<PAGE>
Rule 424(b)(5)
Registration No. 33-56997
PROSPECTUS SUPPLEMENT
(To Prospectus dated January 23, 1995)
- -------------------------------------------------------------------------------
Part of the Allegheny [LOGO OF ALLEGHENY
Power System POWER SYSTEMS, INC.]
$30,000,000
WEST PENN POWER COMPANY
FIRST MORTGAGE BONDS, SERIES MM, 7 3/4%
- -------------------------------------------------------------------------------
The First Mortgage Bonds, Series MM, 7 3/4% (the "Offered New Bonds") mature
on May 1, 2025 and will bear interest from May 1, 1995. Interest on the
Offered New Bonds is payable on May 1 and November 1 of each year, commencing
November 1, 1995. The Offered New Bonds will be redeemable on or after May 1,
2005, 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............................... 98.395% .350% 98.045%
- --------------------------------------------------------------------------------
Total.................................. $29,518,500 $105,000 $29,413,500
</TABLE>
===============================================================================
(1) Plus accrued interest from May 1, 1995.
(2) The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting estimated expenses of $106,344 payable by the Company.
- -------------------------------------------------------------------------------
The Offered New Bonds are offered by the several Underwriters subject to
delivery by the Company and acceptance by the Underwriters, to prior sale and
to withdrawal, cancellation or modification of the offer without notice.
Delivery of the Offered New Bonds to the Underwriters is expected to be made
at the office of Prudential Securities Incorporated, One New York Plaza, New
York, New York, on or about May 19, 1995.
PRUDENTIAL SECURITIES INCORPORATED
CITICORP SECURITIES, INC.
DEUTSCHE BANK SECURITIES CORPORATION
PAINEWEBBER INCORPORATED
SALOMON BROTHERS INC
May 12, 1995
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS 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, together with other
corporate funds, will be used to redeem $30 million of the Company's First
Mortgage Bonds, Series EE, 9% at the current redemption price of 105.60% of
principal amount plus accrued interest to the redemption date and to pay
issuance expenses.
RECENT DEVELOPMENTS
The Company and its affiliates, Monongahela Power Company and The Potomac
Edison Company, have been named as defendants in one new asbestos complaint
filed in state court in West Virginia involving thirty-four plaintiffs and
eighty-three defendants. They cannot predict the outcome of this proceeding.
The lawsuit filed by the Burgettstown PURPA project against the Company in
the Court of Common Pleas of Washington County, Pennsylvania has been
dismissed, without prejudice. On May 2, 1995, the developers of the
Burgettstown PURPA project filed suit in federal court in the Western District
of Pennsylvania against the Company, Allegheny Power System, Inc. ("APS") and
Allegheny Power Service Corporation ("APSC") alleging antitrust violations,
unfair competition, breach of contract and intentional interference with a
contract. The lawsuit seeks recovery of alleged lost profits and out-of-pocket
costs as well as treble and punitive damages. The Company, APS and APSC cannot
predict the outcome of this proceeding.
The petition filed by the Company with the Federal Energy Regulatory
Commission which sought a declaration that the orders of the Pennsylvania
Public Utility Commission requiring the Company to purchase capacity from
Burgettstown violated PURPA, has been dismissed.
SELECTED FINANCIAL INFORMATION
The following summary income statement information as to the year ended
December 31, 1994 and the twelve months ended March 31, 1995 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, 1994. The
unaudited summary income statement information for the twelve months ended
March 31, 1995 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>
12 MONTHS ENDED YEAR ENDED
MARCH 31, 1995 DECEMBER 31, 1994*
--------------- ------------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Income Statement Data:
Total Operating Revenues.................. $1,132,984 $1,128,242
Operating Income.......................... 149,646 141,894
Income Before Interest Charges............ 163,831 157,241
Interest Charges.......................... 58,069 56,226
Consolidated Income Before Cumulative
Effect of Accounting Charge.............. 105,762 101,015
Cumulative Effect of Accounting Change.... -- 19,031
Consolidated Net Income................... 105,762 120,046
Ratio of Earnings to Fixed Charges.......... 3.47 3.40
</TABLE>
- --------
* Income Statement Data includes the cumulative effect of an accounting
change to record unbilled revenue recorded in the first quarter of 1994.
The Ratio of Earnings to Fixed Charges is before the cumulative effect of
the accounting change.
S-2
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company at December
31, 1994 and March 31, 1995, and as adjusted to give effect to the sale of the
Offered New Bonds and the refunding of $30 million of the Company's First
Mortgage Bonds, Series EE, 9%.
<TABLE>
<CAPTION>
MARCH 31, 1995 DECEMBER 31, 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... $ 967,735 $ 967,735 $ 955,482 $ 955,482
Preferred Stock (Not Subject to
Mandatory Redemption)........... 149,708 149,708 149,708 149,708
Long-Term Debt................... 836,551 836,356 836,426 836,235
---------- ---------- ---------- ----------
Total Capitalization............ $1,953,994 $1,953,799 $1,941,616 $1,941,425
========== ========== ========== ==========
</TABLE>
CONSTRUCTION AND FINANCING
Construction expenditures by the Company in 1994 amounted to $260 million
and for 1995 and 1996 are expected to aggregate $172 million and $115 million,
respectively. In 1994, these expenditures included $97 million for
environmental control technology, of which $78 million was for compliance with
the Clean Air Act Amendments of 1990 ("CAAA"). The 1995 and 1996 estimated
expenditures include $53 million and $19 million, respectively, for
environmental control technology, of which $38 million and $1 million,
respectively, are 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 are being collected through currently
approved base rates.
<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
(MILLIONS OF DOLLARS)
<S> <C> <C> <C>
Generation............................................. $169.6 $108.6 $ 58.1
Transmission and Distribution.......................... 74.4 57.7 50.0
Other.................................................. 16.4 6.1 7.2
------ ------ ------
Total................................................ $260.4 $172.4 $115.3
====== ====== ======
Allowance For Funds Used During Construction Included
Above................................................. $ 10.8 $ 4.3 $ 1.9
</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 $30,000,000 aggregate principal
amount and will mature on May 1, 2025. The Offered New Bonds will bear
interest at the rate per annum shown on the front cover of this Prospectus
Supplement from May 1, 1995 or from the most recent interest payment date to
which interest has been paid or provided for, payable semiannually on May 1
and November 1 of each year, commencing November 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 May 1, 2005, 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 May 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 DURING REGULAR IF REDEEMED DURING REGULAR IF REDEEMED DURING REGULAR
THE 12-MONTH PERIOD REDEMPTION THE 12-MONTH PERIOD REDEMPTION THE 12-MONTH PERIOD REDEMPTION
BEGINNING MAY 1, PRICE BEGINNING MAY 1, PRICE BEGINNING MAY 1, PRICE
- ------------------- ---------- ------------------- ---------- ------------------- ----------
<S> <C> <C> <C> <C> <C>
2005............... 103.073% 2009............... 101.844% 2013............... 100.615%
2006............... 102.766 2010............... 101.537 2014............... 100.308
2007............... 102.459 2011............... 101.230 2015 and
2008............... 102.151 2012............... 100.923 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 ($300,000) 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.
UNDERWRITING
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 Underwriters named below, and each of the Underwriters 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
UNDERWRITER BONDS
----------- -----------
<S> <C>
Prudential Securities Incorporated............................... 6,000,000
Citicorp Securities, Inc......................................... 6,000,000
Deutsche Bank Securities Corporation............................. 6,000,000
PaineWebber Incorporated......................................... 6,000,000
Salomon Brothers Inc............................................. 6,000,000
-----------
Total........................................................... $30,000,000
===========
</TABLE>
Under the terms and conditions of the Purchase Agreement, the Underwriters
are committed to take and pay for all of the Offered New Bonds, if any are
taken.
The Company has been advised by the Underwriters that the Underwriters
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 0.250% of the principal amount of the
Offered New Bonds. The Underwriters may allow and such dealers may reallow to
certain brokers and dealers a concession not in excess of 0.250% 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 Underwriters.
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
Underwriters 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 Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
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>
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
$130,000,000 aggregate principal amount of its First Mortgage Bonds (the "New
Bonds") and up to 900,000 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. Unless otherwise provided in a Prospectus
Supplement, 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 JANUARY 23, 1995.
<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, D.C. 20549; SUITE 1400,
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, D.C. 20549. CERTAIN
SECURITIES OF THE COMPANY ARE LISTED ON THE NEW YORK STOCK EXCHANGE, INC., 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, 1993 (the "Annual Report");
(ii) The Quarterly Reports of the Company on Form 10-Q for the Quarters
ended March 31, 1994, June 30, 1994 and September 30, 1994; and
(iii) The Current Report of the Company on Form 8-K dated August 2, 1994.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 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 of 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: MR. 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, 1994 1993 1992 1991 1990 1989
------------------ ---- ---- ---- ---- ----
<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 3,160 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)...... 3,068 2,954 2,935 2,845 2,703 2,840
Sales (KWh in Millions):
Retail customers....... 16,734 16,317 15,830 15,408 15,179 14,816
Nonaffiliated utilities
(c).................. 4,717 5,445 7,780 7,684 9,343 10,580
Other, including
affiliates (c)....... 1,773 1,821 2,248 2,485 2,426 1,868
Customers (at end of
period)................ 650,603 646,732 640,219 633,636 627,479 621,056
</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, 1994
-------------------------
AMOUNT PERCENT
------ -----------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Common Stock, Other Paid-in Capital, and Retained $ 902,721 47.1%
Earnings..............................................
Preferred Stock (Not Subject to Mandatory Redemption). 149,708 7.8
Long-Term Debt........................................ 863,302 45.1
------------- --------
Total Capitalization................................ $1,915,731 100.0%
============= ========
</TABLE>
3
<PAGE>
INCOME STATEMENT SUMMARY
The following summary income information as to the years ended December 31,
1989 through 1993 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, 1994 reflects all adjustments (which
consist only of normal recurring adjustments) which in the Company's opinion
are necessary for fair presentation of that period.
<TABLE>
<CAPTION>
TWELVE MONTHS YEARS ENDED DECEMBER 31,
ENDED ------------------------------------------------------
SEPTEMBER 30, 1994 1993 1992 1991 1990 1989
------------------ ---- ---- ---- ---- ----
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Total Operating
Revenues*.............. $1,140,943 $1,084,977 $1,076,841 $1,070,803 $1,058,852 $1,015,647
Operating Income....... 149,978 141,352 130,938 134,854 124,725 114,060
Income Before Interest
Charges.............. 167,863 159,157 150,482 151,806 140,465 133,138
Interest Charges....... 55,524 57,096 52,326 50,628 47,212 44,887
Consolidated Net
Income............... 112,339 102,061 98,156 101,178 93,253 88,251
Ratio of Earnings to
Fixed Charges.......... 3.79 3.49 3.51 3.80 3.51 3.41
Ratio of Earnings to
Fixed Charges and
Preferred Stock
Dividend Requirements.. 3.15 2.92 2.97 3.19 2.95 2.86
</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 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 $118 million for
environmental protection, of which $104 million was for compliance with the
Clean Air Act Amendments of 1990 (the "CAAA"). The 1994 and 1995 estimated
expenditures include $95 million and $51 million, respectively, for
environmental protection, of which $82 million and $33 million, respectively,
are to cover costs of compliance with the CAAA. Allowance for funds used
during construction (AFUDC)(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>
4
<PAGE>
In connection with its construction and demand-side management programs, 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 and other 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 form 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, 1994, it had $675 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, KK and LL, 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.
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
6
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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, 1994 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.
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.
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<PAGE>
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 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.
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
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
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<PAGE>
(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, New York.
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 New 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 a 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.
9
<PAGE>
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 LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
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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 SUP-
PLEMENT 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 UNLAW-
FUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DE-
LIVERY 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 PROSPECTUS 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
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<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
Underwriting............................................................... 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>
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$30,000,000
WEST PENN POWER COMPANY
FIRST MORTGAGE BONDS, SERIES MM, 7 3/4%
-----------------------
PROSPECTUS SUPPLEMENT
-----------------------
PRUDENTIAL SECURITIES INCORPORATED
CITICORP SECURITIES, INC.
DEUTSCHE BANK SECURITIES CORPORATION
PAINEWEBBER INCORPORATED
SALOMON BROTHERS INC
MAY 12, 1995
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