<PAGE> 1
Rule 424(b)(4)
PROSPECTUS SUPPLEMENT File No. 33-60917
(TO PROSPECTUS DATED JUNE 24, 1997)
$105,000,000
WISCONSIN POWER AND LIGHT COMPANY
7% DEBENTURES DUE JUNE 15, 2007
------------------------
Interest on the 7% Debentures due June 15, 2007 (the "Debentures") is
payable semi-annually on June 15 and December 15 of each year, commencing
December 15, 1997. The Debentures will be general unsecured obligations of
Wisconsin Power and Light Company (the "Company") and will rank on a parity with
all other unsecured and unsubordinated debt of the Company. The Debentures are
not redeemable prior to maturity and will not be subject to any sinking fund.
The Debentures will be represented by one or more global securities
registered in the name of the nominee of The Depository Trust Company ("DTC"),
as depositary. Book-Entry Interests (as defined in the accompanying Prospectus)
in such global securities will be shown on, and transfers thereof will be
effected only through, records maintained by DTC or its nominee for such global
securities and on the records of DTC and its participants. Except as described
herein and in the accompanying Prospectus, Debentures in definitive form will
not be issued. See "Certain Terms of the Debentures" herein and "Description of
the Debentures" and "Book-Entry Only System" in the accompanying Prospectus.
------------------------
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. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=========================================================================================================
UNDERWRITING PROCEEDS TO
PRICE TO PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Debenture............................. 99.715% .65% 99.065%
- ---------------------------------------------------------------------------------------------------------
Total..................................... $104,700,750 $682,500 $104,018,250
=========================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from the date of issuance.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deduction of expenses payable by the Company estimated at $190,000.
------------------------
The Debentures are being offered by the Underwriter, subject to prior sale,
when, as and if issued to and accepted by it, subject to approval of certain
legal matters by counsel for the Underwriter and to certain other conditions.
The Underwriter reserves the right to withdraw, cancel or modify such offer and
to reject orders in whole or in part. It is expected that delivery of the
Debentures will be made through the book-entry facilities of DTC on or about
June 30, 1997 against payment therefor in immediately available funds.
------------------------
MERRILL LYNCH & CO.
------------------------
The date of this Prospectus Supplement is June 25, 1997.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER 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
A portion of the net proceeds from the sale of the Debentures will be used
to retire at maturity $55,000,000 aggregate principal amount of the Company's
First Mortgage Bonds, Series Z, 6 1/8%, due July 15, 1997, and the remainder
will be used to repay short-term debt which was incurred by the Company to
repurchase in private transactions approximately $23,000,000 aggregate principal
amount of its First Mortgage Bonds, Series V, 9.30%, due December 1, 2025, and
to finance utility construction expenditures. As of June 20, 1997, the average
weighted interest rate on the short-term debt to be repaid was approximately
5.56% per annum.
SELECTED FINANCIAL INFORMATION
Set forth below is selected financial information for the Company for the
twelve months ended March 31, 1997 and the years ended December 31, 1996, 1995
and 1994.
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, --------------------------------
1997 1996 1995 1994
------------- ---- ---- ----
(UNAUDITED)
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C>
Income Statement Data:
Operating Revenues............................... $769,046 $759,275 $689,672 $687,811
Income Before Interest Expense................... $104,780 $113,957 $112,473 $102,643
Net Income for Common Stock...................... $ 69,748 $ 79,175 $ 75,342 $ 68,185
Ratio of Earnings to Fixed Charges
(unaudited)(1)................................. 4.35 4.81 4.23 4.29
</TABLE>
<TABLE>
<CAPTION>
AT MARCH 31, 1997 (UNAUDITED)
--------------------------------------------
PERCENT OF
CAPITALIZATION
ACTUAL AS ADJUSTED(2) AS ADJUSTED
------ -------------- --------------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Capitalization (3):
Current maturities of long-term debt..................... $ 55,000 $ 0 0.0%
First mortgage bonds, net(4)............................. 258,676 258,676 25.7
Debentures............................................... 0 105,000 10.4
Preferred stock without mandatory redemption............. 59,963 59,963 6.0
Common shareowners' investment........................... 583,785 583,785 57.9
-------- ---------- -----
Total.................................................. $957,424 $1,007,424 100.0%
======== ========== =====
</TABLE>
- -------------------------
(1) For the purpose of computing the ratios of earnings to fixed charges,
earnings have been calculated by adding to income before interest expense,
Federal and state income taxes and the estimated interest component of
rentals. Fixed charges represent interest expense, amortization of debt
discount, premium and expense and the estimated interest component of
rentals.
(2) As adjusted for the issuance of the Debentures and the application of the
net proceeds as described under "Use of Proceeds."
(3) For the purpose of this presentation, capitalization includes current
maturities of long-term debt.
(4) Excludes variable rate demand bonds in the amount of $56.975 million and
unamortized discount relating to outstanding First Mortgage Bonds in the
amount of $1.223 million.
S-2
<PAGE> 3
CERTAIN TERMS OF THE DEBENTURES
The following description of the particular terms of the Debentures
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Debentures set forth in the
accompanying Prospectus under "Description of the Debentures," to which
description reference is hereby made.
GENERAL
The Debentures will be unsecured general obligations of the Company and
will be issued as a separate series of securities under the Indenture, dated as
of June 20, 1997 (the "Unsecured Debt Indenture"), between the Company and
Firstar Trust Company, as Trustee. As of the date hereof, the Company had no
Securities (as defined in the accompanying Prospectus) outstanding under the
Indenture but had $371,874,000 of secured debt outstanding under its First
Mortgage Indenture (as defined in the accompanying Prospectus). The Unsecured
Debt Indenture does not limit the Company's ability to issue additional First
Mortgage Bonds or to enter into sale and leaseback transactions. See
"Description of the New Bonds" in the accompanying Prospectus.
MATURITY AND INTEREST
The Debentures will be limited to $105,000,000 aggregate principal amount
and will mature on June 15, 2007. Each Debenture will bear interest from June
30, 1997 or from the most recent interest payment date to which interest has
been paid, at the rate per annum specified on the cover page hereof, payable
semi-annually on June 15 and December 15, commencing December 15, 1997, to the
person in whose name such Debenture is registered at the close of business on
the preceding June 1 and December 1, respectively.
NO REDEMPTION PRIOR TO MATURITY
The Debentures will not be redeemable prior to maturity.
OTHER TERMS
The covenant described in the accompanying Prospectus under "Description of
the Debentures -- Certain Covenants -- Limitations on Liens" will apply to the
Debentures. Future series of Securities issued under the Unsecured Debt
Indenture may or may not have different covenants.
The Debentures will be subject to defeasance under the conditions described
in the accompanying Prospectus. The Unsecured Debt Indenture is governed by the
laws of the State of Wisconsin.
BOOK-ENTRY PROCEDURES
The Debentures will be represented by one or more global securities
registered in the name of DTC or its nominee. Book-Entry Interests in such
global securities will be shown on, and transfers thereof will be effected only
through, records maintained by DTC or its nominee for such global securities and
on the records of DTC Participants (as defined in the accompanying Prospectus).
Except as described below and in the accompanying Prospectus, Debentures in
definitive form will not be issued and owners of Book-Entry Interests will not
be considered the holders thereof.
The laws of some states require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and such
laws may impair the ability to transfer beneficial interests in the global
securities.
In the event that the book-entry system is discontinued, or DTC is at any
time unwilling or unable to continue as depositary, and a successor depositary
is not appointed by the Company within 90 days, the Company will issue
individual Debentures in certificated form to owners of Book-Entry Interests in
exchange for the Debentures held by DTC or its nominee, as the case may be.
S-3
<PAGE> 4
Settlement for the Debentures will be made by the Underwriter in
immediately available funds. All payments of principal and interest on global
securities will be made by the Company in immediately available funds.
See "Book-Entry Only System" in the accompanying Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement ("the
Purchase Agreement") between the Company and Merrill Lynch, Pierce, Fenner &
Smith Incorporated (the "Underwriter"), the Company has agreed to sell to the
Underwriter, and the Underwriter has agreed to purchase, the principal amount of
the Debentures set forth below.
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................. $105,000,000
============
</TABLE>
The Purchase Agreement provides that the obligations of the Underwriter are
subject to certain conditions precedent and that the Underwriter will be
obligated to purchase all of the Debentures if any are purchased.
The Underwriter has advised the Company that it will initially offer the
Debentures to the public initially at the public offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession not in excess of .40% of the principal amount of the
Debentures. The Underwriter may allow, and such dealers may reallow, a discount
not in excess of .25% of the principal amount on sales to certain other dealers.
After the initial public offering, the public offering price, concession and
discount may be changed.
The Debentures are a new issue of securities with no established trading
market. The Company does not intend to list the Debentures on any securities
exchange. The Underwriter has advised the Company that it currently intends to
make a market in the Debentures; however, the Underwriter is not obligated to do
so, and may discontinue any such market making at any time without notice. No
assurance can be given as to the liquidity of the trading market for the
Debentures.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
S-4
<PAGE> 5
PROSPECTUS
$105,000,000
WISCONSIN POWER AND LIGHT COMPANY
DEBT SECURITIES
------------------------
Wisconsin Power and Light Company (the "Company") may from time to time
offer up to $105 million aggregate principal amount of its debt securities (the
"Debt Securities"). The Debt Securities may be offered in one or more series and
may be either First Mortgage Bonds (the "New Bonds") or unsecured debt
securities consisting of notes, debentures or other evidences of indebtedness
(the "Debentures"). The Debt Securities will be offered to the public on terms
determined at the time or times of sale. An accompanying supplement to this
Prospectus (the "Prospectus Supplement") will set forth the specific terms and
conditions of the Debt Securities offered thereby, including, without
limitation, the title, aggregate principal amount, denominations, maturity, rate
(which may be fixed or variable) and time of payment of interest, any terms for
redemption or conversion, any terms for sinking or analogous fund payment(s),
any listing on a registered national securities exchange and the initial public
offering price.
The Company may sell the Debt Securities to or through underwriters (which
may include Merrill Lynch, Pierce, Fenner & Smith Incorporated) or dealers, and
may also sell Debt Securities directly to other purchasers or through agents
designated from time to time by the Company. See "Plan of Distribution." The
names of such underwriters, dealers or agents, any applicable commissions or
discounts and the net proceeds to the Company from the sale of the Debt
Securities will be set forth in the accompanying Prospectus Supplement.
The issue and sale of the Debt Securities are subject to the prior approval
and authorization of the Public Service Commission of Wisconsin, which has been
or will be obtained prior to the sale of the Debt Securities.
------------------------
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.
------------------------
MERRILL LYNCH & CO.
------------------------
The date of this Prospectus is June 24, 1997.
<PAGE> 6
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following
Regional Offices of the Commission: Midwest Regional Office, Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and Northeast
Regional Office, 7 World Trade Center, Suite 1300, New York, New York 10048.
Copies of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, such reports, proxy statements and other information
concerning the Company can be inspected at the offices of the American Stock
Exchange, 86 Trinity Place, New York, New York 10006. Certain securities of the
Company are listed on such exchange.
In addition, the Commission maintains a Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of such Web site is
http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments, schedules and exhibits thereto referred to
herein as the "Registration Statement") under the Securities Act of 1933, as
amended, with respect to the Debt Securities offered hereby. This Prospectus
does not contain all of the information set forth in such Registration
Statement, certain parts of which have been omitted in accordance with the rules
and regulations of the Commission. For further information, reference is made to
such Registration Statement which may be inspected and copied in the manner and
at the sources described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company (under File No.
0-337) with the Commission pursuant to the Exchange Act (to the extent
disclosures therein relate to the Company) are hereby incorporated herein by
reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1996.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering made by this Prospectus shall be deemed to be
incorporated in this Prospectus by reference and to be a part hereof from the
respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained in this Prospectus or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference in this Prospectus modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any or all of the documents that have been or
may be incorporated by reference in this Prospectus (not including exhibits to
such documents unless such exhibits are specifically incorporated by reference
into such documents). Requests should be directed to Edward M. Gleason,
Controller, Treasurer and Corporate Secretary, Wisconsin Power and Light
Company, 222 West Washington Avenue, Madison, Wisconsin 53703 (Telephone: (608)
252-3311).
2
<PAGE> 7
THE COMPANY
The Company, a Wisconsin corporation and a subsidiary of WPL Holdings, Inc.
("WPLH"), is a public utility engaged primarily in generating, purchasing,
distributing and selling electric energy in portions of southern and central
Wisconsin. The Company also purchases, distributes, transports and sells natural
gas in parts of such areas and supplies water in two communities. A wholly owned
subsidiary of the Company supplies electric, gas and water service principally
in Winnebago County, Illinois.
The Company provides electricity in a service territory of approximately
16,000 square miles. As of December 31, 1996, the Company furnished retail
electric service to approximately 385,000 customers in 615 cities, villages and
towns, and wholesale electric service to 24 municipal utilities, one privately
owned utility, three rural electric cooperatives, one Native American nation and
one municipal electric utility which provides retail service to nine
communities. The two largest cities served by the Company are Janesville and
Sheboygan, Wisconsin. During 1996, the Company's electric operating revenues
were derived from the following types of customers: residential and
farm -- 34.2%, industrial -- 24.4%, commercial -- 17.9%, wholesale and
municipal -- 22.3% and other -- 1.2%.
The Company's total net generating capability is approximately 2,300
megawatts. The maximum net hourly peak load on the Company's electric system in
1996 was 2,124 megawatts. During 1996, the Company's net kilowatt-hour
generation of electricity was derived from the following fuel sources: 84% coal,
12.7% nuclear and 3.3% hydroelectric, oil and natural gas. The Company's
electro-generating facilities include: four coal-fired generating stations
(including nine units; four jointly owned), seven natural-gas-fired peaking
units, eight hydro-electric plants (two jointly owned), one gas-fired steam
generating plant and one nuclear power plant (jointly owned).
As of December 31, 1996, the Company provided retail natural gas service to
approximately 151,000 customers in 243 cities, villages and towns. During 1996,
the Company's gas operating revenues were derived from the following types of
customers: residential -- 54.6%, commercial and industrial, firm -- 30.3%,
interruptible -- 3.2%, transportation and other -- 11.9%.
The Company is subject to the jurisdiction of, among other regulatory
agencies, the Public Service Commission of Wisconsin as to various phases of its
operations, including rates, service and issuance of securities. The Company's
Illinois subsidiary is subject to the jurisdiction of the Illinois Commerce
Commission with respect to such matters. The Company and its Illinois subsidiary
also are subject to the jurisdiction of the Federal Energy Regulatory
Commission.
The principal executive offices of the Company are located at 222 West
Washington Avenue, Madison, Wisconsin 53703 and its telephone number is (608)
252-3311.
WPLH, the Company's parent corporation, IES Industries Inc., a holding
company incorporated under the laws of State of Iowa ("IES"), and Interstate
Power Company, an operating public utility incorporated under the laws of the
State of Delaware ("IPC"), among others, have entered into an Agreement and Plan
of Merger, dated as of November 10, 1995, as amended (the "Merger Agreement"),
providing for: (i) IPC becoming a wholly-owned subsidiary of WPLH and (ii) the
merger of IES with and into WPLH, which merger will result in the combination of
IES and WPLH as a single holding company. The holding company will be renamed
Interstate Energy Corporation ("Interstate Energy"). Under the terms of the
Merger Agreement, each outstanding share of IES common stock will be cancelled
and converted into the right to receive 1.14 shares of Interstate Energy common
stock and each outstanding share of IPC common stock will be cancelled and
converted into the right to receive 1.11 shares of Interstate Energy common
stock. The outstanding shares of WPLH common stock will remain unchanged and
outstanding as shares of Interstate Energy common stock.
WPLH, IES and IPC held separate shareowner meetings on September 5, 1996.
At these meetings, the shareowners of all three companies approved the Merger
Agreement. In addition to shareowner approval, approvals must be secured from
regulatory agencies at the federal and state level. The merger partners
currently expect the merger to be completed during 1997.
3
<PAGE> 8
Following the merger, the Company will be a subsidiary of Interstate
Energy. The merger will not affect the separate corporate existence of the
Company nor will it impair the lien of the Company's Indenture of Mortgage or
Deed of Trust, dated August 1, 1941, securing its First Mortgage Bonds or the
rights and powers of the trustees or debtholders thereunder.
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Debt
Securities offered hereby to repay indebtedness, including the retirement,
redemption or refinancing of existing series of the Company's First Mortgage
Bonds. Unless otherwise specified in the Prospectus Supplement, any proceeds not
used for the foregoing purpose will be added to the general funds of the Company
and used for general corporate purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
Set forth below are the ratios of earnings to fixed charges (unaudited) for
the Company for the twelve months ended March 31, 1997 and for the last five
years:
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, --------------------------------
1997 1996 1995 1994 1993 1992
------------- ---- ---- ---- ---- ----
<C> <C> <C> <C> <C> <C>
4.35 4.81 4.23 4.29 3.74 3.47
</TABLE>
For the purpose of computing the ratios of earnings to fixed charges,
earnings have been calculated by adding to income before interest expense,
Federal and state income taxes and the estimated interest component of rentals.
Fixed charges represent interest expense, amortization of debt discount, premium
and expense and the estimated interest component of rentals.
DESCRIPTION OF THE NEW BONDS
The term "Company" as used under this heading does not include its
subsidiaries. The properties of the Company's subsidiaries, which are not
material in the aggregate, are not subject to the lien of the First Mortgage
Indenture hereinafter referred to and do not constitute bondable property under
such First Mortgage Indenture.
GENERAL
The New Bonds will be issued by the Company under the Indenture of Mortgage
or Deed of Trust, dated August 1, 1941, executed by the Company to First
Wisconsin Trust Company (now known as Firstar Trust Company) and George B.
Luhman (Gene E. Ploeger being now the individual trustee under said Indenture),
as Trustees (collectively, the "First Mortgage Trustee"), as amended by the
several indentures supplemental thereto heretofore executed and as to be further
amended and supplemented by one or more supplemental indentures creating the
series in which the New Bonds are to be issued (said Indenture, as so amended,
being herein called the "First Mortgage Indenture").
The following statements, unless the context otherwise indicates, are brief
summaries of the substance or general effect of certain provisions of the First
Mortgage Indenture, which is filed with the Commission as an exhibit to the
Registration Statement for the Debt Securities. Such statements are not complete
and are qualified in their entirety by reference to the First Mortgage
Indenture. The specific references below are to provisions of the First Mortgage
Indenture.
TERMS
Reference is made to the Prospectus Supplement relating to any series of
the New Bonds for the following terms thereof, among others: (a) the title or
designation of the New Bonds; (b) the date of the New
4
<PAGE> 9
Bonds; (c) the date or dates on which the New Bonds may mature; (d) the rate or
rates (which may be fixed or variable) per annum at which the New Bonds will
bear interest, if any, and the date from which such interest, if any, will
accrue; (e) the times at which any such interest will be payable; (f) any
provisions governing redemption, medium of payment and sinking funds or
analogous funds; and (g) any limit on the aggregate principal amount of the New
Bonds. (Article I, Section 1)
Unless otherwise indicated in the Prospectus Supplement relating thereto,
(a) the New Bonds are to be issuable only in definitive fully registered form
without coupons in denominations of $1,000 and integral multiples of $1,000; (b)
the transfer and exchange of the New Bonds will be made without charge, except
for any stamp tax or other governmental charge; and (c) the New Bonds will be
transferable and exchangeable in Milwaukee, Wisconsin or New York, New York.
The New Bonds of a series may be issued in whole or in part in the form of
one or more global bonds that will be deposited with, or on behalf of, a
depositary identified in the Prospectus Supplement relating to the series. The
specific terms of the depositary arrangement with respect to any global bonds of
a series will be described in the Prospectus Supplement relating to the series.
See "Book-Entry Only System."
MAINTENANCE AND REPAIR
For all series of First Mortgage Bonds issued prior to the bonds of Series
W (the "Series W Bonds"), the First Mortgage Indenture provides that during each
year such previously issued bonds are outstanding the Company will expend, and
certify to the First Mortgage Trustee, amounts aggregating not less than 15% of
the gross operating revenues (less the cost of power, gas and water purchased
for exchange or resale) derived during such year from the operation of the
physical properties on which the First Mortgage Indenture is a lien, for (a)
maintenance and repair of such properties, (b) bondable property on which the
First Mortgage Indenture is a first mortgage lien, and/or (c) retirement of
bonds; or will deposit with the First Mortgage Trustee cash to the extent of any
deficiency in such amount, after applying any available credit for unused excess
expenditures made for those purposes in any prior year. Such cash may be
withdrawn to the extent of 100% of net expenditures or excess gross expenditures
for bondable property, or applied to the redemption of bonds if then redeemable
or to the purchase of bonds. (Article VII, Section 1) The supplemental
indenture, dated March 1, 1992, creating the Series W Bonds amended the First
Mortgage Indenture to delete the covenant requiring the annual expenditure of at
least 15% of the Company's gross operating revenues as described above for all
subsequently issued bonds beginning with the Series W Bonds (including the New
Bonds) and, as a result, the Company will be required to comply with such
covenant for so long as bonds issued prior to the Series W Bonds remain
outstanding or until the holders of the requisite principal amount of the
previously issued bonds consent to such amendment.
The First Mortgage Indenture also provides that (a) the Company shall
maintain the mortgaged properties in good repair and working order; (b) the
First Mortgage Trustee may, and if requested by holders of a majority in
principal amount of all outstanding bonds and furnished with the necessary funds
therefor shall, cause such properties to be inspected by an independent engineer
(not more often than at five-year intervals) to determine whether they have been
so maintained and whether any property, not retired on the books, should be
classified as retired for the purpose (among others) of computing "net
expenditures" for bondable property; and (c) the Company shall make good any
deficiency in maintenance disclosed by such engineer's report as rendered or as
modified by arbitration. (Article III, Sections 7 and 8)
SECURITY
The New Bonds will be secured by the lien of the First Mortgage Indenture
and will rank pari passu with all bonds at any time outstanding under the First
Mortgage Indenture, except as to differences between series permitted by the
First Mortgage Indenture and not affecting the rank of the lien. The First
Mortgage Indenture constitutes a first mortgage lien, subject only to permitted
encumbrances and liens, as defined, on all or substantially all the permanent
fixed properties (other than excepted property) now owned by the Company.
(Granting Clause and Excepted Property Clause) The First Mortgage Indenture
contains provisions subjecting "after-acquired property" (other than excepted
property) to the lien thereof. (Granting
5
<PAGE> 10
Clause) However, the priority of the lien on "after-acquired property" would
date from the filing or recording of a subsequent instrument confirming of
record that such property is subject to the lien. In addition, such provisions
might not be effective as to property acquired, and as to certain rents, issues
and products accruing, subsequent to the filing of any case with respect to the
Company under the Federal Bankruptcy Code. The First Mortgage Indenture excepts
from the lien thereof all cash, securities, accounts and bills receivable,
choses in action and certain judgments not deposited or pledged with the First
Mortgage Trustee, all tangible personal property held for sale, rental or
consumption in the ordinary course of business, the last day of each term under
any lease of property, all gas, oil and other minerals upon or under any real
estate subject thereto, and certain real estate described therein.
The First Mortgage Indenture does not prevent a merger or consolidation of
the Company, a sale by the Company of all or substantially all of its assets, a
recapitalization of the Company or other comparable transaction as long as the
lien of the First Mortgage Indenture is preserved on the property then subject
to such lien. The First Mortgage Indenture also does not restrict the amount of
unsecured debt (including, without limitation, Debentures) the Company can
incur. Other than the security afforded by the lien of the First Mortgage
Indenture and the restrictions on the issuance of additional bonds described
below, there are no covenants or provisions of the First Mortgage Indenture
which provide protection to bondholders in the event of a highly leveraged
transaction involving the Company.
RELEASE AND SUBSTITUTION OF PROPERTY
The Company may sell or otherwise dispose of property subject to the lien
of the First Mortgage Indenture, and the First Mortgage Trustee shall release
such property from the lien of the First Mortgage Indenture, upon receipt by the
First Mortgage Trustee, or the trustee under any mortgage constituting a prior
lien on such property, of any money and/or purchase money obligations received
by the Company in consideration for such property in an amount not less than the
fair value of such property. (Article VIII, Section 2)
ISSUANCE OF ADDITIONAL BONDS
The First Mortgage Indenture does not fix an overall limitation on the
total principal amount of bonds that may be issued or outstanding thereunder,
but limits the principal amount of bonds of each presently outstanding series
that may be so outstanding.
Additional bonds currently may be issued from time to time under the First
Mortgage Indenture, subject to the terms thereof, in a principal amount not to
exceed: (a) 60% of "net expenditures" made for bondable property (as defined)
constructed or acquired by the Company on or after August 1, 1941, and on which
the First Mortgage Indenture is a first mortgage lien, subject only to permitted
encumbrances and liens and prepaid liens, as defined; (b) the principal amount
of bonds, previously authenticated under the First Mortgage Indenture, which
have been retired or for the retirement of which the First Mortgage Trustee
holds the necessary funds, other than certain bonds retired through the
operation of the debt retirement or the maintenance and repair provisions of the
First Mortgage Indenture; and/or (c) the amount of cash deposited with the First
Mortgage Trustee for that purpose, which cash may be applied to the retirement
of bonds or may be withdrawn in lieu of the authentication of an equal principal
amount of bonds under the First Mortgage Indenture provisions referred to in
clauses (a) and (b). (Article II, Sections 2, 3 and 4) Bondable property means,
in general, any electric, gas or water utility plant, property or equipment
constructed or acquired by the Company on or after August 1, 1941, and used or
useful in such utility business. "Net expenditures" for bondable property are
determined as provided in the First Mortgage Indenture. In connection with the
issuance of the Series W Bonds, the supplemental indenture creating such bonds
amended the First Mortgage Indenture to allow for the issuance of additional
bonds based on 70% of net expenditures made for bondable property as compared
with the current 60%. Notwithstanding the amendment effected by the supplemental
indenture creating the Series W Bonds, the 60% limitation will continue to
govern the issuance of additional bonds for so long as bonds issued prior to the
Series W Bonds remain outstanding or until the holders of the requisite
principal amount of the previously issued bonds consent to such amendment.
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No additional bonds may be authenticated under the First Mortgage Indenture
provisions referred to in clauses (a) and (c) above, and no bonds bearing a
higher rate of interest than the bonds for the retirement of which they are to
be issued may be authenticated under the First Mortgage Indenture provisions
referred to in clause (b) above more than five years before the maturity of the
bonds to be retired, unless, in each case, the net earnings of the Company for
12 consecutive months ending within 90 days next preceding such authentication
were at least equal to twice the interest for one year on (i) all the bonds to
be outstanding under the First Mortgage Indenture immediately after such
authentication, other than those for the retirement of which the necessary funds
are held by the First Mortgage Trustee, and (ii) all other indebtedness secured
by an equal or prior lien on any part of the Company's property. "Net earnings"
for any period means the total gross earnings and income of the Company, less
all of its operating expenses (including depreciation and taxes other than taxes
measured by income) for the period, computed as provided in the First Mortgage
Indenture. (Article II, Section 5)
MODIFICATION OF FIRST MORTGAGE INDENTURE
The First Mortgage Indenture may not be amended without the consent of
bondholders, except for certain limited purposes therein provided. Such purposes
include, among others, (a) any change of the provisions of the First Mortgage
Indenture provided that such change be made effective only with respect to bonds
authenticated after the execution of the supplemental indenture effecting such
change and only if it would not adversely affect the bonds then outstanding
under the First Mortgage Indenture and (b) any other change not inconsistent
with the terms and which would not impair the security of the First Mortgage
Indenture. (Article XVI, Section 1)
By supplemental indenture dated May 15, 1978, the First Mortgage Indenture
was amended, effective upon the retirement or redemption, or with the consent of
the holders, of all outstanding bonds of all series issued prior to the bonds of
Series R, to provide that, with the consent of the holders of not less than
66 2/3% in principal amount of bonds then outstanding, the First Mortgage
Indenture may be amended in any respect, except that without the consent of the
holder of each outstanding bond affected thereby no such amendment shall, among
other things, (a) extend the time for, reduce or otherwise affect the terms of
payment of the principal of or interest or premium on any bond, (b) permit the
creation of any lien ranking prior to or on a parity with the lien of the First
Mortgage Indenture, other than permitted encumbrances and liens or prepaid
liens, (c) reduce the percentage in principal amount of bonds the consent of the
holders of which is required for any such amendment, (d) impair the right of any
bondholder to institute suit for the enforcement of any payment in respect of
such bondholder's bonds or (e) deprive any non-consenting bondholder of a lien
upon the mortgaged property for the security of such bondholder's bonds.
(Article XVIII)
OTHER FIRST MORTGAGE INDENTURE PROVISIONS
The First Mortgage Indenture provides in effect, with respect to (a)
bondholders' rights to direct the First Mortgage Trustee to take action
thereunder, (b) defaults thereunder and notice to bondholders with respect
thereto and (c) compliance with First Mortgage Indenture provisions, as follows:
(1) Holders of a majority in principal amount of the bonds secured by
the First Mortgage Indenture have the right to direct the time, method and
place of conducting proceedings for remedies available to, or exercising
any trust or power of, the First Mortgage Trustee. However, the First
Mortgage Trustee may decline to follow such directions under certain
circumstances specified in the First Mortgage Indenture, and is not
required to exercise powers of entry or sale under the First Mortgage
Indenture. (Article X, Section 12)
(2) A "default" or an "event of default" means: (a) failure to pay the
principal of any bond secured by the First Mortgage Indenture when due at
maturity or otherwise; (b) failure to pay bond interest within 60 days
after its due date; (c) failure to pay the principal of, or interest on,
any prior lien bond, continued beyond the default period (if any) specified
in the lien securing such bond; (d) failure of the Company for 90 days
after written demand to comply with any other covenant or condition in the
First Mortgage Indenture or in any such bond or any prior lien or bond
secured thereby; or (e) the occurrence
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of certain events of bankruptcy, insolvency, assignment or receivership in
respect to the Company. (Article X, Section 1) The First Mortgage Trustee
may withhold giving notice to bondholders of defaults (other than any
default in payment of interest, principal or sinking or purchase fund
installment in respect of any bond secured by the First Mortgage Indenture)
if it determines in good faith that such withholding is in the interests of
the bondholders. (Article XV, Section 2) Upon default, the First Mortgage
Trustee may, and upon written notice from the holders of a majority in
principal amount of bonds then outstanding shall, declare the principal of
all bonds secured by the First Mortgage Indenture to be immediately due and
payable. (Article X, Section 4) Upon certain terms and conditions, the
declaration of acceleration may be rescinded and waived.
(3) The Company shall furnish to the First Mortgage Trustee
certificates of officers and engineers and, in certain cases, of
accountants in connection with the authentication of bonds, withdrawal of
money, release of property and other matters, and opinions of counsel as to
the lien of the First Mortgage Indenture and other matters. No periodic
evidence is required to be filed with the First Mortgage Trustee as to the
absence of defaults; and no such evidence is required to be filed as to
compliance with the terms of the First Mortgage Indenture, except for the
filing annually of certificates with respect to the satisfaction of the
maintenance and renewal and the debt retirement provisions of the First
Mortgage Indenture and of an opinion of counsel with respect to the lien of
the First Mortgage Indenture.
RELATIONSHIPS WITH THE FIRST MORTGAGE TRUSTEE
The Company maintains general checking accounts with several banks which
are affiliates of the First Mortgage Trustee. The Company has $10 million in
lines of credit with such banks, which are part of $70 million in lines of
credit maintained with various banks. In addition, the Company and its parent,
WPLH, each maintain short-term borrowing agreements with the First Mortgage
Trustee pursuant to which the Company and WPLH may borrow up to $50 million and
$50 million, respectively. Judith D. Pyle, a Director of the Company, is a
Director of the First Mortgage Trustee's parent corporation, Firstar
Corporation.
DESCRIPTION OF THE DEBENTURES
The Debentures will be issued in one or more series under the Indenture,
dated as of June 20, 1997 (the "Unsecured Debt Indenture"), between the Company
and Firstar Trust Company, as Trustee (the "Unsecured Debt Trustee"), which is
filed as an exhibit to the Registration Statement for the Debt Securities. The
following summaries of certain provisions of the Unsecured Debt Indenture and
the Debentures do not purport to be complete and are subject to, and qualified
in their entirety by reference to, all of the provisions of the Unsecured Debt
Indenture and any Officers' Certificates or supplemental indentures relating
thereto, including the definitions therein of certain terms. Whenever particular
Sections or defined terms of the Unsecured Debt Indenture are referred to herein
or in a Prospectus Supplement, such Sections or defined terms are incorporated
by reference herein or therein, as the case may be.
The term "Securities," as used under this heading, refers to all Securities
issued under the Unsecured Debt Indenture and includes the Debentures.
GENERAL
The Unsecured Debt Indenture does not limit the amount of Securities that
can be issued thereunder and provides that the Securities may be issued from
time to time in one or more series pursuant to the terms of one or more
Officers' Certificates or supplemental indentures creating such series. As of
the date of this Prospectus, there were no Securities outstanding under the
Unsecured Debt Indenture. The Debentures will be unsecured and will rank on a
parity with all other unsecured and unsubordinated debt of the Company. Although
the Unsecured Debt Indenture provides for the possible issuance of Securities in
other forms or currencies, the only Securities covered by this Prospectus will
be Securities denominated in U.S. dollars in registered form without coupons.
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Substantially all of the permanent fixed properties of the Company are
subject to the lien of the First Mortgage Indenture under which the Company's
First Mortgage Bonds are outstanding. See "Description of the New Bonds."
TERMS
Reference is made to the Prospectus Supplement relating to any series of
the Debentures for the following terms thereof, among others: (a) the title or
designation, aggregate principal amount, currency or composite currency and
denominations of the Debentures; (b) the price at which the Debentures will be
issued and, if an index formula or other method is used, the method for
determining amounts of principal or interest; (c) the maturity date and other
dates, if any, on which principal will be payable; (d) the rate or rates (which
may be fixed or variable) per annum at which the Debentures will bear interest,
if any; (e) the date or dates from which interest will accrue and on which
interest will be payable, and the record dates for the payment of interest; (f)
the manner of paying principal and interest; (g) the place or places where
principal and interest will be payable; (h) the terms of any mandatory or
optional redemption by the Company; (i) the terms of any redemption at the
option of Holders; (j) whether the Debentures are to be issuable as registered
Securities, bearer Securities, or both, and whether and upon what terms any
registered Securities may be exchanged for bearer Securities and vice versa; (k)
whether the Debentures are to be represented in whole or in part by a Security
in global form and, if so, the terms thereof and the identity of the depositary
for any global Security; (l) any tax indemnity provisions; (m) if the Debentures
provide that payments of principal or interest may be made in a currency other
than that in which Debentures are denominated, the manner for determining such
payments; (n) the portion of principal payable upon acceleration of a Discounted
Security (as defined below) ; (o) whether and upon what terms Debentures may be
defeased; (p) whether the covenant referred to below under "Certain
Covenants -- Limitations on Liens" applies, and any events of default or
restrictive covenants in addition to or in lieu of those set forth in the
Unsecured Debt Indenture; (q) provisions for electronic issuance of Debentures
or for Debentures in uncertificated form; and (r) any additional provisions or
other special terms not inconsistent with the provisions of the Unsecured Debt
Indenture, including any terms that may be required or advisable under United
States or other applicable laws or regulations, or advisable in connection with
the marketing of the Debentures. (Section 2.01)
The Securities of a series may be issued in whole or in part in the form of
one or more global Securities that will be deposited with, or on behalf of, a
depositary identified in the Prospectus Supplement relating to the series.
Global Securities may be issued in registered, bearer or uncertificated form and
in either temporary or permanent form. Unless and until it is exchanged in whole
or in part for Securities in definitive form, a global Security may not be
transferred except as a whole by the depositary to a nominee or a successor
depositary. (Section 2.12) The specific terms of the depositary arrangement with
respect to any Securities of a series will be described in the Prospectus
Supplement relating to the series. See "Book-Entry Only System."
Securities of any series may be issued as registered Securities, bearer
Securities or uncertificated Securities, as specified in the terms of the
series. (Section 2.01) Unless otherwise indicated in the Prospectus Supplement,
registered Securities will be issued in denominations of $1,000 and whole
multiples thereof and bearer Securities will be issued in denominations of
$5,000 and whole multiples thereof. One or more global Securities will be issued
in a denomination or aggregate denominations equal to the aggregate principal
amount of outstanding Securities of the series to be represented by such global
Security or Securities. (Section 2.12)
In connection with its original issuance, no bearer Security will be
offered, sold, resold, or mailed or otherwise delivered to any location in the
United States and a bearer Security in definitive form may be delivered in
connection with its original issuance only if the person entitled to receive the
bearer Security furnishes certification as described in United States Treasury
regulation section 1.163-5(c)(2)(i)(D)(3). (Section 2.04)
For purposes of this Prospectus, unless otherwise indicated, "United
States" means the United States of America (including the States thereof and the
District of Columbia), its territories and possessions and all other areas
subject to its jurisdiction. "United States person" means a citizen or resident
of the United States,
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any corporation, partnership or other entity created or organized in or under
the laws of the United States or a political subdivision thereof or any estate
or trust the income of which is subject to United States Federal income taxation
regardless of its source. Any special United States Federal income tax
considerations applicable to bearer Securities will be described in the
Prospectus Supplement relating thereto.
To the extent set forth in the Prospectus Supplement, except in special
circumstances set forth in the Unsecured Debt Indenture, principal and interest
on bearer Securities will be payable only upon surrender of bearer Securities
and coupons at a paying agency of the Company located outside of the United
States. During any period thereafter for which it is necessary in order to
conform to United States tax law or regulations, the Company will maintain a
paying agent outside the United States to which the bearer Securities and
coupons may be presented for payment and will provide the necessary funds
therefor to the paying agent upon reasonable notice. (Section 2.04)
Registration of transfer of registered Securities may be requested upon
surrender thereof at any agency of the Company maintained for that purpose and
upon fulfillment of all other requirements of the agent. (Sections 2.03 and
2.07) Bearer Securities and the coupons related thereto will be transferable by
delivery.
Securities may be issued under the Unsecured Debt Indenture as Discounted
Securities to be offered and sold at a substantial discount from the principal
amount thereof. Special United States Federal income tax and other
considerations applicable thereto will be described in the Prospectus Supplement
relating to such Discounted Securities. "Discounted Security" means a Security
where the amount of principal due upon acceleration is less than the stated
principal amount of such Security.
CERTAIN COVENANTS
The Debentures will not be secured by any properties or assets and will
represent unsecured debt of the Company. The Unsecured Debt Indenture does not
limit the amount of unsecured debt that the Company can incur. As indicated
under "General" above, substantially all of the permanent fixed properties of
the Company are subject to the lien of the First Mortgage Indenture securing the
Company's First Mortgage Bonds.
As discussed below, the Unsecured Debt Indenture includes certain
limitations on the Company's ability to create liens. Such limitations will
apply if the Officers' Certificate or supplemental indenture establishing the
terms of a series so provides. If applicable, the limitations are subject to a
number of qualifications and exceptions. The Unsecured Debt Indenture does not
limit the Company's ability to issue additional First Mortgage Bonds or to enter
into sale and leaseback transactions.
The covenant described below will apply if so indicated in a Prospectus
Supplement. Any obligations under the Unsecured Debt Indenture are subject to
termination upon defeasance. See "Legal Defeasance and Covenant Defeasance"
below. Also, unless otherwise indicated in a Prospectus Supplement, the
Unsecured Debt Indenture does not afford holders of the Securities protection in
the event of a highly leveraged or other transaction involving the Company that
may adversely affect holders of the Securities.
Limitations on Liens. The Unsecured Debt Indenture provides that, so long
as there remain outstanding any Securities of any series to which this
limitation applies, and subject to termination as referred to above, the Company
will not, and will not permit any Subsidiary to, create or suffer to be created
or to exist any mortgage, pledge, security interest, or other lien
(collectively, "Lien") on any of its properties or assets now owned or hereafter
acquired to secure any indebtedness, without making effective provision whereby
the Securities of such series shall be equally and ratably secured. This
restriction does not apply to or prevent the creation or existence of (a) the
First Mortgage Indenture securing the Company's First Mortgage Bonds or any
indenture supplemental thereto subjecting any property to the Lien thereof or
confirming the Lien thereof upon any property, whether owned before or acquired
after the date of the Unsecured Debt Indenture; (b) Liens on property existing
at the time of acquisition or construction of such property (or created within
one year after completion of such acquisition or construction), whether by
purchase, merger, construction or otherwise (or on the property of a Subsidiary
at the date it became a Subsidiary), or to secure the payment of all or any part
of the purchase price or construction cost thereof, including the extension of
any such Liens to repairs, renewals, replacements, substitutions, betterments,
additions, extensions and improvements then or
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thereafter made on the property subject thereto; (c) any extensions, renewals or
replacements (or successive extensions, renewals or replacements), in whole or
in part, of Liens (including, without limitation, the First Mortgage Indenture)
permitted by the foregoing clauses (a) and (b); (d) the pledge of any bonds or
other securities at any time issued under any of the Liens permitted by clauses
(a), (b) or (c) above; or (e) Permitted Encumbrances. (Section 4.07)
"Permitted Encumbrances" include, among other items, (a) the pledge or
assignment in the ordinary course of business of electricity, gas (either
natural or artificial) or steam, accounts receivable or customers' installment
paper, (b) Liens affixing to property of the Company or a Subsidiary at the time
a Person consolidates with or merges into, or transfers all or substantially all
of its assets to, the Company or a Subsidiary, provided that in the opinion of
the Board of Directors of the Company or Company management (evidenced by a
certified Board resolution or an Officers' Certificate delivered to the
Unsecured Debt Trustee) the property acquired pursuant to the consolidation,
merger or asset transfer is adequate security for the Lien; and (c) Liens or
encumbrances not otherwise permitted if, at the incurrence of and after giving
effect thereto, the aggregate of all obligations of the Company and its
Subsidiaries secured thereby does not exceed 10% of Tangible Net Worth.
"Tangible Net Worth" means (i) common stockholders' equity appearing on the most
recent balance sheet of the Company (or consolidated balance sheet of the
Company and its Subsidiaries if the Company then has one or more consolidated
Subsidiaries) prepared in accordance with generally accepted accounting
principles less (ii) intangible assets (excluding intangible assets recoverable
through rates as prescribed by applicable regulatory authorities). (Section
4.06)
Further, this restriction will not apply to or prevent the creation or
existence of leases made, or existing on property acquired, in the ordinary
course of business. (Section 4.07)
Other Covenants. Any other restrictive covenants which may apply to a
particular series of Securities will be described in the Prospectus Supplement
relating thereto.
SUCCESSOR OBLIGOR
The Unsecured Debt Indenture provides that, unless otherwise specified in
the Officers' Certificate or supplemental indenture establishing a series of
Securities, the Company will not consolidate with or merge into, or transfer all
or substantially all of its assets to, any Person, unless (a) the Person is
organized under the laws of the United States or a State thereof; (b) the Person
assumes by supplemental indenture all the obligations of the Company under the
Unsecured Debt Indenture, the Securities and any coupons; and (c) immediately
after the transaction no Default (as defined) exists. The successor will be
substituted for the Company, and thereafter all obligations of the Company under
the Unsecured Debt Indenture, the Securities and any coupons shall terminate.
(Section 5.01)
EXCHANGE OF SECURITIES
Registered Securities may be exchanged for an equal aggregate principal
amount of registered Securities of the same series and date of maturity in such
authorized denominations as may be requested upon surrender of the registered
Securities at an agency of the Company maintained for such purpose and upon
fulfillment of all other requirements of the agent. (Section 2.07)
To the extent permitted by the terms of a series of Securities authorized
to be issued in registered form and bearer form, bearer Securities may be
exchanged for an equal aggregate principal amount of registered or bearer
Securities of the same series and date of maturity in such authorized
denominations as may be requested upon surrender of the bearer Securities with
all unpaid coupons relating thereto (except as may otherwise be provided in the
Securities) at an agency of the Company maintained for such purpose and upon
fulfillment of all other requirements of the agent. (Section 2.07) As of the
date of this Prospectus, it is expected that the terms of a series of Securities
will not permit registered Securities to be exchanged for bearer Securities.
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DEFAULTS AND REMEDIES
Unless the Officers' Certificate or supplemental indenture establishing the
series otherwise provides, an "Event of Default" with respect to a series of
Securities will occur if:
(1) the Company defaults in any payment of interest on any Securities
of the series when the same becomes due and payable and the Default
continues for a period of 60 days;
(2) the Company defaults in the payment of the principal of any
Securities of the series when the same becomes due and payable at maturity
or upon redemption, acceleration or otherwise;
(3) the Company defaults in the payment or satisfaction of any sinking
fund obligation with respect to any Securities of a series as required by
the Officers' Certificate or supplemental indenture establishing such
series and the Default continues for a period of 60 days;
(4) the Company defaults in the performance of any of its other
agreements applicable to the series and the Default continues for 90 days
after the notice specified below;
(5) the Company pursuant to or within the meaning of any Bankruptcy
Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in an
involuntary case,
(c) consents to the appointment of a Custodian for it or for all or
substantially all of its property, or
(d) makes a general assignment for the benefit of its creditors;
(6) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(a) is for relief against the Company in an involuntary case,
(b) appoints a Custodian for the Company or for all or
substantially all of its property, or
(c) orders the liquidation of the Company, and the order or decree
remains unstayed and in effect for 60 days; or
(7) there occurs any other Event of Default provided for in the
series. (Section 6.01)
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal
or State law for the relief of debtors. The term "Custodian" means any receiver,
trustee, assignee, liquidator or a similar official under any Bankruptcy Law.
(Section 6.01)
"Default" means any event which is, or after notice or passage of time
would be, an Event of Default. A Default under subparagraph (4) above is not an
Event of Default until the Unsecured Debt Trustee or the Holders of at least 25%
in principal amount of the series notify the Company of the Default and the
Company does not cure the Default within the time specified after receipt of the
notice. (Section 6.01) The Unsecured Debt Trustee may require indemnity
reasonably satisfactory to it before it enforces the Unsecured Debt Indenture or
the Securities of the series. (Section 7.01) Subject to certain limitations,
Holders of a majority in principal amount of the Securities of the series may
direct the Unsecured Debt Trustee in its exercise of any trust or power.
(Section 6.05) The Unsecured Debt Trustee may withhold from Securityholders of
the series notice of any continuing Default (except a Default in payment of
principal or interest) if it in good faith determines that withholding notice is
in their interest. (Section 7.04) The Company is required to furnish the
Unsecured Debt Trustee, not less than annually, a brief certificate as to the
Company's compliance with all conditions and covenants under the Unsecured Debt
Indenture. (Section 4.04)
The failure to redeem any Securities subject to a Conditional Redemption
(as defined) is not an Event of Default if any event on which such redemption is
so conditioned does not occur before the redemption date. (Section 6.01)
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The Unsecured Debt Indenture does not have a cross-default provision. Thus,
a default by the Company on any other debt would not constitute an Event of
Default.
AMENDMENTS AND WAIVERS
The Unsecured Debt Indenture and the Securities or any coupons of the
series may be amended, and any default may be waived as follows: The Securities
and the Unsecured Debt Indenture may be amended with the consent of the Holders
of not less than a majority in aggregate principal amount of the Securities of
all series affected voting as one class. (Section 9.02) A Default on a series
may be waived with the consent of the holders of a majority in principal amount
of the Securities of the series. (Section 6.04) However, without the consent of
each Securityholder affected, no amendment or waiver may (a) reduce the amount
of Securities whose Holders must consent to an amendment or waiver, (b) reduce
the interest on or change the time for payment of interest on any Security, (c)
change the stated maturity of any Security, (d) reduce the principal of any
non-Discounted Security or reduce the amount of principal of any Discounted
Security that would be due on acceleration thereof, (e) change the currency in
which principal or interest on a Security is payable, or (f) waive any Default
in payment of interest on or principal of a Security. (Sections 6.04 and 9.02)
Without the consent of any Securityholder, the Unsecured Debt Indenture, the
Securities or any coupons may be amended to cure any ambiguity, omission, defect
or inconsistency; to provide for assumption of Company obligations to
Securityholders in the event of a merger or consolidation requiring such
assumption; to provide that specific provisions of the Unsecured Debt Indenture
shall not apply to a series of Securities not previously issued; to create a
series and establish its terms; to provide for a separate Unsecured Debt Trustee
for one or more series; or to make any change that does not materially adversely
affect the rights of any Securityholder. (Section 9.01)
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Securities of a series may be defeased in accordance with their terms and,
unless the Officers' Certificate or supplemental indenture establishing the
terms of the series otherwise provides, as set forth below. The Company at any
time may terminate as to a series all of its obligations (except for certain
obligations, including obligations with respect to the defeasance trust and
obligations to register the transfer or exchange of a Security, to replace
destroyed, lost or stolen Securities and coupons and to maintain agencies in
respect of the Securities) with respect to the Securities of the series and any
related coupons and the Unsecured Debt Indenture ("legal defeasance"). The
Company at any time may terminate as to a series its obligations with respect to
the Securities and coupons of the series under the covenant described under
"Certain Covenants -- Limitations on Liens" and any other restrictive covenants
which may be applicable to a particular series ("covenant defeasance").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, a series may not be accelerated because of an Event of
Default. If the Company exercises its covenant defeasance option, a series may
not be accelerated by reference to the covenant described under "Certain
Covenants -- Limitations on Liens" or any other restrictive covenants which may
be applicable to a particular series. (Section 8.01)
To exercise either defeasance option as to a series, the Company must
deposit in trust (the "defeasance trust") with the Unsecured Debt Trustee money
or U.S. Government Obligations for the payment of principal, premium, if any,
and interest on the Securities of the series to redemption or maturity and must
comply with certain other conditions. In particular, the Company must obtain an
opinion of tax counsel that the defeasance will not result in recognition of any
gain or loss to Holders for Federal income tax purposes. "U.S. Government
Obligations" are direct obligations of the United States of America which have
the full faith and credit of the United States of America pledged for payment
and which are not callable at the issuer's option, or certificates representing
an ownership interest in such obligations. (Section 8.02)
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REGARDING THE UNSECURED DEBT TRUSTEE
Firstar Trust Company will act as Unsecured Debt Trustee and Registrar for
Securities issued under the Unsecured Debt Indenture and, unless otherwise
indicated in a Prospectus Supplement, the Unsecured Debt Trustee will also act
as Transfer Agent and Paying Agent with respect to the Securities. (Section
2.03) The Company may remove the Unsecured Debt Trustee with or without cause if
the Company so notifies the Unsecured Debt Trustee six months in advance and if
no Default occurs during the six-month period. (Section 7.07) The Unsecured Debt
Trustee is also one of the trustees under the First Mortgage Indenture for the
Company's First Mortgage Bonds, including the New Bonds, and provides services
for the Company and certain affiliates, including WPLH. See "Description of the
New Bonds -- Relationships with the First Mortgage Trustee."
BOOK-ENTRY ONLY SYSTEM
The Debt Securities of any series may be issued initially in the form of
one or more global securities under a book-entry only system operated by a
securities depositary. Unless otherwise specified in the Prospectus Supplement,
the Depository Trust Company ("DTC") will act as securities depositary for the
Debt Securities, which would be registered in the name of CEDE & Co., as
registered securityholder and nominee for DTC. Individual purchases of
Book-Entry Interests (as herein defined) in any such Debt Securities will be
made in book-entry form. Purchasers of Book-Entry Interests in such Debt
Securities will not receive certificates representing their interests in such
Debt Securities. So long as CEDE & Co., as nominee of DTC, is the
securityholder, references herein to holders of the Debt Securities or
registered owners will mean CEDE & Co., rather than the owners of Book-Entry
Interests in Debt Securities.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities deposited by its participants (the "DTC Participants") and
facilitates the settlement of securities transactions among DTC Participants in
such securities through electronic computerized book-entry changes in accounts
of the DTC Participants, thereby eliminating the need for physical movement of
securities certificates. Direct DTC Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations, some of whom (including, possibly, the underwriters with respect
to the Debt Securities), together with the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc., own DTC. Access to the DTC system is also available to others
such as securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a DTC Participant, either
directly or indirectly (the "Indirect Participants").
DTC Participants purchasing Book-Entry Interests (as defined below) in any
Debt Securities will not receive certificates. Each DTC Participant will receive
a credit balance in the records of DTC in the amount of such DTC Participant's
interest in such Debt Securities, which will be confirmed in accordance with
DTC's standard procedures. The ownership interest of each actual purchaser of a
Book-Entry Interest in a Debt Security (the "Book-Entry Interests") will be
recorded through the records of the DTC Participant or through the records of
the Indirect Participant. Owners of Book-Entry Interests should receive from the
DTC Participant or Indirect Participant a written confirmation of their purchase
providing details of the Book-Entry Interests acquired. Transfers of Book-Entry
Interests will be accomplished by book entries made by the DTC Participants or
Indirect Participants who act on behalf of the owners of Book-Entry Interests.
Owners of Book-Entry Interests will not receive certificates representing their
ownership of Book-Entry Interests with respect to any Debt Securities except as
described below upon the resignation of DTC.
Under the First Mortgage Indenture and the Unsecured Debt Indenture,
payments made by the respective Trustee to DTC or its nominee will satisfy the
Company's obligations under the First Mortgage Indenture or the Unsecured Debt
Indenture, as the case may be, to the extent of the payments so made. Owners of
Book-Entry Interests will not be or be considered by the Company or the
respective Trustee to be,
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and will not have any rights as, holders of New Bonds under the First Mortgage
Indenture or Debentures under the Unsecured Debt Indenture, as the case may be.
NEITHER THE COMPANY NOR THE TRUSTEES UNDER THE FIRST MORTGAGE INDENTURE AND
UNSECURED DEBT INDENTURE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY DTC
PARTICIPANT, INDIRECT PARTICIPANT OR ANY OWNER OF A BOOK-ENTRY INTEREST OR ANY
OTHER PERSON NOT SHOWN ON THE REGISTRATION BOOKS OF SUCH TRUSTEE AS BEING A
HOLDER OF DEBT SECURITIES WITH RESPECT TO: (1) ANY NEW BONDS OR DEBENTURES, AS
THE CASE MAY BE; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC
PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE PAYMENT BY DTC OR ANY DTC
PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY OWNER OF A
BOOK-ENTRY INTEREST IN RESPECT OF THE PRINCIPAL OR REDEMPTION PRICE OF OR
INTEREST ON SUCH DEBT SECURITIES; (4) THE DELIVERY BY DTC OR ANY DTC PARTICIPANT
OR INDIRECT PARTICIPANT OF ANY NOTICE TO ANY OWNER OF A BOOK-ENTRY INTEREST
WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE FIRST MORTGAGE INDENTURE
OR UNSECURED DEBT INDENTURE TO BE GIVEN TO HOLDERS OF NEW BONDS OR DEBENTURES,
RESPECTIVELY; (5) THE SELECTION OF THE OWNERS OF A BOOK-ENTRY INTEREST TO
RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF ANY DEBT SECURITIES;
OR (6) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC OR ITS NOMINEE AS HOLDER
OF DEBT SECURITIES.
Principal and redemption price of, and interest payments on, Debt
Securities registered in the name of DTC or its nominee will be made to DTC or
such nominee, as registered owner of such Debt Securities. DTC is responsible
for disbursing such payments to the appropriate DTC Participants and such DTC
Participants, and any Indirect Participants, are in turn responsible for
disbursing the same to the owners of Book-Entry Interests. Unless it has reason
to believe it will not receive payment, DTC's current practice is to credit the
accounts of the DTC Participants on a payment date in accordance with their
respective holdings shown on the records of DTC. Payments by DTC Participants
and Indirect Participants to owners of Book-Entry Interests will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name", and will be the responsibility of such DTC Participant or
Indirect Participant and not of DTC, the Company or the respective Trustee,
subject to any statutory and regulatory requirements as may be in effect from
time to time.
DTC Participants and Indirect Participants carry the "position" of the
ultimate Book-Entry Interest owner on their records, and will be responsible for
providing information to the ultimate Book-Entry Interest owner as to the Debt
Securities in which the Book-Entry Interest is held, debt service payments
received, and other information. Each person for whom a DTC Participant or
Indirect Participant acquires an interest in Debt Securities, as nominee, may
desire to make arrangements with such DTC Participant or Indirect Participant to
receive a credit balance in the records of such DTC Participant or Indirect
Participant, to have all notices of redemption or other communications to or by
DTC which may affect such persons forwarded in writing by such DTC Participant
or Indirect Participant, and to have notification made of all debt service
payments.
Purchases, transfers and sales of Book-Entry Interests by the ultimate
Book-Entry Interest owners may be made through book entries made by DTC
Participants or Indirect Participants or others who act for the ultimate
Book-Entry Interest owner. The respective Trustee under the First Mortgage
Indenture and Unsecured Debt Indenture, the Company and the underwriters, as
such, have no role in those purchases, transfers or sales.
Owners of Book-Entry Interests may be charged a sum sufficient to cover any
tax, fee, or other governmental charge that may be imposed in relation to any
transfer or exchange of a Book-Entry Interest.
Each Trustee will recognize and treat DTC (or any successor securities
depositary) or its nominee as the holder of Debt Securities registered in its
name or the name of its nominee for all purposes, including payment of debt
service, notices, enforcement of remedies and voting. Under DTC's current
practice, a proxy will be
15
<PAGE> 20
given to the DTC Participants holding Book-Entry Interests in Debt Securities in
connection with any matter on which holders of such Debt Securities are asked to
vote or give their consent. Crediting of debt service payments and transmittal
of notices and other communications by DTC to DTC Participants, by DTC
Participants to Indirect Participants and by DTC Participants and Indirect
Participants to the ultimate Book-Entry Interest owners are the responsibility
of those persons and will be handled by arrangements among them and are not the
responsibility of either Trustee, the Company or any underwriter, as such.
Each Trustee, so long as a book-entry system is used for any series of Debt
Securities, will send any notice of redemption and any other notices required by
the First Mortgage Indenture or Unsecured Debt Indenture to be sent to holders
of such New Bonds or Debentures, respectively, only to DTC (or such successor
securities depositary) or its nominee. Any failure of DTC to advise any DTC
Participant, or of any DTC Participant or Indirect Participant to notify the
Book-Entry Interest owner, of any such notice and its content or effect will not
affect the validity of the redemption of the Debt Securities called for
redemption, or any other action premised on that notice. In the event of a call
for redemption, the Trustee's notification to DTC will initiate DTC's standard
call process, and, in the event of a partial call, its lottery process by which
the call will be randomly allocated to DTC Participants holding positions in the
Debt Securities to be redeemed. When DTC and DTC Participants allocate the call
for redemption, the owners of the Book-Entry Interests that have been called
should be notified by the broker or other person responsible for maintaining the
records of those interests and subsequently credited by that person with the
proceeds once such Debt Securities are redeemed.
The Company, the Trustees under the First Mortgage Indenture and the
Unsecured Debt Indenture and any underwriter or agent cannot and do not give any
assurances that DTC, DTC Participants or others will distribute payments of debt
service on Debt Securities made to DTC or its nominee as the registered owner,
or any redemption or other notices, to the Book-Entry Interest owners, or that
they will do so on a timely basis, or that DTC will serve and act in the manner
described in this Prospectus.
The Company understands that the current "Rules" applicable to DTC and DTC
Participants are on file with the Commission, and that the current "Procedures"
of DTC to be followed in dealing with DTC Participants are on file with DTC.
If DTC is at any time unwilling or unable to continue as depositary, and a
successor depositary is not appointed by the Company within 90 days, the Company
will issue individual certificates to owners of Book-Entry Interests in exchange
for the Debt Securities held by DTC or its nominee, as the case may be. In such
instance, an owner of a Book-Entry Interest will be entitled to physical
delivery of certificates equal in principal amount to such Book-Entry Interest
and to have such certificates registered in its name. Individual certificates so
issued will be issued in denominations of $1,000 or any multiple thereof.
Neither the Company, the Trustees under the First Mortgage Indenture and
the Unsecured Debt Indenture nor any underwriter makes any representation as to
the accuracy of the above description of DTC's business, organization and
procedures, which is based upon information furnished by DTC.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in one or more of the following
ways: (a) through underwriters or dealers; (b) directly to a limited number of
purchasers or to a single purchaser; or (c) through agents. The Prospectus
Supplement with respect to each series of the Debt Securities sets forth, among
other things, the terms of the offering of the Debt Securities, including the
name or names of the underwriters, dealers or agents, the purchase price of the
Debt Securities and proceeds to the Company from such sale, any underwriting
discounts and other items constituting underwriters' or agents' compensation and
any discounts and commissions allowed or reallowed or paid to dealers and any
registered securities exchanges on which the Debt Securities may be listed. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If any series of the Debt Securities are sold to underwriters or dealers,
the Prospectus Supplement relating thereto will describe the nature of the
obligation of the underwriters or dealers to purchase and pay for
16
<PAGE> 21
the Debt Securities. The Debt Securities may be offered to the public either
through an underwriting syndicate represented by Merrill Lynch, Pierce, Fenner &
Smith Incorporated as managing underwriter, or directly by such firm acting as
an underwriter. The underwriter or underwriters with respect to a particular
underwritten offering of the Debt Securities 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 of such
Prospectus Supplement. Unless otherwise set forth in the Prospectus Supplement,
the obligations of underwriters to purchase the Debt Securities will be subject
to certain conditions precedent and the underwriters will be obligated to
purchase all the Debt Securities if any are purchased. The distribution of the
Debt Securities by the underwriters may be effected from time to time in one or
more transactions at a fixed price or prices, which may be changed, or at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.
The Debt Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of the Debt Securities in respect of which this Prospectus is delivered
will be named, and any commissions payable by the Company to such agent will be
set forth, in the Prospectus Supplement relating thereto. Unless otherwise
indicated in the Prospectus Supplement, any such agent is acting on a best
efforts basis for the period of its agency.
Underwriters, dealers or agents designated by the Company in connection
with the distribution of the Debt Securities may be entitled to indemnification
by the Company against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribution with respect to payments
which the underwriters or agents may be required to make in respect thereof.
In the event that the Debt Securities are not listed on a registered
national securities exchange, certain broker-dealers may make a market in the
Debt Securities, but will not be obligated to do so and may discontinue any
market-making at any time without notice. No assurance can be given that any
broker-dealer will make a market in the Debt Securities or as to the liquidity
of the trading market for the Debt Securities, whether or not the Debt
Securities are listed on a registered national securities exchange. The
Prospectus Supplement with respect to any series of the Debt Securities will
state, if known, whether or not any broker-dealer intends to make a market in
the Debt Securities. If no such determination has been made, the Prospectus
Supplement will so state.
LEGAL OPINIONS
The validity of the Debt Securities will be passed upon for the Company by
Foley & Lardner, Milwaukee, Wisconsin. Certain legal matters will be passed upon
for the underwriters, dealers, purchasers or agents by Chadbourne & Parke LLP,
New York, New York.
EXPERTS
The consolidated financial statements and schedule of the Company at
December 31, 1996 and 1995 and for each of the three years in the period ending
December 31, 1996 incorporated by reference in this Prospectus and in the
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Use of Proceeds........................ S-2
Selected Financial Information......... S-2
Certain Terms of the Debentures........ S-3
Underwriting........................... S-4
PROSPECTUS
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 2
The Company............................ 3
Use of Proceeds........................ 4
Ratios of Earnings to Fixed Charges.... 4
Description of the New Bonds........... 4
Description of the Debentures.......... 8
Book-Entry Only System................. 14
Plan of Distribution................... 16
Legal Opinions......................... 17
Experts................................ 17
</TABLE>
======================================================
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$105,000,000
WP&L LOGO
7% DEBENTURES
DUE JUNE 15, 2007
------------------------
PROSPECTUS SUPPLEMENT
------------------------
MERRILL LYNCH & CO.
JUNE 25, 1997
======================================================
