Registration Nos. 333-01035 and 333-01035-01
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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MINNESOTA POWER & LIGHT COMPANY
(Exact name of registrant as specified in its charter)
Minnesota 41-0418150
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
MP&L CAPITAL I
(Exact name of registrant as specified in its charter)
Delaware To Be Applied For
(State of incorporation or (I.R.S. Employer
organization) Identification No.)
30 West Superior Street
Duluth, Minnesota 55802
(218) 722-2641
(Address, including zip code, and telephone number,
including area code,
of registrant's principal executive offices)
DAVID G. GARTZKE PHILIP R. HALVERSON, Esq.
Senior Vice President-Finance Vice President, General Counsel
and Chief Financial Officer and Corporate Secretary
30 West Superior Street 30 West Superior Street
Duluth, Minnesota 55802 Duluth, Minnesota 55802
(218) 722-2641 (218) 722-2641
JAMES K. VIZANKO ROBERT J. REGER, JR., Esq.
Corporate Treasurer Reid & Priest LLP
30 West Superior Street 40 West 57th Street
Duluth, Minnesota 55802 New York, New York 10019
(218) 722-2641 (212) 603-2000
(Names and addresses, including zip codes, and telephone numbers,
including area codes, of agents for service)
---------------
It is respectfully requested that the Commission
send copies of all notices, orders and communications to:
MICHAEL CONNOLLY, Esq.
Lane & Mittendorf LLP
320 Park Avenue
New York, New York 10022
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CALCULATION OF REGISTRATION FEE
====================================================================
Title of
Each Proposed Proposed
Class Maximum Maximum Amount
of Amount Offering Aggregate of
to Be to Be Per Offering Registration
Registered Registered Unit(1) Price(1)(2) Fee
--------------------------------------------------------------------
MP&L
Capital I
Cumulative
Quarterly
Income
Preferred
Securities... 3,000,000 $25 $75,000,000(3) $25,862(3)
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Minnesota
Power &
Light Company
Guarantee with
respect to MP&L
Capital I
Cumulative
Quarterly Income
Preferred
Securities
and obligations
under an
Agreement
as to
Expenses and
Liabilities
between the
Company
and MP&L
Capital I(4)..
-------------------------------------------------------------------
Minnesota
Power &
Light Company
Junior
Subordinated
Debentures,
Series(5)....
===================================================================
(1) Estimated solely for the purpose of calculating the
registration fee.
(2) Exclusive of accrued distributions, if any.
(3) The Cumulative Quarterly Income Preferred Securities being
registered are hereby reduced from 5,000,000 to 3,000,000.
(4) No separate consideration will be received for the Minnesota
Power & Light Company (the "Company") Guarantee and the
Company's obligations under the Agreement as to
Expenses and Liabilities.
(5) The Junior Subordinated Debentures will be purchased by MP&L
Capital I with the proceeds of the sale of the Preferred
Securities. No separate consideration will be received for
the Junior Subordinated Debentures.
The registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant 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 Commission, acting
pursuant to said Section 8(a), may determine.
SUBJECT TO COMPLETION, DATED MARCH 11, 1996
3,000,000 Preferred Securities
MP&L CAPITAL I
% Cumulative Quarterly Income Preferred Securities
(QUIPS SM)*
(Liquidation preference $25.00 per Preferred Security)
Guaranteed to the extent
MP&L Capital I has funds as set forth herein by
MINNESOTA POWER & LIGHT COMPANY
-------------------
The % Cumulative Quarterly Income Preferred Securities
(the "Preferred Securities") offered hereby are being issued by
and represent undivided preferred beneficial interests in the
assets of MP&L Capital I ("MP&L Capital"), a statutory business
trust created under the laws of the State of Delaware. Minnesota
Power & Light Company (the "Company"), a Minnesota corporation,
will be the owner of the undivided common beneficial interests in
the assets represented by common securities of MP&L Capital (the
"Common Securities", together with the Preferred Securities
herein referred to as the "Trust Securities"). The Bank of New
York is the Property Trustee of MP&L Capital. MP&L Capital
exists for the sole purpose of issuing the Preferred Securities
and the Common Securities and investing the proceeds thereof in
% Junior Subordinated Debentures, Series , Due , to
be issued by the Company (the "Junior Subordinated Debentures")
in an aggregate principal amount equal to the aggregate
liquidation preference amount of the Trust Securities. The
Preferred Securities will have a preference under certain
circumstances with respect to cash distributions and amounts
payable on liquidation, redemption or otherwise over the Common
Securities. See "Description of the Preferred Securities --
Subordination of Common Securities."
(cover continued on following page)
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SEE "RISK FACTORS," BEGINNING ON PAGE 6, FOR CERTAIN
INFORMATION RELEVANT TO AN INVESTMENT IN THE PREFERRED
SECURITIES, INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND
UNDER WHICH PAYMENT OF DISTRIBUTIONS ON THE PREFERRED SECURITIES
MAY BE DEFERRED AND CERTAIN RELATED FEDERAL INCOME TAX
CONSEQUENCES.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------
Initial
Public
Offering Underwriting Proceeds to
Price Commission (1) Company(2)(3)
-------- -------------- -------------
Per Preferred
Security . . . . . $ (2) $
Total. . . . . . . $ (2) $
___________
(1) MP&L Capital and the Company have agreed to indemnify the
several Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended
(1933 Act). See "Underwriting."
(2) In view of the fact that the entire proceeds of the sale of
the Preferred Securities will be used to purchase the Junior
Subordinated Debentures, the Underwriting Agreement provides
that the Company will pay to the Underwriters, as
compensation for their arranging the investment therein of
such proceeds, $ per Preferred Security (or $ in
the aggregate). See "Underwriting."
(3) Expenses of the offering, which are payable by the Company,
are estimated to be $ .
--------------------
The Preferred Securities offered hereby are offered
severally by the Underwriters, as specified herein, and subject
to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that
delivery of the Preferred Securities will be made only in
book-entry form through the facilities of DTC on or about
, 1996 against payment therefor in immediately available funds.
*QUIPS is a service mark of Goldman, Sachs & Co.
GOLDMAN, SACHS & CO. PAINEWEBBER INCORPORATED
The date of this Prospectus is , 1996.
Information contained herein is subject to completion or
amendment. A Registration Statement relating to these securities
has been filed with the Securities and Exchange Commission.
These securities may not be sold nor may offers to buy be
accepted prior to the time the Registration Statement becomes
effective. This prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any
sale of these securities in any jurisdiction in which such offer,
solicitation, or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
(cover continued)
Registered owners (the "Holders") of the Preferred
Securities will be entitled to receive preferential cumulative
cash distributions accruing from the date of original issuance
and payable quarterly in arrears on the last day of March, June,
September and December of each year, commencing , 1996,
at the per annum rate of % of the liquidation preference
amount of $25 per Preferred Security (together, at any given
time, with any accrued but unpaid such amounts and interest
thereon, if any, "Distributions"). Interest on the Junior
Subordinated Debentures is the sole source of income for MP&L
Capital from which payment of Distributions on the Preferred
Securities can be made. The Company has the right to defer
payments of interest on the Junior Subordinated Debentures by
extending the interest payment period thereon at any time or from
time to time for up to 20 consecutive quarters with respect to
each deferral period (each, an "Extension Period"), provided that
any such Extension Period may not extend beyond the maturity of
the Junior Subordinated Debentures. Upon the termination of any
Extension Period and the payment of all amounts then due,
including interest on deferred interest payments, the Company may
select a new Extension Period, subject to the above requirements.
If interest payments on the Junior Subordinated Debentures
are deferred, Distributions on the Preferred Securities will also
be deferred and the Company will not be permitted, subject to
certain exceptions set forth herein, to (i) declare or pay
dividends or distributions on (other than dividends or
distributions paid in shares of Common Stock of the Company) or
redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock, or (ii) make any payment of
principal of, interest or premium, if any, on, or repay,
repurchase or redeem any indebtedness that is pari passu with the
Junior Subordinated Debentures (including other Debt Securities,
as defined herein) or make any guarantee payment with respect to
the foregoing. During an Extension Period, quarterly
Distributions on the Preferred Securities will continue to accrue
and Distributions that are in arrears will bear interest on the
amount thereof at the per annum rate of % (to the extent
permitted by applicable law, compounded quarterly), and Holders
of Preferred Securities will be required to accrue income for
United States federal income tax purposes. See "Description of
the Junior Subordinated Debentures -- Option to Extend Interest
Payment Period" and "Certain United States Federal Income Tax
Consequences -- Potential Extension of Interest Payment Period
and Original Issue Discount." Any Extension Period with
respect to payment of interest on the Junior Subordinated
Debentures, other Debt Securities (as defined herein) or on any
similar securities will apply to all such securities and will
also apply to Distributions with respect to the Preferred
Securities and all other securities with terms substantially the
same as the Preferred Securities. Based upon the Company's
current financial condition and, in light of the restriction on
payment of dividends on the Company's securities during an
Extension Period, the Company believes that an extension of a
distribution payment period on the Preferred Securities is
currently unlikely and has no current intention to cause such an
extension. See "Description of the Preferred Securities --
Distributions."
The payment of Distributions and payments on liquidation of
MP&L Capital or the redemption of Preferred Securities, in each
case out of moneys held by MP&L Capital as set forth below, are
guaranteed by the Company to the extent MP&L Capital has
sufficient funds available to make such payments (the
"Guarantee"). See "Description of the Guarantee." If the
Company fails to make interest payments on the Junior
Subordinated Debentures held by MP&L Capital, MP&L Capital will
have insufficient funds to pay Distributions on the Preferred
Securities. The Guarantee does not cover payment of
Distributions when MP&L Capital does not have sufficient funds to
pay such Distributions. In such event, the remedy of a Holder of
Preferred Securities would be enforcement of the rights of MP&L
Capital under the Junior Subordinated Debentures held by MP&L
Capital. See "Description of the Preferred Securities -- Voting
Rights." The Company's obligations under the Guarantee are
subordinate and junior in right of payment to Senior Indebtedness
of the Company except any liabilities that may be made pari passu
expressly by their terms. The Company has agreed in an Agreement
as to Expenses and Liabilities (the "Expense Agreement") to
provide funds to MP&L Capital as needed to pay obligations of
MP&L Capital to parties other than Holders of Trust Securities.
The obligations of the Company with respect to the Guarantee, the
Expense Agreement and the Junior Subordinated Debentures
constitute a full and unconditional guarantee of the Preferred
Securities by the Company.
The Preferred Securities are subject to mandatory redemption
upon repayment of the Junior Subordinated Debentures at maturity
or upon their earlier redemption. See "Description of the
Preferred Securities -- Redemption Procedures." The Company will
have the option at any time on or after , to redeem
the Junior Subordinated Debentures, in whole or in part. The
Company also will have the option, upon the occurrence and during
the continuation of a Special Event (as defined herein), (i) to
redeem at any time the Junior Subordinated Debentures, in whole
but not in part, which will result in the redemption of all the
Trust Securities by MP&L Capital or (ii) to cause the termination
of MP&L Capital and, in connection therewith, after satisfaction
of creditors of MP&L Capital, if any, to cause the distribution
of Junior Subordinated Debentures to the Holders of Preferred
(cover continued)
Securities and the Common Securities. Any redemption of Trust
Securities by MP&L Capital will be in amounts having an aggregate
liquidation preference amount equal to the aggregate principal of
Junior Subordinated Debentures to be redeemed and will be at a
redemption price equal to 100% of such liquidation preference
amount, plus accrued and unpaid Distributions, if any, to the
redemption date (the "Redemption Price"). Each class of the
Trust Securities will be redeemed in proportion to the percentage
they represent of all the Trust Securities. See "Description of
the Junior Subordinated Debentures -- Optional Redemption."
The Junior Subordinated Debentures are subordinate and
junior in right of payment to all Senior Indebtedness (as defined
herein) of the Company. The terms of the Junior Subordinated
Debentures place no limitation on the amount of Senior
Indebtedness that may be incurred by the Company. As of December
31, 1995, the Company had approximately $790 million of principal
amount of indebtedness for borrowed money and capital lease
obligations constituting Senior Indebtedness (as defined herein).
See "Description of the Junior Subordinated Debentures --
Subordination" and "Description of the Preferred Securities."
In the event of the liquidation of MP&L Capital, the Holders
of the Trust Securities will be entitled to receive either (i)
Junior Subordinated Debentures in an aggregate principal amount
of $25 per Preferred Security or (ii) a liquidation preference
amount of $25 per Preferred Security, plus accrued and unpaid
Distributions thereon to the date of payment, subject to certain
limitations. See Description of the "Preferred Securities --
Liquidation Distribution upon Termination."
Application will be made to list the Preferred Securities on
the New York Stock Exchange (the "NYSE").
The Preferred Securities will be represented by global
certificates registered in the name of The Depository Trust
Company (the "DTC") or its nominee. Beneficial interests in the
Preferred Securities will be shown on, and transfers thereof will
be effected only through, records maintained by participants in
DTC. Except as described herein, Preferred Securities in
certificated form will not be issued in exchange for the global
certificates. See "Description of the Preferred Securities --
Book-Entry Only Issuance - The Depository Trust Company."
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE PREFERRED SECURITIES OFFERED HEREBY AT LEVELS
ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE,
IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934 (the "1934 Act") and, in
accordance therewith, files reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other
information filed by the Company may be inspected and copied at
the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the following Regional Offices of the Commission: New York
Regional Office, 7 World Trade Center, 13th Floor, New York, New
York 10048; and Chicago Regional Office, Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material may also be obtained at prescribed rates from
the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Company's Common Stock
is listed on the New York Stock Exchange. Reports and other
information concerning the Company may be inspected and copied at
the office of such Exchange at 20 Broad Street, New York, New
York. In addition, certain of the Company's preferred stocks are
listed on the American Stock Exchange. Reports and other
information concerning the Company may be inspected and copied at
the office of such Exchange at 86 Trinity Place, New York, New
York.
No separate financial statements of MP&L Capital are
included herein. The Company considers that such financial
statements would not be material to Holders of the Preferred
Securities because the Company is a reporting company under the
1934 Act and MP&L Capital has no independent operations, but
exists for the sole purpose of issuing the Trust Securities and
holding as trust assets the Junior Subordinated Debentures.
MP&L Capital will not file separate reports under the 1934
Act. The obligations of the Company under the Junior
Subordinated Debentures to pay principal and interest, and the
obligations of the Company under the Junior Subordinated
Debentures and pursuant to the Trust Agreement to pay amounts
equal to all expenses of MP&L Capital, together with the
Guarantee and the rights of the Holders of Preferred Securities
to directly enforce the Company's obligations with respect to the
Junior Subordinated Debentures, constitute a full and
unconditional guarantee by the Company of payments due on the
Preferred Securities. See "Description of the Junior
Subordinated Debentures -- Additional Interest" and "Description
of the Guarantee -- Events of Default."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the
Commission pursuant to the 1934 Act, are hereby incorporated by
reference:
1. The Company's Annual Report on Form 10-K for the year
ended December 31, 1994 (the "Company 1994 10-K")
except for Items 7, 8 and 14(a)(1) thereof;
2. The Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1995, June 30, 1995 and
September 30, 1995;
3. The Company's Current Reports on Form 8-K dated January
5, 1995, February 23, 1995, February 27, 1995 (as
amended on Form 8-K/A dated May 25, 1995), March 3,
1995, July 12, 1995 (as amended on Form 8-K/A dated
September 8, 1995), October 6, 1995, January 8, 1996,
February 16, 1996 and March 11, 1996.
Each document filed subsequent to the date of this
Prospectus pursuant to Section 13(a), 13(c), 14 or 15(d) of the
1934 Act prior to the termination of the offering made by this
Prospectus shall be deemed to be incorporated by reference in
this Prospectus and shall be a part hereof from the date of
filing of such document; provided, however, that the documents
enumerated above or subsequently filed by the Company pursuant to
Section 13 of the 1934 Act prior to the filing with the
Commission of the Company's most recent Annual Report on Form 10-
K shall not be incorporated by reference in this Prospectus or be
a part hereof from and after the filing of such Annual Report on
Form 10-K. The documents which are incorporated by reference in
this Prospectus are sometimes hereinafter referred to as the
"Incorporated Documents."
Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other
subsequently filed document which is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus
is delivered, upon the written or oral request of any such
person, a copy of any document referred to above which has been
or may be incorporated in this Prospectus by reference, other
than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents).
Requests for such copies should be directed to: Shareholder
Services, Minnesota Power, 30 West Superior Street, Duluth,
Minnesota 55802, telephone number (218) 723-3974 or (800) 535-
3056.
PROSPECTUS SUMMARY
The following is a summary of certain information contained
herein and should be read in conjunction with such information
contained elsewhere in this Prospectus and is subject to and
qualified by reference to such information. Capitalized terms
used herein have the respective meanings ascribed to them
elsewhere in this Prospectus.
THE COMPANY
The Company was incorporated under the laws of the State of
Minnesota in 1906 and is a diversified electric utility engaged
in the generation, purchase, transmission, distribution and sale
of electric energy wholly within the state of Minnesota. The
principal executive offices of the Company are located at 30 West
Superior Street, Duluth, Minnesota 55802; and the telephone
number is (218) 722-2641.
MP&L CAPITAL
MP&L Capital is a Delaware statutory business trust created
for the exclusive purposes of (i) issuing the Preferred
Securities and Common Securities representing undivided
beneficial interests in the assets of MP&L Capital, (ii) holding
as trust assets the Junior Subordinated Debentures and (iii)
engaging in only those other activities necessary or incidental
thereto. Upon issuance of the Preferred Securities, the Holders
thereof will own all of the issued and outstanding Preferred
Securities. The Company has agreed to acquire Common Securities
in an amount equal to at least 3% of the total capital of MP&L
Capital and will own all of the issued and outstanding Common
Securities.
DESCRIPTION OF PREFERRED SECURITIES AND JUNIOR SUBORDINATED
DEBENTURES
The Preferred Securities are undivided preferred beneficial
interests in the assets of MP&L Capital and will have a
preference, under certain circumstances, with respect to cash
Distributions and amounts payable on liquidation, redemption or
otherwise over the trust interests represented by the Common
Securities issued by MP&L Capital.
Holders of the Preferred Securities will be entitled to
receive cumulative cash Distributions accruing from the date of
original issuance and payable quarterly in arrears on the last
day of March, June, September and December of each year,
commencing , 1996, at the per annum rate of % of
the liquidation preference amount thereof to the persons in whose
names the Preferred Securities are registered at the close of
business on the relevant record dates. Such Distributions will
originally accrue from, and include, the Closing Date and will
accrue to, and include, the first distribution payment date, and
thereafter will accrue from, and exclude, the last distribution
payment date through which Distributions have been paid. In the
event that any date on which a distribution is payable on the
Preferred Securities is not a Business Day (as defined herein),
then such distribution will be made on the next succeeding
Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is
in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date.
MP&L Capital will hold Junior Subordinated Debentures in an
aggregate principal amount equal to the liquidation preference
amount of the Trust Securities. The Junior Subordinated
Debentures are unsecured subordinated debt securities issued
under an Indenture dated as of , 1996, between the
Company and The Bank of New York, as Trustee (the "Indenture").
MP&L Capital will use interest payments on the Junior
Subordinated Debentures to make Distributions on the Preferred
Securities. The Junior Subordinated Debentures will be
subordinate to all Senior Indebtedness of the Company but are
senior to all capital stock of the Company.
The Company has the right to defer payments of interest on
the Junior Subordinated Debentures during Extension Periods of up
to 20 consecutive quarters, provided that no single distribution
payment period, as extended, may exceed 20 consecutive quarterly
interest payment periods or extend beyond the maturity of the
Junior Subordinated Debentures. Distributions on the Preferred
Securities will accrue with interest, compounded quarterly, but
will not be payable, during an Extension Period. The Company may
prepay at any time all or any portion of the interest accrued
during an Extension Period. Based upon the Company's current
financial condition and, in light of the restriction on payment
of dividends during an Extension Period, the Company believes
that an extension of a distribution payment period on the
Preferred Securities is unlikely and has no current intention to
cause such an extension of a distribution payment period. Upon
the termination of any Extension Period and the payment of all
amounts then due, the Company may elect another Extension Period.
The Company will give MP&L Capital and the Debenture Trustee
notice of its election of an Extension Period prior to the
earlier of (i) one Business Day prior to the record date for the
distribution which would occur but for such election or (ii) the
date the Company is required to give notice to the NYSE or other
applicable self-regulatory organization of such record date and
will cause MP&L Capital to send notice of such election to the
Holders of Preferred Securities.
If and to the extent the Company makes interest payments on
the Junior Subordinated Debentures deposited in MP&L Capital as
trust assets, the Property Trustee is obligated to make
Distributions promptly on the Preferred Securities. The payment
of Distributions on the Preferred Securities and payments on
liquidation of MP&L Capital and the redemption of Preferred
Securities are guaranteed by the Company if and to the extent
that MP&L Capital has funds available therefor.
The Junior Subordinated Debentures are redeemable, in whole
or in part, on or after , or at any time upon the
occurrence of a Special Event and in certain other circumstances,
at the option of the Company. Upon redemption of the Junior
Subordinated Debentures, the Preferred Securities and the Common
Securities will be redeemed on a pro rata basis to the same
extent as the Junior Subordinated Debentures are redeemed.
Upon the occurrence and during the continuation of a Special
Event, the Company may elect (i) to redeem the Junior
Subordinated Debentures at any time, in whole but not in part, in
which event all of the Trust Securities will be redeemed or (ii)
to cause the termination of MP&L Capital, in which event, after
the satisfaction of creditors of MP&L Capital, if any, the Junior
Subordinated Debentures will be distributed to the Holders of the
Preferred Securities and the Common Securities on a pro rata
basis. If at any time MP&L Capital is not or will not be taxed
as a grantor trust but a Tax Event in respect of the Preferred
Securities has not occurred, the Company has the right to
terminate MP&L Capital and cause the Junior Subordinated
Debentures to be distributed to the Holders of the Preferred
Securities in liquidation of MP&L Capital. If the Junior
Subordinated Debentures are distributed to the Holders of the
Preferred Securities, the Company will use its best efforts to
have the Junior Subordinated Debentures listed on the New York
Stock Exchange or on such other exchange as the Preferred
Securities are then listed. See "Description of the Preferred
Securities -- Special Event Redemption or Distribution."
The Company will guarantee payment, where applicable, of
accrued and unpaid Distributions, the Redemption Price and
amounts due upon liquidation, to the extent MP&L Capital has
funds available therefor.
The Trust Agreement (as defined herein) provides that the
Company shall pay for all debts and obligations (other than with
respect to the Trust Securities) and all costs and expenses of
MP&L Capital, including any taxes and all costs and expenses with
respect thereto, to which MP&L Capital may become subject, except
for United States withholding taxes.
No sinking fund will be established for the benefit of the
Preferred Securities.
RISK FACTORS
Prospective purchasers of Preferred Securities should
carefully review the information contained elsewhere herein and
should particularly consider the following risk factors with
respect to the Preferred Securities:
Ranking of Subordinated Obligations Under the Guarantee and the
Junior Subordinated Debentures
The Company's obligations under the Guarantee issued by the
Company for the benefit of the Holders of the Preferred
Securities are unsecured and rank subordinate and junior in right
of payment to Senior Indebtedness of the Company, except any
liabilities that may be made pari passu expressly by their terms.
The obligations of the Company under the Junior Subordinated
Debentures are subordinate and junior in right of payment to
Senior Indebtedness of the Company. As of December 31, 1995,
Senior Indebtedness of the Company aggregated approximately $790
million. There are no terms of the Preferred Securities, the
Junior Subordinated Debentures or the Guarantee that limit the
Company's ability to incur additional indebtedness, including
indebtedness that would rank senior to the Junior Subordinated
Debentures and the Guarantee. See "Description of the Guarantee
-- Status of the Guarantee" and "Description of the Junior
Subordinated Debentures -- Subordination."
The ability of MP&L Capital to pay amounts due on the
Preferred Securities is solely dependent upon the Company making
payments on the Junior Subordinated Debentures as and when
required.
Option to Extend Interest Payment Period; Tax Consequences
The Company has the right under the Indenture to extend the
interest payment period at any time and from time to time on the
Junior Subordinated Debentures, for a period not exceeding 20
consecutive quarters. As a consequence of any such extension,
quarterly Distributions on the Preferred Securities would be
deferred by MP&L Capital during such Extension Period, but would
continue to accumulate additional Distributions thereon at the
rate of % per annum. In the event that the Company exercises
this right, during any Extension Period the Company may not (i)
declare or pay dividends or distributions (other than dividends
or distributions in Common Stock of the Company) on, or redeem,
purchase, acquire, or make a liquidation payment with respect to
any of its capital stock, or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem
any indebtedness that is pari passu with the Junior Subordinated
Debentures (including other Debt Securities, as defined herein)
or make any guarantee payment with respect to the foregoing.
Prior to the termination of any such Extension Period, the
Company may further extend the interest payment period, provided
that such Extension Period together with all such previous and
further extensions thereof may not exceed 20 consecutive quarters
and that such extended interest payment period may not extend
beyond the maturity date of the Junior Subordinated Debentures.
Any Extension Period with respect to payment of interest on the
Junior Subordinated Debentures, other Debt Securities or on any
similar securities will apply to all such securities and will
also apply to distributions with respect to the Preferred
Securities and all other securities with terms substantially the
same as the Preferred Securities. See "Description of the
Preferred Securities -- Distributions" and "Description of the
Junior Subordinated Debentures -- Option to Extend Interest
Payment Period."
Because the Company has the right to extend the interest
payment period on the Junior Subordinated Debentures, the Junior
Subordinated Debentures will be treated as having been issued
with original issue discount ("OID") for United States federal
income tax purposes. As a result, Holders of Preferred
Securities will be required to include in their gross income
Distributions as they accrue, rather than when they are paid,
regardless of the Holder's regular method of accounting. OID on
the Preferred Securities will be treated as interest and will
generally be equal to the Distributions on the Preferred
Securities each year. Should an Extension Period occur, a Holder
of Preferred Securities will continue to accrue interest (in the
form of OID) in income in respect of its pro rata share of the
Junior Subordinated Debentures held by MP&L Capital for United
States federal income tax purposes. As a result, a Holder of
Preferred Securities will include such interest in gross income
for United States federal income tax purposes in advance of the
receipt of cash, and will not receive the cash related to such
income from MP&L Capital if the Holder disposes of the Preferred
Securities prior to the record date for the payment of
Distributions. See "Certain United States Federal Income Tax
Considerations -- Potential Extension of Interest Payment Period
and Original Issue Discount."
The Company has no current intention of exercising its right
to defer payments of interest by extending the interest payment
period on the Junior Subordinated Debentures. However, should
the Company elect to exercise such right in the future, the
market price of the Preferred Securities is likely to be
affected. A Holder that disposes of its Preferred Securities
during an Extension Period, therefore, might not receive the same
return on its investment as a Holder that continues to hold its
Preferred Securities. In addition, as a result of the existence
of the Company's right to defer interest payments, the market
price of the Preferred Securities (which represent a preferred
undivided beneficial interest in the Junior Subordinated
Debentures) may be more volatile than other securities on which
original issue discount accrues that do not have such rights.
Special Event Redemption or Distribution; Potential Adverse
Effect on Market Price
Upon the occurrence and continuation of a Special Event, the
Company has the right to (i) redeem the Junior Subordinated
Debentures, in whole but not in part, and therefore cause a
mandatory redemption of all the Preferred Securities at the
Redemption Price within 90 days following the occurrence of such
Special Event or (ii) cause the termination of MP&L Capital and,
in connection therewith, after satisfaction of creditors of MP&L
Capital, if any, cause the Junior Subordinated Debentures to be
distributed to the Holders of Trust Securities at the Redemption
Price within 90 days following the occurrence of such Special
Event. If at any time MP&L Capital is not or will not be taxed
as a grantor trust but a Tax Event (as defined herein) in respect
of the Preferred Securities has not occurred, the Company has the
right to terminate MP&L Capital and cause the Junior Subordinated
Debentures to be distributed to the Holders of the Preferred
Securities in liquidation of MP&L Capital. There can be no
assurance as to the market prices for the Junior Subordinated
Debentures which may be distributed in exchange for Preferred
Securities if a termination and liquidation of MP&L Capital were
to occur. Accordingly, such Junior Subordinated Debentures
could, if distributed, trade at a discount to the price of the
Preferred Securities exchanged. See "Description of the
Preferred Securities -- Special Event Redemption or Distribution"
and "Certain United States Federal Income Tax Consequences."
On December 7, 1995, the U.S. Treasury Department proposed
certain tax law changes that, among other things, would generally
deny interest deductions to corporate issuers of debt if the debt
instrument has a term exceeding 20 years and is not reflected as
indebtedness on the issuer's balance sheet. As described in the
Treasury Department's proposal, the proposed changes would not
affect the ability of the Company to deduct interest on the
Junior Subordinated Debentures because the term of the Junior
Subordinated Debentures is _____ years. However, there can be no
assurance that subsequent proposals or final legislation will not
affect the ability of the Company to deduct interest on the
Junior Subordinated Debentures, which in turn could give rise to
a Tax Event, as described more fully under "Description of the
Preferred Securities -- Special Event Redemption or
Distribution." Accordingly, there can be no assurance that a
Special Event will not occur.
There can be no assurance as to the market prices for
Preferred Securities or Junior Subordinated Debentures that may
be distributed in exchange for Preferred Securities if a
dissolution or liquidation of MP&L Capital were to occur.
Accordingly, the Preferred Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the
secondary market, or the Junior Subordinated Debentures that a
Holder of Preferred Securities may receive on termination and
liquidation of the MP&L Capital, may trade at a discount to the
price that the investor paid to purchase the Preferred Securities
offered hereby. Because Holders of Preferred Securities may
receive Junior Subordinated Debentures upon the occurrence of a
Special Event, prospective purchasers of Preferred Securities are
also making an investment decision with regard to the Junior
Subordinated Debentures and should carefully review all the
information regarding the Junior Subordinated Debentures
contained herein. See "Description of the Preferred Securities -
- Special Event Redemption or Distribution" and "Description of
the Junior Subordinated Debentures -- General" in the
accompanying Prospectus.
Limited Voting Rights
Holders of Preferred Securities will generally have limited
voting rights relating only to the modification of the Preferred
Securities and the dissolution, winding-up or termination of MP&L
Capital. Holders of Preferred Securities will not be entitled to
vote to appoint, remove or replace the Property Trustee or the
Delaware Trustee, which voting rights are vested exclusively in
the Holder of the Common Securities except upon the occurrence of
certain events described herein. The Administrative Trustees and
the Company may amend the Trust Agreement to ensure that MP&L
Capital will be classified for United States federal income tax
purposes as a grantor trust without the consent of Holders, even
if such action adversely affects the interests of Holders. See
"Description of the Preferred Securities -- Voting Rights", "--
Amendments" and "-- Co-Trustees and Separate Property Trustees."
Rights Under the Guarantee; Limitation as to Funds Available to
MP&L Capital
The Guarantee will be qualified as an indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). The Bank of New York will act as indenture trustee under
the Guarantee for the purposes of compliance with the Trust
Indenture Act (the "Guarantee Trustee") and will hold the
Guarantee for the benefit of the Holders of the Preferred
Securities. The Bank of New York will also act as trustee for
the Junior Subordinated Debentures and as Property Trustee under
the Trust Agreement.
The Guarantee guarantees to the Holders of the Preferred
Securities to the extent not paid by MP&L Capital, the payment
(but not the collection) of (i) any accrued and unpaid
Distributions required to be paid on the Preferred Securities, to
the extent MP&L Capital has funds available therefor, (ii) the
Redemption Price with respect to Preferred Securities called for
redemption by MP&L Capital, to the extent MP&L Capital has funds
available therefor and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of MP&L Capital (unless
the Junior Subordinated Debentures are distributed to Holders of
the Preferred Securities), the lesser of (a) the aggregate of the
liquidation preference amount and all accrued and unpaid
Distributions on the Preferred Securities to the date of payment
and (b) the amount of assets of MP&L Capital remaining available
for distribution to Holders of the Preferred Securities in
liquidation of MP&L Capital. The Holders of not less than a
majority in aggregate liquidation preference amount of the
Preferred Securities have the right to direct the time, method
and place of conducting any proceeding for any remedy available
to the Guarantee Trustee or to direct the exercise of any trust
power conferred upon the Guarantee Trustee under the Guarantee.
Any Holder of Preferred Securities may institute a legal
proceeding directly against the Company to enforce the Guarantee
Trustee's rights under the Guarantee without first instituting a
legal proceeding against MP&L Capital, the Guarantee Trustee or
any other person or entity. If the Company were to default on
its obligations under the Junior Subordinated Debentures, MP&L
Capital would lack available funds for the payment of
Distributions or amounts payable on redemption of the Preferred
Securities or otherwise, and in such event Holders of the
Preferred Securities would not be able to rely upon the Guarantee
for payment of such amounts. If the Property Trustee fails to
enforce its rights under the Junior Subordinated Debentures or
the Trust Agreement, any Holder of Preferred Securities may
institute a legal proceeding directly against the Company to
enforce the Property Trustee's rights under the Junior
Subordinated Debentures or the Trust Agreement, to the fullest
extent permitted by law, without first instituting any legal
proceeding against the Property Trustee or any other person or
entity. See "Description of the Guarantee -- Status of the
Guarantee" and "Description of the Junior Subordinated Debentures
-- Subordination" herein. The Trust Agreement pursuant to which
MP&L Capital has been formed provides that each Holder of
Preferred Securities by acceptance thereof agrees to the
provisions of the Guarantee and the Indenture.
The Preferred Securities are subject to mandatory redemption
upon repayment of the Junior Subordinated Debentures at maturity
or upon their earlier redemption. See "Description of the
Preferred Securities -- Redemption Procedures." The Company will
have the option at any time on or after upon not
less than 45 days' notice, to redeem the Junior Subordinated
Debentures, in whole or in part.
Trading Characteristics of Preferred Securities
The Preferred Securities constitute a new issue of
securities with no established trading market. While the Company
will apply to list the Preferred Securities on the NYSE, a
minimum of 400 beneficial holders and 1,000,000 outstanding
securities is required for listing a new class of securities on
the NYSE. Accordingly, no assurance can be given as to the
liquidity of, or the development and maintenance of trading
markets for, the Preferred Securities. If approved for listing,
the Preferred Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to
the underlying Junior Subordinated Debentures. A Holder that
disposes of Preferred Securities between record dates for
payments of Distributions thereon will be required to include
accrued but unpaid interest on the Junior Subordinated Debentures
through the date of disposition in income as ordinary income and
to add such amount to such Holder's adjusted tax basis in such
Holder's pro rata share of the underlying Junior Subordinated
Debentures deemed disposed of. To the extent the selling price
is less than such Holder's adjusted tax basis (which will
include, in the form of OID, all accrued and unpaid interest),
such Holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset
ordinary income for United States federal income tax purposes.
See "Certain United States Federal Income Tax Consequences --
Potential Extension of Interest Payment Period and Original Issue
Discount" and "-- Sale, Exchange and Redemption of the Preferred
Securities."
THE COMPANY
The Company is an operating public utility incorporated
under the laws of the State of Minnesota since 1906. Its
principal executive office is at 30 West Superior Street, Duluth,
Minnesota 55802, and its telephone number is (218) 722-2641. The
Company has operations in four business segments: (1) electric
operations, which include electric and gas services, and coal
mining; (2) water operations, which include water and wastewater
services; (3) automobile auctions, which also include a finance
company and an auto transport company; and (4) investments, which
include real estate operations, a 22.1 percent equity investment
in a financial guaranty reinsurance company, and a securities
portfolio. As of December 31, 1995, the Company and its
subsidiaries had approximately 5,600 employees.
Summary of Earnings Per Share
Year Ended December 31,
------------------------
1993 1994 1995
---- ---- ----
Consolidated Earnings Per Share
Continuing Operations $ 2.27 $ 1.99 $ 2.06
Discontinued Operations (*) (.07) .07 .10
------ ------ ------
Total $ 2.20 $ 2.06 $ 2.16
====== ====== ======
Percentage of Earnings by Business Segment
Continuing Operations
Electric Operations 63% 63% 61%
Water Operations 4 23 (2)
Automobile Auctions - - 0
Investments 36 11 36
Discontinued Operations(*) (3) 3 5
---- ---- ----
100% 100% 100%
==== ==== ====
_______________
(*) On June 30,1995, the Company sold its interest in its paper
and pulp business to Consolidated Papers, Inc. ("CPI") for
$118 million in cash, plus CPI's assumption of certain debt
and lease obligations. The Company is still committed
to a maximum guarantee of $90 million to ensure a portion
of a $33.4 million annual lease obligation for paper
mill equipment under an operating lease extending to
2012. CPI has agreed to indemnify the Company for any
payments the Company may make as a result of the Company's
obligation relating to this operating lease.
Electric Operations
Electric operations generate, transmit, distribute and sell
electricity. The Company provides electricity to 122,000 customers in
northern Minnesota, while the Company's wholly owned subsidiary,
Superior Water, Light and Power Company, sells electricity to 14,000
customers and natural gas to 11,000 customers, and provides water to
10,000 customers in northwestern Wisconsin. Another wholly owned
subsidiary, BNI Coal, Ltd. ("BNI Coal") owns and operates a lignite
mine in North Dakota. Two electric generating cooperatives, Minnkota
Power Cooperative, Inc. and Square Butte Electric Cooperative ("Square
Butte"), presently consume virtually all of BNI Coal's production of
lignite coal under coal supply agreements extending to 2027. Under an
agreement with Square Butte, the Company purchases 71 percent of the
output from the Square Butte unit which is capable of generating up to
470 megawatts.
In 1995 large industrial customers contributed about half of the
Company's electric operating revenue. The Company has large power
contracts to sell power to eleven industrial customers (five taconite
producers, five paper companies and a pipeline company) each requiring
10 megawatts or more of power. These contracts, which have
termination dates ranging from April 1997 to December 2005, require
the payment of minimum monthly demand charges that cover most of the
fixed costs, including a return on common equity, associated with
having the capacity available to serve these customers.
Water Operations
Water operations include Southern States Utilities, Inc. ("SSU")
and Heater Utilities, Inc. ("Heater"), both wholly owned subsidiaries
of the Company. SSU is the largest private water supplier in Florida.
At December 31, 1995, SSU provided water to 117,000 customers and
wastewater treatment services to 53,000 customers in Florida. At
December 31, 1995, Heater provided water to 26,000 customers and
wastewater treatment services to 3,000 customers in North Carolina and
South Carolina. These water operations have been upgrading existing
facilities and building new facilities.
Responding to a Florida Supreme Court decision addressing the
issue of retroactive ratemaking with respect to another company, on
March 5, 1996, the Florida Public Service Commission ("FPSC") voted to
reconsider an October 1995 order (the "Refund Order") which would have
required SSU to refund about $10 million, including interest, to
customers who paid more since October 1993 under uniform rates than
they would have paid under stand alone rates. Under the Refund Order,
the collection of the $10 million from customers who paid less under
uniform rates would not be permitted. The Refund Order was in
response to the Florida First District Court of Appeals reversal in
April 1995 of the 1993 FPSC order which approved uniform rates for
most of SSU's service areas in Florida. With "uniform rates," all
customers in the uniform rate areas pay the same rates for water and
wastewater services. Uniform rates are an alternative to "stand-
alone" rates which are calculated based on the cost of serving each
service area. The FPSC will reconsider the Refund Order at an
undetermined date. SSU continues to believe that it would be improper
for the FPSC to order a refund to one group of customers without
permitting recovery of a similar amount from the remaining customers
since the First District Court of Appeals affirmed SSU's total revenue
requirement for operations in Florida. No provision for refund has
been recorded.
In June 1995 SSU filed a request with the FPSC for an $18.6
million annual increase in water and wastewater treatment rates. On
November 1, 1995, the FPSC denied the Company's original $12 million
interim rate request for two reasons: (1) it was based on uniform
rates which were deemed improper by a court order subsequent to the
Company's original filing, and (2) the FPSC had not yet formulated a
policy on allowable investments and expenses to be included in a
forward-looking interim test year. The Company submitted additional
information to support interim rate approval of $12 million based on a
forward-looking test year and $8.4 million based on a historical test
year. On January 4, 1996, the FPSC permitted the Company to implement
an interim rate increase (based on a historical test year) of $7.9
million, on an annualized basis, over revenue previously collected
under a uniform rate structure. Interim rates went into effect on
January 23, 1996. Final rates are anticipated to become effective in
the fourth quarter of 1996.
Automobile Auctions
The Company has an 83 percent ownership interest in ADESA
Corporation ("ADESA"), the third largest automobile auction business
in the United States. ADESA, headquartered in Indianapolis, Indiana,
owns and operates 19 automobile auctions in the United States and
Canada through which used cars and other vehicles are sold to
franchised automobile dealers and licensed used car dealers. Two
wholly owned subsidiaries of ADESA, Automotive Finance Company and
ADESA Auto Transport, perform related services. Sellers at ADESA's
auctions include domestic and foreign auto manufacturers, car dealers,
fleet/lease companies, banks and finance companies.
The Company acquired 80 percent of ADESA on July 1, 1995, for
$167 million in cash. Proceeds from the sale of the paper and pulp
business combined with proceeds from the sale of securities
investments were used to fund this acquisition. Acquired goodwill and
other intangible assets associated with this acquisition are being
amortized on a straight line basis over periods not exceeding 40
years. In January 1996 the Company provided an additional $15 million
of capital in exchange for 1,982,346 original issue common stock
shares of ADESA. This capital contribution increased the Company's
ownership interest in ADESA to 83 percent. Put and call agreements
with ADESA's four top managers provide ADESA management the right to
sell to the Company, and the Company the right to purchase, ADESA
management's 17 percent retained ownership interest in ADESA, in
increments during the years 1997, 1998 and 1999, at a price based on
ADESA's financial performance.
Investments
The Company owns 80 percent of Lehigh Acquisition Corporation, a
real estate company which owns various real estate properties and
operations in Florida.
The Company has a 22.1 percent equity investment in Capital Re
Corporation ("Capital Re"). Capital Re is a Delaware holding company
engaged primarily in financial and mortgage guaranty reinsurance
through its wholly owned subsidiaries, Capital Reinsurance Company and
Capital Mortgage Reinsurance Company. Capital Reinsurance Company is
a reinsurer of financial guarantees of municipal and non-municipal
debt obligations. Capital Mortgage Reinsurance Company is a reinsurer
of residential mortgage guaranty insurance. The Company's equity
investment in Capital Re at December 31, 1995, was $93 million.
As of December 31, 1995, the Company had approximately $106
million invested in a securities portfolio. The majority of the
securities are investment grade stocks of other utility companies and
are considered by the Company to be conservative investments.
Additionally, the Company sells common stock securities short and
enters into short sales of treasury futures contracts as part of an
overall investment portfolio hedge strategy.
MP&L CAPITAL
MP&L Capital is a statutory business trust created under Delaware
law pursuant to (i) a trust agreement executed by the Company, as
depositor for MP&L Capital, the Property Trustee, the Delaware Trustee
(each as defined herein) and an Administrative Trustee, an employee of
the Company (together with such other Administrative Trussees from
time to time appointed by the Company, the "Administrative Trustees")
of such trust (the "Original Trust Agreement") and (ii) the filing
of a certificate of trust with the Delaware Secretary of State on
February 15, 1996. Such trust agreement will be amended and restated
in its entirety (as so amended and restated, the "Trust Agreement")
substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The Trust
Agreement will be qualified as an indenture under the Trust Indenture
Act. MP&L Capital exists for the exclusive purposes of (i)
issuing Trust Securities representing undivided beneficial
interests in the assets of MP&L Capital, (ii) holding the Junior
Subordinated Debentures as trust assets and (iii) engaging in
only those other activities necessary or incidental thereto.
All of the Common Securities will be owned by the Company. The
Common Securities will rank pari passu, and payments will be made
thereon pro rata, with the Preferred Securities, except that upon the
occurrence and continuance of a default under the Indenture, the
rights of the Holder of the Common Securities to payment in respect of
Distributions and payments upon liquidation, redemption and otherwise
will be subordinated to the rights of the Holders of the Preferred
Securities. The Company will acquire Common Securities having an
aggregate liquidation preference amount equal to 3% of the total
capital of MP&L Capital. MP&L Capital has a term of approximately
years, but may terminate earlier as provided in the Trust Agreement.
MP&L Capital's business and affairs will be conducted by the
Administrative Trustees. The office of the Delaware Trustee in the
State of Delaware is White Clay Center, Route 273, Newark, Delaware
19711. The principal place of business of MP&L Capital is c/o
Minnesota Power & Light Company, 30 West Superior Street, Duluth,
Minnesota 55802.
MINNESOTA POWER & LIGHT COMPANY
SUMMARY FINANCIAL INFORMATION
Historical
------------------------
Year Ended December 31,
1993 1994 1995
---- ---- ----
(In thousands except
per share amounts)
INCOME STATEMENT DATA:
Operating revenue and income $582,495 $582,167 $672,917
Income
Continuing operations $ 64,374 $ 59,465 $ 61,857
Discontinued operations (1,753) 1,868 2,848
-------- -------- --------
Net Income $ 62,621 $ 61,333 $ 64,705
Earnings per share
of common stock
Continuing operations $ 2.27 $ 1.99 $ 2.06
Discontinued operations (.07) $ .07 $ .10
------ ------ ------
Total $ 2.20 $ 2.06 $ 2.16
Pro Forma(1)
-----------------------
Year Ended December 31,
1994 1995
---- ----
(In thousands except
per share amounts)
INCOME STATEMENT DATA:
Operating revenue and income $674,696 $729,674
Income
Continuing operations $ 61,771 $ 61,422
Discontinued operations $ 1,868 $ 2,848
-------- --------
Net Income $ 63,639 $ 64,270
Earnings per share
of common stock
Continuing operations $ 2.07 $ 2.04
Discontinued operations $ .07 $ .10
------ ------
Total $ 2.14 $ 2.14
December 31, 1995 Percent
----------------- -------
(In thousands)
BALANCE SHEET DATA:
Common stock equity $ 584,072 46%
Preferred stock not subject
to mandatory redemption 28,547 2
Preferred stock subject
to mandatory redemption 20,000 2
Long-term debt
(excluding current maturities) $ 639,548 50
---------- ----
Total capitalization $1,272,167 100%
Ratios of Earnings to Fixed Charges (2)
Year Ended December 31,
--------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
Ratios of
Earnings
to Fixed Charges 2.55 2.60 2.52 2.17 1.90
Supplemental Ratios of Earnings to Fixed Charges (2)(3)
Year Ended December 31,
--------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
Supplemental
Ratios of
Earnings
to Fixed Charges 2.20 2.25 2.19 1.95 1.73
Ratios of Earnings to Fixed Charges and Preferred Dividends (2)
Year Ended December 31,
--------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
Ratios of
Earnings
to Fixed Charges
and Preferred
Dividends 2.32 2.38 2.32 2.03 1.76
Supplemental Ratios of Earnings to Fixed Charges and
Preferred Dividends (2)(3)
Year Ended December 31,
--------------------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
Supplemental
Ratios of
Earnings
to Fixed Charges
and Preferred
Dividends 2.04 2.10 2.05 1.84 1.63
---------------
(1) Presents unaudited pro forma consolidated results as if ADESA was
acquired on January 1, 1994. See Note 3 to the Company's
Consolidated Financial Statements in the Company's Form 8-K dated
February 16, 1996, incorporated herein by reference.
(2) Ratios for prior periods have been restated to reflect
discontinued operations.
(3) The supplemental ratio of earnings to fixed charges includes the
Company's obligation under a contract with Square Butte which
extends through 2007, pursuant to which the Company is purchasing
71 percent of the output of a generating unit capable of
generating up to 470 megawatts. The Company is obligated to
pay Square Butte all of Square Butte's leasing, operating
and debt service costs (less any amounts collected from
the sale of power or energy to others) that shall not have been
paid by Square Butte when due. See Note 12 to the Company's
Consolidated Financial Statements in the Company's Form 8-K
dated February 16, 1996, incorporated herein by reference.
USE OF PROCEEDS
The proceeds to be received by MP&L Capital from the sale of the
Preferred Securities will be used to purchase Junior Subordinated
Debentures of the Company. The proceeds of such purchase will be
applied by the Company for general corporate purposes, which may
include the acquisition of outstanding securities of the Company.
DESCRIPTION OF THE PREFERRED SECURITIES
MP&L Capital was authorized and created by the Original Trust
Agreement. The Preferred Securities and the Common Securities will be
created pursuant to the terms of the Trust Agreement. The Preferred
Securities will represent undivided beneficial interests in the assets
of MP&L Capital and entitle the Holders thereof to a preference over
the Common Securities in certain circumstances with respect to
Distributions and amounts payable on redemption or liquidation, as
well as other benefits as described in the Trust Agreement. The
following summaries of certain provisions of the Trust Agreement do
not purport to be complete and are subject to, and are qualified in
their entirety by reference to, the provisions of the Trust Agreement,
including the definitions therein of certain terms, and the Trust
Indenture Act. Wherever particular sections or defined terms of the
Trust Agreement are referred to, such sections or defined terms are
incorporated herein by reference. The Trust Agreement has been filed
as an exhibit to the Registration Statement of which this Prospectus
forms a part.
General
All of the Common Securities are owned by the Company. The
Common Securities will rank pari passu, and payments will be made
thereon pro rata, with the Preferred Securities based on the
liquidation preference amount of the Trust Securities, except as
described under "Subordination of Common Securities." (Section 4.03).
The Junior Subordinated Debentures will be owned by MP&L Capital and
held by the Property Trustee in trust for the benefit of the Holders
of the Trust Securities. (Section 2.09). The Guarantee is a full and
unconditional guarantee with respect to the Preferred Securities but
does not guarantee payment of Distributions or amounts payable on
redemption or liquidation of the Preferred Securities when MP&L
Capital does not have funds available to make such payments.
Distributions
The Distributions payable on the Preferred Securities will be
fixed at a rate per annum of % of the stated liquidation
preference amount thereof. The term "Distributions" as used herein
includes interest payable on overdue Distributions, unless otherwise
stated. The amount of Distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months and
for any period shorter than a full month, on the basis of the actual
number of days elapsed. (Section 4.01(b)). Distributions that are in
arrears will bear interest on the amount thereof at the per annum rate
of % (to the extent permitted by applicable law, compounded
quarterly).
Distributions on the Preferred Securities will be cumulative,
will accrue from the date of initial issuance thereof, and will be
payable quarterly in arrears, on March 31, June 30, September 30 and
December 31 of each year, commencing , 1996, except as
otherwise described below. Such Distributions will originally accrue
from, and include, the date of initial issuance and will accrue to,
and include, the first distribution payment date, and thereafter will
accrue from, and exclude, the last distribution payment date through
which Distributions have been paid. In the event that any date on
which Distributions are otherwise payable on the Preferred Securities
is not a Business Day, payment of the distribution payable on such
date will be made on the next succeeding Business Day (and without any
interest or other payment in respect of any such delay) except that,
if such Business Day is in the next succeeding calendar year, payment
of such distribution shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made
on such date (each date on which Distributions are otherwise payable
in accordance with the foregoing, a distribution payment date).
(Section 4.01(a)). A Business Day is used herein to mean any day
other than a Saturday or a Sunday or a day on which banking
institutions in The City of New York are authorized or required by law
or executive order to remain closed or a day on which the Corporate
Trust Office of the Property Trustee or the Debenture Trustee (as
defined herein) is closed for business.
The Company has the right under the Indenture pursuant to which
it will issue the Junior Subordinated Debentures to extend the
interest payment period at any time or from time to time on the Junior
Subordinated Debentures to a period not exceeding 20 consecutive
quarters, with the consequence that quarterly Distributions on the
Preferred Securities would be deferred (but would continue to accrue
with interest payable on unpaid Distributions at the rate per annum
set forth above, compounded quarterly) by MP&L Capital during any such
Extension Period. In the event that the Company exercises this right,
during such period the Company may not (i) declare or pay dividends or
distributions (other than dividends or distributions in Common Stock
of the Company) on, or redeem, purchase, acquire, or make a
liquidation payment with respect to any of its capital stock, or (ii)
make any payment of principal of, interest or premium, if any, on, or
repay, repurchase or redeem any indebtedness that is pari passu with
the Junior Subordinated Debentures (including other Debt Securities)
or make any guarantee payment with respect to the foregoing. Prior to
the termination of any such Extension Period, the Company may further
extend the interest payment period, provided that such Extension
Period together with all such previous and further extensions thereof
may not exceed 20 consecutive quarters and that such Extension Period
may not extend beyond the maturity date of the Junior Subordinated
Debentures. Any Extension Period with respect to payment of interest
on the Junior Subordinated Debentures, other Debt Securities or on any
similar securities will apply to all such securities and will also
apply to Distributions with respect to the Preferred Securities and
all other securities with terms substantially the same as the
Preferred Securities. Upon the termination of any Extension Period
and the payment of all amounts then due, the Company may select a new
extended interest payment period, subject to the foregoing
requirements. See "Description of the Junior Subordinated Debentures -
- Interest" and "-- Option to Extend Interest Payment Period."
It is anticipated that the income of MP&L Capital available for
distribution to the Holders of the Preferred Securities will be
limited to payments on the Junior Subordinated Debentures to be
purchased by MP&L Capital with the proceeds of the sale of the
Preferred Securities. See "Description of the Junior Subordinated
Debentures." If the Company does not make interest payments on the
Junior Subordinated Debentures, the Property Trustee will not have
funds available to pay Distributions on the Preferred Securities and
the Common Securities. The payment of Distributions (if and to the
extent MP&L Capital has sufficient funds available for the payment of
such Distributions) is guaranteed by the Company as set forth herein
under "Descriptions of the Guarantee."
Distributions on the Preferred Securities will be payable to the
Holders thereof as they appear on the register of MP&L Capital on the
relevant record dates, which as long as the Preferred Securities
remain in book-entry form, will be one Business Day prior to the
relevant Distribution Date. Subject to any applicable laws and
regulations and the Trust Agreement, each such payment will be made as
described under "-- Book-Entry Only Issuance - The Depository Trust
Company." In the event any Preferred Securities are not in book-entry
form, the relevant record date for such Preferred Securities shall be
the date 15 days prior to the relevant Distribution Date or if such
date is not a Business Day, the next succeeding Business Day.
(Section 4.01(d)).
Redemption
The Junior Subordinated Debentures will mature on
, and the Company has the right to redeem the Junior Subordinated
Debentures (a) in whole or in part, on or after , or (b)
at any time, in whole but not in part, upon the occurrence of a Tax
Event or an Investment Company Event (each, as defined below, a
"Special Event"), subject to the conditions described under
"Description of the Junior Subordinated Debentures -- Optional
Redemption."
Mandatory Redemption
Upon the repayment of the Junior Subordinated Debentures, whether
at maturity or upon earlier redemption as provided in the Indenture,
the proceeds from such repayment shall be applied by the Property
Trustee to redeem a Like Amount (as defined herein) of Trust
Securities, upon not less than 30 nor more than 60 days' notice, at
the Redemption Price. See "Description of the Junior Subordinated
Debentures -- Optional Redemption."
Special Event Redemption or Distribution
If a Special Event shall occur and be continuing with respect to
the Preferred Securities, the Company has the right to (i) redeem the
Junior Subordinated Debentures in whole, but not in part, and
therefore cause a mandatory redemption of all the Preferred Securities
at the Redemption Price within 90 days following the occurrence of
such Special Event, or (ii) cause the termination of MP&L Capital and
in connection therewith, after satisfaction of MP&L creditors, if any,
cause the Junior Subordinated Debentures to be distributed to the
Holders of the Trust Securities at the Redemption Price within 90 days
following the occurrence of such Special Event. If at any time MP&L
Capital is not or will not be taxed as a grantor trust but a Tax Event
has not occurred, the Company has the right to terminate MP&L Capital
and cause the Junior Subordinated Debentures to be distributed to the
holders of the Preferred Securities in liquidation of MP&L Capital.
See "Certain United States Federal Income Tax Consequences -- Receipt
of Junior Subordinated Debentures or Cash Upon Liquidation of MP&L
Capital." If the Company does not elect either option (i) or (ii)
above, the Preferred Securities will remain outstanding and, in the
event a Tax Event has occurred and is continuing, Additional Interest
(as defined below) will be payable on the Junior Subordinated
Debentures.
"Like Amount" means (i) with respect to a redemption of Trust
Securities, Preferred Securities and Common Securities, each in
amounts having a liquidation value equal to the proportion all such
securities have to the liquidation value of all the Trust Securities,
together having an aggregate liquidation value equal to the principal
amount of Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture, the proceeds of which are
to be used to pay the Redemption Price of such Trust Securities and
(ii) with respect to a distribution of Junior Subordinated Debentures
to Holders of Trust Securities in connection with a liquidation of
MP&L Capital upon the occurrence of a Special Event or the bankruptcy,
termination or liquidation of the Company or an order for judicial
termination of MP&L Capital having been entered by a court of
competent jurisdiction, Junior Subordinated Debentures having a
principal amount equal to the liquidation value of the Trust
Securities of the Holders to which such Junior Subordinated Debentures
are distributed.
"Tax Event" means the receipt by MP&L Capital of an opinion of
counsel (which may be counsel to the Company or an affiliate but not
an employee thereof and which must be acceptable to the Property
Trustee) experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or
therein affecting taxation, or as a result of any official
administrative or judicial decision interpreting or applying such laws
or regulations, which amendment or change is effective or such
pronouncement or decision is announced on or after the date of
original issuance of the Preferred Securities, there is more than an
insubstantial risk that (i) MP&L Capital is, or will be within 90 days
of the date thereof, subject to United States federal income tax with
respect to income received or accrued on the Junior Subordinated
Debentures, (ii) interest payable by the Company on the Junior
Subordinated Debentures, is not, or within 90 days of the date
thereof, will not be, deductible, in whole or in part, for United
States federal income tax purposes, or (iii) MP&L Capital is, or will
be within 90 days of the date thereof, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
"Investment Company Event" means the occurrence of a change in
law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or
regulatory authority ("Change in 1940 Act Law") to the effect that
MP&L Capital is or will be considered an "investment company" that is
required to be registered under the Investment Company Act of 1940, as
amended, which Change in 1940 Act Law becomes effective on or after
the date of original issuance of the Preferred Securities.
On December 7, 1995, the U.S. Treasury Department proposed
certain tax law changes that, among other things, would generally deny
interest deductions to corporate issuers of debt if the debt
instrument has a term exceeding 20 years and is not reflected as
indebtedness on the issuer's balance sheet. As described in the
Treasury Department's proposal, the proposed changes would not affect
the ability of the Company to deduct interest on the Junior
Subordinated Debentures, because the term of the Junior Subordinated
Debentures is _____ years. However, there can be no assurance that
subsequent proposals or final legislation will not affect the ability
of the Company to deduct interest on the Junior Subordinated
Debentures, which in turn could give rise to a Tax Event. Accordingly,
there can be no assurance that a Special Event will not occur.
On the date fixed for any distribution of Junior Subordinated
Debentures, upon termination of MP&L Capital (i) the Preferred
Securities and the Common Securities will no longer be deemed to be
outstanding, (ii) DTC or its nominee, as the record holder of such
Preferred Securities, will receive a registered global certificate or
certificates representing the Junior Subordinated Debentures to be
delivered upon such distribution and (iii) certificates representing
Preferred Securities will be deemed to represent Junior Subordinated
Debentures having an aggregate principal amount equal to the stated
liquidation preference amount of, and bearing accrued and unpaid
interest equal to accrued and unpaid Distributions on, such Preferred
Securities until such certificates are presented to the Company or its
agent for transfer or reissuance.
There can be no assurance as to the market price for the Junior
Subordinated Debentures which may be distributed in exchange for
Preferred Securities if a termination and liquidation of MP&L Capital
were to occur. Accordingly, the Junior Subordinated Debentures which
an investor may subsequently receive on termination and liquidation of
MP&L Capital, may trade at a discount to the price of the Preferred
Securities exchanged. If the Junior Subordinated Debentures are
distributed to the Holders of Preferred Securities upon the
dissolution of MP&L Capital, the Company will use its best efforts to
list the Junior Subordinated Debentures on the NYSE or on such other
exchange on which the Preferred Securities are then listed.
Redemption Procedures
The Company may not redeem fewer than all the Junior Subordinated
Debentures and MP&L Capital may not redeem fewer than all the
outstanding Preferred Securities unless all accrued and unpaid
Distributions have been paid on all Preferred Securities for all
quarterly distribution periods terminating on or prior to the date of
redemption or if a partial redemption of the Preferred Securities
would result in the delisting of the Preferred Securities by any
national securities exchange on which the Preferred Securities are
then listed.
Preferred Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the
contemporaneous redemption of Junior Subordinated Debentures.
Redemptions of the Preferred Securities shall be made and the
Redemption Price shall be deemed payable on each date selected for
redemption (the "Redemption Date") only to the extent that MP&L
Capital has funds available for the payment of such Redemption Price.
(Section 4.02(c)). See also "Subordination of Common Securities."
If MP&L Capital gives a notice of redemption in respect of
Preferred Securities (which notice will be irrevocable), then, on or
before the Redemption Date, MP&L Capital will irrevocably deposit with
DTC funds sufficient to pay the applicable Redemption Price and will
give DTC irrevocable instructions and authority to pay the Redemption
Price to the beneficial holders of such Preferred Securities. If such
Preferred Securities are no longer in book-entry form, MP&L Capital,
to the extent funds are available, will irrevocably deposit with the
paying agent for such Preferred Securities funds sufficient to pay the
applicable Redemption Price and will give such paying agent
irrevocable instructions and authority to pay the Redemption Price to
the Holders thereof upon surrender of their certificates evidencing
such Preferred Securities. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date for any
Preferred Securities called for redemption shall be payable to the
Holders of such Preferred Securities on the relevant record dates for
the related distribution payment dates. If notice of redemption shall
have been given and funds deposited as required, then on the
Redemption Date, all rights of Holders of such Preferred Securities so
called for redemption will cease, except the right of the Holders of
such Preferred Securities to receive the Redemption Price, but without
interest thereon, and such Preferred Securities will cease to be
outstanding. In the event that any date fixed for redemption of
Preferred Securities is not a Business Day, then payment of the amount
payable on such date will be made on the next succeeding day which is
a Business Day (and without any interest or other payment in respect
of any such delay). In the event that payment of the Redemption Price
in respect of Preferred Securities called for redemption is improperly
withheld or refused and not paid either by MP&L Capital or by the
Company pursuant to the Guarantee described herein under "Description
of the Guarantee", Distributions on such Preferred Securities will
continue to accrue at the then applicable rate, from the original
Redemption Date to the date of payment, in which case the actual
payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United
States federal securities law), the Company may at any time and from
time to time purchase outstanding Preferred Securities by tender, in
the open market or by private agreement.
If less than all the Trust Securities are to be redeemed on a
Redemption Date, then the aggregate liquidation preference of such
securities to be redeemed shall be allocated on a pro rata basis to
the Common Securities and the Preferred Securities. The particular
Preferred Securities to be redeemed shall be selected not more than 60
days prior to the Redemption Date by the Property Trustee from the
outstanding Preferred Securities not previously called for redemption,
by such method as the Property Trustee shall deem fair and appropriate
and which may provide for the selection for redemption of Preferred
Securities in liquidation preference amounts equal to $25 or integral
multiples thereof. The Property Trustee shall promptly notify the
security registrar in writing of the Preferred Securities selected for
redemption and, in the case of any Preferred Securities selected for
partial redemption, the liquidation preference amount thereof to be
redeemed. For all purposes of the Trust Agreement, unless the context
otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred
Securities redeemed or to be redeemed only in part, to the portion of
the liquidation preference amount of Preferred Securities that has
been or is to be redeemed. (Section 4.02(f)).
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, the
Trust Securities, shall be made pro rata based on the Liquidation
Amount of the Trust Securities; provided, however, that if on any
distribution payment date or Redemption Date an Event of Default under
the Indenture (as described below, see "Events of Default; Notice")
under the Trust Agreement shall have occurred and be continuing, no
payment of any Distribution on, or Redemption Price of, any Common
Security, and no other payment on account of the redemption,
liquidation or other acquisition of Common Securities, shall be made
unless payment in full in cash of all accrued and unpaid Distributions
on all outstanding Preferred Securities for all distribution periods
terminating on or prior thereto, or in the case of payment of the
Redemption Price, the full amount of such Redemption Price on all
outstanding Preferred Securities, shall have been made or provided
for, and all funds available to the Property Trustee shall first be
applied to the payment in full, in cash, of all Distributions on, or
Redemption Price of, Preferred Securities then due and payable.
(Section 4.03(a)).
In the case of any default under the Trust Agreement resulting
from an Event of Default under the Indenture, the Company as Holder of
the Common Securities will be deemed to have waived any such default
under the Trust Agreement until the effect of all such Defaults with
respect to the Preferred Securities have been cured, waived or
otherwise eliminated. Until any such default under such Trust
Agreement with respect to the Preferred Securities has been so cured,
waived or otherwise eliminated, the Property Trustee shall act solely
on behalf of the Holders of the Preferred Securities and not the
Holders of the Common Securities, and only Holders of Preferred
Securities will have the right to direct the Property Trustee to act
on their behalf. (Section 4.03(b)).
Liquidation Distribution upon Termination
Pursuant to the Trust Agreement, MP&L Capital shall terminate and
shall be liquidated by the Property Trustee on the first to occur of:
(i) December 31, , the expiration of the term of MP&L Capital;
(ii) the bankruptcy, dissolution or liquidation of the Company; (iii)
the redemption of all of the Preferred Securities, (iv) the
termination and liquidation of MP&L Capital upon (a) the occurrence of
a Special Event or (b) in the event MP&L Capital is not or will not be
taxed as a grantor trust under the United States federal income tax
law, but a Tax Event has not occurred, and, in either such case, the
Company as Depositor has given written direction to the Property
Trustee to terminate MP&L Capital within 90 days of such event (which
direction is optional and wholly within the discretion of the Company
as Depositor) and (v) an order for judicial termination of MP&L
Capital having been entered by a court of competent jurisdiction.
(Sections 9.01 and 9.02).
If an early termination occurs as described in clause (ii),
(iii), (iv) or (v) above, MP&L Capital shall be liquidated by the
Property Trustee as expeditiously as the Property Trustee determines
to be appropriate by adequately providing for the satisfaction of
liabilities of creditors, if any, and by distributing to each Holder
of Preferred Securities and Common Securities a Like Amount of Junior
Subordinated Debentures, unless such distribution is determined by the
Property Trustee not to be practical, in which event such Holders will
be entitled to receive, out of the assets of MP&L Capital available
for distribution to Holders after adequate provision, as determined by
the Property Trustee, has been made for the satisfaction of
liabilities of creditors, if any, an amount equal to, in the case of
Holders of Preferred Securities, the aggregate liquidation preference
of the Preferred Securities plus accrued and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in
part because MP&L Capital has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable
directly by MP&L Capital on the Preferred Securities shall be paid on
a pro rata basis. The Company, as Holder of the Common Securities,
will be entitled to receive Distributions upon any such termination
pro rata with the Holders of the Preferred Securities, except that if
default has occurred and is continuing under the Indenture, the
Preferred Securities shall have a preference over the Common
Securities. (Sections 9.04(a) and 9.04(d)). If an early termination
occurs as described in clause (v) above, the Junior Subordinated
Debentures will be subject to optional redemption in whole but not in
part.
Events of Default; Notice
Any one of the following events constitutes an Event of Default
under the Trust Agreement (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or
order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of an Event of Default as defined in
Section 801 of the Indenture (see "Description of the Junior
Subordinated Debentures -- Events of Default"); or
(ii) default by MP&L Capital in the payment of any
distribution when it becomes due and payable, and continuation of
such default for a period of 30 days; or
(iii) default by MP&L Capital in the payment of any
Redemption Price, of any Trust Security when it becomes due and
payable; or
(iv) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Trustees in the Trust
Agreement (other than a covenant or warranty a default in the
performance of which or the breach of which is specifically dealt
with in clause (ii) or (iii) above), and continuation of such
default or breach for a period of 60 days after there has been
given, by registered or certified mail, to the Property Trustee
by the Holders of Preferred Securities having at least 10% of the
total liquidation preference amount of the outstanding Preferred
Securities, a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice is a
Notice of Default thereunder; or
(v) the occurrence of certain events of bankruptcy or
insolvency with respect to MP&L Capital;
Within five Business Days after the occurrence of any Event of
Default, the Property Trustee shall transmit to the Holders of Trust
Securities and the Company notice of any such Event of Default
actually known to the Property Trustee, unless such Event of Default
shall have been cured or waived.
Merger or Consolidation of the Property Trustee or the Delaware
Trustee
Any entity into which the Property Trustee or the Delaware
Trustee may be merged or with which it may be consolidated, or any
entity resulting from any merger, conversion or consolidation to which
the Property Trustee or the Delaware Trustee shall be a party, or any
entity succeeding to all or substantially all the corporate trust
business of the Property Trustee or the Delaware Trustee, shall be the
successor to the Property Trustee or the Delaware Trustee under the
Trust Agreement, provided such entity shall be otherwise qualified and
eligible. (Section 8.12).
Book-Entry Only Issuance -- The Depository Trust Company
The Depository Trust Company (the "DTC") will act as securities
depositary for all of the Preferred Securities. The Preferred
Securities will be issued only as fully-registered securities
registered in the name of Cede & Co. ("DTC's nominee"). One or more
fully-registered global Preferred Securities certificates,
representing the aggregate number of Preferred Securities, will be
issued and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the
New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the 1934 Act. DTC holds securities that
its participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and
certain other organizations ("Direct Participants"). DTC is owned by
a number of its Direct Participants and by the New York Stock
Exchange, the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC system is
also available to others, such as securities brokers and dealers,
banks and trust companies that clear transactions through or maintain
a direct or indirect custodial relationship with a Direct Participant
("Indirect Participants"). The rules applicable to DTC and its Direct
Participants and Indirect Participants are on file with the
Commission.
Purchases of Preferred Securities within the DTC system must be
made by or through Direct Participants, which will receive a credit
for the Preferred Securities on DTC's records. The ownership interest
of each actual purchaser of each Preferred Security (the "Beneficial
Owner") is in turn to be recorded on the Participants' records.
Beneficial Owners will not receive written confirmation from DTC of
their purchases, but Beneficial Owners are expected to receive written
confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the Participants through
which the Beneficial Owners purchased Preferred Securities. Transfers
of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the Preferred
Securities, except in the event that use of the book-entry system for
the Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities
deposited by Direct Participants with DTC are registered in the name
of DTC's nominee, Cede & Co. The deposit of Preferred Securities with
DTC and their registration in the name of Cede & Co. effect no change
in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Preferred Securities; DTC's records reflect
only the identity of the Direct Participants to whose accounts such
Preferred Securities are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by
Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements that
may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. as the registered
Holder of Preferred Securities. If less than all of the Preferred
Securities are being redeemed, DTC's current practice is to determine
by lot the amount of the interest of each Direct Participant in such
issue to be redeemed.
Although voting with respect to the Preferred Securities is
limited, in those cases where a vote is required, neither DTC nor Cede
& Co. will itself consent or vote with respect to Preferred
Securities. Under its usual procedures, DTC would mail an Omnibus
Proxy to MP&L Capital as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co. consenting or voting rights to those
Direct Participants to whose accounts the Preferred Securities are
credited on the record date (identified in a listing attached to the
Omnibus Proxy). The Company and MP&L Capital believe that the
arrangements among DTC, Direct and Indirect Participants, and
Beneficial Owners will enable the Beneficial Owners to exercise rights
equivalent in substance to the rights that can be directly exercised
by a holder of a beneficial interest in MP&L Capital.
Distribution payments on the Preferred Securities will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on the
relevant payment date in accordance with their respective holdings
shown on DTC's records unless DTC has reason to believe that it will
not receive payments on such payment date. Payments by Participants
to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the
account of customers in bearer form or registered in "street name,"
and such payments will be the responsibility of such Participant and
not of DTC, the Property Trustee, MP&L Capital or the Company, subject
to any statutory or regulatory requirements to the contrary that may
be in effect from time to time. Payment of Distributions to DTC is
the responsibility of MP&L Capital, disbursement of such payments to
Direct Participants is the responsibility of DTC, and disbursement of
such payments to the Beneficial Owners is the responsibility of
Participants.
Except as provided herein, a Beneficial Owner will not be
entitled to receive physical delivery of Preferred Securities.
Accordingly, each Beneficial Owner must rely on the procedures of DTC
to exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities
depositary with respect to the Preferred Securities at any time by
giving reasonable notice to MP&L Capital and the Company. Under such
circumstances, in the event that a successor securities depositary is
not obtained, Preferred Securities certificates are required to be
printed and delivered. Additionally, the Administrative Trustees
(with the consent of the Company) may decide to discontinue use of the
system of book-entry transfers through DTC (or any successor
depositary) with respect to the Preferred Securities. In that event,
certificates for the Preferred Securities will be printed and
delivered.
The information in this section concerning DTC and DTC's book-
entry system has been obtained from sources that the Company and MP&L
Capital believe to be reliable, but neither the Company nor MP&L
Capital takes responsibility for the accuracy thereof.
Voting Rights
Holders of Trust Securities shall be entitled to one vote for
each $25 in liquidation preferences represented by their Trust
Securities in respect of any matter as to which such Holders of Trust
Securities are entitled to vote. Except as described below and under
"-- Amendments," and under "Description of the Guarantee -- Amendments
and Assignment" and as otherwise required by law and the Trust
Agreement, the Holders of the Preferred Securities will have no voting
rights. (Section 6.01(a)).
So long as any Junior Subordinated Debentures are held by the
Property Trustee, the Property Trustee shall not (i) direct the time,
method and place of conducting any proceeding for any remedy available
to the Debenture Trustee, or executing any trust or power conferred on
the Debenture Trustee with respect to the Junior Subordinated
Debentures, (ii) waive any past default which is waivable under
Section 813 of the Indenture, (iii) exercise any right to rescind or
annul a declaration that the principal of all the Junior Subordinated
Debentures shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or the Junior
Subordinated Debentures, where such consent shall be required,
without, in each case, obtaining the prior approval of the Holders of
Preferred Securities having of at least 66 2/3% of the liquidation
preference amount of the outstanding Preferred Securities; provided,
however, that where a consent under the Indenture would require the
consent of each Holder of Junior Subordinated Debentures affected
thereby, no such consent shall be given by the Property Trustee
without the prior consent of each Holder of Preferred Securities. The
Property Trustee shall not revoke any action previously authorized or
approved by a vote of the Preferred Securities. If the Property
Trustee fails to enforce its rights under the Junior Subordinated
Debentures or the Trust Agreement, a Holder of Preferred Securities
may institute a legal proceeding directly against the Company to
enforce the Property Trustee's rights under the Junior Subordinated
Debentures or the Trust Agreement, to the fullest extent permitted by
law, without first instituting any legal proceeding against the
Property Trustee or any other person or entity. The Property Trustee
shall notify all Holders of the Preferred Securities of any notice of
default received from the Debenture Trustee. In addition to obtaining
the foregoing approvals of the Holders of the Preferred Securities,
prior to taking any of the foregoing actions, the Property Trustee
shall receive an opinion of counsel experienced in such matters to the
effect that MP&L Capital will be classified as a "grantor trust" and
will not be classified as an association taxable as a corporation for
United States federal income tax purposes on account of such action.
(Section 6.01(b)).
Any required approval of Holders of Preferred Securities may be
given at a separate meeting of Holders of Preferred Securities
convened for such purpose or pursuant to written consent. The
Administrative Trustees will cause a notice of any meeting at which
Holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such Holders is to be taken,
to be given to each Holder of Preferred Securities in the manner set
forth in the Trust Agreement. (Section 6.02).
No vote or consent of the Holders of Preferred Securities will be
required for MP&L Capital to redeem and cancel Preferred Securities in
accordance with the Trust Agreement.
Notwithstanding that Holders of Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any
of the Preferred Securities that are owned by the Company, the
Property Trustee or any affiliate of the Company or the Property
Trustee, shall, for purposes of such vote or consent, be treated as if
they were not outstanding.
Amendments
The Trust Agreement may be amended from time to time by MP&L
Capital (on approval of a majority of the Administrative Trustees) and
the Company, without the consent of any Holders of Trust Securities,
(i) to cure any ambiguity, correct or supplement any provision therein
which may be inconsistent with any other provision therein, or to make
any other provisions with respect to matters or questions arising
under the Trust Agreement, which shall not be inconsistent with the
other provisions of the Trust Agreement, provided, however, that any
such amendment shall not adversely affect in any material respect the
interests of any Holder of Trust Securities or (ii) to modify,
eliminate or add to any provisions of the Trust Agreement to such
extent as shall be necessary to ensure that MP&L Capital will not be
classified for United States federal income tax purposes as an
association taxable as a corporation at any time that any Trust
Securities are outstanding or to ensure MP&L Capital's exemption from
the status of an "investment company" under the Investment Company Act
of 1940, as amended (the "1940 Act"); provided, however, that, except
in the case of clause (ii), such action shall not adversely affect in
any material respect the interests of any Holder of Trust Securities
and, in the case of clause (i), any amendments of the Trust Agreement
shall become effective when notice thereof is given to the Holders of
Trust Securities.
Except as provided below, any provision of the Trust Agreement
may be amended by the Trustees and the Company with (i) the consent of
Holders of Trust Securities representing not less than a majority in
liquidation preference of the Trust Securities then outstanding and
(ii) receipt by the Trustees of an opinion of counsel to the effect
that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment will not affect MP&L
Capital's status as a grantor trust for United States federal income
tax purposes or affect MP&L Capital's exemption from status of an
"investment company" under the 1940 Act.
Without the consent of each affected Holder of Trust Securities,
the Trust Agreement may not be amended to (i) change the amount or
timing of any distribution with respect to the Trust Securities or
otherwise adversely affect the amount of any distribution required to
be made in respect of the Trust Securities as of a specified date or
(ii) restrict the right of a Holder of Trust Securities to institute
suit for the enforcement of any such payment on or after such date.
Removal of Property Trustee
Unless an Event of Default under the Indenture shall have
occurred and be continuing, the Property Trustee may be removed at any
time by act of the Holder of the Common Securities. If an Event of
Default under the Indenture has occurred and is continuing, the
Property Trustee may be removed at such time by act of the Holders of
Preferred Securities having a majority of the liquidation preference
of the 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, which voting rights are vested
exclusively in the Company as the Holder of the Common Securities. No
resignation or removal of the Property Trustee and no appointment of a
successor trustee shall be effective until the acceptance of
appointment by the successor Property Trustee in accordance with the
provisions of the Trust Agreement. (Section 8.10).
Co-trustees and Separate Property Trustee
Unless an Event of Default under the Indenture shall have
occurred and be continuing, at any time or times, for the purpose of
meeting the legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust Property (as defined in
the Trust Agreement) may at the time be located, the Holder of the
Common Securities and the Property Trustee shall have power to
appoint, and upon the written request of the Property Trustee, the
Company, as Depositor, shall for such purpose join with the Property
Trustee in the execution, delivery and performance of all instruments
and agreements necessary or proper to appoint one or more persons
approved by the Property Trustee either to act as co-trustee, jointly
with the Property Trustee, of all or any part of such Trust Property,
or to act as separate trustee of any such property, in either case
with such powers as may be provided in the instrument of appointment,
and to vest in such person or persons in such capacity, any property,
title, right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement. If the Company, as Depositor, does
not join in such appointment within 15 days after the receipt by it of
a request so to do, or in case an Event of Default under the Indenture
has occurred and is continuing, the Property Trustee alone shall have
power to make such appointment. (Section 8.09).
Form, Exchange, and Transfer
Preferred Securities will be issuable only in fully registered
form each having a liquidation preference amount of $25 and any
integral multiple thereof.
At the option of the Holder, subject to the terms of the Trust
Agreement, Preferred Securities will be exchangeable for other
Preferred Securities, of any authorized denomination and of like tenor
and aggregate liquidation preference.
Subject to the terms of the Trust Agreement, Preferred Securities
may be presented for exchange as provided above or for registration of
transfer (duly endorsed or accompanied by a duly executed instrument
of transfer) at the office of the Transfer Agent designated for such
purpose. The Administrative Trustees may designate the Company as
Transfer Agent and as Registrar. No service charge will be made for
any registration of transfer or exchange of Preferred Securities, but
the Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith. Such
transfer or exchange will be effected upon the Transfer Agent being
satisfied with the documents of title and identity of the person
making the request. The Administrative Trustees may at any time
designate additional Transfer Agents or rescind the designation of any
Transfer Agent or approve a change in the office through which any
Transfer Agent acts.
MP&L Capital will not be required to (i) issue, register the
transfer of, or exchange any Preferred Securities during a period
beginning at the opening of business 15 calendar days before the day
of mailing of a notice of redemption of any Preferred Securities
called for redemption and ending at the close of business on the day
of such mailing or (ii) register the transfer of or exchange any
Preferred Securities so selected for redemption, in whole or in part,
except the unredeemed portion of any such Preferred Securities being
redeemed in part.
Registrar and Transfer Agent
Initially, The Bank of New York will act as Registrar and
Transfer Agent for the Preferred Securities.
Registration of transfers of Preferred Securities will be
effected without charge by or on behalf of MP&L Capital, but upon
payment (with the giving of such indemnity as MP&L Capital or the
Company may require) in respect of any tax or other governmental
charges which may be imposed in relation to it.
MP&L Capital will not be required to register or cause to be
registered any transfer of Preferred Securities after they have been
called for redemption except the unredeemed portion of any Preferred
Securities being redeemed in part.
Concerning the Property Trustee
The Company maintains deposit accounts and conducts other banking
transactions with the Property Trustee in the ordinary course of their
businesses. The Property Trustee also acts as the Guarantee Trustee
under the Guarantee, the Debenture Trustee under the Indenture and
trustee under the Company's Mortgage and Deed of Trust with respect to
all of the electric generating plants and other materially important
physical properties of the Company and substantially all other
properties described in the Mortgage as owned by the Company, subject
to certain exceptions.
Miscellaneous
Application will be made to list the Preferred Securities on the
New York Stock Exchange.
The Delaware Trustee will act as the resident trustee in the
State of Delaware and will have no other significant duties. The
Property Trustee will hold the Junior Subordinated Debentures on
behalf of MP&L Capital and will maintain a payment account with
respect to the Trust Securities, and will also act as trustee under
the Trust Agreement for the purposes of the Trust Indenture Act. See
"Events of Default; Notice." The Administrative Trustees will
administer the day to day operations of MP&L Capital. See "Voting
Rights."
The Administrative Trustees are authorized and directed to
conduct the affairs of MP&L Capital and to operate MP&L Capital so
that MP&L Capital will not be deemed to be an "investment company"
required to be registered under the 1940 Act or taxed as a corporation
for United States federal income tax purposes and so that the Junior
Subordinated Debentures will be treated as indebtedness of the Company
for United States federal income tax purposes. In this connection,
the Administrative Trustees and the Company are authorized to take any
action, not inconsistent with applicable law, the certificate of trust
or the Trust Agreement, that the Administrative Trustees and the
Company determine in their discretion to be necessary or desirable for
such purposes, as long as such action does not materially adversely
affect the interests of the Holders of the Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar
rights.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the
Guarantee that will be executed and delivered by the Company for the
benefit of the Holders from time to time of Preferred Securities. The
Guarantee will be qualified as an indenture under the Trust Indenture
Act. The Bank of New York will act as Guarantee Trustee under the
Guarantee for the purposes of compliance with the Trust Indenture Act.
The terms of the Guarantee will be those set forth in such Guarantee
and those made part of such Guarantee by the Trust Indenture Act. The
summary does not purport to be complete and is subject in all respects
to the provisions of, and is qualified in its entirety by reference
to, the Guarantee, which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, and the Trust
Indenture Act. The Guarantee Trustee will hold the Guarantee for the
benefit of the Holders of the Preferred Securities.
General
The Company will fully and unconditionally agree, to the extent
set forth herein, to pay the Guarantee Payments (as defined herein) in
full to the Holders of the Preferred Securities (except to the extent
paid by or on behalf of MP&L Capital), as and when due, regardless of
any defense, right of set-off or counterclaim that the Company may
have or assert. The following payments with respect to the Preferred
Securities, to the extent not paid by or on behalf of MP&L Capital
(the "Guarantee Payments"), will be subject to the Guarantee (without
duplication): (i) any accrued and unpaid Distributions required to be
paid on the Preferred Securities, to the extent the Property Trustee
has available in the payment account sufficient funds to make such
payment, (ii) the Redemption Price with respect to any Preferred
Securities called for redemption by MP&L Capital, to the extent the
Property Trustee has available in the payment account sufficient funds
to make such payment and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of MP&L Capital (other than in
connection with a redemption of all of the Preferred Securities), the
lesser of (a) the aggregate of the liquidation preference amount and
all accrued and unpaid Distributions on the Preferred Securities to
the date of payment and (b) the amount of assets of MP&L Capital
remaining available for distribution to Holders of Preferred
Securities in liquidation of MP&L Capital. The Company's obligation
to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Company to the Holders of Preferred Securities
or by causing MP&L Capital to pay such amounts to such Holders.
The Guarantee will be a guarantee with respect to the Preferred
Securities issued by MP&L Capital from the time of issuance of the
Preferred Securities, but will not apply to (i) any payment of
Distributions if and to the extent that MP&L Capital does not have
funds available to make such payments, or (ii) collection of payment.
If the Company does not make interest payments on the Junior
Subordinated Debentures held by MP&L Capital, MP&L Capital will not
have funds available to pay Distributions on the Preferred Securities.
The Guarantee will rank subordinate and junior in right of payment to
all liabilities of the Company (except those made pari passu by their
terms). See "Status of the Guarantee." The Company has agreed in the
Expense Agreement to provide funds to MP&L Capital as needed to pay
obligations of MP&L Capital to parties other than Holders of Trust
Securities. The obligations of the Company with respect to the
Guarantee, the Expense Agreement and the Debentures constitute a full
and unconditional guarantee of the Preferred Securities by the
Company. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes
such guarantee. It is only the combined operation of these documents
that has the effect of providing a full and unconditional guarantee of
MP&L's Capital obligations under the Preferred Securities.
Amendments and Assignment
Except with respect to any changes that do not materially
adversely affect the rights of Holders of Preferred Securities (in
which case no vote will be required), the terms of the Guarantee may
be changed only with the prior approval of the Holders of Preferred
Securities having at least 66 2/3% of the liquidation preference
amount of the outstanding Preferred Securities. All guarantees and
agreements contained in the Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Company and
shall inure to the benefit of the Holders of the Preferred Securities
then outstanding.
Events of Default
An event of default under the Guarantee will occur upon the
failure of the Company to perform any of its payment obligations
thereunder. The Holders of Preferred Securities having a majority of
the liquidation preference of the Preferred Securities 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
Guarantee or to direct the exercise of any trust or power conferred
upon the Guarantee Trustee under the Guarantee.
If the Guarantee Trustee fails to enforce the Guarantee, any
Holder of Preferred Securities may institute a legal proceeding
directly against the Company to enforce the Guarantee Trustee's rights
under the Guarantee without first instituting a legal proceeding
against MP&L Capital, the Guarantee Trustee or any other person or
entity.
The Company, as Guarantor, will be required to provide annually
to the Guarantee Trustee a statement as to the performance by the
Company of certain of its obligations under the Guarantee and as to
any default in such performance and an officer's certificate as to the
Company's compliance with all conditions under the Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, prior to the occurrence of a default by
the Company in performance of the Guarantee, has undertaken to perform
only such duties as are specifically set forth in the Guarantee and,
after default with respect to the Guarantee, must exercise the same
degree of care as a prudent individual would exercise in the conduct
of his or her own affairs. Subject to this provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in
it by the Guarantee at the request of any Holder of Preferred
Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby. See
"Description of the Preferred Securities -- Concerning the Property
Trustee."
Termination of the Guarantee
The Guarantee will terminate and be of no further force and
effect upon full payment of the Redemption Price of all Preferred
Securities, the distribution of Junior Subordinated Debentures to
Holders of Preferred Securities in exchange for all of the Preferred
Securities or full payment of the amounts payable upon liquidation of
MP&L Capital. The Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred
Securities or the Guarantee.
Status of the Guarantee
The Guarantee will constitute an unsecured obligation of the
Company and will rank (i) subordinate and junior in right of payment
to all liabilities of the Company (except liabilities that may be made
pari passu by their terms), (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Company
and with any guarantee now or hereafter entered into by the Company in
respect of any preferred or preference stock of any affiliate of the
Company and (iii) senior to the Company's common stock. The Trust
Agreement provides that each Holder of Preferred Securities by
acceptance thereof agrees to the subordination provisions and other
terms of the Guarantee.
The Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal
proceeding directly against the Guarantor to enforce its rights under
the Guarantee without first instituting a legal proceeding against any
other person or entity).
Governing Law
The Guarantee will be governed by and construed in accordance
with the laws of the State of New York.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of the
Junior Subordinated Debentures which MP&L Capital will hold as trust
assets. The following description does not purport to be complete and
is qualified in its entirety by reference to the description in the
Indenture between the Company and the Trustee with respect to the
Junior Subordinated Debentures (the "Debenture Trustee"), which is
filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. Whenever particular provisions or defined
terms in the Indenture are referred to herein, such provisions or
defined terms are incorporated by reference herein. Section
references used herein are references to provisions of the Indenture
unless otherwise noted.
The Indenture provides for the issuance of debentures (including
the Junior Subordinated Debentures), notes or other evidence of
indebtedness by the Company (each a "Debt Security") in an unlimited
amount from time to time. The Junior Subordinated Debentures
constitute a separate series under the Indenture.
General
The Junior Subordinated Debentures will be limited in aggregate
principal amount to the sum of the aggregate liquidation preference
amount of the Preferred Securities and the consideration paid by the
Company for the Common Securities and will have terms similar to the
terms of the Preferred Securities. The Junior Subordinated Debentures
are unsecured, subordinated obligations of the Company which rank
junior to all of the Company's Senior Indebtedness. The Junior
Subordinated Debentures will bear interest at the same rate, payable
at the same times, as the distributions payable on the Trust
Securities, and will have a maturity and redemption provisions
correlative to those of the Trust Securities.
The entire outstanding principal amount of the Junior
Subordinated Debentures will become due and payable, together with any
accrued and unpaid interest thereon, including Additional Interest (as
defined herein), if any, on , . The amounts payable as
principal and interest on the Junior Subordinated Debentures will be
sufficient to provide for payment of Distributions payable on the
Trust Securities.
The Articles of Incorporation of the Company limit the
amount of unsecured indebtedness with a maturity of more than one year
that the Company may create or assume, without the consent of the
Holders of a majority of the total number of shares of preferred stock
then outstanding, to not more than 25% of the aggregate of the sum of
the principal amount of the secured indebtedness of the Company and
the capital stock and surplus of the Company as stated on the
Company's books of account. At December 31, 1995, the Company could
have issued approximately $249 million of unsecured indebtedness (such
as the Junior Subordinated Debentures) without violating this
provision.
Also under the Articles of Incorporation, the creation or
assumption of unsecured indebtedness with a maturity of more than one
year requires that net earnings available for the payment of interest
for 12 consecutive out of the preceding 15 months be at least twice
the annual interest requirements on all outstanding indebtedness of
the Company, including the indebtedness to be created or assumed. At
December 31, 1995, the Company could have issued an additional $141
million of unsecured indebtedness, including the Junior Subordinated
Debentures, at an assumed annual interest rate of 7.75%, without
violating this provision.
If Junior Subordinated Debentures are distributed to Holders of
Preferred Securities in a termination of MP&L Capital, such Junior
Subordinated Debentures will be issued in fully registered
certificated form in denominations of $25 and integral multiples
thereof and may be transferred or exchanged at the offices described
below.
Payments of principal and interest on Junior Subordinated
Debentures will be payable, the transfer of Junior Subordinated
Debenture will be registrable, and Junior Subordinated Debentures will
be exchangeable for Junior Subordinated Debentures of other
denominations of a like aggregate principal amount, at the corporate
trust office of the Debenture Trustee in The City of New York;
provided that payment of interest may be made at the option of the
Company by check mailed to the address of the persons entitled thereto
and that the payment in full of principal with respect to any Junior
Subordinated Debenture will be made only upon surrender of such Junior
Subordinated Debenture to the Debenture Trustee.
Optional Redemption
On or after , the Company will have the right, at
any time and from time to time, to redeem the Junior Subordinated
Debentures, in whole or in part, at a redemption price equal to 100%
of the principal amount of the Junior Subordinated Debentures being
redeemed, together with any accrued but unpaid interest, including
Additional Interest, if any, to the Redemption Date.
If a Special Event shall occur and be continuing, the Company
shall have the right to redeem the Junior Subordinated Debentures, in
whole but not in part, at a redemption price equal to 100% of the
principal amount of Junior Subordinated Debentures then outstanding
plus any accrued and unpaid interest, including Additional Interest,
if any, to the Redemption Date. The Junior Subordinated Debentures
will be subject to optional redemption in whole but not in part upon
the termination and liquidation of MP&L Capital pursuant to an order
for the dissolution, termination or liquidation of MP&L Capital
entered by a court of competent jurisdiction.
For so long as MP&L Capital is the Holder of all the outstanding
Junior Subordinated Debentures, the proceeds of any such redemption
will be used by MP&L Capital to redeem Preferred Securities and Common
Securities in accordance with their terms. The Company may not redeem
less than all the Junior Subordinated Debentures unless all accrued
and unpaid interest (including any Additional Interest) has been paid
in full on all outstanding Junior Subordinated Debentures for all
quarterly interest periods terminating on or prior to the date of
redemption.
Any optional redemption of Junior Subordinated Debentures shall
be made upon not less than 30 nor more than 60 days' notice from the
Debenture Trustee to the Holders of Junior Subordinated Debentures, as
provided in the Indenture. All notices of redemption shall state the
Redemption Date, the redemption price plus accrued and unpaid
distributions, if less than all the Junior Subordinated Debentures are
to be redeemed, the identification of those to be redeemed and the
portion of the principal amount of any Junior Subordinated Debentures
to be redeemed in part; that on the Redemption Date, subject to the
Debenture Trustee's receipt of the redemption monies, the redemption
price plus accrued and unpaid distributions will become due and
payable upon each such Junior Subordinated Debentures to be redeemed
and that interest thereon will cease to accrue on and after said date;
and the place or places where such securities are to be surrendered
for payment of the redemption price plus accrued and unpaid
distributions.
Interest
The Junior Subordinated Debentures shall bear interest at the
rate of % per annum. Such interest is payable quarterly in arrears
on March 31, June 30, September 30 and December 31 of each year (each,
an "Interest Payment Date"), commencing , 1996, to the
person in whose name each Junior Subordinated Debenture is registered,
by the close of business on the Business Day 15 days preceding such
Interest Payment Date. It is anticipated that MP&L Capital will be
the sole Holder of the Junior Subordinated Debentures.
The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months and for any period
shorter than a full month, on the basis of the actual number of days
elapsed (Section 310). In the event that any date on which interest
is payable on the Junior Subordinated Debentures is not a Business
Day, then payment of the interest payable on such date will be made on
the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that,
if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date the
payment was originally payable (Section 113).
Option to Extend Interest Payment Period
The Company has the right under the Indenture to extend the
interest payment period from time to time on the Junior Subordinated
Debentures to a period not exceeding 20 consecutive quarters during
which period interest will be compounded quarterly. At the end of an
Extension Period, the Company must pay all interest then accrued and
unpaid (together with interest thereon at the rate specified for the
Junior Subordinated Debentures compounded quarterly, to the extent
permitted by applicable law). However, during any such Extension
Period, the Company shall not (i) declare or pay any dividend or
distribution (other than a dividend or distribution in Common Stock of
the Company) on, or redeem, purchase, acquire or make a liquidation
payment with respect to, any of its capital stock or (ii) make any
payment of principal of, interest or premium, if any, on, or repay,
repurchase or redeem any indebtedness that is pari passu with the
Junior Subordinated Debentures (including other Debt Securities), or
make any guarantee payments with respect to the foregoing. Prior to
the termination of any such Extension Period, the Company may further
extend the interest payment period, provided that such Extension
Period together with all such previous and further extensions thereof
shall not exceed 20 consecutive quarters at any one time or extend
beyond the maturity date of the Junior Subordinated Debentures. Any
extension period with respect to payment of interest on the Junior
Subordinated Debentures, other Debt Securities or on any similar
securities will apply to all such securities and will also apply to
Distributions with respect to the Preferred Securities and all other
securities with terms substantially the same as the Preferred
Securities. Upon the termination of any such Extension Period and the
payment of all amounts then due, the Company may select a new
Extension Period, subject to the above requirements. No interest
shall be due and payable during an Extension Period, except at the end
thereof. The Company will give MP&L Capital and the Debenture Trustee
notice of its election of an Extension Period prior to the earlier of
(i) one Business Day prior to the record date for the distribution
which would occur but for such election or (ii) the date the Company
is required to give notice to the NYSE or other applicable
self-regulatory organization of the record date and will cause MP&L
Capital to send notice of such election to the Holders of Preferred
Securities.
Additional Interest
So long as any Preferred Securities remain outstanding, if MP&L
Capital would be required to pay, with respect to its income derived
from the interest payments on the Junior Subordinated Debentures any
amounts for or on account of any taxes, duties, assessments or
governmental charges of whatever nature imposed by the United States,
or any other taxing authority, then, in any such case, the Company
will pay as interest on such Junior Subordinated Debentures such
additional interest (the "Additional Interest") as may be necessary in
order that the net amounts received and retained by MP&L Capital after
the payment of such taxes, duties, assessments or governmental charges
shall result in the MP&L Capital's having such funds as it would have
had in the absence of the payment of such taxes, duties, assessments
or governmental charges.
Defeasance
The principal amount of any series of Debt Securities issued
under the Indenture will be deemed to have been paid for purposes of
the Indenture and the entire indebtedness of the Company in respect
thereof will be deemed to have been satisfied and discharged, if there
shall have been irrevocably deposited with the Debenture Trustee or
any paying agent, in trust: (a) money in an amount which will be
sufficient, or (b) in the case of a deposit made prior to the maturity
of the Junior Subordinated Debentures, Government Obligations (as
defined herein), which do not contain provisions permitting the
redemption or other prepayment thereof at the option of the issuer
thereof, the principal of and the interest on which when due, without
any regard to reinvestment thereof, will provide moneys which,
together with the money, if any, deposited with or held by the
Debenture Trustee, will be sufficient, or (c) a combination of (a) and
(b) which will be sufficient, to pay when due the principal of and
premium, if any, and interest, if any, due and to become due on the
Debt Securities of such series that are outstanding. For this
purpose, Government Obligations, include direct obligations of, or
obligations unconditionally guaranteed by, the United States of
America entitled to the benefit of the full faith and credit thereof
and certificates, depositary receipts or other instruments which
evidence a direct ownership interest in such obligations or in any
specific interest or principal payments due in respect thereof.
It is possible that for United States federal income tax purposes
any deposit contemplated in the preceding paragraph could be treated
as a taxable exchange of the Junior Subordinated Debentures
outstanding for an issue of obligations of MP&L Capital or a direct
interest in the cash and securities held by MP&L Capital. In that
case, Holders of the Junior Subordinated Debentures outstanding would
recognize a gain or loss for federal income tax purposes, as if their
share of MP&L Capital obligations or the cash or securities deposited,
as the case may be, had actually been received by them in exchange for
their Junior Subordinated Debentures. In addition, such Holders
thereafter would be required to include in income a share of the
income, gain or loss of MP&L Capital. The amount so required to be
included in income could be different from the amount that would be
includable in the absence of such deposit. Prospective investors are
urged to consult their own tax advisors as to the specific
consequences to them of any such deposit.
Subordination
The Junior Subordinated Debentures will be subordinate and junior
in right of payment to all Senior Indebtedness of the Company to the
extent provided in the Indenture. No payment of principal of
(including redemption and sinking fund payments), or interest on, the
Junior Subordinated Debentures may be made (i) upon the occurrence of
certain events of bankruptcy, insolvency or reorganization, (ii) if
any Senior Indebtedness is not paid when due, (iii) if any other
default has occurred pursuant to which the Holders of Senior
Indebtedness have accelerated the maturity thereof and with respect to
(ii) and (iii), such default has not been cured or waived, or (iv) if
the maturity of any series of Debt Securities has been accelerated,
because of an event of default with respect thereto, which remains
uncured. Upon any payment or distribution of assets of the Company to
creditors upon any dissolution, winding-up, liquidation or
reorganization, whether voluntary or involuntary or in bankruptcy,
insolvency, receivership or other proceedings, all principal of, and
premium, if any, and interest due or to become due on, all Senior
Indebtedness must be paid in full before the Holders of the Junior
Subordinated Debentures are entitled to receive or retain any payment
thereon. (Section 1502). Subject to the prior payment of all Senior
Indebtedness, the rights of the Holders of the Junior Subordinated
Debentures will be subrogated to the rights of the Holders of Senior
Indebtedness to receive payments or distributions applicable to Senior
Indebtedness until all amounts owing on the Junior Subordinated
Debentures are paid in full. (Section 1504).
The term Senior Indebtedness is defined in the Indenture to mean
all obligations (other than non-recourse obligations and the
indebtedness issued under the Indenture) of, or guaranteed or assumed
by, the Company for borrowed money, including both senior and
subordinated indebtedness for borrowed money (other than the Debt
Securities), or for the payment of money relating to any lease which
is capitalized on the consolidated balance sheet of the Company and
its subsidiaries in accordance with generally accepted accounting
principles as in effect from time to time, or evidenced by bonds,
debentures, notes or other similar instruments, and in each case,
amendments, renewals, extensions, modifications and refundings of any
such indebtedness or obligations, whether existing as of the date of
this Indenture or subsequently incurred by the Company unless, in the
case of any particular indebtedness, renewal, extension or refunding,
the instrument creating or evidencing the same or the assumption or
guarantee of the same expressly provides that such indebtedness,
renewal, extension or refunding is not superior in right of payment to
or is pari passu with the Junior Subordinated Debentures; provided
that the Company's obligations under the Guarantee shall not be deemed
to be Senior Indebtedness. (Section 101).
The Indenture does not limit the aggregate amount of Senior
Indebtedness that may be issued. As of December 31, 1995, the Company
had approximately $790 million principal amount of indebtedness for
borrowed money constituting Senior Indebtedness.
Consolidation, Merger, and Sale of Assets
Under the terms of the Indenture, the Company may not consolidate
with or merge into any other entity or convey, transfer or lease its
properties and assets substantially as an entirety to any entity,
unless (i) the corporation formed by such consolidation or into which
the Company is merged or the entity which acquires by conveyance or
transfer, or which leases, the property and assets of the Company
substantially as an entirety shall be a entity organized and validly
existing under the laws of any domestic jurisdiction and such entity
expressly assumes the Company's obligations on all Debt Securities and
under the Indenture, (ii) immediately after giving effect to the
transaction, no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have
occurred and be continuing, and (iii) the Company shall have delivered
to the Debenture Trustee an Officer's Certificate and an Opinion of
Counsel as provided in the Indenture. (Section 1101).
Events of Default
Each of the following will constitute an Event of Default under
the Indenture with respect to the Debt Securities of any series: (a)
failure to pay any interest on the Debt Securities of such series
within 30 days after the same becomes due and payable, provided that
deferral of payment during an Extension Period will not constitute an
Event of Default; (b) failure to pay principal or premium, if any, on
the Debt Securities of such series when due and payable; (c) failure
to perform, or breach of, any other covenant or warranty of the
Company in the Indenture (other than a covenant or warranty of the
Company in the Indenture solely for the benefit of one or more series
of Debt Securities other than such series) for 60 days after written
notice to the Company by the Debenture Trustee, or to the Company and
the Debenture Trustee by the Holders of at least 33% in principal
amount of the Debt Securities of such series outstanding under the
Indenture as provided in the Indenture; (d) the entry by a court
having jurisdiction in the premises of (1) a decree or order for
relief in respect of the Company in an involuntary case or proceeding
under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or (2) a decree or order adjudging
the Company a bankrupt or insolvent, or approving as properly filed a
petition by one or more Persons other than the Company seeking
reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official for the Company or for any
substantial part of its property, or ordering the winding up or
liquidation of its affairs, and any such decree or order for relief or
any such other decree or order shall have remained unstayed and in
effect for a period of 90 consecutive days; and (e) the commencement
by the Company of a voluntary case or proceeding under any applicable
Federal or state bankruptcy, insolvency, reorganization or other
similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree
or order for relief in respect of the Company in a case or other
similar proceeding or to the commencement of any bankruptcy or
insolvency case or proceeding against it under any applicable Federal
or state law or the filing by it of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or state
law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official of the
Company or of any substantial part of its property, or the making by
it of an assignment for the benefit of creditors, or the admission by
it in writing of its inability to pay its debts generally as they
become due, or the authorization of such action by the Board of
Directors. (Section 801).
An Event of Default with respect to the Debt Securities of a
particular series may not necessarily constitute an Event of Default
with respect to Debt Securities of any other series issued under the
Indenture.
If an Event of Default due to the default in payment of principal
of or interest on any series of Debt Securities or due to the default
in the performance or breach of any other covenant or warranty of the
Company applicable to the Debt Securities of such series but not
applicable to all series occurs and is continuing, then either the
Trustee or the Holders of 33% in principal amount of the outstanding
Debt Securities of such series may declare the principal of all of the
Debt Securities of such series and interest accrued thereon to be due
and payable immediately (subject to the subordination provisions of
the Indenture). If an Event of Default due to the default in the
performance of any other covenants or agreements in the Indenture
applicable to all outstanding Debt Securities or due to certain events
of bankruptcy, insolvency or reorganization of the Company has
occurred and is continuing, either the Trustee or the Holders of not
less than 33% in principal amount of all outstanding Debt Securities,
considered as one class, and not the Holders of the Debt Securities of
any one of such series may make such declaration of acceleration
(subject to the subordination provisions of the Indenture).
At any time after the declaration of acceleration with respect to
the Debt Securities of any series has been made and before a judgment
or decree for payment of the money due has been obtained, the Event or
Events of Default giving rise to such declaration of acceleration
will, without further act, be deemed to have been waived, and such
declaration and its consequences will, without further act, be deemed
to have been rescinded and annulled, if
(a) the Company has paid or deposited with the Debenture Trustee
a sum sufficient to pay
(1) all overdue interest on all Debt Securities of such
series;
(2) the principal of and premium, if any, on any Debt
Securities of such series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or rates
prescribed therefor in such Debt Securities;
(3) interest upon overdue interest at the rate or rates
prescribed therefor in such Debt Securities, to the extent that
payment of such interest is lawful; and
(4) all amounts due to the Debenture Trustee under the
Indenture; and
(b) any other Event or Events of Default with respect to Debt
Securities of such series, other than the nonpayment of the principal
of the Debt Securities of such series which has become due solely by
such declaration of acceleration, have been cured or waived as
provided in the Indenture. (Section 802).
Subject to the provisions of the Indenture relating to the duties
of the Debenture Trustee in case an Event of Default shall occur and
be continuing, the Debenture Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the
request or direction of any of the Holders of the Junior Subordinated
Debentures, unless such Holders shall have offered to the Debenture
Trustee reasonable indemnity. (Section 903). If an Event of Default
has occurred and is continuing in respect of a series of Debt
Securities, subject to such provisions for the indemnification of the
Debenture Trustee, the Holders of a majority in principal amount of
the outstanding Debt Securities of such series will have the right to
direct the time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee, or exercising any trust or
power conferred on the Debenture Trustee, with respect to the Debt
Securities of such series; provided, however, that if an Event of
Default occurs and is continuing with respect to more than one series
of Debt Securities, the Holders of a majority in aggregate principal
amount of the outstanding Debt Securities of all such series,
considered as one class, will have the right to make such direction,
and not the Holders of the Debt Securities of any one of such series;
and provided, further, that such direction will not be in conflict
with any rule of law or with the Indenture. (Section 812).
No Holder of Debt Securities of any series will have any right to
institute any proceeding with respect to the Indenture, or for the
appointment of a receiver or a trustee, or for any other remedy
thereunder, unless (i) such Holder has previously given to the
Debenture Trustee written notice of a continuing Event of Default with
respect to the Debt Securities of such series, (ii) the Holders of not
less than a majority in aggregate principal amount of the outstanding
Debt Securities of all series in respect of which an Event of Default
shall have occurred and be continuing, considered as one class, have
made written request to the Debenture Trustee, and such Holder or
Holders have offered reasonable indemnity to the Debenture Trustee to
institute such proceeding in respect of such Event of Default in its
own name as trustee and (iii) the Debenture Trustee has failed to
institute any proceeding, and has not received from the Holders of a
majority in aggregate principal amount of the outstanding Debt
Securities of such series a direction inconsistent with such request,
within 60 days after such notice, request and offer. (Section 807).
However, such limitations do not apply to a suit instituted by a
Holder of a Debt Security for the enforcement of payment of the
principal of or any premium or interest on such Debt Security on or
after the applicable due date specified in such Debt Security.
(Section 808).
The Company will be required to furnish to the Debenture Trustee
annually a statement by an appropriate officer as to such officer's
knowledge of the Company's compliance with all conditions and
covenants under the Indenture, such compliance to be determined
without regard to any period of grace or requirement of notice under
the Indenture. (Section 606).
Modification and Waiver
Without the consent of any Holder of Debt Securities, the Company
and the Debenture Trustee may enter into one or more supplemental
indentures for any of the following purposes: (a) to evidence the
assumption by any permitted successor to the Company of the covenants
of the Company in the Indenture and in the Debt Securities; or (b) to
add one or more covenants of the Company or other provisions for the
benefit of the Holders of outstanding Debt Securities or to surrender
any right or power conferred upon the Company by the Indenture; or (c)
to add any additional Events of Default with respect to outstanding
Debt Securities; or (d) to change or eliminate any provision of the
Indenture or to add any new provision to the Indenture, provided that
if such change, elimination or addition will adversely affect the
interests of the Holders of Debt Securities of any series in any
material respect, such change, elimination or addition will become
effective with respect to such series only (1) when the consent of the
Holders of Debt Securities of such series has been obtained in
accordance with the Indenture, or (2) when no Debt Securities of such
series remain outstanding under the Indenture; or (e) to provide
collateral security for all but not part of the Debt Securities; (f)
to establish the form or terms of Debt Securities of any other series
as permitted by the Indenture; or (g) to provide for the
authentication and delivery of bearer securities and coupons
appertaining thereto representing interest, if any, thereon and for
the procedures for the registration, exchange and replacement thereof
and for the giving of notice to, and the solicitation of the vote or
consent of, the Holders thereof, and for any and all other matters
incidental thereto; or (h) to evidence and provide for the acceptance
of appointment of a successor Debenture Trustee under the Indenture
with respect to the Debt Securities of one or more series and to add
to or change any of the provisions of the Indenture as shall be
necessary to provide for or to facilitate the administration of the
trusts under the Indenture by more than one trustee; or (i) to
provide for the procedures required to permit the utilization of a
noncertificated system of registration for the Debt Securities of all
or any series; or (j) to change any place where (1) the principal of
and premium, if any, and interest, if any, on all or any series of
Debt Securities shall be payable, (2) all or any series of Debt
Securities may be surrendered for registration of transfer or exchange
and (3) notices and demands to or upon the Company in respect of Debt
Securities and the Indenture may be served; or (k) to cure any
ambiguity or inconsistency or to add or change any other provisions
with respect to matters and questions arising under the Indenture,
provided such changes or additions shall not adversely affect the
interests of the Holders of Debt Securities of any series in any
material respect. (Section 1201).
The Holders of at least a majority in aggregate principal amount
of the Debt Securities of all series then outstanding may waive
compliance by the Company with certain restrictive provisions of the
Indenture. (Section 607). The Holders of not less than a majority in
principal amount of the outstanding Debt Securities of any series may
waive any past default under the Indenture with respect to such
series, except a default in the payment of principal, premium, or
interest and certain covenants and provisions of the Indenture that
cannot be modified or be amended without the consent of the Holder of
each outstanding Debt Security of such series affected. (Section 813).
Without limiting the generality of the foregoing, if the Trust
Indenture Act is amended after the date of the Indenture in such a way
as to require changes to the Indenture or the incorporation therein of
additional provisions or so as to permit changes to, or the
elimination of, provisions which, at the date of the Indenture or at
any time thereafter, were required by the Trust Indenture Act to be
contained in the Indenture, the Indenture will be deemed to have been
amended so as to conform to such amendment of the Trust Indenture Act
or to effect such changes, additions or elimination, and the Company
and the Debenture Trustee may, without the consent of any Holders,
enter into one or more supplemental indentures to evidence or effect
such amendment. (Section 1201).
Except as provided above, the consent of the Holders of not less
than a majority in aggregate principal amount of the Debt Securities
of all series then outstanding, considered as one class, is required
for the purpose of adding any provisions to, or changing in any
manner, or eliminating any of the provisions of, the Indenture or
modifying in any manner the rights of the Holders of such Debt
Securities under the Indenture pursuant to one or more supplemental
indentures; provided, however, that if less than all of the series of
Debt Securities outstanding are directly affected by a proposed
supplemental indenture, then the consent only of the Holders of a
majority in aggregate principal amount of outstanding Debt Securities
of all series so directly affected, considered as one class, will be
required; and provided further, that no such amendment or modification
may (a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Debt Security, or
reduce the principal amount thereof or the rate of interest thereon
(or the amount of any installment of interest thereon) or change the
method of calculating such rate or reduce any premium payable upon the
redemption thereof, or change the coin or currency (or other property)
in which any Debt Security or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity of any Debt Security
(or, in the case of redemption, on or after the Redemption Date)
without, in any such case, the consent of the Holder of such Debt
Security, (b) reduce the percentage in principal amount of the
outstanding Debt Security of any series, (or, if applicable, in
liquidation preference of Preferred Securities) the consent of the
Holders of which is required for any such supplemental indenture, or
the consent of the Holders of which is required for any waiver of
compliance with any provision of the Indenture or any default
thereunder and its consequences, or reduce the requirements for quorum
or voting, without, in any such case, the consent of the Holder of
each outstanding Debt Security of such series, or (c) modify certain
of the provisions of the Indenture relating to supplemental
indentures, waivers of certain covenants and waivers of past defaults
with respect to the Debt Security of any series, without the consent
of the Holder of each outstanding Junior Subordinated Debenture
affected thereby. A supplemental indenture which changes or
eliminates any covenant or other provision of the Indenture which has
expressly been included solely for the benefit of one or more
particular series of Debt Securities, or modifies the rights of the
Holders of Debt Securities of such series with respect to such
covenant or other provision, will be deemed not to affect the rights
under the Indenture of the Holders of the Debt Securities of any other
series. (Section 1202).
The Indenture provides that in determining whether the Holders of
the requisite principal amount of the outstanding Debt Securities have
given any request, demand, authorization, direction, notice, consent
or waiver under the Indenture, or whether a quorum is present at the
meeting of the Holders of Debt Securities, Debt Securities owned by
the Company or any other obligor upon the Debt Securities or any
affiliate of the Company or of such other obligor (unless the Company,
such affiliate or such obligor owns all Debt Securities outstanding
under the Indenture, determined without regard to this provision)
shall be disregarded and deemed not to be outstanding.
If the Company shall solicit from Holders any request, demand,
authorization, direction, notice, consent, election, waiver or other
Act, the Company may, at its option, fix in advance a record date for
the determination of Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other such act,
but the Company shall have no obligation to do so. If such a record
date is fixed, such request, demand, authorization, direction, notice,
consent, waiver or other Act may be given before or after such record
date, but only the Holders of record at the close of business on such
record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of the
outstanding Debt Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the outstanding Debt
Securities shall be computed as of the record date. Any request,
demand, authorization, direction, notice, consent, election, waiver or
other Act of a Holder shall bind every future Holder of the same Debt
Security and the Holder of every Debt Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by
the Debenture Trustee or the Company in reliance thereon, whether or
not notation of such action is made upon such Debt Security. (Section
104).
Resignation of Debenture Trustee
The Debenture Trustee may resign at any time by giving written
notice thereof to the Company or may be removed at any time by Act of
the Holders of a majority in principal amount of all series of Debt
Securities then outstanding delivered to the Debenture Trustee and the
Company. No resignation or removal of the Debenture Trustee and no
appointment of a successor trustee will become effective until the
acceptance of appointment by a successor trustee in accordance with
the requirements of the Indenture. So long as no Event of Default or
event which, after notice or lapse of time, or both, would become an
Event of Default has occurred and is continuing and except with
respect to a Debenture Trustee appointed by Act of the Holders, if the
Company has delivered to the Debenture Trustee a resolution of its
Board of Directors appointing a successor trustee and such successor
has accepted such appointment in accordance with the terms of the
Indenture, the Trustee will be deemed to have resigned and the
successor will be deemed to have been appointed as trustee in
accordance with the Indenture. (Section 910).
Notices
Notices to Holders of Debt Securities will be given by mail to
the addresses of such Holders as they may appear in the security
register therefor.
Title
The Company, the Debenture Trustee, and any agent of the Company
or the Debenture Trustee, may treat the Person in whose name Debt
Securities are registered as the absolute owner thereof (whether or
not such Debt Securities may be overdue) for the purpose of making
payments and for all other purposes irrespective of notice to the
contrary.
Governing Law
The Indenture and the Debt Securities will be governed by, and
construed in accordance with, the laws of the State of New York.
Concerning the Debenture Trustee
The Debenture Trustee under the Indenture is The Bank of New
York. In addition, The Bank of New York acts as Property Trustee
under the Trust Agreement and as Guarantee Trustee under the
Guarantee. The Bank of New York (Delaware) acts as the Delaware
Trustee under the Trust Agreement. See "Description of the Preferred
Securities -- Concerning the Property Trustee."
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain United States federal
income tax consequences relevant to the purchase, ownership and
disposition of Preferred Securities as of the date hereof and
represents the opinion of Reid & Priest LLP, counsel to the Company,
insofar as it relates to matters of law or legal conclusions. Except
where noted, it deals only with Preferred Securities held as capital
assets and does not deal with special situations, such as those of
dealers in securities or currencies, financial institutions, life
insurance companies, persons holding Preferred Securities as a part of
a hedging or conversion transaction or a straddle, United States
Holders (as defined herein) whose "functional currency" is not the
U.S. dollar, or persons who are not United States Holders. In
addition, this discussion does not address the tax consequences to
persons who purchase Preferred Securities other than pursuant to their
initial issuance and distribution. Furthermore, the discussion below
is based upon the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations, rulings and judicial decisions
thereunder as of the date hereof, and such authorities may be
repealed, revoked or modified at any time so as to result in United
States federal income tax consequences different from those discussed
below. These authorities are subject to various interpretations and
it is therefore possible that the United States federal income tax
treatment of the Preferred Securities may differ from the treatment
described below.
PROSPECTIVE PURCHASERS OF PREFERRED SECURITIES, INCLUDING PERSONS
WHO ARE NOT UNITED STATES HOLDERS AND PERSONS WHO PURCHASE PREFERRED
SECURITIES IN THE SECONDARY MARKET, ARE ADVISED TO CONSULT WITH THEIR
TAX ADVISORS AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF PREFERRED SECURITIES IN
LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY
STATE, LOCAL OR OTHER TAX LAWS.
United States Holders
As used herein, a "United States Holder" means a Holder that is a
citizen or resident of the United States, a corporation, partnership
or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, or an estate or
trust the income of which is subject to United States federal income
taxation regardless of its source.
Classification of MP&L Capital
Reid & Priest LLP, special counsel to the Company and MP&L
Capital, is of the opinion that, under current law and assuming full
compliance with the terms of the Indenture and the instruments
establishing MP&L Capital (and certain other documents), MP&L Capital
will be classified as a "grantor trust" for United States federal
income tax purposes and will not be classified as an association
taxable as a corporation. Each Holder will be treated as owning an
undivided beneficial interest in the Junior Subordinated Debentures.
Accordingly, each Holder will be required to include in its gross
income interest (in the form of OID) accrued with respect to its
allocable share of Junior Subordinated Debentures as described below.
No amount included in income with respect to the Preferred Securities
will be eligible for the dividends received deduction. Investors
should be aware that the opinion of Reid & Priest LLP does not address
any other issue and is not binding on the Internal Revenue Service or
the courts.
Classification of the Junior Subordinated Debentures
Based on the advice of its counsel, the Company believes and
intends to take the position that the Junior Subordinated Debentures
will constitute indebtedness for United States federal income tax
purposes. No assurance can be given that such position will not be
challenged by the Internal Revenue Service or, if challenged, that
such a challenge will not be successful. By purchasing and accepting
Preferred Securities, each Holder covenants to treat the Junior
Subordinated Debentures as indebtedness and the Preferred Securities
as evidence of an indirect beneficial ownership in the Junior
Subordinated Debentures. The remainder of this discussion assumes
that the Junior Subordinated Debentures will be classified as
indebtedness of the Company for United States federal income tax
purposes.
On December 7, 1995, the U.S. Treasury Department proposed
certain tax law changes that, among other things, would generally deny
interest deductions to corporate issuers of debt if the debt
instrument has a term exceeding 20 years and is not reflected as
indebtedness on the issuer's balance sheet. As described in the
Treasury Department's proposal, the proposed changes would not affect
the ability of the Company to deduct interest on the Junior
Subordinated Debentures because the term of the Junior Subordinated
Debentures is _____ years. However, there can be no assurance that
subsequent proposals or final legislation will not affect the ability
of the Company to deduct interest on the Junior Subordinated
Debentures, which in turn could give rise to a Tax Event, which would
permit the Company to cause a redemption of the Preferred Securities
or a distribution of the Junior Subordinated Debentures in liquidation
of MP&L Capital, as described more fully in the Prospectus under
"Description of the Preferred Securities -- Special Event Redemption
or Distribution."
Potential Extension of Interest Payment Period and Original Issue
Discount
Under the terms of the Junior Subordinated Debentures, the
Company has the option to defer payments of interest for up to 20
consecutive quarterly distribution payment periods and to pay as a
lump sum at the end of such period all of the interest that has
accrued during such period. During any such Extension Period,
Distributions on the Preferred Securities will also be deferred.
Because of this option to extend the interest payment periods, the
Junior Subordinated Debentures will be treated as having been issued
with OID for United States federal income tax purposes. As a result,
United States Holders will be required to accrue interest income (in
the form of OID) on an economic accrual basis even if they use the
cash method of tax accounting. In the event of an Extension Period, a
United States Holder will be required to continue to include OID in
income notwithstanding that MP&L Capital will not make any
Distribution on the Preferred Securities during such Extension Period.
As a result, any Holder who disposes of Preferred Securities prior to
the record date for the payment of Distributions following such
Extension Period will include interest in gross income but will not
receive any Distributions related thereto from MP&L Capital. The tax
basis of a Preferred Security will be increased by the amount of any
OID that is included in income, and will be decreased when and if
Distributions are subsequently received from MP&L Capital by such
Holders.
Receipt of Junior Subordinated Debentures or Cash Upon
Liquidation of MP&L Capital
Under certain circumstances, as described under the caption
"Description of the Preferred Securities -- Special Event Redemption
or Distribution," Junior Subordinated Debentures may be distributed to
Holders of Preferred Securities in exchange for the Preferred
Securities and in liquidation of MP&L Capital. Under current law, for
United States federal income tax purposes, if MP&L Capital is treated
as a grantor trust at the time of distribution, such a distribution
would be treated as a non-taxable event to each United States Holder,
and each United States Holder would receive an aggregate tax basis in
the Junior Subordinated Debentures equal to such Holder's aggregate
tax basis in its Preferred Securities. A United States Holder's
holding period for the Junior Subordinated Debentures received in
liquidation of MP&L Capital would include the period during which such
Holder held the Preferred Securities.
Under certain circumstances, as described under the caption
"Description of the Preferred Securities -- Redemption of Preferred
Securities," the Junior Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to Holders of
Preferred Securities in redemption of the Preferred Securities. Under
current law, such a redemption would, for United States federal income
tax purposes, constitute a taxable disposition of the Preferred
Securities, and a Holder would recognize gain or loss as if such
Holder had sold such redeemed Preferred Securities. See "Sale,
Exchange and Redemption of the Preferred Securities."
Sale, Exchange and Redemption of the Preferred Securities
Upon the sale, exchange or redemption of Preferred Securities, a
United States Holder will recognize gain or loss equal to the
difference between the amount realized upon the sale, exchange or
redemption and such Holder's adjusted tax basis in the Preferred
Securities. A United States Holder's adjusted tax basis will, in
general, be the issue price of the Preferred Securities, increased by
the OID previously included in income by the United States Holder and
reduced by any Distributions on the Preferred Securities. Such gain
or loss will be capital gain or loss and will be long-term capital
gain or loss if at the time of sale, exchange or redemption, the
Preferred Securities have been held for more than one year. Under
current law, net capital gains of individuals are, under certain
circumstances, taxed at lower rates than items of ordinary income.
The deductibility of capital losses is subject to limitations.
Information Reporting and Backup Withholding
Subject to the qualification discussed below, income on the
Preferred Securities will be reported to holders on Form 1099, which
should be mailed to such Holders by January 31, following each
calendar year.
MP&L Capital will be obligated to report annually to Cede & Co.,
as holder of record of the Preferred Securities, the OID related to
the Junior Subordinated Debentures that accrued during the year. MP&L
Capital currently intends to report such information on Form 1099
prior to January 31, following each calendar year. The Underwriters
have indicated to MP&L Capital that, to the extent that they hold
Preferred Securities as nominees for beneficial holders, they
currently expect to report the OID that accrued during the calendar
year on such Preferred Securities to such beneficial holders on Forms
1099 by January 31, following each calendar year. Under current law,
holders of Preferred Securities who hold as nominees for beneficial
holders will not have any obligation to report information regarding
the beneficial holders to MP&L Capital. MP&L Capital, moreover, will
not have any obligation to report to beneficial holders who are not
also record holders. Thus, beneficial holders of Preferred Securities
who hold their Preferred Securities through the Underwriters will
receive Forms 1099 reflecting the income on their Preferred Securities
from such nominee holders rather than from MP&L Capital.
Payments made in respect of, and proceeds from the sale of,
Preferred Securities (or Junior Subordinated Debentures distributed to
holders of Preferred Securities) may be subject to "backup"
withholding tax of 31% unless the holder complies with certain
identification requirements or fails to report in full dividend and
interest income. Any withheld amounts will be allowed as a refund or
a credit against the holder's United Stated federal income tax
liability, provided the required information is provided to the
Internal Revenue Service.
These information reporting and backup withholding tax rules are
subject to temporary Treasury Regulations. Accordingly, the
application of such rules to the Preferred Securities could be
changed.
EXPERTS
The Company's financial statements incorporated in this
Prospectus by reference to the Company's Current Report on Form 8-K,
dated February 16, 1996, except as they relate to ADESA (an 80% owned
subsidiary of the Company), have been audited by Price Waterhouse LLP,
independent accountants, and, insofar as they relate to ADESA, by
Ernst & Young LLP, independent auditors. The report of Price
Waterhouse LLP thereon appears on page 10 of such Form 8-K. Such
financial statements, except as they relate to ADESA, have been so
incorporated in reliance on the report of Price Waterhouse LLP, given
on the authority of said firm as experts in auditing and accounting.
The financial statement schedule incorporated in this Prospectus
by reference to the Company 1994 10-K has been so incorporated in
reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of ADESA appearing in the
Company's Current Report on Form 8-K, dated July 12, 1995, for the
year ended December 31, 1994, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included in
said Current Report on Form 8-K and incorporated herein by reference
in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements of ADESA for the period
from July 1, 1995 to December 31, 1995 which are included in the
consolidated financial statements of the Company contained in the
Company's Current Report on Form 8-K, dated February 16, 1996 have
been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon included in said Current Report on Form 8-K.
Such report is given upon the authority of such firm as experts in
accounting and auditing.
The statements made in the Company 1994 10-K under Part I, Item 1
-- Business-Regulation and Rates and Environmental Matters,
incorporated herein by reference, have been reviewed by Philip R.
Halverson, Esq., Duluth, Minnesota, General Counsel for the Company.
All of such statements are set forth or incorporated by reference
herein in reliance upon the opinion of Mr. Halverson given upon his
authority as an expert. At December 31, 1995, Mr. Halverson owned
approximately 4001 shares of the common stock of the Company.
Statements as to United States federal income taxation under "Certain
United States Federal Income Tax Consequences" herein have been passed
upon for the Company and MP&L Capital by Reid & Priest LLP, New York,
New York, of counsel to the Company.
LEGALITY
Certain matters of Delaware law relating to the validity of the
Preferred Securities, the enforceability of the Trust Agreement and
the creation of MP&L Capital are being passed upon by Richards, Layton
& Finger, Special Delaware counsel for the Company and MP&L Capital.
The legality of the other securities offered hereby will be passed
upon for the Company and MP&L Capital by Philip R. Halverson, Esq. and
by Reid & Priest LLP, and for the Underwriters by Lane & Mittendorf
LLP, New York, New York. However, all matters pertaining to
incorporation of the Company and all other matters of Minnesota law
will be passed upon only by Philip R. Halverson, Esq.
UNDERWRITING
Subject to the terms and conditions of the Underwriting
Agreement, the Company and MP&L Capital have agreed that MP&L Capital
will issue and sell to each of the Underwriters named below, and each
of the Underwriters, for whom Goldman, Sachs & Co. and PaineWebber
Incorporated are acting as Representatives, has severally agreed to
purchase from MP&L Capital the respective number of Preferred
Securities set forth opposite its name below:
Number of
Underwriter Preferred Securities
----------- --------------------
Goldman, Sachs & Co. . . . . . .
PaineWebber Incorporated . . . .
__________
Total. . . . . . . . . . . . . .
==========
Subject to the terms and conditions of the Underwriting
Agreement, the Underwriters are committed to take and pay for all the
Preferred Securities offered hereby, if any are taken.
The Underwriters propose to offer the Preferred Securities in
part directly to the public at the initial public offering price set
forth on the cover page of this Prospectus, and in part to certain
securities dealers at such price less a concession of $ per
Preferred Security. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per Preferred Security to
certain brokers and dealers. After the Preferred Securities are
released for sale to the public, the offering price and other selling
terms may from time to time be varied by the Representatives.
In view of the fact that the proceeds of the sale of the
Preferred Securities will be used to purchase the Junior Subordinated
Debentures, the Underwriting Agreement provides that the Company will
pay as compensation, for the Underwriters' arranging the investment
therein of such proceeds, an amount of $ per Preferred Security for
the accounts of the several Underwriters.
The Company and MP&L Capital have agreed that, during the period
beginning from the date of the Underwriting Agreement and continuing
to and including the earlier of (i) the date on which the distribution
of the Preferred Securities ceases, as determined by the
Representatives, or (ii) 90 days after the issuance of the Preferred
Securities, neither will offer, sell, contract to sell or otherwise
dispose of, any other beneficial interests in MP&L Capital or any
other securities of MP&L Capital or the Company, as the case may be,
that are substantially similar to the Preferred Securities (including
any guarantee of such securities) or any securities that are
convertible into or exchangeable for, or that represent the right to
receive, any such substantially similar securities of either MP&L
Capital or the Company, without the prior written consent of the
Representatives, provided that this restriction shall specifically not
apply to the Company's common stock, preferred stock, secured
indebtedness and unsecured indebtedness which is not subordinated.
Prior to this offering, there has been no public market for the
Preferred Securities. Application will be made to list the Preferred
Securities on the NYSE. In order to meet one of the requirements for
listing the Preferred Securities on the NYSE, the Underwriters will
undertake to sell lots of 100 or more Preferred Securities to a
minimum of 400 beneficial holders. Trading of the Preferred
Securities on the NYSE is expected to commence within a seven-day
period after the initial delivery of the Preferred Securities. The
Representatives have advised the Company that they intend to make a
market in the Preferred Securities prior to commencement of trading on
the NYSE, but are not obligated to do so and may discontinue any such
market making at any time without notice.
The Company and MP&L Capital have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under
the 1933 Act.
Certain of the Underwriters or their affiliates have provided
from time to time, and expect to provide in the future, services to
the Company and its affiliates, in the ordinary course of business,
for which such Underwriters or their affiliates have received or will
receive customary fees and commissions.
======================================================================
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and, if
given or made, such information or representations must not be relied
upon as having been authorized. This Prospectus does not constitute
an offer to sell or the solicitation of an offer to buy any securities
other than the securities described in this Prospectus or an offer to
sell or the solicitation of any offer to buy such securities in any
circumstances in which such offer or solicitation is unlawful.
Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that the
information contained herein or therein is correct as of any time
subsequent to the date of such information.
--------------------
TABLE OF CONTENTS
Page
----
Available Information. . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference. . . . . . . . 2
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . 9
MP&L Capital . . . . . . . . . . . . . . . . . . . . . . . . . 11
Summary Financial Information. . . . . . . . . . . . . . . . . 13
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . 14
Description of the Preferred Securities. . . . . . . . . . . . 14
Description of the Guarantee . . . . . . . . . . . . . . . . . 25
Description of the Junior Subordinated Debentures. . . . . . . 27
Certain United States Federal Income Tax Consequences. . . . . 36
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Legality . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . 39
====================================================================
3,000,000 Preferred Securities
MP&L CAPITAL I
% Cumulative Quarterly Income
Preferred Securities (QUIPS) sm
Guaranteed to the extent
MP&L Capital I has funds as
set forth herein by
MINNESOTA POWER
& LIGHT COMPANY
----------
PROSPECTUS
----------
Goldman, Sachs & Co.
PaineWebber Incorporated
Representatives of the Underwriters
====================================================================
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses payable by
the Company in connection with the issuance and distribution of the
securities to be registered.
Filing fee - Securities and Exchange Commission. . . $45,103.45*
Fees of the Trustee. . . . . . . . . . . . . . . . . 35,000.00
Counsel Fees . . . . . . . . . . . . . . . . . . . . 125,000.00
Auditors' fees . . . . . . . . . . . . . . . . . . . 30,000.00
Printing, including Registration Statement,
prospectuses, exhibits, etc.. . . . . . . . . . . . 15,000.00
Miscellaneous. . . . . . . . . . . . . . . . . . . . 24,896.55
----------
Total expenses . . . . . . . . . . . . . . . . . . . $275,000.00
==========
---------------
* Original filing fee paid by the Company at the time the
Registration Statement (Nos. 333-01035 and 333-01035-01) was
filed on February 16, 1996.
Item 15. Indemnification of Directors and Officers.
Section 302A.521 of the Minnesota Business Corporation Act
generally provides for the indemnification of directors, officers or
employees of a corporation made or threatened to be made a party to a
proceeding by reason of the former or present official capacity of the
person against judgments, penalties and fines (including attorneys'
fees and disbursements) where such person, among other things, has not
been indemnified by another organization, acted in good faith,
received no improper personal benefit and with respect to any criminal
proceeding, had no reasonable cause to believe his conduct was
unlawful.
Section 13 of the Bylaws of the Company contains the following
provisions relative to indemnification of directors and officers:
"The Company shall reimburse or indemnify each present and future
director and officer of the Company (and his or her heirs, executors
and administrators) for or against all expenses reasonably incurred by
such director or officer in connection with or arising out of any
action, suit or proceeding in which such director or officer may be
involved by reason of being or having been a director or officer of
the Company. Such indemnification for reasonable expenses is to be to
the fullest extent permitted by the Minnesota Business Corporation
Act, Minnesota Statutes Chapter 302A. By affirmative vote of the Board
of Directors or with written approval of the Chairman and Chief
Executive Officer, such indemnification may be extended to include
agents and employees who are not directors or officers of the Company,
but who would otherwise be indemnified for acts and omissions under
Chapter 302A of the Minnesota Business Corporation Act, if such agent
or employee were an officer of the Company."
"Reasonable expenses may include reimbursement of attorney's fees
and disbursements, including those incurred by a person in connection
with an appearance as a witness."
"Upon written request to the Company and approval by the Chairman
and Chief Executive Officer, an agent or employee for whom
indemnification has been extended, or an officer or director may
receive an advance for reasonable expenses if such agent, employee,
officer or director is made or threatened to be made a party to a
proceeding involving a matter for which indemnification is believed to
be available under Minnesota Statutes Chapter 302A."
"The foregoing rights shall not be exclusive of other rights to
which any director or officer may otherwise be entitled and shall be
available whether or not the director or officer continues to be a
director or officer at the time of incurring such expenses and
liabilities."
The Company has insurance covering its expenditures which might
arise in connection with the lawful indemnification of its directors
and officers for their liabilities and expenses, and insuring officers
and directors of the Company against certain other liabilities and
expenses.
Item 16. Exhibits.
1(a) - Form of Underwriting Agreement.
+3(a)1 - Articles of Incorporation, restated as of
July 27, 1988 (filed as Exhibit 3(a), File
No. 33-24936).
+3(a)2 - Certificate Fixing Terms of Serial Preferred
Stock A, $7.125 Series (filed as Exhibit
3(a)2, File No. 33-50143).
+3(a)3 - Certificate Fixing Terms of Serial Preferred
Stock A, $6.70 Series (filed as Exhibit
3(a)3, File No. 33-50143).
+3(b) - Bylaws as amended January 23, 1991 (filed as
Exhibit 3(b), File No. 33-45549).
**4(a) - Trust Agreement relating to the Preferred
Securities.
4(b) - Form of Amended and Restated Trust Agreement
relating to the Preferred Securities.
4(c) - Form of Indenture relating to the Junior
Subordinated Debentures.
4(d) - Form of Guarantee Agreement.
**4(e) - Form of Agreement as to Expenses and
Liabilities.
4(f) - Form of Officer's Certificate establishing
Debentures.
**4(g) - Form of Preferred Securities.
**5(a) - Opinion and Consent of Philip R. Halverson,
Esq., General Counsel and Corporate Secretary
of the Company.
**5(b)
and 8 - Opinion and Consent of Reid & Priest LLP.
**5(c) - Opinion and Consent of Richards, Layton &
Finger, Special Delaware Counsel to the
Company and MP&L Capital.
**12(a) - Computation of Ratio of Earnings to Fixed
Charges and Supplemental Ratio of Earnings to
Fixed Charges of the Company.
**12(b) - Computation of Ratio of Earnings to Fixed
Charges and Preferred Dividends and
Supplemental Ratio of Earnings to Fixed
Charges and Preferred Dividends of the
Company.
23(a) - Consent of Price Waterhouse LLP.
23(b) - Consent of Ernst & Young LLP.
**23(c) - Consents of Philip R. Halverson, Esq., Reid &
Priest LLP and Richards, Layton & Finger are
contained in Exhibits 5(a), 5(b) and 5(c),
respectively.
**24 - Power of Attorney (see page II-6).
**25(a) - Statement on Form T-1 of The Bank of New York
relating to Amended and Restated Trust
Agreement.
**25(b) - Statement on Form T-1 of The Bank of New York
relating to Indenture.
**25(c) - Statement on Form T-1 of The Bank of New York
relating to Guarantee Agreement.
______________________
** Previously filed.
+ Incorporated herein by reference as indicated.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) That, for purposes of determining any liability under
the 1933 Act, each filing of the registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the 1934 Act that
is incorporated by reference in this Registration Statement shall
be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(2) That, for purposes of determining any liability under
the 1933 Act, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
1933 Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(3) That, for the purpose of determining any liability
under the 1933 Act, each post-effective amendment that contains a
form of prospectus 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.
(4) That, insofar as indemnification for liabilities
arising under the 1933 Act may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the provisions described under Item 15 above, 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 the 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.
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 amendment to the registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City
of New York, State of New York, on March 11, 1996.
MINNESOTA POWER & LIGHT COMPANY
(Registrant)
By /s/ Robert J. Reger, Jr.
------------------------
Robert J. Reger, Jr.
(Attorney-In-Fact)
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed by the
following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Edwin L. Russell*
---------------------
Edwin L. Russell President, March 11, 1996
President, Chief Executive Officer
Chief Executive Officer and Director
and Director
/s/ D. G. Gartzke*
------------------
D. G. Gartzke Senior Vice President- March 11, 1996
Senior Vice President- Finance and
Finance and Chief Financial Officer
Chief Financial Officer
/s/ Mark A. Schober*
--------------------
Mark A. Schober Corporate Controller March 11, 1996
Corporate Controller
Merrill K. Cragun* Director March 11, 1996
Dennis E. Evans* Director March 11, 1996
Sister Kathleen Hofer* Director March 11, 1996
D. Michael Hockett* Director March 11, 1996
Peter J. Johnson* Director March 11, 1996
Jack R. Kelly, Jr.* Director March 11, 1996
Paula F. McQueen* Director March 11, 1996
Robert S. Nickoloff* Director March 11, 1996
Jack I. Rajala* Director March 11, 1996
Charles A. Russell* Director March 11, 1996
Arend J. Sandbulte* Chairman and Director March 11, 1996
Nick Smith* Director March 11, 1996
Bruce W. Stender* Director March 11, 1996
Donald C. Wegmiller* Director March 11, 1996
*By: /s/ Robert J. Reger, Jr.
-----------------------------
Robert J. Reger, Jr.
(Attorney-In-Fact)
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 amendment to the registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City
of Duluth, State of Minnesota, on March 11, 1996.
MP&L Capital I
By: /s/ Philip R. Halverson
-----------------------
Philip R. Halverson
EXHIBIT INDEX
Exhibit Description
------- -----------
1(a) Form of Underwriting Agreement
4(b) Form of Amended and Restated Trust
Agreement relating to the Preferred
Securities
4(c) Form of Indenture relating to the
Junior Subordinated Debentures
4(d) Form of Guarantee Agreement
4(f) Form of Officer's Certificate
establishing Debentures
23(a) Consent of Price Waterhouse LLP
23(b) Consnet of Ernst & Young LLP