As filed with the Securities and Exchange Commission on August 12, 1996
Registration No. 333-05289
333-05289-01
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
To
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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SOUTHWESTERN PUBLIC SERVICE CAPITAL I SOUTHWESTERN PUBLIC SERVICE COMPANY
(Exact name of Registrant as (Exact name of Registrant as
specified in the Trust Agreement) specified in its charter)
Delaware New Mexico
(State or other jurisdiction of incorporation or organization)
75-6494522 75-0575400
(I.R.S. Employer Identification Number)
Tyler at Sixth
Amarillo, Texas 79101
(806) 378-2121
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
Bill D. Helton
Chairman of the Board
and Chief Executive Officer
Tyler at Sixth
Amarillo, Texas 79101
(806) 378-2121
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
Gary W. Wolf, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
____
/___/
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box.
____
/_X_/
If this Form is filed to register additional securities for an offer-
ing pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
____
/___/
If the Form is a post-effective amendment filed pursuant Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
reg- istration statement number of the earlier effective registration statement
for the same offering.
____
/___/
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.
____
/___/
CALCULATION OF REGISTRATION FEE
================================================================================
: Proposed :
: maximum :
Title of each : aggregate : Amount of
class of securities : offering : registration
to be registered : price : fee
- --------------------------------------------------------------------------------
: :
Southwestern Public Service : :
Capital I Preferred Securities : (1)(2) : N/A
: :
Southwestern Public Service : :
Company Surety Obligations with : :
respect to Preferred Securities : (1)(2) : N/A
Southwestern Public Service : :
Company Deferrable Interest : :
Subordinated Debentures : (1)(2) : N/A
- --------------------------------------------------------------------------------
Total $100,000,000 $34,482.76(3)
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(1) In no event will the aggregate maximum offering price of all securities
issued pursuant to this Registration Statement exceed $100,000,000.
(2) Subject to Footnote (1), there are being registered hereunder a presently
indeterminate number of Preferred Securities of Southwestern Public Service
Capital I, together with related Surety Obligations and Deferrable Interest
Subordinated Debentures of Southwestern Public Service Company for which no
separate consideration will be received by any of the Registrants. The
Surety Obligations with respect to the Preferred Securities are comprised
of several instruments, the Guarantee, the Deferrable Interest Subordinated
Debentures, the Trust Agreement, the Indenture and the Expense Agreement,
all as described in the Registration Statement.
(3) Pursuant to Rule 457(o), the registration fee is calculated on the basis of
the proposed maximum offering price of the securities.
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The Registrants hereby amend this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
-2-
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. Neither this prospectus supplement nor the prospectus to which it
relates shall constitute an offer to sell or the solicitation of an offer to buy
nor shall there be any sale of these securities in any State in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
SUBJECT TO COMPLETION DATED AUGUST 12, 1996
PRELIMINARY PROSPECTUS SUPPLEMENT
TO PRELIMINARY PROSPECTUS DATED AUGUST 12, 1996
4,000,000 Preferred Securities
Southwestern Public Service Capital I
__% Trust Preferred Securities, Series A
(Liquidation Amount $25 per Preferred Security)
Fully and unconditionally guaranteed by
SOUTHWESTERN PUBLIC SERVICE COMPANY
------------------
The ___% Trust Preferred Securities, Series A (the "Preferred Securities")
offered hereby represent undivided preferred beneficial interests in
Southwestern Public Service Capital I, a trust formed under the laws of the
State of Delaware (the "Issuer" or the "Trust"). The preferred interests
represented by the Preferred Securities will have a preference under certain
circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the trust interests represented by the
Common Securities (as defined) issued by the Issuer. See "Description of
Preferred Securities -- Subordination of Common Securities" in the accompanying
Prospectus.
Southwestern Public Service Company, a New Mexico corporation (the
"Company"), will be the owner of the trust interests represented by the common
securities (the "Common Securities") issued by the Issuer. The Issuer exists for
the sole purpose of issuing its trust interests and investing the proceeds
thereof in the % Deferrable Interest Subordinated Debentures, Series A, Due (the
"Junior Subordinated Debentures") issued by the Company.
Holders of the Preferred Securities will be entitled to receive cumulative
cash distributions accruing from the date of original issuance and payable
quarterly in arrears on , , and of each year, commencing , 199 , at the rate of
% per annum. The Company has the right to defer interest payments on the Junior
Subordinated Debentures by extending the interest payment period thereon at any
time for up to 20 consecutive quarters (each an "Extension Period"). If interest
payments are so deferred, distributions on the Preferred Securities will also be
deferred. During an Extension Period, distributions, as well as interest thereon
to the extent permitted by law, will continue to accrue, and holders of
Preferred Securities will be required to accrue interest income for United
States Federal income tax purposes. See "Certain Terms of the Junior
Subordinated Debentures -- Option to Extend Interest Payment Period" and "United
States Taxation -- Potential Extension of Interest Payment Period and Original
Issue Discount."
As more fully described herein, the Company will enter into several
contractual arrangements (the "Surety Obligations") for the purpose of fully and
unconditionally backing up the payment of distributions on, payments on any
redemption of, and any liquidation distribution with respect to the Preferred
Securities. These Surety Obligations are comprised of: (i) the guarantee by the
Company (the "Guarantee") for the benefit of holders of Preferred Securities;
(ii) the trust agreement pursuant to which the Trust was formed (the "Trust
Agreement"); (iii) an expenses and liabilities agreement (the "Expense
Agreement") provided for in the Trust Agreement pursuant to which the Company
will agree to pay all of the Trust indebtedness, expenses or liabilities (other
than obligations of the Trust to pay to holders of the Preferred Securities the
amounts due such holders pursuant to the terms of the Preferred Securities); and
(iv) the Junior Subordinated Debentures and the indenture (the "Indenture")
pursuant to which they will be issued.
The Guarantee is limited to a guarantee, on a subordinated basis, to the
holders of Preferred Securities, of the payment of distributions, out of moneys
held by the Issuer, and payments upon liquidation of the Issuer or the
redemption of Preferred Securities, as set forth below. See "Certain Terms of
the Guarantee." If the Company fails to make interest payments on the Junior
Subordinated Debentures held by the Issuer, the Issuer will have insufficient
funds to pay distributions on the Preferred Securities. The Guarantee does not
cover payment of distributions when the Issuer does not have sufficient funds to
pay such distributions. In such event, the remedy of a holder of Preferred
Securities is to enforce the rights of the Issuer under the Junior Subordinated
Debentures held by the Issuer. The Company's obligations under the Guarantee are
subordinate and junior in right of payment to all other liabilities of the
Company except trade credit and any liabilities that may be made pari passu with
or subordinate to the Guarantee expressly by their terms ("Senior
Indebtedness"). Wilmington Trust Company is the Property Trustee of the Issuer
and the Guarantee Trustee of the Company.
The Preferred Securities are subject to mandatory redemption upon repayment
of the Junior Subordinated Debentures at maturity or their earlier redemption,
in whole or in part. See "Description of Preferred Securities -- Redemption" in
the accompanying Prospectus. The Company will have the option at any time on or
after , , to redeem, in whole or in part, the Junior Subordinated Debentures,
and will also have the right at any time, upon occurrence of a Special Event (as
defined herein), to redeem, in whole but not in part, the Junior Subordinated
Debentures. See "Description of Junior Subordinated Debentures -- Optional
Redemption" in the accompanying Prospectus.
The Junior Subordinated Debentures are subordinate and junior in right of
payment to all Senior Indebtedness of the Company. As of May 31, 1996, the
Company had approximately $771 million principal amount of Senior Indebtedness
outstanding. The terms of the Junior Subordinated Debentures do not limit the
Compa- ny's ability to incur additional Senior Indebtedness. See "Description of
Junior Subordinated Debentures -- Subordination" in the accompanying Prospectus.
In the event of the liquidation of the Issuer, the holders of the Preferred
Securities will be entitled to receive for each Preferred Security a liquidation
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preference of $25 (the "Liquidation Amount") plus accrued and unpaid
distributions thereon to the date of payment and interest thereon to the extent
permitted by law, subject to certain limitations. See "Description of Preferred
Securities -- Liquidation Distribution Upon Dissolution" in the accompanying
Prospectus.
Application will be made to have the Preferred Securities approved for
listing on the New York Stock Exchange.
The Preferred Securities will be represented by a global certificate
registered in the name of The Depository Trust Company ("DTC") or its nominee.
Beneficial interests in the Preferred Securities will be shown on, and transfers
thereof will be effected only through, records maintained by Participants (as
defined herein) in DTC. Except as described herein, Preferred Securities in
certificated form will not be issued in exchange for the global certificate. See
"Description of Preferred Securities -- Book-Entry-Only Issuance -- The
Depository Trust Company" in the accompanying Prospectus.
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SEE "RISK FACTORS" BEGINNING ON PAGE S-7 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING THE PERIOD AND
CIRCUMSTANCES DURING AND UNDER WHICH PAYMENT ON THE PREFERRED SECURITIES AND THE
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. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------
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Initial
Public Under- Proceeds to
Offering writing the
Price Commission(1) Issuer(2)(3)
Per Preferred Security $25.00 (2) $
Total $100,000,000 (2) $
- --------------------------------------------------------------
- ---------------
(1) The Issuer and the Company have agreed to indemnify the several
Underwriters (as defined herein) against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
(2) In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures, the
Underwriting Agreement provides that the Company will pay to the
Underwriters, as compen- sation for their arranging the investment therein
of such proceeds, $ per Preferred Security (or $ in the aggregate); or, in
the case of certain institutions, $ per Preferred Security. Accordingly,
the maximum aggregate amount of underwriting commission will be $___, but
the actual amount of underwriting commission will be less than such amount
to the extent that Preferred Securities are sold to such institutions.
(3) Expenses of the offering, which are payable by the Company, are estimated
to be $ .
--------------------
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, and subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that delivery of the Preferred Securities will be made only in
book-entry form through the facilities of DTC on or about , 199_.
--------------------
The date of this Prospectus Supplement is , 199_.
----------------------
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PREFERRED
SECURITIES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK
EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the
detailed information and financial statements incorporated herein by reference.
The Offering
Securities Offered ................ % Trust Preferred Securities, Series A
Distribution Payment Dates ........ , , and , commencing , 199 ,
subject to deferral as described herein.
Redemption ........................ At the option of the Company at $25 per
Preferred Security, in whole or in part,
on or after , or, in whole, but
not in part, upon the occurrence of a
Special Event (as defined herein).
Use of Proceeds ................... Proceeds from this offering will be used
by the Company for the repayment of
short-term debt and or general corporate
purposes.
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RISK FACTORS
PROSPECTIVE PURCHASERS OF PREFERRED SECURITIES SHOULD CAREFULLY REVIEW THE
INFORMATION CONTAINED ELSEWHERE IN THIS PRO- SPECTUS SUPPLEMENT AND IN THE
ACCOMPANYING PROSPECTUS AND SHOULD PARTICULARLY CONSIDER THE FOLLOWING MATTERS:
Subordination of Guarantee and Junior Subordinated Debentures. The
Company's obligations under the Guarantee and under the Junior Subordinated
Debentures are subordinate and junior in right of payment to all Senior
Indebtedness other than indebtedness that may be made pari passu with or
subordinate to the Guarantee and the Junior Subordinated Debentures expressly by
their terms. As of May 31, 1996, the Company had approximately $771 million
principal amount of indebtedness for borrowed money and other obligations
constituting Senior Indebtedness outstanding. There are no terms of the
Preferred Securities, the Junior Subordinated Debentures or the Guarantee that
limit the Company's ability to incur additional Senior Indebtedness. See
"Description of Guarantee -- Status of the Guarantee" and "Description of Junior
Subordinated Debentures -- Subordination."
The ability of the Issuer to pay amounts due on its Preferred Securities is
solely dependent upon the Company making payments on the Junior Subordinated
Debentures held by such Issuer as and when required.
Option to Extend Interest Payment Period; Tax Consequences. The Company has
the right under the Indenture (as defined herein) to extend, from time to time,
the interest payment period on the Junior Subordinated Debentures for a period
not exceeding 20 consecutive quarters. Upon the termination of any such extended
interest payment period and the payment of all amounts then due, the Company may
select a new extended interest payment period, subject to the requirements
described herein and in the accompanying Prospectus. During any such extended
interest payment period, quarterly distributions on the Preferred Securities
would be deferred (but would continue to accrue with additional distributions
thereon to the extent permitted by law) by the Issuer. In the event that the
Company exercises this right, during such period it may not declare or pay
dividends or distributions (other than dividends or distributions payable in
capital stock of the Company or other securities ranking junior in right of
payment to the Junior Subordinated Debentures) on, or redeem, purchase, acquire,
or make a liquidation payment with respect to any of its capital stock or any
security ranking pari passu with or junior in right of payment to the Junior
Subordinated Debentures, or make any guarantee payment with respect to the
foregoing (other than pro rata payments under the Guarantee) or repurchase,
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or cause any of its subsidiaries to repurchase, any security of the Company
ranking pari passu with or junior in right of payment to the Junior Subordinated
Debentures (except for payments made on any series of Junior Subordinated
Debentures upon the stated maturity of such Junior Subordinated Debentures);
provided that the Company may redeem, purchase, acquire or make a liquidation
payment with respect to any of its capital stock, make any guarantee payment
with respect to the foregoing or repurchase, or cause any of its subsidiaries to
repurchase, any security of the Company ranking pari passu with or junior in
right of payment to the Junior Subordinated Debentures with securities (or the
proceeds from the issuance of securities) having no higher ranking than the
capital stock or the other securities which are to be redeemed, purchased,
acquired, with respect to which a liquidation payment is to be made, to which a
guarantee payment is to be made with respect to the foregoing or which are to be
repurchased. Prior to the termination of any such extended interest payment
period, the Company may further extend the interest payment period, provided
that such extended interest payment period, together with all previous and
further extensions thereof, may not exceed 20 consecutive quarters and that such
extended interest payment period may not extend beyond the maturity or
redemption date of the Junior Subordinated Debentures. Upon the termination of
any extended interest payment period and the payment of all amounts then due,
the Company may select a new extended interest payment period, subject to the
foregoing requirements. If the Company should determine to exercise its
extension right in the future, the market price of the Preferred Securities is
likely to be affected. The Issuer and the Company believe that such an extension
of an interest payment period on the Junior Subordinated Debentures is unlikely
to occur. See "Certain Terms of the Preferred Securities -- Distributions" and
"Certain Terms of the Junior Subordinated Debentures -- Option to Extend
Interest Payment Period."
Should an interest payment period be extended, Preferred Securities holders
will continue to recognize interest income for United States Federal income tax
purposes. As a result, such holders will be required to include accruing
interest in gross income for United States Federal income tax purposes in
advance of the actual receipt of such interest. Furthermore, such holders will
not receive the related actual interest payments from the Issuer if they dispose
of their Preferred Securities prior to the record date for payment of
distributions. See "United States Taxation -- Potential Extension of Interest
Payment Period and Original Issue Discount."
Rights Under the Guarantee. The Guarantee will be qual- ified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Wilmington Trust Company
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will act as indenture trustee under the Guarantee for the purposes of compliance
with the Trust Indenture Act (the "Guarantee Trustee"). The Guarantee Trustee
will hold the Guarantee for the benefit of the holders of the Preferred
Securities and will also be the trustee for the Junior Subordinated Debentures
and the Property Trustee (as defined herein).
The Guarantee is limited to a guarantee, on a subordinated basis, to the
holders of the Preferred Securities, of the payment (but not the collection) of
(i) any accrued and unpaid distributions required to be paid on the Preferred
Securities, if and only to the extent that the Issuer has funds sufficient to
make payment therefor, (ii) the Redemption Price (as defined herein) with
respect to Preferred Securities called for redemption by the Issuer, if and only
to the extent that the Issuer has funds sufficient to make payment therefor and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination of
the Issuer (other than in connection with a redemption of all of the Preferred
Securities), the lesser of (a) the aggregate Liquidation Amount and all accrued
and unpaid distributions on the Preferred Securities to the date of payment, to
the extent the Issuer has funds sufficient to make such payment, and (b) the
amount of assets of the Issuer remaining available for distribution to holders
of the Preferred Securities in liquidation of the Issuer. The holders of a
majority in aggregate Liquidation Amount of the Preferred Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee or to direct the exercise of any trust
or power conferred upon the Guarantee Trustee under the Guarantee. There are no
preconditions to any holder of Preferred Securities instituting a legal
proceeding directly against the Company to enforce such holder's rights under
the Guarantee. There is no requirement that a holder of Preferred Securities
first institute a legal proceeding against the Issuer, the Guarantee Trustee or
any other person or entity. If the Company were to default on its obligations
under the Junior Subordinated Debentures, the Issuer would lack available funds
for the payment of distributions or amounts payable on redemption of the
Preferred Securities or otherwise, and in such event holders of the Preferred
Securities would not be able to rely upon the Guarantee for payment of such
amounts. In such event, the holders of at least 25% in aggregate Liquidation
Amount of the Preferred Securities then outstanding shall have the right to
enforce directly the rights of the Issuer under the Junior Subordinated
Debentures. See "Description of Guarantee -- Status of the Guarantee" and
"Description of Junior Subordinated Debentures -- Subordination" set forth in
the accompanying Prospectus.
S-9
Special Event Redemption. Upon the occurrence of a Spe- cial Event (as
defined herein), the Company has the right to redeem the Junior Subordinated
Debentures, in whole but not in part, in which event the Issuer will redeem the
Preferred Securi- ties. See "Certain Terms of the Preferred Securities --
Redemp- tion" and "-- Special Event Redemption or Distribution."
Recent Tax Law Proposals. If the tax law changed, as a result of the
Proposed Legislation as described under "Recent Developments" below or
otherwise, so that in the Company's judgment it would be precluded from
deducting interest on the Junior Subordinated Debentures, the Company could
redeem the Junior Subordinated Debentures, thereby causing a mandatory
redemption of the Preferred Securities. The Company presently anticipates that,
as permitted by the terms of the Junior Subordinated Debentures and subject to
market and other conditions, it would cause such redemption of the Preferred
Securities if the tax law changed, as a result of the Proposed Legislation or
otherwise, in a manner that would not permit the interest deduction. The Company
also has the option of distributing Junior Subordinated Debentures or of leaving
the Preferred Securities outstanding should such a tax law change occur as
described under "Certain Terms of the Preferred Securities -- Special Event
Redemption or Distribution." If the Preferred Securities are redeemed, holders
would receive $25 per Preferred Security plus accrued and unpaid distributions
to the redemption date. Gain or loss will be recognized on a redemption for cash
of Preferred Securities in an amount equal to the difference between the amount
realized and the tax basis of a holder of the Preferred Securities in his or her
Preferred Securities. Gain or loss recognized by a holder of Preferred
Securities on the redemption of Preferred Securities held for more than one year
generally will be taxable as long-term capital gain or loss. In addition, the
holder would have the ability to reinvest the proceeds received in an alternate
investment; however, there can be no assurance that the rate of return on any
alternative investment would be as favorable to a holder as an investment in the
Preferred Securities. If the Company chose to distribute the Junior Subordinated
Debentures to the holders of the Preferred Securities, under current United
States Federal income tax law and interpretations, if the Trust is treated as a
grantor trust at the time of the distribution, such a distribution should not be
treated as a taxable event to holders of the Preferred Securities. Such a
tax-free transaction would result in a holder of Preferred Securities retaining
an aggregate tax basis in the Junior Subordinated Debentures equal to such
holder's aggregate tax basis in the holder's pro rata share of the Junior
Subordinated Debentures prior to the distribution. A holder's holding period for
such Junior Subordinated Debentures would include the period for which the
Preferred Securities were held by such holder. If the Trust
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were not treated as a grantor trust at the time of the distribution, the
distribution could be a taxable event to holders of the Preferred Securities, in
which case the principles discussed above with respect to a redemption of
Preferred Securities would apply, and the holders would have a new tax basis and
holding period in the Junior Subordinated Debentures.
Limited Voting Rights. Holders of Preferred Securities will have limited
voting rights, and, except upon the occurrence of an Event of Default (as
defined herein) under the Trust Agreement, will not be entitled to vote to
appoint, remove or replace the Property Trustee or the Administrative Trustees
(as defined herein) or to increase or decrease the number of the Administrative
Trustees. Such voting rights are vested exclusively in the Depositor, unless and
until an Event of Default has occurred and is continuing. See "Description of
Preferred Securities -- Events of Default; Notice" in the accompanying
Prospectus.
Trading Characteristics of Preferred Securities. Application will be made
to have the Preferred Securities approved for listing on the New York Stock
Exchange. If approved for listing, the Preferred Securities are expected to
trade at a price that takes into account the value, if any, of accrued and
unpaid distributions; thus, purchasers will not pay and sellers will not receive
any accrued and unpaid interest with respect to their undivided interests in
Junior Subordinated Debentures owned through the Preferred Securities that is
not included in the trading price of the Preferred Securities. However, interest
on the Junior Subordinated Debentures will be included in the gross income of
U.S. Holders (as defined herein) of Preferred Securities as it accrues, rather
than when it is paid. See "United States Taxation -- Income from Preferred
Securities" and "-- Disposition of Preferred Securities."
Because the Preferred Securities pay a dividend at a fixed rate based upon
the fixed interest rate payable on the Junior Subordinated Debentures, the
trading price of the Preferred Securities may decline if interest rates rise.
SOUTHWESTERN PUBLIC SERVICE CAPITAL I
General
Southwestern Public Service Capital I is a statutory business trust formed
under the Delaware Business Trust Act pursuant to (i) a Trust Agreement executed
by David M. Wilks, President and Chief Operating Officer of the Company, as
depositor of the Issuer, and the Property Trustee and (ii) the filing of a
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Certificate of Trust with the Delaware Secretary of State on June 5, 1996. Such
Trust Agreement will be amended and restated in its entirety (as so amended and
restated, the "Trust Agreement") substantially in the form filed as an exhibit
to the Registration Statement of which this Prospectus Supplement is a part. The
Trust Agreement will be qualified as an indenture under the Trust Indenture Act.
The Issuer exists for the exclusive purposes of (i) issuing the Preferred
Securities and the Common Securities representing trust interests in the Issuer,
(ii) purchasing the Junior Subordinated Debentures with the Common Securities
and the proceeds from the sale of the Preferred Securities and (iii) engaging
only in those other activities necessary or incidental thereto. All of the
Common Securities will be owned by the Company. The Common Securities will rank
pari passu, and payments will be made thereon pro rata, with the Preferred
Securities, except that upon the occurrence and continuance of an Event of
Default under the Trust Agreement, the rights of the holders of the Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinate and junior to the rights of the
holders of the Preferred Securities. The Company will acquire Common Securities
having an aggregate Liquidation Amount equal to 3% of the total capital of the
Issuer. The Issuer will terminate on , _____ unless earlier terminated as
provided in the Trust Agreement. The Issuer's business and affairs will be
conducted by the Property Trustee and the Administrative Trustees. The holder of
the Common Securities, or if an Event of Default has occurred and is continuing,
the holders of at least a majority in the aggregate Liquidation Amount of the
then outstanding Preferred Securities, will be entitled to appoint, remove or
replace the Trustees (as defined herein) of the Issuer.
The duties and obligations of the Trustees shall be governed by the Trust
Agreement. David M. Wilks, Robert D. Dickerson and James D. Steinhilper, all
employees of the Company, will be appointed as Administrative Trustees pursuant
to the terms of the Trust Agreement. Under the Trust Agreement, the
Administrative Trustees will have certain duties and powers including, but not
limited to, the delivery of certain notices to the holders of the Preferred
Securities, the appointment of the Paying Agent (as defined in the accompanying
Prospectus) and the Registrar (as defined in the accompanying Prospectus) and
the registering of transfers of the Preferred Securities. Under the Trust
Agreement, Wilmington Trust Company, as the Property Trustee, will have certain
duties and powers including, but not limited to, holding legal title to the
Junior Subordinated Debentures on behalf of the Trust, the collection of
payments in respect of the Junior Subordinated Debentures, maintenance of the
Payment Account (as defined in the Trust Agreement), the sending of default
notices with
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respect to the Preferred Securities and the distribution of the assets of the
Trust in the event of a winding up of the Trust. See "Description of Preferred
Securities" in the accompanying Prospectus.
The Company has agreed to pay all fees and expenses related to the Issuer
and the offering of the Preferred Securities pursuant to the Expense Agreement.
Accounting Treatment
The Trust is a special purpose entity which is effectively controlled by
the Company. The financial position, operating results and cash flows of this
special purpose entity will be consolidated with the Company. The Junior
Subordinated Debentures issued by the Company to the Trust and all other
intercompany transactions will be eliminated in consolidation. The Preferred
Securities issued by the Trust will be reflected as a separate line item titled
"Company-Obligated Mandatorily Redeemable Preferred Securities of Subsidiary
Trust holding solely Subordinated Debt Securities" in the Company's Consolidated
Statement of Capitalization. In addition, the Company will include, in a
footnote to its financial statements, disclosure that the sole asset of the
Trust is Junior Subordinated Debentures, stating the principal amount, interest
rate and maturity date of such Junior Subordinated Debentures and include, in an
audited footnote to the financial statements, disclosure that (a) the Trust is
wholly owned, (b) the sole asset of the Trust is Junior Subordinated Debentures,
stating the principal amount, the interest rate and maturity date of such
Subordinated Debentures and (c) considered together, the Surety Obligations
constitute a full and unconditional guarantee by the Company of the Trust's
obligations under the Preferred Securities.
RECENT DEVELOPMENTS
On March 19, 1996, President Clinton proposed certain tax law changes that
would, among other things, generally deny corporate issuers a deduction for
interest in respect of certain debt obligations issued on or after December 7,
1995 (the "Proposed Legislation") if such debt obligations have a maximum term
of in excess of 20 years and are not shown as indebtedness on the issuer's
applicable consolidated balance sheet. In addition, the Proposed Legislation
would deny issuers an interest deduction on any debt instrument with a weighted
average maturity of more than 40 years. On March 29, 1996, Senate Finance
Committee Chairman William V. Roth, Jr. and House Ways and Means Committee
Chairman Bill Archer issued a joint statement (the "Joint Statement")
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indicating their intent that certain legislative proposals initiated by the
Clinton administration, including the Proposed Legislation, that may be adopted
by either of the tax-writing committees of Congress would have an effective date
that is no earlier than the date of "appropriate Congressional action." There
can be no assurances, however, that the effective date guidance contained in the
Joint Statement will be incorporated into the Proposed Legislation, if enacted,
or that other legislation enacted after the date hereof will not otherwise
adversely affect the ability of the Company to deduct the interest payable on
the Junior Subordinated Debentures.
If the tax law changed, as a result of the Proposed Legislation or
otherwise, so that in the Company's judgment it would be precluded from
deducting interest on the Junior Subordinated Debentures, the Company could,
subject to receiving an Opinion of Counsel to the effect that a relevant tax law
change (as described in the accompanying Prospectus) had occurred, redeem the
Junior Subordinated Debentures in whole, thereby causing a mandatory redemption
of the Preferred Securities in whole at a price of $25 per Preferred Security,
plus accrued but unpaid distributions. The Company presently anticipates that,
as permitted by the terms of the Junior Subordinated Debentures and subject to
market and other conditions, it would cause such redemption of the Preferred
Securities if the tax law changed, as a result of the Proposed Legislation or
otherwise, in a manner that would not permit the interest deduction. The Company
also has the option, subject to receiving an Opinion of Counsel, of distributing
Junior Subordinated Debentures or the option of leaving the Preferred Securities
outstanding should such a tax law change occur as described under "Certain Terms
of the Preferred Securities -- Special Event Redemption or Distribution."
USE OF PROCEEDS
The Issuer will use the proceeds from this offering of $100,000,000 million,
together with the Common Securities, to purchase the Junior Subordinated
Debentures. The Company will use the cash proceeds from the sale of the Junior
Subordinated Debentures, net of the Underwriters' compensation and the other
expenses of this offering, for the repayment of short-term debt and for general
corporate purposes. As of ____________, 1996, approximately $_______ of such
short-term indebtedness was outstanding and it had a weighted average interest
rate of approximately _____% per annum and maturities within __________ of its
date of issuance.
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CERTAIN TERMS OF THE PREFERRED SECURITIES
General
The following summary description of certain terms and provisions of the
Preferred Securities sets forth certain portions of the description of the terms
and provisions of the Preferred Securities included in the accompanying
Prospectus under the heading "Description of Preferred Securities," to which
description reference is hereby made. This summary of certain terms and
provisions of the Preferred Securities does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the Trust Agreement.
The form of the Trust Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus Supplement and the accompanying Prospectus
are a part. See "Description of Preferred Securities" in the accompanying
Prospectus.
Distributions
The Preferred Securities represent undivided preferred beneficial interests
in the assets of the Issuer, and the distributions on each Preferred Security
are payable at the rate set forth on the cover page of this Prospectus
Supplement, payable, except in the event of an extension, quarterly in arrears
on , , and of each year, commencing ____________. Distributions in arrears after
the payment date therefor will accumulate additional distributions thereon (to
the extent permitted by law) compounded quarterly at the rate per annum set
forth on the cover page of this Prospectus Supplement. The term "distributions"
as used herein shall include any such additional distributions to the extent
permitted by law. Distributions will accrue from the date of original issuance
of the Preferred Securities. The amount of distributions payable for any period
will be computed on the basis of a 360-day year of twelve 30-day months and, for
any period shorter than a full monthly period, shall be computed on the basis of
the actual number of days elapsed in such period.
So long as an Event of Default under the Indenture has not occurred and is
continuing, the Company has the right at any time and from time to time to
extend the interest payment period on the Junior Subordinated Debentures for not
more than 20 consecutive quarters, provided that any such Extension Period shall
not extend beyond the maturity date or redemption date of the Junior
Subordinated Debentures. During any Extension Period quarterly distributions on
the Preferred Securities would be deferred by the Issuer, would continue to
accrue, and holders of Preferred Securities would be required to accrue interest
income for United
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States Federal income tax purposes. See "Certain Terms of the Junior
Subordinated Debentures -- Option to Extend Interest Payment Period" and "United
States Taxation -- Potential Extension of Interest Payment Period and Original
Issue Discount." In the event that the Company exercises this right, during such
period it may not declare or pay any dividends or distributions (other than
dividends or distributions payable in common stock of the Company or other
securities ranking junior in right of payment to the Junior Subordinated
Debentures) on, or redeem, purchase, acquire, or make a liquidation payment with
respect to, any of its capital stock or any security ranking pari passu with or
junior in right of payment to the Junior Subordinated Debentures, or make any
guarantee payment with respect to the foregoing (other than pro rata payments
under the Guarantee) or repurchase, or cause any of its subsidiaries to
repurchase, any security of the Company ranking pari passu with or junior in
right of payment to the Junior Subordinated Debentures (except for payments made
on any series of Junior Subordinated Debentures upon the stated maturity of such
Junior Subordinated Debentures); provided that the Company may redeem, purchase,
acquire or make a liquidation payment with respect to any of its capital stock
or any security ranking pari passu with or junior in right of payment to the
Junior Subordinated Debentures, make any guarantee payment with respect to the
foregoing or repurchase, or cause any of its subsidiaries to repurchase, any
security of the Company ranking pari passu with or junior in right of payment to
the Junior Subordinated Debentures with securities (or the proceeds from the
issuance of securities) having no higher ranking than the capital stock or the
other securities which are to be redeemed, purchased, acquired, with respect to
which a liquidation payment is to be made, to which a guarantee payment is to be
made with respect to the foregoing or which are to be repurchased. This covenant
effectively requires that an interest payment on the Junior Subordinated
Debentures may be extended only if the interest periods on all other series of
Junior Subordinated Debentures that may be outstanding at the time are likewise
extended. Prior to the termination of any such extended interest payment period,
the Company may further extend the interest payment period, provided that such
Extension Period together with all such previous and further extensions thereof
may not exceed 20 consecutive quarters or extend beyond the maturity or
redemption date of the Junior Subordinated Debentures. Upon the termination of
any Extension Period and the payment of all amounts then due, the Company may
select a new extended interest payment period, subject to the above
requirements. See "Certain Terms of the Junior Subordinated Debentures -- Option
to Extend Interest Payment Period" and "United States Taxation -- Potential
Extension of Interest Payment Period and Original Issue Discount."
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The Company has no current intention of exercising its right to defer
payments of distributions on the Preferred Securities by extending the interest
payment period on the Junior Subordinated Debentures.
Redemption
Upon the payment of the Junior Subordinated Debentures, whether at maturity
or upon earlier redemption as provided in the Indenture, the proceeds from such
payment will be applied by the Property Trustee to redeem a Like Amount (as
defined below) of the Common Securities and the Preferred Securities, upon not
less than 30 nor more than 90 days' notice, at a redemption price equal to the
aggregate Liquidation Amount plus accumulated and unpaid distributions, plus
additional distributions thereon to the extent permitted by law, to the
redemption date. See "Certain Terms of Junior Subordinated Debentures --
Redemption."
The Company has the right to redeem the Junior Subordinated Debentures (a)
on or after _____________, _____, in whole or in part, or (b) at any time, in
whole but not in part, upon the occurrence of a Tax Event or an Investment
Company Event (each as defined below, a "Special Event"), subject to the
conditions described under "-- Special Event Redemption or Distribution," below.
Special Event Redemption or Distribution
If a Special Event shall occur and be continuing with respect to the Issuer
or the Preferred Securities, the Company has the right to (i) redeem the Junior
Subordinated Debentures in whole (but not in part) and thereby cause a mandatory
redemption of the Preferred Securities in whole (but not in part) at the
redemption price within 90 days following the occurrence of such Special Event,
or (ii) terminate the Issuer and cause the Junior Subordinated Debentures to be
distributed, subject to the receipt of an Opinion of Counsel experienced in such
matters to the effect that the holders of the Preferred Securities will not
recognize gain or loss for Untied States Federal income tax purposes as a result
of such distribution, to the holders of the Preferred Securities in liquidation
of the Issuer. If at any time the Issuer is not or will not be taxed as a
grantor trust, but a Tax Event has not occurred, the Company has the right to
terminate the Issuer and cause the Junior Subordinated Debentures to be
distributed, subject to the receipt of an Opinion of Counsel experienced in such
matters to the effect that the holders of the Preferred Securities will not
recognize gain or loss for United States Federal income tax purposes as a result
of such distribution, to the holders of the Preferred Securities in liquidation
of the Issuer.
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Under current United States Federal income tax law and interpretations, if the
Issuer is treated as a grantor trust at the time of the distribution, such a
distribution should not be a taxable event to holders of the Preferred
Securities. Should there be a change in law, a change in legal interpretation, a
Special Event or other circumstances, however, the termination could be a
taxable event to holders of the Preferred Securities. See "United States
Taxation -- Receipt of Junior Subordinated Debentures Upon Liquidation of the
Issuer." If the Company does not elect either option (i) or (ii) above, the
Preferred Securities will remain outstanding.
"Tax Event" means the receipt by the Issuer or the Company, as the case may
be, of an Opinion of Counsel (which may be counsel to the Issuer, the Company or
an affiliate, and which must be reasonably acceptable to the Property Trustee)
experienced in such matters to the effect that a relevant tax law change has
occurred after ___________, 1996. For purposes of the preceding sentence a
relevant tax law change is any amendment or change to (or officially proposed
amendment or change to) the laws (including regulations thereunder) of the
United States or any political subdivision or taxing authority thereof, or the
publication of any judicial opinion interpreting such laws (and regulations) or
any written interpretation of such laws (or regulations) by any governmental
authority having jurisdiction to enforce or administer such laws (or
regulations) (including official and unofficial opinions purporting to apply
such laws and regulations to other persons who have issued securities similar to
the Junior Subordinated Debentures), which amendment, change, proposed amendment
or change, opinion or interpretation could, if valid and enacted or applied to
the Issuer or the Company, result in (i) the Issuer, either currently or within
90 days of the date thereof, becoming subject to United States Federal income
tax with respect to interest received on the Junior Subordinated Debentures,
(ii) interest payable by the Company on the Junior Subordinated Debentures
attributable to the Preferred Securities, either currently or within 90 days of
the date thereof, becoming nondeductible for United States Federal income tax
purposes or (iii) the Issuer, either currently or within 90 days of the date
thereof, becoming subject to more than a de minimis amount of other taxes,
duties or other governmental charges.
"Investment Company Event" means the occurrence of a change in law
or regulation or a change in the interpretation or application of any law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law") to the effect that the Issuer is or will
be considered an "investment company" that is required to be registered
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under the Investment Company Act of 1940, as amended, which Change in 1940 Act
Law becomes effective after ______________, 1996.
"Like Amount" means (i) with respect to a redemption of the Preferred
Securities and the Common Securities (together, the "Trust Securities"), Trust
Securities having an aggregate Liquidation Amount equal to the principal amount
of Junior Subordinated Debentures to be contemporaneously redeemed in accordance
with the Indenture and the proceeds of which will be used to pay the redemption
price of such Trust Securities and (ii) with respect to a distribution of Junior
Subordinated Debentures to holders of Trust Securities in connection with a
termination or liquidation of the Issuer upon the bankruptcy, dissolution or
liquidation of a holder of Common Securities, the occurrence of a Special Event
or in the event that the Issuer is not or will not be taxed as a grantor trust
but a Tax Event has not occurred, Junior Subordinated Debentures having a
principal amount equal to the aggregate Liquidation Amount of the Trust
Securities in exchange for which such Junior Subordinated Debentures are
distributed.
Rights Under the Guarantee and the Junior Subordinated Debentures
The Guarantee will be a full guarantee with respect to the Preferred
Securities from the time of issuance of the Preferred Securities, but will not
apply to any payments of distributions or other amounts due to the extent the
Issuer does not have sufficient available funds to pay such distributions or
other amounts due (which would occur in the event that the Company has failed to
make a payment of principal or interest on the Junior Subordinated Debentures).
There are no preconditions to a holder of Preferred Securities instituting a
legal proceeding directly against the Company to enforce such holder's rights
under the Guarantee. If the Guarantee Trustee fails to enforce the Guarantee,
any holder of Preferred Securities may institute a legal proceeding directly
against the Company to enforce such holder's rights under the Guarantee without
first instituting a legal proceeding against the Issuer, the Guarantee Trustee
or any other person or entity. To the extent the Company was to default on its
obligation to pay amounts payable on the Junior Subordinated Debentures, the
Issuer would lack sufficient available funds for the payment of distributions on
or amounts payable on redemption of the Trust Securities and, in such event,
holders of the Preferred Securities would not be able to rely on the Guarantee
for payment of such amounts. Instead, the remedy of a holder of Preferred
Securities would be to enforce the rights of the Issuer under the Junior
Subordinated Debentures held by such Issuer. The above mechanisms and
obligations relating to the Guarantee and the Junior Subordinated Debentures and
the obligations of the Company under the other Surety Obligations, taken
together, constitute a
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full and unconditional guarantee by the Company of payments due on the Preferred
Securities. See "Certain Terms of the Guarantee" and "Certain Terms of the
Junior Subordinated Debentures."
CERTAIN TERMS OF THE GUARANTEE
General
The following summary description of the Guarantee sets forth certain
portions of the description of the terms and provisions of the Guarantee
included in the accompanying Prospectus under the heading, "Description of
Guarantee," to which description reference is hereby made. This summary of
certain terms and provisions of the Guarantee does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the Guarantee.
The form of Guarantee has been filed as an exhibit to the Registration Statement
of which this Prospectus Supplement and the accompanying Prospectus are a part.
The Company will fully guarantee, on a subordinated basis, the obligations
of the Issuer with respect to the Preferred Securities; provided that the
Guarantee will not apply to any payment of distributions if and to the extent
that the Issuer does not have funds sufficient to make such payments. If the
Company does not make interest payments on the Junior Subordinated Debentures
held by the Issuer, it is expected that the Issuer will not pay distributions on
the Preferred Securities. The Guarantee will rank subordinate and junior in
right of payment to all liabilities of the Company (except trade credit and any
liabilities that may be made pari passu with or subordinate to the Guarantee
expressly by their terms). See "Description of the Guarantee -- Status of the
Guarantee" in the accompanying Prospectus.
Events of Default
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment obligations thereunder.
If the Guarantee Trustee fails to enforce the Guarantee, any holder of
Preferred Securities may institute a legal proceeding directly against the
Company to enforce such holder's rights under the Guarantee without first
instituting a legal proceeding against the Issuer, the Guarantee Trustee or any
other person or entity. The Guarantee is a guarantee of payment, not of
collection.
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Termination of the Guarantee
The Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of all Preferred Securities, the
distribution of Junior Subordinated Debentures to holders of Preferred
Securities in exchange for all of the Preferred Securities or upon payment in
full of the amounts payable upon liquidation of the Issuer.
CERTAIN TERMS OF THE JUNIOR SUBORDINATED DEBENTURES
General
The following summary description of the Junior Subordinated Debentures
sets forth certain portions of the description of the terms and provisions of
the Junior Subordinated Debentures included in the accompanying Prospectus under
the heading "Description of Junior Subordinated Debentures," to which
description reference is hereby made. This summary of certain terms and
provisions of the Junior Subordinated Debentures does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the Indenture,
including the Supplemental Indenture. The forms of Indenture and Supplemental
Indenture have been filed as exhibits to the Registration Statement of which
this Prospectus Supplement and the accompanying Prospectus are a part.
Concurrently with the issuance of the Preferred Securities, the Issuer will
invest the proceeds thereof, together with the Common Securities, in the Junior
Subordinated Debentures issued by the Company to the Issuer. The Junior
Subordinated Debentures will bear interest at the annual rate of %, payable
quarterly in arrears, except in the event of an extension, on , , , and of each
year, commencing _______. Interest which is accrued and unpaid after the
quarterly payment date therefor will bear additional interest on the amount
thereof (to the extent permitted by law) at the rate per annum of %, compounded
quarterly. The term "Interest" as used herein shall include quarterly interest
payments, interest on quarterly interest payments in arrears and Additional
Interest (as defined below), as applicable.
The Junior Subordinated Debentures will be issued under the Indenture and
the Supplemental Indenture. The Junior Subordinated Debentures will mature on ,
20 . The Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Indebtedness of the
Company. See "Description of Junior Subordinated Debentures -- Subordination" in
the accompanying Prospectus.
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Option to Extend Interest Payment Period
The Company has the right at any time and from time to time, so long as an
Event of Default under the Indenture has not occurred and is continuing, to
extend the interest payment period for the Junior Subordinated Debentures for up
to 20 consecutive quarters; provided that no Extension Period shall extend
beyond the stated maturity date or date of redemption of the Junior Subordinated
Debentures. At the end of the Extension Period, the Company is obligated to pay
all interest then accrued and unpaid (together with interest thereon to the
extent permitted by law). During any Extension Period, the Company will not
declare or pay any dividends or distributions (other than dividends or
distributions payable in capital stock of the Company or other securities,
including other indebtedness, such as notes or debentures, ranking junior in
right of payment to the Junior Subordinated Debentures) on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of its capital stock
or any security ranking pari passu with or junior in right of payment to the
Junior Subordinated Debentures, or make any guarantee payment (other than pro
rata payments under the Guarantee and other than payments upon redemptions of
capital stock pursuant to any mandatory or optional sinking fund provisions) or
repurchase, or cause any of its subsidiaries to repurchase, any security of the
Company ranking pari passu with or junior in right of payment to the Junior
Subordinated Debentures (except for payments made on any series of Junior
Subordinated Debentures upon the stated maturity of such Junior Subordinated
Debentures); provided that the Company may redeem, purchase, acquire or make a
liquidation payment with respect to any of its capital stock, make any guarantee
payment with respect to the foregoing or repurchase, or cause any of its
subsidiaries to repurchase, any security of the Company ranking pari passu with
or junior in right of payment to the Junior Subordinated Debentures with
securities (or the proceeds from the issuance of securities) having no higher
ranking than the capital stock or the other securities which are to be redeemed,
purchased, acquired, with respect to which a liquidation payment is to be made,
to which a guarantee payment is to be made with respect to the foregoing or
which are to be repurchased. This covenant requires that an interest payment on
the Junior Subordinated Debentures may be extended only if the interest payments
on all other series of Junior Subordinated Debentures that may be outstanding at
the time are likewise extended. Prior to the termination of any Extension
Period, the Company may further extend the interest payment period, provided
that such Extension Period, together with all such previous and further
extensions thereof, may not exceed 20 consecutive quarters or extend beyond the
maturity or redemption date of the Junior Subordinated Debentures. Upon the
termination of any Extension Period and the payment of all amounts then due,
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the Company may select a new Extension Period subject to the above requirements.
So long as the Property Trustee shall be the sole holder of the Junior
Subordinated Debentures, the Company is required to give the Property Trustee
and the Debenture Trustee notice of its selection of such Extension Period at
least one Business Day prior to the date the Property Trustee or the Company is
required to give notice to any national securities exchange on which any of the
Preferred Securities are listed or to other applicable self-regulatory
organization or to holders of the Preferred Securities on the record date, but
in any event not less than one Business Day prior to such record date. The
Debenture Trustee will be required to give notice of the Company's selection of
such Extension Period to the holders of the Preferred Securities and the
Administrative Trustees.
Redemption
The Junior Subordinated Debentures are redeemable prior to maturity at the
option of the Company (i) at any time on or after the date set forth on the
cover page of this Prospectus Supplement, in whole or in part, and (ii) if a
Special Event occurs and is continuing, in whole, but not in part, in each case
at a Redemption Price equal to 100% of the principal amount thereof plus accrued
interest to the redemption date. The Junior Subordinated Debentures will be
subject to optional redemption in whole, but not in part, upon the termination
and liquidation of the Issuer pursuant to an order for the dissolution,
termination or liquidation of the Issuer entered by a court of competent
jurisdiction. For so long as the Trust is the holder of all Junior Subordinated
Debentures outstanding, the proceeds of any redemption described in this section
shall be used by the Issuer to redeem the Preferred Securities and the Series A
Common Securities in accordance with their terms.
The Company shall not redeem the Junior Subordinated Debentures in part
unless all accrued and unpaid interest (including any Additional Interest) has
been paid in full on all Junior Subordinated Debentures outstanding for all
quarterly interest periods on or prior to the Redemption Date.
UNITED STATES TAXATION
General
The following is a summary of certain United States Federal income tax
considerations that may be relevant to prospective
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purchasers of Preferred Securities and represents the opinion of Cahill Gordon &
Reindel, 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
investors to vary substantially from the consequences described below. Unless
otherwise stated, this summary deals only with Preferred Securities held as
capital assets and not with special classes of holders, such as dealers in
securities or currencies, life insurance companies, persons holding Preferred
Securities as a hedge against or which are hedged against currency risks or as a
part of a straddle, or persons whose functional currency is not the United
States dollar.
POTENTIAL INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF PREFERRED SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES,
AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR OTHER TAX LAWS.
While the Company believes, based upon the advice of its counsel, that the
Junior Subordinated Debentures will be treated as indebtedness for United States
Federal income tax purposes, holders of Preferred Securities should note that
the Internal Revenue Service (the "IRS") may attempt to treat the Junior
Subordinated Debentures as equity rather than indebtedness for tax purposes. If
the IRS were successful in such attempt, the Junior Subordinated Debentures
would be subject to redemption at the option of the Company as described under
"Description of Preferred Securities -- Redemption."
Income from Preferred Securities
In connection with the issuance of the Preferred Securities, Cahill Gordon
& Reindel will render its opinion generally to the effect that under then
current law, and assuming full compliance with the terms of the Trust Agreement
and the Indenture (and certain other documents), the Issuer will be classified
for United States Federal income tax purposes as a grantor trust and not as an
association taxable as a corporation.
As a consequence, each holder of Preferred Securities will be considered
the owner of a pro rata portion of the Junior Subordinated Debentures held by
the Issuer. As a further consequence, each holder of Preferred Securities will
be required to include in gross income his or her pro rata share of the income
accrued on the Junior Subordinated Debentures held by the Issuer.
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Such income should not exceed distributions received by the holders of Preferred
Securities on the Preferred Securities except in the case of an extension of the
interest payment period as described under "Description of Preferred Securities
- -- Distributions." No portion of such income will be eligible for the
dividends-received deduction.
Potential Extension of Interest Payment Period and Original Issue
Discount
Under the Indenture, the Company has the option to extend from time to time
the interest payment period on the Junior Subordinated Debentures to a period
not exceeding 20 consecutive quarters but not beyond the maturity date or
redemption date of the Junior Subordinated Debentures. The Company's option to
extend the interest payment period (even if not exercised) will cause the Junior
Subordinated Debentures, from the date of issuance, to be treated as issued with
"original issue discount" for United States Federal income tax purposes.
Accordingly, a holder of Preferred Securities will accrue interest income (i.e.,
original issue discount) under a constant yield basis over the term of the
Junior Subordinated Debentures (including any Extension Period), regardless of
the receipt of cash with respect to the period to which such income is
attributable.
Holders of Preferred Securities during an Extension Period will include
interest in gross income in advance of the receipt of cash, and any holders of
Preferred Securities who dispose of Preferred Securities prior to the record
date for the payment of distributions will include such interest in gross
income, but will not receive any cash related thereto from the Issuer. The tax
basis of a Preferred Security will be increased by the amount of any original
issue discount that is included in income without the receipt of cash, and will
be decreased when and if such cash is subsequently received by the holder of the
Preferred Security.
Disposition of Preferred Securities
Gain or loss will be recognized on a sale, including a redemption for cash,
of Preferred Securities in an amount equal to the difference between the amount
realized and the tax basis of a holder of the Preferred Securities in his or her
Preferred Securities. Gain or loss recognized by a holder of Preferred
Securities on the sale or exchange of Preferred Securities held for more than
one year generally will be taxable as long-term capital gain or loss.
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United States Alien Holders
For purposes of this discussion, a "United States Alien Holder" is any
holder or beneficial owner who or which is (i) a nonresident alien individual or
(ii) a foreign corporation, foreign partnership, foreign estate or foreign
trust, in any such case not subject to United States Federal income tax on a net
income basis in respect of the Preferred Securities.
Under present United States Federal income tax law, subject to the
discussion below with respect to backup withholding:
(i) Payments by the Issuer or any of its Paying Agents to any United
States Alien Holder will not be subject to United States withholding tax
provided that (a) the beneficial owner of the Preferred Securities does not
actually or constructively own 10% or more of the total combined voting
power of all classes of stock of the Company, (b) the beneficial owner of
the Preferred Securities is not a "controlled foreign corporation" for
United States tax purposes that is related to the Company through stock
ownership, and (c) either (1) the beneficial owner of the Preferred
Securities certifies to the Issuer or its agent, under penalties of
perjury, that it is a United States Alien Holder and provides its name and
address or (2) the holder of the Preferred Securities 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 statement has been received from the
beneficial owner by such financial institution or by a financial
institution intermediary between it and the beneficial owner, and such
financial institution furnishes the Issuer with a copy thereof; and
(ii) a United States Alien Holder of the Preferred Securities will not
be subject to United States Federal income or withholding tax on any gain
realized on the sale or exchange of the Preferred Securities unless (a)
such person is present in the United States for 183 days or more in the
taxable year of sale and (b) such person has a "tax home" in the United
States or certain other requirements are met.
Backup Withholding and Information Reporting
In general, information requirements will apply to payments to noncorporate
United States holders of the proceeds of the sale of the Preferred Securities
within the United States, and "backup withholding" at a rate of 31% will apply
to such payments
S-26
if the seller fails to provide a correct taxpayer identification number.
Payments of the proceeds from the sale by a United States Alien Holder of
Preferred Securities 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
the proceeds from the sale of Preferred Securities to or through the United
States office of a broker is subject to information reporting and backup
withholding unless the holder or beneficial owner certifies as to its non-United
States status or otherwise establishes an exemption from information reporting
and backup withholding.
The IRS has issued proposed regulations which, if enacted in their current
form, would require backup withholding on payments with respect to the Junior
Subordinated Debentures that are made outside the United States if the payor has
actual knowledge that the recipient is a United States Holder. The proposed
regulations are proposed to be effective for payments made after December 31,
1997, and current law would remain in effect until then. United States Holders
should consult with their tax advisors as to compliance with the new rules so as
to avoid possible backup withholding on payments after 1997.
Receipt of Junior Subordinated Debentures
upon Liquidation of the Issuer
Under certain circumstances as described in "Description of Preferred
Securities -- Special Event Redemption or Distribution," the Company may cause
the Issuer to be terminated and the Junior Subordinated Debentures to be
distributed to the holders of Preferred Securities in liquidation of such
holders' interests in the Issuer. Under current United States Federal income tax
law and interpretations, if the Trust is treated as a grantor trust at the time
of the distribution, such a distribution should not be treated as a taxable
event to holders of the Preferred Securities. Such a tax-free transaction would
result in a holder of Preferred Securities retaining an aggregate tax basis in
the Junior Subordinated Debentures equal to such holder's aggregate tax basis in
the holder's pro rata share of the Junior Subordinated Debentures prior to the
distribution. A holder's holding period for such Junior Subordinated Debentures
would include the period for which the Preferred Securities were held by such
holder.
S-27
If the Trust were not treated as a grantor trust at the time of the
distribution, the distribution could be a taxable event to holders of the
Preferred Securities, in which case the principles discussed above under "--
Disposition of the Preferred Securities" would apply, and the holders would have
a new tax basis and holding period in the Junior Subordinated Debentures.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Company and the Issuer have agreed that the Issuer will issue and sell to each
of the underwriters named below (collectively, the "Underwriters") and the
Underwriters have severally agreed to purchase from the Issuer, the respective
number of Preferred Securities set forth opposite its name below:
Number of
Preferred
Underwriter Securities
----------- ----------
_________
Total ...................... 4,000,000
=========
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all the Preferred Securities
offered hereby, if any are taken.
The Underwriters propose to offer the Preferred Securities in part directly
to the public at the initial public offering price set forth on the cover page
of this Prospectus Supplement, and in part to certain securities dealers at such
price less a concession of $ per Preferred Security. The Underwriters may allow,
and such dealers may reallow, a concession not in excess of $ per Preferred
Security to certain brokers and dealers. After the Preferred Securities are
released for sale to the public, the offering price and other selling terms may
from time to time be varied by the representatives of the Underwriters.
S-28
In view of the fact that the proceeds from the sale of the Preferred
Securities (together with the delivery by the Issuer to the Company of the
Common Securities) will be used to purchase the Junior Subordinated Debentures
issued by the Company, the Underwriting Agreement provides that the Company will
pay as Underwriters' compensation for the Underwriters arranging the investment
therein of such proceeds, an amount of $ per Preferred Security or ($ per
Preferred Security sold to certain institutions) for the accounts of the several
Underwriters.
The Company and the Issuer have agreed, during the period beginning from
the date of the Underwriting Agreement and continuing to and including the
earlier of (i) the date on which the distribution of the Preferred Securities
ceases, as determined by the Underwriters, or (ii) 30 days after the issuance of
the Preferred Securities, not to offer, sell, contract to sell or otherwise
dispose of any Preferred Securities, any other interests of the Issuer or any
other issuer of a series of Preferred Securities or the Company which are
substantially similar to the Preferred Securities (including any Guarantee of
such securities) or any securities convertible into or exchangeable for
Preferred Securities, preferred stock or such substantially similar securities
of the Issuer or the Company, without the prior written consent of the
representatives of the Underwriters.
Prior to this offering, there has been no market for the Preferred
Securities. Application will be made to have the Preferred Securities approved
for listing on the New York Stock Exchange. In order to meet one of the
requirements for listing the Preferred Securities on the New York Stock
Exchange, the Underwriters will undertake to sell lots of 100 or more Preferred
Securities to a minimum of 400 beneficial holders. If approved for listing,
trading of the Preferred Securities on the New York Stock Exchange is expected
to commence within a fourteen-day period after the initial delivery of the
Preferred Securities. The representatives have advised the Company that they
intend to make a market in the Preferred Securities prior to the commencement of
trading on the New York Stock Exchange, but are not obligated to do so and may
discontinue any such market-making at any time without notice.
The Company and the Issuer have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, or to make contributions in respect thereof.
Certain of the Underwriters engage in transactions with, and from time to
time have performed services for, the Company in the ordinary course of
business.
S-29
SUBJECT TO COMPLETION, DATED AUGUST 12, 1996
PROSPECTUS
$100,000,000
SOUTHWESTERN PUBLIC SERVICE CAPITAL I
TRUST PREFERRED SECURITIES
Fully and Unconditionally Guaranteed by
SOUTHWESTERN PUBLIC SERVICE COMPANY
--------------------
Southwestern Public Service Capital I, a statutory business trust formed
under the laws of the State of Delaware (the "Issuer"), may offer, from time to
time, its preferred securities (the "Preferred Securities") representing
preferred undivided beneficial interests in the assets of the Issuer.
Southwestern Public Service Company, a New Mexico corporation (the "Company"),
will be the sole owner of the beneficial interests represented by common
securities (the "Common Securities") of the Issuer. The payment of periodic cash
distributions with respect to the Preferred Securities and payments on
liquidation or redemption with respect to such Preferred Securities are each
guaranteed by the Company pursuant to several contractual arrangements of the
Company (the "Surety Obligations") as more fully described herein. The Company's
obligations under its guarantee (the "Guarantee") for the benefit of holders of
Preferred Securities will be subordinate and junior in right of payment to all
Senior Indebtedness of the Company. Concurrently with the issuance by the Issuer
of its Preferred Securities, such Issuer will invest the proceeds thereof and
any contributions made in respect of the Common Securities in a corresponding
series of the Company's junior subordinated deferrable interest debentures (the
"Junior Subordinated Debentures") having terms corresponding to the Issuer's
Preferred Securities. The Junior Subordinated Debentures will be unsecured and
subordinate and junior in right of payment to the Senior Indebtedness of the
Company. The Junior Subordinated Debentures held by the Issuer will be its sole
asset and payments of principal and interest under such Junior Subordinated
Debentures will be its only revenue. Upon the occurrence of certain events, the
Company may redeem the Junior Subordinated Debentures or may terminate the
Issuer and cause the Junior Subordinated Debentures to be distributed to the
holders of the corresponding Preferred Securities in liquidation of their
interest in such Issuer.
The Preferred Securities may be offered in amounts, at prices and on terms
to be determined at the time of offering; provided, that the aggregate initial
public offering price of all Preferred Securities shall not exceed $100,000,000.
Specific terms of the Preferred Securities in respect of which this Prospectus
is being delivered will be set forth in an accompanying Prospectus Supplement
with respect to such series, including, without limitation and where applicable,
the specific title, aggregate amount, dividend rate or rates (or method of
determining such rate or rates), the initial public offering price and any other
rights, preferences, privileges, limitations and restrictions.
The Prospectus Supplement relating to the Preferred Securities will contain
information concerning certain United States Federal income tax considerations,
if applicable to the Preferred Securities.
The Preferred Securities may be sold to or through underwriters or dealers
as designated from time to time. The names of such dealers or under- writers and
any applicable commissions or discounts will be set forth in the Prospectus
Supplement with respect to such Preferred Securities. See "Plan of
Distribution."
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE 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 _______, 1996.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
-2-
AVAILABLE INFORMATION
Southwestern Public Service Company (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934 (the "Exchange
Act") and in accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission") which may be inspected and
copied at the offices of the Commission, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549; 500 West Madison Street, Suite 1400, Chicago, Illinois
60661; and Seven World Trade Center, Suite 1300, New York, New York 10048, and
copies of such material can be obtained from the Public Reference Section of the
Commission, Washington, D.C. 20549, at prescribed rates. (The Commission
maintains a site on the World Wide Web containing reports, proxy materials,
information statements and other items. The address is http://www.sec.gov.)
Certain securities of the Company are listed on the New York, Chicago and
Pacific Stock Exchanges. Reports, proxy and information statements, and other
information concerning the Company can be inspected at such exchanges.
The Company and the Issuer have filed with the Commission a registration
statement on Form S-3 (herein, together with all amendments and exhibits
thereto, referred to as the "Registration Statement") under the Securities Act
of 1933, as amended (the "Securities Act"). This Prospectus does not contain all
of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement.
No separate financial statements of the Issuer are included herein. The
Company considers that such financial statements would not be material to
holders of the Preferred Securities because: (i) all of the Common Securities of
the Issuer will be owned by the Company, a reporting company under the Exchange
Act; (ii) the Issuer has no independent operations, but exists for the sole
purpose of issuing the Preferred Securities and investing the proceeds thereof
(plus the Common Securities) in the Junior Subordinated Debentures; and (iii)
the obligations of the Issuer under the Preferred Securities are fully and
unconditionally guaranteed by the Company.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
1-3789) pursuant to the the Exchange Act are incorporated herein by reference as
of their respective dates of filing and shall be deemed to be a part hereof:
-3-
1. The Company's Annual Report on Form 10-K for the year ended August 31,
1995 (the "1995 Form 10-K").
2. The Company's Quarterly Report on Form 10-Q for the quarters ended
November 30, 1995 (the "November Quarterly Report"), February 29, 1996 (the
"February Quarterly Report") and May 31, 1996 (the "May Quarterly Report").
3. The Company's Current Reports on Form 8-K filed February 2, 1996,
February 26, 1996 and July 1, 1996.
4. Joint Proxy Statement/Prospectus for the Annual Meeting held January 31,
1996 included in the Registration State- ment on Form S-4 of New Century
Energies, Inc. (Registration No. 33-64951).
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of this offering shall also be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, on the request of any such person, a copy of any or all documents
referred to above which have been or may be incorporated by reference in this
Prospectus (not including exhibits to such incorporated information that are not
specifically incorporated by reference into such information). Requests for such
copies should be directed to Secretary, Southwestern Public Service Company,
Tyler at Sixth, Amarillo, Texas 79101.
THE COMPANY
The Company, incorporated under the laws of the State of New Mexico in
1921, is principally engaged in the generation, transmission, distribution and
sale of electric energy in portions of Texas, New Mexico, Oklahoma and Kansas.
The electric properties comprise an interconnected system. A major portion of
the Company's electric operating revenues is derived from operations in Texas.
The Company has two wholly owned non-utility subsidiaries, Utility Engineering
Corporation and Quixx Corporation. The principal executive offices of the
Company are located at Tyler at Sixth, Amarillo, Texas 79101 (Tel:
806-378-2121).
-4-
At the annual meeting of the Company's shareholders held on January 31,
1996, the shareholders approved the proposed "merger of equals" of the Company
and Public Service Company of Colorado ("PSCo") (the "Merger Agreement").
Pursuant to the terms of the Merger Agreement, upon satisfaction or waiver of
the terms and conditions thereof, the Company and PSCo will become wholly owned
subsidiaries of a new holding company called New Century Energies, Inc. The
Company and PSCo will maintain their separate identities and continue to serve
customers in their respective service areas. The Company's obligations, such as
guarantees, debt and any preferred stock (including the Guarantee and the Junior
Subordinated Debentures) of the Company outstanding at the time of effectiveness
of the merger will remain outstanding obligations, debt and preferred stock of
the Company and the terms and conditions thereof will not change. The
transaction is subject to various conditions including the receipt of approvals
from various state and federal regulators.
THE ISSUER
Southwestern Public Service Capital I is a statutory business trust formed
under Delaware law pursuant to (i) a trust agreement executed by David M. Wilks,
President and Chief Operating Officer of the Company (together with his
successors, the "Depositor"), as the depositor of the Issuer, and the Issuer
Trustees (as defined herein) and (ii) the filing of a certificate of trust with
the Delaware Secretary of State. Such trust agreement will be amended and
restated in its entirety (as so amended and restated, the "Trust Agreement")
substantially in the form filed as an exhibit to the Registration Statement of
which this Prospectus is a part. The Trust Agreement will be qualified as an
indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). The Issuer exists for the exclusive purpose of (i) issuing its
Preferred Securities and Common Securities, (ii) purchasing the Junior
Subordinated Debentures with the Common Securities and the proceeds from the
sale of the Preferred Securities and (iii) engaging only in those other
activities necessary or incidental thereto. All of the Common Securities will be
owned by the Company. The Common Securities will rank pari passu, and payments
will be made thereon pro rata, with the Preferred Securities, except that upon
the occurrence and continuance of an Event of Default (as defined herein) under
the Trust Agreement, the rights of the holders of the corresponding Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption or other acquisition of Common Securities will be subordinated to the
rights of the holders of Preferred Securities. The Company will acquire Common
Securities of the Issuer in an aggregate Liquidation Amount equal to 3% of the
total
-5-
capital of the Issuer and, at that time, also become the Depositor. The Issuer
will have a term of more than 20 and not less than 50 years, as specified in the
applicable Prospectus Supplement, but may terminate earlier as provided in the
Trust Agreement. The Issuer's business and affairs is conducted by its trustees,
each appointed by the Company as holder of the Common Securities: Wilmington
Trust Company (the "Property Trustee") and three individual trustees (the
"Administrative Trustees") who are employees or officers of or affiliated with
the Company (collectively, the "Issuer Trustees"). The Depositor of the Issuer
or the holders of a majority in Liquidation Amount of the Preferred Securities
and Common Securities, if an event of default under the Trust Agreement has
occurred and is continuing, will be entitled to appoint, remove or replace the
Issuer Trustees. Unless an event of default under the Trust Agreement shall have
occurred and is continuing, the holders of the Preferred Securities and Common
Securities shall not have the right to vote to appoint, remove or replace the
Administrative Trustees, which voting rights are vested exclusively in the
Depositor of the Issuer. The duties and obligations of each of the Issuer
Trustees are governed by the Trust Agreement. The Company has agreed to pay all
fees and expenses related to the Issuer and the offering of the Preferred
Securities and has agreed to pay, directly or indirectly, all ongoing costs,
expenses and liabilities, limited to the extent provided herein, of the Issuer.
The principal executive office of the Issuer is Tyler at Sixth, Amarillo,
Texas 79101, Attention: Secretary (Tel: (806) 378-2121).
RECENT DEVELOPMENTS
On March 19, 1996, President Clinton proposed certain tax law changes that
would, among other things, generally deny corporate issuers a deduction for
interest in respect of certain debt obligations issued on or after December 7,
1995 (the "Proposed Legislation") if such debt obligations have a maximum term
of in excess of 20 years and are not shown as indebtedness on the issuer's
applicable consolidated balance sheet. In addition, the Proposed Legislation
would deny issuers an interest deduction on any debt instrument with a weighted
average maturity of more than 40 years. On March 29, 1996, Senate Finance
Committee Chairman William V. Roth, Jr. and House Ways and Means Committee
Chairman Bill Archer issued a joint statement (the "Joint Statement") indicating
their intent that certain legislative proposals initiated by the Clinton
administration, including the Proposed Legislation, that may be adopted by
either of the tax-writing committees of Congress would have an effective date
that is no earlier than the
-6-
date of "appropriate Congressional action." There can be no assurances, however,
that the effective date guidance contained in the Joint Statement will be
incorporated into the Proposed Legislation, if enacted, or that other
legislation enacted after the date hereof will not otherwise adversely affect
the ability of the Company to deduct the interest payable on the Junior
Subordinated Debentures.
If the tax law changed, as a result of the Proposed Legislation or
otherwise, so that in the Company's judgment it would be precluded from
deducting interest on the Junior Subordinated Debentures, the Company could,
subject to receiving an Opinion of Counsel to the effect that a relevant tax law
change (as described in the accompanying Prospectus) had occurred, redeem the
Junior Subordinated Debentures in whole, thereby causing a mandatory redemption
of the Preferred Securities in whole at a price of $25 per Preferred Security,
plus accrued but unpaid distributions. The Company presently anticipates that,
as permitted by the terms of the Junior Subordinated Debentures and subject to
market and other conditions, it would cause such redemption of the Preferred
Securities if the tax law changed, as a result of the Proposed Legislation or
otherwise, in a manner that would not permit the interest deduction. The Company
also has the option, subject to receiving an Opinion of Counsel, of distributing
Junior Subordinated Debentures or the option of leaving the Preferred Securities
outstanding should such a tax law change occur as described under "Description
of Preferred Securities -- Special Event Redemption or Distribution."
USE OF PROCEEDS
The Issuer will use the proceeds from the Offering of its Preferred
Securities, together with its Common Securities, to purchase Junior Subordinated
Debentures. The proceeds received by the Company from the sale of the Junior
Subordinated Debentures will be used as described in the Prospectus Supplement
by which such securities are offered.
EARNINGS RATIOS
The Company's Ratio of Earnings to Fixed Charges for each of the periods
indicated is as follows:
-7-
Twelve Months Ended
-------------------
May 31, August 31,
1996 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ----
Ratio of Earnings
to Fixed Charges: 4.59 5.10 4.76 4.82 4.53 4.67
The Company's Ratios for future periods will be included in the Company's
Reports on Form 10-K and 10-Q. Such Reports are incorporated by reference into
this Prospectus at the time they are filed.
DESCRIPTION OF PREFERRED SECURITIES
General
An original trust agreement between David M. Wilks, President and Chief
Operating Officer of the Company, as Depositor, and Wilmington Trust Company, as
the Property Trustee, has been used to authorize and create the Issuer. The
original trust agreement is filed as an exhibit to the Registration Statement of
which this Prospectus is a part. The Preferred Securities and the Common
Securities of the Issuer (together, the "Issuer Securities") will be issued by
the Administrative Trustees on behalf of the Issuer pursuant to the terms of the
Trust Agreement (as amended and restated from the original trust agreement). The
Preferred Securities represent undivided preferred beneficial interests in the
assets of the Issuer and entitle the holders thereof to a preference over the
Common Securities of such Issuer, in certain circumstances, with respect to
distributions and amounts payable on redemption or liquidation as well as to
other benefits as described in the Trust Agreement. The following summary of
certain provisions of the Trust Agreement does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the provisions of the
Trust Agreement and the Trust Indenture Act. Wherever particular sections or
defined terms of the Trust Agreement are referred to, such sections or defined
terms are incorporated herein by reference. Section references used herein are
references to provisions of the Trust Agreement unless otherwise stated.
All of the Common Securities of the Issuer will be owned by the Company.
The Common Securities of the Issuer rank pari passu, and payments will be made
thereon pro rata, with the Preferred Securities of the such Issuer except as
described under "-- Subordination of Common Securities." (Section 4.03). Legal
title to the Junior Subordinated Debentures will be held in the name of the
Property Trustee and held in trust for the benefit of the
-8-
holders of the Issuer Securities. (Section 2.09). The Guarantee is a full and
unconditional guarantee on a subordinated basis with respect to the Preferred
Securities but does not guarantee payment of distributions or amounts payable on
redemption or liquidation of the Preferred Securities when the Issuer does not
have funds sufficient to make such payments.
The Preferred Securities will initially be offered in denominations of $25
(based on Liquidation Amount) and integral multiples of $25 in excess thereof.
Liquidation Amount
The amount payable on the Preferred Securities in the event of any
liquidation of the Issuer is $25 per Preferred Security (the "Liquidation
Amount"), plus accumulated and unpaid distributions unless, in connection with
such liquidation, the Junior Subordinated Debentures are distributed to the
holders of the Preferred Securities.
Distributions
The distributions payable on the Preferred Securities will be fixed at the
rate per annum set forth in the Prospectus Supplement. Distributions in arrears
after the quarterly payment date therefor will accumulate additional
distributions thereon compounded quarterly at the same rate per annum, to the
extent permitted by law. The term "distributions" as used herein includes any
such additional distributions (the "Additional Amounts"), unless otherwise
stated, with respect to the Preferred Securities. The amount of distributions
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months and, for any period shorter than a full month, shall be computed
on the basis of the actual number of days elapsed in such period. (Section
4.01(b)). See "Description of Junior Subordinated Debentures -- Additional
Interest."
Distributions on the Preferred Securities will be cumulative, will accrue
from the date of the initial issuance thereof, and will be payable quarterly in
arrears, on the payment dates set forth in the applicable Prospectus Supplement
of each year, except in the event of an extension of the interest payment period
by the Company on the corresponding series of Junior Subordinated Debentures. In
the event that any date on which distributions are otherwise payable on
Preferred Securities is not a Business Day, payment of the distributions payable
on such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect to any such delay) except that,
if such Business Day is in the next succeeding calendar
-9-
year, payment of such distribution shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date (each date on which distributions are otherwise payable in accordance with
the foregoing, a "Distribution Date"). A "Business Day" shall mean any day other
than (x) a Saturday or a Sunday, (y) a day on which banks in New York are
authorized or obligated by law or executive order to remain closed or (z) a day
on which the Corporate Trust Office of the Property Trustee or the principal
office of the Company is closed for business. (Section 1.01 and 4.01(a)).
So long as an Event of Default under the Deferrable Interest Subordinated
Debenture Indenture (the "Indenture") has not occurred and is not continuing,
the Company has the right under the Indenture, as supplemented by a supplemental
indenture relating to the Junior Subordinated Debentures (a "Supplemental
Indenture"), to extend, at any time and from time to time, the interest payment
period on each series of Junior Subordinated Debentures issued thereunder for a
period not exceeding 20 consecutive quarters, with the consequence that
quarterly distributions on the corresponding Preferred Securities would be
deferred (but would continue to accrue distributions thereon, including
additional distributions payable on unpaid distributions to the extent permitted
by law at the rate per annum set forth in the Prospectus Supplement, compounded
quarterly) by the Issuer during any such extended interest payment period;
provided that any such extension period shall not extend beyond the maturity
date or redemption date of the Junior Subordinated Debentures. During any
extension period quarterly distributions on the Preferred Securities would be
deferred by the Issuer, would continue to accrue, and holders of Preferred
Securities would be required to accrue interest income for United States Federal
income tax purposes. See "Description of Junior Subordinated Debentures --
Option to Extend Interest Payment Period" herein and "United States Taxation --
Potential Extension of Interest Payment Period and Original Issue Discount" in
the accompanying Prospectus Supplement. In the event the Company exercises this
right, during such period the Company may not declare or pay any dividends or
distributions (other than dividends or distributions payable in capital stock of
the Company or other securities ranking junior in right of payment to the Junior
Subordinated Debentures) on or redeem, purchase, acquire, or make a liquidation
payment with respect to, any of its capital stock or any security ranking pari
passu with or junior in right of payment to the Junior Subordinated Debentures,
or make any guarantee payments with respect to the foregoing (other than pro
rata payments under the Guarantee) or repurchase, or cause any of its
subsidiaries to repurchase, any security of the Company ranking pari passu with
or junior in right of payment to the Junior Subordinated Debentures (except for
payments
-10-
made on any series of Junior Subordinated Debentures upon the stated maturity of
such Junior Subordinated Debentures); provided that the Company may redeem,
purchase, acquire or make a liquidation payment with respect to any of its
capital stock or any security ranking pari passu with or junior in right of
payment to the Junior Subordinated Debentures, make any guarantee payment with
respect to the foregoing or repurchase, or cause any of its subsidiaries to
repurchase, any security of the Company ranking pari passu with or junior in
right of payment to the Junior Subordinated Debentures with securities (or the
proceeds from the issuance of securities) having no higher ranking than the
capital stock or the other securities which are to be redeemed, purchased,
acquired, with respect to which a liquidation payment is to be made, to which a
guarantee payment is to be made with respect to the foregoing or which are to be
repurchased. This covenant requires that an interest payment period on the
Junior Subordinated Debentures may be extended only if the interest payment
periods on all other series of Junior Subordinated Debentures that may be
outstanding at the time are likewise extended. Prior to the termination of any
such extended interest payment period, the Company may further extend the
interest payment period, provided that such extended interest payment period,
together with all previous and further extensions thereof, may not exceed 20
consecutive quarters or extend beyond the maturity or the redemption date of the
series of the Junior Subordinated Debentures in question. Upon the termination
of any extended interest payment period and the payment of all amounts then due,
the Company may select a new extended interest payment period subject to the
foregoing requirements. See "Description of Junior Subordinated Debentures --
Interest" and "-- the Company's Option to Extend Interest Payment Periods"
herein and "United States Taxation -- Potential Extension of Interest Payment
Period and Original Issue Discount" in the accompanying Prospectus Supplement.
It is anticipated that the income of the Issuer available for distribution
to the holders of the Preferred Securities will be limited to the payments under
the Junior Subordinated Debentures which the Issuer will purchase with the
Common Securities and the proceeds from the issuance and sale of the Preferred
Securities. See "Description of Junior Subordinated Debentures." If the Company
does not make interest payments on the Junior Subordinated Debentures, the
Property Trustee will not have funds available to pay distributions on the
Preferred Securities. The payment of distributions (if and to the extent an
Issuer has funds sufficient to make such payments) is guaranteed on a
subordinated basis by the Company to the extent set forth herein under
"Description of Guarantee. "The Company's obligations under the Guarantee, the
Trust Agreement, the Expense Agreement, the Junior Subordinated Debentures and
the Indenture constitute, in the
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aggregate, a full and unconditional guarantee with respect to the Preferred
Securities. See "Relationship Among the Preferred Secu- rities, the Junior
Subordinated Debentures and the Guarantee."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of the Issuer on the relevant record
dates, which, as long as the Preferred Securities remain in book-entry-only
form, will be one Business Day prior to the relevant Distribution Date. Subject
to any applicable laws and regulations and the provisions of the Trust
Agreement, each such payment will be made as described under "-- Book-Entry-Only
Issuance -- The Depository Trust Company" below. In the event that the Preferred
Securities do not remain in book-entry-only form, the relevant record date shall
be the date 15 days prior to the relevant Distribution Date. (Section 4.01(d)).
Redemption
Upon the repayment of any series of Junior Subordinated Debentures, whether
at maturity or upon earlier redemption as provided in the Indenture, the
proceeds from such repayment shall be applied by the Property Trustee to redeem
a Like Amount (as defined herein) of Issuer Securities, upon not less than 30
nor more than 90 days' notice, at a redemption price equal to the aggregate
Liquidation Amount plus accumulated and unpaid distributions, plus additional
distributions thereon, if any, to the extent permitted by law, to the redemption
date (the "Redemption Price"). See "Description of Junior Subordinated
Debentures -- Optional Redemption."
The Company will have the right to redeem the Junior Subordinated
Debentures (a) on or after a date to be specified in the Prospectus Supplement,
in whole or in part, or (b) at any time, in whole but not in part, upon
occurrence of a Tax Event or an Investment Company Event (each as defined below,
a "Special Event"), subject to the conditions described under "-- Special Event
Redemption or Distribution" and "Description of Junior Subordinated Debentures
- -- Optional Redemption."
Special Event Redemption or Distribution
If a Special Event shall occur and be continuing with respect to the Issuer
or the Preferred Securities of the Issuer, the Company has the right to (i)
redeem the corresponding Junior Subordinated Debentures in whole, but not in
part, and thereby cause a mandatory redemption of such Preferred Securities in
whole, but not in part, at the Redemption Price within 90 days following the
occurrence of such Special Event, or (ii) terminate
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the Issuer and cause the corresponding Junior Subordinated Debentures to be
distributed, subject to the receipt of an Opinion of Counsel experienced in such
matters to the effect that the holders of the Preferred Securities will not
recognize gain or loss for United States Federal income tax purposes as a result
of such distribution, to the holders of the Preferred Securities in liquidation
of such Issuer. If at any time the Issuer is not or will not be taxed as a
grantor trust, but a Tax Event has not occurred, the Depositor has the right to
terminate such Issuer and cause the corresponding Junior Subordinated Debentures
to be distributed, subject to the receipt of an Opinion of Counsel experienced
in such matters to the effect that the holders of the Preferred Securities will
not recognize gain or loss for United States Federal income tax purposes as a
result of such distribution, to the holders of the Preferred Securities of such
Issuer. Under current United States Federal income tax law and interpretations,
if the Issuer is treated as a grantor trust at the time of the distribution,
such a distribution should not be a taxable event to holders of the Preferred
Securities. Should there be a change in law, a change in legal interpretation, a
Special Event or other circumstances, however, the termination could be a
taxable event to holders of the Preferred Securities of an Issuer. See "United
States Taxation -- Receipt of Junior Subordinated Debentures Upon Liquidation of
the Issuer" in the accompanying Prospectus Supplement. If the Company does not
elect either option (i) or (ii) above, the Preferred Securities will remain
outstanding.
"Tax Event" means the receipt by the Issuer or the Company, as the case may
be, of an Opinion of Counsel (which may be counsel to the Issuer, the Company or
an affiliate, and which must be reasonably acceptable to the Property Trustee)
experienced in such matters to the effect that a relevant tax law change has
occurred after a date specified in the accompanying Prospectus Supplement. For
purposes of the preceding sentence, a relevant tax law change is any amendment
or change to (or officially proposed amendment or change to) the laws (including
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof, or the publication of any judicial opinion
interpreting such laws (and regulations) or any written interpretation of such
laws (or regulations) by any governmental authority having jurisdiction to
enforce or administer such laws (or regulations) (including official and
unofficial opinions purporting to apply such laws and regulations to other
persons who have issued securities similar to the Junior Subordinated
Debentures), which amendment, change, proposed amendment or change, opinion or
interpretation could, if valid and enacted or applied to an Issuer or the
Company, result in (i) such Issuer, either currently or within 90 days of the
date thereof, becoming subject to United States Federal income tax with respect
to interest
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received on the Junior Subordinated Debentures, (ii) interest payable by the
Company on the Junior Subordinated Debentures attributable to the Preferred
Securities, either currently or within 90 days of the date thereof, becoming
nondeductible for United States Federal income tax purposes or (iii) the Issuer,
either currently or within 90 days of the date thereof, becoming subject to more
than a de minimis amount of other taxes, duties or other governmental charges.
"Investment Company Event" means the occurrence of a change in law or
regulation or a change in the interpretation or application of any law or
regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law") to the effect that the Issuer is or will
be considered an "investment company" that is required to be registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), which Change in
1940 Act Law becomes effective after a date specified in the accompanying
Prospectus Supplement.
"Like Amount" means (i) with respect to a redemption of Issuer Securities,
Issuer Securities having an aggregate Liquidation Amount equal to the principal
amount of corresponding Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture and the proceeds of which will be used
to pay the Redemption Price of such Issuer Securities and (ii) with respect to a
distribution of Junior Subordinated Debentures to holders of the Preferred
Securities in connection with the termination or liquidation of the Issuer upon
the bankruptcy, dissolution or liquidation of a holder of the Common Securities,
the occurrence of a Special Event or in the event that the Issuer is not or will
not be taxed as a grantor trust but a Tax Event has not occurred, Junior
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Preferred Securities of the holders to whom such
series of Junior Subordinated Debentures is distributed.
Redemption Procedures
Preferred Securities redeemed on each date fixed for redemption (the
"Redemption Date") shall be redeemed at the Redemption Price with the proceeds
from the contemporaneous redemption of the corresponding Junior Subordinated
Debentures. Redemptions of Preferred Securities shall be made, and the
Redemption Price shall be deemed payable, on each Redemption Date only to the
extent that an Issuer has funds sufficient for the payment of such Redemption
Price. (Section 4.02(d)). See "-- Subordination of Common Securities."
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If the Property Trustee gives a notice of redemption in respect of
Preferred Securities of a particular series (which notice will be conditioned
upon the redemption of the related series of Junior Subordinated Debentures),
then, by 12:00 noon, New York time, on the Redemption Date, the Property Trustee
will, so long as such Preferred Securities are in book-entry-only form,
irrevocably deposit with The Depository Trust Company ("DTC") funds sufficient
to pay the applicable Redemption Price and, at the direction of the Depositor,
will give DTC irrevocable instructions and authority to pay the Redemption Price
to the holders of such Preferred Securities. See "-- Book-Entry-Only Issuance --
The Depository Trust Company." If such Preferred Securities are no longer in
book-entry-only form, the Property Trustee will irrevocably deposit with the
Paying Agent for such Preferred Securities funds sufficient to pay the
applicable Redemption Price and will give such Paying Agent irrevocable
instructions and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing Preferred Securities.
Notwithstanding the foregoing, distributions payable on or prior to the
Redemption Date for any Preferred Securities called for redemption shall be
payable to the holders of such Preferred Securities on the relevant record date
for the related Distribution Date. If notice of redemption shall have been given
and funds deposited as required, then upon the date of such deposit, all rights
of holders of such Preferred Securities so called for redemption will cease,
except the right of the holders of such Preferred Securities to receive the
Redemption Price, but without interest on such Redemption Price, and such
Preferred Securities will cease to be outstanding. In the event that any date
fixed for redemption of Preferred Securities is not a Business Day, then payment
of the Redemption Price 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 falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day. In the event that payment of the Redemption Price in respect of Preferred
Securities called for redemption is not paid either by the Issuer or by the
Company pursuant to the Guarantee described herein under "Description of
Guarantee," distributions on such Preferred Securities will continue to accrue
at the rate set forth on the face of such securities, from the original
Redemption Date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
Redemption Price. Failure to deposit the Redemption Price with the Property
Trustee (and/or irrevocably direct the Property Trustee to apply money held by
it to the redemption of Preferred Securities) in the case of an optional
redemption shall not be an Event of Default but shall be deemed to be a
rescission of the call for redemption. (Section 4.02(e)).
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Subject to applicable law (including, without limitation, United States
Federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement.
Payment of the Redemption Price on Preferred Securities to holders of such
Preferred Securities shall be made to the record holders thereof as they appear
on the register for such Preferred Securities on the relevant record date, which
shall be one Business Day prior to the relevant Redemption Date, provided,
however, that in the event that such Preferred Securities do not remain in
book-entry-only form, the relevant record date shall be the date 15 days prior
to the Redemption Date. (Section 4.02(f)).
If less than all the outstanding Issuer Securities are to be redeemed on a
Redemption Date, then the aggregate amount payable shall be allocated 3% to the
Common Securities and 97% to the Preferred Securities. The particular Preferred
Securities to be redeemed shall be selected not more than 90 days prior to the
Redemption Date by the Property Trustee from the outstanding Preferred
Securities not previously called for redemption, by such method as the Property
Trustee shall deem fair and appropriate and which may provide for the selection
for redemption of portions (equal to $25 and integral multiples in excess
thereof) of the aggregate Liquidation Amount of Preferred Securities of a
denomination larger than $25. The Property Trustee shall promptly notify the
Securities Registrar in writing of the Preferred Securities selected for partial
redemption and, in the case of any such Preferred Securities selected for
partial redemption, the aggregate Liquidation Amount thereof to be redeemed. For
all purposes of the Trust Agreement, unless the context otherwise requires, all
provisions relating to the redemption of a series of Preferred Securities shall
relate, in the case of any Preferred Securities redeemed or to be redeemed only
in part, to the portion of the aggregate Liquidation Amount of the Preferred
Securities that has been or is to be redeemed. (Section 4.02(g)).
Subordination of Common Securities
Payment of distributions (including Additional Amounts, if applicable) on,
and the Redemption Price of, Issuer Securities, as applicable, shall be made pro
rata based on the aggregate Liquidation Amount of both the Preferred Securities
and the Common Securities; provided, however, that if on any Distribution Date
or Redemption Date an Event of Default (as defined herein, see "-- Events of
Default; Notice," below) under the Indenture shall have occurred and be
continuing, with respect to the Preferred Securities, no payment of any
distribution (including Additional
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Amounts, if applicable) on, or the Redemption Price of, any Common Security
corresponding thereto, and no other payment on account of the redemption,
liquidation or other acquisition of the corresponding Common Securities shall be
made unless payment in full in cash of all accumulated and unpaid distributions
(including Additional Amounts, if applicable) on all outstanding Preferred
Securities for all distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price the full amount of such Redemption
Price on all such outstanding Preferred Securities called for redemption, shall
have been made or provided for, and all funds available to the Property Trustee
shall first be applied to the payment in full in cash of all distributions
(including Additional Amounts, if applicable) on, or the Redemption Price of
such Preferred Securities then due and payable. (Section 4.03(a)).
In the case of any Event of Default under the Trust Agreement, the holder
of the Common Securities will be deemed to have waived any right to act with
respect to any such Event of Default under such Trust Agreement until the effect
of all such Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated. Until all such Events of Default under
the Trust Agreement have been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the holders of the Preferred
Securities and not the holder of the Common Securities, and only the holders of
such Preferred Securities will have the right to direct the Property Trustee to
act on their behalf. (Section 4.03(b)).
Liquidation Distribution Upon Dissolution
Pursuant to the Trust Agreement, the Issuer shall be liquidated on the
first to occur of: (i) the expiration of the term of the Trust; (ii) the
bankruptcy, dissolution or liquidation of a holder of Common Securities; (iii)
the Depositor has elected to cause the Trust to be dissolved after the
occurrence of a Special Event or in the event that the Trust is not or will not
be taxed as a grantor trust but a Tax Event has not occurred; (iv) the
redemption of all of the Preferred Securities; and (v) an order for dissolution
of the Trust issued by a court of competent jurisdiction. (Section 9.01 and
9.02).
If an early termination occurs as described in clause (iii) of the
immediately preceding paragraph, the Issuer shall be liquidated as expeditiously
as practicable by having the Property Trustee distribute, subject to the receipt
of an Opinion of Counsel experienced in such matters to the effect that the
holders of the Preferred Securities will not recognize gain or loss for United
States Federal income tax purposes as a result of
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such distribution, to each holder of Preferred Securities and Common Securities
a Like Amount of Junior Subordinated Debentures held by such Issuer (a "Final
Distribution"). However, in the event that the Property Trustee determines that
such Final Distribution is impractical, the holders of such Issuer Securities
will be entitled to receive, out of the assets of the Issuer available for
distribution to holders after satisfaction of all liabilities of creditors, an
amount equal to the aggregate of the stated Liquidation Amount of $25 per Issuer
Security plus accrued and unpaid distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"). If such Liquidation
Distribution can be paid only in part because the Issuer has insufficient assets
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by such Issuer on the Issuer Securities shall be paid
on a pro rata basis. However, if an Event of Default has occurred and is
continuing, the holders of the Common Securities will be entitled to receive
distributions upon any such dissolution only after the holders of the Preferred
Securities. If the Junior Subordinated Debentures are distributed to the holders
of the corresponding Preferred Securities, the Company will use reasonable
efforts to have such Junior Subordinated Debentures listed on such stock
exchanges, if any, on which the Preferred Securities are then listed. If the
Company defaults on its payment obligations under the Indenture, a holder will
have the right to take action directly against the Company for enforcement of
payment of principal of or interest on the Junior Subordinated Debentures having
a principal amount equal to the aggregate Liquidation Amount of the Preferred
Securities of such holder. If an early termination occurs as described in clause
(ii) of the immediately preceding paragraph, a liquidating trustee (the
"Liquidating Trustee") may be appointed by a majority of the aggregate
Liquidation Amount of the Issuer Securities or by a court of competent
jurisdiction. Any such Liquidating Trustee shall (unless otherwise instructed by
a court of competent jurisdiction) make a Final Distribution or, if deemed
appropriate by such Liquidating Trustee, make a Liquidation Distribution, in
substantially the same manner as described above. (Section 9.04).
Events of Default; Notice
The occurrence of an "Event of Default" as defined in Section 501 of the
Indenture (see "Description of Junior Subordinated Debentures -- Events of
Default") constitutes an "Event of Default" under the Trust Agreement.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Preferred Securities, the
Administrative Trustees
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and the Depositor, unless such Event of Default shall have been cured or waived.
(Section 8.02).
Unless an Event of Default shall have occurred and be continuing, any
Trustee with respect to the Issuer Securities may be removed at any time by act
of the Depositor of the Issuer. If an Event of Default has occurred and is
continuing, any Trustee with respect to the Issuer Securities may be removed at
such time by act of the holders of a majority in aggregate Liquidation Amount of
the outstanding Issuer Securities, delivered to such Trustee (in its individual
capacity and on behalf of the relevant Issuer). No resignation or removal of a
Trustee and no appointment of a successor Trustee shall be effective until the
acceptance of appointment by the successor Trustee in accordance with the
provisions of the Trust Agreement. (Section 8.10).
If an Event of Default has occurred and is continuing, the Preferred
Securities shall have a preference over the corre- sponding Common Securities
upon dissolution of the relevant Issuer as described above. See "-- Liquidation
Distribution Upon Dissolution."
Merger or Consolidation of a Trustee
Any corporation into which either the Property Trustee or any
Administrative Trustee that is not a natural person may be merged or with which
it may be consolidated or any corporation resulting from any merger, conversion
or consolidation to which any such Trustee shall be a party shall be the
successor to such Trustee under the Trust Agreement, provided such corporation
is otherwise qualified and eligible. (Section 8.12).
Voting Rights
Except as provided below and under "Description of Guarantee -- Amendments
and Assignments" and as otherwise required by law, the holders of the Preferred
Securities will have no voting rights. (Section 6.01(a)).
So long as any Junior Subordinated Debentures are held by the Issuer, the
Property Trustee shall not (i) direct the time, method and place of conducting
any proceeding for any remedy available to the Debenture Trustee, or executing
any trust or power conferred on the Debenture Trustee with respect to the Junior
Subordinated Debentures, (ii) waive any past default which is waivable under
Section 513 of the Indenture, (iii) exercise any right to rescind or annul any
declaration that the principal of all the Junior Subordinated Debentures shall
be due and payable or (iv) consent to any amendment, modification of termination
of the
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Indenture or the Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders of
at least a majority in aggregate Liquidation Amount of the outstanding Issuer
Securities; provided, however, that where a consent under the Indenture would
require the consent of each holder of Junior Subordinated Debentures affected
thereby, no such consent shall be given by the Property Trustee without the
prior consent of each holder of the Issuer Securities. The Property Trustee
shall not revoke any action previously authorized or approved by a vote of the
holders of the Issuer Securities, except pursuant to a subsequent vote of the
outstanding Issuer Securities. The Property Trustee shall notify all holders of
Issuer Securities of any notice of default received from the Debenture Trustee.
In addition to obtaining the foregoing approvals of the holders of the Issuer
Securities, prior to taking any of the foregoing actions, the Property Trustee
shall obtain an Opinion of Counsel experienced in such matters to the effect
that the Issuer will not be classified as an association taxable as a
corporation for United States Federal income tax purposes on account of such
action. (Section 6.01(b)).
If any proposed amendment to the Trust Agreement provides for, or the
Trustees otherwise propose to effect, (i) any action that would adversely affect
the powers, preferences or special rights of the holders of the Issuer
Securities, whether by way of amendment to the Trust Agreement relating to such
Issuer Securities or otherwise, or (ii) the dissolution, winding-up or
termination of the Issuer, other than pursuant to the Trust Agreement, then the
holders of the outstanding Issuer Securities will be entitled to vote on such
amendment or proposal, and such amendment or proposal shall not be effective
except with the approval of the holders of at least a majority in aggregate
Liquidation Amount of such outstanding Issuer Securities. (Section 6.01(c)).
No amendment to the Trust Agreement may be made if, as a result of such
amendment, the Issuer would be classified as an association taxable as a
corporation for United States Federal income tax purposes. (Section 6.01(c)).
Any required approval of the holders of Issuer Securities may be given at a
meeting of the holders of Issuer Securities convened for such purpose or
pursuant to the written consent of such holders. The Administrative Trustees
will cause a notice of any meeting at which holders of such Issuer Securities
are entitled to vote, or of any matter upon which action by written consent of
such holders is to be taken, to be given to each holder of record of such Issuer
Securities in the manner set forth in the Trust Agreement (Section 6.02).
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No vote or consent of the holders of Issuer Securities will be required for
the Issuer to redeem and cancel Issuer Securities in accordance with the Trust
Agreement.
Notwithstanding that holders of Issuer Securities are entitled to vote or
consent under any of the circumstances described above, any of the Issuer
Securities that are owned by the Company, any Trustee or any affiliate of the
Company or any Trustee, shall, for purposes of such vote or consent, be treated
as if they were not outstanding.
Co-Property Trustees and Separate Property Trustees
Unless an Event of Default under the Trust Agreement shall have occurred
and be continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any part
of the Trust Property (as defined in the Trust Agreement) may at the time be
located, the Depositor and the Administrative Trustees shall have power to
appoint, and upon the written request of the Administrative Trustees, the
Depositor shall for such purpose join with the Administrative Trustees in the
execution, delivery and performance of all instruments and agreements necessary
or proper to appoint one or more persons approved by the Property Trustee either
to act as co-property trustee, jointly with the Property Trustee, of all or any
part of such Trust Property, or to act as separate trustee of any such Trust
Property, in either case with such powers as may be provided in the instrument
of appointment, and to vest in such person or persons in such capacity, any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement. If the Depositor does not join in such
appointment within 15 days after the receipt by it of a request to do so, or in
case an Event of Default under the Indenture has occurred and is continuing, the
Administrative Trustees and the Property Trustee shall have power to make such
appointment. (Section 8.09).
Payment and Paying Agents
Payments in respect of the Preferred Securities shall be made to DTC, which
shall credit the relevant accounts at DTC on the applicable Distribution Dates
or, if the Preferred Securities are not held by DTC, such payments shall be made
by check mailed to the address of the holder entitled thereto as such address
shall appear on the securities register. The Paying Agent shall initially be
Wilmington Trust Company. The Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Administrative Trustees, the
Property Trustee and the Depositor. In the event that Wilmington Trust Company
chooses no
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longer to be the Paying Agent, the Administrative Trustees shall appoint a
successor acceptable to the Property Trustee and the Company to act as Paying
Agent (which shall be a bank or trust company or the Company). (Section 4.04 and
5.08).
Book-Entry-Only Issuance--The Depository Trust Company
DTC will act as securities depository for the Preferred Securities. The
Preferred Securities will be issued only as fully-registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global Preferred Security certificates will be issued,
representing in the aggregate the total number of Preferred Securities, and will
be deposited with Wilmington Trust Company, as custodian for DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds the securities that its participants ("Participants") deposit with it. DTC
facilitates the settlement of securities transactions among Participants through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers, securities dealers, banks, trust
companies, clearing corporations and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct Participants, as well as
by the New York Stock Exchange, the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers, securities dealers, banks
and trust companies that clear through or maintain a custodial relationship with
a Direct Participant, either directly or indirectly ("Indirect Participants").
The underwriters with respect to the Preferred Securities may be Direct or
Indirect Participants. The rules applicable to DTC and its Participants are on
file with the Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each Preferred Security ("Beneficial Owner") is, in turn, recorded on a Direct
or Indirect Participant's records, as the case may be. Beneficial Owners will
not receive written confirmation from DTC of their purchases, but Beneficial
Owners are expected to receive written confirmations providing details of the
transactions, as well as
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periodic statements of their holdings, from the respective Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are also effected
by entries made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their
ownership interests in Preferred Securities, except in the event that use of the
book-entry system for the Preferred Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants are responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
the arrangements made among them, subject to any statutory or regulatory
requirements as may be in effect from time time.
Redemption notices, if any, will be sent to DTC. If less than all of the
Preferred Securities of a particular series are being redeemed, DTC's practice
is to determine by lot the amount of the Preferred Securities held by each
Direct Participant in such series to be redeemed.
Although voting with respect to the Preferred Securities is limited to the
holders of record of the Preferred Securities, in those cases where a vote is
required neither DTC nor Cede & Co. will itself consent or vote with respect to
any Preferred Securities. Under its usual procedures, DTC would mail an Omnibus
Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants
(identified in a listing attached to the Omnibus Proxy) to whose accounts the
Preferred Securities are credited on the record date.
Distribution payments on the Preferred Securities will be made by the
Issuer to DTC. DTC's practice is to credit Direct Participants' accounts on the
relevant payment date in accordance with their respective holdings as shown on
DTC's records, unless DTC has reason to believe that it will not receive
payments on such payment date. Payments by Participants to Beneficial Owners
will be governed by standing instructions and customary practices and will be
the responsibility of such Participants and not of
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DTC, the Issuer or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of distributions to
DTC is the responsibility of the Issuer, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments to
the Beneficial Owners is the responsibility of the Direct or Indirect
Participants in whose accounts the Preferred Securities are held, respectively.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
the Issuer. If DTC stops providing such services and a successor securities
depositary is not obtained, Preferred Security certificates must be printed and
delivered. Additionally, the Administrative Trustees (with the consent of the
Company) could decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depositary). In that event, definitive
certificates for the Preferred Securities would be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company and the Issuer believe to be
reliable. Neither the Company nor the Issuer have responsibility for the
performance by DTC or its Participants of their respective obligations as
described herein or under the rules and procedures governing their respective
operations.
Registrar and Transfer Agent
Wilmington Trust Company will act as Securities Registrar and transfer
agent for the Issuer Securities. (Section 5.04).
Registration of transfers of Issuer Securities will be effected without
charge by or on behalf of the Issuer, but upon payment (with the giving of such
indemnity as the Issuer or the Company may require) in respect of any tax or
other governmental charges which may be imposed in connection therewith.
(Section 5.04).
The Securities Registrar will not be required to register or cause to be
registered any transfer of Issuer Securities after they have been called for
redemption. (Section 5.04).
Information Concerning the Property Trustee
The Property Trustee undertakes to perform only such duties as are
specifically set forth in the Trust Agreement and,
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after an Event of Default under the Indenture, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Property Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Preferred Securities or Junior Subordinated Debentures
unless the Property Trustee is offered reasonable indemnity against the costs,
expenses and liabilities that might be incurred thereby. (Section 8.01).
Modification of the Trust Agreement
From time to time, the Company and the Trustees may, without the consent of
any holders of the Preferred Securities, amend the Trust Agreement for specified
purposes, including, among other things, (i) to cure ambiguities, correct or
supplement any provision of the Trust Agreement which may be inconsistent with
any other provision thereof or to make any other provisions with respect to
matters or questions arising under the Trust Agreement which shall not be
inconsistent with the other provisions of the Trust Agreement, or (ii) to ensure
that the Trust will not be classified for United States Federal income tax
purposes as an association taxable as a corporation and will not be required to
register as an "investment company" under the 1940 Act; provided, however, that
such amendment or action shall not adversely affect the rights of any holder of
the Issuer Securities. The Trust Agreement contains provisions permitting the
Company and the Trustees, with the consent of the holders of not less than a
majority in aggregate Liquidation Amount of the outstanding Issuer Securities
related thereto and upon receipt of an appropriate Opinion of Counsel, to modify
the Trust Agreement in a manner affecting the rights of the holders of such
Issuer Securities; provided that no such modification may, without the consent
of the holder of each such outstanding Issuer Security affected by the proposed
modification (i) change the amount or timing of any distribution on such Issuer
Securities or otherwise adversely affect the amount of any distribution required
to be made in respect of such Issuer Securities as of a specified date, (ii)
restrict the right of any holder of such Issuer Securities to institute suit for
the enforcement of any payment under such Trust Agreement or (iii) change the
percentage of Issuer Securities required to consent to any modification to the
Trust Agreement. (Section 10.02).
Governing Law
The Trust Agreement will be governed by, and construed in accordance with,
the laws of the State of Delaware. (Section 10.05).
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Miscellaneous
The Administrative Trustees are authorized and directed to conduct the
affairs of the Issuer and to operate the Issuer so that the Issuer will not be
deemed to be an "investment company" required to be registered under the 1940
Act or be taxed as a corporation for United States Federal income tax purposes
and so that the Junior Subordinated Debentures will be treated as indebtedness
of the Company for United States Federal income tax purposes. In this
connection, the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust of the Issuer or the
Trust Agreement, that the Administrative Trustees determine in their discretion
to be necessary or desirable for such purposes, as long as such action does not
adversely affect the interest of the holders of the Preferred Securities.
(Section 2.07).
Holders of the Preferred Securities have no preemptive rights.
DESCRIPTION OF GUARANTEE
General
Set forth below is certain information concerning the Guarantee that will
be executed and delivered by the Company for the benefit of the holders from
time to time of Preferred Securities. The Guarantee will be qualified as an
indenture under the Trust Indenture Act. Wilmington Trust Company will act as
indenture trustee (the "Guarantee Trustee") under the Guarantee for purposes of
compliance with the Trust Indenture Act. The terms of the Guarantee will be
those set forth in such Guarantee and those made part of such Guarantee by the
Trust Indenture Act. This summary does not purport to be complete and is subject
in all respects to the provisions of, and is qualified in its entirety by
reference to, the Guarantee, the form of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part, and of the Trust
Indenture Act. The Guarantee Trustee will hold the Guarantee for the benefit of
the holders of the Preferred Securities. Whenever particular provisions of or
defined terms in the Guarantee are referred to, such sections or defined terms
are incorporated herein by reference. Section references used herein are
references to provisions of the Guarantee unless otherwise stated.
The Company will agree, on a subordinated basis, to the extent set forth
below, to make the Guarantee Payments (as defined below) in full to the holders
of the Preferred Securities (without
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duplication of amounts theretofore paid by the Issuer with respect thereto), as
and when due, regardless of any defense, right of set-off or counterclaim that
such Issuer may have or assert other than the defense of payment. (Section 5.1).
The following payments with respect to the Preferred Securities, to the extent
not paid by or on behalf of the Issuer (the "Guarantee Payments"), will be
subject to the related Guarantee (without duplication): (i) any accrued and
unpaid distributions required to be paid on the Preferred Securities, if and
only to the extent that the Issuer has funds sufficient to make such payment;
(ii) the Redemption Price with respect to any such Preferred Securities called
for redemption by the Issuer, if and only to the extent that the Issuer has
funds sufficient to make such payment; and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of such Issuer (other than in connection
with a redemption of all of the corresponding Preferred Securities), the lesser
of (a) the aggregate Liquidation Amount and all accrued and unpaid distributions
on such Preferred Securities to the date of payment, to the extent the Issuer
has funds sufficient to make such payment, and (b) such amount of assets of such
Issuer remaining available for distribution to holders of such Preferred
Securities in liquidation of such Issuer. (Section 1.1). The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Company to the holders of the Preferred Securities or by
causing the Issuer to pay such amounts to such holders. (Section 5.1).
The Guarantee will be a guarantee on a subordinated basis with respect to
the Preferred Securities from the time of the issuance of such Preferred
Securities, but will not apply (i) to any payment of distributions if and to the
extent that the Issuer does not have funds sufficient to make such payments or
(ii) to the collection of payment. If the Company does not make interest
payments on a series of Junior Subordinated Debentures held by the Issuer, it is
expected that such Issuer will not pay distributions on such Preferred
Securities. The Guarantee will rank subordinate and junior in right of payment
to all liabilities of the Company (except trade credit and any liabilities made
pari passu with, or subordinate to, the Guarantee by their terms). See "--
Status of the Guarantee."
With respect to the Preferred Securities, the mechanisms and obligations
relating to the Guarantee, the Indenture and the Junior Subordinated Debentures
and the obligation of the Company under the Trust Agreement to pay all
obligations, costs and expenses (other than obligations of the Trust to pay to
holders of the Preferred Securities the amounts due such holders pursuant to the
terms of the Preferred Securities) of the Issuer (the "Expense Agreement") taken
together, are a full and unconditional
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subordinated guarantee by the Company of payment due of such Preferred
Securities. See "Description of Junior Subordinated Debentures" and
"Relationship Among the Preferred Securities, the Junior Subordinated Debentures
and the Guarantee".
Amendments and Assignments
Except with respect to any changes that do not adversely affect the rights
of the holders of Preferred Securities (in which case no consent of such holders
will be required), the terms of the Guarantee may be changed only with the prior
approval of the holders of not less than a majority in aggregate Liquidation
Amount of such outstanding Preferred Securities. All guarantees and agreements
contained in the Guarantee will be binding upon the successors, assigns,
receivers, trustees and representatives of the Company, and shall inure to the
benefit of the holders of the corresponding Preferred Securities then
outstanding. (Sections 8.1 and 8.2).
Events of Default
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment obligations thereunder. (Section 1.1). The
holders of a majority in aggregate Liquidation Amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee. (Section 5.4).
Any holder of the Preferred Securities may institute a legal proceeding
directly against the Company to enforce such holder's rights under the Guarantee
without first instituting a legal proceeding against the Issuer, the Guarantee
Trustee or any other person or entity. (Section 5.4).
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Company in the performance of the Guarantee, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after default with respect to the Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by the Guarantee at the
request of any holder of Preferred Securities unless the Guarantee Trustee is
offered
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reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby. (Sections 3.1 and 3.2).
Termination of the Guarantee
The Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of all Preferred Securities, the
distribution of Junior Subordinated Debentures to the holders of such Preferred
Securities in exchange for all of such Preferred Securities or upon payment in
full of the amounts payable upon liquidation of the Issuer. Notwithstanding the
foregoing, the Guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any holder of Preferred Securities must restore
payment of any sums paid under such Preferred Securities or the Guarantee.
(Section 7.1).
Status of the Guarantee
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Indebtedness
(as defined below) of the Company. (Section 6.1). The Trust Agreement provides
that each holder of Preferred Securities by acceptance thereof agrees to the
subordination provisions and other terms of the Guarantee.
The Guarantee will rank pari passu with any similar guarantees issued by
the Guarantor on behalf of the holders of Preferred Securities issued by any
other issuer holding Junior Subordinated Debentures issued under the Indenture.
(Section 6.2).
The Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). (Section
5.5).
Governing Law
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York. (Section 8.5).
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
General
Set forth below is a description of certain terms of the Junior
Subordinated Debentures which the Issuer will purchase with
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its Common Securities and the proceeds of the issuance and sale of such Issuer's
Preferred Securities. The following summary does not purport to be complete and
is subject in all respects to, and is qualified in its entirety by reference to,
the Indenture, as supplemented by a supplemental indenture creating the series
of Junior Subordinated Debentures (the "Supplemental Indenture"), from the
Company to Wilmington Trust Company, as trustee with respect to the Junior
Subordinated Debentures (the "Debenture Trustee"), the forms of which are filed
as exhibits to the Registration Statement of which this Prospectus is a part,
and the Trust Indenture Act. Whenever particular provisions of or defined terms
in the Indenture or the Supplemental Indenture are referred to, such sections or
defined terms are incorporated herein by reference. Section references used
herein are references to provisions of the Indenture unless otherwise stated.
Concurrently with the issuance of Preferred Securities, the Issuer will
invest the proceeds thereof in a corresponding series of Junior Subordinated
Debentures newly issued by the Company. The Junior Subordinated Debentures will
mature on a date that is more than 20 and less than 50 years from the date of
issuance, as specified in the Prospectus Supplement. The Junior Subordinated
Debentures will be unsecured subordinated obligations of the Company issued
under the Indenture. The Junior Subordinated Debentures will be in a principal
amount equal to the aggregate stated Liquidation Amount of the Preferred
Securities plus the Company's concurrent investment in the Common Securities and
will rank pari passu with any other series of Junior Subordinated Debentures
that may be issued. The Indenture does not limit the aggregate principal amount
of Junior Subordinated Debentures which may be issued thereunder.
Optional Redemption
The Company will have the right, at any time and from time to time, as set
forth in the Supplemental Indenture, to redeem the Junior Subordinated
Debentures, in whole or in part, at a redemption price as set forth in such
Supplemental Indenture, together with any accrued but unpaid interest thereon,
including any Additional Interest (as defined below) to the redemption date.
If a Special Event shall occur and be continuing, the Company shall have
the right to redeem any series of Junior Subordinated Debentures in whole but
not in part, at 100% of the principal amount thereof plus any accrued and unpaid
interest on such Junior Subordinated Debentures, including any Additional
Interest, if any, to the redemption date fixed for redemption for such series.
(Section 102 of the Supplemental Indenture).
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For so long as the Issuer is the holder of all the outstanding Junior
Subordinated Debentures, the proceeds of any such redemption will be used by
such Issuer to redeem Preferred Securities and the Common Securities in
accordance with their terms. The Company may not redeem Junior Subordinated
Debentures in part unless all accrued and unpaid interest thereon (including any
Additional Interest) has been paid in full on all outstanding Junior
Subordinated Debentures for all interest periods terminating on or prior to the
redemption date. (Section 102 of the Supplemental Indenture).
Any optional redemption of Junior Subordinated Debentures shall be made
upon not less than 30 nor more than 90 days' notice to the holders thereof. If
at the time of mailing of any notice of redemption the Company shall not have
deposited with the Debenture Trustee (and/or irrevocably directed the Debenture
Trustee to apply, from money held by it available to be used for the redemption
of Junior Subordinated Debentures) an amount in cash sufficient to redeem all of
the Junior Subordinated Debentures to be redeemed, including accrued interest to
such redemption date, such notice shall state that the proposed redemption to
which such notice relates is subject to the deposit of such amount with the
Debenture Trustee on or before the redemption date. Failure to have so deposited
such amount (or directed such payment) shall not constitute an Event of Default
but shall be deemed to be a rescission of the call for redemption. (Section
1204).
After notice of redemption is given and the Company having on or before the
redemption date deposited with the Debenture Trustee (and/or having irrevocably
directed the Debenture Trustee to apply, from money held by it available to be
used for the redemption of Junior Subordinated Debentures) an amount in cash
sufficient to redeem all of the Junior Subordinated Debentures to be redeemed,
the Junior Subordinated Debentures so to be redeemed will, on the redemption
date, become due and payable and from and after such date, such Junior
Subordinated Debentures will cease to bear interest. (Section 1206).
The Junior Subordinated Debentures will be subject to optional redemption
in whole, but not in part, upon the termination and liquidation of the Issuer
holding such series of Junior Subordinated Debentures pursuant to an order for
the dissolution, termination or liquidation of such Issuer entered by a court of
competent jurisdiction. For so long as the Issuer is the holder of all Junior
Subordinated Debentures, the proceeds of any redemption described in this
section shall be used by such Issuer to redeem its Preferred Securities and the
Common Securities in accordance with their terms.
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The Company shall not redeem the Junior Subordinated Debentures in part
unless all accrued and unpaid interest (including any Additional Interest) has
been paid in full on all Junior Subordinated Debentures outstanding for all
interest periods on or prior to the redemption date.
Distributions of Debentures
Under certain circumstances involving the termination of the Issuer, Junior
Subordinated Debentures held by such Issuer may be distributed to the holders of
the Preferred Securities in liquidation of the Issuer, after satisfaction of all
liabilities to creditors of the Issuer as provided by applicable law. If
distributed to holders of Preferred Securities in liquidation, the Junior
Subordinated Debentures will initially be issued in the form of one or more
global securities, and DTC, or any successor depositary for the Preferred
Securities, will act as depositary for the Junior Subordinated Debentures. It is
anticipated that the depositary arrangements for the Junior Subordinated
Debentures, if distributed, would be substantially identical to those in effect
for the Preferred Securities. Neither the Company, the Debenture Trustee, any
Paying Agent nor any other agent of the Company or the Debenture Trustee will
have any responsibility or liability for any aspect of the records relating to
or payments made on account of persons holding Junior Subordinated Debentures in
the form of a global security for the Junior Subordinated Debentures or for
maintaining, supervising or reviewing any records relating to such holders.
A global security shall be exchangeable for Junior Subordinated Debentures
registered in the names of persons other than DTC or its nominee only if (i) DTC
notifies the Company that it is unwilling or unable to continue as a depositary
for such global security and no successor depositary shall have been appointed,
or if at any time DTC ceases to be a clearing agency registered under the
Exchange Act at a time when DTC is required to be so registered to act as such
depositary, (ii) the Company in its sole discretion determines that such global
security shall be so exchangeable, or (iii) there shall have occurred and be
continuing an Event of Default with respect to such global security. Any global
security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for definitive certificates registered in such names as DTC shall
direct. It is expected that such instructions will be based upon directions
received by DTC from its Participants with respect to the ownership of
beneficial interests in such global security. In the event that Junior
Subordinated Debentures are issued in definitive form, such Junior Subordinated
Debentures will be issued in denominations of $25 and integral
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multiples thereof and may be transferred or exchanged at the offices described
below.
Payments on Junior Subordinated Debentures represented by a global security
will be made to DTC, as the depositary for the Junior Subordinated Debentures.
In the event Junior Subordinated Debentures are issued in definitive form,
principal and interest will be payable, the transfer of the Junior Subordinated
Debentures will be registrable, and Junior Subordinated Debentures will be
exchangeable for Junior Subordinated Debentures of other denominations of a like
aggregate principal amount, at the corporate office of the Debenture Trustee in
Wilmington, Delaware, or at the offices of any paying or transfer agent
appointed by the Company, provided that payment of interest may be made, at the
option of the Company, by check mailed to the address of the persons entitled
thereto or by wire transfer. In addition, if the Junior Subordinated Debentures
are issued in certificated form, the record dates for payment of interest will
be the 15th day preceding the end of each quarter. For a description of DTC and
the terms of the depositary arrangements relating to payments, transfers, voting
rights and other matters, see "Description of Preferred Securities --
Book-Entry-Only Issuance -- The Depository Trust Company."
If the Junior Subordinated Debentures are distributed to the holders of
Preferred Securities upon the liquidation of the Issuer, the Company will use
its best efforts to list the Junior Subordinated Debentures on such stock
exchanges, if any, as the Preferred Securities are then listed.
Interest
The Junior Subordinated Debentures shall bear interest at the rate per
annum set forth in the applicable Supplemental Indenture and from the date
specified therein. Such interest shall be payable in arrears on the dates of
each year specified in the Supplemental Indenture (each, an "Interest Payment
Date"), subject to certain exceptions, to the person in whose name such Junior
Subordinated Debentures are registered, at the close of business on the Business
Day next preceding such Interest Payment Date. (Section 307 of the Indenture and
Section 101 of the Supplemental Indenture). It is anticipated that the Junior
Subordinated Debentures issued with respect to an issue of Preferred Securities
will be held in the name of the Property Trustee in trust for the benefit of the
holders of the Issuer Securities.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months and, for any period shorter than a
full monthly period, shall be
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computed on the basis of the actual number of days elapsed in such period.
(Section 310). In the event that any date on which interest is payable on the
Junior Subordinated Debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on the date the payment was
originally payable. (Section 101 of the Supplemental Indenture).
Interest which is accrued and unpaid after the Interest Payment Date
therefor will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate specified for the Junior Subordinated Debentures.
The term "Interest" as used herein shall include interest payments, interest on
interest payments in arrears and Additional Interest, as applicable.
The Company's Option to Extend Interest Payment Periods
The Company shall have the right, at any time and from time to time while
the Junior Subordinated Debentures are outstanding, so long as an Event of
Default has not occurred or is continuing, to extend the interest payment period
on such Junior Subordinated Debentures for a period not exceeding 20 consecutive
quarters (the "Extension Period") during which period interest will compound
quarterly. At the end of any such Extension Period, the Company must pay all
interest then accrued and unpaid (together with interest thereon at the rate
specified for such Junior Subordinated Debentures to the extent permitted by
applicable law). During any such Extension Period, the Company may not declare
or pay any dividends or distributions (other than dividends or distributions
payable in capital stock of the Company or other securities ranking junior in
right of payment to the Junior Subordinated Debentures) on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of its capital stock
or any security ranking pari passu with or junior in right of payment to the
Junior Subordinated Debentures, or make any guarantee payment with respect to
the foregoing (other than pro rata payments under the Guarantee) or repurchase,
or cause any of its subsidiaries to repurchase, any security of the Company
ranking pari passu with or junior in right of payment to the Junior Subordinated
Debentures (except for payments made on any series of Junior Subordinated
Debentures upon the stated maturity of such Junior Subordinated Debentures);
provided that the Company may redeem, purchase, acquire or make a liquidation
payment with respect to any of its capital stock or any security ranking pari
passu with or junior in right of payment to the Junior Subordinated Debentures,
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make any guarantee payment with respect to the foregoing or repurchase, or cause
any of its subsidiaries to repurchase, any security of the Company ranking pari
passu with or junior in right of payment to the Junior Subordinated Debentures
with securities (or the proceeds from the issuance of securities) having no
higher ranking than the capital stock or the other securities which are to be
redeemed, purchased, acquired, with respect to which a liquidation payment is to
be made, to which a guarantee payment is to be made with respect to the
foregoing or which are to be repurchased. This covenant requires that an
interest payment period on the Junior Subordinated Debentures may be extended
only if the interest payment periods on all other series of Junior Subordinated
Debentures that may be outstanding at the time are likewise extended. Prior to
the termination of any Extension Period, the Company may further extend the
interest payment period, provided that such Extension Period together with all
such previous and further extensions thereof may not exceed 20 consecutive
quarters or extend beyond the maturity date or redemption date of such Junior
Subordinated Debentures. Upon the termination of any such Extension Period and
the payment of all amounts then due, the Company may select a new Extension
Period, subject to the foregoing requirements. No interest shall be due and
payable during an Extension Period, except at the end thereof. So long as the
Property Trustee shall be the sole holder of the Junior Subordinated Debentures,
the Company must give the Property Trustee, the Administrative Trustees and the
Debenture Trustee notice of its selection of such Extension Period at least one
Business Day prior to the earlier of (i) the date that the distribution on the
Preferred Securities is payable or (ii) the date the Administrative Trustees are
required to give notice to the New York Stock Exchange or other applicable
self-regulatory organization or to holders of the Preferred Securities of the
record date for the payment of such distribution or the date such distribution
is payable, but in any event not less than one Business Day prior to such record
date. The Debenture Trustee will be required to give prompt notice of the
Company's selection of such Extension Period to the holders of the Preferred
Securities and the Administrative Trustees. (Section 101 of the Supplemental
Indenture).
Right of Set-Off
Notwithstanding anything to the contrary in the Indenture, the Company
shall have the right to set-off any payment it is otherwise required to make
thereunder to the extent the Company has theretofore made, or is concurrently on
the date of such payment making, a payment under the Guarantee. (Section 311).
-35-
Additional Interest
If at any time the Issuer shall be required to pay any interest on
distributions in arrears in respect of the Preferred Securities pursuant to the
terms thereof, the Company will pay as interest to such Issuer, as the holder of
the corresponding Junior Subordinated Debentures, an amount of additional
interest ("Additional Interest Attributable to Deferral") equal to interest on
distributions in arrears. Accordingly, in such circumstances the Company will,
to the fullest extent permitted by applicable law, pay interest upon interest in
order to provide for quarterly compounding on such Junior Subordinated
Debentures. In addition, if the Issuer is required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States or any other taxing authority, then, in each
case, the Company will also pay such amounts as shall be required so that the
net amounts received and retained by such Issuer after paying such taxes,
duties, assessments or governmental charges will be not less than the amounts
such Issuer would have received had no such taxes, duties, assessments or
governmental charges been imposed ("Additional Interest Attributable to Taxes,"
and, together with Additional Interest Attributable to Deferral, "Additional
Interest"). (Section 101 of the Indenture and Section 101 of the Supplemental
Indenture).
Subordination
The Junior Subordinated Debentures will be subordinate and junior in right
of payment to the prior payment, in full in cash or cash equivalents, of all
Senior Indebtedness (as defined below). (Sections 101 and 1101). In the event of
(a) any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in connection
therewith, relating to the Company or to its assets, or (b) any liquidation,
dissolution or other winding-up of the Company, whether voluntary or involuntary
and whether or not involving insolvency or bankruptcy, or (c) any assignment for
the benefit of creditors or any other marshalling of assets and liabilities of
the Company (except a distribution in connection with a consolidation of the
Company with, or the merger of the Company into, another corporation or the
liquidation or dissolution of the Company following conveyance, transfer or
lease of its properties and assets substantially as an entirety to another
corporation upon the terms and conditions described below under "--Consolida-
tion, Merger and Sale"), the holders of all Senior Indebtedness will be entitled
to receive payment in full in cash or cash equivalents of all amounts due or to
become due thereon, before the holders of Junior Subordinated Debentures are
entitled to receive any payment on account of the principal of or interest on
the
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Junior Subordinated Debentures; and any payment or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, by set-off or otherwise, to which the holders of the Junior
Subordinated Debentures or the Debenture Trustee would be entitled but for the
provisions of the Indenture relating to subordination shall be paid by the
liquidating trustee or agent or other person making such payment or distribution
directly to the holders of Senior Indebtedness ratably according to the
aggregate amounts remaining unpaid on account of the Senior Indebtedness to the
extent necessary to make payment in full in cash or cash equivalents of all
Senior Indebtedness remaining unpaid. In the event that, notwithstanding the
foregoing, the Debenture Trustee or any holder of the Junior Subordinated
Debentures shall have received payment or distribution of assets of the Company
of any kind or character (excluding certain permitted subordinated securities)
before all Senior Indebtedness is paid in full or payment thereof provided for,
then such payment or distribution will be paid over or delivered to the trustee
in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or
other person making payment or distribution of the assets of the Company for
application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to pay all Senior Indebtedness in full in cash or cash
equivalents. (Section 1102).
The Company is prohibited from making payments on account of the principal
of or interest on the Junior Subordinated Debentures or on account of the
purchase or redemption or other acquisition of the Junior Subordinated
Debentures if there shall have occurred and be continuing: (a) a default in any
payment with respect to any Senior Indebtedness or (b) any other event of
default with respect to any Senior Indebtedness resulting in the acceleration of
the maturity thereof. (Section 1103). In the event that the Company makes any
payment to the Debenture Trustee or any holder of Junior Subordinated
Debentures, which payment is prohibited by the foregoing, then such payment is
required to be paid over to the representative of the holders of the Senior
Indebtedness then outstanding to the extent necessary to pay in full, in cash or
cash equivalents, all Senior Indebtedness. (Section 1103).
Subject to the payment in full of all Senior Indebtedness, the holders of
the Junior Subordinated Debentures shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments and distributions of assets
of the Company applicable to the Senior Indebtedness until the Junior
Subordinated Debentures are paid in full. (Section 1105).
If the Company fails to make any payment on the Junior Subordinated
Debentures when due or within any applicable grace
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period, such failure will constitute an Event of Default under the Indenture.
See "--Events of Default."
As of May 31, 1996, the Senior Indebtedness of the Company was
approximately $771 million.
The term "Senior Indebtedness" shall mean the principal of, interest on and
any other payment due pursuant to any of the following, whether outstanding at
the date of execution of any Supplemental Indenture or thereafter incurred,
created or assumed:
(a) all indebtedness of the Company on a consolidated basis (other
than any obligations to trade creditors) evidenced by notes, debentures,
bonds or other securities sold by the Company for money borrowed and
capitalized lease obligations;
(b) all indebtedness of others of the kinds described in the preceding
clause (a) assumed by or guaranteed in any manner by the Company or in
effect guaranteed by the Company;
(c) all obligations of the Company issued or assumed as the deferred
purchase price of property, all conditional sale obligations of the Company
and all obligations of the Company under any title retention agreement (but
excluding trade accounts payable);
(d) certain obligations of the Company for the reimbursement of any
obligor on any letter of credit, banker's acceptance, security purchase
facility, surety bond or similar credit transaction entered into in the
ordinary course of business of the Company; and
(e) all renewals, extensions or refundings of indebted- ness of the
kinds described in any of the preceding clauses (a) through (d);
unless, in the case of any particular indebtedness, capitalized lease
obligation, guarantee, renewal, extension or refunding, the instrument creating
or evidencing the same or the assumption or guarantee of the same expressly
provides that such indebtedness, capitalized lease obligation, guarantee,
renewal, extension or refunding is made pari passu with or subordinate to the
Junior Subordinated Debentures. (Section 101).
Notwithstanding the foregoing, the Junior Subordinated Debentures will rank
pari passu with each other series of Junior Subordinated Debentures that may be
issued under the Indenture.
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The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued.
Certain Covenants
The Junior Subordinated Debentures will not be secured by any properties or
assets and will represent unsecured debt of the Company.
Unless otherwise indicated in a Prospectus Supplement, the covenants
contained in the Indenture and the Junior Subordinated Debentures do not afford
holders of the Junior Subordinated Debentures special protection in the event of
a highly leveraged or other transaction involving the Company that may adversely
affect holders of the Junior Subordinated Debentures.
In the Indenture, the Company covenants that it will not declare or pay any
dividends or distributions (other than dividends or distributions payable in
common stock of the Company or other securities ranking junior in right of
payment to the Junior Subordinated Debentures) on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of its capital stock or any
security ranking pari passu with or junior in right of payment to the Junior
Subordinated Debentures, or make any guarantee payments with respect to the
foregoing (other than pro rata payments under the Guarantee) or repurchase, or
cause any of its subsidiaries to repurchase, any security of the Company ranking
pari passu with or junior in right of payment to the Junior Subordinated
Debentures (except for payments made on any series of Junior Subordinated
Debentures upon the stated maturity of such Junior Subordinated Debentures) if
at such time (i) there shall have occurred any event of which the Company has
actual knowledge that (a) with the giving of notice or the lapse of time, or
both, would constitute an Event of Default with respect to such Junior
Subordinated Debentures and (b) which the Company shall not have taken
reasonable steps to cure, (ii) the Company shall have given notice of its
selection of an Extension Period as provided in the Indenture, and such
Extension Period, or any extension thereof, shall have commenced and be
continuing, or (iii) the Company shall be in default with respect to its payment
of any obligations under the Guarantee. Notwithstanding the foregoing, the
Company may redeem, purchase, acquire or make a liquidation payment with respect
to any of its capital stock or any security ranking pari passu with or junior in
right of payment to the Junior Subordinated Debentures, make any guarantee
payment with respect to the foregoing or repurchase, or cause any of its
subsidiaries to repurchase, any security of the Company ranking pari passu with
or junior in right of payment to the Junior Subordinated Debentures with
securities (or the proceeds from the issuance of securities) having no higher
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ranking than the capital stock or the other securities which are to be redeemed,
purchased, acquired, with respect to which a liquidation payment is to be made,
to which a guarantee payment is to be made with respect to the foregoing or
which are to be repurchased. (Section 1005).
The Company also covenants (i) not to transfer ownership of Common
Securities of the Issuer to which Junior Subordinated Debentures have been
issued to any person other than an affiliate of the Company as permitted under
the Indenture; provided that no such transfer will result in (x) such Issuer
being considered an "investment company" that is required to be registered under
the Investment Company Act of 1940, as amended, or (y) the Issuer not being
taxed as a grantor trust for United States Federal income tax purposes, (ii) not
to voluntarily dissolve, wind up or terminate the Issuer, except in connection
with the distribution of the Junior Subordinated Debentures to the holders of
the Preferred Securities of such Issuer in liquidation of such Issuer or in
connection with certain mergers, consolidations or amalgamations permitted by
the Trust Agreement and (iii) to use its reasonable efforts, consistent with the
terms and provisions of the Trust Agreement, to cause such Issuer to remain a
grantor trust and otherwise not to be classified as an association taxable as a
corporation for United States Federal income tax purposes. (Section 1005).
Events of Default
The Indenture will provide that any one or more of the following described
events with respect to Junior Subordinated Debentures that has occurred and is
continuing constitutes an "Event of Default" with respect to the Junior
Subordinated Debentures:
(a) failure for 30 days to pay any interest on the Junior Subordinated
Debentures, including any Additional Interest in respect thereof, when due
(subject to the deferral of any due date in the case of an Extension
Period);
(b) failure to pay any principal on the Junior Subordinated Debentures
when due whether at maturity, upon redemption, by declaration of
acceleration or otherwise; except that, in the case of an optional
redemption, the failure to redeem any Junior Subordinated Debenture which
is the result of the Company's failure to deposit on or before the
redemption date with the Debenture Trustee (and/or having irrevocably
directed the Debenture Trustee to apply, from money held by it available to
be used for the redemption of Junior Subordinated Debentures) an amount in
cash sufficient to redeem
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all of the Junior Subordinated Debentures to be redeemed,
shall not be an Event of Default, but shall be deemed a
rescission of the call for redemption;
(c) failure to observe or perform in any material respect any other
covenant relating to such series of Junior Subordinated Debentures
contained in the Indenture for 90 days after written notice to the Company
from the Debenture Trustee or the holders of at least 25% in principal
amount of the outstanding Junior Subordinated Debentures; or
(d) certain events in bankruptcy, insolvency or reor- ganization of
the Company. (Section 501).
If an Event of Default has occurred and is continuing, the holders of a
majority in outstanding principal amount of the Junior Subordinated Debentures
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Debenture Trustee. (Section 512). The Debenture
Trustee or the holders of not less than 25% in aggregate outstanding principal
amount of the Junior Subordinated Debentures may declare the principal and
interest due and payable immediately upon an Event of Default. In addition, the
holders of at least 25% in aggregate Liquidation Amount of the Preferred
Securities shall have such right. The holders of a majority in outstanding
principal amount of the Junior Subordinated Debentures may annul such
declaration and waive the default if the default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration and any Additional Interest has been deposited
with the Debenture Trustee. (Section 502).
The holders of a majority in outstanding principal amount of the Junior
Subordinated Debentures may, on behalf of the holders of all the Junior
Subordinated Debentures, waive any past default, except a default in the payment
of principal or interest (unless such default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee) or
a default in respect of a covenant or provision which under the Indenture cannot
be modified or amended without the consent of the holder of each outstanding
Junior Subordinated Debenture. (Section 513). The Company is required to file
annually with the Debenture Trustee a certificate as to whether or not the
Company is in compliance with all the conditions and covenants applicable to it
under the Indenture. (Section 1004).
Unless otherwise provided in a Prospectus Supplement, a voluntary or
involuntary dissolution of the Issuer prior to the
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redemption or maturity of the Junior Subordinated Debentures held by such Issuer
will not constitute an Event of Default with respect to such Junior Subordinated
Debentures. If the Issuer is dissolved, an event the possibility of which the
Company and the Issuer consider to be remote, any of the following, among other
things, could occur: (i) a distribution of the Junior Subordinated Debentures
held by such Issuer to the holders of the Preferred Securities, (ii) a cash
distribution to the holders of such Preferred Securities out of the sale of
assets of such Issuer, after satisfaction of all liabilities to creditors, or
(iii) a permitted redemption at par of the Junior Subordinated Debentures, and a
consequent redemption of a like amount of such Preferred Securities, at the
option of the Company under the circumstances described under "--Optional
Redemption" or (iv) the rollover of Trust Property (as defined in the Trust
Agreement) into another entity with similar characteristics.
Form, Exchange and Transfer
The Junior Subordinated Debentures, if issued in certificated form, will be
issuable only in registered form, without coupons and only in denominations of
$25 and integral multiples thereof. (Section 302).
Subject to the terms of the Indenture, Junior Subordinated Debentures may
be presented for registration of transfer or exchange (duly endorsed or
accompanied by satisfactory instruments of transfer) at the office of the
securities 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 Junior Subordinated Debentures, 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 securities registrar or such transfer agent, as the case may
be, being satisfied with the documents of transfer, title and identity of the
person making the request. The Company has appointed the Debenture Trustee as
the initial securities registrar. (Section 305). The Company may at any time
designate additional transfer agents, rescind the designation of any transfer
agent or approve a change in the office through which any transfer agent acts.
(Section 1002).
If the Junior Subordinated Debentures are to be redeemed in part, the
Company will not be required to issue, register the transfer of or exchange any
Junior Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of mailing of the notice of redemption for such
Junior Subordinated Debentures that may be selected for redemption and ending
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at the close of business on the day of such mailing. (Section 305).
Payment and Paying Agents
Payment of interest on a Junior Subordinated Debenture on any interest
payment date will be made to the person in whose name such Junior Subordinated
Debenture (or one or more predecessor Junior Subordinated Debentures) is
registered at the close of business on the regular record date for such
interest. (Section 307).
Principal of and any interest on the Junior Subordinated Debentures 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 securities register
or by wire transfer. The corporate trust office of the Debenture Trustee in the
City of Wilmington, Delaware is designated as the Company's initial sole Paying
Agent for payments with respect to the Junior Subordinated Debentures. 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. (Section 1002).
Supplemental Indentures, Modification of the Indenture
From time to time the Company and the Debenture Trustee may, without the
consent of the holders of the Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies, qualifying, or maintaining the
qualification of, the Indenture under the Trust Indenture Act, or making any
other change that does not adversely affect the rights of any holder of Junior
Subordinated Debentures. (Section 901). The Indenture will contain provisions
permitting the Company and the Debenture Trustee, with the consent of the
holders of not less than a majority in principal amount of the Junior
Subordinated Debentures, to modify the Indenture in a manner affecting the
rights of the holders of such Junior Subordinated Debentures; provided that no
such modification may, without the consent of the holder of each outstanding
Junior Subordinated Debenture so affected, (i) change the fixed maturity of the
Junior Subordinated Debentures, reduce the principal amount thereof, or reduce
the rate or extend the time for payment of interest thereon (otherwise than as
permitted under the Indenture), (ii) reduce the percentage of the principal
amount of Junior Subordinated Debentures, the holders of which are required to
consent to any such modification
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of the Indenture or (iii) modify certain provisions of the Indenture relating to
the waiver of past defaults or compliance by the Company with certain covenants
set forth therein. The Indenture also requires the consent of the holders of the
affected Preferred Securities, if any, in respect of certain amendments to or
termination of the Indenture and in respect to compliance by the Company with
certain covenants in the Indenture. (Section 902). In addition, the Company and
the Debenture Trustee may execute, without the consent of any holders of Junior
Subordinated Debentures, Supplemental Indentures for the purpose of creating new
series of Junior Subordinated Debentures. (Section 901).
Consolidation, Merger and Sale
The Company may not consolidate with, merge into, or convey, transfer or
lease its properties and assets substantially as an entirety to, any person (a
"Successor Person"), and may not permit any person to merge into, 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 United States jurisdiction and assumes the Company's obligations on the
Junior Subordinated Debentures, the Indenture, the Guarantee and the Expense
Agreement; (ii) immediately after giving effect to the transaction and treating
any indebtedness which becomes an obligation of the Company or any subsidiary as
a result of the transaction as having been incurred by it at the time of the
transaction, no Event of Default, and no event which, after notice or lapse of
time, would become an Event of Default, shall have occurred and be continuing;
(iii) such transaction does not give rise to any breach or violation of the
Trust Agreement or the Guarantee; and (iv) the Company has delivered to the
Debenture Trustee an Officers' Certificate and an Opinion of Counsel as to
certain matters. (Section 801).
Satisfaction and Discharge
Under the terms of the Indenture, the Company will be discharged from any
and all obligations in respect of the Junior Subordinated Debentures (except, in
each case, for certain obligations to register the transfer or exchange of such
Junior Subordinated Debentures, replace stolen, lost or mutilated Junior
Subordinated Debentures and hold moneys or U.S. Government Obligations (as
defined in the Indenture) for payment in trust) if the Company deposits with the
Debenture Trustee, in trust, moneys or U.S. Government Obligations in an amount
sufficient to pay all the principal of, and interest on, such Junior
Subordinated Debentures on the dates such payments are due in accordance with
the terms of such Junior Subordinated Debentures. (Section 401).
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Governing Law
The Indenture, any Supplemental Indenture and the Junior Subordinated
Debentures will be governed by, and construed in accordance with, the laws of
the State of New York. (Section 112).
Miscellaneous
The Company will have the right at all times to assign any of its rights or
obligations under the Indenture to a direct or indirect wholly-owned subsidiary
of the Company, provided that, in the event of any such assignment, the Company
will remain liable for such obligations. Subject to the foregoing, the Indenture
will be binding upon and inure to the benefit of the parties thereto and their
respective successors and assigns. (Section 109).
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
distributions and other payments due on the Preferred Securities because: (i)
the aggregate principal amount of the Junior Subordinated Debentures will be
equal to the sum of the aggregate stated Liquidation Amount of the Issuer
Securities; (ii) the interest rate and interest and other payment dates on the
Junior Subordinated Debentures will correspond to the distribution rate and
distribution and other payment dates on the Preferred Securities; (iii) the
Expense Agreement entered into by the Company pursuant to the Trust Agreement
provide that the Company shall pay for all, and the Issuer shall not be
obligated to pay, directly or indirectly, for any, costs, expenses or
liabilities of such Issuer, including any income taxes, duties and other
governmental charges, and all costs and expenses with respect thereto, to which
such Issuer may become subject, except for United States withholding taxes and
such Issuer's payment obligations to holders of the Preferred Securities under
such Preferred Securities; and (iv) the Trust Agreement further provides that
the Trustees shall not cause or permit the Issuer to, among other things, engage
in any activity that is not consistent with the limited purposes of the Issuer.
The Company's obligations under the Guarantee, the Trust Agreement, the Expense
Agreement, the Junior Subordinated Debentures and the Indenture constitute, in
the aggregate, a full and unconditional guarantee with respect to the Preferred
Securities.
-45-
Payments of distributions and other amounts due on Preferred Securities (to
the extent the Issuer has funds sufficient for the payment of such
distributions) are guaranteed by the Company as and to the extent set forth
under "Description of Guarantee." If and to the extent that the Company does not
make payments on the Junior Subordinated Debentures, the Issuer will not pay
distributions or other amounts due on the Preferred Securities.
A holder of a Preferred Security to which such Guarantee applies may
institute a legal proceeding directly against the Company to enforce such
holder's rights under such Guarantee without first instituting a legal
proceeding against the Issuer of such Preferred Security or any other person or
entity. In addition, if the Company defaults on its obligations under the
Indenture, the holders of at least 25% in the aggregate Liquidation Amount of
the Preferred Securities then outstanding shall have the right to enforce the
rights of the Issuer under the Junior Subordinated Debentures.
The Preferred Securities will evidence the rights of the holders thereof to
the benefits of the Issuer, a trust that exists for the sole purpose of issuing
its Issuer Securities and investing the proceeds of its Preferred Securities in
the corresponding Junior Subordinated Debentures of the Company, while the
Junior Subordinated Debentures represents indebtedness of the Company. A
principal difference between the rights of a holder of a Preferred Security and
a holder of a Junior Subordinated Debenture is that a holder of a Junior
Subordinated Debenture will accrue, and (subject to the permissible extensions
of the interest payment period) is entitled to receive, interest on the
principal amount of Junior Subordinated Debentures held, while a holder of
Preferred Securities is only entitled to receive distributions if and to the
extent the Issuer has funds sufficient for the payment of such distributions.
Upon any voluntary or involuntary dissolution, winding-up or termination of
the Issuer involving the distribution of Junior Subordinated Debentures, the
holders of Preferred Securities will be entitled to receive, out of assets
legally available for distribution to such holders, the Final Distribution or a
Liquidation Distribution; provided, however, that if an Event of Default under
the Trust Agreement shall have occurred and be continuing, the holders of the
Common Securities shall be entitled to receive, out of assets legally available
for distribution to such holders, distributions only after the holders of the
Preferred Securities. See "Description of the Preferred Securities --
Liquidation Distribution Upon Dissolution." Upon any voluntary or involuntary
liquidation or bankruptcy of the Company, the Issuer,
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as a holder of Junior Subordinated Debentures, would be a subordinated creditor
of the Company, subordinated in right of payment to all Senior Indebtedness, but
entitled to receive payment in full of principal and interest before any
stockholders of the Company receive any payments or distributions. Since the
Company has agreed to pay for all costs, expenses and liabilities of the Issuer
(other than United States withholding taxes and other than the Issuer's
obligations to the holders of Preferred Securities under the Preferred
Securities, which obligations are independently covered by the Guarantee), the
positions of a holder of Preferred Securities and a holder of Junior
Subordinated Debentures relative to other creditors and to stockholders of the
Company in the event of a liquidation or bankruptcy of the Company would be
substantially the same.
A default or event of default under any Senior Indebtedness will not
constitute a default or Event of Default under the Junior Subordinated
Debentures. However, in the event of payment defaults under, or acceleration of,
Senior Indebtedness, the subordination provisions of the Junior Subordinated
Debentures provide that no payments may be made in respect of the Junior
Subordinated Debentures until such Senior Indebtedness has been paid in full or
any payment default thereunder has been cured or waived.
Failure to make required payments on the Junior Subordinated Debentures
would constitute an Event of Default under the Indenture.
PLAN OF DISTRIBUTION
The Preferred Securities may be sold in a public offering to or through
underwriters or dealers designated from time to time. The Issuer may sell its
Preferred Securities as soon as practicable after the effectiveness of the
Registration Statement of which this Prospectus is a part. The names of any
underwriters or dealers involved in the sale of the Preferred Securities in
respect of which this Prospectus is delivered, the number of Preferred
Securities to be purchased by any such underwriters or dealers and the
applicable commissions or discounts will be set forth in the applicable
Prospectus Supplement.
Underwriters may offer and sell Preferred Securities at a fixed price or
prices, which may be changed, or from time to time 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 Preferred Securities,
underwriters will be deemed to have received compensation from the Company and
the Issuer in the form of underwriting discounts or commissions.
-47-
Underwriters may sell Preferred Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters.
Any underwriting compensation paid by the Company to underwriters in
connection with the offering of the Preferred Securities, and any discounts,
concessions or commissions allowed by such underwriters to participating
dealers, will be set forth in the applicable Prospectus Supplement. Underwriters
and dealers participating in the distribution of Preferred Securities may be
deemed to be underwriters, and any discounts and commissions received by them,
and any profit realized by them on resale of such Preferred Securities, may be
deemed to constitute underwriting discounts and commissions under the Securities
Act. Underwriters and dealers may be entitled, pursuant to their agreement with
the Company and the Issuer, to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act, and
to reimbursement by the Company for certain expenses.
In connection with the offering of the Preferred Securities, the Issuer
thereof may grant to the underwriters an option to purchase additional Preferred
Securities to cover over-allot- ments, if any, at the initial public offering
price (with an additional underwriting commission), as set forth in the
applicable Prospectus Supplement.
Underwriters and dealers may engage in transactions with, or perform
services for, the Company, the Issuer and any of their respective affiliates.
The Issuer's Preferred Securities will be a new issue of securities and
will have no established trading market. Any underwriters to whom the Issuer's
Preferred Securities are sold by such Issuer for public offering and sale may
make a market in such Preferred Securities, but such underwriters will not be
obligated to do so and may discontinue any market-making at any time without
notice. Such Preferred Securities may or may not be listed on a national
securities exchange. No assurance can be given as to the liquidity of or the
existence of meaningful trading markets for any Preferred Securities.
LEGAL OPINIONS
Certain legal matters in connection with the Preferred Securities are being
passed upon for the Company and the Issuer by Hinkle, Cox, Eaton, Coffield &
Hensley, L.L.P., Amarillo, Texas, and Cahill Gordon & Reindel, a partnership
including a
-48-
professional corporation, New York, New York, and for the Issuer by Richards,
Layton & Finger, special Delaware counsel to the Company and the Issuers. Cahill
Gordon & Reindel and Richards, Layton & Finger are not passing upon the
incorporation of the Company and are relying upon the opinions of Hinkle, Cox,
Eaton, Coffield & Hensley, L.L.P. as to matters of New Mexico and Texas law;
Rainey, Ross, Rice & Binns, Oklahoma City, Oklahoma as to matters of Oklahoma
law; and Foulston & Siefkin, Topeka, Kansas as to matters of Kansas law. Gary W.
Wolf, a partner in the law firm of Cahill Gordon & Reindel, is a director of the
Company.
EXPERTS
The consolidated financial statements of Southwestern Public Service
Company and subsidiaries as of August 31, 1995 and 1994 and for the years then
ended included in the Company's 1995 Form 10-K, which is incorporated herein by
reference, have been audited by Deloitte & Touche LLP ("Deloitte & Touche"),
independent certified public accountants, as stated in their report, which is
also 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 any unaudited interim financial information included in the
Company's quarterly reports on Form 10-Q that are or will be incorporated herein
by reference, Deloitte & Touche applies limited procedures in accordance with
professional standards for reviews of such information. As stated in any of its
reports that are included in the Company's quarterly reports on Form 10-Q that
are or will be incorporated herein by reference, Deloitte & Touche did not audit
and did not express an opinion on such interim financial information.
Accordingly, the degree of reliance on any of Deloitte & Touche's reports on
such information should be restricted in light of the limited nature of the
review procedures applied. Deloitte & Touche is not subject to the liability
provisions of Section 11 of the Securities Act for any of its reports on such
unaudited interim financial information because those reports are not "reports"
or a "part" of the Registration Statement filed under the Securities Act with
respect to the Preferred Securities or the Junior Subordinated Debentures
prepared or certified by an accountant within the meaning of Sections 7 and 11
of the Securities Act.
The consolidated financial statements of Southwestern Public Service
Company and subsidiaries for the year ended August 31, 1993 included in the
Company's 1995 Form 10-K, which is incorporated herein by reference, are
incorporated herein in reliance upon the report of KPMG Peat Marwick LLP,
independent
-49-
certified public accountants, included in the 1995 Form 10-K, and upon the
authority of that firm as experts in accounting and auditing.
To the extent that a firm of certified public accountants audits and
reports on the financial statements of the Company issued at future dates, and
consents to the use of their report thereon, such financial statements also will
be incorporated by reference herein in reliance upon their report and said
authority.
The statements and legal conclusions as to all matters of law in the
Company's 1995 Form 10-K, the November Quarterly Report, the February Quarterly
Report, the May Quarterly Report and this Prospectus (except as to matters of
Kansas and Oklahoma law and United States Federal income tax matters in such
documents) have been reviewed by Hinkle, Cox, Eaton, Coffield & Hensley, L.L.P.
Statements and legal conclusions as to matters of Oklahoma law in such documents
have been reviewed by Rainey, Ross, Rice & Binns. Statements and legal
conclusions as to matters of Kansas law in such documents have been reviewed by
Foulston & Siefkin. Statements and legal conclusions in the accompanying
Prospectus Supplement as to United States Federal income tax matters have been
reviewed by Cahill Gordon & Reindel. All such statements and legal conclusions
are set forth in such documents and incorporated by reference herein or set
forth herein in reliance upon said firms, respectively, as experts.
-50-
No dealer, salesman, or any other
person has been authorized to give 4,000,000
any information or to make any PREFERRED SECURITIES
representations other than those
contained in this Prospectus,
including any prospectus supplement
in connection with the offer contained
in this Prospectus, and, if
given or made, such information or SOUTHWESTERN PUBLIC
representations must not be relied SERVICE CAPITAL I
upon as having been authorized by
the Company or any underwriter, (Liquidation Amount
dealer, or agent. This Prospectus $25 per Preferred
does not constitute an offer to Security)
sell or a solicitation of an offer
to buy any of these securities in ___% Trust
any jurisdiction to any person to Preferred Securities,
whom it is unlawful to make such Series A
offer or solicitation in such juris-
diction. Neither the delivery of Fully and
this Prospectus nor any sale made Unconditionally
hereunder shall, under any circum- Guaranteed by
stances, create any implication
that there has been no change in SOUTHWESTERN PUBLIC
the affairs of the Company since SERVICE COMPANY
the date hereof.
---------------
TABLE OF CONTENTS
Prospectus Supplement
Page
Prospectus Summary.................. S-6
Risk Factors ....................... S-7
Southwestern Public Service
Capital I.......................... S-11
Recent Developments................. S-13
Use of Proceeds..................... S-14
Certain Terms of the
Preferred Securities ............. S-15
Certain Terms of the
Guarantee ........................ S-20
Certain Terms of the Junior
Subordinated Debentures .......... S-21
United States Taxation ............. S-23
Underwriting ....................... S-28
Prospectus
Available Information............... 3
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Incorporation of Certain
Documents by Reference............ 3
The Company......................... 4
The Issuer.......................... 5
Recent Developments................. 6
Use of Proceeds..................... 7
Earnings Ratios..................... 7
Description of Preferred
Securities........................ 8
Description of Guarantee............ 26
Description of Junior
Subordinated Debentures........... 29
Relationship Among the Preferred
Securities, the Junior
Subordinated Debentures
and the Guarantee................. 45
Plan of Distribution................ 47
Legal Opinions...................... 48 Dated , 1996
Experts............................. 49
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Set forth below is an estimate (except for the Securities and Exchange
Commission registration fee) of the fees and expenses payable by the Company in
connection with the distribution of the Preferred Securities.
Securities and Exchange Commission
Registration Fee ........................................ $ 34,482.76
Listing Fee ............................................... 50,000.00
Counsel Fees and Expenses ................................. 220,000.00
Services of Independent Accountants ....................... 40,000.00
Trustee's Fees and Expenses ............................... 25,000.00
Printing Expenses, including Engraving .................... 150,000.00
Rating Agency Fees ........................................ 100,000.00
Blue Sky Fees and Expenses ................................ 10,000.00
Miscellaneous Expenses .................................... 10,517.24
---------
Total ......................................... $ 640,000.00
--------------
Item 15. Idemnification of Directors and Officers.
Section 53-11-4.1 of the New Mexico Business Corporation Act (the "NMBCA")
empowers a corporation to indemnify any officer or director against judgments,
penalties, fines, settlements, and reasonable expenses actually incurred by the
person in connection with any threatened, pending, or completed action, suit, or
proceeding, whether civil, criminal, administrative, or investigative, if the
person acted in good faith and in a manner reasonably believed to be in or not
opposed to the best interests of the corporation, and with respect to a criminal
proceeding, had no reasonable cause to believe the person's conduct was
unlawful. This section empowers a corporation to maintain insurance or furnish
similar protection, including, but not limited to, providing a trust fund, a
letter of credit, or self-insurance, on behalf of any officer or director
against any liability asserted against the person in such capacity whether or
not the corporation would have the power to indemnify the person against such
liability under the provisions of this section.
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The indemnification authorized by Section 53-11-4.1 is not exclusive of any
other rights to which an officer or director may be entitled under the articles
of incorporation, the bylaws, an agreement, a resolution of shareholders or
directors or otherwise.
Article Sixth of the Restated Articles of Incorporation of the Company
provides that a director of the Company shall not be personally liable to the
Company or to the shareholders for monetary damages for a breach of fiduciary
duty as a director unless such director has breached or failed to perform the
duties of his or her office in accordance with the NMBCA, and the breach or
failure to perform constitutes negligence, willful misconduct, or recklessness.
Article IV of the Bylaws of the Company requires the Company, to the
fullest extent permitted by the NMBCA, to pay or reimburse expenses,
liabilities, and losses incurred by an officer or director involved in any
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative by reason of the fact that such person is or was serving as an
officer or director of the Company.
The Bylaws also require the Company to pay or reimburse all covered
expenses to an officer or director promptly upon receipt of a written claim and,
where the claimant seeks an advancement of expenses, an undertaking by or on
behalf of the person to repay such amounts if it should ultimately be determined
by a court of final jurisdiction that such person is not entitled to
indemnification.
The Company has entered into indemnity agreements with each officer and
director of the Company. These contracts provide for the advancement of expenses
(including attorneys' fees) incurred or to be incurred by an officer or director
in connection with a proceeding. The contracts also provide for indemnification
of such persons against expenses, liabilities, and losses.
Pursuant to each director's indemnity agreement, the Company keeps in
effect a letter of credit in the face amount of $5,000,000 obtained from a
commercial bank for the benefit of all directors who are a party to an indemnity
agreement. A director who has incurred or may incur expenses in connection with
a proceeding prior to the final disposition of such a proceeding for any reason
may request an independent trustee to draw upon the letter of credit for the
payment or advancement
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of such expenses. Upon such request, the trustee will draw upon the letter of
credit and deliver such funds to such director.
The Company is insured up to $25,000,000 against loss in excess of $200,000
because of any claim made against the Company or its officers or directors and
alleged to have been caused by any negligent act, error, omission, or breach of
duty by its officers or directors. The insurance is subject to certain
exclusions.
Item 16. Exhibits.
Reference is made to the Exhibit Index filed as part of this Registration
Statement.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; notwithstanding the foregoing, any increase or
decrease in volume of securities being offered (if the total dollar value
of securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement;
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(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 (the "1934 Act") that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such
II-4
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Southwestern Public Service Company, the Registrant, certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing
on Form S-3 and has duly caused this Amendment No. 1 to the Registration
Statement to be signed on its behalf by the undersigned, there- under duly
authorized, in the City of Amarillo, and the State of Texas, on the 12th day of
August, 1996.
SOUTHWESTERN PUBLIC SERVICE COMPANY
(Registrant)
By: *
--------------------------------
Bill D. Helton
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Principal Executive and Chairman of the August 12, 1996
Financial Officer and Board and Chief
Director: Executive Officer
*
- -----------------------------
Bill D. Helton
Principal Accounting Officer: Executive Vice August 12, 1996
President,
Accounting and
Corporate
Development
/s/ Doyle R. Bunch II
- -----------------------------
Doyle R. Bunch II
Directors:
Gene H. Bishop* )
C. Coney Burgess* )
J. C. Chambers* )
Danny H. Conklin* )
Giles M. Forbess* ) Directors August 12, 1996
R. R. Hemminghaus* )
Don Maddox* )
J. Howard Mock* )
Shirley Bird Perry* )
David M. Wilks* )
Gary W. Wolf* )
*The undersigned, by signing his name hereto, does sign and execute this
Amendment No. 1 to the Registration Statement pursuant to the Powers of Attorney
executed by the above-named officers and directors of the Company and which are
being filed herewith with the Securities and Exchange Commission on behalf of
such officers and directors.
By: /s/ Doyle R. Bunch II
--------------------------
Doyle R. Bunch II
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, as amended,
Southwestern Public Service Capital I, the Registrant, certifies that it has
reasonable grounds to believe that it meets all of the requirements for filing
on Form S-3 and has duly caused this Amendment No. 1 to the Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Amarillo, and the State of Texas, on the 12th day of
August, 1996.
SOUTHWESTERN PUBLIC SERVICE
CAPITAL I
(Registrant)
By: /s/David M. Wilks
----------------------------
David M. Wilks,
President and Chief
Operating Officer of
Southwestern Public
Service Company,
as Depositor
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- ------ -------
** 1(a) - Form of Underwriting Agreement relating to the
Preferred Securities.
** 4(a) - Form of Indenture.
** 4(b) - Form of Supplemental Indenture.
4(c) - Form of Debenture (included in Exhibit 4(b)).
4(d) - Form of Preferred Security (included as
Exhibit G to Exhibit 4(h)).
** 4(e) - Form of Guarantee Agreement.
* 4(f) - Certificate of Trust for Southwestern Public
Service Capital I.
* 4(g) - Trust Agreement for Southwestern Public Service
Capital I.
** 4(h) - Form of Amended and Restated Trust Agreement.
** 5(a) - Opinion of Hinckle, Cox, Eaton, Coffield &
Hensley, L.L.P. relating to the legality of the
Debentures and the Guarantee.
** 5(b) - Opinion of Richards, Layton & Finger, special Delaware
counsel, relating to the legality of the Preferred Securities of
Southwestern Public
Service Capital I.
** 8 - Opinion of Cahill Gordon & Reindel, as to tax
matters.
10 - Form of Expense Agreement (included as
Exhibit F in Exhibit 4(h)).
12 - Statements re Computation of Ratios of Earnings
to Fixed Charges (incorporated by reference to
exhibit 12 Form 10-K for 1995 and exhibit 12
Form 10-Q for quarter ended May 31, 1996).
** 15 - Letter re Unaudited Interim Financial
Information.
**23(a) - Consent of Hinkle, Cox, Eaton, Coffield &
Hensley, L.L.P. (included in Exhibit 5(a)).
**23(b) - Consent of Richards, Layton & Finger (included in Exhibit 5(b)).
**23(c) - Consent of Cahill Gordon & Reindel (included in Exhibit 8).
**23(d) - Consent of Foulston & Siefkin.
**23(e) - Consent of Rainey, Ross, Rice & Binns.
* 23(f) - Consent of Deloitte & Touche LLP, independent
certified public accountants.
* 23(g) - Consent of KPMG Peat Marwick LLP, independent
certified public accountants.
* 24 - Powers of Attorney.
Exhibit
Number Exhibit
- ------ -------
**25(a) - Statement of Eligibility under the Trust Indenture Act of 1939
(on Form T-1) of Debenture Trustee.
**25(b) - Statement of Eligibility under the Trust Indenture Act of 1939
(on Form T-1) of Property Trustee.
**25(c) - Statement of Eligibility under the Trust Indenture Act of 1939
(on Form T-1) of Guarantee Trustee.
- --------------------
* Previously filed.
** Filed herewith.
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