<PAGE>
Rule No. 424(b)(5)
Registration No. 33-51303
PROSPECTUS SUPPLEMENT
(To Prospectus dated December 23, 1993)
- --------------------------------------------------------------------------------
Part of the Allegheny [LOGO OF ALLEGHENY
Power System POWER SYSTEMS, INC.]
$65,000,000
West Penn Power Company
First Mortgage Bonds, Series LL, 8 1/8%
- --------------------------------------------------------------------------------
The First Mortgage Bonds, Series LL, 8 1/8% (the "Offered New Bonds") mature on
August 1, 2024 and will bear interest from August 1, 1994. Interest on the
Offered New Bonds is payable on August 1 and February 1 of each year,
commencing February 1, 1995. The Offered New Bonds will be redeemable on or
after August 1, 2004, in whole or in part, at the option of the Company at the
regular redemption prices set forth herein. The Offered New Bonds may also be
redeemed at 100% of their principal amount through trust money. The Offered New
Bonds will be issued only in registered form in denominations of $1,000 and
integral multiples thereof. See "Description of Offered New Bonds."
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
================================================================================
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public (1) Discount (2) Company (1) (3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Bond............................... 98.500% .489% 98.011%
- --------------------------------------------------------------------------------
Total.................................. $64,025,000 $317,850 $63,707,150
</TABLE>
===============================================================================
(1) Plus accrued interest from August 1, 1994.
(2) The Company has agreed to indemnify the Purchasers against certain civil
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $98,106 payable by the Company.
- --------------------------------------------------------------------------------
The Offered New Bonds are offered by the several Purchasers subject to delivery
by the Company and acceptance by the Purchasers, to prior sale and to
withdrawal, cancellation or modification of the offer without notice. Delivery
of the Offered New Bonds to the Purchasers is expected to be made at the office
of Prudential Securities Incorporated, 100 Gold Street, New York, New York, on
or about August 2, 1994.
Prudential Securities Incorporated
Chase Securities, Inc.
Citicorp Securities, Inc.
C.J. Lawrence/Deutsche Bank Securities
Corporation
PaineWebber Incorporated
Salomon Brothers Inc
July 26, 1994
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE PURCHASERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
USE OF PROCEEDS
The net proceeds from the sale of the Offered New Bonds will be added to the
Company's general funds and will be used to pay or prepay outstanding short-
term debt and for other corporate purposes. As of June 30, 1994, the Company
had outstanding $49,746,665 of short-term debt at an average interest rate of
4.68% per annum and with a maturity of one day.
RECENT DEVELOPMENTS
The Company, Monongahela Power Company and The Potomac Edison Company
(collectively, the "Operating Subsidiaries") previously reported that the
Environmental Protection Agency ("EPA") had identified them and approximately
875 others as potentially responsible parties ("PRPs") under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), with respect to the Jack's Creek/Sitkin Smelting Superfund Site
("Site"). Allegheny Power Service Corporation ("APSC"), a wholly-owned
subsidiary of Allegheny Power System, Inc., has also been identified as a PRP
with respect to the Site. The EPA alleges that the Operating Subsidiaries and
APSC sent materials, including wire and other reclaimable items, to the Site in
the mid-1970's. According to the EPA, treatment of these materials caused
contamination of the soil at the Site. Under CERCLA, PRPs may be held liable
for potential EPA response and remediation action at the Site. To date, the EPA
has spent approximately $5,000,000 on studies and response action at the Site.
A Remedial Investigation/Feasibility Study ("RI/FS") was prepared for the Site
by the EPA. Although the remedial alternatives contained in the RI/FS range as
high as $113,000,000, the EPA has not yet selected which remedial alternative
it will use. The Operating Subsidiaries and APSC believe they have defenses to
allegations of liability and intend to vigorously defend this matter. At this
time it is not possible to determine what costs, if any, they may incur.
The Company previously reported that the Consumer Advocate Division of the
West Virginia Public Service Commission, Maryland People's Counsel and
Pennsylvania Office of Consumer Advocate had filed a joint complaint against
Allegheny Generating Company ("AGC") with the Federal Energy Regulatory
Commission ("FERC") challenging AGC's existing return on equity ("ROE"). On
June 2, 1994, the FERC denied AGC's motion to dismiss the complaint, set an
effective date of April 1, 1994 for any refund, and ordered that a public
hearing be held on the complaint.
SELECTED FINANCIAL INFORMATION
The following summary income statement information as to the year ended
December 31, 1993 should be read in conjunction with the audited Financial
Statements contained in the Annual Report for the Company on Form 10-K for the
year ended December 31, 1993. The unaudited summary income statement
information for the twelve months ended June 30, 1994 reflects all adjustments
(which consist only of normal recurring adjustments) which in the Company's
opinion are necessary for a fair presentation of that period.
<TABLE>
<CAPTION>
Year Ended 12 Months Ended
December 31, 1993 June 30, 1994
----------------- ---------------
(Thousands of Dollars)
<S> <C> <C>
Income Statement Data:
Total Operating Revenues.................... $1,084,977 $1,135,917
Operating Income............................ 141,352 150,034
Income Before Interest Charges.............. 159,157 166,568
Interest Charges............................ 57,096 55,693
Consolidated Net Income..................... 102,061 110,875
Ratio of Earnings to Fixed Charges............ 3.49x 3.83x
</TABLE>
S-2
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company at December
31, 1993 and June 30, 1994, and as adjusted to give effect to the sale of the
Offered New Bonds.
<TABLE>
<CAPTION>
December 31, 1993 June 30, 1994
---------------------- ----------------------
Actual As Adjusted Actual As Adjusted
---------- ----------- ---------- -----------
(Thousands of Dollars) (Thousands of Dollars)
<S> <C> <C> <C> <C>
Common Stock, Other Paid-in
Capital and Retained Earnings... $ 893,969 $ 893,969 $ 896,748 $ 896,748
Preferred Stock (Not Subject to
Mandatory Redemption)........... 149,708 149,708 149,708 149,708
Long-Term Debt................... 782,369 846,076 784,245 847,952
---------- ---------- ---------- ----------
Total Capitalization............ $1,826,046 $1,889,753 $1,830,701 $1,894,408
========== ========== ========== ==========
</TABLE>
CONSTRUCTION AND FINANCING
Construction expenditures by the Company in 1993 amounted to $251 million and
for 1994 and 1995 are expected to aggregate $258 million and $208 million,
respectively. In 1993, these expenditures included $104 million for compliance
with the Clean Air Act Amendments of 1990 ("CAAA"). The 1994 and 1995 estimated
expenditures include $82 million and $33 million, respectively, to cover the
costs of compliance with the CAAA. Allowance for funds used during construction
(shown below) has been reduced for carrying charges on CAAA expenditures that
will be collected through currently approved base rates.
<TABLE>
<CAPTION>
1993 1994 1995
------- ------- -------
(Millions of Dollars)
<S> <C> <C> <C>
Generation............................................. $152.0 $165.7 $118.2
Transmission and Distribution.......................... 81.0 69.5 70.9
Other.................................................. 18.0 22.7 18.9
------ ------ ------
Total................................................ $251.0 $257.9 $208.0
====== ====== ======
Allowance For Funds Used During Construction Included
Above................................................. $ 8.6 $ 12.7 $ 6.2
</TABLE>
DESCRIPTION OF OFFERED NEW BONDS
The following description of the particular terms of the Offered New Bonds
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Offered New Bonds set forth in the
Prospectus, to which description reference is hereby made.
General
The Offered New Bonds will be limited to $65,000,000 aggregate principal
amount and will mature on August 1, 2024. The Offered New Bonds will bear
interest at the rate per annum shown on the front cover of this Prospectus
Supplement from August 1, 1994 or from the most recent interest payment date to
which interest has been paid or provided for, payable semiannually on August 1
and February 1 of each year, commencing February 1, 1995, to the persons in
whose name the Offered New Bonds (or any predecessor Offered New Bonds) are
registered at the close of business on the last business day which is more than
fourteen days prior to such interest payment date. Principal of and interest on
the Offered New Bonds are payable, and transfers of the Offered New Bonds are
registrable, at the office of the Trustee at 1 Chase Manhattan Plaza, New York,
New York.
S-3
<PAGE>
Neither the Indenture nor the Supplemental Indenture relating to the Offered
New Bonds contains any covenants or other provisions that are specifically
intended to afford holders of the Offered New Bonds special protection in the
event of a highly leveraged transaction.
Redemption
On or after August 1, 2004, the Offered New Bonds will be redeemable at the
option of the Company, in whole or in part, at any time during the 12-month
period beginning on August 1 in each year, on at least 20 but not more than 60
days' notice, at the percentages of their principal amount set forth below
opposite such year, plus accrued interest.
<TABLE>
<CAPTION>
If redeemed If redeemed If redeemed
during the during the during the
12-month 12-month 12-month
period Regular period Regular period Regular
beginning Redemption beginning Redemption beginning Redemption
August 1, Price August 1, Price August 1, Price
- ------------ ---------- ------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
2004......... 103.313% 2008......... 101.988% 2012......... 100.663%
2005......... 102.981 2009......... 101.656 2013......... 100.331
2006......... 102.650 2010......... 101.325 2014 and
2007......... 102.319 2011......... 100.994 thereafter.. 100.000
</TABLE>
The Special Redemption Price is 100% plus accrued interest and applies to
redemptions of the Offered New Bonds with cash deposited in the trust estate
from proceeds of released property, property taken by eminent domain or
insurance. Redemptions of the Offered New Bonds during any 12-month period
beginning May 1 at the Special Redemption Price with cash included in the trust
estate may not exceed the greater of (a) 1% of the principal amount of such
series of the Offered New Bonds originally issued ($650,000) or (b) the lowest
percentage so redeemed of Bonds of any other series then redeemable during such
period relative to the respective aggregate principal amount of Bonds of such
series originally issued.
PURCHASERS
Subject to the terms and conditions set forth in the Purchase Agreement
relating to the Offered New Bonds, the Company has agreed to sell to each of
the Purchasers named below, and each of the Purchasers has severally agreed to
purchase, the principal amount of the Offered New Bonds set forth opposite its
name below:
<TABLE>
<CAPTION>
Principal
Amount of
Offered New
Purchaser Bonds
--------- -----------
<S> <C>
Prudential Securities Incorporated............................... $11,250,000
Chase Securities, Inc. .......................................... $10,750,000
Citicorp Securities, Inc. ....................................... $10,750,000
C.J. Lawrence/Deutsche Bank Securities Corporation............... $10,750,000
PaineWebber Incorporated......................................... $10,750,000
Salomon Brothers Inc............................................. $10,750,000
-----------
Total.......................................................... $65,000,000
===========
</TABLE>
Under the terms and conditions of the Purchase Agreement, the Purchasers are
committed to take and pay for all of the Offered New Bonds, if any are taken.
The Company has been advised by the Purchasers that the Purchasers propose to
offer the Offered New Bonds in part directly to retail purchasers at the
initial public offering price set forth on the cover page of this Prospectus
Supplement, and in part to certain securities dealers at such price less a
concession not in excess of .40% of the principal amount of the Offered New
Bonds. The Purchasers may allow and such dealers may reallow to certain brokers
and dealers a concession not in excess of .25% of the principal amount of the
Offered New Bonds. After the Offered New Bonds are released for sale to the
public, the offering price and other selling terms may from time to time be
varied by the Purchasers.
S-4
<PAGE>
There is presently no established trading market for the Offered New Bonds,
and the Company does not intend to apply for listing of the Offered New Bonds
on a national securities exchange. The Company has been advised by the
Purchasers that they intend to make a market in the Offered New Bonds, but are
not obligated to do so and may discontinue market-making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
the Offered New Bonds.
The Company has agreed to indemnify the several Purchasers against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
Chase Securities, Inc. is an affiliate of The Chase Manhattan Bank, N.A.
which is a lender to the Company and certain of its affiliates. In addition,
The Chase Manhattan Bank, N.A., or its affiliates, participates in various
general financing and banking transactions for the Company and its affiliates.
Citicorp Securities, Inc. is an affiliate of Citibank, N.A. which is a lender
to the Company and certain of its affiliates. In addition, Citibank, N.A., or
its affiliates, participates in various general financing and banking
transactions for the Company and its affiliates.
S-5
<PAGE>
PROSPECTUS
First Mortgage Bonds
Preferred Stock
(par value $100)
WEST PENN POWER COMPANY
--------------
West Penn Power Company (the "Company") may offer and sell from time to time
in one or more series, or all at one time in one or more series, up to
$195,000,000 aggregate principal amount of its First Mortgage Bonds ("New
Bonds") and up to 500,000 shares of its Preferred Stock (par value $100) ("New
Preferred Stock" and together with the New Bonds, the "Securities") at prices
and on terms to be determined at the time of sale. This Prospectus will be
supplemented by one or more prospectus supplements ("Prospectus Supplement")
which will set forth in the case of an offering of New Bonds, the aggregate
principal amount, maturity, interest rate (or method of calculating the
interest rate), any redemption provisions, offering price, proceeds to the
Company, and any other specific terms of the particular series of New Bonds
and, in the case of an offering of New Preferred Stock, the specific
designation, number of shares, rate and time of payment of dividends, or manner
of determining such rate and time, offering price, any redemption provisions,
proceeds to the Company, and any other specific terms of the particular series
of the New Preferred Stock. The sale of one series of New Bonds or of one
series of New Preferred Stock will not be contingent upon the sale of any other
series of New Bonds or New Preferred Stock, as the case may be.
--------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------
The date of this Prospectus is December 23, 1993.
<PAGE>
AVAILABLE INFORMATION
WEST PENN POWER COMPANY (THE "COMPANY"), 800 CABIN HILL DRIVE, GREENSBURG, PA
15601 (TEL. 412-837-3000), IS SUBJECT TO THE INFORMATIONAL REQUIREMENTS OF THE
SECURITIES EXCHANGE ACT OF 1934 AND IN ACCORDANCE THEREWITH FILES REPORTS AND
OTHER INFORMATION WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION"). SUCH REPORTS AND OTHER INFORMATION FILED BY THE COMPANY CAN BE
INSPECTED AT THE PUBLIC REFERENCE FACILITIES OF THE COMMISSION, ROOM 1024,
JUDICIARY PLAZA, 450 FIFTH STREET, N.W., WASHINGTON, DC 20549; SUITE 1400,
NORTHWESTERN ATRIUM CENTER, 500 WEST MADISON STREET, CHICAGO, ILLINOIS 60661;
AND ROOM 1400, 7 WORLD TRADE CENTER, NEW YORK, NEW YORK 10048. COPIES OF SUCH
MATERIAL CAN BE OBTAINED FROM THE PUBLIC REFERENCE SECTION OF THE COMMISSION AT
PRESCRIBED RATES. REQUESTS SHOULD BE DIRECTED TO THE COMMISSION'S PUBLIC
REFERENCE SECTION, ROOM 1024, JUDICIARY PLAZA, 450 FIFTH STREET, N.W.,
WASHINGTON, DC 20549. CERTAIN SECURITIES OF THE COMPANY ARE LISTED ON THE NEW
YORK STOCK EXCHANGE, AND REPORTS AND OTHER INFORMATION CONCERNING THE COMPANY
CAN BE INSPECTED AT THE OFFICES OF SUCH EXCHANGE.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, are hereby
incorporated by reference in this Prospectus:
(i) The Annual Report of the Company on Form 10-K for the year ended
December 31, 1992, as amended by the Company's Report on Form 8 filed
on March 3, 1993 (the "Annual Report");
(ii) The Quarterly Reports of the Company on Form 10-Q for the Quarters
ended March 31, 1993, June 30, 1993 and September 30, 1993; and
(iii) The Current Reports of the Company on Form 8-K dated June 9, 1993.
All documents filed by the Company pursuant to Sections 13, 14 or 15(d) of
the Securities Exchange Act of 1934 after the date of this Prospectus and prior
to the termination of the offering of the Securities offered hereby shall be
deemed to be incorporated in this Prospectus by reference and to be a part
hereof from the date of filing such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as modified or superseded, to constitute a part of this
Prospectus.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON TO
WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, ON THE WRITTEN OR ORAL
REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO
ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED BY REFERENCE IN THIS PROSPECTUS,
OTHER THAN EXHIBITS TO SUCH DOCUMENTS. REQUESTS FOR SUCH COPIES SHOULD BE
DIRECTED TO: WEST PENN POWER COMPANY, 800 CABIN HILL DRIVE, GREENSBURG, PA
15601, ATTENTION: KENNETH D. MOWL, SECRETARY AND TREASURER, (TEL. 412-837-
3000).
2
<PAGE>
THE COMPANY
The Company, incorporated in Pennsylvania in 1916, is an electric utility
operating in western, north and south central Pennsylvania which owns
generating capacity in Pennsylvania and West Virginia. The Company is a wholly-
owned subsidiary of Allegheny Power System, Inc. and, together with Monongahela
Power Company ("Monongahela"), The Potomac Edison Company ("Potomac Edison")
and Allegheny Generating Company ("AGC") (collectively, the "affiliates"),
makes up the Allegheny Power integrated electric utility system (the "System").
The Company owns 45% of the common stock of AGC, and Monongahela and Potomac
Edison own the remainder of AGC's common stock. AGC owns an undivided 40%
interest (840 MW) in a pumped-storage hydroelectric station in Bath County,
Virginia, which is operated by an unaffiliated company.
SELECTED INFORMATION
The following selected information is qualified in its entirety by the
detailed information appearing elsewhere in this Prospectus and by the
information and financial statements (including the notes thereto) appearing in
the documents incorporated in this Prospectus by reference.
<TABLE>
<CAPTION>
TWELVE MONTHS YEARS ENDED DECEMBER 31,
ENDED ---------------------------------------
SEPTEMBER 30, 1993 1992 1991 1990 1989 1988
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Generating capability at
end of period (KW in
Thousands):
Company-owned:
Coal-fired........... 3,160 3,160 3,160 3,160 3,115 3,115
Pumped-storage (a)... 378 378 378 378 378 378
Hydro................ 52 52 52 52 52 52
Nonutility contract
(b).................. 133 133 133 133 133 133
Maximum hour peak demand
(KW in Thousands)...... 2,954 2,935 2,845 2,703 2,840 2,765
Sales (KWh in Millions):
Retail customers....... 16,264 15,830 15,408 15,179 14,816 14,704
Nonaffiliated utilities
(c).................. 6,025 7,780 7,684 9,343 10,580 9,787
Other, including
affiliates (c)....... 1,859 2,248 2,485 2,426 1,868 1,483
Customers (at end of
period)................ 643,984 640,219 633,636 627,479 621,056 614,101
</TABLE>
- ------
(a) Capacity entitlement through percentage ownership of AGC.
(b) Nonutility generating capacity available through contractual arrangements
pursuant to the Public Utility Regulatory Policies Act of 1978.
(c) Amounts for periods prior to 1991 have been reclassified for comparative
purposes to reflect a change in a Federal Energy Regulatory Commission
classification.
CAPITALIZATION
<TABLE>
<CAPTION>
SEPTEMBER 30, 1993
-------------------------
AMOUNT PERCENT
------ -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Common Stock, Other Paid-in Capital, and Retained
Earnings............................................ $ 788,851 46.0%
Preferred Stock (Not Subject to Mandatory Redemption). 149,708 8.8
Long-Term Debt........................................ 775,185 45.2
---------- --------
Total Capitalization................................ $1,713,744 100.0%
========== ========
</TABLE>
3
<PAGE>
INCOME STATEMENT SUMMARY
The following summary income information as to the years ended December 31,
1988 through 1992 should be read in conjunction with the audited Financial
Statements contained in the Annual Report. The unaudited income information for
the twelve months ended September 30, 1993 reflects all adjustments (which
consist only of normal recurring adjustments) which in the Company's opinion
are necessary for a fair presentation of that period.
<TABLE>
<CAPTION>
TWELVE MONTHS YEARS ENDED DECEMBER 31,
ENDED ----------------------------------------------------
SEPTEMBER 30, 1993 1992 1991 1990 1989 1988
------------------ ---- ---- ---- ---- ----
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Total Operating
Revenues*............ $1,076,438 $1,076,841 $1,070,803 $1,058,852 $1,015,647 $991,554
Operating Income....... 135,141 130,938 134,854 124,725 114,060 124,270
Income Before Interest
Charges.............. 154,478 150,482 151,806 140,465 133,138 144,168
Interest Charges....... 57,625 52,326 50,628 47,212 44,887 46,053
Consolidated Net
Income............... 96,853 98,156 101,178 93,253 88,251 98,115
Ratio of Earnings to
Fixed Charges.......... 3.27 3.51 3.80 3.51 3.41 3.71
Ratio of Earnings to
Fixed Charges and
Preferred Stock
Dividend Requirements.. 2.76 2.97 3.19 2.95 2.86 3.11
</TABLE>
- ------
* Amounts for periods prior to 1991 have been reclassified for comparative
purposes to reflect a change in a Federal Energy Regulatory Commission
classification.
USE OF PROCEEDS
The net proceeds from the sale of the Securities will be added to the
Company's general funds and, together with other funds available to the
Company, will be used to pay or prepay, to the extent desirable, debt, to
redeem outstanding bonds and preferred stock, and for other corporate purposes,
including the financing of the Company's construction program.
CONSTRUCTION AND FINANCING
Construction expenditures by the Company in 1992 amounted to $204 million and
for 1993 and 1994 are expected to aggregate $257 million and $219 million,
respectively. In 1992, these expenditures included $90 million for
environmental protection, of which $77 million was for compliance with the
Clean Air Act Amendments of 1990 (the "CAAA"). The 1993 and 1994 estimated
expenditures include $129 million and $64 million, respectively, for
environmental protection, of which $115 million and $49 million, respectively,
are to cover costs of compliance with the CAAA. The estimated amounts for 1993
and 1994 have been reduced to reflect recovery of carrying charges on CAAA
expenditures included in base rates.
<TABLE>
<CAPTION>
1992 1993 1994
---- ---- ----
(MILLIONS OF DOLLARS)
<S> <C> <C> <C>
Generation.......................................... $120.2 $164.5 $126.7
Transmission and Distribution....................... 67.0 75.0 72.3
Other............................................... 17.2 17.5 20.0
------- ------- -------
Total............................................. $204.4 $257.0 $219.0
======= ======= =======
Allowance for Funds used During Construction
Included Above.................................... $ 8.3 $10.6 $13.0
</TABLE>
4
<PAGE>
In connection with its construction program, the Company must make estimates
of the availability and cost of capital as well as the future demands of its
customers that are necessarily subject to regional, national, and international
developments, changing business conditions, and other factors. The construction
of facilities and their cost are affected by laws and regulations, lead times
in manufacturing, availability of labor, materials and supplies, inflation,
interest rates, and licensing, rate, environmental and other proceedings before
regulatory authorities. As a result, the Company's future plans, as well as its
projected ownership of future generating stations, are subject to continuing
review and substantial change.
The Company has financed its construction program through internally
generated funds, first mortgage bond and preferred stock issues, pollution
control and solid waste disposal bonds, instalment loans, long-term lease
arrangements, equity investments by its parent, and, where necessary, interim
short-term debt. The future ability of the Company to finance its construction
program by these means depends on many factors, including rate levels
sufficient to provide internally generated funds and adequate revenues to
produce a satisfactory return on the common equity portion of the Company's
capital structure and to support the issuance of senior securities.
DESCRIPTION OF THE NEW BONDS
General
The New Bonds are to be issued under an Indenture, dated as of March 1, 1916,
between the Company and The Chase Manhattan Bank (National Association), as
Trustee, as supplemented and as to be supplemented as is necessary to create
any series of New Bonds (collectively, the "Indenture") and under resolutions
of the Board of Directors of the Company creating New Bonds (the "Board
Resolutions"). The Trustee is a depositary of funds of and a lender to the
Company and its affiliates.
The statements under this caption relating to the New Bonds, the Indenture
and the Board Resolutions are summaries and do not purport to be complete. They
make use of terms defined in the Indenture and the Board Resolutions and are
qualified in their entirety by express reference to the Indenture and the Board
Resolutions, the forms of which will be filed as exhibits to the Registration
Statement of which this Prospectus is a part.
Reference is made to the Prospectus Supplement relating to the particular New
Bonds offered thereby (the "Offered New Bonds") for the terms of the Offered
New Bonds, including dates of maturity, the rates of interest, and the prices
at which, the periods within which, and the terms and conditions upon which,
the Offered New Bonds may, pursuant to any optional or mandatory redemption
provisions, be redeemed by the Company.
Unless otherwise indicated in the Prospectus Supplement relating thereto, the
Offered New Bonds are to be issued as registered securities without coupons in
denominations of $1,000 or any integral multiple of $1,000. They will be
transferable and exchangeable without charge except for governmental charges,
if any.
The Indenture does not contain any covenants or other provisions that are
specifically intended to afford holders of the New Bonds special protection in
the event of a highly leveraged transaction.
Maintenance and Depreciation Provisions
The Company must annually credit to a depreciation reserve account at least
2% of the average principal amount of Bonds outstanding during such year, in
addition to expenditures for repairs and renewals, and must within one (1) year
thereafter expend such amount in property additions. The Company must also
expend annually for maintenance and repairs 2-1/2% of the average principal
amount of Bonds outstanding during such year, with a credit for expenditures in
the three (3) previous years in excess of the sum covenanted to be so expended.
If the amount covenanted to be so expended exceeds requirements, the Company
must apply any unexpended balance to property additions.
5
<PAGE>
On or before May 1 in each year, as long as any of the Bonds of Series U, EE,
FF, GG, HH or II ("Prior Bonds") are outstanding, the Company is required to
pay to the Trustee as a Renewal and Replacement Fund an amount equal to 2-1/4%
of the average amount of Depreciable Property of the Company during the
preceding year less certain optional credits for expenditures for replacements,
property additions and Bonds retired. Cash deposited may be used to purchase or
redeem Prior Bonds or withdrawn against Prior Bonds or property additions.
Excess credits may be used in any subsequent year. The Company has reserved the
right to change the 2-1/4% with the approval of the Commission.
The maintenance and depreciation provisions for the various series overlap in
many respects and, accordingly, may be satisfied by the same expenditures and
credit.
Security
The New Bonds will be equally and ratably secured, together with all other
Bonds now or hereafter issued, by a direct first mortgage lien on all real
estate (including easements), fixed property and franchises now or hereafter
owned by the Company subject to no liens securing indebtedness except taxes for
the current year and those not yet due and liens existing on property acquired.
The lien on certain after-acquired property may be subject to rights of others
which attach prior to the recording of a supplemental indenture subjecting such
property to the Indenture.
The Company, subject to the meeting of certain requirements, may acquire
property subject to liens, which, as to property covered thereby, will rank
prior to the lien of the Indenture.
Issuance of Additional Bonds
Additional Bonds may be issued in an amount equal to (1) 60% of the lesser of
cost or fair value of property additions, (2) cash deposited with the Trustee
and (3) Bonds retired or to be retired. Cash deposited may be withdrawn in the
amount of the Bonds issuable as shown in (1). Bonds are issuable as shown in
(1) and (except as to Bonds issued to refund Bonds or prior lien obligations
which bear a higher interest rate or mature within 2 years of the refunding) as
shown in (3) only if net earnings of the Company available for bond interest
for a specified period are not less than twice interest charges for a like
period on all Bonds then outstanding and applied for and on prior lien
obligations. In calculating such net earnings, (a) there is deducted for
depreciation a sum equal to the higher of (i) 2-1/4% per annum of Depreciable
Property or (ii) book depreciation, and (b) in the case of (1) after consent by
certain of the present Bonds outstanding or after such certain of the present
Bonds are no longer outstanding, no deduction shall be made for any income,
excess profits or other taxes measured by or dependent on income. The Company
estimates that at September 30, 1993, it had $631 million of unbonded bondable
property available for the issuance of Bonds.
The Company expects that the New Bonds will be issued on the basis of
property additions, cash or Bonds retired or to be retired.
Modification
A majority in interest of the Bondholders may waive any default, and the
Indenture may be modified to permit qualification under the Trust Indenture Act
of 1939, or substitute legislation, without any consent of the Bondholders of
the New Bonds. To the extent permitted by the Indenture, the rights of
Bondholders of Series U, EE, FF, GG, HH, II, JJ and KK, the New Bonds and
future series of Bonds may, with consent of holders of 66-2/3% of the Bonds
adversely affected, be changed in any way except to affect the terms of payment
of principal or interest or to reduce such percentage.
6
<PAGE>
Defaults
Failure to pay principal, or, for specified periods, to pay interest or meet
other Indenture requirements constitutes an event of default. A majority of the
Bondholders may direct the time, method and place of exercising any power
conferred upon the Trustee, but the Trustee, subject during default to the
required standard of care, is first entitled to security or indemnity
satisfactory to it. Periodic evidence as to general compliance with the
Indenture is not required to be furnished unless prescribed by the Commission
under the Trust Indenture Act of 1939, but certificates as to compliance with
certain provisions are required to be furnished annually and in connection with
action to be taken by the Trustee at the Company's request.
Miscellaneous
Holders of the New Bonds must furnish the Company the necessary evidence to
enable it to determine whether deduction or retention of any taxes from any
payment of principal or interest is required. New Bonds owned by individuals
residing in Pennsylvania are subject to the 4 mills ($4.00 on each $1,000 of
principal amount) Pennsylvania corporate loans tax. Such tax will be withheld
from interest payments to such individuals.
DESCRIPTION OF THE NEW PREFERRED STOCK
The authorized preferred stock of the Company consists of 3,097,077 shares of
cumulative preferred stock, par value $100 (the "Preferred Stock"), of which
1,497,077 shares were issued and outstanding as of September 30, 1993 as shares
of various series heretofore established. The statements herein concerning the
New Preferred Stock are brief summaries of the relative rights and preferences
of the Preferred Stock. They make use of terms defined in the Company's
charter, as amended, do not purport to be complete, and are qualified in their
entirety by reference to such charter, which has been filed as an exhibit to
the Registration Statement of which this Prospectus is a part.
As set forth below, particular series of the New Preferred Stock may differ
with respect to designation, liquidation preference per share, sinking fund
provisions, if any, amount and method of determining the rate of dividends and
redemption terms, among other things.
Reference is made to the Prospectus Supplement relating to the particular
series of New Preferred Stock offered thereby (the "Offered New Preferred
Stock") for the specific terms of the Offered New Preferred Stock, including
the dividend rate (or, if the rate is not fixed, the method of determining the
dividend rate), the liquidation preference per share, any provisions for
redemption (including by way of sinking fund) and other terms of the Offered
New Preferred Stock.
General
The Company's charter provides that the Company's Preferred Stock may be
divided into and issued in series. The New Preferred Stock will constitute one
or more new series of the Company's Preferred Stock. All shares of Preferred
Stock are of equal rank. The charter provides that all of the shares of
Preferred Stock shall be identical in all respects, except as to the
designation thereof and except that each series may vary, as fixed and
determined by the Board of Directors of the Company at the time of its creation
and expressed in a resolution, as to (a) the dividend rate, (b) the price at
which, and the terms and conditions on which, such shares may be redeemed, (c)
the amounts payable upon shares in the event of voluntary or involuntary
liquidation, (d) sinking fund provisions for the redemption or purchase of
shares, and (e) the terms and conditions, if any, on which shares may be
converted.
7
<PAGE>
Dividends
The holders of each series of the New Preferred Stock shall be entitled to
receive, in preference to any class of stock ranking junior to the Preferred
Stock, when, as and if declared by the Board of Directors of the Company out of
funds legally available therefor, cumulative cash dividends at the rate
determined in accordance with the charter at the time of creation of such
series. If so specified in the Prospectus Supplement, such dividend rate may be
subject to adjustment from time to time in the manner specified therein. The
New Preferred Stock will rank on parity, as to dividends, with all series of
Preferred Stock. No dividend shall be paid upon, or declared or set apart for,
any share of Preferred Stock for any quarterly dividend period unless at the
same time a like proportionate dividend for the same quarterly dividend period,
ratably in proportion to the respective annual dividend rates fixed therefor,
shall be paid upon, or declared and set apart for, all shares of Preferred
Stock of all series then issued and outstanding and entitled to receive such
dividend.
If any dividends are in arrears on the Preferred Stock, the Company may not
acquire (for a sinking fund or otherwise) any shares thereof (except by
redemption of all) without prior approval of the Commission under the Public
Utility Holding Company Act of 1935.
The Company's charter provides that so long as any shares of Preferred Stock
are outstanding, the Company shall not declare any dividends or make any
distributions in respect of outstanding shares of any stock of the Company
ranking junior to the Preferred Stock as to dividends or assets (the "junior
stock"), other than dividends in shares of junior stock or purchase or
otherwise acquire for value any outstanding shares of junior stock (each such
dividend, distribution, purchase or acquisition being called a "dividend") in
contravention of the following:
(a) If and so long as the junior stock equity, as defined, at the end of
the calendar month immediately preceding the date on which a dividend on
the junior stock is declared is, or as a result of the dividend would
become, less than 20% of total consolidated capitalization, as defined, the
Company shall not declare such dividends in an amount which, together with
all other dividends on the junior stock paid within the year ending with
and including the date on which such dividend is payable, exceeds 50% of
the consolidated net income of the Company and its subsidiaries available
for dividends on the junior stock for the 12 full calendar months
immediately preceding the calendar month in which such dividends are
declared, except in an amount not exceeding the aggregate of dividends
which under the restriction set forth above could have been, and have not
been, declared; and
(b) If and so long as the junior stock equity, as defined, at the end of
the calendar month immediately preceding the date on which a dividend on
the junior stock is declared is, or as a result of the dividend would
become, less than 25% but not less than 20% of total consolidated
capitalization, as defined, the Company shall not declare dividends on the
junior stock in an amount which, together with all other dividends on the
junior stock paid within the year ending with and including the date on
which such dividend is payable, exceeds 75% of the consolidated net income
of the Company and its subsidiaries available for dividends on the junior
stock for 12 full calendar months immediately preceding the calendar month
in which such dividends are declared, except in an amount not exceeding the
aggregate of dividends on junior stock which under the restriction above
under (a) and in this paragraph could have been, and have not been,
declared.
Liquidation Rights
In the event of any voluntary or involuntary dissolution, liquidation or
winding up of the Company, each series of Preferred Stock, pari passu with each
other, shall have preference over any class of stock ranking junior to the
Preferred Stock until an amount equal to the amount per share determined in
accordance with the charter provisions, plus accrued dividends, shall have been
paid.
8
<PAGE>
Voting Rights
The Preferred Stock has no voting rights except as indicated below or as
required by law.
If dividends on any of the Preferred Stock are in default in an amount
equivalent to four or more full quarterly dividends, and until all such
dividends in arrears have been paid, the Preferred Stock, voting as a class, is
entitled to elect a majority of the Board of Directors. In such case, each
share is entitled to one vote for each director to be elected by the Preferred
Stock, which votes may be cast cumulatively.
A consent of two-thirds of the holders of the outstanding shares of the
Preferred Stock, voting as a class, is required to (1) change the charter to
adversely affect the powers, preferences or rights of the Preferred Stock (the
vote being by the series adversely affected, voting as a class, if less than
all series are adversely affected), but a change in the authorized amount of
the Preferred Stock or the creation, or change in the amount, of any new class
of stock ranking on a parity as to dividends or assets (hereinafter referred to
as "equal rank") with, or any class of stock ranking junior to, the Preferred
Stock is deemed not adverse; or
(2) authorize or create, or increase the authorized amount of, or issue more
than 12 months after such authorization or creation, any prior ranking stock.
A consent of the holders of a majority of the outstanding shares of the
Preferred Stock, voting as a class, is required to (1) issue or assume any
securities representing unsecured debt (except to refund unsecured debt or
retire all outstanding shares of Preferred Stock) if all unsecured debt to be
outstanding would exceed 20%, or all such debt with maturities of less than 10
years to be outstanding would exceed 10%, of secured indebtedness, capital and
surplus;
(2) issue any additional or reacquired shares of Preferred Stock or stock of
equal rank (except to refinance an equal par amount of Preferred Stock or stock
of equal or prior rank) unless annual interest charges on indebtedness of the
Company and its subsidiaries to be outstanding after the issuance and annual
dividend requirements of all Preferred Stock and stock of equal or prior rank
to be outstanding after the issuance are covered 1-1/2 times by consolidated
gross income (after all taxes) for 12 consecutive calendar months within the 15
preceding calendar months and unless aggregate capital applicable to junior
stock equity, as defined, is not less than the aggregate amount payable on
involuntary liquidation on all Preferred Stock and stock of equal or prior rank
to be outstanding; or
(3) dispose of substantially all of the Company's assets or merge or
consolidate except (i) with the approval of the Commission under the Public
Utility Holding Company Act of 1935, or (ii) with or to a subsidiary of the
Company, if the Preferred Stock is not adversely affected thereby and if other
conditions are met.
Other Rights
The New Preferred Stock, when issued, will be fully paid and non-assessable.
The New Preferred Stock has no preemptive, conversion or subscription rights.
Transfer Agent and Registrar
The transfer agent and the registrar for the Preferred Stock is Chemical
Bank, New York, N.Y.
PLAN OF DISTRIBUTION
The Company will sell the Securities from time to time through underwriters
or dealers in either negotiated or competitively bid transactions. Any
Securities acquired by any underwriters will be acquired by such underwriters
for their own account and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The underwriter or
underwriters with respect to a particular underwritten offering of New Bonds or
9
<PAGE>
Preferred Stock will be named in the Prospectus Supplement relating to such
offering and, if an underwriting syndicate is used, the managing underwriter or
underwriters will be set forth on the cover page of such Prospectus Supplement.
The applicable Prospectus Supplement will also set forth the purchase price of
the New Bonds or New Preferred Stock offered and the proceeds to the Company
from such sale, any underwriting discounts and other items constituting
underwriters' compensation, any initial public offering price and any discounts
or concessions allowed or reallowed or paid to dealers and other specific terms
of the particular Securities.
Unless otherwise set forth in the Prospectus Supplement, the obligations of
the underwriters to purchase any Securities will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all of
the particular Securities offered thereby if any are purchased. Underwriters
and dealers may be entitled, under agreements to be entered into with the
Company, to indemnification against certain civil liabilities, including
liabilities under the Securities Act of 1933.
VALIDITY OF THE SECURITIES
The validity of the Securities offered hereby will be passed upon for the
Company by Sullivan & Cromwell, New York, New York, and for underwriters by
Simpson Thacher & Bartlett (a partnership which includes professional
corporations), New York, New York. On matters of local law, those firms will
rely on Thomas K. Henderson, Esq., Vice President, Legal Services of the
Company.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report have been so incorporated in reliance on the
reports of Price Waterhouse, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
10
<PAGE>
================================================================================
No person has been authorized to give any information or to make any represen-
tations other than those contained in this Prospectus Supplement or the Pro-
spectus and, if given or made, such information or representation must not be
relied upon as having been authorized. This Prospectus Supplement and the Pro-
spectus do not constitute an offer to sell or a solicitation of an offer to buy
any securities other than the securities offered by this Prospectus Supplement
and the Prospectus or an offer to sell or a solicitation of an offer to buy
such securities in any jurisdiction to any person to whom it is unlawful to
make such offer or solicitation in such jurisdiction. Neither the delivery of
this Prospectus Supplement and the Prospectus nor any sale made thereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of West Penn Power Company since the date of this Pro-
spectus Supplement or the Prospectus, or that the information herein or therein
is correct as of any time since such date.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Supplement
Use of Proceeds............................................................ S-2
Recent Developments........................................................ S-2
Selected Financial Information............................................. S-2
Capitalization............................................................. S-3
Construction and Financing................................................. S-3
Description of Offered New Bonds........................................... S-3
Purchasers................................................................. S-4
Prospectus
Available Information...................................................... 2
Incorporation of Certain Documents
by Reference.............................................................. 2
The Company................................................................ 3
Selected Information....................................................... 3
Capitalization............................................................. 3
Income Statement Summary................................................... 4
Use of Proceeds............................................................ 4
Construction and Financing................................................. 4
Description of the New Bonds............................................... 5
Description of the New Preferred Stock..................................... 7
Plan of Distribution....................................................... 9
Validity of the Securities................................................. 10
Experts.................................................................... 10
</TABLE>
================================================================================
================================================================================
$65,000,000
West Penn
Power Company
First Mortgage Bonds,
Series LL, 8 1/8%
----------------------
PROSPECTUS SUPPLEMENT
----------------------
Prudential Securities Incorporated
Chase Securities, Inc.
Citicorp Securities, Inc.
C.J. Lawrence/Deutsche Bank Securities
Corporation
PaineWebber Incorporated
Salomon Brothers Inc
July 26, 1994
================================================================================
