<PAGE>
As filed with the Securities and Exchange Commission on January 4, 2000
Registration Nos. 333-92283
333-92283-01
333-92283-02
333-92283-03
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO. 1
To
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Duke Capital Delaware 56-0282142
Corporation Delaware 62-6349496
Duke Capital Delaware 62-6349495
Financing Trust IV Delaware 52-7011988
Duke Capital (State or other jurisdiction of (I.R.S. Employer
Financing Trust V incorporation or organization) Identification
Duke Capital 526 South Church Street Nos.)
Financing Trust VI Charlotte, North Carolina 28202
(Exact name of each 704-594-6200
registrant as
specified in its
charter)
(Address, including zip code, and telephone number,
including area code, of each registrant's principal executive offices)
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RICHARD J. OSBORNE JOHN SPUCHES
Vice President and Chief Dewey Ballantine LLP
Financial Officer 1301 Avenue of the Americas
526 South Church Street New York, New York 10019
Charlotte, North Carolina 28202 Telephone No. 212-259-7700
Telephone No. 704-382-5159
(Names, addresses, including zip codes, and telephone numbers, including area
codes, of agents for service of each registrant)
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Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed Maximum
Amount Offering Price Proposed Maximum
Title of Each Class of to be Per Aggregate Offering Amount of
Securities to be Registered Registered(1) Unit(1)(2)(3) Price(1)(2)(3)(4) Registration Fee(1)(4)
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<S> <C> <C> <C> <C>
Duke Capital Financing Trust IV Trust
Preferred Securities................
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Duke Capital Financing Trust V Trust
Preferred Securities................
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Duke Capital Financing Trust VI Trust
Preferred Securities................
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Duke Capital Corporation Senior
Notes...............................
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Duke Capital Corporation Junior
Subordinated Notes .................
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Duke Capital Corporation Guarantees
with respect to Trust Preferred
Securities of Duke Capital Financing
Trust IV, Duke Capital Financing
Trust V and Duke Capital Financing
Trust VI (5)(6).....................
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Total................................ $2,000,000,000 100% $2,000,000,000 $396,000
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(1) Registered hereunder are a currently indeterminate number of Trust
Preferred Securities of Duke Capital Financing Trust IV, Duke Capital
Financing Trust V and Duke Capital Financing Trust VI and a currently
indeterminate principal amount of Senior Notes and Junior Subordinated
Notes of Duke Capital Corporation with an aggregate initial offering price
not to exceed $2,000,000,000. Junior Subordinated Notes also may be issued
to Duke Capital Financing Trust IV, Duke Capital Financing Trust V or Duke
Capital Financing Trust VI and later distributed upon dissolution and
distribution of the assets thereof, which would include such Junior
Subordinated Notes for which no separate consideration will be received.
Pursuant to Rule 457(o) under the Securities Act of 1933, which permits
the registration fee to be calculated on the basis of the maximum offering
price of all the securities listed, the table does not specify by each
class information as to the amount to be registered, proposed maximum
offering price per unit or proposed maximum aggregate offering price.
(2) Estimated solely for the purpose of determining the registration fee.
(3) Exclusive of accrued interest and distributions, if any.
(4) A registration fee in the amount of $396,000 has previously been paid.
(5) No separate consideration will be received for the Duke Capital
Corporation Guarantees. Pursuant to Rule 457(n) under the Securities Act
of 1933, no separate fee is payable in respect of the Duke Capital
Corporation Guarantees.
(6) Includes the obligations of Duke Capital Corporation under the respective
Trust Agreements, the Subordinated Indenture, the related series of Junior
Subordinated Notes, the respective Guarantees and the respective
Agreements as to Expenses and Liabilities, which include Duke Capital
Corporation's covenant to pay any indebtedness, expenses or liabilities of
the Trusts (other than obligations pursuant to the terms of the Trust
Preferred Securities or other similar interests), all as described in this
registration statement.
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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 Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
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</TABLE>
<PAGE>
EXPLANATORY NOTE
This Registration Statement includes a prospectus and two forms of prospectus
supplement. The first is a form of prospectus supplement that may be used in
connection with issuances from time to time of Trust Preferred Securities. The
second is a form of prospectus supplement that may be used in connection with
issuances from time to time of Senior Notes.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this Prospectus is not complete and may be changed. We may +
+not sell the Preferred Securities until the registration statement filed with +
+the Securities and Exchange Commission is effective. This Prospectus is not +
+an offer to sell the Preferred Securities and it is not soliciting an offer +
+to buy the Preferred Securities in any state where the offer or sale of the +
+Preferred Securities is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS SUPPLEMENT
(To Prospectus dated January , 2000)
Subject to Completion dated January 4, 2000
[ ] Preferred Securities
Duke Capital Financing Trust [ ]
% Trust Preferred Securities
(Liquidation amount $ per Preferred Security)
Guaranteed, to the extent described herein, by
Duke Capital Corporation
a subsidiary of Duke Energy Corporation
-----------
A brief description of the % Trust Preferred Securities can be found
under "Summary of Offering" in this Prospectus Supplement.
You should carefully read "Risk Factors" beginning on page S-9 to learn
about specific risks associated with the Preferred Securities, as well as the
other information in this Prospectus Supplement and the accompanying Prospectus,
before you make your investment decision.
Duke Capital intends to list the Preferred Securities on the New York Stock
Exchange under the symbol " ". Duke Capital expects trading in the Preferred
Securities to begin on the New York Stock Exchange within 30 days after the
original issue date.
-----------
<TABLE>
<CAPTION>
Per Preferred Security Total
----------------------- -------
<S> <C> <C>
Initial Public Offering Price...................
Underwriting Discounts and Commissions.......... (1) (1)
Proceeds, before expenses, to the Trust.........
</TABLE>
- -----
(1)Underwriting commissions of $ per Preferred Security (or $ in the
aggregate) will be paid by Duke Capital.
-----------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus Supplement or the accompanying
Prospectus. Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the Preferred Securities on or about
, .
-----------
[Names of Underwriters]
-----------
Prospectus Supplement dated , .
<PAGE>
You should rely only on the information contained or incorporated by
reference in this Prospectus Supplement and the accompanying Prospectus. None
of Duke Capital, the Trust or the Underwriters has authorized any other person
to provide you with different information. If anyone provides you with
different or inconsistent information, you should not rely on it. If this
Prospectus Supplement is inconsistent with the accompanying Prospectus, you
should rely on this Prospectus Supplement. None of Duke Capital, the Trust or
the Underwriters is making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information in this Prospectus Supplement and the accompanying Prospectus
is accurate only as of the respective dates on the front of those documents or
earlier dates specified therein. Duke Capital's business, financial condition,
results of operations and prospects may have changed since those dates.
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Forward-Looking Statements................................................ S-3
Summary of Offering....................................................... S-4
Risk Factors.............................................................. S-9
Duke Capital Financing Trust [ ].......................................... S-13
Description of the Preferred Securities................................... S-14
Description of the Series Junior Subordinated Notes..................... S-27
Relationship Among the Preferred Securities, the Series Junior
Subordinated Notes and the Guarantee..................................... S-31
Material Federal Income Tax Considerations................................ S-33
Underwriting.............................................................. S-35
Validity of the Securities................................................ S-36
Prospectus
About This Prospectus..................................................... 2
Where You Can Find More Information....................................... 2
Duke Capital Corporation.................................................. 3
Use of Proceeds........................................................... 6
The Trusts................................................................ 6
Description of the Senior Notes........................................... 7
Description of the Junior Subordinated Notes.............................. 17
Description of the Preferred Securities................................... 26
Description of the Guarantees............................................. 27
Accounting Treatment...................................................... 30
Plan of Distribution...................................................... 30
Experts................................................................... 31
Validity of the Securities................................................ 31
</TABLE>
S-2
<PAGE>
FORWARD-LOOKING STATEMENTS
This Prospectus Supplement and the accompanying Prospectus contain or
incorporate by reference statements that do not directly or exclusively relate
to historical facts. Such statements are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. You can
typically identify forward-looking statements because they include or are
preceded by forward-looking words, such as "may," "will," "could," "project,"
"believe," "anticipate," "expect," "estimate," "continue," "potential," "plan,"
"forecast" and the like. Those statements represent Duke Capital's intentions,
plans, expectations, assumptions and beliefs about future events and are
subject to risks, uncertainties and other factors. Many of those factors are
outside Duke Capital's control and could cause actual results to differ
materially from the results expressed or implied by those forward-looking
statements. Some of the factors that could cause such differences are:
. state, federal and foreign legislative and regulatory initiatives that
affect cost and investment recovery, have an impact on rate structures
and affect the speed at and degree to which competition enters the
natural gas industry;
. industrial, commercial and residential growth in the service
territories of Duke Capital's subsidiaries;
. the weather and other natural phenomena;
. the timing and extent of changes in commodity prices, interest rates
and foreign currency exchange rates;
. changes in environmental and other laws and regulations to which Duke
Capital and its subsidiaries are subject or other external factors
over which Duke Capital has no control;
. the results of financing efforts, including Duke Capital's ability to
obtain financing on favorable terms, which can be affected by various
factors, including its credit ratings and general economic conditions;
. growth in opportunities for Duke Capital's subsidiaries;
. achievement of Year 2000 readiness by Duke Capital, its subsidiaries
and the customers and suppliers of those subsidiaries; and
. the effect of accounting policies issued periodically by accounting
standard-setting bodies.
In light of these risks, uncertainties and assumptions, the forward-
looking events referred to in this Prospectus Supplement and the accompanying
Prospectus might not occur. Neither Duke Capital nor the Underwriters undertake
any obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
S-3
<PAGE>
SUMMARY OF OFFERING
This summary highlights information appearing elsewhere in this Prospectus
Supplement and in the accompanying Prospectus. This summary does not contain
all the information you should consider before investing in the Preferred
Securities. You should pay special attention to the Risk Factors section of
this Prospectus Supplement to determine whether an investment in the Preferred
Securities is appropriate for you.
Duke Capital Corporation............ Duke Capital Corporation, a wholly owned
subsidiary of Duke Energy Corporation,
is the parent company of a number of
affiliates of Duke Energy. The
subsidiaries of Duke Capital are
primarily engaged in the interstate
transportation and storage of natural
gas, in the gathering, processing,
marketing and intrastate transportation
and storage of natural gas, natural gas
liquids and crude oil, in natural gas
and electric power marketing, in the
acquisition, development and operation
of independent power production
facilities worldwide, in risk management
services and in engineering consulting,
construction and other related energy
services.
The principal executive offices of Duke
Capital are located at 526 South Church
Street, Charlotte, NC 28202 (telephone
(704) 594-6200).
The Trust........................... Duke Capital Financing Trust [ ] is a
statutory business trust created solely
for the purposes of (1) issuing the
Preferred Securities to the public, (2)
issuing the Common Securities to Duke
Capital and (3) using the proceeds from
the issuance of the Preferred Securities
and the Common Securities to purchase
Duke Capital's Series Junior
Subordinated Notes due , .
Preferred Securities Offered........ % Trust Preferred Securities.
Distributions; Distribution Dates... Holders of the Preferred Securities are
entitled to receive cumulative cash
distributions at a yearly rate of % of
the liquidation amount of those
Preferred Securities. Distributions will
accrue
S-4
<PAGE>
from the original issue date.
Distributions will be payable quarterly,
except during extension periods, on
March 31, June 30, September 30 and
December 31 of each year, commencing on
, .
The distribution dates will correspond
to the interest payment dates on the
Series Junior Subordinated Notes and
the rate at which distributions will be
paid on the Preferred Securities will
correspond to the interest rate on the
Series Junior Subordinated Notes. If
Duke Capital does not pay principal or
interest on the Series Junior
Subordinated Notes, no amounts will be
paid on the Preferred Securities.
Record Dates........................ The close of business on the 15th
calendar day before the relevant
distribution date.
Series Junior Subordinated
Notes............................... Duke Capital will issue $ of
Series Junior Subordinated Notes under
its Subordinated Indenture. The Trust
will use the proceeds from the sale of
the Preferred Securities to purchase
$ of Series Junior
Subordinated Notes, and the Trust will
use the proceeds from the sale of the
Common Securities to purchase $
of Series Junior Subordinated Notes.
The Series Junior Subordinated Notes
will be unsecured subordinated
obligations of Duke Capital.
Deferral of Distributions;
Extension Periods................... Duke Capital has the right to defer
payments of interest on the Series
Junior Subordinated Notes by extending
the interest payment period on the
Series Junior Subordinated Notes, at
any time and as often as it wishes, for
up to consecutive quarters (each, an
"extension period") but not beyond the
maturity date of the Series Junior
Subordinated Notes. If Duke Capital
defers payments of interest on the
Series Junior Subordinated Notes,
distributions on the Preferred
Securities will also be deferred.
Deferred interest will bear interest at
a yearly rate of %, compounded
quarterly, to the date of payment, to
the extent legally permitted.
S-5
<PAGE>
Payments of deferred interest, and any
interest on deferred interest, on the
Series Junior Subordinated Notes will
be passed through to the holders of the
Preferred Securities.
The only restrictions on Duke Capital's
ability to defer payments of interest
are that during an extension period Duke
Capital may not, with certain
exceptions, (1) pay dividends on, or
redeem or otherwise purchase, any of its
capital stock or (2) pay principal or
interest on, or redeem or otherwise
purchase, any of its debt securities
ranking equal in priority with or
subordinate to the Series Junior
Subordinated Notes.
During an extension period, holders of
Preferred Securities will recognize
interest income for United States
federal income tax purposes before the
receipt of the cash payments of those
deferred distributions even if the
holder is a cash basis taxpayer.
Redemption; Special Event
Redemption.......................... The Trust will redeem the Preferred
Securities when Duke Capital repays the
Series Junior Subordinated Notes at
maturity or upon earlier redemption.
Duke Capital will have the right to
redeem the Series Junior Subordinated
Notes at any time, in whole or in part,
on or after , . Duke Capital
also will have the right to redeem the
Series Junior Subordinated Notes at
any time, in whole but not in part,
during the 90 days after the occurrence
of a Special Event (see below).
Redemption Price.................... If the Preferred Securities are redeemed
or the Trust is terminated without
distribution of the Series Junior
Subordinated Notes, each holder of a
Preferred Security will be entitled to
receive a liquidation amount of $ per
Preferred Security plus accrued and
unpaid distributions (including any
interest on those distributions) to the
date of payment.
S-6
<PAGE>
Special Event....................... A "Special Event" means a Tax Event or an
Investment Company Act Event.
A "Tax Event" means that because of
changes in certain tax laws or
regulations, or in how they are
interpreted or applied, there is more
than an insubstantial risk that (1) the
Trust would be subject to United States
federal income tax with respect to
income accrued or received on the Series
Junior Subordinated Notes, (2)
interest payable on the Series Junior
Subordinated Notes would not be
deductible by Duke Capital for United
States federal income tax purposes or
(3) the Trust would be subject to more
than a de minimis amount of other taxes,
duties or other governmental charges.
An "Investment Company Act Event" means
that because of changes in certain laws
or regulations, or in how they are
interpreted or applied, there is more
than an insubstantial risk that the
Trust is or will be considered an
"investment company" under the
Investment Company Act of 1940.
Termination of Trust................ Duke Capital will have the right to
terminate the Trust at any time and
cause the Property Trustee to distribute
$ of the Series Junior
Subordinated Notes pro rata to the
holders of the Preferred Securities in
exchange for their Preferred Securities.
This right is optional and wholly in
Duke Capital's discretion.
Ranking of Series Junior
Subordinated Notes.................. The Series Junior Subordinated Notes
will be subordinate and junior in right
of payment to all indebtedness for
borrowed money and other obligations of
Duke Capital included in the definition
of Senior Indebtedness. See "Description
of the Junior Subordinated Notes--
Subordination" in the accompanying
Prospectus for a description of Senior
Indebtedness.
S-7
<PAGE>
Guarantee........................... Duke Capital will fully and
unconditionally guarantee the payment of
distributions and other payments by the
Trust on the Preferred Securities, but
only to the extent that the Trust has
funds legally and immediately available
to make those distributions and
payments.
Ranking of Guarantee................ Duke Capital's obligations under the
Guarantee will be subordinate and junior
in right of payment to all of Duke
Capital's other liabilities, other than
similar guarantees. The Guarantee will
rank equal in priority with Duke
Capital's most senior preferred stock
and with similar guarantees.
Book-Entry Issuance................. The Preferred Securities will be
represented by a global certificate or
certificates deposited with and
registered in the name of The Depository
Trust Company, New York, New York or its
nominee. This means that investors will
not receive certificates for their
Preferred Securities.
Listing ............................ Duke Capital intends to list the
Preferred Securities on the New York
Stock Exchange under the symbol " "
and expects that trading in the
Preferred Securities on the New York
Stock Exchange will begin within 30 days
after the original issue date.
The Trustees........................ The Chase Manhattan Bank will act as
Property Trustee of the Trust. Two of
Duke Capital's officers will act as the
Administrative Trustees of the Trust.
Chase Manhattan Bank Delaware will be
the Delaware Trustee of the Trust. The
Chase Manhattan Bank also serves as the
Indenture Trustee--the trustee under
Duke Capital's Subordinated Indenture
under which the Series Junior
Subordinated Notes will be issued--and
will act as the Guarantee Trustee--the
trustee under the Guarantee. The Chase
Manhattan Bank is also the Trustee under
Duke Capital's Senior Indenture. The
Property Trustee, Delaware Trustee and
Administrative Trustees together are
sometimes referred to as the "Securities
Trustees" in this Prospectus Supplement.
S-8
<PAGE>
RISK FACTORS
An investment in the Preferred Securities involves a number of risks.
Some of the risks relate to the terms of the Preferred Securities and the
Series Junior Subordinated Notes. Other risks relate to Duke Capital or the
Trust. You should carefully read and consider the following risk factors, as
well as the other information contained in this Prospectus Supplement and the
accompanying Prospectus, before you buy any Preferred Securities.
Payments on the Preferred Securities Depend upon Payments on the Series
Junior Subordinated Notes by Duke Capital
The only source of funds for payments on the Preferred Securities will be
the payments that Duke Capital makes on the Series Junior Subordinated Notes.
If Duke Capital fails to make timely payments on the Series Junior
Subordinated Notes, the Trust will not have sufficient funds for distributions
or other payments on the Preferred Securities.
Rights under the Guarantee Are Limited
If the Trust does not have sufficient funds legally and immediately
available to pay distributions or other payments on the Preferred Securities,
the holders of the Preferred Securities will not be able to rely upon the
Guarantee for payment of those distributions or other payments.
The Guarantee Ranks Subordinate to Many of Duke Capital's Other Obligations
Duke Capital's obligations under the Guarantee will rank:
. subordinate and junior in right of payment to all of Duke Capital's
other liabilities, other than obligations or liabilities that rank
equal in priority or subordinate by their terms;
. equal in priority with the most senior preferred stock that may be
issued by Duke Capital and similar guarantees; and
. senior to Duke Capital's common stock.
The Series Junior Subordinated Notes Rank Subordinate to Many of Duke
Capital's Other Obligations
Duke Capital's obligations under the Series Junior Subordinated Notes
will rank subordinate and junior in right of payment to all of Duke Capital's
Senior Indebtedness. As of , , Duke Capital's Senior Indebtedness
totaled approximately $ . For a description of Duke Capital's Senior
Indebtedness, see "Description of the Junior Subordinated Notes--Subordination"
in the accompanying Prospectus.
The Preferred Securities, the Series Junior Subordinated Notes and the
Guarantee do not limit Duke Capital's ability to incur additional Senior
Indebtedness or other indebtedness.
The Series Junior Subordinated Notes Are Subject to Structural Subordination
Duke Capital conducts its business through subsidiaries. Accordingly,
Duke Capital's ability to meet its obligations under the Series Junior
Subordinated Notes is dependent on the earnings and cash flows of those
subsidiaries and the ability of those subsidiaries to pay dividends or to
S-9
<PAGE>
advance or repay funds to Duke Capital. In addition, the rights that Duke
Capital and its creditors would have to participate in the assets of any such
subsidiary upon the subsidiary's liquidation or recapitalization will be
subject to the prior claims of the subsidiary's creditors. Certain subsidiaries
of Duke Capital have incurred substantial amounts of debt in the expansion of
their businesses and Duke Capital anticipates that certain of its subsidiaries
will do so in the future.
Duke Capital Has the Option to Defer Interest Payments on the Series Junior
Subordinated Notes Which Would Cause a Deferral of Distributions on the
Preferred Securities--During an Extension Period Interest and Distributions
Would Accrue but They Would Not be Paid to Holders of the Series Junior
Subordinated Notes or the Preferred Securities
Duke Capital will have the right, at any time and from time to time, to
defer interest payments on the Series Junior Subordinated Notes for up to
consecutive quarters, but not beyond the maturity date of the Series Junior
Subordinated Notes. Any such deferral period is called an "extension period" in
this Prospectus Supplement. During an extension period distributions on the
Preferred Securities will also be deferred.
Duke Capital will pay interest on any deferred interest on the Series
Junior Subordinated Notes at a yearly rate of %, compounded quarterly, to the
date of payment, to the extent legally permitted. Payments of deferred
interest, together with any interest on those payments, will be passed through
to the holders of the Preferred Securities.
If Duke Capital defers interest payments, each holder of Preferred
Securities, or of Series Junior Subordinated Notes, will recognize income as
original issue discount for federal income tax purposes before the holder is
paid deferred distributions. This will be so even if the holder is a cash basis
taxpayer. A holder of Preferred Securities, or of Series Junior Subordinated
Notes, will not receive cash related to that income if the holder disposes of
the Preferred Securities, or the Series Junior Subordinated Notes, before the
record date for the payment of such amounts. Investors should consult their own
tax advisors with respect to these and other tax consequences of an investment
in the Preferred Securities.
Duke Capital Has the Option to Redeem the Series Junior Subordinated Notes if
a Special Event Occurs
Duke Capital will have the option to redeem the Series Junior
Subordinated Notes in whole at any time during the 90 days after the occurrence
of a Special Event. If Duke Capital redeems the Series Junior Subordinated
Notes after the occurrence of a Special Event, the Trust will redeem the
Preferred Securities.
Duke Capital Has the Option to Terminate the Trust and Distribute the Series
Junior Subordinated Notes
Duke Capital will have the right to terminate the Trust at any time and
cause the Series Junior Subordinated Notes to be distributed to the holders
of the Preferred Securities in liquidation of the Trust.
S-10
<PAGE>
There can be no assurance as to the market price for the Series Junior
Subordinated Notes if a termination and liquidation of the Trust occurs and
Series Junior Subordinated Notes are distributed in exchange for Preferred
Securities. The Series Junior Subordinated Notes that the investor would
receive may trade at less than the price that the investor paid to purchase the
Preferred Securities and/or less than the market price of the Preferred
Securities before the exchange.
Holders of Preferred Securities Will Have Limited Voting Rights
Holders of Preferred Securities will have limited voting rights. See
"Description of the Preferred Securities--Voting Rights" for additional
information.
In general, holders of Preferred Securities will not be entitled to vote
to appoint, remove or replace any of the Securities Trustees. Duke Capital, as
the holder of the Common Securities, generally has that right. However, the
holders of the Preferred Securities will have the right to appoint a substitute
Property Trustee or Delaware Trustee if an event of default with respect to the
Series Junior Subordinated Notes occurs and is continuing.
Trading Characteristics of Preferred Securities; No Previous Public Market for
the Preferred Securities
Duke Capital expects to list the Preferred Securities on the New York
Stock Exchange. The Preferred Securities are expected to trade at a price that
takes into account the value, if any, of accrued but unpaid distributions.
Accordingly, purchasers will not pay and sellers will not receive accrued and
unpaid interest with respect to Preferred Securities that is not included in
the trading price of the Preferred Securities.
If a holder disposes of Preferred Securities prior to the occurrence of
an extension period, any portion of the amount received that is attributable to
accrued interest will be treated as interest income for tax purposes and will
not be treated as part of the amount realized for purposes of determining gain
or loss on the disposition of the Preferred Securities. If an extension period
occurs, interest on the Series Junior Subordinated Notes will be included in
the income of holders of Preferred Securities as it accrues rather than when it
is paid. If an extension period occurs, a holder that disposes of its Preferred
Securities between record dates for payments of distributions will be required
to include in income as original issue discount accrued but unpaid interest on
the Series Junior Subordinated Notes through the date of disposition and to
add that amount to the holder's adjusted tax basis in the related Series
Junior Subordinated Notes that are regarded as having been disposed of by that
holder. A holder generally will recognize a capital loss to the extent the
selling price is less than the holder's adjusted tax basis. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for federal income tax purposes.
No public market for the Preferred Securities existed before this
offering. There can be no assurance that an active public market for the
Preferred Securities will develop. If an active trading market for the
Preferred Securities does develop, there can be no assurance that it will be
sustained after this offering.
S-11
<PAGE>
An Investment in the Trust Involves Risks Parallel to Those of an Investment in
Duke Capital
An investment in the Trust, like an investment in Duke Capital, will
involve risks associated with Duke Capital's operating conditions and will be
affected by the competitive factors, economic conditions, industry conditions
and equity market conditions to which Duke Capital is subject.
Consequences of a Highly Leveraged Transaction
The Subordinated Indenture does not contain provisions that will protect
holders of the Series Junior Subordinated Notes if Duke Capital engages in a
highly leveraged transaction. The Trust Agreement does not contain provisions
that will protect holders of Preferred Securities under those circumstances.
S-12
<PAGE>
DUKE CAPITAL FINANCING TRUST [ ]
Duke Capital created the Trust as a statutory business trust under
Delaware law. The Trust's business is defined in a trust agreement executed by
Duke Capital, as depositor, and the Delaware Trustee. That trust agreement will
be amended when the Preferred Securities are issued. The amended trust
agreement will be in substantially the form filed as an exhibit to the
Registration Statement of which this Prospectus Supplement and the accompanying
Prospectus are a part. The amended trust agreement is called the "Trust
Agreement" in this Prospectus Supplement.
The Trust exists for the purposes of (1) issuing the Preferred Securities
to the public, (2) issuing the Common Securities to Duke Capital and (3) using
the proceeds from the issuance of the Preferred Securities and the Common
Securities to purchase the Series Junior Subordinated Notes. The Trust may
engage in only those other activities as are necessary, appropriate, convenient
or incidental to those purposes. The Preferred Securities and the Common
Securities together are sometimes called the "Trust Securities" in this
Prospectus Supplement.
The Trust has a term of approximately years from its creation, but may
terminate earlier as provided in the Trust Agreement.
The Securities Trustees--the Administrative Trustees, the Property
Trustee and the Delaware Trustee--will conduct the Trust's business and
affairs. Duke Capital, as the holder of the Common Securities, will appoint the
Securities Trustees. Two of Duke Capital's officers initially will serve as
Administrative Trustees. The Chase Manhattan Bank will serve as Property
Trustee. Chase Manhattan Bank Delaware will serve as Delaware Trustee. Duke
Capital, as the holder of all the Common Securities, will have the right to
appoint, remove or replace any of the Securities Trustees, subject to the right
of the holders of a majority of the Preferred Securities to appoint a
substitute Property Trustee and Delaware Trustee if an event of default with
respect to the Series Junior Subordinated Notes occurs.
The Property Trustee will hold legal title to the Series Junior
Subordinated Notes for the benefit of the Trust and the holders of the Trust
Securities. The Property Trustee will have the power, with certain exceptions,
to exercise all rights, powers and privileges under the Subordinated Indenture
as the holder of the Series Junior Subordinated Notes.
The Series Junior Subordinated Notes will constitute substantially all
the assets of the Trust. Other assets that may constitute "Trust Property"
include any cash on deposit in, or owing to, the payment account established
under the Trust Agreement. Trust Property will also include any other property
or assets that the Property Trustee holds under the Trust Agreement. The Trust
may from time to time receive cash from Duke Capital under the Agreement as to
Expenses and Liabilities between Duke Capital and the Trust.
The Trust's office address in the State of Delaware is c/o Chase
Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware 19801. The
principal place of business of the Trust will be c/o Duke Capital Corporation,
526 South Church Street, Charlotte, North Carolina 28202 (telephone (704) 594-
6200).
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DESCRIPTION OF THE PREFERRED SECURITIES
The following description of the Preferred Securities is only a summary
and is not intended to be comprehensive. For additional information you should
refer to the Trust Agreement. The form of the Trust Agreement is an exhibit to
the Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus are a part.
General
The Trust Agreement authorizes the Administrative Trustees to issue the
Preferred Securities and the Common Securities on behalf of the Trust. The
Preferred Securities represent preferred undivided beneficial interests in the
assets of the Trust. The Common Securities represent common undivided
beneficial interests in the assets of the Trust. The Trust Agreement does not
permit the Trust to issue any other securities or to incur any indebtedness for
borrowed money.
The Preferred Securities will have an aggregate liquidation amount equal
to approximately 97% of the total capital of the Trust. The Common Securities
will have an aggregate liquidation amount equal to approximately 3% of the
total capital of the Trust.
Duke Capital will own all the Common Securities.
In general, the Preferred Securities will rank equal in priority with the
Common Securities, and the Trust will make payments on the Preferred Securities
on a pro rata basis with the Common Securities. The rights of the holders of
the Preferred Securities to receive distributions and liquidation, redemption
and other payments will be senior to the rights of the holder of the Common
Securities if an event of default occurs under the Subordinated Indenture with
respect to the Series Junior Subordinated Notes.
Duke Capital has guaranteed, on a subordinated basis, certain payments
with respect to the Preferred Securities. Those payments are payments of
distributions and payments if the Preferred Securities are redeemed or the
Trust is liquidated, in each case to the extent set forth in the Guarantee. The
Guarantee does not cover those payments when the Trust does not have sufficient
funds legally and immediately available to make the payments. In that event,
the holders of a majority of the Preferred Securities may direct the Property
Trustee to enforce its rights under the Series Junior Subordinated Notes. In
addition, a holder of Preferred Securities may institute a legal proceeding
directly against Duke Capital, without first instituting a legal proceeding
against the Property Trustee or any other person or entity, to enforce payment
to that holder of principal or interest on Series Junior Subordinated Notes
having a principal amount equal to the liquidation amount of that holder's
Preferred Securities on or after the due dates specified or provided for in the
Series Junior Subordinated Notes. These mechanisms and obligations, together
with Duke Capital's obligations under the Agreement as to Expenses and
Liabilities, provide a full and unconditional guarantee by Duke Capital of the
payments due on the Preferred Securities, subject to certain subordination
provisions.
Distributions
Distributions on the Preferred Securities will be fixed at a yearly rate
of % and will accrue from the original issue date of the Preferred Securities.
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Distributions on the Preferred Securities will be payable quarterly in
arrears on the following distribution dates: March 31, June 30, September 30
and December 31 of each year, commencing on , , except if an
extension period occurs. Distributions payable on a date that is not a Business
Day will be paid on the next day that is a Business Day (without any interest
or other payment due to the delay), except that if that Business Day falls in
the next calendar year, the payment will be made on the immediately preceding
Business Day. In each such case, payment will be made with the same effect as
if made on the date the payment was originally payable. "Business Day" means
any day other than a Saturday or Sunday, a day on which banks in New York City
are authorized or obligated by law or executive order to remain closed or a day
on which the principal corporate trust office of the Property Trustee or the
Indenture Trustee is closed for business.
Distributions on the Preferred Securities will be payable to holders of
record at the close of business on the 15th calendar day before the relevant
distribution date. Each payment of a distribution will be made as described
under the caption "--Book-Entry Issuance--The Depository Trust Company" in this
Prospectus Supplement while the Preferred Securities are in book-entry only
form. Distributions will be computed on the basis of a 360-day year of twelve
30-day months.
Duke Capital has the right to defer interest payments on the Series
Junior Subordinated Notes by extending the interest payment period from time to
time on the Series Junior Subordinated Notes. If Duke Capital exercises that
right, distributions on the Preferred Securities will be deferred during the
extension period. Deferred interest installments on the Series Junior
Subordinated Notes will bear interest at a yearly rate of %, compounded
quarterly, to the payment date, to the extent legally permitted. Duke Capital
will have the right to make partial payments of interest on any interest
payment date during an extension period. If distributions are deferred, the
deferred distributions and accrued interest on those distributions will be
paid, if funds are legally available for those payments, to holders of record
of the Preferred Securities on the record date immediately after the extension
period ends.
The Trust will pay distributions on the Preferred Securities on the
distribution dates to the extent that it has funds legally and immediately
available. Those funds will be limited to payments that Duke Capital makes
under the Series Junior Subordinated Notes.
Redemption
The Trust will redeem the Preferred Securities when Duke Capital repays
the Series Junior Subordinated Notes at maturity or upon redemption. The
Series Junior Subordinated Notes will mature on , . Duke Capital
may redeem the Series Junior Subordinated Notes, in whole or in part, at its
option at any time on or after , . Duke Capital may also redeem the
Series Junior Subordinated Notes, in whole but not in part, at any time
during the 90 days after the occurrence of a Special Event. In each case the
redemption price will be equal to 100% of the principal amount of the Series
Junior Subordinated Notes to be redeemed plus accrued but unpaid interest
(including any Additional Interest as defined below) to the redemption date.
Duke Capital may redeem the Series Junior Subordinated Notes in whole but not
in part if a partial redemption of the Series Junior Subordinated Notes would
cause the Preferred Securities to be delisted.
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Any Preferred Securities that are to be redeemed will be redeemed upon at
least 30 but not more than 60 days' notice at a redemption price for each
Preferred Security equal to the liquidation amount of $ plus any accrued and
unpaid distributions on the Preferred Security to the date of payment. Any
Preferred Securities that are to be redeemed will be redeemed with the proceeds
from the redemption of an equivalent amount of Series Junior Subordinated
Notes. The redemption price of the Preferred Securities will be deemed payable
on each redemption date only to the extent that the Trust has funds legally and
immediately available for payment of that redemption price.
If fewer than all the outstanding Preferred Securities are to be redeemed
and the Preferred Securities are in book-entry form, DTC will reduce the amount
of the interest of each of its participants in the Preferred Securities in
accordance with its procedures. If the Preferred Securities are no longer in
book-entry form, the Property Trustee will redeem the Preferred Securities to
be redeemed in any manner that it deems fair and appropriate.
Special Event Redemption or Distribution
Duke Capital may at its option redeem all the Series Junior
Subordinated Notes at any time during the 90 days after the occurrence of a
Special Event. In that event, the Preferred Securities will also be redeemed.
A Special Event is either a Tax Event or an Investment Company Act Event.
A "Tax Event" means that the Administrative Trustees and Duke Capital have
received an opinion of counsel experienced in such matters to the effect that,
as a result of:
. any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations under those laws) of the
United States or any political subdivision or taxing authority of or
in the United States; or
. any amendment to, or change in, an interpretation or application of
such laws or regulations,
there is more than an insubstantial risk that:
. the Trust would be subject to United States federal income tax with
respect to income accrued or received on the Series Junior
Subordinated Notes;
. interest payable on the Series Junior Subordinated Notes would not
be deductible by Duke Capital for United States federal income tax
purposes; or
. the Trust would be subject to more than a de minimis amount of other
taxes, duties or other governmental charges,
which amendment or change becomes effective on or after the original issue date
of the Preferred Securities.
An "Investment Company Act Event" means that the Administrative Trustees
and Duke Capital have received an opinion of counsel experienced in such
matters to the effect that, as a result of the occurrence of a change in law or
regulation or a written change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or regulatory
authority on or after the original issue date of the Preferred Securities,
there is more than an insubstantial risk that
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the Trust is or will be considered an "investment company" under the Investment
Company Act of 1940, which change becomes effective on or after the original
issue date of the Preferred Securities.
Distribution of Series Junior Subordinated Notes upon Termination of Trust
Duke Capital will have the right to terminate the Trust at any time and,
after the Trust satisfies its liabilities to creditors, cause the Series
Junior Subordinated Notes to be distributed to the holders of the Preferred
Securities in liquidation of the Trust. That right is optional and wholly
within Duke Capital's discretion.
Circumstances under which Duke Capital may decide to exercise its right
to terminate the Trust could include:
. the occurrence of an Investment Company Act Event or a Tax Event;
. adverse tax consequences to Duke Capital or the Trust that the
definition of a Tax Event does not cover because those consequences do
not result from an amendment or change described in that definition;
and
. changes in the accounting applicable to the Preferred Securities. See
"Accounting Treatment" in the accompanying Prospectus.
If Series Junior Subordinated Notes are distributed to the holders of
the Preferred Securities, Duke Capital will use its best efforts to have the
Series Junior Subordinated Notes listed on the New York Stock Exchange or
other exchange on which the Preferred Securities are then listed.
After the date for any distribution of Series Junior Subordinated Notes
upon termination of the Trust:
. the Preferred Securities and the Guarantee will no longer be
considered outstanding;
. the securities depositary or its nominee, as the record holder of the
Preferred Securities, will receive a registered global certificate or
certificates representing the Series Junior Subordinated Notes
delivered upon the distribution; and
. any certificates representing Preferred Securities not held by the
securities depositary or its nominee will be deemed to represent
Series Junior Subordinated Notes. Those Series Junior Subordinated
Notes will have:
. an aggregate principal amount equal to the aggregate liquidation
amount of those Preferred Securities;
. an interest rate identical to the rate at which cumulative cash
distributions are payable on those Preferred Securities; and
. accrued and unpaid interest equal to the accrued and unpaid
distributions on those Preferred Securities,
until the certificates are presented to Duke Capital or its agent for transfer
or reissuance.
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There can be no assurance as to the market prices for either the
Preferred Securities or the Series Junior Subordinated Notes that may be
distributed in exchange for the Preferred Securities if a termination and
liquidation of the Trust occurs. Accordingly, the Preferred Securities that an
investor may purchase, or the Series Junior Subordinated Notes that the
investor may receive if the Trust is terminated or liquidated, may trade at a
price less than the price paid by the investor to purchase the Preferred
Securities and/or less than the market price of the Preferred Securities before
the exchange.
Redemption Procedures
If the Trust has the funds required for the redemption and the Preferred
Securities are in book-entry form, then the Property Trustee will irrevocably
deposit sufficient funds with the securities depositary on the redemption date
to pay the redemption price. If the Trust has the funds required for the
redemption and the Preferred Securities are not in book-entry form, the
Property Trustee will irrevocably deposit sufficient funds with the paying
agent to pay the redemption price and will instruct the paying agent to pay the
redemption price to the holders of the Preferred Securities upon surrender of
their Preferred Securities certificates. Immediately before the close of
business on the deposit date, distributions will cease to accrue and all rights
of holders of Preferred Securities called for redemption will cease, except the
right of those holders to receive the redemption price, without interest on it.
If the redemption date is not a Business Day, the redemption price
payable on that date will be paid on the next day that is a Business Day
(without any interest or other payment due to the delay), except that if that
Business Day falls in the next calendar year, the payment will be made on the
immediately preceding Business Day.
If fewer than all the Trust Securities are to be redeemed, the
liquidation amount of the Trust Securities to be redeemed will be allocated 97%
to the Preferred Securities and 3% to the Common Securities.
If the Trust does not pay the redemption price and Duke Capital does not
pay the redemption price under the Guarantee, distributions on the Preferred
Securities to be redeemed will continue to accrue at the applicable rate from
the redemption date originally established for those Preferred Securities to
the date the redemption price is actually paid.
Book-Entry Issuance--The Depository Trust Company
The Preferred Securities will be book-entry securities. Upon issuance,
all book-entry securities will be represented by one or more fully registered
global certificates. Each global certificate will be deposited with, or on
behalf of, The Depository Trust Company ("DTC"), a securities depositary, and
will be registered in the name of DTC or a nominee of DTC. DTC or its nominee
will thus be the only registered holder of those Preferred Securities and will
be considered the sole owner of the Preferred Securities for purposes of the
Trust Agreement.
Purchasers of Preferred Securities may only hold interests in the global
securities through DTC if they are participants in the DTC system. Purchasers
may also hold interests through a securities intermediary--banks, brokerage
houses and other institutions that maintain securities accounts for
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customers--that has an account with DTC. DTC will maintain accounts showing the
Preferred Security holdings of its participants, and those participants will in
turn maintain accounts showing the Preferred Security holdings of their
customers. Some of those customers may themselves be securities intermediaries
holding Preferred Securities for their customers. Thus, each beneficial owner
of a book-entry Preferred Security will hold that Preferred Security indirectly
through a hierarchy of intermediaries, with DTC at the "top" and the beneficial
owner's own securities intermediary at the "bottom."
The Preferred Securities of each beneficial owner of a book-entry
security will be evidenced solely by entries on the books of the beneficial
owner's securities intermediary. The actual purchaser of the Preferred
Securities will generally not be entitled to have the Preferred Securities
represented by the global securities registered in its name and will not be
considered the owner under the Trust Agreement. In most cases, a beneficial
owner will also not be able to obtain a paper certificate evidencing the
holder's ownership of Preferred Securities. The book-entry system for holding
Preferred Securities eliminates the need for physical movement of certificates
and is the system through which most publicly traded common stock is held in
the United States. However, the laws of some jurisdictions require some
purchasers of securities to take physical delivery of their securities in
definitive form. These laws may impair the ability to transfer book-entry
securities.
A beneficial owner of book-entry Preferred Securities represented by a
global security will receive definitive (paper) Preferred Securities only if:
. DTC is unwilling or unable to continue as depositary for such global
security and Duke Capital is unable to find a qualified replacement
for DTC within 90 days; or
. Duke Capital in its sole discretion decides to terminate the book-
entry system with respect to the Preferred Securities.
Definitive Preferred Securities in registered form will have the same
terms as and be in an equal aggregate principal amount to the equivalent book-
entry Preferred Securities, and will be in denominations of $ or integral
multiples of $ . Definitive Preferred Securities will be registered in the
name or names of the person or persons that DTC specifies in a written
instruction to the registrar of the Preferred Securities. DTC may base its
written instruction upon directions it receives from its participants.
In this Prospectus Supplement, for book-entry Preferred Securities,
references to actions taken by holders of Preferred Securities will mean
actions taken by DTC upon instructions from its participants, and references to
payments and notices of redemption to holders of Preferred Securities will mean
payments and notices of redemption to DTC or its nominee as the registered
holder of the Preferred Securities for distribution to participants in
accordance with DTC's procedures.
DTC is a limited purpose trust company organized under the laws of the
State of New York, 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 under section 17A of the Securities Exchange Act
of 1934. The rules applicable to DTC and its participants are on file with the
Securities and Exchange Commission.
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The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that Duke Capital and the Trust believe
to be reliable, but neither Duke Capital nor the Trust takes any responsibility
for its accuracy. Duke Capital and the Trust have no responsibility for the
performance by DTC or its participants of their respective obligations,
including obligations that they have under the rules and procedures that govern
their operations.
Liquidation Distribution upon Dissolution
The Trust will terminate on , , or earlier if:
. one of certain bankruptcy, insolvency or reorganization events occurs
with respect to Duke Capital, Duke Capital is dissolved or liquidated,
or the Trust is dissolved by judicial decree;
. Duke Capital directs the Property Trustee to terminate the Trust and
to distribute the Series Junior Subordinated Notes to the holders of
the Trust Securities in liquidation of the Trust; or
. Duke Capital repays all the Series Junior Subordinated Notes at
maturity or upon redemption and the Trust Securities are paid in full
as a result.
If an early termination occurs as described in the first and second
instances listed above, the Trust will be liquidated and the Property Trustee
will distribute an equivalent amount of Series Junior Subordinated Notes to
each holder of Trust Securities after the Trust satisfies its liabilities to
creditors. If the Administrative Trustees determine that the distribution of
Series Junior Subordinated Notes is not practical in the case of the first
instance listed above, those holders instead will receive an amount equal to
the liquidation amount of $ per Trust Security plus accrued and unpaid
distributions to the date of payment out of the assets of the Trust that are
available for distribution, after satisfaction of the Trust's liabilities to
creditors. That amount is called the "liquidation distribution" in this
Prospectus Supplement.
If the Trust does not have sufficient assets available to pay the total
liquidation distribution of the Trust Securities, then, except as described in
the next sentence, the Trust will make the payment to the holders of the
Preferred Securities and the holder of the Common Securities on a pro rata
basis. If an event of default under the Subordinated Indenture has occurred and
is continuing with respect to the Series Junior Subordinated Notes, however,
the Preferred Securities will have a preference over the Common Securities with
respect to the payment.
Events of Default
The following are events of default under the Trust Agreement:
. the occurrence of an event of default under the Subordinated Indenture
with respect to the Series Junior Subordinated Notes;
. the Trust's failure to pay any distribution, when due, that continues
for 30 days;
. the Trust's failure to pay the redemption price of any Preferred
Security or Common Security when due;
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. failure to perform, or breach of, any covenant or warranty of the
Securities Trustees in the Trust Agreement that continues for 60 days
after the holders of at least 25% of the outstanding Preferred
Securities give written notice of the failure or breach, requiring it
to be remedied; or
. the occurrence of certain bankruptcy or insolvency events with respect
to the Trust.
In the case of the fourth event of default listed above, the holders of
at least the same percentage of Preferred Securities as had given the default
notice may extend the grace period. The grace period will be automatically
extended if the Securities Trustees have initiated and are diligently pursuing
corrective action.
The Property Trustee will notify the holders of Trust Securities, the
Administrative Trustees and Duke Capital of any default known to it within 90
days after the default occurs, unless the default has been cured or waived. For
this purpose, the term "default" means any event which is an event of default
or which would become an event of default after notice has been given or a
grace period has expired or both, as the case may be.
If an event of default under the Subordinated Indenture with respect to
the Series Junior Subordinated Notes occurs and is continuing:
. the holders of Preferred Securities will rely on the Property Trustee,
as the holder of the Series Junior Subordinated Notes, to enforce
its rights against Duke Capital; and
. the holders of a majority of the Preferred Securities will have the
right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee or the
exercise of any power of the Property Trustee under the Trust
Agreement, including the right to direct the Property Trustee to
exercise the remedies available to it as the holder of the Series
Junior Subordinated Notes.
If the Property Trustee fails to enforce its rights under the Series
Junior Subordinated Notes, a holder of Preferred Securities may, to the extent
permitted by law and the Trust Agreement, institute a legal proceeding against
Duke Capital to enforce the Property Trustee's rights under the Trust
Agreement. The holder would not need to first institute a legal proceeding
against the Property Trustee, the Trust or any other person or entity. A holder
of Preferred Securities may also institute a legal proceeding directly against
Duke Capital to enforce payment to that holder of principal or interest on
Series Junior Subordinated Notes that are equal in principal amount to the
liquidation amount of the holder's Preferred Securities on or after the due
dates of the Series Junior Subordinated Notes. The holder would not need to
first institute a legal proceeding against the Property Trustee or any other
person or entity.
Duke Capital, as the holder of the Common Securities, may remove the
Securities Trustees at any time unless an event of default under the
Subordinated Indenture has occurred and is continuing with respect to the
Series Junior Subordinated Notes. If such an event of default has occurred
and is continuing, the holders of a majority of the Preferred Securities may
remove the Property Trustee and the Delaware Trustee. Removal of the Property
Trustee or the Delaware Trustee will become effective when the successor
trustee accepts its appointment.
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If an event of default under the Subordinated Indenture with respect to
the Series Junior Subordinated Notes has occurred and is continuing, the
holders of Preferred Securities will have a preference over the holders of
Common Securities if the Trust is dissolved.
The Property Trustee will notify the holders of the Preferred Securities
of any notice of default that it receives from the Indenture Trustee with
respect to the Series Junior Subordinated Notes.
Voting Rights
So long as the Property Trustee holds any Series Junior Subordinated
Notes, the Securities Trustees will not:
. direct the time, method and place of conducting any proceeding for any
remedy available to the Indenture Trustee, or exercising any power of
the Indenture Trustee with respect to the Series Junior Subordinated
Notes;
. consent to waive any past default under the Subordinated Indenture;
. exercise any right to rescind or annul a declaration that the
principal of all the Series Junior Subordinated Notes will be due
and payable; or
. consent to any amendment, modification or termination of the
Subordinated Indenture or the Series Junior Subordinated Notes, if
that consent is required, or to any other action, as the holder of the
Series Junior Subordinated Notes, under the Subordinated Indenture,
without obtaining the prior approval of the holders of at least 66 2/3% of the
outstanding Preferred Securities. When the Subordinated Indenture requires the
consent of each holder of Series Junior Subordinated Notes affected, the
Securities Trustees will not give that consent without the prior consent of
each holder of outstanding Preferred Securities. The Securities Trustees may
not revoke any action that the holders of the Preferred Securities have
authorized or approved.
If any proposed amendment to the Trust Agreement provides for any of the
following or the Securities Trustees propose to effect:
. any action that would adversely affect the powers, preferences or
special rights of the Preferred Securities; or
. the dissolution, winding-up or termination of the Trust, other than
pursuant to the Trust Agreement,
then the holders of outstanding Preferred Securities will have the right to
vote as a class on that amendment or proposal. The amendment or proposal will
be effective only if at least 66 2/3% of the outstanding Preferred Securities
approve it. Holders of Preferred Securities may provide their approval at a
meeting convened for that purpose or by written consent.
Any Preferred Securities that Duke Capital, the Administrative Trustees,
or any affiliate of Duke Capital or an Administrative Trustee owns, whether of
record or beneficially, will be treated as not outstanding for purposes of a
vote or consent.
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The holders of the Preferred Securities will have no other voting rights
except those described under the caption "--Amendment of the Trust Agreement"
in this Prospectus Supplement and those described under the captions
"Amendments and Assignment" and "Events of Default" in "Description of the
Guarantees" in the accompanying Prospectus and any other voting rights
otherwise required by law or by the Trust Agreement.
Co-Property Trustees and Separate Property Trustees
Duke Capital, as the holder of the Common Securities, and the Property
Trustee will have the power to appoint one or more co-property trustees or
separate property trustees for all or part of the Trust Property for the
purpose of meeting certain legal requirements, including the legal requirements
of any jurisdiction in which part of the Trust Property is located. The
Property Trustee will have the power to make the appointment alone if Duke
Capital, as depositor, does not join in the appointment within 15 days after it
receives a request to do so, or in case an event of default under the
Subordinated Indenture with respect to the Series Junior Subordinated Notes
has occurred and is continuing.
Amendment of the Trust Agreement
Duke Capital and the Securities Trustees may amend the Trust Agreement
without the consent of the holders of the Trust Securities:
. to cure any ambiguity or to make any corrections or additions that are
not inconsistent with the other provisions of the Trust Agreement that
do not adversely affect the interests of any holder of Trust
Securities in any material respect; or
. to modify, eliminate or add to any provisions of the Trust Agreement
to the extent necessary to ensure that the Trust will not be
classified as other than a grantor trust for United States federal
income tax purposes.
The Trust or the Securities Trustees may make other amendments to the
Trust Agreement if:
. the holders of at least 66 2/3% of the outstanding Trust Securities
approve the amendment; and
. the Securities Trustees receive an opinion of counsel to the effect
that the amendment will not affect the Trust's status as a grantor
trust or the Trust's exemption from the Investment Company Act of
1940.
The consent of each affected holder of Trust Securities will be required
to amend the Trust Agreement to:
. change the amount or timing of any distribution or any payment upon
redemption, or otherwise adversely affect the amount of any
distribution or any payment upon redemption required to be made on the
Trust Securities as of a specified date;
. restrict the right of a holder of Trust Securities to sue to enforce
any of those payments on or after that date;
. change the purpose of the Trust;
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. authorize the issuance of any additional beneficial interests in the
Trust; or
. change the consent required to amend the Trust Agreement.
Mergers, Consolidations, Replacements, Transfers
The Trust may not consolidate, amalgamate, merge with or into or be
replaced by any corporation or other entity, or convey, transfer or lease
substantially all of its properties and assets to any corporation or other
entity, except as described below. At Duke Capital's request but without the
consent of the holders of the Trust Securities, the Trust may consolidate,
amalgamate, merge with or into, or be replaced by a trust organized under the
laws of any state, if:
. the successor entity either:
. expressly assumes all the Trust's obligations with respect to the
Trust Securities; or
. substitutes other securities having substantially the same terms
as the Trust Securities for the Preferred Securities and the
Common Securities so long as those other securities--called
"Successor Securities" in this Prospectus Supplement--rank equal
in priority with the Trust Securities with respect to
distributions and payments upon liquidation, redemption and
otherwise;
. Duke Capital expressly appoints a trustee of the successor entity,
possessing the same powers and duties as the Property Trustee as the
holder of the Series Junior Subordinated Notes;
. the Preferred Securities or any Successor Securities are listed on any
national securities exchange or other organization on which the
Preferred Securities are then listed, or any Successor Securities will
be so listed upon notification of issuance;
. the consolidation, amalgamation, merger or replacement does not cause
the Preferred Securities, including any Successor Securities, to be
downgraded by any nationally recognized statistical rating
organization;
. the consolidation, amalgamation, merger or replacement does not
adversely affect the rights, preferences and privileges of the holders
of the Trust Securities, including any Successor Securities, in any
material respect;
. the successor entity has a purpose substantially identical to that of
the Trust;
. prior to the consolidation, amalgamation, merger or replacement, Duke
Capital and the Property Trustee have received an opinion of counsel
to the effect that:
. the transaction does not adversely affect the rights, preferences
and privileges of the holders of the Trust Securities, including
any Successor Securities, in any material respect; and
. following the transaction, neither the Trust nor the successor
entity will be required to register as an "investment company"
under the Investment Company Act of 1940; and
. Duke Capital owns all the common securities of the successor entity
and guarantees the obligations of the successor relating to the
Successor Securities at least to the extent provided by the Guarantee.
S-24
<PAGE>
However, the Trust may not enter into any of the mergers, consolidations or
other transactions mentioned above if that transaction would cause the Trust or
its successor entity to be classified as other than a grantor trust for United
States federal income tax purposes except with the consent of the holders of
all the Trust Securities.
Payments; Paying Agent
So long as DTC is the securities depositary for the Preferred Securities,
payments on the Preferred Securities will be made to DTC or its nominee and DTC
will credit the relevant accounts at DTC on the applicable distribution dates.
If DTC or its nominee no longer holds the Preferred Securities, the paying
agent will make payments on the Preferred Securities by check mailed to the
address of the holder entitled to the payment as that address appears in the
security register for the Preferred Securities.
The paying agent will initially be the Property Trustee. The paying agent
will be permitted to resign as paying agent if it gives 30 days' written notice
to the Administrative Trustees and Duke Capital. The Administrative Trustees
will appoint a successor paying agent in the event of any such resignation.
Transfers; Exchanges; Registrar and Transfer Agent
There will be no service charge for registration of transfers or
exchanges of any Preferred Securities. However, payment of any tax or other
governmental charge may be required in connection with a transfer or exchange.
The registrar and transfer agent for the Preferred Securities will not be
required to register any transfer or exchange of Preferred Securities that have
been called for redemption.
Duke Capital and the Trust anticipate that the Property Trustee or one of
its affiliates will act as registrar and transfer agent for the Preferred
Securities.
Information Concerning the Property Trustee
Before an event of default occurs under the Trust Agreement, the Property
Trustee will perform only those duties that are expressly specified in the
Trust Agreement. After any default, the Property Trustee will exercise the same
degree of care as a prudent person would exercise in the conduct of his or her
own affairs. Subject to these provisions, the Property Trustee is under no
obligation to exercise any of the powers vested in it by the Trust Agreement at
the request of any holder of Preferred Securities, unless that holder offers
the Property Trustee reasonable indemnity against the costs, expenses and
liabilities that the Property Trustee might incur as a result.
The Chase Manhattan Bank is the Property Trustee. The Chase Manhattan
Bank is also the Indenture Trustee and the Guarantee Trustee and serves as
Trustee under Duke Capital's Senior Indenture. Duke Capital and certain of its
affiliates maintain deposit accounts and banking relationships with The Chase
Manhattan Bank. The Chase Manhattan Bank also serves as trustee under other
indentures pursuant to which securities of Duke Capital and certain of its
affiliates are outstanding.
S-25
<PAGE>
Miscellaneous
The Trust Agreement directs the Administrative Trustees to operate the
Trust so that the Trust will not be:
. deemed to be an "investment company" that is required to be registered
under the Investment Company Act of 1940; or
. taxed as other than a grantor trust for United States federal income
tax purposes.
The Trust Agreement also directs the Administrative Trustees to operate the
Trust so that the Series Junior Subordinated Notes will be treated as
indebtedness of Duke Capital for United States federal income tax purposes. The
Trust Agreement authorizes the Administrative Trustees and Duke Capital to take
any action not inconsistent with applicable law, the Trust's certificate of
trust or the Trust Agreement, that they determine to be necessary or desirable
for those purposes. No such action may, however, materially and adversely
affect the interests of the holders of the Preferred Securities.
Duke Capital and its affiliates may purchase outstanding Preferred
Securities by tender, in the open market or by private agreement, to the extent
legally permitted.
S-26
<PAGE>
DESCRIPTION OF THE SERIES JUNIOR SUBORDINATED NOTES
The following description of the Series Junior Subordinated Notes is
only a summary and is not intended to be comprehensive. The description should
be read together with the description of the general terms and provisions of
the Junior Subordinated Notes provided under the caption "Description of the
Junior Subordinated Notes" in the accompanying Prospectus.
General
Duke Capital will issue the Series Junior Subordinated Notes as a
series of Subordinated Notes under the Subordinated Indenture. The Series
Junior Subordinated Notes will be limited in principal amount to $ , which
is the liquidation amount of the Trust Securities.
The Series Junior Subordinated Notes will mature and become due and
payable, together with any accrued and unpaid interest, including any
Additional Interest (as defined below), on , .
The Series Junior Subordinated Notes will rank equal in priority with
any other series of Junior Subordinated Notes issued under the Subordinated
Indenture.
The Series Junior Subordinated Notes will not be subject to any
sinking fund provision.
Optional Redemption
Duke Capital will have the right to redeem the Series Junior
Subordinated Notes:
. from time to time, in whole or in part, on or after , ; or
. at any time, in whole but not in part, during the 90 days after the
occurrence of a Special Event.
Duke Capital may redeem the Series Junior Subordinated Notes upon not less
than 30 nor more than 60 days' notice at a redemption price equal to the
principal amount to be redeemed plus any accrued and unpaid interest,
including any Additional Interest, to the redemption date.
If a partial redemption of the Series Junior Subordinated Notes would
cause the Preferred Securities to be delisted, Duke Capital will be required
to redeem all of the Series Junior Subordinated Notes.
Interest
The Series Junior Subordinated Notes will bear interest at a yearly
rate of % from the original issue date. Interest on the Series Junior
Subordinated Notes will be payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year, commencing on , ,
unless the applicable interest period is extended. Interest will be payable to
the person or persons in whose name the Series Junior Subordinated Notes are
registered at the close of business on the 15th calendar day before the
relevant interest payment date, except that interest payable on the maturity
date or on a redemption date will be paid to the person to whom principal is
payable. Interest will be computed on the basis of a 360-day year of twelve
30-day months.
S-27
<PAGE>
If any date on which interest is payable on the Series Junior
Subordinated Notes is not a Business Day, the interest payable on that date
will be paid on the next day that is a Business Day (without any interest or
other payment due to the delay), except that if that Business Day falls in the
next calendar year, interest will be paid on the immediately preceding Business
Day.
Option to Extend Interest Payment Period
Duke Capital will have the right, at any time and from time to time, to
defer interest payments on the Series Junior Subordinated Notes by extending
the interest payment period for up to consecutive quarters, but not beyond
the maturity date. When the extension period has ended, Duke Capital will pay
all accrued and unpaid interest, including any Additional Interest, on the next
interest payment date. Before any extension period ends, Duke Capital may
further defer interest payments by extending the interest payment period.
However, an extension period, together with any previous and further
extensions, may not exceed consecutive quarters. During an extension period,
Duke Capital will have the right to make partial payments of interest on any
interest payment date. After an extension period terminates and all amounts due
are paid, Duke Capital may select a new extension period, subject to the
previously mentioned requirements.
Duke Capital has no present intention of exercising its right to defer
payments by extending the interest payment period on the Series Junior
Subordinated Notes.
Duke Capital will notify the holder or holders of the Series Junior
Subordinated Notes and the Indenture Trustee of its selection or extension of
an extension period at least one Business Day before the earlier of:
. the record date for the interest payment date on which the extension
period is to begin or the record date for the interest payment date on
which the extension period that is being extended would otherwise
terminate; or
. the date that Duke Capital or the Trust is required to give notice to
the New York Stock Exchange or other self-regulatory organization of
the record date or the date those distributions are payable.
Additional Interest
"Additional Interest" means:
. those additional amounts as may be required so that the net amounts
that a holder of Series Junior Subordinated Notes (if the holder is
the Trust) receives and retains after paying taxes, duties,
assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States or any other taxing
authority will not be less than the amounts the holder would have
received had no such taxes, duties, assessments or other governmental
charges been imposed; and
. interest on interest due but not paid on an interest payment date for
the Series Junior Subordinated Notes, accruing at a yearly rate of
% from the applicable interest payment date to the date of payment,
compounded quarterly, on each interest payment date, to the extent
legally permitted.
S-28
<PAGE>
Certain Covenants
Duke Capital will covenant, for the benefit of the holders of Series
Junior Subordinated Notes and the holders of the Preferred Securities, that:
. if it has given notice of its election to extend an interest payment
period for the Series Junior Subordinated Notes and the extension is
continuing; or
. if an event of default under the Subordinated Indenture with respect
to the Series Junior Subordinated Notes has occurred and is
continuing,
then it will not:
. declare or pay any dividend or make any distributions with respect to
any of its capital stock, or redeem, purchase, acquire or make a
liquidation payment with respect to any of its capital stock, or
. make any payment of interest, principal or premium on any debt
securities, including guarantees other than the Guarantee, issued by
it which rank equal in priority with or junior to the Series Junior
Subordinated Notes, or repay, repurchase or redeem any such debt
securities.
However, those covenants will not restrict:
. any action described in the preceding sentence that results from a
reclassification of Duke Capital's capital stock or the exchange or
conversion of one class or series of Duke Capital's capital stock for
another class or series; or
. dividends or distributions in Duke Capital's capital stock.
Duke Capital will also covenant that, for so long as the Trust Securities
are outstanding, it will:
. continue to own all the Common Securities directly or indirectly; and
. use its reasonable efforts to cause the Trust:
. to remain a statutory business trust, except in connection with
the distribution of Series Junior Subordinated Notes in
liquidation of the Trust, the redemption of all the Trust
Securities, or certain mergers, consolidations or amalgamations;
and
. to otherwise continue to be classified as a grantor trust for
United States federal income tax purposes.
Any successor of Duke Capital may, however, succeed to Duke Capital's ownership
of the Common Securities without Duke Capital's violating this covenant if the
successor is permitted under the Subordinated Indenture.
Book-Entry Issuance
Duke Capital expects that the Series Junior Subordinated Notes will be
issued in the form of one or more global certificates registered in the name of
the securities depositary or its nominee if the Series Junior Subordinated
Notes are distributed to holders of Trust Securities in connection with
S-29
<PAGE>
the voluntary or involuntary dissolution, winding-up or liquidation of the
Trust. The procedures applicable to the transfer and payment of the Series
Junior Subordinated Notes are expected to be substantially similar to those
applicable to the transfer and payment of the Preferred Securities.
Denominations
The Series Junior Subordinated Notes will be issuable in denominations
of $ and integral multiples of $ .
Defeasance
The Series Junior Subordinated Notes will be subject to Defeasance but
not to Covenant Defeasance as described in the Subordinated Indenture. See
"Description of the Junior Subordinated Notes--Defeasance and Covenant
Defeasance" in the accompanying Prospectus.
Miscellaneous
Duke Capital will have the right to assign any of its rights or
obligations under the Subordinated Indenture with respect to the Series Junior
Subordinated Notes to one of its direct or indirect wholly owned subsidiaries.
Duke Capital will remain primarily liable for the performance of those
obligations in the event of an assignment.
S-30
<PAGE>
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE SERIES JUNIOR SUBORDINATED NOTES AND THE GUARANTEE
As long as Duke Capital makes interest and other payments on the Series
Junior Subordinated Notes when due, those payments will be sufficient to cover
distributions and payments due on the Preferred Securities and the Common
Securities. This is the case primarily because:
. the total principal amount of the Series Junior Subordinated Notes
will be equal to the total liquidation amount of the Trust Securities;
. the interest rate and interest and other payment dates on the Series
Junior Subordinated Notes will correspond to the distribution rate and
distribution and other payment dates for the Preferred Securities;
. the Agreement as to Expenses and Liabilities between Duke Capital and
the Trust provides that Duke Capital will pay all costs and expenses
of the Trust; and
. the Trust Agreement provides that the Securities Trustees will not
permit the Trust to engage in any activity that is inconsistent with
the purposes of the Trust.
If Duke Capital does not make the required payments on the Series Junior
Subordinated Notes, it is expected that the Trust will not have sufficient
funds to make the related distributions on the Preferred Securities. Duke
Capital will guarantee payments of distributions and other payments due on the
Preferred Securities but only to the extent that the Trust has funds legally
and immediately available for the payment of those distributions and other
payments.
If an event of default under the Subordinated Indenture with respect to
the Series Junior Subordinated Notes occurs and is continuing, then:
. the holders of Preferred Securities will rely on the Property Trustee,
as the holder of the Series Junior Subordinated Notes, to enforce
its rights against Duke Capital; and
. the holders of a majority of the Preferred Securities will have the
right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee or to
direct the exercise of any power of the Property Trustee under the
Trust Agreement, including the right to direct the Property Trustee to
exercise the remedies available to it as a holder of the Series
Junior Subordinated Notes.
If the Property Trustee fails to enforce its rights under the Series
Junior Subordinated Notes, a holder of Preferred Securities may, to the extent
legally permitted, institute a legal proceeding against Duke Capital to enforce
its rights under the Trust Agreement without first instituting a legal
proceeding against the Property Trustee, the Trust or any other person or
entity. Moreover, a holder of Preferred Securities may institute a legal
proceeding directly against Duke Capital to enforce payment to that holder of
principal or interest on Series Junior Subordinated Notes having a principal
amount equal to the liquidation amount of the Preferred Securities of that
holder on or after the due dates specified in the Series Junior Subordinated
Notes. The Trust Agreement also provides a mechanism whereby the holders of
Preferred Securities may appoint a substitute Property Trustee if an event of
default under the Subordinated Indenture with respect to the Series Junior
Subordinated Notes occurs and is continuing.
S-31
<PAGE>
The Guarantee provides a mechanism whereby the holders of the Preferred
Securities may direct the Guarantee Trustee to enforce its rights under the
Guarantee if Duke Capital fails to make payments under the Guarantee. In
addition, any holder of Preferred Securities may institute a legal proceeding
directly against Duke Capital to enforce the Guarantee Trustee's rights under
the Guarantee without first instituting a legal proceeding against the
Guarantee Trustee or any other person or entity.
The Guarantee, the Subordinated Indenture, the Series Junior
Subordinated Notes, the Trust Agreement and the Agreement as to Expenses and
Liabilities provide a full and unconditional guarantee, subject to certain
subordination provisions, by Duke Capital of the payments due on the Preferred
Securities.
The holders of Preferred Securities will be entitled to receive the
liquidation distribution with respect to those Preferred Securities in cash,
out of assets legally available for distribution to those holders, upon any
voluntary or involuntary dissolution, winding-up or termination of the Trust
unless the Series Junior Subordinated Notes are distributed in connection with
those events. Upon any voluntary or involuntary liquidation or bankruptcy of
Duke Capital, the Property Trustee, as holder of the Series Junior
Subordinated Notes, would be a subordinated creditor of Duke Capital,
subordinated in right of payment to all Senior Indebtedness, but entitled to
receive payment in full of principal and interest before Duke Capital's
shareholder receives payments or distributions. Because Duke Capital is
guarantor under the Guarantee and has agreed to pay all costs, expenses and
liabilities of the Trust under the Agreement as to Expenses and Liabilities,
other than the Trust's obligations to holders of the Preferred Securities, the
positions of a holder of Preferred Securities and a holder of Series Junior
Subordinated Notes relative to other creditors and Duke Capital's shareholder
would be substantially the same in the event of the liquidation or bankruptcy
of Duke Capital.
A default or event of default under any Senior Indebtedness is not a
default or an event of default under the Subordinated Indenture. However, if a
default occurs with respect to Senior Indebtedness or if Senior Indebtedness is
accelerated, the subordination provisions of the Series Junior Subordinated
Notes provide that no payments may be made in respect of the Series Junior
Subordinated Notes:
. until that Senior Indebtedness has been paid in full, in the case of
any payment by, or distribution of assets of, Duke Capital to
creditors upon a dissolution, winding-up, liquidation or
reorganization of Duke Capital; or
. until all amounts due on that Senior Indebtedness have been paid, in
the case of a payment default beyond any grace period under that
Senior Indebtedness or the acceleration of that Senior Indebtedness
because of a default with respect to that Senior Indebtedness.
S-32
<PAGE>
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
Following is the opinion of Dewey Ballantine LLP, counsel to Duke Capital
and the Trust, as to the material United States federal income tax consequences
of the purchase, ownership and disposition of Preferred Securities by holders
that acquire Preferred Securities on their original issue at the initial
offering price and that hold the Preferred Securities as capital assets. The
opinion does not address all tax consequences that may be important to a holder
in light of the holder's peculiar circumstances or to holders subject to
special rules, such as financial institutions, foreign persons, real estate
investment trusts, regulated investment companies, insurance companies, tax-
exempt organizations, dealers in securities or currencies, traders in
securities that elect to mark to market, individual retirement and other tax-
deferred accounts, and persons engaging in straddles or hedges relating to
Preferred Securities. This discussion is based on legal authorities that are
subject to change at any time in a manner that could adversely affect holders.
Prospective investors in Preferred Securities should consult their own tax
advisors with regard to the application of the tax considerations discussed
below to their own situations as well as the application of any state, local or
other tax laws.
The Trust will be disregarded for federal income tax purposes and each
holder of Preferred Securities will be treated as the owner of a proportionate
amount of the Series Junior Subordinated Notes held by the Trust.
Accordingly, a holder will include in income the holder's share of the income
from the Series Junior Subordinated Notes. Duke Capital believes that the
likelihood of the occurrence of an extension period is remote and accordingly
that under applicable income tax regulations the Series Junior Subordinated
Notes should not be treated as issued with original issue discount. These
regulations have not been addressed in any rulings or other interpretations by
the Internal Revenue Service and it is possible that the Internal Revenue
Service could take a contrary position. If, however, Duke Capital exercises its
option to defer payments of interest, the Series Junior Subordinated Notes
would at that time be treated as issued with original issue discount and all
the stated interest payments on the Series Junior Subordinated Notes would
thereafter be treated as original issue discount. As a result, holders would be
required to accrue original issue discount income on an economic accrual basis,
even if the holder uses the cash method of accounting for tax purposes and even
though holders will not receive any payments during the extension period.
Because income on the Preferred Securities will constitute interest or original
issue discount, corporate holders will not be entitled to a dividends-received
deduction with respect to any income from the Preferred Securities.
Upon a sale, retirement or other taxable disposition of Preferred
Securities, a holder will recognize gain or loss equal to the difference
between the amount realized on the sale, retirement or other disposition and
the holder's adjusted tax basis in the Preferred Securities. If the holder
disposes of Preferred Securities prior to the occurrence of an extension
period, any portion of the amount received that is attributable to accrued
interest will be treated as interest income to the holder and will not be
treated as part of the amount realized for purposes of determining gain or loss
on the disposition of the Preferred Securities. Any recognized gain or loss
will be capital gain or loss and will be long-term capital gain or loss if the
holding period for the Preferred Securities is more than one year at the time
of sale, retirement or other disposition.
The Series Junior Subordinated Notes will be subject to Defeasance.
See "Description of the Junior Subordinated Notes--Defeasance and Covenant
Defeasance" in the accompanying
S-33
<PAGE>
Prospectus. Under current United States federal income tax laws, a Defeasance
would be treated as an exchange of the relevant Series Junior Subordinated
Notes in which holders of those Series Junior Subordinated Notes might
recognize gain or loss. In addition, the amount, timing and character of
amounts that holders would thereafter be required to include in income might be
different from that which would be includible in the absence of that
Defeasance.
Income on Preferred Securities will be reported to holders on Form 1099,
which form should be mailed to holders of Preferred Securities by January 31
following each calendar year. A holder will generally be required to furnish a
social security number or other taxpayer identification number in order to
avoid "backup withholding" tax on distributions on the Preferred Securities and
payment of the proceeds from the disposition of Preferred Securities. Any
amount so withheld will be allowed as a refund or a credit against the holder's
United States federal income tax liability, provided the required information
is furnished to the Internal Revenue Service.
The United States federal income tax discussion set forth above may not
be applicable to a holder, depending upon the holder's particular situation,
and therefore each holder should consult a tax advisor with respect to the tax
consequences of the ownership and disposition of Preferred Securities,
including the tax consequences under state, local, foreign and other tax laws
and the possible effects of changes in federal or other tax law.
S-34
<PAGE>
UNDERWRITING
Subject to the terms and conditions of an Underwriting Agreement, the
Trust has agreed to sell to each of the Underwriters named below, and each of
those Underwriters has severally agreed to purchase, the number of Preferred
Securities specified opposite its name. In the Underwriting Agreement, the
Underwriters have agreed, subject to certain conditions, to purchase all of the
Preferred Securities if any of the Preferred Securities are purchased. ,
and are acting as Representatives for the Underwriters in the
offering.
<TABLE>
<CAPTION>
Number of
Underwriter Preferred Securities
----------- --------------------
<S> <C>
----
Total....................................................
====
</TABLE>
Since the proceeds of the sale of the Preferred Securities will be used
to purchase Series Junior Subordinated Notes, the Underwriting Agreement
provides that Duke Capital will pay as compensation to the Underwriters $
per Preferred Security for the accounts of the several Underwriters, or $ in
the aggregate.
The Underwriters have advised Duke Capital and the Trust that they
propose to offer the Preferred Securities:
. in part directly to the public at the initial public offering price
that is stated on the cover page of this Prospectus Supplement; and
. in part to certain securities dealers at that price less a concession
not in excess of $ per Preferred Security.
The Underwriters may allow, and those dealers may reallow, a concession not in
excess of $ per Preferred Security to certain other dealers. The
Representatives may vary the initial public offering price and other selling
terms from time to time after the Preferred Securities are released for sale to
the public.
The Preferred Securities are expected to be approved for listing on the
New York Stock Exchange, subject to official notice of issuance. Trading of the
Preferred Securities on the New York Stock Exchange is expected to begin within
a 30-day period after the initial delivery of the Preferred Securities. The
Representatives have advised Duke Capital and the Trust that they intend to
make a market in the Preferred Securities before trading on the New York Stock
Exchange begins. The Representatives will have no obligation to make a market
in the Preferred Securities, however, and may cease market-making activities,
if commenced, at any time.
S-35
<PAGE>
There has been no public market for the Preferred Securities before this
offering. 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.
The Underwriters may purchase and sell the Preferred Securities in the
open market in connection with the offering. Those transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the offering. Stabilizing
transactions consist of certain bids or purchases for the purpose of preventing
or retarding a decline in the market price of the Preferred Securities.
Syndicate short positions involve the sale by the Underwriters of a greater
number of Preferred Securities than they are required to purchase from the
Trust in the offering. The Underwriters also may impose a penalty bid, by which
selling concessions allowed to syndicate members or other broker-dealers with
respect to the Preferred Securities sold for their account in the offering may
be reclaimed by the syndicate if those Preferred Securities are repurchased by
the syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Preferred
Securities, which may be higher than the price that might otherwise prevail in
the open market. These activities, if commenced, may be discontinued at any
time. These transactions may be effected on the New York Stock Exchange, in the
over-the-counter market or otherwise.
Duke Capital and the Trust have agreed, during the period of days
from the date of the Underwriting Agreement, not to sell, offer to sell, grant
any option for the sale of, or otherwise dispose of any Preferred Securities,
any security convertible into or exchangeable for Preferred Securities or the
Series Junior Subordinated Notes or any debt securities substantially similar
to the Series Junior Subordinated Notes or equity securities substantially
similar to the Preferred Securities (except for the Series Junior
Subordinated Notes and the Preferred Securities issued pursuant to the
Underwriting Agreement), without prior written consent of the Representatives.
Duke Capital estimates that its expenses in connection with this
offering, excluding underwriting discounts and commissions, will be
approximately $ .
Duke Capital and the Trust have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act of
1933.
Certain of the Underwriters and their affiliates engage in transactions
with, and, from time to time, have performed services for Duke Capital or
certain of its affiliates in the ordinary course of business and may do so in
the future.
VALIDITY OF THE SECURITIES
Richards, Layton & Finger, P.A., special Delaware counsel to Duke Capital
and the Trust, will issue an opinion about the validity of the Preferred
Securities under Delaware law on behalf of Duke Capital and the Trust. Dewey
Ballantine LLP will issue an opinion about the validity of the Series Junior
Subordinated Notes, the Guarantee and certain related matters as well as
certain matters relating to United States federal income tax considerations on
behalf of Duke Capital and the Trust. will issue an opinion about the
validity of the Series Junior Subordinated Notes and the Guarantee for the
Underwriters.
S-36
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this Prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This Prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS SUPPLEMENT
(To Prospectus dated January , 2000)
Subject to Completion dated January 4, 2000
$[ ]
Duke Capital Corporation
a subsidiary of Duke Energy Corporation
Series % Senior Notes due
------------
Duke Capital will pay interest on the Series Senior Notes on and
of each year. The first interest payment will be made on , .
The Series Senior Notes will mature on , and are redeemable at the
option of Duke Capital at any time at a redemption price determined by using
the formula set forth under the caption "Description of the Series Senior
Notes--Optional Redemption" in this Prospectus Supplement.
The Series Senior Notes are unsecured and rank equally with all other
unsecured and unsubordinated indebtedness of Duke Capital. Duke Capital will
issue the Series Senior Notes in denominations of $ and integral multiples
of $ .
<TABLE>
<CAPTION>
Per Series
Senior Note Total
------------ -----
<S> <C> <C>
Initial Public Offering Price(1).............................
Underwriting Discounts and Commissions.......................
Proceeds, before expenses, to Duke Capital...................
</TABLE>
- ------
(1) Purchasers will also be required to pay accrued interest from , , if
settlement occurs after that date.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus Supplement or the accompanying
Prospectus. Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the Series Senior Notes on or about
, .
------------
[Names of Underwriters]
------------
Prospectus Supplement dated , .
<PAGE>
You should rely only on the information contained or incorporated by
reference in this Prospectus Supplement and the accompanying Prospectus. We
have not, and the Underwriters have not, authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. If this Prospectus
Supplement is inconsistent with the accompanying Prospectus, you should rely on
this Prospectus Supplement. We are not, and the Underwriters are not, making an
offer to sell these securities in any jurisdiction where the offer or sale is
not permitted. You should assume that the information in this Prospectus
Supplement and the accompanying Prospectus is accurate only as of the
respective dates on the front of those documents or earlier dates specified
therein. Our business, financial condition, results of operations and prospects
may have changed since those dates.
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Forward-Looking Statements................................................. S-3
Description of the Series Senior Notes................................... S-4
Underwriting............................................................... S-9
Validity of the Securities................................................. S-10
Prospectus
About This Prospectus...................................................... 2
Where You Can Find More Information........................................ 2
Duke Capital Corporation................................................... 3
Use of Proceeds............................................................ 6
The Trusts................................................................. 6
Description of the Senior Notes............................................ 7
Description of the Junior Subordinated Notes............................... 17
Description of the Preferred Securities.................................... 26
Description of the Guarantees.............................................. 27
Accounting Treatment....................................................... 30
Plan of Distribution....................................................... 30
Experts.................................................................... 31
Validity of the Securities................................................. 31
</TABLE>
S-2
<PAGE>
FORWARD-LOOKING STATEMENTS
This Prospectus Supplement and the accompanying Prospectus contain or
incorporate by reference statements that do not directly or exclusively relate
to historical facts. Such statements are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. You can
typically identify forward-looking statements because they include or are
preceded by forward-looking words, such as "may," "will," "could," "project,"
"believe," "anticipate," "expect," "estimate," "continue," "potential,"
"plan," "forecast" and the like. Those statements represent Duke Capital's
intentions, plans, expectations, assumptions and beliefs about future events
and are subject to risks, uncertainties and other factors. Many of those
factors are outside Duke Capital's control and could cause actual results to
differ materially from the results expressed or implied by those forward-
looking statements. Some of the factors that could cause such differences are:
. state, federal and foreign legislative and regulatory initiatives that
affect cost and investment recovery, have an impact on rate structures
and affect the speed at and degree to which competition enters the
natural gas industry;
. industrial, commercial and residential growth in the service
territories of Duke Capital's subsidiaries;
. the weather and other natural phenomena;
. the timing and extent of changes in commodity prices, interest rates
and foreign currency exchange rates;
. changes in environmental and other laws and regulations to which Duke
Capital and its subsidiaries are subject or other external factors
over which Duke Capital has no control;
. the results of financing efforts, including Duke Capital's ability to
obtain financing on favorable terms, which can be affected by various
factors, including its credit ratings and general economic conditions;
. growth in opportunities for Duke Capital's subsidiaries;
. achievement of Year 2000 readiness by Duke Capital, its subsidiaries
and the customers and suppliers of those subsidiaries; and
. the effect of accounting policies issued periodically by accounting
standard-setting bodies.
In light of these risks, uncertainties and assumptions, the forward-
looking events referred to in
this Prospectus Supplement and the accompanying Prospectus might not occur.
Neither Duke Capital nor the Underwriters undertake any obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
S-3
<PAGE>
DESCRIPTION OF THE SERIES SENIOR NOTES
The following description of the Series Senior Notes is only a summary
and is not intended to be comprehensive. The description should be read
together with the description of the general terms and provisions of Senior
Notes provided under the caption "Description of the Senior Notes" in the
accompanying Prospectus.
General
The Series Senior Notes will be limited in principal amount to $
and will be issued as a series of Senior Notes under Duke Capital's Senior
Indenture.
The entire principal amount of the Series Senior Notes will mature and
become due and payable, together with any accrued and unpaid interest, on
, .
The Series Senior Notes will not be subject to any sinking fund
provision.
Interest
Each Series Senior Note will bear interest at the rate of % per year
from the date of original issuance. Duke Capital will pay interest semiannually
on and of each year, beginning , , to the person in
whose name that Series Senior Note is registered at the close of business on
the fifteenth calendar day before the relevant interest payment date, except
that Duke Capital will pay interest payable at the maturity date of the Series
Senior Notes or on a redemption date to the person or persons to whom
principal is payable. The amount of interest payable will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any date on
which interest is payable is not a Business Day, Duke Capital will pay that
interest on the next Business Day without any interest or other payment due to
the delay.
Optional Redemption
Duke Capital will have the right to redeem the Series Senior Notes, in
whole or in part at any time, at a redemption price equal to the greater of (1)
100% of the principal amount of the Series Senior Notes to be redeemed and
(2) the sum of the present values of the remaining scheduled payments of
principal and interest on such Series Senior Notes (exclusive of interest
accrued to the
S-4
<PAGE>
redemption date) discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Treasury
Rate plus basis points, plus, in either case, accrued and unpaid interest on
the principal amount being redeemed to such redemption date.
"Treasury Rate" means, with respect to any redemption date, (1) the
yield, under the heading which represents the average for the immediately
preceding week, appearing in the most recently published statistical release
designated "H.15(519)" or any successor publication which is published weekly
by the Board of Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities adjusted to
constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the maturity date of the Series Senior
Notes, yields for the two published maturities most closely corresponding to
the Comparable Treasury Issue shall be determined, and the Treasury Rate shall
be interpolated or extrapolated from such yields on a straight-line basis,
rounding to the nearest month) or (2) if such release (or any successor
release) is not published during the week preceding the calculation date or
does not contain such yields, the rate per year equal to the semiannual
equivalent yield to maturity of the Comparable Treasury Issue, calculated using
a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such redemption
date. The Treasury Rate will be calculated on the third Business Day preceding
the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Independent Investment Banker as having a maturity comparable
to the remaining term of the Series Senior Notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such Series Senior Notes.
"Independent Investment Banker" means and any successor firm or,
if such firm is unwilling or unable to select the Comparable Treasury Issue, an
independent investment banking institution of national standing appointed by
the Senior Indenture Trustee after consultation with Duke Capital.
"Comparable Treasury Price" means with respect to any redemption date for
the Series Senior Notes (1) the average of Reference Treasury Dealer
Quotations for such redemption date, after excluding the highest and lowest
such Reference Treasury Dealer Quotations, or (2) if the Senior Indenture
Trustee obtains fewer than such Reference Treasury Dealer Quotations, the
average of all such quotations.
"Reference Treasury Dealer" means each of , ,
, and and their respective successors; provided,
however, that if any of the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"),
Duke Capital will substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined
by the Senior Indenture Trustee, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Senior Indenture Trustee by such Reference Treasury
Dealer at 5:00 p.m., New York City time, on the third Business Day preceding
such redemption date.
S-5
<PAGE>
Redemption Procedures
Duke Capital will provide not less than 30 nor more than 60 days' notice
mailed to each registered holder of the Series Senior Notes to be redeemed.
If the redemption notice is given and funds deposited as required, then
interest will cease to accrue on and after the redemption date on the Series
Senior Notes or portions of Series Senior Notes called for redemption. In the
event that any redemption date is not a Business Day, Duke Capital will pay the
redemption price on the next Business Day without any interest or other payment
due to the delay.
Ranking
The Series Senior Notes will be direct, unsecured and unsubordinated
obligations of Duke Capital. The Series Senior Notes will rank equal in
priority with all other unsecured and unsubordinated indebtedness of Duke
Capital and senior in right of payment to all existing and future subordinated
debt of Duke Capital. At , , Duke Capital had outstanding
approximately $ of unsecured and unsubordinated indebtedness. The
Senior Indenture contains no restrictions on the amount of additional
indebtedness that Duke Capital may issue under it.
Denominations
The Series Senior Notes will be issuable in denominations of $ and
integral multiples of $ .
Defeasance and Covenant Defeasance
The Series Senior Notes will be subject to Defeasance and Covenant
Defeasance as described in the Senior Indenture. See "Description of the Senior
Notes--Defeasance and Covenant Defeasance" in the accompanying Prospectus.
Book-Entry Only Issuance--The Depository Trust Company
The Depository Trust Company ("DTC") will act as the initial securities
depositary for the Series Senior Notes. The Series Senior Notes will be
initially issued as fully registered securities registered in the name of Cede
& Co., DTC's nominee. One or more fully registered global certificates will be
issued, representing the total principal amount of the Series Senior Notes,
and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. DTC holds securities that its participants
("participants") deposit with DTC. DTC also facilitates the settlement among
participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations ("direct participants"). DTC is
S-6
<PAGE>
owned by a number of its direct participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the National Association
of Securities Dealers, Inc. Access to the DTC system is also available to
others such as securities brokers and dealers, banks and trust companies that
clear through or maintain a custodial relationship with a direct participant,
either directly or indirectly ("indirect participants"). The rules applicable
to DTC and its participants are on file with the Securities and Exchange
Commission.
Purchases of Series Senior Notes within the DTC system must be made by
or through direct participants, which will receive a credit for the Series
Senior Notes on DTC's records. The ownership interest of each actual purchaser
of Series Senior Notes ("beneficial owner") is in turn to be recorded on the
direct and indirect participants' records. Beneficial owners will not receive
written confirmation from DTC of their purchases, but beneficial owners are
expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the direct
or indirect participants through which the beneficial owners entered into the
transaction. Transfers of ownership interests in the Series Senior Notes are
to be accomplished by entries made on the books of participants acting on
behalf of beneficial owners. Beneficial owners will not receive certificates
representing their ownership interests in Series Senior Notes, except in the
event that use of the book-entry system for the Series Senior Notes is
discontinued.
To facilitate subsequent transfers, all Series Senior Notes deposited
by participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Series Senior Notes with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual beneficial owners of the Series
Senior Notes. DTC's records reflect only the identity of the direct
participants to whose accounts such Series Senior Notes are credited, which
may or may not be the beneficial owners. The participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices will be sent to DTC. If less than all of the Series
Senior Notes are being redeemed, DTC will reduce the amount of interest of each
direct participant in the Series Senior Notes in accordance with its
procedures.
Neither DTC nor Cede & Co. will consent or vote with respect to Series
Senior Notes. Under its usual procedures, DTC would mail an Omnibus Proxy to
Duke Capital as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those direct participants
to whose accounts the Series Senior Notes are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Payments on the Series Senior Notes will be made to Cede & Co., as
nominee of DTC. DTC's practice is to credit direct participants' accounts, upon
DTC's receipt of funds and corresponding detailed information, on the relevant
payment date in accordance with their respective holdings shown on DTC's
records. Payments by participants to beneficial owners will be governed
S-7
<PAGE>
by standing instructions and customary practices, as is the case with
securities held for the account of customers in bearer form or registered in
"street name," and will be the responsibility of such participant and not of
DTC or Duke Capital, subject to any statutory or regulatory requirements as may
be in effect from time to time. Payment to Cede & Co. is the responsibility of
Duke Capital or the paying agent, disbursement of such payments to direct
participants is the responsibility of Cede & Co. and disbursement of such
payments to the beneficial owners is the responsibility of direct and indirect
participants.
Except as provided herein, a beneficial owner of an interest in a global
Series Senior Note will not be entitled to receive physical delivery of
Series Senior Notes. Accordingly, each beneficial owner must rely on the
procedures of DTC to exercise any rights under the Series Senior Notes. The
laws of some jurisdictions require that certain purchasers of securities take
physical delivery of securities in definitive form. Such laws may impair the
ability to transfer beneficial interests in a global Series Senior Note.
DTC may discontinue providing its services as securities depositary with
respect to the Series Senior Notes at any time by giving reasonable notice to
Duke Capital. Under such circumstances, in the event that a successor
securities depositary is not obtained within 90 days, Series Senior Note
certificates will be printed and delivered to the holders of record.
Additionally, Duke Capital may decide to discontinue use of the system of book-
entry transfers through DTC (or a successor securities depositary) with respect
to the Series Senior Notes. In that event, certificates for the Series
Senior Notes will be printed and delivered to the holders of record.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that Duke Capital believes to be
reliable, but neither Duke Capital nor any Underwriter takes any responsibility
for its accuracy. Duke Capital has no responsibility for the performance by DTC
or its participants of their respective obligations, including obligations that
they have under the rules and procedures that govern their operations.
S-8
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, Duke
Capital has agreed to sell to each of the Underwriters named below (for whom
, , , , , and
are acting as Representatives) and each of the Underwriters has
severally agreed to purchase from Duke Capital the respective principal amount
of Series Senior Notes set forth opposite its name below:
<TABLE>
<CAPTION>
Principal Amount
of Series
Underwriter Senior Notes
----------- ----------------
<S> <C>
-----
Total.................................................... $
=====
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to
certain conditions, to purchase all of the Series Senior Notes if any of the
Series Senior Notes are purchased.
The Underwriters propose initially to offer the Series Senior Notes to
the public at the initial public offering price set forth on the cover page of
this Prospectus Supplement, and to certain dealers at that price less a
concession not in excess of $ per Series Senior Note. The Underwriters may
allow, and those dealers may reallow, a discount not in excess of $ per
Series Senior Note to certain other dealers. The initial public offering
price, selling concession and discount may be changed after the initial public
offering.
The Underwriters may purchase and sell the Series Senior Notes in the
open market in connection with the offering. Those transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the offering. Stabilizing
transactions consist of certain bids or purchases for the purpose of preventing
or retarding a decline in the market price of the Series Senior Notes.
Syndicate short positions involve the sale by the Underwriters of a greater
number of Series Senior Notes than they are required to purchase from Duke
Capital in the offering. The Underwriters also may impose a penalty bid, by
which selling concessions allowed to syndicate members or other broker dealers
with respect to the securities sold in the offering for their account may be
reclaimed by the syndicate if those Series Senior Notes are repurchased by
the syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Series Senior
Notes, which may be higher than the price that might otherwise prevail in the
open market. These activities, if commenced, may be discontinued at any time.
S-9
<PAGE>
Duke Capital has agreed, during the period of days from the date of
the Underwriting Agreement, not to sell, offer to sell, grant any option for
the sale of, or otherwise dispose of any Series Senior Notes, any security
convertible into or exchangeable for the Series Senior Notes or any debt
securities substantially similar to the Series Senior Notes (except for the
Series Senior Notes issued pursuant to the Underwriting Agreement), without
the prior written consent of the Representatives.
Duke Capital estimates that its expenses in connection with this
offering, excluding underwriting discounts and commissions, will be
approximately $ .
Duke Capital has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
Certain of the Underwriters and their affiliates engage in transactions
with, and, from time to time, have performed services for Duke Capital or
certain of its affiliates in the ordinary course of business and may do so in
the future.
VALIDITY OF THE SECURITIES
Dewey Ballantine LLP will issue an opinion about the validity of the
Series Senior Notes and certain related matters on behalf of Duke Capital.
will issue an opinion about the validity of the Series Senior Notes
for the Underwriters.
S-10
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$[ ]
Duke Capital Corporation
a subsidiary of Duke Energy Corporation
Series % Senior Notes
due
---------------------
PROSPECTUS SUPPLEMENT
---------------------
[Names of Underwriters]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this Prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This Prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale of these securities is not +
+permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion dated January 4, 2000
PROSPECTUS
$2,000,000,000
Duke Capital Corporation
a subsidiary of Duke Energy Corporation
Senior Notes
Junior Subordinated Notes
-----------
Duke Capital Financing Trust IV
Duke Capital Financing Trust V
Duke Capital Financing Trust VI
Trust Preferred Securities
Guaranteed, to the extent described herein, by
Duke Capital Corporation
a subsidiary of Duke Energy Corporation
-----------
This Prospectus contains summaries of the general terms of these
securities. You will find the specific terms of these securities, and the
manner in which they are being offered, in supplements to this Prospectus. You
should read this Prospectus and the applicable Prospectus Supplement carefully
before you invest.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus. Any representation to the contrary is
a criminal offense.
The date of this Prospectus is January , 2000.
<PAGE>
ABOUT THIS PROSPECTUS
This Prospectus is part of a Registration Statement that Duke Capital,
Duke Capital Financing Trust IV, Duke Capital Financing Trust V and Duke
Capital Financing Trust VI filed with the SEC utilizing a "shelf" registration
process. Under the shelf registration process, Duke Capital may issue Senior
Notes and Junior Subordinated Notes and Duke Capital Financing Trust IV, Duke
Capital Financing Trust V and Duke Capital Financing Trust VI may issue trust
preferred securities in one or more offerings up to a total dollar amount of
$2,000,000,000. The trust preferred securities that Duke Capital Financing
Trust IV, Duke Capital Financing Trust V and Duke Capital Financing Trust VI
may issue are called "Preferred Securities" in this Prospectus.
This Prospectus provides general descriptions of the Senior Notes, Junior
Subordinated Notes and Preferred Securities. Each time Senior Notes, Junior
Subordinated Notes or Preferred Securities are sold, a Prospectus Supplement
will provide specific information about the terms of that offering. The
Prospectus Supplement may also add, update or change information contained in
this Prospectus. The Registration Statement filed with the SEC includes
exhibits that provide more details about the matters discussed in this
Prospectus. You should read this Prospectus, the related exhibits filed with
the SEC and any Prospectus Supplement, together with the additional information
described under the next caption, "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
Duke Capital files annual, quarterly and special reports and other
information with the SEC. You may read and copy any document Duke Capital files
at the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC's toll-free telephone number at 1-800-
SEC-0330 for further information about the operation of the public reference
rooms. Duke Capital's SEC filings are available on the SEC's Web site at
http://www.sec.gov.
The SEC allows Duke Capital to "incorporate by reference" the information
Duke Capital files with it, which means that Duke Capital can disclose
important information to you by referring you to those documents. The
information incorporated by reference is an important part of this Prospectus
and should be read with the same care. Information that Duke Capital files
later with the SEC will automatically update and supersede that information.
The following documents are incorporated in and made a part of this
Prospectus by reference:
Duke Capital's annual report on Form 10-K for the year ended December 31,
1998;
Duke Capital's quarterly reports on Form 10-Q for the quarters ended
March 31, 1999, June 30, 1999 and September 30, 1999; and
Duke Capital's current reports on Form 8-K filed on January 26, 1999,
February 24, 1999, June 1, 1999, August 6, 1999 and December 30, 1999.
Any documents that Duke Capital files with the SEC in the future under
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 will
also be incorporated by reference into this Prospectus until all of the
securities being registered are sold.
2
<PAGE>
You may obtain a copy of the filings incorporated by reference in this
Prospectus at no cost by writing or calling Duke Capital at the following
address or at one of the following telephone numbers:
Investor Relations Department
Duke Capital Corporation
P.O. Box 1005
Charlotte, North Carolina 28201
(704) 382-3853 or (800) 488-3853 (toll-free)
DUKE CAPITAL CORPORATION
Duke Capital, a wholly owned subsidiary of Duke Energy Corporation, is a
holding company that, through subsidiaries, primarily operates in six business
segments:
. Natural Gas Transmission
. Field Services
. Trading and Marketing
. Global Asset Development
. Other Energy Services
. Real Estate Operations
Natural Gas Transmission, through its Northeast Pipelines, provides
interstate transportation and storage of natural gas for customers primarily in
the Mid-Atlantic and New England states.
Field Services gathers, processes, transports and markets natural gas and
produces and markets natural gas liquids. Field Services operates gathering
systems in western Canada and ten contiguous states in the United States that
serve major gas-producing regions in the Rocky Mountains, Permian Basin, Mid-
Continent and onshore and offshore Gulf Coast areas. Duke Capital and Phillips
Petroleum Company agreed on December 16, 1999 to combine Field Services'
natural gas gathering and processing business and Phillips Petroleum's gas
gathering, processing and marketing unit to form a new company--Duke Energy
Field Services--that would be owned approximately 70% by Duke Capital and
approximately 30% by Phillips Petroleum at closing. The transaction is
presently scheduled to close during the first quarter of 2000, subject to
regulatory approval.
Trading and Marketing primarily markets natural gas, electricity and
other energy-related products across North America. Duke Energy owns a 60%
interest in Trading and Marketing's energy trading operations, with Mobil
Corporation owning a 40% minority interest. This segment also includes limited
hydrocarbon exploration and production activities that are wholly owned by Duke
Capital.
Global Asset Development develops, owns and operates energy-related
facilities worldwide. Global Asset Development conducts its operations
primarily through Duke Energy North America, LLC and Duke Energy International,
LLC.
Other Energy Services provides engineering, consulting, construction and
integrated energy solutions worldwide, primarily through Duke Engineering &
Services, Inc., Duke/Fluor Daniel and DukeSolutions, Inc.
3
<PAGE>
Real Estate Operations develops commercial and residential real estate
projects and manages forest holdings in the southeastern United States. Real
Estate Operations conducts its business through Crescent Resources, Inc.
The foregoing information about Duke Capital and its business segments is
only a general summary and is not intended to be comprehensive. For additional
information about Duke Capital and its business segments you should refer to
the information described under the caption "Where You Can Find More
Information."
Duke Capital's principal executive offices are located at 526 South
Church Street, Charlotte, North Carolina 28202, telephone (704) 594-6200.
4
<PAGE>
Recent Financial Data
The following shows only selected consolidated financial information. You
should refer to the financial statements included in the documents incorporated
by reference in this Prospectus for additional information. See "Where You Can
Find More Information."
<TABLE>
<CAPTION>
Nine Months
Ended September 30, Year Ended December 31,
----------------------- -----------------------
1999 1998 1998 1997(1) 1996(1)
---------- --------- ------- ------- -------
(unaudited)
(millions)
<S> <C> <C> <C> <C> <C>
Income Statement Data
Operating Revenues............ $ 11,851 $ 9,868 $13,059 $11,915 $7,816
Operating Expenses............ 11,107 9,139 12,023 11,079 6,947
---------- --------- ------- ------- ------
Operating Income........... 744 729 1,036 836 869
Other Income, Net............. 51 72 101 37 20
---------- --------- ------- ------- ------
Earnings Before Interest and
Taxes........................ 795 801 1,137 873 889
Interest Expense.............. 199 180 237 214 232
Income Before Extraordinary
Items........................ 340 371 519 380 399
Net Income.................... 1,000(2) 363 511 380 382
</TABLE>
- --------
(1) Data reflects accounting for the combination of Duke Capital with
PanEnergy Corp on June 30, 1997 similar to a pooling of interests. As a
result, the data gives effect to the combination as if it had occurred as
of January 1, 1996.
(2) Reflects a one-time after-tax extraordinary gain of approximately $660
million attributable to the sale of certain pipeline operations on March
29, 1999.
<TABLE>
<CAPTION>
As of As of December 31,
September 30, --------------------------
1999 1998 1997(1) 1996(1)
------------- ---------- ------- -------
(unaudited)
<S> <C> <C> <C> <C>
Balance Sheet Data (millions)
Property, Plant and Equipment,
Net............................ $10,446 $ 7,154 $ 6,065 $5,801
Total Assets.................... 19,166 13,856 11,097 9,752
Short-Term Debt................. 95 29 138 359
Long-Term Debt, including cur-
rent portion................... 5,228 3,142 2,942 2,203
Trust Preferred Securities...... 823 580 -- --
Stockholder's Equity............ 5,079 4,073 3,366 3,060
</TABLE>
- --------
(1) Data reflects accounting for the combination of Duke Capital with
PanEnergy Corp on June 30, 1997 similar to a pooling of interests. As a
result, the data gives effect to the combination as if it had occurred as
of December 31, 1996.
Financial Ratios
(unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended September 30, Year Ended December 31,
------------------- ------------------------------------
1999 1998 1998 1997(1) 1996(1) 1995(1) 1994(1)
--------- --------- ---- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to
Fixed Charges.......... 3.3 4.0 4.2 3.7 3.6 3.2 2.7
</TABLE>
For purposes of this ratio (a) earnings consist of income from continuing
operations before income taxes and fixed charges, and (b) fixed charges consist
of all interest deductions and the interest component of rentals.
- --------
(1) Data reflects accounting for the combination of Duke Capital with
PanEnergy Corp on June 30, 1997 similar to a pooling of interests. As a
result, the data gives effect to the combination as if it had occurred as
of January 1, 1994.
5
<PAGE>
USE OF PROCEEDS
Each Trust will invest the proceeds it receives from the sale of the
Preferred Securities in Junior Subordinated Notes. Unless the applicable
Prospectus Supplement states otherwise, Duke Capital will use the net proceeds
that it receives from such investment and any proceeds that it receives from
sales of its Senior Notes or other sales of the Junior Subordinated Notes for
general corporate purposes, including capital expenditures, working capital,
debt repayments and advances to affiliates.
If Duke Capital does not use the proceeds of the Senior Notes or the
Junior Subordinated Notes, or the net proceeds of the Preferred Securities,
immediately, it may temporarily invest them in short-term interest-bearing
obligations or deposit them with banks.
THE TRUSTS
Duke Capital formed each Trust as a statutory business trust under
Delaware law. Each Trust's business is defined in a trust agreement executed by
Duke Capital, as depositor, and Chase Manhattan Bank Delaware. Each trust
agreement will be amended when Preferred Securities are issued under it and
will be in substantially the form filed as an exhibit to the Registration
Statement. Each amended trust agreement is called a "Trust Agreement" in this
Prospectus.
The Preferred Securities and the Common Securities of each Trust
represent undivided beneficial interests in the assets of that Trust. The
Preferred Securities and the Common Securities together are sometimes called
the "Trust Securities" in this Prospectus.
The trustees of each Trust will conduct that Trust's business and
affairs. Duke Capital, as the holder of the Common Securities of each Trust,
will appoint the trustees of that Trust. The trustees of each Trust will
consist of:
. two officers of Duke Capital as Administrative Trustees;
. The Chase Manhattan Bank as Property Trustee; and
. Chase Manhattan Bank Delaware as Delaware Trustee.
The Prospectus Supplement relating to the Preferred Securities of a Trust
will provide further information concerning that Trust.
No separate financial statements of any Trust are included in this
Prospectus. Duke Capital considers that such statements would not be material
to holders of the Preferred Securities because no Trust has any independent
operations and the sole purpose of each Trust is investing the proceeds of the
sale of its Trust Securities in Junior Subordinated Notes. Duke Capital does
not expect that any of the Trusts will be filing annual, quarterly or special
reports with the SEC.
The principal place of business of each Trust will be c/o Duke Capital
Corporation, 526 South Church Street, Charlotte, North Carolina 28202,
telephone (704) 594-6200.
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DESCRIPTION OF THE SENIOR NOTES
Duke Capital will issue the Senior Notes in one or more series under its
Senior Indenture dated as of April 1, 1998 between Duke Capital and The Chase
Manhattan Bank, as Trustee, as supplemented from time to time. The Senior
Indenture is called the "Senior Indenture" in this Prospectus. The Trustee
under the Senior Indenture is called the "Senior Indenture Trustee" in this
Prospectus. The Senior Indenture is an exhibit to the Registration Statement.
Duke Capital conducts its business through subsidiaries. Accordingly, its
ability to meet its obligations under the Senior Notes is dependent on the
earnings and cash flows of those subsidiaries and the ability of those
subsidiaries to pay dividends or to advance or repay funds to Duke Capital. In
addition, the rights that Duke Capital and its creditors would have to
participate in the assets of any such subsidiary upon the subsidiary's
liquidation or recapitalization will be subject to the prior claims of the
subsidiary's creditors. Certain subsidiaries of Duke Capital have incurred
substantial amounts of debt in the expansion of their businesses and Duke
Capital anticipates that certain of its subsidiaries will do so in the future.
The following description of the Senior Notes is only a summary and is
not intended to be comprehensive. For additional information you should refer
to the Senior Indenture.
General
The Senior Indenture does not limit the amount of Senior Notes that Duke
Capital may issue under it. Duke Capital may issue Senior Notes from time to
time under the Senior Indenture in one or more series by entering into
supplemental indentures or by its Board of Directors or a duly authorized
committee authorizing the issuance. The form of supplemental indenture to the
Senior Indenture is an exhibit to the Registration Statement.
The Senior Notes of a series need not be issued at the same time, bear
interest at the same rate or mature on the same date.
The Senior Indenture does not protect the holders of Senior Notes if Duke
Capital engages in a highly leveraged transaction.
Provisions Applicable to Particular Series
The Prospectus Supplement for a particular series of Senior Notes will
specify the terms of that series, including, if applicable:
. the title of the series;
. any limit on the principal amount of the Senior Notes of the series;
. the date or dates on which principal is payable or the method for
determining the date or dates, and any right that Duke Capital has to
change the date on which principal is payable;
. the interest rate or rates, if any, or the method for determining the
rate or rates, and the date or dates from which interest will accrue;
. any interest payment dates and the regular record date for the
interest payable on each interest payment date, if any;
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. whether Duke Capital may extend the interest payment periods and, if
so, the terms of the extension;
. the place or places where payments will be made, if other than the
principal corporate trust office of the Senior Indenture Trustee;
. any obligation that Duke Capital has to redeem the Senior Notes
through a sinking fund or to purchase the Senior Notes through a
purchase fund or at the option of the holder;
. whether Duke Capital has the option to redeem the Senior Notes and, if
so, the terms of its redemption option;
. whether the provisions described under the caption "Defeasance and
Covenant Defeasance" will not apply to the Senior Notes;
. the currency in which payments will be made if other than U.S.
dollars, and the manner of determining the equivalent of those amounts
in U.S. dollars;
. if payments may be made, at Duke Capital's election or at the holder's
election, in a currency other than that in which the Senior Notes are
stated to be payable, then the currency in which those payments may be
made, the terms and conditions of the election and the manner of
determining those amounts;
. the portion of the principal payable upon acceleration of maturity, if
other than the entire principal;
. whether the Senior Notes will be issuable as global securities and, if
so, the securities depositary;
. any changes in the events of default or covenants with respect to the
Senior Notes;
. any index or formula used for determining principal, premium or
interest;
. if the principal payable on the maturity date will not be determinable
on one or more dates prior to the maturity date, the amount which will
be deemed to be such principal amount or the manner of determining it;
and
. any other terms.
Unless Duke Capital states otherwise in the applicable Prospectus
Supplement, Duke Capital will issue the Senior Notes only in fully registered
form, without coupons, and there will be no service charge for any registration
of transfer or exchange of the Senior Notes. Duke Capital may, however, require
payment to cover any tax or other governmental charge payable in connection
with any transfer or exchange. Transfers and exchanges of the Senior Notes may
be made at The Chase Manhattan Bank, 55 Water Street, New York, New York 10041.
The Senior Notes will be issuable in denominations of $1,000 and any
integral multiples of $1,000, unless Duke Capital states otherwise in the
applicable Prospectus Supplement.
Duke Capital may offer and sell the Senior Notes, including original
issue discount Senior Notes, at a substantial discount below their principal
amount. The applicable Prospectus Supplement will describe special United
States federal income tax and any other considerations applicable to those
securities. In addition, the applicable Prospectus Supplement may describe
certain special United States federal income tax or other considerations, if
any, applicable to any Senior Notes which are denominated in a currency other
than U.S. dollars.
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Global Securities
Duke Capital may issue some or all of the Senior Notes as book-entry
securities. Any such book-entry securities will be represented by one or more
fully registered global certificates. Duke Capital will register each global
security with, or on behalf of, a securities depositary identified in the
applicable Prospectus Supplement. Each global certificate will be deposited
with the securities depositary or its nominee or a custodian for the securities
depositary.
As long as the securities depositary or its nominee is the registered
holder of a global security representing Senior Notes, that person will be
considered the sole owner and holder of the global security and the Senior
Notes it represents for all purposes. Except in limited circumstances, owners
of beneficial interests in a global security:
. may not have the global security or any Senior Notes it represents
registered in their names;
. may not receive or be entitled to receive physical delivery of
certificated Senior Notes in exchange for the global security; and
. will not be considered the owners or holders of the global security or
any Senior Notes it represents for any purposes under the Senior Notes
or the Senior Indenture.
Duke Capital will make all payments of principal and any premium and
interest on a global security to the securities depositary or its nominee as
the holder of the global security. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of securities in
definitive form. These laws may impair the ability to transfer beneficial
interests in a global security.
Ownership of beneficial interests in a global security will be limited to
institutions having accounts with the securities depositary or its nominee,
which are called "participants" in this discussion, and to persons that hold
beneficial interests through participants. When a global security representing
Senior Notes is issued, the securities depositary will credit on its book
entry, registration and transfer system the principal amounts of Senior Notes
the global security represents to the accounts of its participants. Ownership
of beneficial interests in a global security will be shown only on, and the
transfer of those ownership interests will be effected only through, records
maintained by:
. the securities depositary, with respect to participants' interests;
and
. any participant, with respect to interests the participant holds on
behalf of other persons.
Payments participants make to owners of beneficial interests held through
those participants will be the responsibility of those participants. The
securities depositary may from time to time adopt various policies and
procedures governing payments, transfers, exchanges and other matters relating
to beneficial interests in a global security. None of the following will have
any responsibility or liability for any aspect of the securities depositary's
or any participant's records relating to beneficial interests in a global
security representing Senior Notes, for payments made on account of those
beneficial interests or for maintaining, supervising or reviewing any records
relating to those beneficial interests:
. Duke Capital;
. the Senior Indenture Trustee; or
. an agent of either of the above.
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Redemption
Any provisions relating to the redemption of Senior Notes will be set
forth in the applicable Prospectus Supplement. Unless Duke Capital states
otherwise in the applicable Prospectus Supplement, Duke Capital may redeem
Senior Notes only upon notice mailed at least 30 but not more than 60 days
before the date fixed for redemption. Unless Duke Capital states otherwise in
the applicable Prospectus Supplement, that notice may state that the redemption
will be conditional upon the Senior Indenture Trustee, or the applicable Paying
Agent, receiving sufficient funds to pay the principal, premium and interest on
those Senior Notes on the date fixed for redemption and that if the Senior
Indenture Trustee or the applicable Paying Agent does not receive those funds,
the redemption notice will not apply, and Duke Capital will not be required to
redeem those Senior Notes.
Duke Capital will not be required to:
. issue, register the transfer of, or exchange any Senior Notes of a
series during the period beginning 15 days before the date the notice
is mailed identifying the Senior Notes of that series that have been
selected for redemption; or
. register the transfer of, or exchange any Senior Note of that series
selected for redemption except the unredeemed portion of a Senior Note
being partially redeemed.
Consolidation, Merger, Conveyance or Transfer
The Senior Indenture provides that Duke Capital may consolidate or merge
with or into, or convey or transfer all or substantially all of its properties
and assets to, another corporation or other entity. Any successor must,
however, assume Duke Capital's obligations under the Senior Indenture and the
Senior Notes issued under it, and Duke Capital must deliver an officers'
certificate and an opinion of counsel to the Senior Indenture Trustee that
affirm compliance with all conditions in the Senior Indenture relating to the
transaction. When those conditions are satisfied, the successor will succeed to
and be substituted for Duke Capital under the Senior Indenture, and Duke
Capital will be relieved of its obligations under the Senior Indenture and the
Senior Notes issued under it.
Modification; Waiver
Duke Capital may amend or modify the Senior Indenture with the consent of
the holders of a majority of the outstanding Senior Notes of all series of
Senior Notes issued under it that are affected by the amendment or
modification, voting as one class. The consent of the holder of each
outstanding Senior Note affected is, however, required to:
. change the maturity date of the principal, or any installment of
principal or interest on that Senior Note;
. reduce the principal amount, the interest rate or any premium payable
upon redemption on that Senior Note;
. reduce the amount of principal due and payable upon acceleration of
maturity;
. change the currency of payment of principal, premium or interest on
that Senior Note;
. impair the right to institute suit to enforce any such payment on or
after the maturity date or redemption date;
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. reduce the percentage in principal amount of Senior Notes of any
series required to amend or modify the Senior Indenture, to waive
compliance with certain restrictive provisions of the Senior Indenture
or to waive certain defaults; or
. with certain exceptions, modify the provisions of the Senior Indenture
governing amendments of the Senior Indenture or governing waiver of
covenants or past defaults.
In addition, Duke Capital may supplement the Senior Indenture to create new
series of Senior Notes and for certain other purposes, without the consent of
any holders of Senior Notes issued under the Senior Indenture.
The holders of a majority of the outstanding Senior Notes of any series
may waive, for that series, Duke Capital's compliance with certain restrictive
provisions of the Senior Indenture under which those Senior Notes were issued.
The holders of a majority of the outstanding Senior Notes of all series under
the Senior Indenture with respect to which a default has occurred and is
continuing, all holders of those series voting as one class, may waive that
default for all those series, except a default in the payment of principal or
any premium or interest on any Senior Note or a default with respect to a
covenant or provision which cannot be amended or modified without the consent
of the holder of each outstanding Senior Note of the series affected.
If certain payments on a series of Senior Notes are insured by a
financial guaranty insurance policy or other policy, terms other than those
that are described in the preceding paragraph may apply to that series.
Events of Default
The following are events of default under the Senior Indenture with
respect to any series of Senior Notes, unless Duke Capital states otherwise in
the applicable Prospectus Supplement:
. failure to pay principal of or any premium on any Senior Note of that
series when due;
. failure to pay any interest on any Senior Note of that series, when
due, that continues for 60 days; for this purpose, the date on which
interest is due is the date on which Duke Capital is required to make
payment following any deferral of interest payments by it under the
terms of Senior Notes that permit such deferrals;
. failure to make any sinking fund payment when required for any Senior
Note of that series that continues for 60 days;
. failure to perform any covenant in the Senior Indenture (other than a
covenant expressly included solely for the benefit of other series)
that continues for 90 days after the Senior Indenture Trustee or the
holders of at least 33% of the outstanding Senior Notes of that series
give Duke Capital written notice of the default; and
. certain bankruptcy, insolvency or reorganization events with respect
to Duke Capital.
In the case of the fourth event of default listed above, the Senior Indenture
Trustee may extend the grace period. In addition, if holders of a particular
series have given a notice of default, then holders of at least the same
percentage of Senior Notes of that series, together with the Senior Indenture
Trustee, may also extend the grace period. The grace period will be
automatically extended if Duke Capital has initiated and is diligently pursuing
corrective action.
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Additional events of default may be established for a particular series
and, if established, will be described in the applicable Prospectus Supplement.
If an event of default with respect to Senior Notes of a series occurs
and is continuing, then the Senior Indenture Trustee or the holders of at least
33% of the outstanding Senior Notes of that series may declare the principal
amount of all Senior Notes of that series to be immediately due and payable.
However, that event of default will be considered waived at any time after the
declaration but before a judgment for payment of the money due has been
obtained if:
. Duke Capital has paid or deposited with the Senior Indenture Trustee
all overdue interest, the principal and any premium due otherwise than
by the declaration and any interest on such amounts, and any interest
on overdue interest, to the extent legally permitted, in each case
with respect to that series, and all amounts due to the Senior
Indenture Trustee under the Senior Indenture; and
. all events of default with respect to that series, other than the
nonpayment of the principal which became due solely by virtue of the
declaration, have been cured or waived.
The Senior Indenture Trustee is under no obligation to exercise any of
its rights or powers at the request or direction of any holders of Senior Notes
unless those holders have offered the Senior Indenture Trustee security or
indemnity against the costs, expenses and liabilities which it might incur as a
result. The holders of a majority of the outstanding Senior Notes of any series
have, with certain exceptions, the right to direct the time, method and place
of conducting any proceedings for any remedy available to the Senior Indenture
Trustee or the exercise of any power of the Senior Indenture Trustee with
respect to those Senior Notes. The Senior Indenture Trustee may withhold notice
of any default, except a default in the payment of principal or interest, from
the holders of any series if the Senior Indenture Trustee in good faith
considers it in the interest of the holders to do so.
The holder of any Senior Note will have an absolute and unconditional
right to receive payment of the principal, any premium and, within certain
limitations, any interest on that Senior Note on its maturity date or
redemption date and to enforce those payments.
If certain payments on a series of Senior Notes are insured by a
financial guaranty insurance policy or other policy, terms other than those
that are described in the preceding three paragraphs may apply to that series.
Duke Capital is required to furnish each year to the Senior Indenture
Trustee an officers' certificate to the effect that it is not in default under
the Senior Indenture or, if there has been a default, specifying the default
and its status.
Payments; Paying Agent
The paying agent will pay the principal of any Senior Notes only if those
Senior Notes are surrendered to it. Unless Duke Capital states otherwise in the
applicable Prospectus Supplement, the paying agent will pay interest on Senior
Notes, subject to such surrender, where applicable, at its office or, at Duke
Capital's option:
. by wire transfer to an account at a banking institution in the United
States that is designated in writing to the Senior Indenture Trustee
at least 16 days prior to the date of payment by the person entitled
to that interest; or
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. by check mailed to the address of the person entitled to that interest
as that address appears in the security register for those Senior
Notes.
Unless Duke Capital states otherwise in the applicable Prospectus
Supplement, the Senior Indenture Trustee will act as paying agent for the
Senior Notes, and the principal corporate trust office of the Senior Indenture
Trustee will be the office through which the paying agent acts. Duke Capital
may, however, change or add paying agents or approve a change in the office
through which a paying agent acts.
Any money that Duke Capital has paid to a paying agent for principal or
interest on any Senior Notes which remains unclaimed at the end of two years
after that principal or interest has become due will be repaid to Duke Capital
at its request. After repayment to Duke Capital, holders should look only to
Duke Capital for those payments.
Negative Pledge
While any of the Senior Notes remain outstanding, Duke Capital will not,
and will not permit any Principal Subsidiary (as defined below) to, create, or
permit to be created or to exist, any mortgage, lien, pledge, security interest
or other encumbrance upon any Principal Property (as defined below) of Duke
Capital or of a Principal Subsidiary or upon any shares of stock of any
Principal Subsidiary, whether such Principal Property is, or shares of stock
are, owned on or acquired after the date of the Senior Indenture, to secure any
indebtedness for borrowed money of Duke Capital, unless the Senior Notes then
outstanding are equally and ratably secured for so long as any such
indebtedness is so secured.
The foregoing restriction does not apply with respect to, among other
things:
. purchase money mortgages, or other purchase money liens, pledges,
security interests or encumbrances upon property that Duke Capital or
any Principal Subsidiary acquired after the date of the Senior
Indenture;
. mortgages, liens, pledges, security interests or other encumbrances
existing on any property or shares of stock at the time Duke Capital
or any Principal Subsidiary acquired it or them, including those which
exist on any property or shares of stock of an entity with which Duke
Capital or any Principal Subsidiary is consolidated or merged or which
transfers or leases all or substantially all of its properties to Duke
Capital or any Principal Subsidiary;
. mortgages, liens, pledges, security interests or other encumbrances
upon any property of Duke Capital or any Principal Subsidiary or
shares of stock of any Principal Subsidiary that existed on the date
of the initial issuance of Senior Notes or upon the property or shares
of stock of any corporation existing at the time that corporation
became a Principal Subsidiary;
. pledges or deposits to secure performance in connection with bids,
tenders, contracts (other than contracts for the payment of money) or
leases to which Duke Capital or any Principal Subsidiary is a party;
. liens created by or resulting from any litigation or proceeding which
at the time is being contested in good faith by appropriate
proceedings;
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. liens incurred in connection with the issuance of bankers' acceptances
and lines of credit, bankers' liens or rights of offset and any
security given in the ordinary course of business to banks or others
to secure any indebtedness payable on demand or maturing within 12
months of the date that such indebtedness is originally incurred;
. liens incurred in connection with repurchase, swap or other similar
agreements (including commodity price, currency exchange and interest
rate protection agreements);
. liens securing industrial revenue or pollution control bonds;
. liens, pledges, security interests or other encumbrances on any
property arising in connection with any defeasance, covenant
defeasance or in-substance defeasance of indebtedness of Duke Capital
or any Principal Subsidiary;
. liens created in connection with, and created to secure, a non-
recourse obligation;
. mortgages, liens, pledges, security interests or other encumbrances in
favor of the United States of America, any state, any foreign country
or any department, agency or instrumentality or political subdivision
of any such jurisdiction, to secure partial, progress, advance or
other payments pursuant to any contract or statute or to secure any
indebtedness incurred for the purpose of financing all or any part of
the purchase price or the cost of constructing or improving the
property subject to such mortgages;
. indebtedness which Duke Capital or any Principal Subsidiary may issue
in connection with the consolidation or merger of Duke Capital or any
Principal Subsidiary with or into any other entity, which may be an
affiliate of Duke Capital or any Principal Subsidiary, in exchange or
in substitution for secured indebtedness of that entity ("Third Party
Debt") which by its terms (1) is secured by a mortgage on all or a
portion of the property of that entity, (2) prevents that entity from
incurring secured indebtedness, unless the Third Party Debt is secured
equally and ratably with such secured indebtedness or (3) prevents
that entity from incurring secured indebtedness;
. indebtedness of any entity which Duke Capital or any Principal
Subsidiary is required to assume in connection with a consolidation or
merger of that entity, with respect to which any property of Duke
Capital or any Principal Subsidiary is subjected to a mortgage, lien,
pledge, security interest or other encumbrance;
. mortgages, liens, security interests or other encumbrances on property
held or used by Duke Capital or any Principal Subsidiary in connection
with the exploration for, or development, gathering, production,
storage or marketing of, natural gas, oil or other minerals (including
liquefied gas and synthetic gas);
. mortgages, liens, pledges, security interests and other encumbrances
in favor of Duke Capital, one or more Principal Subsidiaries, one or
more wholly owned Subsidiaries (as defined below) of Duke Capital or
any of the foregoing in combination;
. mortgages, liens, pledges, security interests or other encumbrances
upon any property acquired, constructed, developed or improved by Duke
Capital or any Principal Subsidiary after the date of the Senior
Indenture which are created before, at the time of, or within 18
months after such acquisition--or in the case of property constructed,
developed or improved, after the completion of the construction,
development or improvement and commencement of full commercial
operation of that property, whichever
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is later--to secure or provide for the payment of any part of its
purchase price or cost; provided that, in the case of such
construction, development or improvement, the mortgages, liens,
pledges, security interests or other encumbrances shall not apply to
any property that Duke Capital or any Principal Subsidiary owns other
than real property that is unimproved up to that time; and
. the replacement, extension or renewal of any mortgage, lien, pledge,
security interest or other encumbrance described above; or the
replacement, extension or renewal (not exceeding the principal amount
of indebtedness so secured together with any premium, interest, fee or
expense payable in connection with any such replacement, extension or
renewal) of the indebtedness so secured; provided that such
replacement, extension or renewal is limited to all or a part of the
same property that secured the mortgage, lien, pledge, security
interest or other encumbrance replaced, extended or renewed, plus
improvements on it or additions or accessions to it.
In addition, Duke Capital or any Principal Subsidiary may create or assume any
other mortgage, lien, pledge, security interest or other encumbrance not
excepted in the Senior Indenture without Duke Capital equally and ratably
securing the Senior Notes, if immediately after that creation or assumption,
the principal amount of indebtedness for borrowed money of Duke Capital that
all such other mortgages, liens, pledges, security interests and other
encumbrances secure does not exceed an amount equal to 10% of Duke Capital's
common stockholder's equity as shown on its consolidated balance sheet for the
accounting period occurring immediately before the creation or assumption of
that mortgage, lien, pledge, security interest or other encumbrance.
For purposes of the preceding paragraphs, the following terms have these
meanings: "Principal Property" means any natural gas pipeline, natural gas
gathering system, natural gas storage facility, natural gas processing plant or
other plant or facility located in the United States that in the opinion of the
Board of Directors or management of Duke Capital is of material importance to
the business conducted by Duke Capital and its consolidated subsidiaries taken
as a whole; "Principal Subsidiary" means any Subsidiary of Duke Capital that
owns a Principal Property; and "Subsidiary" means, as to any entity, a
corporation of which more than 50% of the outstanding shares of stock having
ordinary voting power (other than stock having such power only by reason of
contingency) is at the time owned, directly or indirectly, through one or more
intermediaries, or both, by such entity.
Defeasance and Covenant Defeasance
The Senior Indenture provides that Duke Capital may be:
. discharged from its obligations, with certain exceptions, with respect
to any series of Senior Notes, as described in the Senior Indenture,
such a discharge being called a "Defeasance" in this Prospectus; and
. released from its obligations under certain restrictive covenants
especially established with respect to any series of Senior Notes,
including the obligations described above under the caption "Negative
Pledge," as described in the Senior Indenture, such a release being
called a "Covenant Defeasance" in this Prospectus.
Duke Capital must satisfy certain conditions to effect a Defeasance or Covenant
Defeasance. Those conditions include the irrevocable deposit with the Senior
Indenture Trustee, in trust, of money or
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government obligations which through their scheduled payments of principal and
interest would provide sufficient money to pay the principal and any premium
and interest on those Senior Notes on the maturity dates of those payments or
upon redemption.
Following a Defeasance, payment of the Senior Notes defeased may not be
accelerated because of an event of default under the Senior Indenture.
Following a Covenant Defeasance, the payment of Senior Notes may not be
accelerated by reference to the covenants from which Duke Capital has been
released. A Defeasance may occur after a Covenant Defeasance.
Under current United States federal income tax laws, a Defeasance would
be treated as an exchange of the relevant Senior Notes in which holders of
those Senior Notes might recognize gain or loss. In addition, the amount,
timing and character of amounts that holders would thereafter be required to
include in income might be different from that which would be includible in the
absence of that Defeasance. Duke Capital urges investors to consult their own
tax advisors as to the specific consequences of a Defeasance, including the
applicability and effect of tax laws other than United States federal income
tax laws.
Under current United States federal income tax law, unless accompanied by
other changes in the terms of the Senior Notes, a Covenant Defeasance should
not be treated as a taxable exchange.
Concerning the Senior Indenture Trustee
The Chase Manhattan Bank is the Senior Indenture Trustee and the Trustee
under the Subordinated Indenture. Duke Capital and certain of its affiliates
maintain deposit accounts and banking relationships with The Chase Manhattan
Bank. The Chase Manhattan Bank also serves as trustee under other indentures
pursuant to which securities of Duke Capital and of certain of its affiliates
are outstanding.
The Senior Indenture Trustee will perform only those duties that are
specifically set forth in the Senior Indenture unless an event of default under
the Senior Indenture occurs and is continuing. In case an event of default
occurs and is continuing, the Senior Indenture Trustee will exercise the same
degree of care as a prudent individual would exercise in the conduct of his or
her own affairs. Subject to those provisions, the Senior Indenture Trustee is
under no obligation to exercise any of its powers under the Senior Indenture at
the request of any holder of Senior Notes unless that holder offers reasonable
indemnity to the Senior Indenture Trustee against the costs, expenses and
liabilities which it might incur as a result.
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DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES
Duke Capital will issue the Junior Subordinated Notes in one or more
series under its Subordinated Indenture dated as of April 1, 1998 between Duke
Capital and The Chase Manhattan Bank, as Trustee, as supplemented from time to
time. The Subordinated Indenture is called the "Subordinated Indenture" in this
Prospectus. The Trustee under the Subordinated Indenture is called the
"Subordinated Indenture Trustee" in this Prospectus. The Subordinated Indenture
is an exhibit to the Registration Statement.
The Junior Subordinated Notes are unsecured obligations of Duke Capital
and are junior in right of payment to "Senior Indebtedness" of Duke Capital.
You may find a description of the subordination provisions of the Junior
Subordinated Notes, including a description of Senior Indebtedness of Duke
Capital, under the caption "Subordination."
Duke Capital conducts its business through subsidiaries. Accordingly, its
ability to meet its obligations under the Junior Subordinated Notes is
dependent on the earnings and cash flows of those subsidiaries and the ability
of those subsidiaries to pay dividends or to advance or repay funds to Duke
Capital. In addition, the rights that Duke Capital and its creditors would have
to participate in the assets of any such subsidiary upon the subsidiary's
liquidation or recapitalization will be subject to the prior claims of the
subsidiary's creditors. Certain subsidiaries of Duke Capital have incurred
substantial amounts of debt in the expansion of their businesses and Duke
Capital anticipates that certain of its subsidiaries will do so in the future.
The following description of the Junior Subordinated Notes is only a
summary and is not intended to be comprehensive. For additional information you
should refer to the Subordinated Indenture.
General
The Subordinated Indenture does not limit the amount of Subordinated
Notes, including Junior Subordinated Notes, that Duke Capital may issue under
it. Duke Capital may issue Subordinated Notes, including Junior Subordinated
Notes, from time to time under the Subordinated Indenture in one or more series
by entering into supplemental indentures or by its Board of Directors or a duly
authorized committee authorizing the issuance. Two forms of supplemental
indenture to the Subordinated Indenture (one with respect to Junior
Subordinated Notes initially issued to a Trust and the other with respect to
Junior Subordinated Notes initially issued to the public) are exhibits to the
Registration Statement.
The Junior Subordinated Notes of a series need not be issued at the same
time, bear interest at the same rate or mature on the same date.
The Subordinated Indenture does not protect the holders of Junior
Subordinated Notes if Duke Capital engages in a highly leveraged transaction.
Provisions Applicable to Particular Series
The Prospectus Supplement for a particular series of Junior Subordinated Notes
will specify the terms of that series, including, if applicable:
. the title of the series;
. any limit on the principal amount of the Junior Subordinated Notes of
the series;
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. the date or dates on which principal is payable or the method for
determining the date or dates, and any right that Duke Capital has to
change the date on which principal is payable;
. the interest rate or rates, if any, or the method for determining the
rate or rates, and the date or dates from which interest will accrue;
. any interest payment dates and the regular record date for the
interest payable on each interest payment date, if any;
. whether Duke Capital may extend the interest payment periods and, if
so, the terms of the extension;
. the place or places where payments will be made, if other than the
principal corporate trust office of the Subordinated Indenture
Trustee;
. any obligation that Duke Capital has to redeem the Junior Subordinated
Notes through a sinking fund or to purchase the Junior Subordinated
Notes through a purchase fund or at the option of the holder;
. whether Duke Capital has the option to redeem the Junior Subordinated
Notes and, if so, the terms of its redemption option;
. whether the provisions described under the caption "Defeasance and
Covenant Defeasance" will not apply to the Junior Subordinated Notes;
. the currency in which payments will be made if other than U.S.
dollars, and the manner of determining the equivalent of those amounts
in U.S. dollars;
. if payments may be made, at Duke Capital's election or at the holder's
election, in a currency other than that in which the Junior
Subordinated Notes are stated to be payable, then the currency in
which those payments may be made, the terms and conditions of the
election and the manner of determining those amounts;
. the portion of the principal payable upon acceleration of maturity, if
other than the entire principal;
. whether the Junior Subordinated Notes will be issuable as global
securities and, if so, the securities depositary;
. any changes in the events of default or covenants with respect to the
Junior Subordinated Notes;
. any index or formula used for determining principal, premium or
interest;
. if the principal payable on the maturity date will not be determinable
on one or more dates prior to the maturity date, the amount which will
be deemed to be such principal amount or the manner of determining it;
. the subordination of the Junior Subordinated Notes to any other of
Duke Capital's indebtedness, including other series of Subordinated
Notes; and
. any other terms.
The interest rate and interest and other payment dates of each series of
Junior Subordinated Notes issued to a Trust will correspond to the rate at
which distributions will be paid and the distribution and other payment dates
of the Preferred Securities of that Trust.
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Unless Duke Capital states otherwise in the applicable Prospectus
Supplement, Duke Capital will issue the Junior Subordinated Notes only in fully
registered form without coupons, and there will be no service charge for any
registration of transfer or exchange of the Junior Subordinated Notes. Duke
Capital may, however, require payment to cover any tax or other governmental
charge payable in connection with any transfer or exchange. Transfers and
exchanges of the Junior Subordinated Notes may be made at The Chase Manhattan
Bank, 55 Water Street, New York, New York 10041.
The Junior Subordinated Notes will be issuable in denominations of $1,000
and any integral multiples of $1,000, unless Duke Capital states otherwise in
the applicable Prospectus Supplement.
Global Securities
Duke Capital may issue some or all of the Junior Subordinated Notes as
book-entry securities. Any such book-entry securities will be represented by
one or more fully registered global certificates. Duke Capital will register
each global security with, or on behalf of, a securities depositary identified
in the applicable Prospectus Supplement. Each global certificate will be
deposited with the securities depositary or its nominee or a custodian for the
securities depositary.
As long as the securities depositary or its nominee is the registered
holder of a global security representing Junior Subordinated Notes, that person
will be considered the sole owner and holder of the global security and the
Junior Subordinated Notes it represents for all purposes. Except in limited
circumstances, owners of beneficial interests in a global security:
. may not have the global security or any Junior Subordinated Notes it
represents registered in their names;
. may not receive or be entitled to receive physical delivery of
certificated Junior Subordinated Notes in exchange for the global
security; and
. will not be considered the owners or holders of the global security or
any Junior Subordinated Notes it represents for any purposes under the
Junior Subordinated Notes or the Subordinated Indenture.
Duke Capital will make all payments of principal and any premium and
interest on a global security to the securities depositary or its nominee as
the holder of the global security. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of securities in
definitive form. These laws may impair the ability to transfer beneficial
interests in a global security.
Ownership of beneficial interests in a global security will be limited to
institutions having accounts with the securities depositary or its nominee,
which are called "participants" in this discussion, and to persons that hold
beneficial interests through participants. When a global security representing
Junior Subordinated Notes is issued, the securities depositary will credit on
its book-entry, registration and transfer system the principal amounts of
Junior Subordinated Notes the global security represents to the accounts of its
participants. Ownership of beneficial interests in a global security will be
shown only on, and the transfer of those ownership interests will be effected
only through, records maintained by:
. the securities depositary, with respect to participants' interests;
and
. any participant, with respect to interests the participant holds on
behalf of other persons.
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Payments participants make to owners of beneficial interests held through
those participants will be the responsibility of those participants. The
securities depositary may from time to time adopt various policies and
procedures governing payments, transfers, exchanges and other matters relating
to beneficial interests in a global security. None of the following will have
any responsibility or liability for any aspect of the securities depositary's
or any participant's records relating to beneficial interests in a global
security representing Junior Subordinated Notes, for payments made on account
of those beneficial interests or for maintaining, supervising or reviewing any
records relating to those beneficial interests:
. Duke Capital;
. the Subordinated Indenture Trustee;
. the Trust (if the Junior Subordinated Notes are issued to a Trust); or
. any agent of any of the above.
Redemption
Any provisions relating to the redemption of Junior Subordinated Notes
will be set forth in the applicable Prospectus Supplement. Unless Duke Capital
states otherwise in the applicable Prospectus Supplement, Duke Capital may
redeem Junior Subordinated Notes only upon notice mailed at least 30 but not
more than 60 days before the date fixed for redemption.
Duke Capital will not be required to:
. issue, register the transfer of, or exchange any Junior Subordinated
Notes of a series during the period beginning 15 days before the date
the notice is mailed identifying the Junior Subordinated Notes of that
series that have been selected for redemption; or
. register the transfer of, or exchange any Junior Subordinated Note of
that series selected for redemption except the unredeemed portion of a
Junior Subordinated Note being partially redeemed.
Consolidation, Merger, Conveyance or Transfer
The Subordinated Indenture provides that Duke Capital may consolidate or
merge with or into, or convey or transfer all or substantially all of its
properties and assets to, another corporation or other entity. Any successor
must, however, assume Duke Capital's obligations under the Subordinated
Indenture and the Subordinated Notes, including the Junior Subordinated Notes,
issued under it, and Duke Capital must deliver an officers' certificate and an
opinion of counsel to the Subordinated Indenture Trustee that affirm compliance
with all conditions in the Subordinated Indenture relating to the transaction.
When those conditions are satisfied, the successor will succeed to and be
substituted for Duke Capital under the Subordinated Indenture, and Duke Capital
will be relieved of its obligations under the Subordinated Indenture and the
Subordinated Notes issued under it.
Modification; Waiver
Duke Capital may amend or modify the Subordinated Indenture with the
consent of the holders of a majority of the outstanding Subordinated Notes of
all series issued under it that are affected by the
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amendment or modification, voting as one class. The consent of the holder of
each outstanding Subordinated Note affected is, however, required to:
. change the maturity date of the principal, or any installment of
principal or interest on that Subordinated Note;
. reduce the principal amount, the interest rate or any premium payable
upon redemption on that Subordinated Note;
. reduce the amount of principal due and payable upon acceleration of
maturity;
. change the currency of payment of principal, premium or interest on
that Subordinated Note;
. impair the right to institute suit to enforce any such payment on or
after the maturity date or redemption date;
. reduce the percentage in principal amount of Subordinated Notes of any
series required to amend or modify the Subordinated Indenture, to
waive compliance with certain restrictive provisions of the
Subordinated Indenture or to waive certain defaults; or
. with certain exceptions, modify the provisions of the Subordinated
Indenture governing amendments of the Subordinated Indenture or
governing waiver of covenants or past defaults.
In addition, Duke Capital may supplement the Subordinated Indenture to create
new series of Junior Subordinated Notes and for certain other purposes, without
the consent of any holders of Subordinated Notes, including Junior Subordinated
Notes.
The holders of a majority of the outstanding Junior Subordinated Notes of
any series may waive, for that series, Duke Capital's compliance with certain
restrictive provisions of the Subordinated Indenture under which those Junior
Subordinated Notes were issued. The holders of a majority of the outstanding
Subordinated Notes of all series under the Subordinated Indenture with respect
to which a default has occurred and is continuing, all holders of those series
voting as one class, may waive that default for all those series, except a
default in the payment of principal or any premium or interest on any
Subordinated Note or a default with respect to a covenant or provision which
cannot be amended or modified without the consent of the holder of each
outstanding Subordinated Note of the series affected.
Duke Capital may not amend the Subordinated Indenture to change the
subordination of any outstanding Junior Subordinated Notes without the consent
of each holder of Senior Indebtedness that the amendment would adversely
affect.
Events of Default
The following are events of default under the Subordinated Indenture with
respect to any series of Junior Subordinated Notes, unless Duke Capital states
otherwise in the applicable Prospectus Supplement:
. failure to pay principal of or any premium on any Junior Subordinated
Note of that series when due;
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. failure to pay any interest on any Junior Subordinated Note of that
series, when due, that continues for 60 days; for this purpose, the
date on which interest is due is the date on which Duke Capital is
required to make payment following any deferral of interest payments
by it under the terms of Junior Subordinated Notes that permit such
deferrals;
. failure to make any sinking fund payment when required for any Junior
Subordinated Note of that series that continues for 60 days;
. failure to perform any covenant in the Subordinated Indenture (other
than a covenant expressly included solely for the benefit of other
series) that continues for 90 days after the Subordinated Indenture
Trustee or the holders of at least 33% of the outstanding Junior
Subordinated Notes of that series give Duke Capital written notice of
the default; and
. certain bankruptcy, insolvency or reorganization events with respect
to Duke Capital.
In the case of the fourth event of default listed above, the Subordinated
Indenture Trustee may extend the grace period. In addition, if holders of a
particular series have given a notice of default, then holders of at least the
same percentage of Junior Subordinated Notes of that series, together with the
Subordinated Indenture Trustee, may also extend the grace period. The grace
period will be automatically extended if Duke Capital has initiated and is
diligently pursuing corrective action.
Additional events of default may be established for a particular series
and, if established, will be described in the applicable Prospectus Supplement.
If an event of default with respect to Junior Subordinated Notes of a
series occurs and is continuing, then the Subordinated Indenture Trustee or the
holders of at least 33% of the outstanding Junior Subordinated Notes of that
series may declare the principal amount of all Junior Subordinated Notes of
that series to be immediately due and payable. However, that event of default
will be considered waived at any time after the declaration but before a
judgment for payment of the money due has been obtained if:
. Duke Capital has paid or deposited with the Subordinated Indenture
Trustee all overdue interest, the principal and any premium due
otherwise than by the declaration and any interest on such amounts,
and any interest on overdue interest, to the extent legally permitted,
in each case with respect to that series, and all amounts due to the
Subordinated Indenture Trustee under the Subordinated Indenture; and
. all events of default with respect to that series, other than the
nonpayment of the principal which became due solely by virtue of the
declaration, have been cured or waived.
A holder of Preferred Securities may institute a legal proceeding
directly against Duke Capital, without first instituting a legal proceeding
against the Property Trustee of the Trust under which those Preferred
Securities were issued or any other person or entity, for enforcement of
payment to that holder of principal or interest on an equivalent amount of
Junior Subordinated Notes of the related series on or after the due dates
specified in those Junior Subordinated Notes.
The Subordinated Indenture Trustee is under no obligation to exercise any
of its rights or powers at the request or direction of any holders of Junior
Subordinated Notes unless those holders have offered the Subordinated Indenture
Trustee security or indemnity against the costs, expenses
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and liabilities which it might incur as a result. The holders of a majority of
the outstanding Junior Subordinated Notes of any series have, with certain
exceptions, the right to direct the time, method and place of conducting any
proceedings for any remedy available to the Subordinated Indenture Trustee or
the exercise of any power of the Subordinated Indenture Trustee with respect
to those Junior Subordinated Notes. The Subordinated Indenture Trustee may
withhold notice of any default, except a default in the payment of principal
or interest, from the holders of any series if the Subordinated Indenture
Trustee in good faith considers it in the interest of the holders to do so.
The holder of any Junior Subordinated Note will have an absolute and
unconditional right to receive payment of the principal, any premium and,
within certain limitations, any interest on that Junior Subordinated Note on
its maturity date or redemption date and to enforce those payments.
Duke Capital is required to furnish each year to the Subordinated
Indenture Trustee an officers' certificate to the effect that it is not in
default under the Subordinated Indenture or, if there has been a default,
specifying the default and its status.
Payments; Paying Agent
The paying agent will pay the principal of any Junior Subordinated Notes
only if those Junior Subordinated Notes are surrendered to it. Unless Duke
Capital states otherwise in the applicable Prospectus Supplement, the paying
agent will pay interest on Junior Subordinated Notes, subject to such
surrender, where applicable, at its office or, at Duke Capital's option:
. by wire transfer to an account at a banking institution in the United
States that is designated in writing to the Subordinated Indenture
Trustee at least 16 days prior to the date of payment by the person
entitled to that interest; or
. by check mailed to the address of the person entitled to that interest
as that address appears in the security register for those Junior
Subordinated Notes.
Unless Duke Capital states otherwise in the applicable Prospectus
Supplement, the Subordinated Indenture Trustee will act as paying agent for
the Junior Subordinated Notes, and the principal corporate trust office of the
Subordinated Indenture Trustee will be the office through which the paying
agent acts. Duke Capital may, however, change or add paying agents or approve
a change in the office through which a paying agent acts.
Any money that Duke Capital has paid to a paying agent for principal or
interest on any Junior Subordinated Notes which remains unclaimed at the end
of two years after that principal or interest has become due will be repaid to
Duke Capital at its request. After repayment to Duke Capital, holders should
look only to Duke Capital for those payments.
Defeasance and Covenant Defeasance
The Subordinated Indenture provides that Duke Capital may be:
. discharged from its obligations, with certain exceptions, with respect
to any series of Junior Subordinated Notes, as described in the
Subordinated Indenture, such a discharge being called a "Defeasance"
in this Prospectus; and
. released from its obligations under certain restrictive covenants
especially established with respect to a series of Junior Subordinated
Notes, as described in the Subordinated Indenture, such a release
being called a "Covenant Defeasance" in this Prospectus.
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Duke Capital must satisfy certain conditions to effect a Defeasance or
Covenant Defeasance. Those conditions include the irrevocable deposit with the
Subordinated Indenture Trustee, in trust, of money or government obligations
which through their scheduled payments of principal and interest would provide
sufficient money to pay the principal and any premium and interest on those
Junior Subordinated Notes on the maturity dates of those payments or upon
redemption. Following a Defeasance, payment of the Junior Subordinated Notes
defeased may not be accelerated because of an event of default under the
Subordinated Indenture.
Under current United States federal income tax laws, a Defeasance would
be treated as an exchange of the relevant Junior Subordinated Notes in which
holders of those Junior Subordinated Notes might recognize gain or loss. In
addition, the amount, timing and character of amounts that holders would
thereafter be required to include in income might be different from that which
would be includible in the absence of that Defeasance. Duke Capital urges
investors to consult their own tax advisors as to the specific consequences of
a Defeasance, including the applicability and effect of tax laws other than
United States federal income tax laws.
Junior Subordinated Notes issued to a Trust will not be subject to
Covenant Defeasance.
Subordination
Each series of Junior Subordinated Notes will be subordinate and junior
in right of payment, to the extent set forth in the Subordinated Indenture, to
all Senior Indebtedness as defined below. If:
. Duke Capital makes a payment or distribution of any of its assets to
creditors upon its dissolution, winding-up, liquidation or
reorganization, whether in bankruptcy, insolvency or otherwise;
. a default beyond any grace period has occurred and is continuing with
respect to the payment of principal, interest or any other monetary
amounts due and payable on any Senior Indebtedness; or
. the maturity of any Senior Indebtedness has been accelerated because
of a default on that Senior Indebtedness,
then the holders of Senior Indebtedness generally will have the right to
receive payment, in the case of the first instance, of all amounts due or to
become due upon that Senior Indebtedness, and, in the case of the second and
third instances, of all amounts due on that Senior Indebtedness, or Duke
Capital will make provision for those payments, before the holders of any
Junior Subordinated Notes have the right to receive any payments of principal
or interest on their Junior Subordinated Notes.
"Senior Indebtedness" means, with respect to any series of Junior
Subordinated Notes, the principal, premium, interest and any other payment in
respect of any of the following:
. all of Duke Capital's indebtedness that is evidenced by notes,
debentures, bonds or other securities Duke Capital sells for money or
other obligations for money borrowed;
. all indebtedness of others of the kinds described in the preceding
category which Duke Capital has assumed or guaranteed or which Duke
Capital has in effect guaranteed through an agreement to purchase,
contingent or otherwise; and
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. all renewals, extensions or refundings of indebtedness of the kinds
described in either of the preceding two categories.
Any such indebtedness, renewal, extension or refunding, however, will not
be Senior Indebtedness if the instrument creating or evidencing it or the
assumption or guarantee of it provides that it is not superior in right of
payment to or is equal in right of payment with those Junior Subordinated
Notes. Senior Indebtedness will be entitled to the benefits of the
subordination provisions in the Subordinated Indenture irrespective of the
amendment, modification or waiver of any term of the Senior Indebtedness.
Future series of Subordinated Notes which are not Junior Subordinated
Notes may rank senior to outstanding series of Junior Subordinated Notes and
would constitute Senior Indebtedness with respect to those series.
The Subordinated Indenture does not limit the amount of Senior
Indebtedness that Duke Capital may issue. As of September 30, 1999, Duke
Capital's Senior Indebtedness totaled approximately $3,800,000,000.
Concerning the Subordinated Indenture Trustee
The Chase Manhattan Bank is the Subordinated Indenture Trustee and the
Senior Indenture Trustee. Duke Capital and certain of its affiliates maintain
deposit accounts and banking relationships with The Chase Manhattan Bank. The
Chase Manhattan Bank also serves as trustee under other indentures pursuant to
which securities of Duke Capital and of certain of its affiliates are
outstanding.
The Subordinated Indenture Trustee will perform only those duties that
are specifically set forth in the Subordinated Indenture unless an event of
default under the Subordinated Indenture occurs and is continuing. In case an
event of default occurs and is continuing, the Subordinated Indenture Trustee
will exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to those provisions, the
Subordinated Indenture Trustee is under no obligation to exercise any of its
powers under the Subordinated Indenture at the request of any holder of Junior
Subordinated Notes unless that holder offers reasonable indemnity to the
Subordinated Indenture Trustee against the costs, expenses and liabilities
which it might incur as a result.
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DESCRIPTION OF THE PREFERRED SECURITIES
Each Trust may issue only one series of Preferred Securities. The Trust
Agreement of each Trust will authorize the Administrative Trustees to issue the
Preferred Securities of that Trust on behalf of that Trust. For additional
information you should refer to the applicable Trust Agreement. The form of
Trust Agreement is an exhibit to the Registration Statement.
You should refer to the applicable Prospectus Supplement for the terms of
any series of Preferred Securities, including:
. the title of the series;
. the number of Preferred Securities of the series;
. the yearly distribution rate, or the method of determining that rate,
and the date or dates on which distributions will be payable;
. the date or dates, or method of determining the date or dates, from
which distributions will be cumulative;
. the amount that will be paid out of the assets of the Trust to the
holders of the Preferred Securities upon the voluntary or involuntary
dissolution, winding-up or termination of the Trust;
. any obligation that the Trust has to purchase or redeem the Preferred
Securities, and the price at which, the period within which, and the
terms and conditions upon which the Trust will purchase or redeem
them;
. any voting rights of the Preferred Securities that are in addition to
those legally required, including any right that the holders of the
Preferred Securities have to approve certain actions under or
amendments to the Trust Agreement;
. any right that the Trust has to defer distributions on the Preferred
Securities in the event the interest payment period on the related
Junior Subordinated Notes is extended; and
. any other rights, preferences, privileges, limitations or restrictions
upon the Preferred Securities of the series.
Duke Capital will guarantee each series of Preferred Securities to the
extent described below under the caption "Description of the Guarantees."
The applicable Prospectus Supplement will describe any material United
States federal income tax considerations that apply to the Preferred
Securities.
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DESCRIPTION OF THE GUARANTEES
Duke Capital will execute the Guarantees from time to time for the
benefit of the holders of the Preferred Securities of the respective Trusts.
The Chase Manhattan Bank will act as Guarantee Trustee under each Guarantee.
The Guarantee Trustee will hold each Guarantee for the benefit of the holders
of the Preferred Securities to which it relates.
The following description of the Guarantees is only a summary and is not
intended to be comprehensive. The form of Guarantee is an exhibit to the
Registration Statement.
General
Duke Capital will irrevocably and unconditionally agree under each
Guarantee to pay the Guarantee Payments that are defined below, to the extent
specified in that Guarantee, to the holders of the Preferred Securities to
which the Guarantee relates, to the extent that the Guarantee Payments are not
paid by or on behalf of the related Trust. Duke Capital is required to pay the
Guarantee Payments to the extent specified in the relevant Guarantee regardless
of any defense, right of set-off or counterclaim that Duke Capital may have or
may assert against any person.
The following payments and distributions on the Preferred Securities of a
Trust are Guarantee Payments:
. any accrued and unpaid distributions required to be paid on the
Preferred Securities of the Trust, but only to the extent that the
Trust has funds legally and immediately available for those
distributions;
. the redemption price for any Preferred Securities that the Trust calls
for redemption, including all accrued and unpaid distributions to the
redemption date, but only to the extent that the Trust has funds
legally and immediately available for the payment; and
. upon a dissolution, winding-up or termination of the Trust, other than
in connection with the distribution of Junior Subordinated Notes to
the holders of Trust Securities of the Trust or the redemption of all
the Preferred Securities of the Trust, the lesser of:
. the sum of the liquidation amount and all accrued and unpaid
distributions on the Preferred Securities of the Trust to the
payment date, to the extent that the Trust has funds legally and
immediately available for the payment; and
. the amount of assets of the Trust remaining available for
distribution to holders of the Preferred Securities of the Trust
in liquidation of the Trust.
Duke Capital may satisfy its obligation to make a Guarantee Payment by
making that payment directly to the holders of the related Preferred Securities
or by causing the Trust to make the payment to those holders.
Each Guarantee will be a full and unconditional guarantee, subject to
certain subordination provisions, of the Guarantee Payments with respect to the
related Preferred Securities from the time of issuance of those Preferred
Securities, except that the Guarantee will only apply to the payment of
distributions and other payments on the Preferred Securities when the Trust has
sufficient funds legally and immediately available to make those distributions
or other payments.
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If Duke Capital does not make the required payments on the Junior
Subordinated Notes that the Property Trustee holds under a Trust, that Trust
will not make the related payments on its Preferred Securities.
Subordination
Duke Capital's obligations under each Guarantee will be unsecured
obligations of Duke Capital. Those obligations will rank:
. subordinate and junior in right of payment to all of Duke Capital's
other liabilities, other than obligations or liabilities that rank
equal in priority or subordinate by their terms;
. equal in priority with the most senior preferred stock that Duke
Capital may issue and similar guarantees; and
. senior to Duke Capital's common stock.
Duke Capital has no preferred stock outstanding that will rank equal in
priority with the Guarantees. Duke Capital has common stock outstanding that
will rank junior to the Guarantees.
Each Guarantee will be a guarantee of payment and not of collection. This
means that the guaranteed party may institute a legal proceeding directly
against Duke Capital, as guarantor, to enforce its rights under the Guarantee
without first instituting a legal proceeding against any other person or
entity.
The terms of the Preferred Securities will provide that each holder of
the Preferred Securities, by accepting those Preferred Securities, agrees to
the subordination provisions and other terms of the related Guarantee.
Amendments and Assignment
Duke Capital may amend each Guarantee without the consent of any holder
of the Preferred Securities to which that Guarantee relates if the amendment
does not materially and adversely affect the rights of those holders. Duke
Capital may otherwise amend each Guarantee with the approval of the holders of
at least 66 2/3% of the outstanding Preferred Securities to which that
Guarantee relates.
Termination
Each Guarantee will terminate and be of no further effect when:
. the redemption price of the Preferred Securities to which the
Guarantee relates is fully paid;
. Duke Capital distributes the related Junior Subordinated Notes to the
holders of those Preferred Securities; or
. the amounts payable upon liquidation of the related Trust are fully
paid.
Each Guarantee will remain in effect or will be reinstated if at any time
any holder of the related Preferred Securities must restore payment of any sums
paid to that holder with respect to those Preferred Securities or under that
Guarantee.
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Events of Default
An event of default will occur under any Guarantee if Duke Capital fails
to perform any of its payment obligations under that Guarantee. The holders of
a majority of the Preferred Securities of any series may waive any such event
of default and its consequences on behalf of all of the holders of the
Preferred Securities of that series. The Guarantee Trustee is obligated to
enforce the Guarantee for the benefit of the holders of the Preferred
Securities of a series if an event of default occurs under the related
Guarantee.
The holders of a majority of the Preferred Securities to which a
Guarantee relates have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee
with respect to that Guarantee or to direct the exercise of any trust or power
that the Guarantee Trustee holds under that Guarantee. Any holder of the
related Preferred Securities may institute a legal proceeding directly against
Duke Capital to enforce that holder's rights under the Guarantee without first
instituting a legal proceeding against the Guarantee Trustee or any other
person or entity.
Concerning the Guarantee Trustee
The Chase Manhattan Bank is the Guarantee Trustee. It is also the
Property Trustee, the Subordinated Indenture Trustee and the Senior Indenture
Trustee. Duke Capital and certain of its affiliates maintain deposit accounts
and banking relationships with The Chase Manhattan Bank. The Chase Manhattan
Bank also serves as trustee under other indentures pursuant to which securities
of Duke Capital and certain of its affiliates are outstanding.
The Guarantee Trustee will perform only those duties that are
specifically set forth in each Guarantee unless an event of default under the
Guarantee occurs and is continuing. In case an event of default occurs and is
continuing, the Guarantee Trustee will exercise the same degree of care as a
prudent individual would exercise in the conduct of his or her own affairs.
Subject to those provisions, the Guarantee Trustee is under no obligation to
exercise any of its powers under any Guarantee at the request of any holder of
the related Preferred Securities unless that holder offers reasonable indemnity
to the Guarantee Trustee against the costs, expenses and liabilities which it
might incur as a result.
Agreements as to Expenses and Liabilities
Duke Capital will enter into an Agreement as to Expenses and Liabilities
under each Trust Agreement. Each Agreement as to Expenses and Liabilities will
provide that Duke Capital will, with certain exceptions, irrevocably and
unconditionally guarantee the full payment of any indebtedness, expenses or
liabilities of the related Trust to each person or entity to whom that Trust
becomes indebted or liable. The exceptions are the obligations of the Trust to
pay to the holders of the related Preferred Securities or other similar
interests in that Trust the amounts due to the holders under the terms of those
Preferred Securities or those similar interests.
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ACCOUNTING TREATMENT
Each Trust will be treated as a subsidiary of Duke Capital for financial
reporting purposes. Accordingly, Duke Capital's consolidated financial
statements will include the accounts of each Trust. The Preferred Securities,
along with other trust preferred securities that Duke Capital guarantees on an
equivalent basis, will be presented as a separate line item in Duke Capital's
consolidated balance sheets, entitled "Guaranteed Preferred Beneficial
Interests in Subordinated Notes of Duke Capital Corporation." Duke Capital will
record distributions that each Trust pays on the Preferred Securities as an
expense in its consolidated statement of income.
PLAN OF DISTRIBUTION
The Senior Notes, the Junior Subordinated Notes and the Preferred
Securities may be sold in any of three ways:
. through underwriters or dealers;
. directly to a limited number of institutional purchasers or to a
single purchaser; or
. through agents.
The applicable Prospectus Supplement will describe the terms under which
the Senior Notes, the Junior Subordinated Notes or the Preferred Securities are
offered, including:
. the names of any underwriters, dealers or agents;
. the purchase price and the net proceeds from the sale;
. any underwriting discounts and other items constituting underwriters'
compensation;
. any initial public offering price; and
. any discounts or concessions allowed, re-allowed or paid to dealers.
Any underwriters or dealers may from time to time change any initial
public offering price and any discounts or concessions allowed, re-allowed or
paid to dealers.
If underwriters participate in the sale of the Senior Notes, the Junior
Subordinated Notes or the Preferred Securities, those underwriters will acquire
the Senior Notes, Junior Subordinated Notes or Preferred Securities for their
own account and may resell them in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of the sale.
Unless Duke Capital states otherwise in the applicable Prospectus
Supplement, the obligations of any underwriter to purchase the Senior Notes,
the Junior Subordinated Notes or the Preferred Securities will be subject to
conditions, and the underwriter will be obligated to purchase all the Senior
Notes, Junior Subordinated Notes or Preferred Securities offered, except that
in some cases involving a default by an underwriter, less than all of the
Senior Notes, Junior Subordinated Notes or Preferred Securities offered may be
purchased. If the Senior Notes, the Junior Subordinated Notes or the Preferred
Securities are sold through an agent, the applicable Prospectus Supplement will
state the name and any commission that may be paid to the agent. Unless Duke
Capital states otherwise in the Prospectus Supplement, that agent will be
acting on a best-efforts basis for the period of its appointment.
30
<PAGE>
Agents and underwriters may be entitled to indemnification against
certain civil liabilities, including liabilities under the Securities Act of
1933, under agreements entered into with the applicable Trust and Duke Capital.
Underwriters and their affiliates may engage in transactions with, and,
from time to time, perform services for, the Trusts and Duke Capital or their
affiliates in the ordinary course of their business.
The Senior Notes, the Junior Subordinated Notes and the Preferred
Securities may or may not be listed on a national securities exchange.
EXPERTS
Duke Capital's consolidated financial statements as of December 31, 1998
and 1997 and for each of the three years in the period ended December 31, 1998,
except PanEnergy Corp and subsidiaries as of and for the period ended December
31, 1996, included in Duke Capital's annual report on Form 10-K for the year
ended December 31, 1998, which are incorporated by reference in this
Prospectus, have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report which is incorporated by reference in this
Prospectus. The financial statements of PanEnergy Corp and subsidiaries
(consolidated with Duke Capital's financial statements) as of and for the year
ended December 31, 1996 have been audited by KPMG LLP, independent certified
public accountants, as stated in their report incorporated by reference in this
Prospectus. Those financial statements are incorporated in this Prospectus in
reliance upon the respective reports of such firms given upon their authority
as experts in accounting and auditing.
VALIDITY OF THE SECURITIES
Richards, Layton & Finger, P.A., special Delaware counsel to Duke Capital
and the Trusts, will issue opinions about the validity of the Preferred
Securities under Delaware law on behalf of Duke Capital and the Trusts. Dewey
Ballantine LLP will issue opinions about the validity of the Senior Notes, the
Junior Subordinated Notes and the Guarantees and certain related matters on
behalf of Duke Capital. Counsel named in the applicable Prospectus Supplement
will issue opinions about the validity of the Senior Notes, the Junior
Subordinated Notes and the Guarantees on behalf of any underwriters, dealers or
agents.
31
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[ ]
Preferred Securities
Duke Capital
Financing Trust [ ]
% Trust Preferred Securities
(Liquidation amount $ per Preferred Security)
Guaranteed, to the extent
described herein, by
Duke Capital
Corporation
a subsidiary of
Duke Energy Corporation
----------------
PROSPECTUS SUPPLEMENT
----------------
[Names of Underwriters]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution:
The estimated expenses of issuance and distribution, other than underwriting
discounts and commissions, to be borne by Duke Capital Corporation are as
follows:
<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee................ $ 396,000*
Trustee Fees and Expenses.................................... 50,000
Listing Fees of New York Stock Exchange...................... 200,000
Printing Costs............................................... 165,000
Legal Fees and Expenses...................................... 185,000
Accounting Fees.............................................. 25,000
Blue Sky Fees and Expenses................................... 23,000
Rating Agency Fees........................................... 300,000
Miscellaneous................................................ 6,000
----------
Total...................................................... $1,350,000
==========
</TABLE>
--------
* Actual
Item 15. Indemnification of Directors and Officers.
Section 2 of Article X of the Restated Certificate of Incorporation of Duke
Capital Corporation provides as follows:
"(a) Right to Indemnification. Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding'), by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a director or
officer of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or
agent or in any other capacity while serving as a director, officer, employee
or agent, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the DGCL, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such amendment),
against all expense, liability and loss (including attorneys' fees, judgments,
fines, amounts paid or to be paid in settlement, and excise taxes or penalties
arising under the Employee Retirement Income Security Act of 1974, as in effect
from time to time) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
such person's heirs, executors and administrators; provided, however, that,
except as provided in paragraph (b) hereof, the Corporation shall indemnify any
such person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof) was
authorized by the Board. The right to indemnification conferred in this Section
shall be a contract right and shall include the right to have the Corporation
pay the expenses incurred in
II-1
<PAGE>
defending any such proceeding in advance of its final disposition; any advance
payments to be paid by the Corporation within 20 calendar days after the
receipt by the Corporation of a statement or statements from the claimant
requesting such advance or advances from time to time; provided, however, that,
if and to the extent the DGCL requires, the payment of such expenses incurred
by a director or officer in such person's capacity as a director or officer
(and not in any other capacity in which service was or is rendered by such
person while a director or officer, including, without limitation, service to
an employee benefit plan) in advance of the final disposition of a proceeding,
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced if it
shall ultimately be determined that such director or officer is not entitled to
be indemnified under this Section or otherwise. The Corporation may, to the
extent authorized from time to time by the Board of Directors, grant rights to
indemnification, and rights to have the Corporation pay the expenses incurred
in defending any proceeding in advance of its final disposition, to any
employee or agent of the Corporation to the fullest extent of the provisions of
this Article with respect to the indemnification and advancement of expenses of
directors and officers of the Corporation.
"(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of this
Section is not paid in full by the Corporation within 30 calendar days after a
written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standard of
conduct which makes it permissible under the DGCL for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because the claimant has met the applicable standard of conduct set forth in
the DGCL, nor an actual determination by the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
"(c) Non-Exclusivity of Rights. The right of indemnification and the payment of
expenses incurred in defending a proceeding in advance of its final disposition
conferred in this Section shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, By-Law, agreement, vote of stockholders or
disinterested directors or otherwise. No repeal or modification of this Article
shall in any way diminish or adversely affect the rights of any director,
officer, employee or agent of the Corporation hereunder in respect of any
occurrence or matter arising prior to any such repeal or modification.
"(d) Insurance. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the
II-2
<PAGE>
Corporation would have the power to indemnify such person against such expense,
liability or loss under the DGCL."
Section 145 of the Delaware General Corporation Law gives corporations the
power to indemnify officers and directors under certain circumstances.
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number
-------
<C> <S>
1.1* -- Form of Underwriting Agreement relating to Senior Notes.
1.2* -- Form of Underwriting Agreement relating to Junior Subordinated
Notes.
1.3* -- Form of Underwriting Agreement relating to Trust Preferred
Securities.
4.1* -- Senior Indenture between Duke Capital Corporation and The Chase
Manhattan Bank, as Trustee, dated as of April 1, 1998 (filed with
Form S-3, File No. 333-71297, effective February 10, 1999, as
Exhibit 4.1).
4.2* -- Form of Supplemental Indenture to Senior Indenture to be used in
connection with the issuance of Senior Notes.
4.3* -- Subordinated Indenture between Duke Capital Corporation and The
Chase Manhattan Bank, as Trustee, dated as of April 1, 1998 (filed
with Form S-3, File No. 333-71297, effective February 10, 1999, as
Exhibit 4.3).
4.4-A* -- Form of Supplemental Indenture to Subordinated Indenture to be used
in connection with the issuance of Junior Subordinated Notes.
4.4-B* -- Form of Supplemental Indenture to Subordinated Indenture to be used
in connection with the issuance of Junior Subordinated Notes
relating to Trust Preferred Securities.
4.5-A* -- Certificate of Trust of Duke Capital Financing Trust IV (filed with
Form S-3, File No. 333-71297, effective February 10, 1999, as
Exhibit 4.5-B).
4.5-B* -- Certificate of Trust of Duke Capital Financing Trust V (filed with
Form S-3, File No. 333-71297, effective February 10, 1999, as
Exhibit 4.5-C).
4.5-C* -- Certificate of Trust of Duke Capital Financing Trust VI (filed with
Form S-3, File No. 333-85995, effective September 3, 1999, as
Exhibit 4.5-C).
4.6-A* -- Trust Agreement of Duke Capital Financing Trust IV (filed with Form
S-3, File No. 333-71297, effective February 10, 1999, as Exhibit
4.6-B).
4.6-B* -- Trust Agreement of Duke Capital Financing Trust V (filed with Form
S-3, File No. 333-71297, effective February 10, 1999, as Exhibit
4.6-C).
4.6-C* -- Trust Agreement of Duke Capital Financing Trust VI (filed with Form
S-3, File No. 333-85995, effective September 3, 1999, as Exhibit
4.6-C).
4.7* -- Form of Amended and Restated Trust Agreement (Agreements for Duke
Capital Financing Trust IV, Duke Capital Financing Trust V and Duke
Capital Financing Trust VI will be substantially identical except
for names and dates).
4.8* -- Form of Trust Preferred Security for Duke Capital Financing Trust
IV, Duke Capital Financing Trust V and Duke Capital Financing Trust
VI (included in Exhibit 4.7 above).
4.9* -- Form of Senior Note (included in Exhibit 4.2 above).
4.10* -- Form of Junior Subordinated Note (included in Exhibits 4.4-A and
4.4-B above).
4.11* -- Form of Guarantee Agreement (Agreements for Duke Capital Financing
Trust IV, Duke Capital Financing Trust V and Duke Capital Financing
Trust VI will be substantially identical except for names and
dates).
4.12* -- Form of Agreement as to Expenses and Liabilities (included in
Exhibit 4.7 above).
5.1* -- Opinion of Dewey Ballantine LLP.
5.2-A* -- Opinion of Richards, Layton & Finger, P.A. relating to Duke Capital
Financing Trust IV.
5.2-B* -- Opinion of Richards, Layton & Finger, P.A. relating to Duke Capital
Financing Trust V.
5.2-C* -- Opinion of Richards, Layton & Finger, P.A. relating to Duke Capital
Financing Trust VI.
8* -- Tax Opinion of Dewey Ballantine LLP.
12* -- Computation of ratio of earnings to fixed charges.
23.1** -- Consent of Deloitte & Touche LLP.
23.2** -- Consent of KPMG LLP.
23.3* -- Consent of Dewey Ballantine LLP (included in Exhibit 5.1 above).
23.4* -- Consent of Dewey Ballantine LLP (included in Exhibit 8 above).
23.5* -- Consent of Richards, Layton & Finger, P.A. (included in Exhibits
5.2-A, 5.2-B and 5.2-C above).
24.1* -- Power of Attorney of certain officers and directors of Duke Capital
Corporation.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number
-------
<C> <S>
24.2* -- Resolution of Duke Capital Corporation re: Power of Attorney.
25.1* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Senior Indenture Trustee.
25.2* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Subordinated Indenture
Trustee.
25.3-A* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Property Trustee under
Duke Capital Financing Trust IV.
25.3-B* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Property Trustee under
Duke Capital Financing Trust V.
25.3-C* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Property Trustee under
Duke Capital Financing Trust VI.
25.4-A* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Guarantee Trustee with
respect to Duke Capital Financing Trust IV.
25.4-B* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Guarantee Trustee with
respect to Duke Capital Financing Trust V.
25.4-C* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Guarantee Trustee with
respect to Duke Capital Financing Trust VI.
</TABLE>
- ----------------
*previously filed
**filed herewith
Item 17. Undertakings.
(a) Undertaking related to Rule 415 offering:
The undersigned registrants hereby undertake:
(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 (the "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
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;
(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 (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, S-8 or F-3 and the information required
to be included in a post-effective amendment by those paragraphs is contained
in periodic reports filed by the registrants pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement.
II-4
<PAGE>
(2) That, for the purpose of determining any liability under the 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.
(b) Undertaking related to filings incorporating subsequent Securities Exchange
Act of 1934 documents by reference:
The undersigned registrants hereby undertake that, for purposes of determining
any liability under the Act, each filing of Duke Capital Corporation's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934 that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Undertaking related to acceleration of effectiveness:
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of each undersigned
registrant pursuant to the indemnification provisions described in Item 15
above or in contractual arrangements pursuant thereto, or otherwise, each
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by each
undersigned registrant of expenses incurred or paid by a director, officer or
controlling person of each registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, each registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(d) The undersigned registrants hereby undertake that:
(1) For purposes of determining any liability under the Act, the information
omitted from the form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form of prospectus
filed by the registrants pursuant to Rule 424(b)(1) or 497(h) under the Act
shall be deemed to be part of this registration statement as of the time it was
declared effective:
(2) For the purpose of determining any liability under the Act, each post-
effective amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
Duke Capital Corporation, certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this registration statement or amendment thereto to be signed on its
behalf by the undersigned, thereunto duly authorized, in Charlotte, North
Carolina, on the 4th day of January, 2000.
DUKE CAPITAL CORPORATION
By: R. B. Priory
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement or amendment thereto has been signed by the following directors and
officers of Duke Capital Corporation in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Richard B. Priory President and Chief January 4, 2000
Executive Officer (Principal
Executive Officer)
Richard J. Osborne Vice President and January 4, 2000
Chief Financial Officer
(Principal Financial
Officer)
Sandra P. Meyer Controller (Principal January 4, 2000
Accounting Officer)
Fred J. Fowler |
Robert S. Lilien \
Richard J. Osborne / All of the Directors January 4, 2000
Harvey J. Padewer |
Richard B. Priory |
</TABLE>
Robert T. Lucas III, by signing his name hereto, does hereby sign this document
on behalf of Duke Capital Corporation and on behalf of each of the above-named
persons pursuant to a power of attorney duly executed by Duke Capital
Corporation and such persons, filed with the Securities and Exchange Commission
as an exhibit hereto.
/s/ Robert T. Lucas III
-------------------------------------
Robert T. Lucas III
Attorney-in-fact
II-6
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, Duke Capital
Financing Trust IV certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
registration statement or amendment thereto to be signed on its behalf by the
undersigned, thereunto duly authorized, in Charlotte, North Carolina, on the
4th day of January, 2000.
DUKE CAPITAL FINANCING TRUST IV
By: Duke Capital Corporation,
Depositor
/s/ Robert T. Lucas III
By: _________________________________
Robert T. Lucas III
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, Duke Capital
Financing Trust V certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
registration statement or amendment thereto to be signed on its behalf by the
undersigned, thereunto duly authorized, in Charlotte, North Carolina, on the
4th day of January, 2000.
DUKE CAPITAL FINANCING TRUST V
By: Duke Capital Corporation,
Depositor
/s/ Robert T. Lucas III
By: _________________________________
Robert T. Lucas III
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, Duke Capital
Financing Trust VI certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
registration statement or amendment thereto to be signed on its behalf by the
undersigned, thereunto duly authorized, in Charlotte, North Carolina, on the
4th day of January, 2000.
DUKE CAPITAL FINANCING TRUST VI
By: Duke Capital Corporation,
Depositor
/s/ Robert T. Lucas III
By: _________________________________
Robert T. Lucas III
Assistant Secretary
II-7
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
Number
-------
<C> <S>
1.1* -- Form of Underwriting Agreement relating to Senior Notes.
1.2* -- Form of Underwriting Agreement relating to Junior Subordinated
Notes.
1.3* -- Form of Underwriting Agreement relating to Trust Preferred
Securities.
4.1* -- Senior Indenture between Duke Capital Corporation and The Chase
Manhattan Bank, as Trustee, dated as of April 1, 1998 (filed with
Form S-3, File No. 333-71297, effective February 10, 1999, as
Exhibit 4.1).
4.2* -- Form of Supplemental Indenture to Senior Indenture to be used in
connection with the issuance of Senior Notes.
4.3* -- Subordinated Indenture between Duke Capital Corporation and The
Chase Manhattan Bank, as Trustee, dated as of April 1, 1998 (filed
with Form S-3, File No. 333-71297, effective February 10, 1999, as
Exhibit 4.3).
4.4-A* -- Form of Supplemental Indenture to Subordinated Indenture to be used
in connection with the issuance of Junior Subordinated Notes.
4.4-B* -- Form of Supplemental Indenture to Subordinated Indenture to be used
in connection with the issuance of Junior Subordinated Notes
relating to Trust Preferred Securities.
4.5-A* -- Certificate of Trust of Duke Capital Financing Trust IV (filed with
Form S-3, File No. 333-71297, effective February 10, 1999, as
Exhibit 4.5-B).
4.5-B* -- Certificate of Trust of Duke Capital Financing Trust V (filed with
Form S-3, File No. 333-71297, effective February 10, 1999, as
Exhibit 4.5-C).
4.5-C* -- Certificate of Trust of Duke Capital Financing Trust VI (filed with
Form S-3, File No. 333-85995, effective September 3, 1999, as
Exhibit 4.5-C).
4.6-A* -- Trust Agreement of Duke Capital Financing Trust IV (filed with Form
S-3, File No. 333-71297, effective February 10, 1999, as Exhibit
4.6-B).
4.6-B* -- Trust Agreement of Duke Capital Financing Trust V (filed with Form
S-3, File No. 333-71297, effective February 10, 1999, as Exhibit
4.6-C).
4.6-C* -- Trust Agreement of Duke Capital Financing Trust VI (filed with Form
S-3, File No. 333-85995, effective September 3, 1999, as Exhibit
4.6-C).
4.7* -- Form of Amended and Restated Trust Agreement (Agreements for Duke
Capital Financing Trust IV, Duke Capital Financing Trust V and Duke
Capital Financing Trust VI will be substantially identical except
for names and dates).
4.8* -- Form of Trust Preferred Security for Duke Capital Financing Trust
IV, Duke Capital Financing Trust V and Duke Capital Financing Trust
VI (included in Exhibit 4.7 above).
4.9* -- Form of Senior Note (included in Exhibit 4.2 above).
4.10* -- Form of Junior Subordinated Note (included in Exhibits 4.4-A and
4.4-B above).
4.11* -- Form of Guarantee Agreement (Agreements for Duke Capital Financing
Trust IV, Duke Capital Financing Trust V and Duke Capital Financing
Trust VI will be substantially identical except for names and
dates).
4.12* -- Form of Agreement as to Expenses and Liabilities (included in
Exhibit 4.7 above).
5.1* -- Opinion of Dewey Ballantine LLP.
5.2-A* -- Opinion of Richards, Layton & Finger, P.A. relating to Duke Capital
Financing Trust IV.
5.2-B* -- Opinion of Richards, Layton & Finger, P.A. relating to Duke Capital
Financing Trust V.
5.2-C* -- Opinion of Richards, Layton & Finger, P.A. relating to Duke Capital
Financing Trust VI.
8* -- Tax Opinion of Dewey Ballantine LLP.
12* -- Computation of ratio of earnings to fixed charges.
23.1** -- Consent of Deloitte & Touche LLP.
23.2** -- Consent of KPMG LLP.
23.3* -- Consent of Dewey Ballantine LLP (included in Exhibit 5.1 above).
23.4* -- Consent of Dewey Ballantine LLP (included in Exhibit 8 above).
23.5* -- Consent of Richards, Layton & Finger, P.A. (included in Exhibits
5.2-A, 5.2-B and 5.2-C above).
24.1* -- Power of Attorney of certain officers and directors of Duke Capital
Corporation.
24.2* -- Resolution of Duke Capital Corporation re: Power of Attorney.
25.1* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Senior Indenture Trustee.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number
-------
<C> <S>
25.2* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Subordinated Indenture
Trustee.
25.3-A* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Property Trustee under
Duke Capital Financing Trust IV.
25.3-B* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Property Trustee under
Duke Capital Financing Trust V.
25.3-C* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Property Trustee under
Duke Capital Financing Trust VI.
25.4-A* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Guarantee Trustee with
respect to Duke Capital Financing Trust IV.
25.4-B* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Guarantee Trustee with
respect to Duke Capital Financing Trust V.
25.4-C* -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Chase Manhattan Bank, as Guarantee Trustee with
respect to Duke Capital Financing Trust VI.
</TABLE>
- ----------------
*previously filed
**filed herewith
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to (i) the incorporation by reference in this Pre-Effective
Amendment No. 1 to the Registration Statement No. 333-92283 on Form S-3 of Duke
Capital Corporation, (ii) the incorporation by reference in Post-Effective
Amendment No. 2 to Registration Statement No. 333-71297 on Form S-3 of Duke
Capital Corporation and (iii) the incorporation by reference in Post-Effective
Amendment No. 1 to Registration Statement No. 333-85995 on Form S-3 of Duke
Capital Corporation of our report dated February 12, 1999, appearing in the
annual report on Form 10-K of Duke Capital Corporation for the year ended
December 31, 1998 filed with the Securities and Exchange Commission, and to the
reference to us under the heading "Experts" in the Prospectus which is a part of
these Registration Statements.
/s/ DELOITTE & TOUCHE LLP
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DELOITTE & TOUCHE LLP
Charlotte, North Carolina
January 4, 2000
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to (i) the incorporation by reference in this Pre-Effective
Amendment No. 1 to the Registration Statement No. 333-92283 on Form S-3 of Duke
Capital Corporation, (ii) the incorporation by reference in Post-Effective
Amendment No. 2 to Registration Statement No. 333-71297 on Form S-3 of Duke
Capital Corporation and (iii) the incorporation by reference in Post-Effective
Amendment No. 1 to Registration Statement No. 333-85995 on Form S-3 of Duke
Capital Corporation of our report dated January 16, 1997 on the consolidated
balance sheet of PanEnergy Corp as of December 31, 1996 and the related
consolidated statements of income, common stockholders' equity and cash flows
for the year ended December 31, 1996 appearing in the annual report on Form 10-K
of PanEnergy Corp for the year ended December 31, 1996 and to the reference to
our firm under the heading "Experts" in the Prospectus.
/s/ KPMG LLP
- ---------------------------
KPMG LLP
Houston, Texas
January 4, 2000
