Filed Pursuant to Rule
424(b)(5) (Form S-3
Registration Statements
No. 33-55473 and 33-61228)
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JANUARY 6, 1995
$75,000,000
ARIZONA PUBLIC SERVICE COMPANY
10% MONTHLY INCOME DEBT SECURITIES (MIDS)
(JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES, SERIES A)
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The Series A Junior Subordinated Debentures will mature on January 31,
2025. Interest on the Series A Junior Subordinated Debentures is payable
monthly, commencing January 31, 1995. The Series A Junior Subordinated
Debentures will be redeemable at the option of the Company, in whole or in part,
on or after January 31, 2000 at 100% of the principal amount redeemed together
with accrued interest to the redemption date. The Series A Junior Subordinated
Debentures will be represented by a Global Security or Securities that will be
deposited with, or on behalf of, The Depository Trust Company, and will be
available for purchase in denominations of $25 and any integral multiple
thereof. See "Certain Terms of the Series A Junior Subordinated Debentures."
The obligations of the Company under the Series A Junior Subordinated
Debentures are subordinate and junior in right of payment to Senior Debt of
the Company. As of September 30, 1994, outstanding Senior Debt of the Company
aggregated approximately $2.21 billion.
Application will be made to have the Series A Junior Subordinated
Debentures listed on the New York Stock Exchange.
-------------
SEE "INVESTMENT CONSIDERATIONS" FOR CERTAIN INFORMATION RELEVANT TO AN
INVESTMENT IN THE SERIES A JUNIOR SUBORDINATED DEBENTURES, INCLUDING THE
PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENT OF INTEREST ON THE
SERIES A JUNIOR SUBORDINATED DEBENTURES MAY BE DEFERRED AND THE RELATED
FEDERAL INCOME TAX CONSEQUENCES.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH
IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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Initial Public Underwriting Proceeds to
Offering Price (1) Discount (2) Company (1)(3)
------------------ -------------- --------------
Per Series A Junior
Subordinated
Debenture.......... 100.00% 3.10% 96.90%
Total................ $75,000,000 $2,325,000 $72,675,000
- -------------
(1) Plus accrued interest, if any, from the date of original issuance.
(2) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended.
(3) Before deducting estimated expenses of $125,000 payable by the Company.
-------------
The Series A Junior Subordinated Debentures are offered severally by the
Underwriters, as specified herein, 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 the Series A Junior Subordinated Debentures will be ready for
delivery in New York, New York, on or about January 12, 1995.
Goldman, Sachs & Co.
Dean Witter Reynolds Inc.
Lehman Brothers
Morgan Stanley & Co. Incorporated
PaineWebber Incorporated
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The date of this Prospectus Supplement is January 6, 1995.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES
A JUNIOR SUBORDINATED DEBENTURES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
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INVESTMENT CONSIDERATIONS
Prospective purchasers of Series A Junior Subordinated Debentures should
carefully review the information contained elsewhere in this Prospectus
Supplement and in the accompanying Prospectus and should particularly consider
the following matters:
SUBORDINATION OF SERIES A JUNIOR SUBORDINATED DEBENTURES. The obligations
of the Company under the Series A Junior Subordinated Debentures are
subordinate and junior in right of payment to Senior Debt of the Company. As
of September 30, 1994, outstanding Senior Debt of the Company aggregated
approximately $2.21 billion. There are no terms in the Series A Junior
Subordinated Debentures that limit the Company's ability to incur additional
indebtedness, including indebtedness that ranks senior to the Series A Junior
Subordinated Debentures. See "Description of Debt Securities -- Subordination"
in the accompanying Prospectus.
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
Series A Junior Subordinated Debentures to a period not exceeding 60
consecutive months, and, as a consequence, monthly interest payments on the
Series A Junior Subordinated Debentures would be deferred (but would continue to
accrue with interest thereon) during any such extended interest payment period.
In the event that the Company exercises this right, the Company may not declare
or pay dividends on, or redeem, purchase or acquire, any of its capital stock,
except that the Company may make mandatory sinking fund payments with respect to
its $10.00 Cumulative Preferred Stock, Series U ($100 par value), and its $7.875
Cumulative Preferred Stock, Series V ($100 par value). Therefore, the Company
believes that the extension of an interest payment period on the Series A Junior
Subordinated Debentures is unlikely. 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 60 consecutive months or extend beyond the
maturity of the Series A Junior Subordinated Debentures. Upon the termination of
any extension period and the payment of all amounts then due, the Company may
select a new extension period, subject to the above requirements. See "Certain
Terms of the Series A Junior Subordinated Debentures -- Option to Extend
Interest Payment Period."
Should an extended interest payment period occur, holders of the Series A
Junior Subordinated Debentures will continue to accrue income for United
States federal income tax purposes even though interest is not being paid on a
current basis. As a result, such a holder 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 from the Company related to such income
if such a holder disposes of his or her Series A Junior Subordinated
Debentures prior to the record date for payment of interest. See "United
States Taxation -- United States Holders."
APPLICATION OF PROCEEDS
The Company intends to apply the net proceeds from the sale of the
Series A Junior Subordinated Debentures to the repayment of short-term
borrowings incurred for (i) the redemption in June 1994 of $28.4 million of
the Company's $11.50 Cumulative Preferred Stock, Series R, (ii) the redemption
in September 1994 of $50 million of the Company's $8.50 Cumulative Preferred
Stock, Series T, and (iii) the redemption on October 24, 1994 of $20 million of
the Company's $8.48 Cumulative Preferred Stock, Series S. The estimated average
interest rate of the short-term borrowings to be retired is 4.8%. Any proceeds
not immediately so applied will be invested temporarily, pending such
application, in United States government or agency obligations, commercial
paper, bank certificates of deposit, or repurchase agreements collateralized by
United States government or agency obligations, or will be deposited with
banks.
CERTAIN TERMS OF THE SERIES A JUNIOR SUBORDINATED DEBENTURES
The following description of specific terms of the Series A Junior
Subordinated Debentures supplements and should be read in conjunction with the
description of the general terms and provisions of the Debt Securities set
forth in the accompanying Prospectus under the caption "Description of Debt
Securities." The following summary does not purport to be complete and is
subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the description in the accompanying Prospectus and the
Indenture, dated as of January 1, 1995, between the Company and The Bank of
New York, as Trustee, as supplemented by a First Supplemental Indenture, dated
as of January 1, 1995 (the Indenture, as so supplemented, is hereinafter
referred to as the "Indenture").
PRINCIPAL AMOUNT, INTEREST AND MATURITY
The Series A Junior Subordinated Debentures will be issued as a series of
Debt Securities under the Indenture. The Series A Junior Subordinated
Debentures will be limited in aggregate principal amount to $75 million.
The Series A Junior Subordinated Debentures are to mature January 31, 2025
and will bear interest at the rate per annum shown in the title thereof payable
monthly on the last day of each calendar month, commencing January 31, 1995, to
the persons in whose names the Series A Junior Subordinated Debentures are
registered at the close of business on the relevant record dates, which will be
one Business Day (as hereinafter defined) prior to the relevant payment dates.
The amount of interest payable for any period will be computed on the basis of a
360-day year of twelve 30-day months. Interest will accrue from the date of
original issuance to, but not including, the relevant payment date. In the event
that any date on which interest is payable on the Series A 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 such date. A "Business Day" shall mean any
day other than a day on which banking institutions in The City of New York are
authorized or obligated by law to close.
GLOBAL SECURITIES
The Series A Junior Subordinated Debentures will be represented by a Global
Security or Securities that will be deposited with, or on behalf of, The
Depository Trust Company (the "Depositary"), and will be available for purchase
in denominations of $25 and any integral multiple thereof.
The Depositary has advised the Company and the Underwriters as follows:
the Depositary is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. The Depositary was created to hold securities of its
participating organizations ("participants") and to facilitate the clearance
and settlement of securities transactions, such as transfers and pledges,
among its participants in such securities through electronic computerized
book-entry changes in accounts of the participants, thereby eliminating the
need for physical movement of securities certificates. Participants include
securities brokers and dealers (including the Underwriters), banks, trust
companies, clearing corporations and certain other organizations, some of whom
(and/or their representatives) own the Depositary. Access to the Depositary's
book entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with a participant, either directly or indirectly. Persons who are not
participants may beneficially own securities held by the Depositary only
through participants.
A further description of the Depositary's procedures with respect to the
Series A Junior Subordinated Debentures is set forth under "Description of
Debt Securities -- Global Securities" in the accompanying Prospectus.
REDEMPTION
The Series A Junior Subordinated Debentures will be redeemable at the
option of the Company, as a whole or in part, at any time on or after January
31, 2000 and prior to maturity, upon not less than 30 nor more than 60 days'
notice, at 100% of the principal amount redeemed togeth with accrued interest to
the redemption date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company shall have the right at any time during the term of the
Series A Junior Subordinated Debentures to extend the interest payment period
from time to time to a period not exceeding 60 consecutive months (the
"Extension Period"), at the end of which Extension Period the Company shall
pay all interest then accrued and unpaid (together with interest thereon at
the rate specified for the Series A Junior Subordinated Debentures to the
extent permitted by applicable law); provided, that, during any such Extension
Period, the Company shall not declare or pay any dividend on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock or make any guarantee payments with respect to the foregoing,
except that the Company may make mandatory sinking fund payments with respect
to its $10.00 Cumulative Preferred Stock, Series U ($100 par value), and its
$7.875 Cumulative Preferred Stock, Series V ($100 par value). 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 60
consecutive months or extend beyond the maturity of the Series A Junior
Subordinated Debentures. Upon the termination of any 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 during an Extension
Period, except at the end thereof, shall be due and payable. The Company
shall give the holders of the Series A Junior Subordinated Debentures notice
of its selection of such Extension Period ten Business Days prior to the earlier
of (i) the next interest payment date or (ii) the date the Company is
required to give notice to holders of the Series A Junior Subordinated
Debentures (or, if applicable, to the New York Stock Exchange or other
applicable self-regulatory organization) of the record or payment date of such
interest payment, but in any event not less than two Business Days prior to
such record date.
DEFEASANCE
The provisions described in the accompanying Prospectus under the caption
"Description of Debt Securities -- Defeasance and Covenant Defeasance" are
applicable to the Series A Junior Subordinated Debentures.
PAYING AGENT AND REGISTRAR
The Bank of New York will act as Paying Agent and Registrar for the
Series A Junior Subordinated Debentures.
UNITED STATES TAXATION
GENERAL
This section is a summary of certain United States federal income tax
considerations that may be relevant to prospective purchasers of Series A
Junior Subordinated Debentures and represents the opinion of Sullivan &
Cromwell, special tax counsel to the Company, insofar as it relates to matters
of law and legal conclusions. This section is based upon current provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), existing and
proposed regulations thereunder and current administrative rulings and court
decisions, all of which are subject to change. Subsequent changes may cause
tax consequences to vary substantially from the consequences described below.
No attempt has been made in the following discussion to comment on all
United States federal income tax matters affecting purchasers of Series A
Junior Subordinated Debentures. Moreover, the discussion focuses on holders
of Series A Junior Subordinated Debentures who are individual citizens or
residents of the United States that hold the Series A Junior Subordinated
Debentures as a capital asset and has only limited application to
corporations, estates, trusts or non-resident aliens. Accordingly, each
prospective purchaser of Series A Junior Subordinated Debentures should
consult, and should depend on, his or her own tax advisor in analyzing the
federal, state, local and foreign tax consequences of the purchase, ownership
or disposition of Series A Junior Subordinated Debentures.
UNITED STATES HOLDERS
For purposes of this discussion, a United States Holder is a beneficial
owner who or that is (i) a citizen or resident of the United States, (ii) a
domestic corporation or (iii) otherwise subject to United States federal
income taxation on a net income basis in respect of the Series A Junior
Subordinated Debentures.
Interest on Series A Junior Subordinated Debentures will be included in
the income of a United States Holder as it accrues, rather than when it is paid,
regardless of the United States Holder's regular method of accounting for tax
purposes. United States holders may therefore include interest in income for
taxable years prior to the year in which the interest is actually received. This
should only be significant, however, during an Extension Period.
A United States Holder will generally recognize gain or loss on the sale
or retirement of a Series A Junior Subordinated Debenture equal to the
difference between the amount realized from the sale or retirement and the
tax basis of the Series A Junior Subordinated Debenture. Such gain or loss
will be capital gain or loss, and will be long-term capital gain or loss if
the Series A Junior Subordinated Debenture has been held for more than one
year. The tax basis of the Series A Junior Subordinated Debenture will
generally equal the amount paid for it, increased by the amount of any
accrued but unpaid interest.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
holder who or which is (i) a nonresident alien individual or (ii) a foreign
corporation, partnership or estate or trust, in either case not subject to
United States federal income tax on a net income basis in respect of a
Series A Junior Subordinated Debenture.
Under current United States federal income tax law, subject to the
discussion below with respect to backup withholding:
(i) Payments by the Company or any of its paying agents to any holder
of a Series A Junior Subordinated Debenture who or which is a United
States Alien Holder will not be subject to United States federal
withholding tax provided that (a) the beneficial owner of the Series A
Junior Subordinated Debenture does not actually or constructively own
10%, or more of the total combined voting power of all classes of capital
stock of the Company entitled to vote, (b) the beneficial owner of the
Series A Junior Subordinated Debenture is not a controlled foreign
corporation that is related to the Company through stock ownership and
(c) either (x) the beneficial owner of the Series A Junior Subordinated
Debenture certifies to the Company or its agent, under penalties of
perjury, that it is a United States Alien Holder and provides its name
and address or (y) the holder of the Series A Junior Subordinated
Debenture is a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of
its trade or business (a "financial institution"), and such holder
certifies to the Company or its agent under penalties of perjury that
such statement has been received from the beneficial owner by it or by a
financial institution between it and the beneficial owner and furnishes
the Company or its agent with a copy thereof, and (ii) a United States
Alien Holder of a Series A Junior Subordinated Debenture will generally
not be subject to United States federal withholding tax on any gain
realized on the sale or exchange of a Series A Junior Subordinated
Debenture unless such holder is present in the United States for 183 days
or more in the taxable year of sale and either has a "tax home" in the
United States or certain other requirements are met.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments of
principal and interest on a Series A Junior Subordinated Debenture, and the
proceeds of the sale of a Series A Junior Subordinated Debenture prior to
maturity within the United States, with respect to non-corporate United
States Holders, and "backup withholding" at a rate of 31% will apply to such
payments if the United States Holder fails to provide an accurate taxpayer
identification number or to report all interest and dividends required to be
shown on its federal Income tax returns.
Information reporting and backup withholding will not apply to payments
of principal and interest made by the Company or a paying agent to a United
States Allen Holder on a Series A Junior Subordinated Debenture if the
certification described in clause (i) (c) under "United States Alien Holders"
above is received, provided that the payor does not have actual knowledge
that the holder is a United States Holder.
Payments of the proceeds from the sale by a United States Alien Holder of
a Series A Junior Subordinated Debenture made to or through a foreign office
of a broker will not be subject to information reporting or backup
withholding, except that if the broker is a United States person, a
controlled foreign corporation for United States tax purposes or a foreign
person 50% or more of whose gross income is effectively connected with a
United States trade or business for a specified three-year period,
information reporting may apply to such payments. Payments of proceeds from
the sale of a Series A Junior Subordinated Debenture to or through the United
States office of a broker is subject to information reporting and backup
withholding unless the United States Alien Holder or beneficial owner
certifies as to its non-United States status or otherwise establishes an
exemption from information reporting and backup withholding.
UNDERWRITING
The Underwriters named below have severally agreed to purchase from
the Company the following respective principal amounts of Series A Junior
Subordinated Debentures:
Underwriter Principal Amount
- ----------- ----------------
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . . . . . . $10,725,000
Dean Witter Reynolds Inc. . . . . . . . . . . . . . . . . . . . 10,725,000
Lehman Brothers Inc. . . . . . . . . . . . . . . . . . . . . . 10,725,000
Morgan Stanley & Co. Incorporated . . . . . . . . . . . . . . . 10,725,000
PaineWebber Incorporated . . . . . . . . . . . . . . . . . . . 10,725,000
Advest, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 375,000
Alex. Brown & Sons Incorporated . . . . . . . . . . . . . . . . 1,875,000
CS First Boston Corporation . . . . . . . . . . . . . . . . . . 1,875,000
Cowen & Company . . . . . . . . . . . . . . . . . . . . . . . . 375,000
Dain Bosworth Incorporated . . . . . . . . . . . . . . . . . . 375,000
Dillon, Read & Co. Inc. . . . . . . . . . . . . . . . . . . . . 1,875,000
A.G. Edwards & Sons, Inc. . . . . . . . . . . . . . . . . . . . 1,875,000
Fahnestock & Co. Inc. . . . . . . . . . . . . . . . . . . . . . 375,000
Interstate/Johnson Lane Corporation . . . . . . . . . . . . . . 375,000
Janney Montgomery Scott Inc. . . . . . . . . . . . . . . . . . 375,000
Kemper Securities, Inc. . . . . . . . . . . . . . . . . . . . . 1,875,000
Kennedy, Cabot & Co. . . . . . . . . . . . . . . . . . . . . . 375,000
Legg Mason Wood Walker Incorporated . . . . . . . . . . . . . . 375,000
McDonald & Company Securities, Inc. . . . . . . . . . . . . . . 375,000
Morgan Keegan & Company, Inc. . . . . . . . . . . . . . . . . . 375,000
Olde Discount Corporation . . . . . . . . . . . . . . . . . . . 375,000
Piper Jaffray Inc.. . . . . . . . . . . . . . . . . . . . . . . 375,000
Principal Financial Securities, Inc.. . . . . . . . . . . . . . 375,000
Prudential Securities Incorporated . . . . . . . . . . . . . . 1,875,000
Pryor, McClendon, Counts & Co., Inc. . . . . . . . . . . . . . 375,000
Rauscher Pierce Refsnes, Inc. . . . . . . . . . . . . . . . . . 375,000
Raymond James & Associates, Inc. . . . . . . . . . . . . . . . 375,000
Salomon Brothers Inc . . . . . . . . . . . . . . . . . . . . . 1,875,000
Muriel Siebert & Co., Inc. . . . . . . . . . . . . . . . . . . 375,000
Sutro & Co. Incorporated. . . . . . . . . . . . . . . . . . . . 375,000
Trilon Securities International . . . . . . . . . . . . . . . . 375,000
U.S. Clearing Corp. . . . . . . . . . . . . . . . . . . . . . . 375,000
Wedbush Morgan Securities . . . . . . . . . . . . . . . . . . . 375,000
Wheat, First Securities, Inc. . . . . . . . . . . . . . . . . . 375,000
-----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . $75,000,000
===========
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent, and that the
Underwriters will be obligated to purchase all of the Series A Junior
Subordinated Debentures if any are purchased.
The Company has been advised by the several Underwriters that they
propose to offer the Series A Junior Subordinated Debentures to the public
initially at the public offering price set forth on the cover page of this
Prospectus Supplement and to certain dealers at such price less a concession not
in excess of 2.0% of the principal amount of the Series A Junior Subordinated
Debentures; that the Underwriters and such dealers may reallow a discount not in
excess of 1.0% of such principal amount on sales to certain other dealers; and
that after the initial public offering, the public offering price and concession
and discount to dealers may be changed by the Underwriters.
The Series A Junior Subordinated Debentures are a new issue of securities
with no established trading market. The Company has been advised by the
Underwriters that they intend to make a market in the Series A Junior
Subordinated Debentures, but are not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Series A Junior Subordinated
Debentures.
Certain of the Underwriters have provided various investment banking
services, including serving as commercial paper dealers under the Company's
commercial paper program, to the Company and its affiliates from time to time,
for which they have received customary compensation. In addition, certain of
the Underwriters have provided various investment banking services to Pinnacle
West Capital Corporation, the Company's parent, from time to time, for which
they have received customary compensation.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
LEGAL MATTERS
Statements as to United States taxation in the Prospectus Supplement
under the caption "United States Taxation" have been passed upon for the
Company by Sullivan & Cromwell, special tax counsel to the Company, and are
stated herein on their authority.
$200,000,000
ARIZONA PUBLIC SERVICE COMPANY
FIRST MORTGAGE BONDS
DEBT SECURITIES
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Arizona Public Service Company (the "Company") intends from time to time
to issue up to $200,000,000 aggregate principal amount of its securities, at
least $100,000,000 of which will consist of First Mortgage Bonds of the
Company (the "New Bonds"), and the remaining $100,000,000 of which will
consist of either New Bonds or other debt securities of the Company (the "Debt
Securities"), or any combination thereof, in one or more series at prices and
on terms to be determined at the time of sale. The New Bonds and the Debt
Securities may be collectively referred to in this Prospectus as the
"Securities".
For each issue of Securities for which this Prospectus is being delivered
(the "Offered Bonds" or the "Offered Debt Securities" and, collectively, the
"Offered Securities"), there will be an accompanying Prospectus Supplement
(the "Prospectus Supplement") that sets forth, without limitation and to the
extent applicable, the specific designation, aggregate principal amount,
denomination, maturity, premium, if any, rate of interest (which may be fixed
or variable) or method of calculation thereof, time of payment of interest,
any terms for redemption, any sinking fund provisions, any subordination
provisions (in the case of the Debt Securities only), the initial public
offering price, the names of any underwriters or agents, the principal
amounts, if any, to be purchased by the underwriters, the compensation of such
underwriters or agents, and any other special terms of the Offered Securities.
The Prospectus Supplement relating to any series of Offered Securities will
also contain information concerning certain United States federal income tax
considerations, if applicable to the Offered Securities.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-------------
The date of this Prospectus is January 6, 1995.
AVAILABLE INFORMATION
Arizona Public Service Company (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(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 can be
obtained at prescribed rates from the Public Reference Section of the
Commission or 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 certain of its regional offices located at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center, 13th
Floor, New York, New York 10048. Certain securities of the Company are listed
on the New York Stock Exchange. Reports, proxy materials, and other
information concerning the Company can be inspected at the office of this
exchange at 20 Broad Street, 7th Floor, New York, New York 10005.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by the
Company (File No. 1-4473) are incorporated by reference in this Prospectus:
1. The Company's Form 10-K Report for the fiscal year ended December 31,
1993 (the "1993 10-K Report");
2. The Company's Form 10-Q Reports for the fiscal quarters ended March 31,
June 30, and September 30, 1994 (the "September 10-Q Report"); and
3. The Company's Form 8-K Reports, dated December 15, 1993, February 23,
April 30, May 19, and October 19, 1994.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14,
or 15(d) of the 1934 Act after the filing date of the September 10-Q Report and
prior to the termination of the offering of the securities offered hereby
shall be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date of filing of such documents.
Any statement contained in a document 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 also incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as 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
oral or written request of such person, a copy of any or all of the documents
referred to above which have been or may be incorporated in this Prospectus by
reference, other than exhibits to such documents. Request for such copies
should be directed to Arizona Public Service Company, Office of the Secretary,
Station 9068, P.O. Box 53999, Phoenix, Arizona 85072-3999, (602) 250-3252.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
SELECTED INFORMATION
The following material is qualified in its entirety by reference to
the detailed information and financial statements incorporated by
reference in this Prospectus.
THE OFFERING
Securities Offered.......................... Up to $200,000,000 of First Mortgage Bonds or up to
$100,000,000 of First Mortgage Bonds and $100,000,000 of
any combination of First Mortgage Bonds and Debt
Securities.
Application of Proceeds..................... Except as otherwise described in the Prospectus Supplement,
the net proceeds of the Offered Securities will be applied
primarily to the redemption, repurchase, repayment, or
retirement of outstanding indebtedness, and temporary
investment pending such application.
THE COMPANY
Business.................................... Electric utility servicing approximately 654,000 customers
in an area that includes all or part of 11 of Arizona's 15
counties.
Generating Fuel Mix (estimated for the
twelve months ended September 30, 1994)...
Coal -- 62.8%; Nuclear -- 30.8%; Gas -- 6.2%; Other --
0.2%.
FINANCIAL DATA (THOUSANDS OF DOLLARS):
Twelve Months Ended
---------------------------------------------------------------------------
December 31,
-----------------------------------------------
September 30, 1994 <F1> 1993 1992 1991
-------------------------- -------------- -------------- ---------------
Electric Operating Revenues...... $ 1,736,320 $ 1,686,290 $ 1,669,679 $ 1,515,289
Refund Obligation <F2>........... -- -- -- (53,436)
-------------------- -------------- -------------- ---------------
Net Operating Revenue.......... $ 1,736,320 $ 1,686,290 $ 1,669,679 $ 1,461,853
==================== ============== ============== ===============
Net Income (Loss)................ $ 259,531 $ 250,386 $ 246,805 $ (222,649)
==================== ============== ============== ===============
Ratio of Earnings to Fixed
Charges........................ 3.08 2.99 2.73 <F3>
CAPITALIZATION DATA (THOUSANDS OF DOLLARS):
As Adjusted<F4>
As of ------------------------------
September 30, 1994 Amount Percentage
---------------------- -------------- --------------
Long-Term Debt (excluding current maturities)... $ 2,170,319 $ 2,258,819 54.8%
Redeemable Preferred Stock...................... 95,000 75,000 1.8
Non-Redeemable Preferred Stock.................. 193,561 193,561 4.7
Common Stock Equity............................. 1,595,604 1,595,604 38.7
------------------ -------------- ------------
Total Capitalization........................ $ 4,054,484 $ 4,122,984 100.0%
================== ============== ============
-------
<FN>
<F1> Financial data as of and for the twelve months ended September 30,
1994 is unaudited but, in the judgment of the Company's management,
contains all necessary adjustments for a fair presentation of the
financial position of the Company on such date and the results of
operations for such period.
<F2> The Company recorded a refund obligation to customers relating to and
included in the write-off described in "Regulatory Matters -- Rate
Case Settlement" in Note 2 of Notes to Financial Statements in
Part II, Item 8 of the 1993 10-K Report and in Note 5 of Notes to
Condensed Financial Statements in Part I, Item 1 of the September 10-Q
Report.
<F3> The write-off resulting from the December 1991 Arizona Corporation
Commission ("ACC") order settling the Company's then-pending rate case
(see "Regulatory Matters -- Rate Case Settlement" in Note 2 of Notes
to Financial Statements in Part II, Item 8 of the 1993 10-K Report)
resulted in a negative coverage ratio and an earnings coverage
deficiency of approximately $317 million for the twelve months ended
December 31, 1991. Excluding the effects of the write-off, the
coverage ratio would have been 2.11 for the same period.
<F4> For the Company's (i) assumed issuance of $200 million of Securities,
(ii) repurchase in October 1994 of approximately $5 million of the
Company's First Mortgage Bonds, (iii) incurrence on October 12, 1994 of
approximately $11 million of long-term debt in connection with a
tax-exempt financing, (iv) redemption on October 24, 1994 of $20 million
of the Company's $8.48 Cumulative Preferred Stock, Series S, and (v)
incurrence on December 16, 1994 of approximately $7.5 million of long-term
debt in connection with a tax-exempt financing. It is assumed that the
net proceeds from the issuance of approximately $125 million of the
Securities will be used for the redemption, repurchase, repayment, or
retirement of a similar amount of outstanding long-term debt.
</FN>
THE COMPANY
The Company was incorporated in 1920 under the laws of Arizona and is
principally engaged in providing electricity in the State of Arizona. The
principal executive offices of the Company are located at 400 North Fifth
Street, Phoenix, Arizona 85004 and its telephone number is (602) 250-1000.
APPLICATION OF PROCEEDS
Except as otherwise described in the Prospectus Supplement, the net
proceeds of the Offered Securities will be applied primarily to the
redemption, repurchase, repayment, or retirement of outstanding indebtedness.
Any proceeds not immediately so applied when received may be invested
temporarily, pending such application, in United States government or agency
obligations, commercial paper, bank certificates of deposit, or repurchase
agreements collateralized by United States government or agency obligations,
or will be deposited with banks.
EARNINGS RATIOS
The following table sets forth the Company's historical ratio of earnings
to fixed charges for each of the indicated periods:
Twelve months ended
- -----------------------------------------------------------------------
December 31,
September 30, ------------------------------------------------
1994 1993 1992 1991 1990 1989
- --------------------- ---- ---- ---- ---- ----
3.08 2.99 2.73 (1) 2.05 2.29
- ----------
(1) The write-off resulting from the December 1991 ACC order settling the
Company's then-pending rate case (see "Regulatory Matters -- Rate Case
Settlement" in Note 2 of Notes to Financial Statements in Part II, Item 8
of the 1993 10-K Report) resulted in a negative coverage ratio and an
earnings coverage deficiency of approximately $317 million for the twelve
months ended December 31, 1991. Excluding the effects of the write-off,
the coverage ratio would have been 2.11 for the same period.
For the purposes of these computations, "earnings" are defined as the sum
of pre-tax income plus fixed charges of the Company and its subsidiaries;
"fixed charges" consist of interest on debt, amortization of debt discount,
premium, and expense and an estimated interest factor in rentals.
DESCRIPTION OF NEW BONDS
GENERAL
The New Bonds may be issued in one or more new series under the Mortgage
and Deed of Trust dated as of July 1, 1946 between the Company and Bank of
America National Trust and Savings Association, as successor by merger to
Security Pacific National Bank, as Trustee ("Bond Trustee"), which as
heretofore amended and supplemented is herein referred to as the "Mortgage,"
and which is to be further amended and supplemented by appropriate
Supplemental Indentures ("Bond Supplemental Indentures"). The following
summary does not purport to be complete and is subject in all respects to the
provisions of, and is qualified in its entirety by reference to, the Mortgage,
the New Bonds, and the Bond Supplemental Indentures, the forms of which are
filed as exhibits to the registration statement of which this Prospectus forms
a part. Whenever particular provisions or defined terms in such documents are
referred to herein, such provisions or defined terms are incorporated by
reference herein.
Reference is made to the Prospectus Supplement relating to any particular
issue of Offered Bonds for the following terms: (1) the aggregate principal
amount of the Offered Bonds; (2) the date on which such Offered Bonds mature;
(3) the rate per annum at which such Offered Bonds will bear interest; (4) the
times at which such interest will be payable; (5) the date, if any, after
which such Offered Bonds may be redeemed at the option of the Company and the
redemption price; and (6) any other special terms. Interest will be paid to
the person in whose name the Offered Bonds are registered at the close of
business on the record date, as established in the Bond Supplemental Indenture
relating thereto, preceding the interest payment date in respect thereof. The
New Bonds will be issued as fully registered bonds, without coupons, in
denominations of $1,000 and multiples thereof. The New Bonds will be
transferable at any time without any service or other charge, except transfer
taxes and other governmental charges, if any.
Except as otherwise described under the heading "Description of New Bonds
- -- Issuance of Additional Bonds" or in the Prospectus Supplement, the
covenants contained in the Mortgage and the New Bonds would not afford holders
of the New Bonds protection in the event of a highly-leveraged transaction
involving the Company.
REDEMPTION
The Offered Bonds are redeemable as set forth in the Prospectus Supplement
relating thereto and, subject to any qualifications or variations set forth in
any such Prospectus Supplement, are also subject to redemption, in each case
at the principal amount of the Offered Bonds to be redeemed together with
accrued interest to the date fixed for redemption, (i) in whole or in part
with the proceeds from mortgaged property of the Company taken under eminent
domain by, or otherwise sold to, a governmental body or agency; (ii) in whole
or in part with the Proceeds of Released Property, including proceeds from the
sale or other disposition (including a sale and leaseback) of property
released from the lien of the Mortgage as specified in section (b) of the
second to the last paragraph under the heading "Description of New Bonds --
Security" below; and (iii) in whole, together with all other first mortgage
bonds of the Company then outstanding, within twelve months of certain mergers
or other transactions involving the transfer of substantially all of the
property subject to the lien of the Mortgage, as then amended. In addition,
after the date and at the price set forth in the Prospectus Supplement,
Offered Bonds may be redeemed in whole or in part with cash deposited in the
replacement fund discussed below.
SECURITY
The New Bonds will rank pari passu, except as to any sinking fund or
similar fund provided for a particular series, with all bonds at any time
outstanding under the Mortgage. The Mortgage constitutes a first mortgage lien
on substantially all the fixed property owned by the Company (which does not
include a combined cycle plant or certain interests in Unit 2 of the Palo
Verde Nuclear Generating Station being leased), other than property
specifically excepted by the Mortgage. Such lien and the Company's title to
certain of its properties are subject to Excepted Encumbrances, to minor
leases, defects, irregularities, and deficiencies, and to the considerations
discussed below with respect to the Four Corners and Navajo Plant locations.
The lien of the Mortgage will also extend to all after-acquired property
(other than the excepted classes) located in the jurisdictions in which the
necessary recordations or filings have been accomplished, subject to Excepted
Encumbrances and to liens existing or placed on such property at the time of
its acquisition by the Company.
Both the Four Corners and the Navajo Plants are located on property held
by the plant participants under leases from the Navajo Tribe and easements
from the Secretary of the Interior. The leases extend from their respective
effective dates in 1966 and 1969 for terms of 50 years with rights of renewal
for up to 25 additional years. The easements are for 50-year terms from the
same effective dates. While the Company owns the rights conferred upon it by
the leases from the Navajo Tribe, the Company does not make any representation
with respect to the Tribe's title to the lands leased (but is not aware of any
assertion of a contesting claim to such lands) or with respect to the
enforceability of the leases against the Tribe.
The Mortgage requires the Company to keep the property encumbered thereby
as an operating system or systems in good repair and working order, but
permits the permanent discontinuance or reduction in capacity of any such
properties which, in the judgment of the Board of Directors of the Company, is
desirable in the conduct of its business or which is ordered by a regulatory
authority or which properties are to be sold or disposed of by the Company.
When not in default under the Mortgage, the Company may obtain the release
from the lien thereof of (a) property that has become unserviceable, obsolete,
or unnecessary for use in the Company's operations, provided that it replaces
such property with, or substitutes for the same, an equal value of other
property, and (b) other property that has been sold or otherwise disposed of,
provided that the Company deposits with the Bond Trustee cash in an amount,
waives the right to issue additional bonds on the basis of retired bonds
previously issued in an amount, or utilizes as a credit net Property Additions
acquired by the Company within the preceding five years and having a fair
value (not more than Cost), equal to the fair value of the property to be
released.
The Bond Trustee may, and upon request of the Company shall, cancel and
discharge the lien of the Mortgage and all indentures supplemental thereto
whenever all indebtedness secured by the Mortgage has been paid.
ISSUANCE OF ADDITIONAL BONDS
Additional bonds may be issued under the Mortgage in a principal amount
equal to (a) 60% of net Property Additions, (b) the principal amount of
certain redeemed or retired bonds previously issued, and/or (c) deposited
cash, provided that the Company's Adjusted Net Earnings over a twelve-month
period are at least two times the annual interest on all bonds to be
outstanding under the Mortgage after the issuance and on indebtedness secured
by prior liens. Exceptions to this earnings coverage requirement apply to
bonds issued on the basis of redeemed or retired bonds where the redeemed or
retired bonds bore a higher rate of interest and where certain other
conditions are satisfied. In addition, the Company's articles of incorporation
allow the Company to issue additional preferred stock when certain earnings
coverage requirements are met. Exceptions to this earnings coverage
requirement apply to preferred stock issued for the purpose of redeeming or
retiring other preferred stock.
Assuming 9.0% as the rate of interest on bonds that might have been issued
on September 30, 1994, and the issuance on that date of $200 million in
aggregate principal amount of the New Bonds, and adjusting for the repurchase
in October 1994 of approximately $5 million of the Company's First Mortgage
Bonds, the coverage afforded by earnings for the twelve months ended September
30, 1994, would have allowed the issuance of approximately $2.02 billion in
aggregate principal amount of additional bonds, as compared to approximately
$346 million of first mortgage bonds on the basis of property additions and
approximately $749 million of first mortgage bonds on the basis of redeemed or
retired bonds.
In addition to the Mortgage restrictions on the Company's issuance of
additional bonds, the Company must obtain ACC approval before issuing equity
securities or incurring long-term debt. Existing ACC orders allow the Company
to have approximately $501 million in aggregate par value of preferred stock
and approximately $2.6 billion in principal amount of long-term debt
outstanding at any one time. The Company does not expect these provisions or
authorizations to limit the Company's ability to meet its capital
requirements.
Property Additions, and in many instances redeemed or retired bonds, as
well as deposited cash, may be used for certain alternative purposes under the
Mortgage, including the release of property from the lien thereof or the
satisfaction of sinking or replacement fund requirements. The Mortgage
contains restrictions on the issuance of bonds, withdrawal of cash, or release
of property on the basis of property subject to prior liens. Property located
on leaseholds or easements (as, for example, the Four Corners and Navajo
Plants) will constitute fundable Property Additions if the leasehold or
easement has an unexpired term of, or the term is extendable at the Company's
option for, at least 30 years after the time of funding, or if the property
may be removed by the Company without compensation.
REPLACEMENT FUND
So long as any of the New Bonds are outstanding, the Company is required
for each calendar year to deposit with the Bond Trustee cash in a formularized
amount related to net additions to the Company's mortgaged utility plant;
however, the Company may satisfy all or any part of the requirement by
utilizing redeemed or retired bonds, net Property Additions, or property
retirements. For the years 1992 and 1993, such requirement amounted to
approximately $117,000,000 and $122,000,000, respectively. Any cash that may
be deposited by the Company pursuant to the requirement may, upon request by
the Company, be applied to the redemption or purchase of bonds and, if not
withdrawn against Property Additions or retired bonds within five years, must
be so applied, subject in each case to any restrictions on any such redemption
or purchase as set forth in the Prospectus Supplement relating to the issue of
bonds to be redeemed or purchased. For example, the cash deposited with the
Bond Trustee by the Company in partial satisfaction of its 1992 replacement
fund requirements was used to redeem $47,430,000 in aggregate principal amount
of the Company's First Mortgage Bonds, 9% Series due 2017, at their principal
amount plus accrued interest, on April 30, 1993 and the cash deposited with
the Bond Trustee by the Company in partial satisfaction of its 1993
replacement fund requirements was used to redeem $60,264,000 in aggregate
principal amount of the Company's First Mortgage Bonds, 103/4% Series due
2019, at their principal amount plus accrued interest, on April 4, 1994.
EVENTS OF DEFAULT
The following are defaults under the Mortgage: (a) failure to pay the
principal of any bond outstanding under the Mortgage when due and payable;
(b) failure to pay interest on any bond outstanding under the Mortgage within
60 days after the same is due and payable; (c) failure to pay any installment
of any fund required to be applied to the purchase or redemption of bonds
outstanding under the Mortgage within 60 days after the same is due and
payable; (d) certain events in bankruptcy, insolvency, or reorganization; and
(e) failure to perform any other covenant of the Mortgage continuing for 90
days after notice by the Bond Trustee or holders of 15% in principal amount of
Eligible bonds. The Mortgage allows the Bond Trustee to withhold notice of
certain defaults, not including any default in the payment of principal of, or
interest on, any bond outstanding, or in the payment of any sinking,
improvement, replacement, or purchase fund installment, if it in good faith
determines that the withholding of such notice is in the interests of the
bondholders.
The holders of not less than a majority in principal amount of Eligible
bonds may direct the time, method, and place of conducting any proceeding for
any remedy available to the Bond Trustee under the Mortgage; provided,
however, that the Trustee may decline to follow any such direction under
certain circumstances, including a determination made in good faith by the
Bond Trustee that it will not be sufficiently indemnified for any
expenditures, including its own charges, in any action or proceeding so
directed. The Company is required to file with the Bond Trustee, on or before
July 1 of each year, a certificate to the effect that, except as otherwise
stated therein, the Company has complied with all of the provisions of the
Mortgage and is not then in default thereunder.
MODIFICATION OF THE MORTGAGE
The Mortgage and the rights of bondholders may be modified with the
consent of the Company, and of the Bond Trustee if deemed affected, and the
vote or assent of the holders of not less than 70% in principal amount of the
Eligible bonds, and of not less than 70% in principal amount of the Eligible
bonds of any one or more series (less than all) affected by any such
modification; except that the bondholders, without the consent of the holder
of each bond affected, have no power to (a) reduce the principal thereof, or
the premium, if any, or rate of interest thereon or otherwise modify the terms
of payment of principal, premium, or interest, or extend the maturity of any
bonds, (b) permit the creation of any lien ranking prior to or on a parity
with the lien of the Mortgage with respect to any of the mortgaged property,
(c) deprive any nonassenting bondholder of a lien upon the mortgaged property
for the security of his bonds, or (d) reduce the percentage of bondholders
authorized to effect any such modification.
OTHER
The Mortgage restricts the payment of dividends on common stock of the
Company under certain conditions which have not existed in the past and do not
currently exist.
The Bond Trustee under the Mortgage is Bank of America National Trust and
Savings Association ("Bank of America"), Los Angeles, California. The Transfer
Agent and Paying Agents are Bank of America and BankAmerica National Trust
Company, New York, New York. The Company maintains normal banking arrangements
with Bank of America, which include (i) a commitment by Bank of America to
lend the Company up to $40 million under two separate revolving credit
agreements, none of which was outstanding at September 30, 1994, and
(ii) three commitments (including one relating to an October 12, 1994
transaction) in the aggregate principal amount of approximately $89.9 million
by Bank of America pursuant to reimbursement agreements related to letters of
credit issued on behalf of the Company in connection with issuances of tax
exempt bonds, the proceeds of which were made available to the Company, none
of which was outstanding at September 30, 1994. In addition, Pinnacle West
Capital Corporation, the Company's parent, maintains normal banking
arrangements with Bank of America.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The Debt Securities may be issued in one or more new series under an
Indenture or Indentures between the Company and The Bank of New York, or other
trustee to be named, as Trustee (each, a "Trustee"). The following summary
does not purport to be complete and is subject in all respects to the
provisions of, and is qualified in its entirety by reference to, the Indenture
and the Debt Securities, the forms of which are filed, or will be filed, as
exhibits to the registration statement of which this Prospectus forms a part,
or as an exhibit to a Report on Form 8-K to be incorporated by reference in
such Prospectus. Whenever particular provisions or defined terms in such
documents are referred to herein or in a Prospectus Supplement, such
provisions or terms are incorporated by reference herein or therein, as the
case may be.
The Debt Securities will be unsecured obligations of the Company and,
unless otherwise provided in a Prospectus Supplement relating to a particular
series of Debt Securities, will be subordinated obligations of the Company. It
is expected that separate Indentures would be used for Senior Debt Securities
and subordinated Debt Securities, respectively.
Reference is made to the Prospectus Supplement relating to any particular
issue of Offered Debt Securities for the following terms: (1) the title of
such Debt Securities; (2) any limit on the aggregate principal amount of such
Debt Securities or the series of which they are a part; (3) the date or dates
on which the principal of any of such Debt Securities will be payable; (4) the
rate or rates at which any of such Debt Securities will bear interest, if any,
the date or dates from which any such interest will accrue, the Interest
Payment Dates on which any such interest will be payable and the Regular
Record Date for any such interest payable on any Interest Payment Date;
(5) the place or places where the principal of and any premium and interest on
any of such Debt Securities will be payable; (6) the period or periods within
which, the price or prices at which and the terms and conditions on which any
of such Debt Securities may be redeemed, in whole or in part, at the option of
the Company; (7) the obligation, if any, of the Company to redeem or purchase
any of such Debt Securities pursuant to any sinking fund or analogous
provision or at the option of the Holder thereof, and the period or periods
within which, the price or prices at which and the terms and conditions on
which any of such Debt Securities will be redeemed or purchased, in whole or
in part, pursuant to any such obligation; (8) the denominations in which any
of such Debt Securities will be issuable, if other than denominations of
$1,000 and any integral multiple thereof; (9) if the amount of principal of or
any premium or interest on any of such Debt Securities may be determined with
reference to an index or pursuant to a formula, the manner in which such
amounts will be determined; (10) if other than the currency of the United
States of America, the currency, currencies, or currency units in which the
principal of or any premium or interest on any of such Debt Securities will be
payable and the manner of determining the equivalent thereof in the currency
of the United States of America for any purpose, including for purposes of
determining the principal amount deemed to be Outstanding at any time; (11) if
the principal of or any premium or interest on any of such Debt Securities is
to be payable, at the election of the Company or the Holder thereof, in one or
more currencies, or currency units other than those in which such Debt
Securities are stated to be payable, the currency, currencies or currency
units in which payment of any such amount as to which such election is made
will be payable, the periods within which and the terms and conditions upon
which such election is to be made and the amount so payable (or the manner in
which such amount is to be determined); (12) if other than the entire
principal amount thereof, the portion of the principal amount of any of such
Debt Securities which will be payable upon declaration of acceleration of the
Maturity thereof; (13) if the principal amount payable at the Stated Maturity
of any of such Debt Securities will not be determinable as of any one or more
dates prior to the Stated Maturity, the amount which will be deemed to be such
principal amount as of any such date for any purpose, including the principal
amount thereof which will be due and payable upon any Maturity other than the
Stated Maturity or which will be deemed to be Outstanding as of any such date
(or, in any such case, the manner in which such deemed principal amount is to
be determined); (14) if applicable, that such Debt Securities, in whole or any
specified part, are defeasible pursuant to the provisions of the Indenture
described under "Defeasance and Covenant Defeasance -- Defeasance and
Discharge" or "Defeasance and Covenant Defeasance -- Covenant Defeasance," or
under both such captions; (15) whether any of such Debt Securities will be
issuable in whole or in part in the form of one or more Global Securities and,
if so, the respective Depositaries for such Global Securities, the form of any
legend or legends to be borne by any such Global Security in addition to or in
lieu of the legend referred to under "Form, Exchange and Transfer -- Global
Securities" and, if different from those described under such caption, any
circumstances under which any such Global Security may be exchanged in whole
or in part for Debt Securities registered, and any transfer of such Global
Security in whole or in part may be registered, in the names of Persons other
than the Depositary for such Global Security or its nominee; (16) any addition
to or change in the Events of Default applicable to any of such Debt
Securities and any change in the right of the Trustee or the Holders to
declare the principal amount of any of such Debt Securities due and payable;
(17) any addition to or change in the covenants in the Indenture; and (18) any
other terms of such Debt Securities not inconsistent with the provisions of
the Indenture. (Section 301).
Debt Securities, including Original Issue Discount Securities, may be sold
at a substantial discount below their principal amount. Certain special United
States federal income tax considerations (if any) applicable to Debt
Securities sold at an original issue discount may be described in the
applicable Prospectus Supplement. In addition, certain special United States
federal income tax or other considerations (if any) applicable to any Debt
Securities which are denominated in a currency or currency unit other than
United States dollars may be described in the applicable Prospectus
Supplement.
Except as otherwise described in the Prospectus Supplement, the covenants
contained in the Indenture would not afford holders of Debt Securities
protection in the event of a highly-leveraged transaction involving the
Company.
SUBORDINATION
The Indenture provides that, unless otherwise provided in a supplemental
indenture or a Board Resolution, the Debt Securities will be subordinate and
subject in right of payment to the prior payment in full of all Senior Debt of
the Company, whether outstanding as of the date of the Indenture or thereafter
incurred. (Section 1401). The balance of the information under this section
assumes that the relevant supplemental indenture or Board Resolution results
in the corresponding series of Debt Securities being subordinated obligations
of the Company.
No payment of principal of (including redemption and sinking fund
payments), premium, if any, or interest on, the Debt Securities may be made if
any Senior Debt is not paid when due, any applicable grace period with respect
to such default has ended and such default has not been cured or waived, or if
the maturity of any Senior Debt has been accelerated because of a default.
(Section 1402). Upon any 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 Debt must be paid in full before the holders of the
Debt Securities are entitled to receive or retain any payment. (Section 1403).
The rights of the holders of the Debt Securities will be subrogated to the
rights of the holders of Senior Debt to receive payments or distributions
applicable to Senior Debt until all amounts owing on the Debt Securities are
paid in full. (Section 1404).
The term "Senior Debt" shall mean the principal of, premium, if any,
interest on and any other payment due pursuant to any of the following,
whether outstanding at the date of execution of the Indenture or thereafter
incurred, created or assumed:
(a) all indebtedness of the Company evidenced by notes, debentures,
bonds, or other securities sold by the Company for money, including all
first mortgage bonds of the Company outstanding from time to time;
(b) all indebtedness of others of the kinds described in the preceding
clause (a) assumed by or guaranteed in any manner by the Company; and
(c) all renewals, extensions, or refundings of indebtedness of the
kinds described in any of the preceding clauses (a) and (b);
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 Debt Securities. (Section 101).
The Indenture does not limit the aggregate amount of Senior Debt that the
Company may issue. As of September 30, 1994, outstanding Senior Debt of the
Company aggregated approximately $2.21 billion.
FORM, EXCHANGE, AND TRANSFER
The Debt Securities of each series will be issuable only in fully
registered form without coupons and, unless otherwise specified in the
applicable Prospectus Supplement, in denominations of $1,000 and any integral
multiple thereof. (Section 302).
At the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to Global Securities, Debt Securities of any series
will be exchangeable for other Debt Securities of the same series, of any
authorized denomination and of like tenor and aggregate principal amount.
(Section 305).
Subject to the terms of the Indenture and the limitations applicable to
Global Securities, Debt Securities may be presented for exchange as provided
above or for registration of transfer (duly endorsed or with the form of
transfer endorsed thereon duly executed) at the office of the Security
Registrar or at the office of any transfer agent designated by the Company for
such purpose. No service charge will be made for any registration of transfer
or exchange of Debt 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 Security
Registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. The Company
has appointed the Trustee as Security Registrar. Any transfer agent (in
addition to the Security Registrar) initially designated by the Company for
any Debt Securities will be named in the applicable Prospectus Supplement.
(Section 305). The Company 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, except that the Company will
be required to maintain a transfer agent in each Place of Payment for the Debt
Securities of each series. (Section 1002).
If the Debt Securities of any series (or of any series and specified
tenor) are to be redeemed in part, the Company will not be required to
(i) issue, register the transfer of, or exchange any Debt Security of that
series (or of that series and specified tenor, as the case may be) during a
period beginning at the opening of business 15 days before the day of mailing
of a notice of redemption of any such Debt Security that may be selected for
redemption and ending at the close of business on the day of such mailing or
(ii) register the transfer of or exchange any Debt Security so selected for
redemption, in whole or in part, except the unredeemed portion of any such
Debt Security being redeemed in part. (Section 305).
GLOBAL SECURITIES
Some or all of the Debt Securities of any series may be represented, in
whole or in part, by one or more Global Securities which will have an
aggregate principal amount equal to that of the Debt Securities represented
thereby. Each Global Security will be registered in the name of a Depositary
or a nominee thereof identified in the applicable Prospectus Supplement, will
be deposited with such Depositary or nominee or a custodian therefor and will
bear a legend regarding the restrictions on exchanges and registration of
transfer thereof referred to below and any such other matters as may be
provided for pursuant to the Indenture.
Notwithstanding any provision of the Indenture or any Debt Security
described herein, no Global Security may be exchanged in whole or in part for
Debt Securities registered, and no transfer of a Global Security in whole or
in part may be registered, in the name of any Person other than the Depositary
for such Global Security or any nominee of such Depositary unless (i) the
Depositary has notified the Company that it is unwilling or unable to continue
as Depositary for such Global Security or has ceased to be qualified to act as
such as required by the Indenture, (ii) there shall have occurred and be
continuing an Event of Default with respect to the Debt Securities represented
by such Global Security or (iii) there shall exist such circumstances, if any,
in addition to or in lieu of those described above as may be described in the
applicable Prospectus Supplement. All securities issued in exchange for a
Global Security or any portion thereof will be registered in such names as the
Depositary may direct. (Sections 204 and 305).
As long as the Depositary, or its nominee, is the registered Holder of a
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Security and the Debt
Securities represented thereby for all purposes under the Debt Securities and
the Indenture. Except in the limited circumstances referred to above, owners
of beneficial interests in a Global Security will not be entitled to have such
Global Security or any Debt Securities represented thereby registered in their
names, will not receive or be entitled to receive physical delivery of
certificated Debt Securities in exchange therefor and will not be considered
to be the owners or Holders of such Global Security or any Debt Securities
represented thereby for any purpose under the Debt Securities or the
Indenture. All payments of principal of and any premium and interest on a
Global Security will be made to the Depositary or its nominee, as the case may
be, as the Holder thereof. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
definitive form. These laws may impair the ability to transfer beneficial
interests in a Global Security.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system,
the respective principal amounts of Debt Securities represented by the Global
Security to the accounts of its participants. Ownership of beneficial
interests in a Global Security will be shown only on, and the transfer of
those ownership interests will be effected only through, records maintained by
the Depositary (with respect to participants' interests) or any such
participant (with respect to interests of persons held by such participants on
their behalf). Payments, transfers, exchanges, and others matters relating to
beneficial interests in a Global Security may be subject to various policies
and procedures adopted by the Depositary from time to time. None of the
Company, the Trustee or any agent of the Company or the Trustee will have any
responsibility or liability for any aspect of the Depositary's or any
participant's records relating to, or for payments made on account of,
beneficial interests in a Global Security, or for maintaining, supervising, or
reviewing any records relating to such beneficial interests.
Secondary trading in notes and debentures of corporate issuers is
generally settled in clearing-house or next-day funds. In contrast, beneficial
interests in a Global Security, in some cases, may trade in the Depositary's
same-day funds settlement system, in which secondary market trading activity
in those beneficial interests would be required by the Depositary to settle in
immediately available funds. There is no assurance as to the effect, if any,
that settlement in immediately available funds would have on trading activity
in such beneficial interests. Also, settlement for purchases of beneficial
interests in a Global Security upon the original issuance thereof may be
required to be made in immediately available funds.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement,
payment of interest on a Debt Security on any Interest Payment Date will be
made to the Person in whose name such Debt Security (or one or more
Predecessor Debt Securities) is registered at the close of business on the
Regular Record Date for such interest. (Section 307).
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium and interest on the Debt Securities of a
particular series will be payable at the office of such Paying Agent or Paying
Agents as the Company may designate for such purpose from time to time, except
that at the option of the Company payment of any interest may be made by check
mailed to the address of the Person entitled thereto as such address appears
in the Security Register. Unless otherwise indicated in the applicable
Prospectus Supplement, the corporate trust office of the Trustee in The City
of New York will be designated as the Company's sole Paying Agent for payments
with respect to Debt Securities of each series. Any other Paying Agents
initially designated by the Company for the Debt Securities of a particular
series will be named in the applicable Prospectus Supplement. The Company may
at any time designate additional Paying Agents or rescind the designation of
any Paying Agent or approve a change in the office through which any Paying
Agent acts, except that the Company will be required to maintain a Paying
Agent in each Place of Payment for the Debt Securities of a particular series.
(Section 1002).
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or any premium or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest
has become due and payable will be repaid to the Company, and the Holder of
such Debt Security thereafter may look only to the Company for payment
thereof. (Section 1003).
CONSOLIDATION, MERGER, AND SALE OF ASSETS
The Company may not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and may not permit any Person to consolidate with or
merge into the Company or convey, transfer, or lease its properties and assets
substantially as an entirety to the Company, unless (i) the successor Person
(if any) is a corporation, partnership, trust or other entity organized and
validly existing under the laws of any domestic jurisdiction and assumes the
Company's obligations on the 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) certain
other conditions are met. (Section 801).
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Indenture with respect to Debt Securities of any series: (a) failure to pay
principal of or any premium on any Debt Security of that series when due;
(b) failure to pay any interest on any Debt Securities of that series when
due, continued for 30 days; (c) failure to deposit any sinking fund payment,
when due, in respect of any Debt Security of that series; (d) failure to
perform any other covenant of the Company in the Indenture (other than a
covenant included in the Indenture solely for the benefit of a series other
than that series), continued for 90 days after written notice has been given
by the Trustee, or the Holders of at least 25% in principal amount of the
Outstanding Debt Securities of that series, as provided in the Indenture; and
(e) certain events in bankruptcy, insolvency or reorganization. (Section 501).
If an Event of Default (other than an Event of Default described in clause
(e) above) with respect to the Debt Securities of any series at the time
Outstanding shall occur and be continuing, either the Trustee or the Holders
of at least 25% in aggregate principal amount of the Outstanding Debt
Securities of that series by notice as provided in the Indenture may declare
the principal amount of the Debt Securities of that series (or, in the case of
any Debt Security that is an Original Issue Discount Security or the principal
amount of which is not then determinable, such portion of the principal amount
of such Debt Security, or such other amount in lieu of such principal amount,
as may be specified in the terms of such Debt Security) to be due and payable
immediately. If an Event of Default described in clause (e) above with respect
to the Debt Securities of any series at the time Outstanding shall occur, the
principal amount of all the Debt Securities of that series (or, in the case of
any such Original Issue Discount Debt Security or other Debt Security, such
specified amount) will automatically, and without any action by the Trustee or
any Holder, become immediately due and payable. After any such acceleration,
but before a judgment or decree based on acceleration, the Holders of a
majority in aggregate principal amount of the Outstanding Debt Securities of
that series may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the non-payment of
accelerated principal (or other specified amount), have been cured or waived
as provided in the Indenture. (Section 502). For information as to waiver of
defaults, see "Modification and Waiver."
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the 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, unless such
Holders shall have offered to the Trustee reasonable indemnity. (Section 603).
Subject to such provisions for the indemnification of the Trustee, the Holders
of a majority in principal amount of the Outstanding Debt Securities of any
series will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred on the Trustee, with respect to the Debt Securities
of that series. (Section 512).
No Holder of a Debt Security 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 Trustee written notice of a
continuing Event of Default with respect to the Debt Securities of that
series, (ii) the Holders of at least 25% in aggregate principal amount of the
Outstanding Debt Securities of that series have made written request, and such
Holder or Holders have offered reasonable indemnity, to the Trustee to
institute such proceeding as trustee and (iii) the Trustee has failed to
institute such proceeding, and has not received from the Holders of a majority
in aggregate principal amount of the Outstanding Debt Securities of that
series a direction inconsistent with such request, within 60 days after such
notice, request and offer. (Section 507). 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 508).
The Company will be required to furnish to the Trustee annually a
statement by certain of its officers as to whether or not the Company, to
their knowledge, is in default in the performance or observance of any of the
terms, provisions and conditions of the Indenture and, if so, specifying all
such known defaults. (Section 1004).
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the Holders of not less than 662/3% in
aggregate principal amount of the Outstanding Debt Securities of each series
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security affected thereby, (a) change the Stated Maturity of
the principal of, or any instalment of principal of or interest on, any Debt
Security, (b) reduce the principal amount of, or any premium or interest on,
any Debt Security, (c) reduce the amount of principal of an Original Issue
Discount Security or any other Debt Security payable upon acceleration of the
Maturity thereof, (d) change the place or currency of payment of principal of,
or any premium or interest on, any Debt Security, (e) impair the right to
institute suit for the enforcement of any payment on or with respect to any
Debt Security, (f) reduce the percentage in principal amount of Outstanding
Debt Securities of any series, the consent of whose Holders is required for
modification or amendment of the Indenture, reduce the percentage in principal
amount of Outstanding Debt Securities of any series necessary for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults or modify such provisions with respect to modification and waiver.
(Section 902).
The Holders of not less than 662/3% in aggregate principal amount of the
Outstanding Debt Securities of any series may waive compliance by the Company
with certain restrictive provisions of the Indenture. (Section 1008). The
Holders of a majority in principal amount of the Outstanding Debt Securities
of any series may waive any past default under the Indenture, except a default
in the payment of principal, premium, or interest and certain covenants and
provisions of the Indenture which cannot be amended without the consent of the
Holder of each Outstanding Debt Security of such series affected. (Section
513).
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given or
taken any direction, notice, consent, waiver, or other action under the
Indenture as of any date, (i) the principal amount of an Original Issue
Discount Security that will be deemed to be Outstanding will be the amount of
the principal thereof that would be due and payable as of such date upon
acceleration of the Maturity thereof to such date, (ii) if, as of such date,
the principal amount payable at the Stated Maturity of a Debt Security is not
determinable (for example, because it is based on an index), the principal
amount of such Debt Security deemed to be Outstanding as of such date will be
an amount determined in the manner prescribed for such Debt Security and
(iii) the principal amount of a Debt Security denominated in one or more
foreign currencies or currency units that will be deemed to be Outstanding
will be the U.S. dollar equivalent, determined as of such date in the manner
prescribed for such Debt Security, of the principal amount of such Debt
Security (or, in the case of a Debt Security described in clause (i) or (ii)
above, of the amount described in such clause). Certain Debt Securities,
including those for whose payment or redemption money has been deposited or
set aside in trust for the Holders and those that have been fully defeased
pursuant to Section 1302, will not be deemed to be Outstanding. (Section 101).
Except in certain limited circumstances, the Company will be entitled to
set any day as a record date for the purpose of determining the Holders of
Outstanding Debt Securities of any series entitled to give or take any
direction, notice, consent, waiver, or other action under the Indenture, in
the manner and subject to the limitations provided in the Indenture. In
certain limited circumstances, the Trustee will be entitled to set a record
date for action by Holders. If a record date is set for any action to be taken
by Holders of a particular series, such action may be taken only by persons
who are Holders of Outstanding Debt Securities of that series on the record
date. To be effective, such action must be taken by Holders of the requisite
principal amount of such Debt Securities within a specified period following
the record date. For any particular record date, this period will be 180 days
or such other shorter period as may be specified by the Company (or the
Trustee, if it set the record date), and may be shortened or lengthened (but
not beyond 180 days) from time to time. (Section 104).
DEFEASANCE AND COVENANT DEFEASANCE
If and to the extent indicated in the applicable Prospectus Supplement,
the Company may elect, at its option at any time, to have the provisions of
Section 1302, relating to defeasance and discharge of indebtedness, or Section
1303, relating to defeasance of certain restrictive covenants in the
Indenture, applied to the Debt Securities of any series, or to any specified
part of a series. (Section 1301).
DEFEASANCE AND DISCHARGE. The Indenture will provide that, upon the
Company's exercise of its option (if any) to have Section 1302 applied to any
Debt Securities, the Company will be discharged from all its obligations with
respect to such Debt Securities (except for certain obligations to exchange or
register the transfer of Debt Securities, to replace stolen, lost or mutilated
Debt Securities, to maintain paying agencies and to hold moneys for payment in
trust) upon the deposit in trust for the benefit of the Holders of such Debt
Securities of money or U.S. Government Obligations, or both, which, through
the payment of principal and interest in respect thereof in accordance with
their terms, will provide money in an amount sufficient to pay the principal
of and any premium and interest on such Debt Securities on the respective
Stated Maturities in accordance with the terms of the Indenture and such Debt
Securities. Such defeasance or discharge may occur only if, among other
things, the Company has delivered to the Trustee an Opinion of Counsel to the
effect that the Company has received from, or there has been published by, the
United States Internal Revenue Service a ruling, or there has been a change in
tax law, in either case to the effect that Holders of such Debt Securities
will not recognize gain or loss for federal income tax purposes as a result of
such deposit, defeasance, and discharge and will be subject to federal income
tax on the same amount, in the same manner and at the same times as would have
been the case if such deposit, defeasance and discharge were not to occur.
(Sections 1302 and 1304).
DEFEASANCE OF CERTAIN COVENANTS. The Indenture provides that, upon the
Company's exercise of its option (if any) to have Section 1303 applied to any
Debt Securities, the Company may omit to comply with certain restrictive
covenants that may be described in the applicable Prospectus Supplement, and
the occurrence of certain Events of Default, which are described above in
clause (d) (with respect to such restrictive covenants) under "Events of
Default" and any that may be described in the applicable Prospectus
Supplement, will be deemed not to be or result in an Event of Default and the
provisions of Article Fourteen relating to subordination will cease to be
effective, in each case with respect to such Debt Securities. The Company, in
order to exercise such option, will be required to deposit, in trust for the
benefit of the Holders of such Debt Securities, money or U.S. Government
Obligations, or both, which, through the payment of principal and interest in
respect thereof in accordance with their terms, will provide money in an
amount sufficient to pay the principal of and any premium and interest on such
Debt Securities on the respective Stated Maturities in accordance with the
terms of the Indenture and such Debt Securities. The Company will also be
required, among other things, to deliver to the Trustee an Opinion of Counsel
to the effect that Holders of such Debt Securities will not recognize gain or
loss for federal income tax purposes as a result of such deposit and
defeasance of certain obligations and will be subject to federal income tax on
the same amount, in the same manner and at the same times as would have been
the case if such deposit and defeasance were not to occur. In the event the
Company exercised this option with respect to any Debt Securities and such
Debt Securities were declared due and payable because of the occurrence of any
Event of Default, the amount of money and U.S. Government Obligations so
deposited in trust would be sufficient to pay amounts due on such Debt
Securities at the time of their respective Stated Maturities but may not be
sufficient to pay amounts due on such Debt Securities upon any acceleration
resulting from such Event of Default. In such case, the Company would remain
liable for such payments. (Sections 1303 and 1304).
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.
(Sections 101 and 106).
TITLE
The Company, the Trustee, and any agent of the Company or the Trustee may
treat the Person in whose name a Debt Security is registered as the absolute
owner thereof (whether or not such Debt Security may be overdue) for the
purpose of making payment and for all other purposes. (Section 308).
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed
in accordance with, the law of the State of New York. (Section 112).
REGARDING THE TRUSTEE
The Trustee under the Indenture is The Bank of New York. The Company
maintains normal banking arrangements with The Bank of New York, which
includes two commitments in the aggregate principal amount of approximately
$35.7 million by The Bank of New York pursuant to reimbursement agreements
related to letters of credit issued on behalf of the Company in connection
with issuances of pollution control bonds, the proceeds of which were made
available to the Company, none of which was outstanding at September 30, 1994.
The Bank of New York also serves as trustee for the holders of several issues
of pollution control bonds issued on behalf of the Company.
PLAN OF DISTRIBUTION
The Company intends to sell up to $200 million in aggregate principal
amount of the Offered Securities to or through underwriters or dealers, and
may also sell the Offered Securities directly to other purchasers or through
agents, as described in the Prospectus Supplement relating to an issue of
Offered Securities.
The distribution of the Offered Securities may be effected from time to
time in one or more transactions at a fixed price or prices, which may be
changed, or at market prices prevailing at the time of sale, at prices related
to such prevailing market prices, or at negotiated prices.
In connection with the sale of the Offered Securities, underwriters may
receive compensation from the Company or from purchasers of Offered Securities
for whom they may act as agents in the form of discounts, concessions, or
commissions. Underwriters may sell Offered Securities to or through dealers,
and such dealers may receive compensation in the form of discounts,
concessions, or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agents. Underwriters, dealers, and agents
that participate in the distribution of Offered Securities may be deemed to be
underwriters, and any discounts or commissions received by them from the
Company and any profit on the resale of Offered Securities by them may be
deemed to be underwriting discounts and commissions under the Securities Act
of 1933 (the "1933 Act"). Any such person who may be deemed to be an
underwriter will be identified, and any such compensation received from the
Company will be described, in the Prospectus Supplement.
Under agreements which may be entered into by the Company, underwriters,
dealers, and agents who participate in the distribution of the Offered
Securities may be entitled to indemnification by the Company against certain
liabilities, including liabilities under the 1933 Act.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this Prospectus by reference to the Company's 1993 Annual
Report on Form 10-K have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for the
periods ended March 31, June 30, and September 30, 1994 and 1993, which is
incorporated herein by reference, Deloitte & Touche LLP have applied limited
procedures in accordance with professional standards for a review of such
information. However, as stated in their reports included in the Company's
Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30, and
September 30, 1994, and incorporated by reference herein, they did not audit and
they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP are not subject to the liability provisions of Section 11
of the Securities Act of 1933 for their reports on the unaudited interim
financial information because those reports are not "reports" or a "part" of the
registration statement prepared or certified by an accountant within the meaning
of Sections 7 and 11 of the Act.
LEGAL OPINIONS
The validity of the Securities offered hereby will be passed upon for the
Company by Snell & Wilmer L.L.P., One Arizona Center, Phoenix, Arizona 85004,
and, it is currently anticipated, for any underwriters of Securities by Sullivan
& Cromwell, 444 South Flower Street, Los Angeles, California 90071. In giving
their opinions, Sullivan & Cromwell and Snell & Wilmer may rely as to matters of
New Mexico law upon the opinion of Keleher & McLeod, P.A., 1200 Public Service
Building, Albuquerque, New Mexico 87102, Sullivan & Cromwell may rely as to all
matters of Arizona law upon the opinion of Snell & Wilmer L.L.P., and Snell &
Wilmer L.L.P. may rely as to all matters of New York law upon the opinion of
Sullivan & Cromwell.
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NO PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS
DO NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES
OTHER THAN THE SECURITIES
DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS OR
AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY
CIRCUMSTANCES IN WHICH SUCH
OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY
OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS NOR ANY SALE
MADE HEREUNDER OR THEREUNDER
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
PROSPECTUS SUPPLEMENT
PAGE
--------
Investment Considerations........... S-2
Application of Proceeds............. S-3
Certain Terms of the Series A Junior
Subordinated Debentures........... S-3
United States Taxation.............. S-5
Underwriting........................ S-7
Legal Matters....................... S-8
PROSPECTUS
Available Information............... 2
Incorporation of Certain Documents
by Reference...................... 2
Selected Information................ 3
The Company......................... 5
Application of Proceeds............. 5
Earnings Ratios..................... 5
Description of New Bonds............ 5
Description of Debt Securities...... 9
Plan of Distribution................ 17
Experts............................. 17
Legal Opinions...................... 18
$75,000,000
ARIZONA PUBLIC SERVICE COMPANY
10% MONTHLY INCOME DEBT
SECURITIES (MIDS)
(JUNIOR SUBORDINATED
DEFERRABLE INTEREST
DEBENTURES, SERIES A)
-------------
PROSPECTUS SUPPLEMENT
-------------
Goldman, Sachs & Co.
Dean Witter Reynolds Inc.
Lehman Brothers
Morgan Stanley & Co. Incorporated
PaineWebber Incorporated