the default).
(Section 801)
MODIFICATION AND WAIVER
There are three types of changes we can make to the indentures and the debt
securities.
CHANGES REQUIRING YOUR APPROVAL. First, there are changes that cannot be
made to your debt securities without your specific approval. The following is a
list of those types of changes:
o change the stated maturity of the principal of or interest on any
debt securities;
o reduce any amounts due on any debt securities;
o reduce the amount of principal payable upon acceleration of the
maturity of any debt securities following a default;
o change the place or currency of payment on any debt securities;
o impair your right to sue for payment;
o if the debt securities are subordinated, modify the subordination
provisions in the subordinated debt indenture in a manner adverse to
the holders of the subordinated debt securities;
o reduce the percentage of holders of debt securities whose consent is
needed to modify or amend the applicable indenture;
o reduce the percentage of holders of debt securities whose consent is
needed to waive compliance with provisions of the applicable indenture
or to waive defaults; and
o modify any other aspect of the provisions dealing with modification
and waiver of the applicable indenture. (Section 902)
CHANGES REQUIRING A MAJORITY VOTE. The second type of change to a
particular indenture and the debt securities is the kind that requires a vote in
favor by holders of debt securities owning a majority of the principal amount of
the particular series affected. Most changes fall into this category, except for
clarifying changes and certain other changes that would not adversely affect
holders of the debt securities. The same vote would be required for us to obtain
a waiver of all or part of any covenants described in the prospectus supplement,
or a waiver of a past default. However, we cannot obtain a waiver of a payment
default or any other aspect of a particular indenture or the debt securities
listed in the first category described above under "--Changes Requiring Your
Approval" unless we obtain your individual consent to the waiver. (Section 513)
CHANGES NOT REQUIRING APPROVAL. The third type of change does not require
any approval by holders of debt securities. This type is limited to
clarifications and certain other changes that would not adversely affect holders
of the debt securities. (Section 901)
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FURTHER DETAILS CONCERNING VOTING
When taking a vote, we will use the following rules to decide how much
principal amount to attribute to a debt security:
o For discount debt securities, we will use the principal amount that
would be due and payable on the voting date if the maturity of the
debt securities were accelerated to that date because of a default.
o For debt securities whose principal amount is not known (for example,
because it is based on an index), we will use a special rule for that
debt security described in the prospectus supplement.
o For debt securities denominated in one or more foreign currencies or
currency units, we will use the U.S. dollar equivalent.
Debt securities will not be considered outstanding, and therefore are not
eligible to vote, if we have deposited or set aside in trust for you money for
their payment or redemption. Debt securities will also not be eligible to vote
if they have been fully defeased as described later on page 23 under
"--Defeasance--Full Defeasance". (Section 101)
We generally will be entitled to set any day as a record date for the
purpose of determining the holders of outstanding debt securities that are
entitled to vote or take other action under the applicable indenture. In certain
limited circumstances, the trustee will be entitled to set a record date for
action by holders. If we or the trustee set a record date for a vote or other
action to be taken by holders of a particular series, that vote or action may be
taken only by persons who are holders of outstanding securities of that series
on the record date and must be taken within 180 days following the record date
or a shorter period that we may specify (or as the trustee may specify if it
sets the record date). We may shorten or lengthen (but not beyond 180 days) this
period from time to time. (Section 104)
"STREET NAME" AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR
BROKERS FOR INFORMATION ON HOW APPROVAL MAY BE GRANTED OR DENIED IF WE SEEK TO
CHANGE THE INDENTURES OR THE DEBT SECURITIES OR REQUEST A WAIVER.
SUBORDINATION PROVISIONS
Unless the prospectus supplement provides otherwise, the following
provisions will apply to the subordinated debt securities.
Direct holders of subordinated debt securities should recognize that
contractual provisions in the subordinated debt indenture may prohibit us from
making payments on those securities. Subordinated debt securities are
subordinate and junior in right of payment, to the extent and in the manner
stated in the subordinated debt indenture, to all of our senior indebtedness, as
defined in the subordinated debt indenture, including all debt securities we
have issued and will issue under the senior debt indenture or other indenture
identified in the subordinated debt indenture.
(Section 1101 in the subordinated debt indenture)
Under the subordinated debt indenture, "senior indebtedness" includes all
of our obligations to pay principal, premium, interest, penalties, fees and
other charges:
o for borrowed money;
o in the form of or evidenced by other instruments, including
obligations incurred in connection with our purchase of property,
assets or businesses;
o under capital leases;
o under letters of credit, bankers' acceptances or similar facilities;
o issued or assumed in the form of a deferred purchase price of
property or services, such as master leases;
o under swaps and other hedging arrangements;
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o pursuant to our guarantee of another entity's obligations and all
dividend obligations guaranteed by us; and
o to satisfy the expenses and fees of the subordinated debt indenture
trustee under the subordinated debt indenture.
The following types of our indebtedness will not be "senior indebtedness":
o indebtedness we owe to a subsidiary of ours;
o indebtedness which, by its terms, expressly provides that it does not
rank senior to the subordinated debt securities;
o indebtedness incurred in the form of trade accounts payable or
accrued liabilities arising in the ordinary course of business;
o indebtedness we owe to any trust, other than the Trusts, or a trustee
of such trust, partnership or other entity affiliated with us, that
is our financing vehicle, and which has issued equity securities or
other securities that are similar to the preferred securities; and
o indebtedness we may incur in violation of the subordinated debt
indenture.
The subordinated debt indenture provides that, unless all principal of and
any premium or interest on the senior indebtedness has been paid in full, no
payment or other distribution may be made in respect of any subordinated debt
securities in the following circumstances:
o in the event of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization, assignment for creditors or
other similar proceedings or events involving us or our assets
(Section 1102 in the subordinated debt indenture); or
o (a) in the event and during the continuation of any default in the
payment of principal, premium, if any, or interest on any senior
indebtedness beyond any applicable grace period or (b) in the event
that any event of default with respect to any senior indebtedness has
occurred and is continuing, permitting the direct holders of that
senior indebtedness (or a trustee) to accelerate the maturity of that
senior indebtedness, whether or not the maturity is in fact
accelerated (unless, in the case of (a) or (b), the payment default or
event of default has been cured or waived or ceased to exist and any
related acceleration has been rescinded) or (c) in the event that any
judicial proceeding is pending with respect to a payment default or
event of default described in (a) or (b). (Section 1103 in the
subordinated debt indenture)
If the trustee under the subordinated debt indenture or any direct holders
of the subordinated debt securities receive any payment or distribution that is
prohibited under the subordination provisions, then the trustee or the direct
holders will have to repay that money to the direct holders of the senior
indebtedness. (Section 1103 in the subordinated debt indenture)
Even if the subordination provisions prevent us from making any payment
when due on the subordinated debt securities of any series, we will be in
default on our obligations under that series if we do not make the payment when
due. This means that the trustee under the subordinated debt indenture and the
direct holders of that series can take action against us, but they will not
receive any money until the claims of the direct holders of senior indebtedness
have been fully satisfied.
The prospectus supplement may include a description of additional terms
implementing the subordination feature.
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COVENANTS
The prospectus supplement for your series of debt securities may set forth
restrictive covenants with respect to your debt security.
DEFEASANCE
The following discussion of full defeasance and covenant defeasance will be
applicable to your series of debt securities only if we choose to have them
apply to that series. If we do so choose, we will inform you of this decision in
the prospectus supplement. (Section 1301 in the senior debt indenture; Section
1401 in the subordinated debt indenture)
FULL DEFEASANCE. If there is a change in federal tax law, as described
below, we can legally release ourselves from any payment or other obligations on
the debt securities (called "full defeasance") if we put in place the following
other arrangements for you to be repaid:
o We must deposit in trust for your benefit and the benefit of all other
direct holders of the debt securities a combination of money and U.S.
government or U.S. government agency notes or bonds that will generate
enough cash to make interest, principal and any other payments on the
debt securities on their various due dates.
o There must be a change in current federal tax law or an IRS ruling
that lets us make the above deposit without causing you to be taxed on
the debt securities any differently than if we did not make the
deposit and just repaid the debt securities ourselves. (Under current
federal tax law, the deposit and our legal release from the debt
securities would be treated as though we took back your debt
securities and gave you your share of the cash and notes or bonds
deposited in trust. In that event, you could recognize gain or loss on
the debt securities you give back to us.)
o We must deliver to the trustee a legal opinion of our counsel
confirming the tax law change described above. (Sections 1302 and
1304 in the senior debt indenture; Sections 1402 and 1404 in the
subordinated debt indenture)
o In the case of the subordinated debt securities, the following
requirement must also be met:
o no event or condition may exist that, under the provisions
described above under "--Subordination Provisions", would prevent
us from making payments of principal, premium or interest on those
subordinated debt securities on the date of the deposit referred
to above or during the 90 days after that date. (Section 1404 in
the subordinated debt indenture)
If we ever did accomplish full defeasance, as described above, you would
have to rely solely on the trust deposit for repayment on the debt securities.
You could not look to us for repayment in the unlikely event of any shortfall.
COVENANT DEFEASANCE. Under current federal tax law, we can make the same
type of deposit described above and be released from some of the restrictive
covenants in the debt securities that may be described in the applicable
prospectus supplement. This is called "covenant defeasance". In that event, you
would lose the protection of those restrictive covenants but would gain the
protection of having money and securities set aside in trust to repay the debt
securities. In order to achieve covenant defeasance, we must do the following:
o We must deposit in trust for your benefit and the benefit of all other
direct holders of the debt securities a combination of money and U.S.
government or U.S. government agency notes or bonds that will generate
enough cash to make interest, principal and any other payments on the
debt securities on their various due dates.
o We must deliver to the trustee a legal opinion of our counsel
confirming that under current federal income tax law we may make the
above deposit without causing you to be taxed on the debt securities
any differently than if we did not make the deposit and just repaid
the debt securities ourselves.
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If we accomplish covenant defeasance, the following provisions of the
indentures and the debt securities would no longer apply:
o Covenants applicable to the series of debt securities and described
in the prospectus supplement.
o The events of default relating to breach of covenants and acceleration
of the maturity of other debt, described below under "--Events of
Default".
In addition, in the case of the subordinated debt securities, the
provisions described above under "--Subordination Provisions" will not apply if
we accomplish covenant defeasance.
If we accomplish covenant defeasance, you can still look to us for
repayment of the debt securities if there is a shortfall in the trust deposit.
In fact, if one of the remaining events of default occurs (such as our
bankruptcy) and the debt securities become immediately due and payable, there
may be such a shortfall. Depending on the event causing the default, you may not
be able to obtain payment of the shortfall. (Sections 1303 and 1304 in the
senior debt indenture; Sections 1403 and 1404 in the subordinated debt
indenture)
EVENTS OF DEFAULT
You will have special rights if an event of default occurs and is not
cured, as described later in this subsection.
WHAT IS AN EVENT OF DEFAULT? The term "event of default" for the debt
securities means any of the following:
o We do not pay the principal of or any premium on a debt security
on its due date.
o We do not pay interest on a debt security within 30 days of its
due date.
o We do not deposit any sinking fund payment on its due date.
o We remain in breach of a covenant of an indenture for 60 days after we
receive a notice of default stating we are in breach. The notice must
be sent by either the trustee or holders of 10% of the principal
amount of debt securities of the affected series.
o We file for bankruptcy or certain other events in bankruptcy,
insolvency or reorganization occur.
o Any other event of default described in the prospectus supplement
occurs. (Section 501)
REMEDIES IF AN EVENT OF DEFAULT OCCURS. If you are the holder of a
subordinated debt security, all remedies available upon the occurrence of an
event of default under the subordinated debt indenture will be subject to the
restrictions on the subordinated debt securities described above under
"--Subordination Provisions". If an event of default has occurred and has not
been cured, the trustee or the holders of 25% in principal amount of the debt
securities of the affected series may declare the entire principal amount of all
the debt securities of that series to be due and immediately payable. If an
event of default occurs because of certain events in bankruptcy, insolvency or
reorganization, the principal amount of all the debt securities of that series
will be automatically accelerated, without any action by the trustee or any
holder. A declaration of acceleration of maturity may be canceled by the holders
of at least a majority in principal amount of the debt securities of the
affected series.
(Section 502)
Except in cases of default, where the trustee has some special duties, the
trustee is not required to take any action under the indentures at the request
of any holders unless the holders offer the trustee reasonable protection from
expenses and liability (called an "indemnity"). If reasonable indemnity is
provided, the holders of a majority in principal amount of the outstanding debt
securities of the relevant series may direct the time, method and place of
conducting any lawsuit or other formal legal action seeking any remedy available
to the trustee. These majority holders may also direct the trustee in performing
any other action under the applicable indenture. (Section 512)
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Before you bypass the trustee and bring your own lawsuit or other formal
legal action or take other steps to enforce your rights or protect your
interests relating to the debt securities, the following must occur:
o You must give the trustee written notice that an event of default has
occurred and remains uncured.
o The holders of 25% in principal amount of all outstanding debt
securities of the relevant series must make a written request that the
trustee take action because of the default, and must offer reasonable
indemnity to the trustee against the cost and other liabilities of
taking that action.
o The trustee must have not taken action for 60 days after receiving
the notice and offer of indemnity. (Section 507)
However, you are entitled at any time to bring a lawsuit for the payment
of money due on your debt security on or after its due date. (Section 508)
"STREET NAME" AND OTHER INDIRECT HOLDERS SHOULD CONSULT THEIR BANKS OR
BROKERS FOR INFORMATION ON HOW TO GIVE NOTICE OR DIRECTION TO OR MAKE A REQUEST
OF THE TRUSTEE AND TO MAKE OR CANCEL A DECLARATION OF ACCELERATION.
We will furnish to the trustee every year a written statement of certain of
our officers certifying that to their knowledge we are in compliance with the
applicable indenture and the debt securities, or else specifying any default.
(Section 1004)
SATISFACTION AND DISCHARGE
Either indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of debt
securities) as to all outstanding debt securities under that indenture when:
o either (a) all such debt securities theretofore authenticated and
delivered (except lost, stolen or destroyed debt securities that
have been replaced or paid and debt securities for whose payment
money has been deposited in trust or segregated and held in trust
by us and repaid to us or discharged from such trust) have been
delivered to the trustee for cancellation or (b) all such debt
securities not theretofore delivered to the trustee for
cancellation have become due and payable, will become due and
payable at the stated maturity date within one year, or are to be
called for redemption within one year under arrangements
satisfactory to the trustee for the giving of notice of redemption
by the trustee in our name, and at our expense, and we have
deposited or caused to be deposited with the trustee as trust
funds in trust for the purpose money in an amount sufficient to
pay and discharge the entire indebtedness on the debt securities
not theretofore delivered to the trustee for cancellation, for
principal amount, premium, if any, and interest to the date of
such deposit (in the case of debt securities which have become due
and payable) or to the stated maturity date or a redemption date,
as the case may be;
o we have paid or caused to be paid all other sums payable by us under
the indenture; and
o we have delivered to the trustee an officers' certificate and an
opinion of counsel stating that all conditions precedent to
satisfaction and discharge have been complied with. (Section 401)
REGARDING THE TRUSTEE
The trustee under the indentures for the debt securities will be Bank One
Trust Company, N.A. Bank One Trust Company, N.A. is the institutional trustee
and its affiliate, Bank One Delaware, Inc., is the Delaware trustee for each of
the Trusts, and Bank One Trust Company, N.A. is the trustee for each trust
guarantee relating to the Trusts. In addition, we and Allegheny Energy Supply
have a commercial banking relationship with Bank One Capital Markets, Inc. and
Bank One, N.A., each of which is an affiliate of Bank One Trust Company, N.A.
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If an event of default (or an event that would be an event of default if
the requirements for giving us default notice or for our default having to exist
for a specific period of time were disregarded) occurs, the trustee may be
considered to have a conflicting interest for purposes of the Trust Indenture
Act of 1939 with respect to the debt securities. In that case, the trustee may
be required to resign as trustee and we would be required to appoint a successor
trustee.
DESCRIPTION OF THE WARRANTS WE MAY OFFER
GENERAL
We may issue warrants to purchase senior debt securities, subordinated debt
securities and common stock or any combination of these securities. Warrants may
be issued by us independently or together with any underlying securities and may
be attached or separate from the underlying securities. We will issue each
series of warrants under a separate warrant agreement to be entered into between
us and a warrant agent. The warrant agent will act solely as our agent in
connection with the warrants of such series and will not assume any obligation
or relationship of agency for or with holders or beneficial owners of warrants.
The following discussion outlines some of the general terms and provisions
of the warrants. Further terms of the warrants and the applicable warrant
agreement will be stated in the applicable prospectus supplement. The following
description and any description of the warrants in a prospectus supplement may
not be complete and is subject to and qualified in its entirety by reference to
the terms and provisions of the warrant agreement, a form of which has been
filed as an exhibit to the registration statement which contains this
prospectus.
The applicable prospectus supplement will describe the terms of any
warrants that we may offer, including the following:
o the title of the warrants;
o the total number of warrants;
o the price or prices at which the warrants will be issued;
o the currency or currencies investors may use to pay for the warrants;
o the designation and terms of the underlying securities purchasable
upon exercise of the warrants;
o the price at which and the currency or currencies, including composite
currencies, in which investors may purchase the underlying securities
purchasable upon exercise of the warrants;
o the date on which the right to exercise the warrants will commence
and the date on which the right will expire;
o whether the warrants will be issued in registered form or bearer form;
o information with respect to book-entry procedures, if any;
o if applicable, the minimum or maximum amount of warrants which may be
exercised at any one time;
o if applicable, the designation and terms of the underlying securities
with which the warrants are issued and the number of warrants issued
with each underlying security;
o if applicable, the date on and after which the warrants and the
related underlying securities will be separately transferable;
o if applicable, a discussion of material United States federal income
tax considerations;
o the identity of the warrant agent;
o the procedures and conditions relating to the exercise of the
warrants; and
o any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
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Warrant certificates may be exchanged for new warrant certificates of
different denominations, and warrants may be exercised at the warrant agent's
corporate trust office or any other office indicated in the applicable
prospectus supplement. Prior to the exercise of their warrants, holders of
warrants exercisable for debt securities will not have any of the rights of
holders of the debt securities purchasable upon such exercise and will not be
entitled to payments of principal (or premium, if any) or interest, if any, on
the debt securities purchasable upon such exercise. Prior to the exercise of
their warrants, holders of warrants exercisable for shares of common stock will
not have any rights of holders of the common stock purchasable upon such
exercise and will not be entitled to dividend payments, if any, or voting rights
of the common stock purchasable upon such exercise.
EXERCISE OF WARRANTS
A warrant will entitle the holder to purchase for cash an amount of
securities at an exercise price that will be stated in, or that will be
determinable as described in, the applicable prospectus supplement. Warrants may
be exercised up to the close of business on the expiration date set forth in the
applicable prospectus supplement. After the close of business on the expiration
date, unexercised warrants will become void.
Warrants may be exercised as set forth in the applicable prospectus
supplement. Upon receipt of payment and the warrant certificate properly
completed and duly executed at the corporate trust office of the warrant agent
or any other office indicated in the prospectus supplement, we will, as soon as
practicable, forward the securities purchasable upon such exercise. If less than
all of the warrants represented by such warrant certificate are exercised, a new
warrant certificate will be issued for the remaining warrants.
ENFORCEABILITY OF RIGHTS; GOVERNING LAW
The holders of warrants, without the consent of the warrant agent, may, on
their own behalf and for their own benefit, enforce, and may institute and
maintain any suit, action or proceeding against us to enforce their rights to
exercise and receive the securities purchasable upon exercise of their warrants.
Unless otherwise stated in the prospectus supplement, each issue of warrants and
the applicable warrant agreement will be governed by the laws of the State of
New York.
DESCRIPTION OF THE STOCK PURCHASE CONTRACTS WE MAY OFFER
We may issue stock purchase contracts, which are contracts obligating
holders to purchase from or sell to us, and obligating us to purchase from or
sell to the holders, a specified number of shares of our common stock at a
future date or dates. The price per share of common stock may be fixed at the
time the stock purchase contracts are issued or may be determined by reference
to a specific formula contained in the stock purchase contracts. We may issue
stock purchase contracts in such amounts and in as many distinct series as we
wish.
The prospectus supplement may contain, where applicable, the following
information about the stock purchase contracts issued under it:
o whether the stock purchase contracts obligate the holder to purchase
or sell, or both purchase and sell, our common stock and the nature
and amount of common stock, or the method of determining that amount;
o whether the stock purchase contracts are to be prepaid or not;
o whether the stock purchase contracts are to be settled by delivery, or
by reference or linkage to the value, performance or level of our
common stock;
o any acceleration, cancellation, termination or other provisions
relating to the settlement of the stock purchase contracts; and
o whether the stock purchase contracts will be issued in fully
registered or global form.
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The applicable prospectus supplement will describe the terms of any stock
purchase contracts. The preceding description and any description of stock
purchase contracts in the applicable prospectus supplement does not purport to
be complete and is subject to and is qualified in its entirety by reference to
the stock purchase contract agreement and, if applicable, collateral
arrangements and depository arrangements relating to such stock purchase
contracts.
DESCRIPTION OF UNITS WE MAY OFFER
We may issue units comprised of one or more of the other securities
described in this prospectus in any combination. Each unit will be issued so
that the holder of the unit is also the holder of each security included in the
unit. Thus, the holder of a unit will have the rights and obligations of a
holder of each included security. The unit agreement under which a unit is
issued may provide that the securities included in the unit may not be held or
transferred separately, at any time or at any time before a specified date.
The applicable prospectus supplement may describe:
o the designation and terms of the units and of the securities
comprising the units, including whether and under what circumstances
those securities may be held or transferred separately;
o any provisions for the issuance, payment, settlement, transfer or
exchange of the units or of the securities comprising the units; and
o whether the units will be issued in fully registered or global form.
The applicable prospectus supplement will describe the terms of any units.
The preceding description and any description of units in the applicable
prospectus supplement does not purport to be complete and is subject to and is
qualified in its entirety by reference to the unit agreement and, if applicable,
collateral arrangements and depositary arrangements relating to such units.
DESCRIPTION OF PREFERRED SECURITIES THAT THE TRUSTS MAY OFFER
The following summary outlines the material terms and provisions of the
preferred securities that any one of the Trusts may offer. The particular terms
of any preferred securities a Trust offers and the extent, if any, to which
these general terms and provisions may or may not apply to the preferred
securities will be described in the applicable prospectus supplement.
A Trust will issue the preferred securities under an amended and restated
declaration of trust, which we will enter into at the time of any offering of
preferred securities by the issuing Trust. The amended and restated declaration
of trust for the Trust is subject to and governed by the Trust Indenture Act of
1939; Bank One Delaware, Inc. will act as Delaware trustee and Bank One Trust
Company, N.A. will act as institutional trustee under the amended and restated
declaration of trust for the purposes of compliance with the provisions of the
Trust Indenture Act. The terms of the preferred securities will be those
contained in the applicable amended and restated declaration of trust and those
made part of the amended and restated declaration of trust by the Trust
Indenture Act and the Delaware Business Trust Act. The following summary may not
be complete and is subject to and qualified in its entirety by reference to the
form of amended and restated declaration of trust, which is filed as an exhibit
to the registration statement which contains this prospectus, the Trust
Indenture Act and the Delaware Business Trust Act.
The discussion in this section is applicable to all of the Trusts. However,
for the remainder of this section, we refer to "Trust" in the singular, which
shall mean the Trust that is issuing preferred securities.
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TERMS
The amended and restated declaration of trust will provide that the Trust
may issue, from time to time, only one series of preferred securities and one
series of common securities. The preferred securities will be offered to
investors and the common securities will be held by us. The terms of the
preferred securities, as a general matter, will mirror the terms of the
subordinated debt securities that we will issue to the Trust in exchange for the
proceeds of the sales of the preferred and common securities. If we fail to make
a payment on the subordinated debt securities, the Trust holding those
securities will not have sufficient funds to make related payments, including
distributions, on its preferred securities.
You should refer to the applicable prospectus supplement relating to the
preferred securities for specific terms of the preferred securities, including,
but not limited to:
o the distinctive designation of the preferred securities and common
securities;
o the total and per-security liquidation amount of the preferred
securities;
o the annual distribution rate, or method of determining the rate at
which the Trust issuing the common securities and preferred securities
will pay distributions, on the preferred securities and the date or
dates from which distributions will accrue;
o the date or dates on which the distributions will be payable and
any corresponding record dates;
o whether distributions on preferred securities will 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 preferred securities will be cumulative;
o the right, if any, to defer distributions on the preferred securities
upon extension of the interest payment period of the related
subordinated debt securities;
o whether the preferred securities are to be issued in book-entry form
and represented by one or more global certificates and, if so, the
depositary for the global certificates and the specific terms of the
depositary arrangement;
o the amount or amounts which will be paid out of the assets of the
Trust issuing the securities to the holders of preferred securities
upon voluntary or involuntary dissolution, winding-up or termination
of the Trust;
o any obligation of the Trust to purchase or redeem preferred
securities issued by it and the terms and conditions relating to any
redemption obligation;
o any voting rights of the preferred securities;
o any terms and conditions upon which the subordinated debt securities
held by the Trust issuing the securities may be distributed to holders
of preferred securities;
o any securities exchange on which the preferred securities will be
listed; and
o any other relevant rights, preferences, privileges, limitations or
restrictions of the preferred securities not inconsistent with the
amended and restated declaration of trust or with applicable law.
We will guarantee the preferred securities to the extent described below
under "Description of Trust Guarantees". Our guarantee, when taken together with
our obligations under the subordinated debt securities and the related
subordinated debt indenture, and our obligations under the amended and restated
declaration of trust, would provide a full, irrevocable and unconditional
guarantee of amounts due on any preferred securities. Certain United States
federal income tax considerations applicable to any offering of preferred
securities will be described in the applicable prospectus supplement.
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LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Unless otherwise specified in an applicable prospectus supplement, the
amended and restated declaration of trust will state that the Trust will be
dissolved:
o on the expiration of the term of the Trust;
o upon bankruptcy, dissolution or liquidation of us or the holder of
the common securities of the Trust;
o upon our written direction to the institutional trustee to dissolve
the Trust and distribute the related subordinated debt securities
directly to the holders of the preferred securities and common
securities;
o upon the redemption by the Trust of all of the preferred and common
securities in accordance with their terms; or
o upon entry of a court order for the dissolution of the Trust.
Unless otherwise specified in an applicable prospectus supplement, in the
event of a dissolution as described above other than in connection with
redemption, after the Trust satisfies all liabilities to its creditors as
provided by applicable law, each holder of the preferred or common securities
issued by the Trust will be entitled to receive:
o the related subordinated debt securities in an aggregate principal
amount equal to the aggregate liquidation amount of the preferred or
common securities held by the holder; or
o cash equal to the aggregate liquidation amount of the preferred or
common securities held by the holder, plus accumulated and unpaid
distributions to the date of payment.
If the Trust cannot pay the full amount due on its preferred and common
securities because it has insufficient assets available for payment, then the
amounts payable by the Trust on its preferred and common securities will be paid
on a PRO RATA basis. However, if an event of default under the subordinated debt
indenture has occurred and is continuing with respect to any series of related
subordinated debt securities, the total amounts due on the preferred securities
will be paid before any distribution on the common securities.
EVENTS OF DEFAULT
The following will be events of default under the amended and restated
declaration of trust:
o an event of default under the subordinated debt indenture occurs
with respect to any related series of subordinated debt
securities; or
o any other event of default, if any, specified in the applicable
prospectus supplement occurs.
If an event of default with respect to a related series of subordinated
debt securities occurs and is continuing under the subordinated debt indenture,
and the subordinated debt indenture trustee fails to declare the principal
amount of all of such subordinated debt securities to be immediately due and
payable, the holders of at least 25% in aggregate liquidation amount of the
outstanding preferred securities of the Trust holding such subordinated debt
securities will have the right to instruct the trustee to declare that the
principal amount of all of such subordinated debt securities be immediately due
and payable.
At any time after a declaration of acceleration has been made by the
trustee with respect to a related series of subordinated debt securities and
before a judgment or decree for payment of the money due has been obtained, the
holders of a majority in liquidation amount of the affected preferred securities
may instruct the trustee to rescind any declaration of acceleration with respect
to the related subordinated debt securities and its consequences:
o if we deposit funds with the subordinated debt indenture trustee
sufficient to pay all overdue principal of and premium and interest on
the related subordinated debt securities and other amounts due to the
subordinated debt indenture trustee; and
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o if all existing events of default with respect to the related
subordinated debt securities have been cured or waived except
non-payment of principal on the related subordinated debt securities
that has become due solely because of the acceleration.
The holders of a majority in liquidation amount of the affected preferred
securities may instruct the trustee to waive any past default under the
subordinated debt indenture with respect to related subordinated debt
securities, other than a default in the payment of principal of, or any premium
or interest on, any related subordinated debt security or a default with respect
to a covenant or provision that cannot be amended or modified without the
consent of the holder of each affected outstanding related subordinated debt
security. In addition, the holders of at least a majority in liquidation amount
of the affected preferred securities may waive any past default under the
amended and restated declaration of trust.
The holders of a majority in liquidation amount of the affected preferred
securities shall have the right to direct the time, method and place of
conducting any proceedings for any remedy available to the institutional trustee
or to direct the exercise of any trust or power conferred on the institutional
trustee under the amended and restated declaration of trust.
A holder of preferred securities may institute a legal proceeding directly
against us, without first instituting a legal proceeding against the
institutional trustee or anyone else, for enforcement of payment to the holder
of principal and any premium or interest on the related series of subordinated
debt securities having a principal amount equal to the aggregate liquidation
amount of the preferred securities of the holder, if we fail to pay principal
and any premium or interest on the related series of subordinated debt
securities when payable.
We are required to furnish annually, to the institutional trustee for the
Trust, officers' certificates to the effect that, to the best knowledge of the
individuals providing the certificates, we and the Trust are not in default
under the applicable amended and restated declaration of trust or, if there has
been a default, specifying the default and its status.
CONSOLIDATION, MERGER OR AMALGAMATION OF THE TRUST
The Trust may not consolidate or merge with or into, or be replaced by, or
convey, transfer or lease its properties and assets substantially as an entirety
to, any entity, except as described below or as described in "-- Liquidation
Distribution Upon Dissolution". The Trust may, with the consent of the
administrative trustees but without the consent of the holders of the
outstanding preferred securities or the other trustees of the Trust, consolidate
or merge with or into, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to, a trust organized under
the laws of any State if:
o the successor entity either:
o expressly assumes all of the obligations of the Trust relating
to its preferred and common securities; or
o substitutes for the Trust's preferred securities other securities
having substantially the same terms as the preferred securities,
so long as the substituted successor securities rank the same as
the preferred securities for distributions and payments upon
liquidation, redemption and otherwise;
o we appoint a trustee of the successor entity who has substantially
the same powers and duties as the institutional trustee of the Trust;
o the successor securities are listed or traded, or any substituted
successor securities will be listed upon notice of issuance, on the
same national securities exchange or other organization on which the
preferred securities are then listed or traded, if any;
o the merger event does not cause the preferred securities or any
substituted successor securities to be downgraded by any national
rating agency;
o the merger event does not adversely affect the rights, preferences and
privileges of the holders of the preferred or common securities or any
substituted successor securities in any material respect;
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o the successor entity has a purpose substantially identical to that
of the Trust;
o prior to the merger event, we shall provide to the Trust an opinion
of counsel from a nationally recognized law firm stating that:
o the merger event does not adversely affect the rights, preferences
and privileges of the holders of the Trust's preferred or common
securities in any material respect;
o following the merger event, neither the Trust nor the successor
entity will be required to register as an investment company under
the Investment Company Act of 1940; and
o following the merger event, the Trust or the successor entity will
continue to be classified as a grantor trust for United States
federal income tax purposes;
o we own, or our permitted transferee owns, all of the common
securities of the successor entity so long as any preferred
securities are outstanding; and
o we guarantee or our permitted transferee guarantees the obligations of
the successor entity under the substituted successor securities at
least to the extent provided under the applicable preferred securities
guarantee.
In addition, unless all of the holders of the preferred securities approve
otherwise, the Trust may not consolidate, amalgamate or merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any other entity, or permit any other entity to
consolidate, amalgamate, merge with or into or replace it if the transaction
would cause the Trust or the successor entity to be taxable as a corporation or
classified other than as a grantor trust for United States federal income tax
purposes.
VOTING RIGHTS
Unless otherwise specified in the applicable prospectus supplement, the
holders of the preferred securities will have no voting rights except as
discussed below and under "--Amendment to the Trust Agreement" and "Description
of Trust Guarantees--Modification of the Trust Guarantee; Assignment" and as
otherwise required by law.
If any proposed amendment to the amended and restated declaration of trust
provides for, or the administrative trustees of the Trust otherwise propose to
effect:
o any action that would adversely affect the powers, preferences or
special rights of the preferred securities in any material respect,
whether by way of amendment to the amended and restated declaration of
trust or otherwise; or
o the dissolution, winding-up or termination of the Trust other than
pursuant to the terms of the amended and restated declaration
of trust,
then the holders of the affected preferred securities as a class will be
entitled to vote on the amendment or proposal. In that case, the amendment or
proposal will be effective only if approved by the holders of at least a
majority in aggregate liquidation amount of the affected preferred securities.
The holders of a majority in aggregate liquidation amount of the preferred
securities issued by the Trust have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the institutional
trustee, or direct the exercise of any trust or power conferred upon the
institutional trustee under the amended and restated declaration of trust,
including the right to direct the institutional trustee, as holder of the
subordinated debt securities, to:
o direct the time, method and place of conducting any proceeding for
any remedy available to the subordinated debt indenture trustee for
any related subordinated debt securities or execute any trust or
power conferred on the subordinated debt indenture trustee with
respect to the related subordinated debt securities;
32
o waive certain past defaults under the subordinated debt indenture with
respect to any related subordinated debt securities;
o cancel an acceleration of the maturity of the principal of any
related subordinated debt securities; or
o consent to any amendment, modification or termination of the
subordinated debt indenture or any related subordinated debt
securities where consent is required.
In addition, before taking any of the foregoing actions, we will provide to
the institutional trustee an opinion of counsel experienced in such matters to
the effect that, as a result of such actions, the Trust will not be taxable as a
corporation or classified as other than a grantor trust for United States
federal income tax purposes.
The institutional trustee will notify all preferred securities holders of
the Trust of any notice of default received from the subordinated debt indenture
trustee with respect to the subordinated debt securities held by the Trust.
Any required approval of the holders of preferred securities may be given
at a meeting of the holders of the preferred securities convened for the purpose
or pursuant to written consent. The administrative trustees will cause a notice
of any meeting at which holders of common securities and preferred securities
are entitled to vote to be given to each holder of record of the preferred
securities at the holder's registered address at least seven days and not more
than 60 days before the meeting.
No vote or consent of the holders of the preferred securities will be
required for the Trust to redeem and cancel its preferred securities in
accordance with its amended and restated declaration of trust.
Notwithstanding that holders of the preferred securities are entitled to
vote or consent under any of the circumstances described above, any of the
preferred securities that are owned by us or any affiliate of ours will, for
purposes of any vote or consent, be treated as if they were not outstanding.
AMENDMENT TO THE TRUST AGREEMENT
The amended and restated declaration of trust may be amended from time to
time by us and the institutional trustee and the administrative trustees of the
Trust, without the consent of the holders of the preferred securities, to:
o cure any ambiguity or correct or supplement any provision which may
be defective or inconsistent with any other provision;
o add to the covenants, restrictions or obligations of the sponsor; or
o modify, eliminate or add to any provisions to the extent necessary to
ensure that the Trust will not be taxable as a corporation or
classified as other than a grantor trust for United States federal
income tax purposes, to ensure that the subordinated debt securities
held by the Trust are treated as indebtedness for United States
federal income tax purposes or to ensure that the Trust will not be
required to register as an investment company under the Investment
Company Act of 1940;
PROVIDED, HOWEVER, that, in each case, the amendment would not adversely affect
in any material respect the interests of the holders of the preferred
securities.
Other amendments to the amended and restated declaration of trust may be
made by us and the trustees of the Trust upon approval of the holders of a
majority in aggregate liquidation amount of the outstanding preferred securities
of the Trust and receipt by the trustees of an opinion of counsel to the effect
that the amendment will not cause the Trust to be taxable as a corporation or
classified as other than a grantor trust for United States federal income tax
purposes, affect the treatment of the subordinated debt securities held by the
Trust as indebtedness for United States federal income tax purposes or affect
the Trust's exemption from the Investment Company Act of 1940.
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Notwithstanding the foregoing, without the consent of each affected holder
of common or preferred securities of the Trust, an amended and restated
declaration of trust may not be amended to:
o change the amount or timing of any distribution on the common
securities or preferred securities of the Trust or otherwise adversely
affect the amount of any distribution required to be made in respect
of the common securities or preferred securities as of a specified
date;
o change any of the redemption provisions; or
o restrict the right of a holder of any common securities or preferred
securities to institute suit for the enforcement of any payment on or
after the distribution date.
REMOVAL AND REPLACEMENT OF TRUSTEES
Unless an event of default exists under the subordinated debt securities,
we may remove the institutional trustee and the Delaware trustee at any time. If
an event of default exists, the institutional trustee and the Delaware trustee
may be removed only by the holders of a majority in liquidation amount of the
outstanding preferred securities. In no event will the holders of the preferred
securities have the right to vote to appoint, remove or replace the
administrative trustees, because these voting rights are vested exclusively in
us as the holder of all the Trust's common securities. No resignation or removal
of the institutional trustee or the Delaware trustee and no appointment of a
successor trustee shall be effective until the acceptance of appointment by the
successor trustee in accordance with the amended and restated declaration of
trust.
MERGER OR CONSOLIDATION OF TRUSTEES
Any entity into which the institutional trustee or the Delaware trustee may
be merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which the trustee
shall be a party, or any entity succeeding to all or substantially all of the
corporate trust business of the trustee, shall be the successor of the trustee
under the applicable amended and restated declaration of trust; provided,
however, that the entity shall be otherwise qualified and eligible.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
For matters relating to compliance with the Trust Indenture Act of 1939,
the institutional trustee for the Trust will have all of the duties and
responsibilities of an indenture trustee under the Trust Indenture Act of 1939.
Except if an event of default exists under the amended and restated declaration
of trust, the institutional trustee will undertake to perform only the duties
specifically set forth in the amended and restated declaration of trust. While
such an event of default exists, the institutional trustee must exercise the
same degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to this provision, the institutional
trustee is not obligated to exercise any of the powers vested in it by the
amended and restated declaration of trust at the request of any holder of
preferred securities, unless it is offered reasonable indemnity against the
costs, expenses and liabilities that it might incur. But the holders of
preferred securities will not be required to offer indemnity if the holders, by
exercising their voting rights, direct the institutional trustee to take any
action following a declaration event of default.
Bank One Trust Company, N.A., which is the institutional trustee for the
Trusts, also serves as the senior debt indenture trustee, the subordinated debt
indenture trustee and the guarantee trustee under the trust guarantee described
below. We and certain of our affiliates maintain banking relationships with Bank
One Trust Company, N.A. and certain of its affiliates, which relationships are
described above under "Description of Debt Securities We May Offer--Regarding
the Trustee".
MISCELLANEOUS
The administrative trustees of the Trust are authorized and directed to
conduct the affairs of and to operate the Trust in such a way that:
34
o the Trust will not be taxable as a corporation or classified as
other than a grantor trust for United States federal income tax
purposes;
o the subordinated debt securities held by the Trust will be treated as
indebtedness of ours for United States federal income tax purposes;
and
o the Trust will not be deemed to be an investment company required
to be registered under the Investment Company Act of 1940.
The administrative trustees are authorized to take any action, so long as
it is consistent with applicable law, the certificate of trust or the amended
and restated declaration of trust, that the administrative trustees determine to
be necessary or desirable for the above purposes, as long as it does not
materially and adversely affect the holders of the preferred securities.
Registered holders of the preferred securities have no preemptive or
similar rights.
The Trust may not, among other things, incur indebtedness or place a lien
on any of its assets.
GOVERNING LAW
The amended and restated declaration of trust and the preferred securities
will be governed by and construed in accordance with the laws of the State of
Delaware.
DESCRIPTION OF TRUST GUARANTEES
The following describes certain general terms and provisions of the trust
guarantees which we will execute and deliver for the benefit of the holders from
time to time of preferred securities issued by any one or all of the Trusts. The
trust guarantees will be separately qualified as an indenture under the Trust
Indenture Act of 1939, and Bank One Trust Company, N.A. will act as indenture
trustee under the trust guarantees for the purposes of compliance with the
provisions of the Trust Indenture Act of 1939. The terms of the trust guarantees
will be those contained in the trust guarantees and those made part of the trust
guarantees by the Trust Indenture Act of 1939. The following summary may not be
complete and is subject to and qualified in its entirety by reference to the
forms of trust guarantees, which are filed as an exhibit to the registration
statement which contains this prospectus, and the Trust Indenture Act of 1939.
The trust guarantees will be held by the guarantee trustees of the Trusts for
the benefit of the holders of the preferred securities.
The discussion in this section is applicable to all of the trust
guarantees. However, for the remainder of this section, we refer to "trust
guarantee" in the singular, which shall mean the trust guarantee that is
executed in connection with a particular issuance of preferred securities by a
Trust.
GENERAL
We will execute the trust guarantee when the preferred securities are
issued. We will irrevocably and unconditionally agree to pay the following
payments or distributions with respect to preferred securities, in full, to the
holders of the preferred securities, as and when they become due regardless of
any defense, right of set-off or counterclaim that the Trust may have except for
the defense of payment:
o any accrued and unpaid distributions which are required to be paid on
the preferred securities, to the extent the Trust does not make such
payments or distributions but has sufficient funds available to do so;
o the redemption price and all accrued and unpaid distributions to the
date of redemption with respect to any preferred securities called for
redemption, to the extent the Trust does not make such payments or
distributions but has sufficient funds available to do so; and
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o upon a voluntary or involuntary dissolution, winding-up or termination
of the Trust (other than in connection with the distribution of
related subordinated debt securities to the holders of preferred
securities or the redemption of all of the preferred securities), to
the extent the Trust does not make such payments or distributions, the
lesser of:
o the total liquidation amount and all accrued and unpaid
distributions on the preferred securities to the date of
payment; and
o the amount of assets of the Trust remaining available for
distribution to holders of such preferred securities in
liquidation of the Trust.
Our obligation to make a payment under the trust guarantee may be satisfied
by our direct payment of the required amounts to the holders of preferred
securities to which the trust guarantee relates or by causing the Trust to pay
the amounts to the holders.
MODIFICATION OF THE TRUST GUARANTEE; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of preferred securities in any material respect (in which case no
vote will be required), the trust guarantee may be amended only with the prior
approval of the holders of not less than a majority in liquidation amount of the
outstanding preferred securities to which the trust guarantee relates. The
manner of obtaining the approval of holders of the preferred securities will be
described in an accompanying prospectus supplement. All guarantees and
agreements contained in the trust guarantee will bind our successors, assigns,
receivers, trustees and representatives and will be for the benefit of the
holders of the outstanding preferred securities to which the trust guarantee
relates.
TERMINATION
The trust guarantee will terminate when any of the following has occurred:
o all preferred securities to which the trust guarantee relates
have been paid in full or redeemed in full by us, the Trust or both;
o the subordinated debt securities held by the Trust have been
distributed to the holders of the preferred securities; or
o the amounts payable in accordance with the amended and restated
declaration of trust upon liquidation of the Trust have been paid
in full.
The trust guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any holder of preferred securities to which the
trust guarantee relates must restore payment of any amounts paid on the
preferred securities or under the trust guarantee.
EVENTS OF DEFAULT
There will be an event of default under the trust guarantee if we fail to
perform any of our payment or other obligations under the trust guarantee.
However, other than with respect to a default in payment of any guarantee
payment, we must have received notice of default and not have cured the default
within 90 days after receipt of the notice. We, as guarantor, will be required
to file annually with the guarantee trustee a certificate regarding our
compliance with the applicable conditions and covenants under our trust
guarantee.
The trust guarantee will constitute a guarantee of payment and not of
collection. The holders of a majority in liquidation amount of the preferred
securities to which the trust 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 the trust guarantee or to direct the
exercise of any trust or power conferred upon the guarantee trustee under the
trust guarantee. If the guarantee trustee fails to enforce the trust guarantee,
any holder of preferred securities to which the trust guarantee relates may
institute a legal proceeding directly against us to enforce the
36
holder's rights under the trust guarantee, without first instituting a legal
proceeding against the trust, the guarantee trustee or anyone else. If we do not
make a guarantee payment, a holder of preferred securities may directly
institute a proceeding against us for enforcement of the trust guarantee for
such payment.
STATUS OF THE TRUST GUARANTEE
The trust guarantee will be our general unsecured obligation and will rank
as follows:
o subordinate and junior in right of payment to all of our senior
indebtedness, as defined in the subordinated debt indenture;
o on parity with any preferred stock we may issue, any guarantees of
other preferred securities we or our affiliates may issue and with
other issues of subordinated debt securities; and
o senior to our common stock.
The terms of the preferred securities provide that each holder of preferred
securities by acceptance of the preferred securities agrees to the subordination
provisions and other terms of the trust guarantee relating to the subordination.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, except if we default under the trust guarantee, will
undertake to perform only such duties as are specifically set forth in the trust
guarantee and, in case a default with respect to the trust guarantee has
occurred, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to this
provision, the guarantee trustee will not be obligated to exercise any of the
powers vested in it by the trust guarantee at the request of any holder of the
preferred securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that it may incur.
GOVERNING LAW
The trust guarantee will be governed by and construed in accordance with
the laws of the State of New York.
EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED DEBT SECURITIES AND THE
TRUST GUARANTEE
As long as we may make payments of interest and any other payments when
they are due on the subordinated debt securities held by the Trust, those
payments will be sufficient to cover distributions and any other payments due on
the preferred securities issued by the Trust because of the following factors:
o the total principal amount of the subordinated debt securities held by
the Trust will be equal to the total stated liquidation amount of the
preferred securities and common securities issued by the Trust;
o the interest rate and the interest payment dates and other payment
dates on the subordinated debt securities held by the Trust will match
the distribution rate and distribution payment dates and other payment
dates for the preferred securities and common securities issued by the
Trust;
o we will pay, and the Trust will not be obligated to pay, directly or
indirectly, all costs, expenses, debt, and obligations of the Trust
(other than obligations under the trust securities); and
o the amended and restated declaration of trust will further provide
that the Trust is not authorized to engage in any activity that is not
consistent with its limited purposes.
We will irrevocably guarantee payments of distributions and other amounts
due on the preferred securities to the extent the Trust has funds available to
pay such amounts as and to the extent set forth under "Description of Trust
Guarantees". Taken together, our obligations under the subordinated debt
securities, the subordinated debt indenture, the amended and restated
declaration of trust and the trust guarantee will provide a full, irrevocable
and unconditional guarantee of the Trust's payments of distributions and other
amounts due on the preferred securities. No single document standing alone or
operating in conjunction with fewer than all of the
37
other documents constitutes this trust guarantee. Only the combined operation of
these documents effectively provides a full, irrevocable and unconditional
guarantee of the Trust's obligations under the preferred securities.
If and to the extent that we do not make the required payments on the
subordinated debt securities, the Trust will not have sufficient funds to make
its related payments, including distributions on the preferred securities. Our
trust guarantee will not cover any payments when the Trust does not have
sufficient funds available to make those payments. Your remedy, as a holder of
preferred securities, is to institute a direct action against us. Our
obligations under the trust guarantee will be subordinate to all of our senior
indebtedness.
LEGAL OWNERSHIP AND GLOBAL SECURITIES
LEGAL OWNERSHIP
"STREET NAME" AND OTHER INDIRECT HOLDERS
Investors who hold securities in accounts at banks or brokers will
generally not be recognized by us as legal holders of securities. This is called
holding in "street name". Instead, we would recognize only the bank or broker,
or the financial institution the bank or broker uses to hold its securities.
These intermediary banks, brokers and other financial institutions pass along
principal, interest and other payments on the securities, either because they
agree to do so in their customer agreements or because they are legally required
to forfeit these securities payments. If your new securities are in "street
name", you should check with your own institution to find out:
o How it handles securities payments and notices.
o Whether it imposes fees or charges.
o How it would handle voting if ever required.
o Whether and how you can instruct it to send you securities
registered in your own name so you can be a direct holder as
described below.
o How it would pursue rights under the securities if there were a
default or other event triggering the need for holders to act to
protect their interests.
DIRECT HOLDERS
Our obligations, as well as the obligations of the trustee and those of any
third parties employed by us or the trustee, run only to persons who are
registered as holders of securities. As noted above, we do not have obligations
to you if you hold in "street name" or other indirect means, either because you
choose to hold securities in that manner or because the securities are issued in
the form of global securities as described below. For example, once we make
payment to the registered holder, we have no further responsibility for the
payment even if that holder is legally required to pass the payment along to you
as a "street name" customer but does not fulfill this obligation.
GLOBAL SECURITIES
WHAT IS A GLOBAL SECURITY? A global security is a special type of
indirectly-held security, as described above under "--Legal Ownership--`Street
Name' and Other Indirect Holders". We may choose to issue some or all of the
securities in the form of global securities, in which case the ultimate
beneficial owners can only be indirect holders. We do this by requiring that the
global security be registered in the name of a financial institution we select
and by requiring that the securities included in the global security not be
transferred to the name of any other direct holder unless the special
circumstances described below occur. The financial institution that acts as the
sole direct holder of the global security is called the "depositary". Any person
wishing to own a global security must do so indirectly through an account with a
broker, bank or other financial institution that in turn has an account with the
depositary. The prospectus supplement will indicate whether your securities will
be issued only in the form of global securities.
38
SPECIAL INVESTOR CONSIDERATIONS FOR GLOBAL SECURITIES. As an indirect
holder, an investor's rights relating to a global security will be governed by
the account rules of the investor's financial institution and of the depositary,
as well as general laws relating to securities transfers. We do not recognize
this type of investor as a holder of securities and instead deal only with the
depositary that holds the global security.
An investor should be aware that if securities are issued only in the form
of global securities:
o The investor cannot get the securities registered in his or her
own name.
o The investor cannot receive physical certificates for his or her
interest in the securities.
o The investor will be a "street name" holder and must look to his or
her own bank or broker for payments on the securities and protection
of his or her legal rights relating to the securities. See the
discussion above under "--Legal Ownership--`Street Name' and Other
Indirect Holders".
o The depositary's policies will govern payments, transfers, exchange
and other matters relating to the investor's interest in the global
security. We and the trustee have no responsibility for any aspect of
the depositary's actions or for its records of ownership interests in
the global security. We and the trustee also do not supervise the
depositary in any way.
o The laws of some jurisdictions require that certain purchasers receive
physical certificates for their interests in the debt securities.
These laws may impair the ability to transfer beneficial interests in
a global security.
SPECIAL SITUATIONS WHEN A GLOBAL SECURITY WILL BE TERMINATED. In a few
special situations described later, a global security will terminate and
interests in it will be exchanged for physical certificates representing
securities. After that exchange, the choice of whether to hold securities
directly or in "street name" will be up to the investor. Investors must consult
their own banks or brokers to find out how to have their interests in the
securities transferred to their own name so that they will be direct holders.
The rights of "street name" investors and direct holders in the securities have
been described above under "--Legal Ownership--`Street Name' and Other Indirect
Holders" and "--Legal Ownership--Direct Holders".
The special situations for termination of a global security are:
o When the depositary notifies us that it is unwilling, unable or no longer
qualified to continue as depositary.
o When an event of default on the securities has occurred and has not
been cured. (Defaults are discussed above in connection with the
relevant securities)
The prospectus supplement may also list additional situations for
terminating a global security that would apply only to the particular securities
covered by the prospectus supplement. When a global security terminates, the
depositary (and not the company or the trustee) is responsible for deciding the
names of the institutions that will be the initial direct holders.
PLAN OF DISTRIBUTION
We and the Trust may offer and sell the securities from time to time as
follows:
o to or through underwriters or dealers;
o directly to other purchasers;
o through designated agents; or
o through a combination of any of these methods of sale.
39
Any underwriter or agent involved in the offer and sale of the securities
will be named in the applicable prospectus supplement.
Because the National Association of Securities Dealers, Inc. ("NASD") views
securities such as the preferred securities as interest in a direct
participation program, any offering of preferred securities by the Trust will be
made in compliance with Rule 2810 of the NASD's Conduct Rules.
In some cases, we and the Trusts may also repurchase the securities and
reoffer them to the public by one or more of the methods described above. This
prospectus may be used in connection with any offering of securities through any
of these methods or other methods described in the applicable prospectus
supplement.
The securities we and the Trusts distribute by any of these methods may be
sold to the public, in one or more transactions, either:
o at a fixed price or prices, which may be changed;
o at market prices prevailing at the time of sale;
o at prices related to prevailing market prices; or
o at negotiated prices.
We and the Trusts may solicit offers to purchase securities directly from
the public from time to time. We and the Trusts may also designate agents from
time to time to solicit offers to purchase securities from the public on our or
the Trusts' behalf. The prospectus supplement relating to any particular
offering of securities will name any agents designated to solicit offers, and
will include information about any commissions we or the Trusts may pay the
agents, in that offering. Agents may be deemed to be "underwriters" as that term
is defined in the Securities Act.
In connection with the sale of securities, underwriters may receive
compensation from us or the Trust or from purchasers of the securities, for whom
they may act as agents, in the form of discounts, concessions or commissions.
Underwriters may sell the securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution of
the securities may be deemed to be underwriters, and any discounts or
commissions they receive from us or the Trusts and any profit on the resale of
the securities they realize may be deemed to be underwriting discounts and
commissions under the Securities Act. Any such underwriter, dealer or agent will
be identified, and any such compensation received will be described, in the
applicable prospectus supplement.
Unless otherwise specified in the related prospectus supplement, each
series of the securities will be a new issue with no established trading market,
other than the common stock. Our common stock is listed on the New York Stock
Exchange, the Chicago Stock Exchange and the Pacific Exchange under the symbol
"AYE". We and the Trusts may elect to list any of the other securities on an
exchange, but are not obligated to do so. It is possible that one or more
underwriters may make a market in a series of the securities, but will not be
obligated to do so and may discontinue any market making at any time without
notice. Therefore, no assurance can be given as to the liquidity of the trading
market for the securities.
If dealers are utilized in the sale of the securities, we and the Trusts
will sell the securities to the dealers as principals. The dealers may then
resell the securities to the public at varying prices to be determined by such
dealers at the time of resale. The names of the dealers and the terms of the
transaction will be set forth in the applicable prospectus supplement.
Securities may also be offered and sold, if so indicated in a prospectus
supplement, in connection with a remarketing upon their purchase, in accordance
with a redemption or repayment pursuant to their terms, or otherwise, by one or
more firms ("remarketing firms"), acting as principals for their own accounts or
as agents for us. Any remarketing firm will be identified and the terms of its
agreement, if any, with us and its
40
compensation will be described in the applicable prospectus supplement.
Remarketing firms may be deemed to be underwriters, as that term is defined in
the 1933 Act, in connection with the securities remarketed thereby.
We and the Trusts may enter into agreements with underwriters, dealers and
agents who participate in the distribution of the securities which may entitle
these persons to indemnification by us and the Trusts against certain
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which such underwriters, dealers or agents may be
required to make in respect thereof. Any agreement in which we agree to
indemnify underwriters, dealers and agents against civil liabilities will be
described in the applicable prospectus supplement.
In connection with an offering, the underwriters may purchase and sell
securities 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 underwriters of a greater number of
securities than they are required to purchase in an 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 securities while an
offering is in progress.
The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the underwriters have repurchased securities
sold by or for the account of that underwriter in stabilizing or short-covering
transactions.
These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the securities. As a result, the price of the
securities 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
underwriters at any time. These transactions may be effected on an exchange or
automated quotation system, if the securities are listed on that exchange or
admitted for trading on that automated quotation system, or in the
over-the-counter market or otherwise.
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must not
rely on any unauthorized information. This prospectus does not offer to sell or
buy any securities in any jurisdiction where it is unlawful.
Underwriters, dealers and agents may engage in transactions with or perform
services for us or the Trusts, or be customers of ours or the Trusts, in the
ordinary course of business.
VALIDITY OF THE SECURITIES
The validity of any securities issued hereunder will be passed upon for us
by Sullivan & Cromwell, New York, New York, our counsel, and for the Trusts with
respect to certain matters of Delaware law by Richards, Layton & Finger, P.A.,
Wilmington, Delaware, special Delaware counsel to the Trusts. Unless otherwise
indicated in the applicable prospectus supplement, the validity of any
securities issued hereunder will be passed upon for any agents or underwriters
by Simpson Thacher & Bartlett. Sullivan & Cromwell and Simpson Thacher &
Bartlett will rely upon Robert R. Winter, Esq. as to all matters of Maryland law
and Richards, Layton & Finger, P.A. as to matters of Delaware law relating to
the Trusts.
EXPERTS
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-K of Allegheny Energy, Inc. for the year ended
December 31, 2000 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
41
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. Information
furnished under Item 9 of our Current Reports on Form 8-K is not incorporated by
reference in this prospectus and the registration statement. We furnished
information under Item 9 of our Current Reports on Form 8-K on January 8,
January 9, January 26, March 1, March 26, April 23, July 27, October 26 and
December 28, 2001 and February 1, 2002.
We incorporate by reference the documents listed below, any filings that we
make after the date of filing the initial registration statement and prior to
the effectiveness of that registration statement, and any future filings made by
us with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 until we sell all of the securities that we have
registered.
o The Annual Report on Form 10-K for the year ended December 31, 2000;
o The Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30 (as amended on Form 10-Q/A #1) and September 30, 2001; and
o The Current Reports on Form 8-K filed January 8, January 26, March 9,
March 26, April 23 and April 30, 2001.
You may request a copy of these filings at no cost by writing or
telephoning us at the following address or telephone number:
Allegheny Energy, Inc.
10435 Downsville Pike
Hagerstown, MD 21740-1766
Attention: Marleen L. Brooks
Secretary
Telephone: (301) 665-2704
We have not included or incorporated by reference in this prospectus any
separate financial statements of the Trusts. We do not believe that these
financial statements would provide holders of preferred securities with any
important information for the following reasons:
o we will own all of the voting securities of the Trusts;
o the Trusts do not and will not have any independent operations other
than to issue securities and to purchase and hold our subordinated
debt securities; and
o we are fully and unconditionally guaranteeing the obligations of
the Trusts as described in this prospectus.
Although the Trusts would normally be required to file information with the
SEC on an ongoing basis, we expect the SEC to exempt the Trusts from filing this
information for as long as we continue to file our information with the SEC.
42
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
ESTIMATED AMOUNTS
-----------------
Securities and Exchange Commission registration fee
under the 1933 Act....................................... $ 138,000
Printing and engraving expenses............................ 400,000
Legal fees and expenses.................................... 250,000
Accountants' fees and expenses............................. 225,000
Stock Exchange Listing fees................................ 50,000
Trustee fees and expenses.................................. 50,000
Blue Sky expenses.......................................... 10,000
Rating Agency fees......................................... 250,000
Miscellaneous.............................................. 50,000
---------
Total.................................................. $1,423,000
=========
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* Except for the Securities and Exchange Commission registration fee, all
fees and expenses are estimated. All of the above fees and expenses will
be borne by Allegheny Energy, Inc.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Article XIII of the Articles of Incorporation of the Company, Article
VI of the By-laws of the Company, as amended, and Section 2-418 of the
Corporations and Associations Article of the Annotated Code of Maryland,
directors and officers are entitled to indemnification by Allegheny against
liability which they may incur in their respective capacities as directors and
officers under certain circumstances. Directors and Officers' Liability
Insurance is carried in an amount of $85,000,000 with a $500,000 corporate
reimbursement. In the Underwriting Agreement, each underwriter will agree to
indemnify the directors of, certain officers of, and persons who control
Allegheny, within the meaning of the Securities Act of 1933, against liabilities
resulting from information that such underwriter supplies for the Registration
Statement.
Each declaration of trust limits the liability of the Trust and certain
other persons and provides for the indemnification by the Trust or us of the
trustees, their officers, directors and employees and certain other persons.
ITEM 16. EXHIBITS.
1.1 Form of Underwriting Agreement for debt securities.*
1.2 Form of Underwriting Agreement for common stock.*
1.3 Form of Underwriting Agreement for warrants.*
1.4 Form of Underwriting Agreement for preferred securities.*
1.5 Form of Underwriting Agreement for stock purchase contracts.*
1.6 Form of Underwriting Agreement for units.*
3.1 Articles of Restatement of Charter of Allegheny Energy, Inc., as
amended September 16, 1997 (incorporated herein by reference to
Exhibit 3.1 of Allegheny's Annual Report on Form 10-K for the year
ended December 31, 1997 (File No. 1-267)).
3.2 Articles Supplementary of Allegheny Energy, Inc., dated July 15,
1999 (incorporated herein by reference to Exhibit 3.1 of
Allegheny's Current Report on Form 8-K, as filed with the
Commission on July 20, 1999 (File No. 1-267)).
3.3 By-laws of Allegheny Energy, Inc., as amended (incorporated herein
by reference to Exhibit 3.2 of Allegheny's Annual Report on Form
10-K for the year ended December 31, 1999 (File No. 1-267)).
II-1
4.1 Stockholder Protection Rights Agreement, dated as of March 2,
2000, between Allegheny Energy, Inc. and ChaseMellon Shareholder
Services L.L.C., as Rights Agent (incorporated herein by reference
to Exhibit 4 of Allegheny's Current Report on Form 8-K, as filed
with the Commission on March 6, 2000 (File No. 1-267)).
4.2 Indenture for senior debt securities (incorporated herein by
reference to Exhibit 4.1 of Allegheny's Current Report on Form
8-K, as filed with the Commission on August 17, 2000 (File No.
1-267)).
4.3 Form of Indenture for subordinated debt securities.
4.4 Form of Common Stock Certificate (incorporated herein by reference
to Exhibit 4(e) of Allegheny's Pre-Effective Amendment No. 1 to
the Registration Statement on Form S-3, as filed with the
Commission on April 4, 2001 (File No. 333-56786)).
4.5 Form of Senior Debt Security (included in Exhibit 4.2).
4.6 Form of Subordinated Debt Security (included in Exhibit 4.3).
4.7 Form of Preferred Security issued by Allegheny Capital Trust I
(included in Exhibit 4.19).
4.8 Form of Common Security issued by Allegheny Capital Trust I
(included in Exhibit 4.19).
4.9 Form of Preferred Security issued by Allegheny Capital Trust II
(included in Exhibit 4.22).
4.10 Form of Common Security issued by Allegheny Capital Trust II
(included in Exhibit 4.22).
4.11 Form of Preferred Security issued by Allegheny Capital Trust III
(included in Exhibit 4.25).
4.12 Form of Common Security issued by Allegheny Capital Trust III
(included in Exhibit 4.25).
4.13 Form of Warrant Agreement.
4.14 Form of Stock Purchase Contract Agreement, including the form of
the Security Certificate.*
4.15 Form of Unit Agreement, including form of Unit Certificate.*
4.16 Form of Pledge Agreement.*
4.17 Certificate of Trust of Allegheny Capital Trust I.
4.18 Declaration of Trust of Allegheny Capital Trust I.
4.19 Form of Amended and Restated Declaration of Trust for Allegheny
Capital Trust I.
4.20 Certificate of Trust of Allegheny Capital Trust II.
4.21 Declaration of Trust of Allegheny Capital Trust II.
4.22 Form of Amended and Restated Declaration of Trust for Allegheny
Capital Trust II.
4.23 Certificate of Trust of Allegheny Capital Trust III.
4.24 Declaration of Trust of Allegheny Capital Trust III.
4.25 Form of Amended and Restated Declaration of Trust for Allegheny
Capital Trust III.
4.26 Form of Preferred Securities Guarantee Agreement relating to
Allegheny Capital Trust I.
4.27 Form of Preferred Securities Guarantee Agreement relating to
Allegheny Capital Trust II.
4.28 Form of Preferred Securities Guarantee Agreement relating to
Allegheny Capital Trust III.
4.29 Form of Common Securities Guarantee Agreement relating to
Allegheny Capital Trust I.
4.30 Form of Common Securities Guarantee Agreement relating to
Allegheny Capital Trust II.
4.31 Form of Common Securities Guarantee Agreement relating to
Allegheny Capital Trust III.
5.1 Opinion of Richards, Layton & Finger, P.A.
5.2 Opinion of Sullivan & Cromwell.
12 Computation of ratios of earnings to fixed charges.
23.1 Consent of PricewaterhouseCoopers LLP.
II-2
23.2 Consent of Richards, Layton & Finger, P.A. (included in Exhibit
5.1).
23.3 Consent of Sullivan & Cromwell (included in Exhibit 5.2).
24 Powers of Attorney (included on signature page).
25.1 Statement of Eligibility of Trustee on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Bank One Trust Company,
N.A., to act as trustee under the Subordinated Debt Indenture for
the Subordinated Debt Securities.
25.2 Statement of Eligibility of Trustee on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Bank One Trust Company,
N.A., to act as trustee under the Amended and Restated Declaration
of Trust for Allegheny Capital Trust I.
25.3 Statement of Eligibility of Trustee on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Bank One Trust Company,
N.A., to act as trustee for the Preferred Securities Guarantee
Agreement for the benefit of the holders of the Preferred
Securities of Allegheny Capital Trust I.
25.4 Statement of Eligibility of Trustee on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Bank One Trust Company,
N.A., to act as trustee under the Amended and Restated Declaration
of Trust for Allegheny Capital Trust II.
25.5 Statement of Eligibility of Trustee on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Bank One Trust Company,
N.A., to act as trustee for the Preferred Securities Guarantee
Agreement for the benefit of the holders of the Preferred
Securities of Allegheny Capital Trust II.
25.6 Statement of Eligibility of Trustee on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Bank One Trust Company,
N.A., to act as trustee under the Amended and Restated Declaration
of Trust for Allegheny Capital Trust III.
25.7 Statement of Eligibility of Trustee on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Bank One Trust Company,
N.A., to act as trustee for the Preferred Securities Guarantee
Agreement for the benefit of the holders of the Preferred
Securities of Allegheny Capital Trust III.
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* To be filed by amendment or as an exhibit to a document to be
incorporated by reference herein in connection with an offering of the
securities.
ITEM 17. UNDERTAKINGS.
(1) The undersigned registrants hereby undertake:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
II-3
PROVIDED, HOWEVER, that paragraphs (1)(a)(i) and (1)(a)(ii) do not
apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference
in this registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(2) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of Allegheny Energy, Inc.'s annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions
described under Item 15, or otherwise, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Hagerstown, Maryland, on February 5, 2002.
ALLEGHENY ENERGY, INC.
By: /s/ Regis F. Binder
----------------------------
Name: Regis F. Binder
Title: Vice President and Treasurer
II-5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature appears
below constitutes and appoints Thomas K. Henderson and Marleen L. Brooks, and
each of them, with full power to act without the others, his or her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, to sign any related registration
statement filed pursuant to Rule 462(b) (including any amendment thereto) of the
Securities Act of 1933, as amended, and to file the same, with all exhibits
thereto, and all documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or any of them, or
their or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the indicated
capacities on February 4, 2002.
SIGNATURE TITLE
Chairman, President, Chief Executive Officer
/s/ Alan J. Noia and Director
- -------------------------------
(Alan J. Noia)
Senior Vice-President and Chief Financial Officer
/s/ Bruce E. Walenczyk (Principal Financial Officer)
- -------------------------------
(Bruce E. Walenczyk)
Vice-President and Controller (Principal
/s/ Thomas J. Kloc Accounting Officer)
- -------------------------------
(Thomas J. Kloc)
/s/ Eleanor Baum Member of the Board of Directors
- -------------------------------
(Eleanor Baum)
/s/ Lewis B. Campbell Member of the Board of Directors
- -------------------------------
(Lewis B. Campbell)
/s/ James J. Hoecker Member of the Board of Directors
- -------------------------------
(James J. Hoecker)
/s/ Wendell F. Holland Member of the Board of Directors
- -------------------------------
(Wendell F. Holland)
/s/ Ted J. Kleisner Member of the Board of Directors
- -------------------------------
(Ted J. Kleisner)
/s/ Frank A. Metz, Jr. Member of the Board of Directors
- --------------------------------
(Frank A. Metz, Jr.)
/s/ Steven H. Rice Member of the Board of Directors
- --------------------------------
(Steven H. Rice)
/s/ Gunnar E. Sarsten Member of the Board of Directors
- --------------------------------
(Gunnar E. Sarsten)
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Hagerstown, Maryland, on February 5, 2002.
ALLEGHENY CAPITAL TRUST I
By: ALLEGHENY ENERGY, INC.,
as Sponsor
By: /s/ Regis F. Binder
-----------------------------------
Name: Regis F. Binder
Title: Vice President and Treasurer
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Hagerstown, Maryland, on February 5, 2002.
ALLEGHENY CAPITAL TRUST II
By: ALLEGHENY ENERGY, INC.,
as Sponsor
By: /s/ Regis F. Binder
----------------------------------
Name: Regis F. Binder
Title: Vice President and Treasurer
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Hagerstown, Maryland, on February 5, 2002.
ALLEGHENY CAPITAL TRUST III
By: ALLEGHENY ENERGY, INC.,
as Sponsor
By: /s/ Regis F. Binder
-----------------------------------
Name: Regis F. Binder
Title: Vice President and Treasurer
II-9
INDEX TO EXHIBITS
EXHIBITS.
1.1 Form of Underwriting Agreement for debt securities.*
1.2 Form of Underwriting Agreement for common stock.*
1.3 Form of Underwriting Agreement for warrants.*
1.4 Form of Underwriting Agreement for preferred securities.*
1.5 Form of Underwriting Agreement for stock purchase contracts.*
1.6 Form of Underwriting Agreement for units.*
3.1 Articles of Restatement of Charter of Allegheny Energy, Inc., as
amended September 16, 1997 (incorporated herein by reference to
Exhibit 3.1 of Allegheny's Annual Report on Form 10-K for the year
ended December 31, 1997 (File No. 1-267)).
3.2 Articles Supplementary of Allegheny Energy, Inc., dated July 15,
1999 (incorporated herein by reference to Exhibit 3.1 of
Allegheny's Current Report on Form 8-K, as filed with the
Commission on July 20, 1999 (File No. 1-267)).
3.3 By-laws of Allegheny Energy, Inc., as amended (incorporated herein
by reference to Exhibit 3.2 of Allegheny's Annual Report on Form
10-K for the year ended December 31, 1999 (File No. 1-267)).
4.1 Stockholder Protection Rights Agreement, dated as of March 2,
2000, between Allegheny Energy, Inc. and ChaseMellon Shareholder
Services L.L.C., as Rights Agent (incorporated herein by reference
to Exhibit 4 of Allegheny's Current Report on Form 8-K, as filed
with the Commission on March 6, 2000 (File No. 1-267)).
4.2 Indenture for senior debt securities (incorporated herein by
reference to Exhibit 4.1 of Allegheny's Current Report on Form
8-K, as filed with the Commission on August 17, 2000 (File No.
1-267)).
4.3 Form of Indenture for subordinated debt securities.
4.4 Form of Common Stock Certificate (incorporated herein by reference
to Exhibit 4(e) of Allegheny's Pre-Effective Amendment No. 1 to
the Registration Statement on Form S-3, as filed with the
Commission on April 4, 2001 (File No. 333-56786)).
4.5 Form of Senior Debt Security (included in Exhibit 4.2).
4.6 Form of Subordinated Debt Security (included in Exhibit 4.3).
4.7 Form of Preferred Security issued by Allegheny Capital Trust I
(included in Exhibit 4.19).
4.8 Form of Common Security issued by Allegheny Capital Trust I
(included in Exhibit 4.19).
4.9 Form of Preferred Security issued by Allegheny Capital Trust II
(included in Exhibit 4.22).
4.10 Form of Common Security issued by Allegheny Capital Trust II
(included in Exhibit 4.22).
4.11 Form of Preferred Security issued by Allegheny Capital Trust III
(included in Exhibit 4.25).
4.12 Form of Common Security issued by Allegheny Capital Trust III
(included in Exhibit 4.25).
4.13 Form of Warrant Agreement.
4.14 Form of Stock Purchase Contract Agreement, including the form of
the Security Certificate.*
4.15 Form of Unit Agreement, including form of Unit Certificate.*
4.16 Form of Pledge Agreement.*
4.17 Certificate of Trust of Allegheny Capital Trust I.
4.18 Declaration of Trust of Allegheny Capital Trust I.
4.19 Form of Amended and Restated Declaration of Trust for Allegheny
Capital Trust I.
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4.20 Certificate of Trust of Allegheny Capital Trust II.
4.21 Declaration of Trust of Allegheny Capital Trust II.
4.22 Form of Amended and Restated Declaration of Trust for Allegheny
Capital Trust II.
4.23 Certificate of Trust of Allegheny Capital Trust III.
4.24 Declaration of Trust of Allegheny Capital Trust III.
4.25 Form of Amended and Restated Declaration of Trust for Allegheny
Capital Trust III.
4.26 Form of Preferred Securities Guarantee Agreement relating to
Allegheny Capital Trust I.
4.27 Form of Preferred Securities Guarantee Agreement relating to
Allegheny Capital Trust II.
4.28 Form of Preferred Securities Guarantee Agreement relating to
Allegheny Capital Trust III.
4.29 Form of Common Securities Guarantee Agreement relating to
Allegheny Capital Trust I.
4.30 Form of Common Securities Guarantee Agreement relating to
Allegheny Capital Trust II.
4.31 Form of Common Securities Guarantee Agreement relating to
Allegheny Capital Trust III.
5.1 Opinion of Richards, Layton & Finger, P.A.
5.2 Opinion of Sullivan & Cromwell.
12 Computation of ratios of earnings to fixed charges.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Richards, Layton & Finger, P.A. (included in Exhibit
5.1).
23.3 Consent of Sullivan & Cromwell (included in Exhibit 5.2).
24 Powers of Attorney (included on signature page).
25.1 Statement of Eligibility of Trustee on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Bank One Trust Company,
N.A., to act as trustee under the Subordinated Debt Indenture for
the Subordinated Debt Securities.
25.2 Statement of Eligibility of Trustee on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Bank One Trust Company,
N.A., to act as trustee under the Amended and Restated Declaration
of Trust for Allegheny Capital Trust I.
25.3 Statement of Eligibility of Trustee on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Bank One Trust Company,
N.A., to act as trustee for the Preferred Securities Guarantee
Agreement for the benefit of the holders of the Preferred
Securities of Allegheny Capital Trust I.
25.4 Statement of Eligibility of Trustee on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Bank One Trust Company,
N.A., to act as trustee under the Amended and Restated Declaration
of Trust for Allegheny Capital Trust II.
25.5 Statement of Eligibility of Trustee on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Bank One Trust Company,
N.A., to act as trustee for the Preferred Securities Guarantee
Agreement for the benefit of the holders of the Preferred
Securities of Allegheny Capital Trust II.
25.6 Statement of Eligibility of Trustee on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Bank One Trust Company,
N.A., to act as trustee under the Amended and Restated Declaration
of Trust for Allegheny Capital Trust III.
25.7 Statement of Eligibility of Trustee on Form T-1 under the Trust
Indenture Act of 1939, as amended, of Bank One Trust Company,
N.A., to act as trustee for the Preferred Securities Guarantee
Agreement for the benefit of the holders of the Preferred
Securities of Allegheny Capital Trust III.
- ------
* To be filed by amendment or as an exhibit to a document to be
incorporated by reference herein in connection with an offering of the
securities.
II-11