<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 25, 1997.
REGISTRATION NO. 333-35235
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CENTRAL MAINE POWER COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MAINE 01-0042740
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
83 EDISON DRIVE, AUGUSTA, MAINE 04336 (207) 623-3521
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL OFFICE)
---------------
DAVID E. MARSH
Chief Financial Officer
AND
ANNE M. PARE, ESQ.
Corporate Counsel
CENTRAL MAINE POWER COMPANY
83 EDISON DRIVE
AUGUSTA, MAINE 04336
(207) 623-3521
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENTS FOR SERVICE)
COPIES TO:
E. ELLSWORTH MCMEEN, III, ESQ. FRANK B. PORTER, JR., ESQ.
LEBOEUF, LAMB, GREENE & MACRAE, L.L.P. CHOATE, HALL & STEWART
125 WEST 55TH STREET EXCHANGE PLACE
NEW YORK, NEW YORK 10019 53 STATE STREET
(212) 424-8000 BOSTON, MASSACHUSETTS 02109
(617) 248-5000
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Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement as determined
by market conditions.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED NOVEMBER 25, 1997
PROSPECTUS
$400,000,000
CENTRAL MAINE POWER COMPANY
MEDIUM-TERM NOTES, SERIES D
DUE FROM NINE MONTHS TO THIRTY YEARS FROM DATE OF ISSUE
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Central Maine Power Company (the "Company") may offer from time to time its
Medium-Term Notes, Series D (the "Notes"), in an aggregate principal amount of
up to $400,000,000. Each Note will mature from nine months to thirty years from
its date of issue, as selected by the initial purchaser and agreed to by the
Company. Unless otherwise set forth in an accompanying Pricing Supplement (the
"Pricing Supplement") to this Prospectus, the Notes will not be redeemable at
the option of the Company or subject to repayment at the option of the Holder
thereof prior to the maturity date thereof set forth in the accompanying
Pricing Supplement (the "Specified Maturity"). See "Description of Notes".
Unless otherwise specified in the applicable Pricing Supplement, each Note
will be registered and will be issued either (i) in book-entry form and
represented by a global security (a "Global Security") registered in the name
of a nominee of The Depository Trust Company, as Depository (the "Depository")
(each such Note represented by a Global Security being referred to herein as a
"Book-Entry Note") or (ii) in certificated form and represented by a
certificate issued in definitive form (a "Certificated Note"), and registered
in the name of the Holder thereof. Beneficial interests in a Global Security
representing Book-Entry Notes will be shown on, and transfers thereof will be
effected only through, records maintained by the Depository (with respect to
beneficial interests of its participants) and its participants. Owners of
beneficial interests in Book-Entry Notes will be entitled to physical delivery
of Certificated Notes only under the limited circumstances described herein.
See "Description of Notes--Book-Entry System". Unless otherwise indicated in
the applicable Pricing Supplement, Notes will be issued only in denominations
of $25,000 and integral multiples of $1,000 in excess thereof.
The interest rate on, or interest rate formula pertaining to, each Note will
be established by the Company at the date of issuance of such Note and will be
indicated in an accompanying Pricing Supplement. Interest rates and interest
rate formulas are subject to change by the Company, but, except as otherwise
set forth herein, no such change will affect the interest rate or interest rate
formula pertaining to any Note theretofore issued or which the Company has
agreed to sell. Unless otherwise indicated in the applicable Pricing
Supplement, each Note will bear interest at a fixed rate (a "Fixed Rate Note"),
which may be zero in the case of a Note issued at a price representing a
discount from the principal amount payable at Specified Maturity, or at a
floating rate determined by reference to the CD Rate, the Commercial Paper
Rate, the Federal Funds Rate, LIBOR, the Prime Rate, the Treasury Rate or such
other interest rate formula as may be designated in an accompanying Pricing
Supplement, as adjusted by the Spread and/or Spread Multiplier, if any,
applicable to such Note (a "Floating Rate Note"). The Notes may be issued as
Original Issue Discount Notes or Extendible Notes. See "Description of Notes".
Unless otherwise specified in the applicable Pricing Supplement, interest on
Fixed Rate Notes will be payable each September 1 and March 1 and at maturity
or upon earlier redemption or repayment. Interest on Floating Rate Notes will
be payable on the dates indicated therein and in the applicable Pricing
Supplement.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------
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<TABLE>
<CAPTION>
Price to Agent's Proceeds to
Public(1) Commission(2) the Company(2)(3)
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<S> <C> <C> <C>
Per Note........... 100.00% .125%-1.750% 99.875%-98.250%
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Total.............. $400,000,000 $500,000-$7,000,000 $399,500,000-$393,000,000
</TABLE>
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(1) Unless otherwise specified in the Pricing Supplement relating thereto, each
Note will be issued at 100% of the principal amount thereof.
(2) The Company will pay Lehman Brothers, Lehman Brothers Inc., Bear, Stearns &
Co. Inc., Salomon Brothers Inc or other agents, (each an "Agent," and
collectively, the "Agents"), a commission, in the form of a discount
ranging from .125% to 1.750%, of the principal amount of any Note sold
through such Agent, depending on such Note's Specified Maturity and the
credit rating assigned to the Notes. Any Agent, acting as principal, may
also purchase Notes at a discount for resale to one or more investors or
one or more broker-dealers (acting as principal for purposes of resale) at
varying prices related to prevailing market prices at the time of resale,
as determined by such Agent, or, if so agreed, at a fixed public offering
price. The Company has agreed to indemnify the Agents against certain
liabilities, including liabilities under the applicable Federal and state
securities laws.
(3) Before deducting offering expenses payable by the Company estimated at
$500,000.
------------
The Notes may be offered on a continuing basis by the Company through the
Agents, each of which has agreed to use its reasonable efforts to solicit
offers to purchase the Notes. The Company also may sell Notes to any Agent
acting as principal for resale to one or more investors, or one or more broker-
dealers. The Company has reserved the right to sell Notes directly to investors
on its own behalf and on such sales no commission will be paid. The Notes will
not be listed on any securities exchange, and there can be no assurance that
the Notes offered by this Prospectus will be sold or that there will be a
secondary market for the Notes. The Company reserves the right to withdraw,
cancel or modify the offer made hereby without notice. The Company or any Agent
who solicited an offer to purchase Notes may reject any such offer in whole or
in part. See "Plan of Distribution".
------------
LEHMAN BROTHERS
BEAR, STEARNS & CO. INC.
SALOMON BROTHERS INC
The date of this Prospectus is , 1997.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES. SUCH
TRANSACTIONS MAY INCLUDE THE PURCHASE OF NOTES FOLLOWING THE PRICING OF THE
OFFERING TO COVER A SYNDICATE SHORT POSITION IN THE NOTES OR FOR THE PURPOSE
OF MAINTAINING THE PRICE OF THE NOTES. FOR A DESCRIPTION OF THESE ACTIVITIES
SEE "PLAN OF DISTRIBUTION".
AVAILABLE INFORMATION
Central Maine Power Company (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 and other information with
the Securities and Exchange Commission (the "Commission"). Information, as of
particular dates, concerning directors and officers of the Company, their
remuneration, the principal holders of securities of the Company and any
material interest of such persons in transactions with the Company is
disclosed in proxy statements distributed to shareholders of the Company and
filed with the Commission. Such reports, proxy statements and other
information filed by the Company can be inspected without charge and copied,
upon payment of prescribed rates, at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's regional offices at 7 World Trade Center, Suite
1300, New York, New York 10048, and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2551. Copies of such material and any part
thereof are also available by mail from the Public Reference Section of the
Commission at its principal office at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Copies of such material are also available and can
be copied at the offices of the New York Stock Exchange on which certain of
the Company's securities are listed, at 11 Wall Street, New York, New York
10005. In addition, the Commission maintains a Web site on the Internet at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission, including the Company.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have heretofore been filed by the Company
with the Commission pursuant to the Exchange Act, are hereby incorporated by
reference in this Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1996.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997.
3. The Company's Current Reports on Form 8-K dated January 29, 1997, May
15, 1997, August 1, 1997 and September 2, 1997.
All documents filed by the Company with the Commission 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 of the Notes shall be
deemed to be incorporated by reference in this Prospectus 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 other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so 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 in this Prospectus by reference,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Requests for such copies should
be directed to Anne M. Pare, Esq., Corporate Secretary and Clerk, Central
Maine Power Company, 83 Edison Drive, Augusta, Maine 04336, telephone number:
(207) 623-3521.
2
<PAGE>
RISK FACTORS
As set forth in the documents filed by the Company with the Commission under
the Exchange Act and incorporated by reference in this Prospectus, the Company
faces major uncertainties in a number of areas, particularly in connection
with its interest in Maine Yankee Atomic Power Company ("Maine Yankee") and
other nuclear generating plants and with the restructuring of the electric
utility industry in anticipation of full competition. The following is a
summary of certain information contained in such documents and should be read
in conjunction therewith and with any other documents filed with the
Commission under the Exchange Act after the date hereof.
This Prospectus contains forecast information items that are "forward-
looking statements" as defined in the Private Securities Litigation Reform Act
of 1995. All such forward-looking information is necessarily only estimated.
There can be no assurance that actual results will not differ from
expectations. Actual results have varied materially and unpredictably from
expectations.
Factors that could cause actual results to differ materially include, among
other matters, the permanent closure and decommissioning of the Maine Yankee
nuclear generating plant and resulting regulatory proceedings; the actual
costs of decommissioning the Maine Yankee plant; continuing outages at other
generating units in which the Company holds interests; electric utility
restructuring, including the ongoing state and federal activities; the results
of the Company's planned sale of its generating assets; future economic
conditions; earnings-retention and dividend pay-out policies; developments in
the legislative, regulatory and competitive environments in which the Company
operates, including regulatory treatment of stranded costs; the Company's
investments in unregulated businesses; and other circumstances that could
affect anticipated revenues and costs, such as unscheduled maintenance or
repair requirements at nuclear plants and other facilities and compliance with
laws and regulations.
MAINE YANKEE
On August 6, 1997, the Board of Directors of Maine Yankee voted to
permanently cease power operations at its nuclear generating plant at
Wiscasset, Maine (the "Plant") and to begin decommissioning the Plant. As
reported in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, its Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997 and its Current Reports
on Form 8-K dated May 15, 1997 and August 1, 1997, the Plant has been shut
down since December 6, 1996. The decision to close the Plant permanently was
based on an economic analysis of the costs, risks and uncertainties associated
with operating the Plant compared to those associated with closing and
decommissioning it.
Costs. The Company has been incurring substantial costs in connection with
its 38% share of Maine Yankee costs, as well as additional costs for
replacement power while the Plant has been out of service. For the nine months
ended September 30, 1997, such costs amounted to approximately $102.3 million
for the Company: $50.7 million due to basic operations and maintenance costs,
$39.2 million due to replacement power costs and $12.4 million associated with
incremental costs of operations and maintenance. The Maine Yankee Board's
decision to close the Plant should mitigate the costs the Company would
otherwise incur in 1997 through a phasing down of Maine Yankee's operations
and maintenance costs, with Maine Yankee's workforce having been reduced from
approximately 475 to 239 employees as of October 31, 1997, but will not reduce
the need to buy replacement energy and capacity. The amount of costs for
replacement energy and capacity will vary during the year based on the
Company's power requirements and market conditions, but the Company expects
such costs to be within a range of approximately $5.0 million to $6.0 million
per month during the remainder of 1997, based on current energy and capacity
needs and market conditions. Under the electric utility restructuring
legislation enacted by the Maine Legislature in May 1997 discussed below, the
Company's obligations to provide replacement power will terminate on March 1,
2000, along with its other power-supply obligations. In the interim, the
termination of a major non-utility generator ("NUG") contract should result in
savings to the Company at an annual rate of approximately $25 million
commencing November 1, 1997.
The impact of the nuclear-related costs on the Company will be a major
obstacle to achieving satisfactory results in 1997, despite the approximately
$75 million in annual Maine Yankee-related costs embedded in the current
determination of the Company's required revenues for ratemaking purposes and
despite success in
3
<PAGE>
controlling other operating costs. The higher costs incurred to date
associated with nuclear plant investment and the costs anticipated to replace
energy and capacity needs for the remainder of the year, as the result of the
permanent shutdown of the Plant, will reduce current earnings to a level that
will trigger the low-earnings bandwidth provisions of the Company's
Alternative Rate Plan (the "ARP"). That provision is activated if actual
earnings for 1997 are outside a bandwidth of 350 basis points above or below a
10.68% percent rate-of-return allowance. A return below the low end of the
range provides for additional revenue through rates equal to one-half the
difference between the actual earned rate of return and the 7.18% (10.68 minus
350 basis points) low end of the bandwidth. While the Company believes the
mechanism will be triggered in 1997, it cannot predict the amount of
additional revenues that may ultimately result. In any case, under the ARP the
Company would not be likely to start to receive any additional revenues before
July 1, 1998. In addition, the Company has affirmed its public statements that
it intends to limit its electricity price increases under the ARP to a level
at or below the rate of inflation through 1999, the last year of the term of
the ARP, in order to attain its goal of price stability. The Company believes
stable prices are essential to its ability to retain and promote electricity
sales.
The Company's 38% ownership interest in Maine Yankee's common equity
amounted to $29.0 million as of September 30, 1997, and under Maine Yankee's
Power Contracts and Additional Power Contracts, the Company is responsible for
38% of the costs of decommissioning the Plant. Maine Yankee's most recent
estimate of the cost of decommissioning is $380.4 million, based on a 1997
study by an independent engineering consultant, plus estimated costs of
interim spent-fuel storage of $127.6 million, for an estimated total cost of
$508.0 million (in 1997 dollars). The previous estimate for decommissioning,
by the same consultant, was $316.6 million (in 1993 dollars), which resulted
in approximately $14.9 million being collected annually from Maine Yankee's
sponsors pursuant to a 1994 Federal Energy Regulatory Commission ("FERC") rate
order. Through September 30, 1997, Maine Yankee had collected approximately
$194.4 million for its decommissioning obligations.
On November 5, 1997, Maine Yankee submitted the new estimate to the FERC as
part of a rate case reflecting the fact that the Plant is no longer operating
and has entered the decommissioning phase. If the FERC accepts the new
estimate, the amount of Maine Yankee's collections for decommissioning would
rise from the $14.9 million previously allowed by the FERC to approximately
$36 million per year. The Company expects several interested parties to
intervene in the FERC proceeding, including state regulators, and cannot
predict the result of the FERC case.
As of September 1, 1997, Maine Yankee has estimated the sum of the future
payments for the closing, decommissioning and recovery of the remaining
investment in Maine Yankee to be approximately $930 million, of which the
Company's 38% share would be approximately $353 million. Legislation enacted
in Maine in 1997 calling for restructuring the electric utility industry
provides for recovery of decommissioning costs, to the extent allowed by
federal regulation, through the rates charged by the transmission and
distribution companies. Based on the legislation and regulatory precedent
established by the FERC in its opinion relating to the decommissioning of the
Yankee Atomic nuclear plant, the Company believes that it is entitled to
recover substantially all of its share of such costs from its customers and
therefore has recorded a regulatory asset and a corresponding liability in the
amount of $345 million on its consolidated balance sheet, which is the $353
million discussed above net of the September 1997 cost-of-service payment to
Maine Yankee. The Company's current annual revenues include recovery of
approximately $75 million in Maine Yankee costs predicated on an operating
Plant.
Management Audit. On September 2, 1997, the MPUC released the report of a
consultant it had retained to perform a management audit of Maine Yankee for
the period January 1, 1994, to June 30, 1997. The report contained both
positive and negative conclusions, the latter including: that Maine Yankee's
decision in December 1996 to proceed with the steps necessary to restart the
Plant was "imprudent"; that Maine Yankee's May 27, 1997 decision to reduce
restart expenses while exploring a possible sale of the Plant was
"inappropriate", based on the consultant's finding that a more objective and
comprehensive competitive analysis at that time "might have indicated a
benefit for restarting" the Plant; and that those decisions resulted in Maine
Yankee incurring $95.9 million in "unreasonable" costs. On October 24, 1997,
the MPUC issued a Notice of Investigation
4
<PAGE>
initiating an investigation of the shutdown decision and of the operation of
the Plant prior to shutdown, and announced that it had directed its consultant
to extend its review to include those areas. The Company does not know how the
MPUC plans to use the consultant's report, but believes the report's negative
conclusions are unfounded and may be contradictory. The Company has been
charging its share of the Maine Yankee expenses to income, and believes it
would have substantial constitutional and jurisdictional grounds to challenge
any effort in an MPUC proceeding to alter wholesale Maine Yankee rates made
effective by the FERC. On November 7, 1997, Maine Yankee initiated a legal
challenge to the MPUC investigation in the Maine Supreme Judicial Court
alleging that such an investigation falls exclusively within the jurisdiction
of the FERC and that the MPUC investigation is therefore barred on
constitutional grounds. The Company filed a similar legal challenge on the
same day.
Debt Restructuring. Maine Yankee has entered into agreements with the
holders of its outstanding First Mortgage Bonds and its lender banks under
which those bondholders and banks agreed that they would not assert that the
voluntary shutdown of the Plant constituted a covenant violation under Maine
Yankee's First Mortgage Indenture or its two bank credit agreements and agreed
to maintain Maine Yankee's level of bank borrowing at $67 million, out of
aggregate commitments of $85 million, which Maine Yankee considers adequate
for its foreseeable needs. The agreements, as extended in October 1997,
terminate January 15, 1998, by which date Maine Yankee must reach agreement on
restructured debt arrangements reflecting its decommissioning status. At the
same time, Maine Yankee and its sponsors, including the Company, agreed to
amend Maine Yankee's Power Contracts and Additional Power Contracts, effective
upon approval by the FERC, to clarify and confirm the sponsors' obligations to
continue to pay their shares of Maine Yankee's costs during the
decommissioning process. Maine Yankee filed the contract amendments with the
FERC as part of its rate proceeding, requesting an effective date of January
15, 1998.
Other Maine Yankee Shareholders. Higher nuclear-related costs are affecting
other stockholders of Maine Yankee in varying degrees. Bangor Hydro-Electric
Company, a Maine-based 7% stockholder, has cited its "deteriorating" financial
condition, suspended its common stock dividend, and sought expedited rate
relief. Maine Public Service Company, a 5% stockholder, cited problems in
satisfying financial covenants in loan documents and reduced its common stock
dividend substantially in early March 1997. Northeast Utilities (20%
stockholder through three subsidiaries), which is also adversely affected by
the substantial additional costs associated with the three shut-down Millstone
nuclear units and the permanently shut-down Connecticut Yankee unit, as well
as significant regulatory issues in Connecticut and New Hampshire, has
implemented an indefinite suspension of its quarterly common stock dividends.
A default by a Maine Yankee stockholder in making payments under its Power
Contract or Capital Funds Agreement could have a material adverse effect on
Maine Yankee, depending on the magnitude of the default, and would constitute
a default under Maine Yankee's bond indenture and its two major credit
agreements unless cured within applicable grace periods by the defaulting
stockholder or other stockholders. The Company cannot predict, however, what
effect, if any, the financial difficulties being experienced by some Maine
Yankee stockholders will have on Maine Yankee or the Company.
INTERESTS IN OTHER NUCLEAR PLANTS
On December 4, 1996, the Board of Directors of Connecticut Yankee Atomic
Power Company voted to permanently shut down the Connecticut Yankee plant for
economic reasons, and to decommission the unit, which had not operated since
July of 1996. The Company has a 6% equity interest in Connecticut Yankee,
totaling approximately $7.0 million at September 30, 1997. The Company
incurred replacement power costs of approximately $3.6 million during the nine
months ended September 30, 1997. Based on cost estimates provided by
Connecticut Yankee, the Company determined its share of the cost of
Connecticut Yankee's continued compliance with regulatory requirements,
recovery of its plant investments, decommissioning and closing the plant to be
approximately $38.9 million and has recorded a regulatory asset and a
corresponding liability in that amount on its consolidated balance sheet. The
Company is currently recovering through rates an amount adequate to recover
these expenses.
The Company has a 2.5% direct ownership interest in Millstone Unit No. 3,
which is operated by Northeast Utilities. This facility has been off-line
since April 1996 due to Nuclear Regulatory Commission ("NRC")
5
<PAGE>
concerns regarding license requirements and the Company cannot predict when it
will return to service. Millstone Unit No. 3, along with two other units at
the same site owned by Northeast Utilities, is on the NRC's "watch list" in
"Category 3", which requires formal NRC action before a unit can be restarted.
The Company incurred replacement power costs related to Millstone Unit No. 3
of approximately $3.6 million during the nine months ended September 30, 1997.
On August 7, 1997, the Company and other minority owners of Millstone Unit No.
3 filed suit and initiated an arbitration claim against Northeast Utilities,
its trustees, and two of its subsidiaries, alleging mismanagement of the unit
by the defendants. The minority owners are seeking to recover their additional
costs resulting from such mismanagement, including their replacement power
costs. The Company cannot predict the outcome of the litigation and
arbitration.
INDUSTRY RESTRUCTURING AND STRANDABLE COSTS
As discussed in the Management's Discussion and Analysis of Financial
Condition and Results of Operations included in the Company's 1996 Form 10-K,
the enactment by Congress of the Energy Policy Act of 1992 accelerated
planning by electric utilities, including the Company, for a transition to a
more competitive industry. Significant legislative steps have already been
taken toward competition in general and non-discriminatory transmission access
as discussed below. A departure from traditional regulation, however, could
have a substantial impact on the value of utility assets and on the ability of
electric utilities to recover their costs through rates. In the absence of
full recovery, utilities would find their above-market costs to be "stranded",
or unrecoverable, in the new competitive setting.
The Company has substantial exposure to cost stranding relative to its size.
In its January 1996 filing, the Company estimated its net-present-value
strandable costs to be approximately $2 billion as of January 1, 1996. These
costs represented the excess costs of purchased power obligations and the
Company's own generating costs over the market value of the power, and the
costs of deferred charges and other regulatory assets. Of the $2 billion,
approximately $1.3 billion was related to above-market costs of purchased
power obligations arising from the Company's long-term, noncancellable
contracts for the purchase of capacity and energy from NUGs, approximately
$200 million was related to estimated net above-market costs of the Company's
own generation, and the remaining $500 million was related to deferred
regulatory assets.
The MPUC also provided estimates of strandable costs for the Company, which
they found to be within a wide range of a negative $445 million to a positive
$965 million. These estimates were prepared using assumptions that differ from
those used by the Company, particularly a starting date for measurement of
January 1, 2000 versus the measurement starting date of January 1, 1996
utilized by the Company. The MPUC concluded that there is a high degree of
uncertainty that surrounds stranded costs estimates, resulting from having to
rely on projections and assumptions about future conditions. Given the
inherent uncertainty and volatility of these projections, the Company believes
that an annual estimation of stranded costs could serve to prevent significant
over- or under-collection beginning in the year 2000.
Estimated strandable costs are highly dependent on estimates of the future
market for power. Higher market rates lower stranded cost exposure, while
lower market rates increase it. In addition to market-related impacts, any
estimate of the ultimate level of strandable costs depends on state and
federal regulations; the extent, timing and form that competition for electric
service will take; the ongoing level of the Company's costs of operations;
regional and national economic conditions; growth of the Company's sales; the
timing of any changes that may occur from state and federal initiatives on
restructuring; and the extent to which regulatory policies ultimately address
recovery of strandable costs.
The estimated market rate for power is based on anticipated regional market
conditions and future costs of producing power. The present value of future
purchased-power obligations and the Company's generating costs reflects the
underlying costs of those sources of generation in place today, with
reductions for contract expirations and continuing depreciation. Deferred
regulatory asset totals include the current uncollected balances and existing
amortization schedules for purchased power contract restructuring and buyouts
negotiated by the Company to lessen the impact of these obligations, energy
management costs, financing costs, and other regulatory promises.
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RESTRUCTURING LEGISLATION
On May 29, 1997, the Governor of Maine signed into law a bill enacted by the
Maine Legislature that will restructure the electric utility industry in Maine
by March 1, 2000. With respect to the ability of the Company to recover
stranded costs, the legislation requires the MPUC, when retail access begins,
to provide a "reasonable opportunity" to recover stranded costs through the
rates of the transmission and distribution company, comparable to the
utility's opportunity to recover stranded costs before the implementation of
retail access under the legislation. Stranded costs are defined as the
legitimate, verifiable and unmitigatable costs made unrecoverable as a result
of the restructuring required by the legislation and would be determined by
the MPUC as provided in the legislation. The MPUC must conduct separate
adjudicatory proceedings to determine the stranded costs for each utility and
the corresponding revenue requirements and stranded-cost charges to be charged
by each transmission and distribution utility. These proceedings must be
completed by July 1, 1999. The MPUC has initiated the proceeding that will
determine the Company's stranded costs, corresponding revenue requirements and
stranded-cost charges to be charged by it when it becomes a transmission-and-
distribution utility and has scheduled completion of the proceeding for the
second half of 1998.
In addition, the legislation requires utilities to use all reasonable means
to reduce their potential stranded costs and to maximize the value from
generation assets and contracts. The MPUC must consider a utility's efforts to
mitigate its stranded costs in determining the amount of the utility's
stranded costs. Stranded costs will be prospectively adjusted as necessary to
correct substantial inaccuracies in the year 2003 and at least every three
years thereafter.
The principal restructuring provisions of the legislation provide for
customers to have direct retail access to generation services and for
deregulation of competitive electricity providers, commencing March 1, 2000
with transmission and distribution companies continuing to be regulated by the
MPUC. By that date, subject to possible extensions of time granted by the MPUC
to improve the sale value of generation assets, investor-owned utilities are
required to divest all generation assets and generation-related business
activities, with two major exceptions: (1) nonutility generator contracts with
qualifying facilities and contracts with demand-side management or
conservation providers, brokers or hosts; and (2) ownership interests in
nuclear power plants. However, the MPUC can require the Company to divest its
interest in Maine Yankee on or after January 1, 2009. The Company has
submitted its plan to divest its generation assets to the MPUC as required by
the legislation and is proceeding with its previously reported plan to sell
its generation assets in 1998, as discussed below. The bill also requires
investor-owned utilities, after February 28, 2000, to sell their rights to the
capacity and energy from all generation assets, including the purchased-power
contracts that had not previously been divested pursuant to the legislation,
with certain minor exceptions.
Upon the commencement of retail access on March 1, 2000, the Company, as a
transmission and distribution utility, will be prohibited from selling
electric energy to retail customers. Any competitive electricity provider that
is affiliated with the Company would be allowed to sell electricity outside
the Company's service territory without limitation as to amount, but within
the Company's service territory the affiliate would be limited to providing no
more than 33% of the total kilowatt hours sold within the Company's service
territory, as determined by the MPUC.
Other features of the legislation include the following:
(a) After the effective date of the legislation, if an entity purchases
10% or more of the stock of a distribution utility, including the Company,
the purchasing entity and any related entity would be prohibited from
selling generation service to any retail customer in Maine.
(b) The legislation encourages the generation of electricity from
renewable resources by requiring competitive providers, as a condition of
licensing, to demonstrate to the MPUC that no less than 30% of their
portfolios of supply sources for retail sales in Maine are accounted for by
renewable resources.
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(c) The legislation requires the MPUC to ensure that standard-offer
service is available to all consumers, but any competitive provider
affiliated with the Company would be limited to providing such service for
only up to 20% of the electric load in the Company's service territory.
(d) Beginning March 1, 2002, or, by MPUC rule, as early as March 1, 2000,
the providing of billing and metering services will be subject to
competition.
(e) A customer who significantly reduces or eliminates consumption of
electricity due to self-generation, conversion to an alternative fuel, or
demand-side management may not be assessed an exit fee or re-entry fee in
any form for such reduction or elimination of consumption or for the re-
establishment of service with a transmission and distribution utility.
(f) Finally, the legislation provides for programs for low-income
assistance, energy conservation, research and development on renewable
resources, assistance for utility employees laid off as a result of the
legislation, and nuclear plant decommissioning costs, all funded through
transmission and distribution utility rates and charges.
The Company has stated that it supports the legislation ultimately enacted,
which reflects protracted negotiations and compromises among the interested
constituencies, and is evaluating means of mitigating its strandable costs
through the financing of the stranded assets. The Company believes, however,
that some of the limitations imposed on transmission and distribution
utilities in the legislation are unnecessary and inappropriate in the
contemplated competitive environment.
SALE OF GENERATION ASSETS
On April 28, 1997, the Company announced a plan to seek proposals to
purchase its generation assets, including interests in nuclear plants and
rights to power under NUG contracts. The Company believes that current market
conditions may offer advantages to seeking proposals before divestiture is
required by legislation. A number of utilities in Massachusetts are also in
the process of selling their generation assets, with a large number of
prospective purchasers expressing interest in acquiring the facilities. On
August 6, 1997, New England Electric System in Massachusetts announced that it
had agreed to sell its non-nuclear generating business to an affiliate of PG&E
Corp. (U.S. Generating Company).
In early June 1997, the Company, working with its investment advisors,
developed and contacted a group of approximately 150 potential bidders that
are believed to be interested in the Company's generation assets and
financially qualified to bid. Non-binding bids were submitted to the Company
in early September and, based on those bids, the Company began a process of
working with a smaller group of qualified buyers. On November 3, 1997, the
Company sent bid documents to the selected qualified buyers and requested
final binding bids by December 10, 1997. Upon receipt of such bids, the
Company will evaluate the bids and negotiate a definitive purchase-and-sale
agreement with the successful bidder or bidders. The consummation of a sale
will extend into late 1998 and is subject to regulatory approvals and
contractual consents. The Company cannot predict whether any sale or sales
will occur, whether it will receive satisfactory proposals, or whether
necessary approvals for any such sale or sales will be obtained.
PROPOSED FEDERAL INCOME TAX ADJUSTMENTS
On September 3, 1997, the Company received from the Internal Revenue Service
("IRS") a Revenue Agent's Report summarizing all adjustments proposed by the
IRS as a result of its audit of the Company's Federal income tax returns for
the years 1992 through 1994, and the Company has received a notice of
deficiency relating to the proposed disallowances. There are two significant
disallowances among those proposed by the IRS. The first is a disallowance of
the Company's write-off of the under collected balance of fuel and purchased-
power costs and the unrecovered balance of its unbilled Electric Revenue
Adjustment Mechanism ("ERAM") revenues, both as of December 31, 1994, which
were charged to income in 1994 in connection with the adoption of the ARP
effective January 1, 1995. The second major adjustment would disallow the
Company's 1994
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deduction of the cost of the buyout of the Fairfield Energy Venture purchased-
power contract by the Company in 1994. The aggregate tax impact, including
both Federal and state taxes, of the unresolved issues amounts to
approximately $39 million, over 90% of which is associated with the two major
disallowances. The two major disallowances relate largely to the timing of the
deductions and would not affect net income except for the cumulative interest
impact which, through September 30, 1997, amounted to $11.7 million, or a
decrease in net income of $7.0 million, and which is expected to increase
interest expense approximately $433.3 thousand per month until either the tax
deficiency is paid or the issues are resolved in favor of the Company, in
which case no interest is due. If the IRS were to prevail, the Company would
be required to make a tax payment of approximately $33 million, but the
Company believes in that event deductions would be amortized over periods of
up to twenty post-1994 tax years. The Company believes its tax treatment of
the unresolved issues was proper and intends to contest the proposed
adjustments vigorously, and as a result the potential interest has not been
accrued. The Company cannot predict the results of its planned appeals. In
addition, the Company incurred $1.1 million of income tax expense related to
settlements of uncontested items in connection with the 1992-1994 IRS audits,
and amended return adjustments for 1995 and 1996.
THE COMPANY
The Company, a Maine corporation organized in 1905, is an investor-owned
electric utility engaged primarily in the generation, purchase, transmission,
distribution and sale of electric energy for the benefit of retail customers
in southern and central Maine and wholesale customers, principally other
utilities (see "Recent Developments"). The principal executive offices of the
Company are located at 83 Edison Drive, Augusta, Maine 04336, and the
Company's telephone number is (207) 623-3521.
The Company serves more than 521,000 customers in its 11,000 square mile
service area in southern and central Maine. The Company's service area
contains the bulk of Maine's industrial centers and includes about 77 percent
of the total population of the State. The Company's industrial and commercial
customers include major producers of pulp and paper products, producers of
chemicals, plastics, electric components, processed food and footwear, and
shipbuilders.
RATIO OF EARNINGS TO FIXED CHARGES
As computed in accordance with Item 503(d) of Regulation S-K of the
Commission, the Company's unaudited ratio of earnings to fixed charges for the
nine-month period ended September 30, 1997 was 1.3, and such ratio for each of
the calendar years (the Company's fiscal year being a calendar year) in the
period 1992 through 1996, inclusive, was 2.5, 2.7, 0.3, 2.0 and 2.8
respectively.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale or sales of the
Notes will be used for general corporate purposes, including, but not limited
to, the repayment of short-term borrowings and other forms of indebtedness,
investments in related companies, and construction financing.
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DESCRIPTION OF NOTES
The following description sets forth certain general terms and provisions of
the Notes. The particular terms of any Notes will be described in the Pricing
Supplement relating to such Notes. The statements made herein are a summary
only, do not purport to be complete, and are qualified in their entirety by
the detailed provisions of an Indenture between the Company and The Bank of
New York (the "Trustee"), dated as of August 1, 1989, as supplemented by the
First Supplemental Indenture, dated as of August 7, 1989, the Second
Supplemental Indenture, dated as of January 10, 1992, the Third Supplemental
Indenture, dated as of December 15, 1994 and the Fourth Supplemental Indenture
to be entered into in connection with the Notes (collectively, the
"Indenture"). Copies of the Indenture, including supplemental indentures, are
filed or incorporated by reference as exhibits to the Registration Statement,
and such exhibits are incorporated herein by reference. All article and
section references are references to articles and sections of the Indenture.
GENERAL
The Notes will be issued under the Indenture, will be unsecured and will
rank equally with the Company's other unsecured senior indebtedness. The Notes
are limited to an aggregate principal amount of $400,000,000 and will
constitute the fourth series of Securities (as defined below) issued under the
Indenture and the fourth series of the Company's Medium-Term Notes. Under the
Indenture, the Company may issue from time to time its notes, debentures or
other evidences of indebtedness, in one or more series (hereinafter referred
to as the "Securities"). The Indenture does not limit the amount of Securities
which may be issued thereunder and additional Securities may be issued
thereunder up to the aggregate principal amount which may be authorized from
time to time by the Company. Capitalized terms used but not otherwise defined
herein have the meanings specified in the Indenture.
The holders of the Company's Preferred Stock have specifically consented to
the issuance of unsecured medium-term notes in an aggregate principal amount
of $500,000,000 outstanding at any one time. Medium-term notes in such an
amount are therefore not subject to the Company's charter restriction on the
issuance of unsecured securities, which (except in the case of certain
refundings) limits such unsecured securities to an amount equal to 20 percent
of the aggregate of all outstanding secured indebtedness, plus capital and
surplus (with certain adjustments). The Notes offered hereby and the Medium-
Term Notes, Series A, the Medium-Term Notes, Series B and the Medium-Term
Notes, Series C previously issued under the Indenture constitute unsecured
medium-term notes for the purpose of the foregoing consent. As of the date of
this Prospectus, $53 million in aggregate principal amount of unsecured
medium-term notes is outstanding.
In the event that the aggregate principal amount of unsecured medium-term
notes at any time outstanding (including, without limitation, the Notes, the
Medium-Term Notes, Series A, the Medium-Term Notes, Series B and the Medium-
Term Notes, Series C) exceeds $500,000,000, the excess of such amount would be
subject to the charter restriction described above. The Company has applied
for approval of the MPUC for the issuance of up to $500,000,000 in aggregate
principal amount of medium-term notes of any series at any one time
outstanding. Issuance of medium-term notes in excess of that amount would
require further approvals.
The Notes may be offered on a continuing basis and each Note will mature
from nine months to thirty years from its date of issue, as selected by the
initial purchaser and agreed to by the Company, and may be subject to
redemption at the option of the Company or repayment at the option of the
Holder prior to Specified Maturity (as set forth below under "Optional
Redemption" and "Repayment at Holder's Option") at the price or prices
specified in the applicable Pricing Supplement. Each Note will be either (i) a
Fixed Rate Note, which may bear interest at a rate of zero in the case of
certain Notes issued at an Issue Price (as defined below) representing a
discount from the principal amount payable at its Specified Maturity (a "Zero-
Coupon Note"), or (ii) a Floating Rate Note which will bear interest at a rate
determined by reference to an interest rate basis or combination of interest
rate bases (the "Base Rate") specified in the applicable Pricing Supplement
that may be adjusted by a Spread and/or Spread Multiplier (each as defined
below).
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Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note in fully registered form without coupons. Except as set
forth below under "Book-Entry System", Book-Entry Notes will not be
exchangeable for Certificated Notes.
The authorized denominations of the Notes will be $25,000 or any larger
amount that is an integral multiple of $1,000.
"Business Day" means any day, other than a Saturday or Sunday, that meets
each of the following applicable requirements: the day is (a) not a day on
which banking institutions are authorized or required by law or regulation to
be closed in The City of New York and (b) with respect to LIBOR Notes, a
London Banking Day. "London Banking Day" means any day on which dealings in
deposits in U.S. dollars are transacted in the London interbank market.
"Index Maturity" means, with respect to a Floating Rate Note, the period to
maturity of the instrument or obligation on which the interest rate formula is
based, as specified in the applicable Pricing Supplement.
"Original Issue Discount Note" means, (i) a Note, including any Zero Coupon
Note, that has a "stated redemption price at maturity" that exceeds its "issue
price"(as such terms are defined for Federal income tax purposes) by at least
0.25% of its principal amount multiplied by the number of full years from the
Original Issue Date to the Specified Maturity for such Note and (ii) any other
Note designated by the Company as issued with original issue discount for
United States Federal income tax purposes.
The Pricing Supplement relating to each Note will describe the following
terms: (1) whether such Note is a Fixed Rate Note or a Floating Rate Note, (2)
the price (expressed as a percentage of the aggregate principal amount
thereof) at which such Note will be issued (the "Issue Price"); (3) the date
on which such Note will be issued (the "Original Issue Date"); (4) the date on
which such Note will mature (the "Specified Maturity"); (5) if such Note is a
Fixed Rate Note, the rate per annum at which such Note will bear interest, if
any, and the date or dates on which interest will be payable (each, an
"Interest Payment Date"), if other than March 1 and September 1 and, if so
stated in the applicable Pricing Supplement, that such rate may be changed by
the Company prior to the Specified Maturity, and, if so, the Optional Reset
Dates (as defined below) and the basis or formula for such change, if any; (6)
if such Note is a Floating Rate Note, the Base Rate, the Initial Interest
Rate, if available, the Interest Reset Period, the Interest Reset Dates, the
Interest Determination Dates, the Calculation Dates, the Interest Payment
Period, the Interest Payment Dates, the Index Maturity, the Maximum Interest
Rate and the Minimum Interest Rate, if any, and the Spread and/or Spread
Multiplier, if any (all as defined below), and any other terms relating to the
particular method of calculating the interest rate for such Note and, if so
specified in the applicable Pricing Supplement, that any such Spread and/or
Spread Multiplier may be changed by the Company prior to the Specified
Maturity and, if so, the Optional Reset Dates (as defined below) and the basis
or formula for such change, if any; (7) whether such Note is an Original Issue
Discount Note, and if so, the yield to maturity; (8) the regular record date
or dates (a "Regular Record Date") if other than as set forth below with
respect to Fixed Rate Notes and Floating Rate Notes; (9) certain specified
United States Federal income tax consequences of the purchase, ownership and
disposition of such Note, if applicable; (10) whether such Note may be
redeemed at the option of the Company or repaid at the option of the Holder
prior to the Specified Maturity and, if so, the provisions relating to such
redemption or repayment; (11) whether such Note will be issued initially as a
Book-Entry Note or a Certificated Note; and (12) any other terms of such Note
not inconsistent with the provisions of the Indenture.
PAYMENT OF PRINCIPAL AND INTEREST
Until the Notes are paid, or payment thereof is provided for, the Company
will, at all times, maintain a paying agent (the "Paying Agent") in The City
of New York capable of performing the duties described herein to be performed
by the Paying Agent. The Company has initially appointed The Bank of New York
as Paying Agent.
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Payments of principal and interest (and premium, if any) to Beneficial
Owners (as defined below) of Book-Entry Notes are expected to be made in
accordance with the Depository's and its participants' procedures in effect
from time to time as described below under "Book-Entry System".
Unless otherwise specified in the applicable Pricing Supplement, payments of
interest on Certificated Notes (other than interest payable at Maturity (as
defined below)), will be made by mailing a check to the Holder at the address
of such Holder appearing on the Register on the applicable Regular Record
Date. Unless otherwise specified in the applicable Pricing Supplement,
principal and any premium and interest payable with respect to any
Certificated Note at Maturity (as defined below) will be paid in immediately
available funds upon surrender of such Note at the office of the Paying Agent.
"Maturity" means the date on which the principal of a Note becomes due and
payable in full in accordance with its terms and the terms of the Indenture,
whether at Specified Maturity or earlier by declaration of acceleration, call
for redemption or otherwise.
Any payment required to be made in respect of a Note on a day that is not a
Business Day for such Note need not be made on such date, but may be made on
the immediately succeeding Business Day (except that in the case of a LIBOR
Note, if such Business Day is in the immediately succeeding calendar month,
such payment shall be made on the immediately preceding Business Day) with the
same force and effect as if made on such date, and no additional interest
shall accrue as a result of such delayed payment.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Original Issue Discount Note is declared to be due and
payable immediately as described under "Events of Default" below, the amount
of principal due and payable with respect to such Note shall be limited to the
Amortized Face Amount of such Note as of the date of such declaration. The
"Amortized Face Amount" of an Original Issue Discount Note that does not bear
stated interest shall be an amount equal to the sum of (i) the principal
amount of such Note multiplied by the Issue Price set forth in the applicable
Pricing Supplement plus (ii) the portion of the difference between the dollar
amount determined pursuant to the preceding clause (i) and the principal
amount of such Note that has accrued at the yield to maturity set forth in the
Pricing Supplement (computed in accordance with generally accepted financial
practices) to such date of declaration, but in no event shall the Amortized
Face Amount of an Original Issue Discount Note exceed its principal amount.
INTEREST AND INTEREST RATES
Each Note other than certain Original Issue Discount Notes will bear
interest from its Original Issue Date or from the most recent Interest Payment
Date to which interest on such Note has been paid or duly provided for at a
fixed rate or rates per annum, or at a rate or rates per annum determined
pursuant to a Base Rate or Rates stated therein and in the applicable Pricing
Supplement that may be adjusted by a Spread and/or Spread Multiplier, until
the principal thereof is paid or made available for payment. Interest will be
payable on each Interest Payment Date and at Maturity. Interest rates, Base
Rates, Spreads and Spread Multipliers are subject to change by the Company
from time to time but no such change will affect any Note theretofore issued
or which the Company has agreed to sell, except as otherwise set forth herein.
Interest payable and punctually paid or duly provided for on any Interest
Payment Date will be paid to the person in whose name a Note is registered at
the close of business on the Regular Record Date immediately preceding such
Interest Payment Date; provided, however, that the first payment of interest
on any Note with an Original Issue Date between a Regular Record Date and the
succeeding Interest Payment Date will be made on the Interest Payment Date
following the immediately succeeding Regular Record Date to the registered
owner on such immediately succeeding Regular Record Date; and provided,
further, that interest payable at Maturity will be payable to the person to
whom principal shall be payable. The "Regular Record Date" with respect to any
Interest Payment Date shall be the date fifteen calendar days immediately
preceding such Interest Payment Date whether or not such date shall be a
Business Day, unless otherwise indicated in the applicable Pricing Supplement.
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All percentages resulting from any calculations will be rounded upwards, if
necessary, to the nearest one hundred-thousandth of a percentage point
(.0000001), with five one-millionths of a percentage point being rounded
upwards (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or
.0987655)), and all dollar amounts used in or resulting from such calculations
on the Notes will be rounded to the nearest one cent (with one-half cent being
rounded upwards).
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issue Date at the
rate per annum stated in the applicable Pricing Supplement and on the face
thereof until the principal amount thereof is paid or made available for
payment. Payments of interest on any Fixed Rate Note with respect to any
Interest Payment Date and at Maturity will include interest from and including
the Original Issue Date or the immediately preceding Interest Payment Date to
which interest has been paid or duly provided for, to but excluding the
applicable Interest Payment Date or the date of Maturity. Unless otherwise set
forth in an applicable Pricing Supplement, interest on each Fixed Rate Note
will be payable semi-annually each September 1 and March 1 and at Maturity.
Interest on Fixed Rate Notes will be computed on the basis of a 360-day year
of twelve 30-day months, unless otherwise indicated in the applicable Pricing
Supplement.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest at a rate or rates determined by
reference to the Base Rate plus or minus the Spread, if any, and/or multiplied
by the Spread Multiplier, if any (each as specified in the applicable Pricing
Supplement) until the principal thereof is paid or made available for payment.
The "Spread" is the number of basis points (one basis point equals one one-
hundredth of a percentage point) specified in the applicable Pricing
Supplement as being applicable to such Floating Rate Note, and the "Spread
Multiplier" is the percentage specified in the applicable Pricing Supplement
as being applicable to such Note. Any Floating Rate Note may also have either
or both of the following: (i) a maximum numerical interest rate limitation, or
ceiling, on the rate of interest which may accrue during any interest period
(the "Maximum Interest Rate"); and (ii) a minimum numerical interest rate
limitation, or floor, on the rate of interest which may accrue during any
interest period (the "Minimum Interest Rate"). The applicable Pricing
Supplement will designate one of the following Base Rates as applicable to
each Floating Rate Note: (a) the CD Rate (a "CD Rate Note"), (b) the
Commercial Paper Rate (a "Commercial Paper Rate Note"), (c) the Federal Funds
Rate (a "Federal Funds Rate Note"), (d) LIBOR (a "LIBOR Note"), (e) the Prime
Rate (a "Prime Rate Note"), (f) the Treasury Rate (a "Treasury Rate Note"), or
(g) such other Base Rate as is set forth in the Pricing Supplement and on the
face of such Floating Rate Note.
Each Floating Rate Note will bear interest from its Original Issue Date to
the first Interest Reset Date (as defined below) for such Note at the Initial
Interest Rate (the "Initial Interest Rate") set forth on the face thereof and
in the applicable Pricing Supplement. Thereafter, the interest rate on each
Floating Rate Note for each Interest Reset Period (as defined below) will be
equal to the interest rate calculated by reference to the Base Rate or Rates
specified on the face thereof and in the applicable Pricing Supplement plus or
minus the Spread, if any, and/or times the Spread Multiplier, if any. The
Spread and/or Spread Multiplier for a Floating Rate Note may be subject to
adjustment during an Interest Reset Period under circumstances specified
therein and in the applicable Pricing Supplement.
The Company will appoint, and enter into an agreement with, an agent (a
"Calculation Agent") to calculate interest rates on Floating Rate Notes.
Unless otherwise specified in the applicable Pricing Supplement, the
Calculation Agent for each Floating Rate Note will be the Trustee. All
determinations to be made by the Calculation Agent shall be at its sole
discretion and shall, in the absence of manifest error, be conclusive for all
purposes and binding on the Holders of Notes.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semi-annually or annually (each an "Interest Reset
Period"), as specified in the applicable Pricing Supplement and on
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the face of such Floating Rate Note. Unless otherwise specified in the
applicable Pricing Supplement, the date or dates on which interest will be
reset (each an "Interest Reset Date") will be, in the case of Floating Rate
Notes that reset daily, each Business Day; in the case of Floating Rate Notes
that reset weekly (other than Treasury Rate Notes), Wednesday of each week; in
the case of Treasury Rate Notes that reset weekly, Tuesday of each week,
except as provided below; in the case of Floating Rate Notes that reset
monthly, the third Wednesday of each month; in the case of Floating Rate Notes
that reset quarterly, the third Wednesday of each of the four months specified
in the applicable Pricing Supplement and on the face of such Floating Rate
Note; in the case of Floating Rate Notes that reset semi-annually, the third
Wednesday of each of the two months specified in the applicable Pricing
Supplement and on the face of such Floating Rate Note; and in the case of
Floating Rate Notes that reset annually, the third Wednesday of the month
specified in the applicable Pricing Supplement and on the face of such
Floating Rate Note. If any Interest Reset Date for any Floating Rate Note is
not a Business Day, such Interest Reset Date shall be postponed to the next
day that is a Business Day, except, in the case of a LIBOR Note, if such
Business Day is in the immediately succeeding calendar month, such Interest
Reset Date shall be the immediately preceding Business Day.
The interest rate for each Interest Reset Period will be the rate determined
by the Calculation Agent on the Calculation Date (as defined below) pertaining
to the Interest Determination Date pertaining to the Interest Reset Date for
such Interest Reset Period. Unless otherwise specified in the applicable
Pricing Supplement, the "Interest Determination Date" pertaining to an
Interest Reset Date for CD Rate Notes, Commercial Paper Rate Notes, Federal
Funds Rate Notes and Prime Rate Notes will be the second Business Day
immediately preceding such Interest Reset Date. Unless otherwise specified in
the applicable Pricing Supplement, the Interest Determination Date pertaining
to an Interest Reset Date for a LIBOR Note will be the second London Banking
Day immediately preceding such Interest Reset Date. Unless otherwise specified
in the applicable Pricing Supplement, the Interest Determination Date
pertaining to an Interest Reset Date for a Treasury Rate Note will be the day
of the week in which such Interest Reset Date falls on which Treasury bills of
the Index Maturity specified on the face of the Treasury Rate Notes would
normally be auctioned. Treasury bills are normally sold at auction on Monday
of each week, unless that day is a legal holiday, in which case the auction is
usually held on the following Tuesday, except that such auction may be held on
the preceding Friday. If, as the result of a legal holiday, an auction is so
held on the preceding Friday, such Friday will be the Interest Determination
Date pertaining to the Interest Reset Date for Treasury Rate Notes occurring
in the immediately succeeding week. If an auction falls on a day that is an
Interest Reset Date for Treasury Rate Notes, such Interest Reset Date will be
the first Business Day immediately following such auction date.
Unless otherwise specified in the applicable Pricing Supplement, the
"Calculation Date", where applicable, pertaining to an Interest Determination
Date will be the earlier of (i) the tenth calendar day after such Interest
Determination Date or if such day is not a Business Day, the immediately
succeeding Business Day or (ii) the Business Day preceding the applicable
Interest Payment Date or Maturity, as the case may be.
Unless otherwise indicated in the applicable Pricing Supplement, interest on
each Floating Rate Note will be payable monthly, quarterly, semi-annually or
annually (the "Interest Payment Period"). Except as provided below or in the
applicable Pricing Supplement, the Interest Payment Dates will be, (i) in the
case of Floating Rate Notes with a daily, weekly or monthly Interest Reset
Period, on the third Wednesday of each month or on the third Wednesday of
March, June, September and December of each year, as specified in the
applicable Pricing Supplement and on the face of such Floating Rate Note; (ii)
in the case of Floating Rate Notes with a quarterly Interest Reset Period, on
the third Wednesday of March, June, September and December of each year; (iii)
in the case of Floating Rate Notes with a semi-annual Interest Reset Period,
on the third Wednesday of each of two months of each year specified in the
applicable Pricing Supplement and on the face of such Floating Rate Note; and
(iv) in the case of Floating Rate Notes with an annual Interest Reset Period,
on the third Wednesday of one month of each year specified in the applicable
Pricing Supplement and on the face of such Floating Rate Note and, in each
case, at Maturity. If any Interest Payment Date other than Maturity for any
Floating Rate Note would otherwise be a day that is not a Business Day, such
Interest Payment Date shall be postponed to the next day that is a Business
Day, except that in the case of a LIBOR Note, if such Business Day is in the
immediately
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succeeding calendar month, such Interest Payment Date shall be the immediately
preceding Business Day. If Maturity for any Floating Rate Note falls on a day
that is not a Business Day, payment of principal, premium, if any, and
interest with respect to such Note will be made on the immediately succeeding
Business Day with the same force and effect as if made on the due date, and no
additional interest shall be payable as a result of such delayed payment.
Unless otherwise indicated in the applicable Pricing Supplement, interest
payments on each Interest Payment Date and at Maturity for Floating Rate Notes
will include accrued interest from and including the Original Issue Date or
the immediately preceding Interest Payment Date to which interest has been
paid or duly provided for, to but excluding the applicable Interest Payment
Date or the date of Maturity. Accrued interest will be calculated by
multiplying the principal amount of a Floating Rate Note by an accrued
interest factor. This accrued interest factor will be computed by adding the
interest factor calculated for each day in the period for which accrued
interest is being calculated. The interest factor (expressed as a decimal
rounded upwards, if necessary, to the next higher one hundred-thousandth of a
percentage point) for each such day will be computed by dividing the interest
rate applicable to such day by 360 in the case of CD Rate Notes, Commercial
Paper Rate Notes, Federal Funds Rate Notes, LIBOR Notes and Prime Rate Notes,
or by the actual number of days in the year, in the case of Treasury Rate
Notes. The interest rate in effect on each day will be (a) if such day is an
Interest Reset Date, the interest rate with respect to the Interest
Determination Date pertaining to such Interest Reset Date, or (b) if such day
is not an Interest Reset Date, the interest rate with respect to the Interest
Determination Date pertaining to the immediately preceding Interest Reset
Date, subject in either case to any Maximum or Minimum Interest Rate
limitation referred to above and to any adjustment by a Spread and/or a Spread
Multiplier referred to above; provided, however, that the interest rate in
effect for the period from and including the Original Issue Date to but
excluding the first Interest Reset Date set forth in the Pricing Supplement
with respect to a Floating Rate Note will be the "Initial Interest Rate"
specified in the applicable Pricing Supplement. The interest rate on the
Floating Rate Notes will in no event be higher than the maximum rate permitted
by applicable law.
CD RATE NOTES
Each CD Rate Note will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any)
specified in such CD Rate Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any applicable Interest Determination Date, the rate on
such date for negotiable certificates of deposit having the Index Maturity
designated in the applicable Pricing Supplement, as such rate is published by
the Board of Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates", or any successor publication of the Board
of Governors of the Federal Reserve System ("H.15(519)") under the heading
"CDs (Secondary Market)" or, if such rate is not published by 3:00 P.M., New
York City time, on the Calculation Date pertaining to such Interest
Determination Date, the CD Rate for such Interest Determination Date will be
the rate on such Interest Determination Date for negotiable certificates of
deposit having the Index Maturity designated in the applicable Pricing
Supplement as published by the Federal Reserve Bank of New York in its daily
statistical release "Composite 3:30 P.M. Quotations for U.S. Government
Securities" or any successor publication of the Federal Reserve Bank of New
York ("Composite Quotations") under the heading "Certificates of Deposit". If
such rate is not published in either H.15(519) or Composite Quotations by 3:00
P.M., New York City time, on the Calculation Date pertaining to such Interest
Determination Date, then the CD Rate for such Interest Determination Date will
be calculated by the Calculation Agent and will be the arithmetic mean of the
secondary market offered rates as of 10:00 A.M., New York City time, on such
Interest Determination Date of three leading nonbank dealers in negotiable
U.S. dollar certificates of deposit in The City of New York selected by the
Calculation Agent for negotiable certificates of deposit of major United
States money center banks of the highest credit standing (in the market for
negotiable certificates of deposit) with a remaining maturity closest to the
Index Maturity designated in the applicable Pricing Supplement in a
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denomination of $5,000,000; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the CD Rate with respect to such Interest Determination Date will be
the CD Rate in effect immediately prior to such Interest Determination Date.
COMMERCIAL PAPER RATE NOTES
Each Commercial Paper Rate Note will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread and/or
Spread Multiplier, if any) specified in such Commercial Paper Rate Note and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any applicable Interest Determination Date,
the Money Market Yield (calculated as described below) of the rate on such
date for commercial paper having the Index Maturity designated in the
applicable Pricing Supplement, as such rate is published in H.15(519), under
the heading "Commercial Paper" or, if such rate is not published by 3:00 P.M.,
New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Commercial Paper Rate for such Interest Determination
Date will be the Money Market Yield of the rate on such Interest Determination
Date for commercial paper having the Index Maturity designated in the
applicable Pricing Supplement as published in Composite Quotations under the
heading "Commercial Paper". If such rate is not published in either H.15(519)
or Composite Quotations by 3:00 P.M., New York City time, on the Calculation
Date pertaining to such Interest Determination Date, then the Commercial Paper
Rate for such Interest Determination Date shall be calculated by the
Calculation Agent and shall be the Money Market Yield of the arithmetic mean
of the offered rates as of 11:00 A.M., New York City time, on such Interest
Determination Date of three leading dealers of commercial paper in The City of
New York selected by the Calculation Agent for commercial paper having the
Index Maturity designated in the applicable Pricing Supplement, placed for an
industrial issuer whose bond rating is "AA", or the equivalent, from a
nationally recognized rating agency; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the Commercial Paper Rate with respect to such Interest
Determination Date will be the Commercial Paper Rate in effect immediately
prior to such Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage rounded to the
nearest one hundred-thousandth of a percentage point) calculated in accordance
with the following formula:
D X 360
Money Market Yield = ----------- X 100
360-(D X M)
where "D" refers to the per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal, and "M" refers to the actual number
of days in the interest period for which interest is being calculated.
FEDERAL FUNDS RATE NOTES
Each Federal Funds Rate Note will bear interest at the interest rate
(calculated with reference to the Federal Funds Rate and the Spread and/or
Spread Multiplier, if any) specified in such Federal Funds Rate Note and in
the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any applicable Interest Determination Date,
the rate on such date for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)" or, if such rate is not published by 3:00
P.M., New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the Federal Funds Rate for such Interest Determination
Date will be the rate on such Interest Determination Date as published in
Composite Quotations under the heading "Federal Funds/Effective Rate". If such
rate is not published in either H.15(519) or Composite Quotations by 3:00
P.M., New York City time, on the Calculation Date pertaining to such Interest
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Determination Date, then the Federal Funds Rate for such Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the rates, as of 9:00 A.M., New York City time, on such
Interest Determination Date, for the last transaction in overnight Federal
Funds arranged by three leading brokers of Federal Funds transactions in The
City of New York selected by the Calculation Agent; provided, however, that if
the brokers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Federal Funds Rate with respect to such
Interest Determination Date will be the Federal Funds Rate in effect
immediately prior to such Interest Determination Date.
LIBOR NOTES
Each LIBOR Note will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread and/or Spread Multiplier, if any) specified
in such LIBOR Note and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR"
means, with respect to any applicable Interest Determination Date, the rate
determined in accordance with the following provisions:
(i) With respect to any such Interest Determination Date, LIBOR will be
either: (a) if "LIBOR Reuters" is specified in the LIBOR Note and the
applicable Pricing Supplement, the arithmetic mean of the offered rates
(unless the specified designated LIBOR Page (as defined below) by its terms
provides only for a single rate, in which case such single rate shall be
used) for deposits in United States dollars having the Index Maturity
designated in such LIBOR Note and the applicable Pricing Supplement,
commencing on the second London Banking Day immediately following the
Interest Determination Date, which appear on the Designated LIBOR Page
specified in such LIBOR Note and the applicable Pricing Supplement as of
11:00 A.M., London time, on that Interest Determination Date, if at least
two such offered rates appear (unless, as aforesaid, only a single rate is
required) on such Designated LIBOR Page, or (b) if "LIBOR Telerate" is
specified in such LIBOR Note and the applicable Pricing Supplement, the
rate for deposits in United States dollars having the Index Maturity
specified in such LIBOR Note and the applicable Pricing Supplement,
commencing on the second London Banking Day immediately following such
Interest Determination Date, which appears on the Designated LIBOR Page
designated in such LIBOR Note and the applicable Pricing Supplement as of
11:00 A.M. London time on that Interest Determination Date. Notwithstanding
the foregoing, if fewer than two offered rates appear on the Designated
LIBOR Page with respect to LIBOR Reuters (unless the specified Designated
LIBOR Page with respect to LIBOR Reuters by its terms provides only for a
single rate, in which case such single rate shall be used), or if no rate
appears on the Designated LIBOR Page with respect to LIBOR Telerate,
whichever may be applicable, LIBOR in respect of the related Interest
Determination Date will be determined as if the parties had specified the
rate described in clause (ii) below.
(ii) With respect to any such Interest Determination Date on which fewer
than two offered rates appear on the Designated LIBOR Page with respect to
LIBOR Reuters (unless the Designated LIBOR Page by its terms provides only
for a single rate, in which case such single rate shall be used), or if no
rate appears on the Designated LIBOR Page with respect to LIBOR Telerate,
as the case may be, the Calculation Agent will request the principal London
office of each of four major banks in the London interbank market selected
by the Calculation Agent to provide the Calculation Agent with its offered
rate quotation for deposits in United States dollars for the period of the
Index Maturity designated in such LIBOR Note and the applicable Pricing
Supplement, commencing on the second London Banking Day immediately
following such Interest Determination Date, to prime banks in the London
interbank market as of 11:00 A.M., London time, on such Interest
Determination Date and in a principal amount that is representative for a
single transaction in United States dollars in such market at such time. If
at least two such quotations are provided, LIBOR determined on such
Interest Determination Date will be the arithmetic mean of such quotations.
If fewer than two quotations are provided, LIBOR determined on such
Interest Determination Date will be the arithmetic mean of the rates quoted
as of 11:00 A.M. in The City of New York, on such Interest Determination
Date by three major banks in The City of New York selected by the
Calculation Agent for loans in United States dollars to leading banks,
having the Index Maturity designated in such LIBOR Note
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and the applicable Pricing Supplement in a principal amount that is
representative for a single transaction in United States dollars in such
market at such time; provided, however, that if the banks so selected by
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR
determined on such Interest Determination Date will be LIBOR in effect on
such Interest Determination Date.
"Designated LIBOR Page" means either (a) the display on the Reuters Monitor
Money Rates Service for the purpose of displaying the London interbank rates
of major banks for United States dollars (if "LIBOR Reuters" is designated in
the LIBOR Note and the applicable Pricing Supplement), or (b) the display on
the Dow Jones Telerate Service for the purpose of displaying the London
interbank rates of major banks for United States dollars (if "LIBOR Telerate"
is designated in the Note and the applicable Pricing Supplement). If neither
LIBOR Reuters nor LIBOR Telerate is specified in the LIBOR Note and the
applicable Pricing Supplement, LIBOR will be determined as if LIBOR Telerate
(page 3750) had been chosen.
PRIME RATE NOTES
Each Prime Rate Note will bear interest at the interest rate (calculated
with reference to the Prime Rate and the Spread and/or Spread Multiplier, if
any) specified in such Prime Rate Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any applicable Interest Determination Date, the
rate set forth in H.15(519) for such date under the heading "Bank Prime Loan"
or, if such rate is not published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the Prime
Rate for such Interest Determination Date shall be calculated by the
Calculation Agent and shall be the arithmetic mean of the rates of interest
publicly announced by each bank named on the Reuters Screen USPRIME 1 Page as
such bank's prime rate or base lending rate as in effect for such Interest
Determination Date as quoted on the Reuters Screen USPRIME 1 Page on such
Interest Determination Date, or, if fewer than four such rates appear on the
Reuters Screen USPRIME 1 Page for such Interest Determination Date, the rate
shall be the arithmetic mean of the prime rates quoted on the basis of the
actual number of days in the year divided by 360 as of the close of business
on such Interest Determination Date by at least two of the three major money
center banks in The City of New York selected by the Calculation Agent. If
fewer than two quotations are provided as aforesaid, the Prime Rate for such
Interest Determination Date shall be calculated by the Calculation Agent and
shall be the arithmetic mean of the prime rates quoted in The City of New York
on such date by the appropriate number of substitute banks or trust companies
organized and doing business under the laws of the United States, or any State
thereof, in each case having total equity capital of at least U.S. $500
million and being subject to supervision or examination by a Federal or state
authority, selected by the Calculation Agent to quote such rate or rates;
provided, however, that if the Prime Rate is not published in H.15(519) and
the banks or trust companies selected as aforesaid are not quoting as
mentioned in this sentence, the Prime Rate with respect to such Interest
Determination Date will be the Prime Rate in effect immediately prior to such
Interest Determination Date. "Reuters Screen USPRIME 1 Page" means the display
designated as page "USPRIME 1" on the Reuters Monitor Money Rate Service (or
such other page as may replace page USPRIME 1 on that service for the purpose
of displaying prime rates or base lending rates of major United States banks).
TREASURY RATE NOTES
Each Treasury Rate Note will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread and/or Spread Multiplier,
if any) specified in such Treasury Rate Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any applicable Interest Determination Date, the
rate applicable to the most recent auction of direct obligations of the United
States ("Treasury bills") having the Index Maturity specified in the
applicable Pricing Supplement and such Treasury Rate Note, as such rate is set
forth in H.15(519) under the heading "Treasury Bills--auction
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average (Investment)" or, if not so made available by 3:00 P.M., New York City
time, on the Calculation Date pertaining to such Interest Determination Date,
the Treasury Rate for such Interest Determination Date will be the auction
average rate (expressed as a bond equivalent, on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) as otherwise announced
by the United States Department of the Treasury. In the event that the results
of the auction of Treasury bills having the specified Index Maturity are not
reported as provided above by 3:00 P.M., New York City time, on such
Calculation Date or if no such auction is held in a particular week, then the
Treasury Rate shall be calculated by the Calculation Agent and shall be the
yield to maturity (expressed as a bond equivalent, on the basis of a year of
365 or 366 days, as applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
P.M., New York City time, on such Interest Determination Date, of three
leading primary United States government securities dealers selected by the
Calculation Agent for the issue of Treasury bills with a remaining maturity
closest to the applicable Index Maturity; provided, however, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned above, the Treasury Rate with respect to such Interest Determination
Date shall be the Treasury Rate in effect immediately prior to such date.
ORIGINAL ISSUE DISCOUNT NOTES
The Company may from time to time offer Original Issue Discount Notes. The
applicable Pricing Supplement to certain Original Issue Discount Notes may
provide that the Holders of such Notes will not receive periodic payments of
interest. For the purpose of determining whether Holders of the requisite
principal amount of Notes outstanding under the Indenture have made a demand
or given a notice or waiver or taken any other action, the outstanding
principal amount of Original Issue Discount Notes shall be deemed to be the
amount of the principal that would be due and payable upon declaration of
acceleration of the Specified Maturity thereof as of the date of such
determination.
Notwithstanding anything in this Prospectus to the contrary, unless
otherwise specified in the applicable Pricing Supplement, if a Note is an
Original Issue Discount Note, the amount payable on such Note in the event of
Maturity prior to the Specified Maturity shall be the Amortized Face Amount of
such Note as of such Maturity.
INTEREST RATE RESET
If the Company has the option with respect to any Note to reset the interest
rate, in the case of a Fixed Rate Note, or to reset the Spread and/or Spread
Multiplier, in the case of a Floating Rate Note (in each case, a "Reset
Note"), the Pricing Supplement relating to such Note will indicate such
option, and, if so, (i) the date or dates on which such interest rate or such
Spread and/or Spread Multiplier, as the case may be, may be reset (each an
"Optional Reset Date") and (ii) the basis or formula, if any, for such
resetting.
The Company may exercise such option with respect to a Note by notifying the
Paying Agent of such exercise at least 45 but not more than 60 days prior to
an Optional Reset Date for such Note. Not later than 40 days prior to such
Optional Reset Date, the Paying Agent will send to the Holder of such Note a
Notice (the "Reset Notice"), by facsimile transmission, hand delivery or
letter (first class, postage prepaid), setting forth (i) the election of the
Company to reset the interest rate, in the case of a Fixed Rate Note, or the
Spread and/or Spread Multiplier, in the case of a Floating Rate Note, (ii)
such new interest rate or such new Spread and/or Spread Multiplier, as the
case may be, and (iii) the provisions, if any, for redemption during the
period from such Optional Reset Date to the next Optional Reset Date or, if
there is no such next Optional Reset Date, to the Specified Maturity of such
Note (each period a "Subsequent Interest Period"), including the date or dates
on which or the period or periods during which and the price or prices at
which such redemption may occur during such Subsequent Interest Period.
Notwithstanding the foregoing, not later than 20 days prior to an Optional
Reset Date for a Note, the Company may, at its option, revoke the interest
rate, in the case of a Fixed Rate Note, or the Spread and/or Spread
Multiplier, in the case of a Floating Rate Note, in either case provided for
in the Reset Notice and
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establish a higher interest rate, in the case of a Fixed Rate Note, or a new
Spread and/or Spread Multiplier which results in a higher interest rate, in
the case of a Floating Rate Note, for the Subsequent Interest Period
commencing on such Optional Reset Date by causing the Paying Agent to send by
facsimile transmission, hand delivery or letter (first class, postage prepaid)
notice of such higher interest rate or new Spread and/or Spread Multiplier, as
the case may be, to the Holder of such Note. Such notice shall be irrevocable.
All Notes with respect to which the interest rate or Spread and/or Spread
Multiplier is reset on an Optional Reset Date will bear such higher interest
rate, in the case of a Fixed Rate Note, or new Spread and/or Spread
Multiplier, in the case of a Floating Rate Note.
If the Company elects to reset the interest rate or the Spread and/or Spread
Multiplier of a Note on an Optional Reset Date, the Holder of such Note will
have the option to elect repayment of such Note by the Company on such
Optional Reset Date at a price equal to the principal amount thereof plus any
accrued interest to such Optional Reset Date. In order for a Note to be so
repaid on an Optional Reset Date on which the interest rate or the Spread
and/or Spread Multiplier is reset, the Holder thereof must follow the
procedures set forth below under "Repayment at Holder's Option" for optional
repayment, except that the period for delivery of such Note or notification to
the Paying Agent shall be at least 25 but not more than 35 days prior to such
Optional Reset Date and except that a Holder who has tendered a Note for
repayment pursuant to a Reset Notice may, by written notice to the Paying
Agent, revoke any such tender for repayment until 5:00 p.m. New York City time
on the tenth day, whether or not a Business Day, prior to such Optional Reset
Date.
EXTENDIBLE NOTES
The Pricing Supplement relating to each Note as to which the Company has the
option to extend the Specified Maturity of such Note for one or more periods
of from one to five whole years (each an "Extension Period") up to but not
beyond the date of final maturity, which shall in no event be more than thirty
years from the Original Issue Date of such Note (the "Final Maturity Date"),
will set forth each applicable Extension Period and the Final Maturity Date.
The Company may exercise such option with respect to a Note by notifying the
Paying Agent of such exercise at least 45 but not more than 60 calendar days
prior to the Specified Maturity of such Note in effect prior to the exercise
of such option (the "Original Specified Maturity Date"). If the Company so
notifies the Paying Agent of such exercise, the Paying Agent will send, not
later than 40 calendar days prior to the Original Specified Maturity Date, by
facsimile transmission, hand delivery or letter (first class, postage
prepaid), to the Holder of such Note a notice (the "Extension Notice")
relating to such Extension Period, indicating (i) that the Company has elected
to extend the Specified Maturity of such Note, (ii) the new Specified
Maturity, (iii) in the case of a Fixed Rate Note, the interest rate applicable
to the Extension Period or, in the case of a Floating Rate Note, the Spread
and/or Spread Multiplier applicable to the Extension Period, and (iv) the
provisions, if any, for redemption during the Extension Period, including the
date or dates on which or the period or periods during which and the price or
prices at which such redemption may occur during the Extension Period. Upon
the sending by the Paying Agent of an Extension Notice to the Holder of a
Note, the Specified Maturity of such Note shall be extended automatically,
and, except as modified by the Extension Notice and as described in the next
two paragraphs, such Note will have the same terms as prior to the sending of
such Extension Notice.
Notwithstanding the foregoing, not later than 20 calendar days prior to the
Original Specified Maturity Date of a Note, the Company may, at its option,
revoke the interest rate, in the case of a Fixed Rate Note, or the Spread
and/or Spread Multiplier, in the case of a Floating Rate Note, provided for in
the Extension Notice and establish a higher interest rate, in the case of a
Fixed Rate Note, or a new Spread and/or Spread Multiplier which results in a
higher interest rate, in the case of a Floating Rate Note, for the Extension
Period by causing the Paying Agent to send by facsimile transmission, hand
delivery or letter (first class, postage prepaid) notice of such higher
interest rate or new Spread and/or Spread Multiplier, as the case may be, to
the Holder of such Note. Such notice shall be irrevocable. All Notes with
respect to which the Specified Maturity is extended will bear such higher
interest rate, in the case of a Fixed Rate Note, or new Spread and/or Spread
Multiplier, in the case
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of a Floating Rate Note, for the Extension Period, whether or not tendered for
repayment as provided in the next paragraph.
If the Company elects to extend the Specified Maturity of a Note, the Holder
of such Note will have the option to elect repayment of such Note by the
Company on the Original Specified Maturity Date at a price equal to the
principal amount thereof plus any accrued and unpaid interest to such date. In
order for a Note to be so repaid on the Original Specified Maturity Date, the
Holder thereof must follow the procedures set forth below under "Repayment at
Holder's Option" for optional repayment, except that the period for delivery
of such Note or notification to the Paying Agent shall be at least 25 but not
more than 35 calendar days prior to the Original Specified Maturity Date. A
Holder who has tendered a Note for repayment following receipt of an Extension
Notice may revoke such tender for repayment by written notice to the Paying
Agent received prior to 5:00 P.M., New York City time, on the tenth day prior
to the Original Specified Maturity Date.
COMBINATION OF PROVISIONS
If so specified in the applicable Pricing Supplement, any Note may be
subject to all of the provisions, or any combination of the provisions,
described above under "Interest Rate Reset" and "Extendible Notes".
OPTIONAL REDEMPTION
The Pricing Supplement relating to each Note will indicate either that such
Note cannot be redeemed prior to its Specified Maturity or that such Note will
be redeemable at the option of the Company on a date or dates specified prior
to its Specified Maturity at a price or prices set forth in the applicable
Pricing Supplement, together with accrued interest to the date fixed for
redemption. The Notes will not be subject to any sinking fund, unless
specified in the applicable Pricing Supplement. The Company may redeem any of
the Notes which are redeemable and remain outstanding either in whole or from
time to time in part, upon not less than 30 nor more than 60 days' notice. If
fewer than all of the Notes with like tenor and terms are to be redeemed, the
Notes to be redeemed shall be selected by the Trustee by such method as the
Trustee shall deem fair and appropriate.
REPAYMENT AT HOLDER'S OPTION
The Pricing Supplement relating to each Note will indicate whether such Note
is repayable at the option of the Holder on a date or dates specified prior to
its Specified Maturity at a price or prices set forth in the applicable
Pricing Supplement, together with accrued interest to the date fixed for
repayment.
In order for a Note to be so repaid, the Paying Agent must receive at least
30 days but not more than 45 days prior to the repayment date (i) the Note
with the form entitled "Option to Elect Repayment" on the reverse of the Note
duly completed or (ii) a facsimile transmission or a letter from a member of a
national securities exchange or the National Association of Securities
Dealers, Inc. or a commercial bank or trust company in the United States
setting forth the name of the Holder of the Note, the principal amount of the
Note, the principal amount of the Note to be repaid, the certificate number or
a description of the tenor and terms of the Note, a statement that the option
to elect repayment is being exercised thereby and a guarantee that the Note to
be repaid with the form entitled "Option to Elect Repayment" on the reverse of
the Note duly completed will be received by the Paying Agent not later than
five Business Days after the date of such facsimile transmission or letter and
such Note and form duly completed are received by the Paying Agent by such
fifth Business Day. Exercise of the repayment option by the Holder of a Note
shall be irrevocable. The repayment option may be exercised by the Holder of a
Note for less than the entire principal amount of the Note provided that the
principal amount of the Note remaining outstanding after repayment is an
authorized denomination.
While the Book-Entry Notes are represented by the Global Securities held by
or on behalf of the Depository, and registered in the name of the Depository
or the Depository's nominee, the option for repayment may be exercised by the
applicable Participant (as defined below) that has an account with the
Depository, on behalf of the Beneficial Owners (as defined below) of the
Global Security or Securities representing such Book-Entry
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Notes, by delivering a written notice substantially similar to the above
mentioned form to the Paying Agent at least 30 days but not more than 60 days
prior to the date of repayment. Notices of elections from Participants on
behalf of Beneficial Owners of the Global Security or Securities representing
such Book-Entry Notes to exercise their option to have such Book-Entry Notes
repaid must be received by the Paying Agent by 5:00 P.M., New York City time,
on the last day for giving such notice. In order to ensure that a notice is
received by the Paying Agent on a particular day, the Beneficial Owner of the
Global Security or Securities representing such Book-Entry Notes must so
direct the applicable Participant before such Participant's deadline for
accepting instructions for that day. Different firms may have different
deadlines for accepting instructions from their customers. Accordingly,
Beneficial Owners of the Global Security or Securities representing Book-Entry
Notes should consult the Participants through which they own their interest
therein for the respective deadlines for such Participants. All notices shall
be executed by a duly authorized officer of such Participant (with signatures
guaranteed) and shall be irrevocable. In addition, Beneficial Owners of the
Global Security or Securities representing Book-Entry Notes shall effect
delivery at the time such notices of election are given to the Depository by
causing the applicable Participant to transfer such Beneficial Owner's
interest in the Global Security or Securities representing such Book-Entry
Notes, on the Depository's records, to the Trustee. See "Book-Entry System".
If applicable, the Company will comply with the requirements of Rule 14e-1
under the Securities Exchange Act of 1934, as amended, and any other
securities laws or regulations in connection with any such repayment.
REPURCHASE
The Company may at any time purchase Notes at any price in the open market
or otherwise. Notes so purchased by the Company may be held or resold or, at
the discretion of the Company, may be surrendered to the Trustee for
cancellation. If any Notes and the applicable Pricing Supplement provide for
mandatory sinking fund payments with respect to such Notes, the Indenture
provides that in lieu of making all or any part of any mandatory sinking fund
payment in cash, the Company may deliver to the Trustee any such Notes
previously purchased or otherwise acquired by the Company (to the extent not
previously credited).
OTHER PROVISIONS
Any provisions with respect to the determination of an interest rate basis,
the specifications of interest rate basis, calculation of the interest rate
applicable to, or the principal payable at Maturity on, any Note, its Interest
Payment Dates or any other matter relating thereto may be modified by the
terms as specified under "Other Provisions" on the face of such Note, or in an
addendum relating thereto if so specified on the face thereof, and in the
applicable Pricing Supplement.
EVENTS OF DEFAULT
The Indenture provides that the following are Events of Default thereunder
with respect to the Notes: (i) default in the payment of the principal of (or
premium, if any, on) any Note when and as the same shall be due and payable;
(ii) default in making a sinking fund payment, if any, when and as the same
shall be due and payable by the terms of any Note; (iii) default for 30 days
in the payment of any installment of interest on any Note; (iv) default for 60
days after written notice (given to the Company by the Trustee or by the
Holders of at least 25% in aggregate principal amount of the Outstanding
Securities of all series affected) in the performance of any other covenant in
respect of the Notes contained in the Indenture; or (v) certain events of
bankruptcy, insolvency or reorganization, or any related court appointment of
a receiver, liquidator or trustee of the Company or any substantial part of
its property. (Section 6.1) An Event of Default with respect to the Notes does
not necessarily constitute an Event of Default with respect to any other
series of Securities issued under the Indenture. The Trustee may withhold
notice to the Holders of the Notes of any default with respect to the Notes
(except a default in the payment of principal or premium, if any, or interest)
if it considers such withholding in the interest of such Holders. (Section
6.11)
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If any Event of Default with respect to the Notes shall have occurred and be
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Outstanding Notes (or, in the case of certain Events
of Default that affect all series of Securities then Outstanding, the Holders
of not less than 25% in aggregate principal amount of all the Securities then
outstanding treated as one class) may declare the principal, or in the case of
discounted Notes, such portion thereof as may be described in the Pricing
Supplement, of all the Notes to be due and payable immediately; however,
subject to certain conditions, any such declaration and its consequences may
be rescinded or annulled by the Holders of not less than a majority in
aggregate principal amount of the Outstanding Notes. (Section 6.1)
Within four months after the close of each year the Company must file with
the Trustee a certificate, signed by specified officers, stating whether or
not such officers have knowledge of any default relating to its covenants,
agreements and obligations with respect to Paying Agents or the maintenance of
its corporate existence, and, if so, specifying each such default and the
nature thereof. (Section 4.6)
Subject to provisions relating to its duties during the continuance of any
Event of Default, the Trustee shall be under no obligation to exercise any of
its rights or powers under the Indenture at the request, order or direction of
any Holders, unless such Holders shall have offered to the Trustee reasonable
indemnity. (Section 7.2) Subject to such provisions for indemnification and
subject to the right of the Trustee to decline to follow any Holders'
directions under specified circumstances, the Holders of a majority in
aggregate principal amount of the Outstanding Notes may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, with
respect to the Notes. (Section 6.9)
TRANSFER
Certificated Notes may be registered for transfer or exchanged at the
Corporate Trust Office of the Trustee or at any other office or agency
maintained by the Company for such purposes, subject to the limitations in the
Indenture, without the payment of any service charge except for any tax or
governmental charge incidental thereto. (Section 3.6)
DEFEASANCE
The Indenture provides that the Company shall be discharged from its
obligations under the Indenture with respect to the Notes at any time prior to
the Stated Maturity or redemption thereof when (a) the Company has irrevocably
deposited with the Trustee, in trust, (i) sufficient funds to pay the
principal of (and premium, if any), and interest to Stated Maturity (or
redemption) on, the Notes, or (ii) such amount of direct obligations of, or
obligations the principal of and interest on which are fully guaranteed by,
the United States Government, and which are not subject to prepayment,
redemption or call, as will, together with the predetermined and certain
income to accrue thereon without consideration of any reinvestment thereof, be
sufficient to pay when due the principal of (and premium, if any), and
interest to Stated Maturity (or redemption) on, the Notes, and (b) the Company
has paid all other sums payable with respect to the Notes. Upon such
discharge, the Holders of the Notes shall no longer be entitled to the
benefits of the Indenture, except for the purposes of registration of transfer
and exchange of the Notes, and replacement of lost, stolen or mutilated Notes.
(Sections 12.1 and 12.3)
MODIFICATIONS OF INDENTURE
The Indenture, the rights and obligations of the Company thereunder and the
rights of the Holders may be modified with respect to one or more series of
Securities issued under the Indenture with the consent of the Holders of not
less than a majority of the aggregate principal amount of Outstanding
Securities of all series affected by the modification (voting as one class).
Without, however, the consent of the Holder of each Security affected, no
modification shall change the Stated Maturity of any Security, reduce the
principal amount or the amount of premium payable thereon, reduce the rate,
extend the time of payment or change the method of calculation of interest
thereon or reduce any amount payable on redemption thereof or reduce the
percentage
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required for modification. No modification of the Indenture subordinating the
indebtedness evidenced by any series of Securities issued thereunder to any
indebtedness of the Company is effective against any Holder of Securities
without such Holder's consent. (Section 10.2)
CONCERNING THE TRUSTEE
The Bank of New York is the Trustee under the Indenture. The Bank of New
York has a course of regular dealings with the Company in the ordinary course
of business and from time to time may also make short-term unsecured loans and
secured or unsecured revolving credit and term loans to the Company and
associated companies.
BOOK-ENTRY SYSTEM
Unless otherwise specified in the applicable Pricing Supplement, the
following provisions will apply to all Book-Entry Notes:
The Depository will act as securities depositary for the Book-Entry Notes.
The Book-Entry Notes will be issued as fully-registered securities registered
in the name of Cede & Co. (the Depository's nominee). One fully-registered
Global Security will be issued for each issue of the Notes, in the aggregate
principal amount of such issue, and will be deposited with the Depository. If,
however, the aggregate principal amount of any issue exceeds the maximum
principal amount authorized by the Depository, one Global Security will be
issued with respect to such maximum principal amount and an additional Global
Security will be issued with respect to any remaining principal amount of such
issue. Unless and until it is exchanged in whole or in part for Notes in
definitive registered form, a Global Security may not be transferred except as
a whole by the Depository to another nominee of the Depository or to a
successor depositary or a nominee of such successor.
The Depository has advised the Company as follows: the Depository is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository holds securities that its
participants ("Participants") deposit with the Depository. The Depository also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
("Direct Participants") include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. The
Depository is owned by a number of its Direct Participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the Depository's system is
also available to others such as securities brokers and dealers, banks and
trust companies that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect Participants").
The rules applicable to the Depository and its Participants are on file with
the Securities and Exchange Commission.
Purchases of Book-Entry Notes under the Depository's system must be made by
or through Direct Participants, which will receive a credit for the Book-Entry
Notes on the Depository's records. The ownership interest of each actual
purchaser of each Book-Entry Note (the "Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from the Depository of their purchase,
but Beneficial Owners are expected to receive written confirmations providing
details of the transactions, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in the Book-
Entry Notes are to be accomplished by entries made on the books of
Participants acting on behalf of the Beneficial Owners. Because the Depository
can act only on behalf of Participants and persons that may hold through
Participants, the ability of an owner of a beneficial interest in a Global
Security to pledge Notes to persons or entities that do not participate in the
book-entry and transfer system of the Depository, or otherwise
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take actions in respect of such Notes, may be limited. In addition, 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 a purchaser's ability to transfer beneficial interests in a Global
Security.
To facilitate subsequent transfers, all Global Securities deposited by
Participants with the Depository are registered in the name of the
Depository's nominee, Cede & Co. The deposit of Global Securities with the
Depository and their registration in the name of Cede & Co. effect no change
in beneficial ownership. The Depository has no knowledge of the actual
Beneficial Owners of the Book-Entry Notes; the Depository's records reflect
only the identity of the Direct Participants to whose accounts such Book-Entry
Notes are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
So long as the Depository or its nominee is the registered owner of a Global
Security, the Depository or such nominee, as the case may be, will be
considered the sole owner or Holder of the Notes represented by such Global
Security for all purposes under the Indenture. Except as set forth below,
owners of beneficial interests in a Global Security will not be entitled to
have Notes represented by such Global Security registered in their names, will
not receive or be entitled to receive physical delivery of Certificated Notes
and will not be considered the owners or Holders of such Notes under the
Indenture.
Conveyance of notices and other communications by the Depository to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co., as the Holder of the Book-
Entry Notes. If less than all of the Book-Entry Notes within an issue are
being redeemed, the Depository's current practice is to determine by lot the
amount of the interest of each Direct Participant in such issue to be
redeemed.
Neither the Depository nor Cede & Co. will consent or vote with respect to
Book-Entry Notes. Under its usual procedures, the Depository will mail an
"Omnibus Proxy" to the Company as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Book-Entry Notes are credited on the record
date (identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the Book-Entry Notes will be made to the
Depository. The Depository's practice is to credit Direct Participants'
accounts on the payable date in accordance with their respective holdings
shown on the Depository's records unless the Depository has reason to believe
that it will not receive payment on the payable date. Payments by Participants
to Beneficial Owners will be governed by standing instructions and customary
practices, as in the case of securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of
such Participant and not of the Depository or the Company, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and interest to the Depository is the responsibility of
the Company, disbursement of such payments to Direct Participants shall be the
responsibility of the Depository, and disbursement of such payments to the
Beneficial Owners shall be the responsibility of Direct and Indirect
Participants. Owners of beneficial interests in a Global Security that hold
through the Depository may experience some delay in the receipt of interest
payments since the Depository will forward payments to Participants, which in
turn will forward them to persons that hold through Participants or to such
owners.
A Beneficial Owner shall give notice to elect to have its Book-Entry Notes
purchased or tendered, through its Participant, to the Paying Agent, and shall
effect delivery of such Book-Entry Notes by causing the Direct Participant to
transfer the Participant's interest in the Book-Entry Notes, on the
Depository's records, to the Paying Agent. The requirement for physical
delivery of Book-Entry Notes in connection with a demand for
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purchase or a mandatory purchase will be deemed satisfied when the ownership
rights in the Book-Entry Notes are transferred by a Direct Participant on the
Depository's records.
If the Depository is at any time unwilling or unable to continue as
depositary or if the Depository ceases to be a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act, and, in either
case, a successor depositary is not appointed by the Company within 90 days,
the Company will issue individual Certificated Notes in exchange for Book-
Entry Notes represented by Global Securities. In addition, the Company may at
any time, and in its sole discretion, determine not to have all or a portion
of any Book-Entry Note represented by Global Securities and in such event will
issue individual Certificated Notes in exchange for the Book-Entry Note or
portion thereof no longer to be represented by Global Securities. If the Notes
are Book-Entry Notes represented by one or more Global Securities and if an
Event of Default with respect to the Notes shall have occurred and be
continuing, the Company will issue individual Certificated Notes in exchange
for such Book-Entry Notes.
The Company may decide to discontinue use of the system of book-entry
transfers through the Depository (or a successor securities depositary). In
that event, Certificated Notes will be printed and delivered in exchange for
the Book-Entry Notes represented by the Global Securities held by the
Depository.
The information in this section concerning the Depository and the
Depository's book-entry system has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
Neither the Company, the Trustee, any Paying Agent nor the registrar for the
Notes will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in a
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel for the
Company, the following summary correctly describes certain United States
Federal income tax considerations as of the date of this Prospectus relating
to ownership of the Notes that may be relevant to an initial Holder of a Note.
This summary is based on laws, regulations, rulings and decisions now in
effect and which are subject to change. This summary deals only with Holders
that will hold Notes as capital assets, and does not address tax
considerations applicable to investors that may be subject to special tax
rules, such as banks, insurance companies, dealers in securities, tax-exempt
organizations, foreign investors, persons that will hold Notes as a position
in a "straddle" for tax purposes or subsequent holders. This summary does not
purport to cover all the possible tax consequences of the purchase, ownership
and disposition of Notes, and it is not intended as tax advice. Investors
should consult their own tax advisers in determining the tax consequences to
them of the purchase, ownership and disposition of Notes, including the
application to their particular situation of the tax considerations discussed
below, as well as the application of other Federal, state, local or other tax
laws.
Holders of Original Issue Discount Notes generally will be subject to the
special tax accounting rules for original issue discount obligations provided
by the Internal Revenue Code of 1986 and certain Treasury Regulations issued
thereunder (the "Regulations"). Holders of such Notes should be aware that, as
described in greater detail below, they generally must include original issue
discount in ordinary gross income for Federal income tax purposes as it
accrues, in advance of the receipt of cash attributable to that income.
In general, each Holder of an Original Issue Discount Note, whether such
Holder uses the cash or the accrual method of tax accounting, will be required
to include in ordinary gross income the sum of the "daily portions" of
original issue discount on that Note for all days during the taxable year that
the Holder owns the Note. The daily portions of original issue discount on an
Original Issue Discount Note are determined by allocating to each
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day in any "accrual period" a ratable portion of the original issue discount
allocable to that accrual period. The "accrual period" for an Original Issue
Discount Note may be of any length and may vary in length over the term of the
Note, provided that each accrual period is no longer than one year and each
scheduled payment of principal or interest occurs either on the first day or
the last day of an accrual period. In the case of an initial Holder, the
amount of original issue discount on an Original Issue Discount Note allocable
to each accrual period is determined by (i) multiplying the "adjusted issue
price" (as defined below) of the Note by a fraction, the numerator of which is
the annual yield to maturity of the Note and the denominator of which is the
number of accrual periods in a year and (ii) subtracting from that product the
amount (if any) payable as interest at the end of that accrual period. The
"adjusted issue price" of an Original Issue Discount Note at the beginning of
any accrual period is the sum of its issue price (as such term is defined for
Federal income tax purposes (including accrued interest, if any) and the
amount of original issue discount allocable to all prior accrual periods,
reduced by the amount of all payments other than interest payments (if any)
made with respect to such Note in all prior accrual periods. As a result of
this "constant yield" method of including original issue discount income, the
amounts so includible in income by a Holder in respect of an Original Issue
Discount Note are lesser in the early years and greater in the later years
than the amounts that would be includible on a straight-line basis. In the
case of an Original Issue Discount Note that is a Floating Rate Note, both the
"annual yield to maturity" and the "amount payable as interest" are generally
determined for these purposes as though the Note bore interest in all periods
at a fixed rate equal to the level of the Base Rate (as adjusted by the
applicable Spread or Spread Multiplier, if any) on the Original Issue Date.
Payments of interest on Floating Rate Notes that are not based on current
values of an objective interest index will be considered contingent payments
and subject to special rules under the Regulations. Under the Regulations,
payments of interest on the CD Rate Notes, Commercial Paper Rate Notes,
Federal Funds Rate Notes, LIBOR Notes, Prime Rate Notes and Treasury Rate
Notes should be considered payments based on current values of objective
interest indices, and therefore the special rules concerning contingent
payments should not apply to such Notes. If any Floating Rate Note specifies a
Base Rate other than the CD Rate, Commercial Paper Rate, Federal Funds Rate,
LIBOR, Prime Rate or Treasury Rate, to the extent the Federal income tax
consequences vary from the consequences described herein, such tax
consequences will be described in the applicable Pricing Supplement.
Notes with a Specified Maturity of one year or less will be subject to
certain tax rules which apply to the timing of inclusion in income of interest
on such obligations ("Short-Term Notes"). Generally, as discussed in more
detail below, for Federal income tax purposes, an individual or other cash
method Holder of a Short-Term Note is not required to accrue any discount on
the Short-Term Note unless an election is made to do so and interest payments
on the Short-Term Note will not be includible in gross income until the
taxable year of receipt. Such a Holder may, however, be required to defer
certain interest deductions.
An obligation which is issued for an amount less than its "stated redemption
price at maturity" will generally be considered to be issued at a discount for
Federal income tax purposes. Under the Regulations, all payments (including
all stated interest) with respect to an obligation will be included in the
stated redemption price at maturity if the obligation is a Short-Term Note
and, thus, Holders will be taxed on discount in lieu of stated interest. This
discount will be equal to the excess of the stated redemption price at
maturity over the "issue price" of each Short-Term Note, unless a Holder
elects to compute this discount as acquisition discount using tax basis
instead of issue price. The issue price of each Short-Term Note will be the
initial offering price to the public at which a substantial amount of the
Short-Term Notes are sold. As previously noted, an individual or other cash
method Holder of a Short-Term Note is not required to accrue any discount for
Federal income tax purposes unless an election is made to do so. Holders who
report income for Federal income tax purposes on the accrual method and
certain other Holders, including banks and dealers in securities, are required
to accrue discount on such Short-Term Notes (as ordinary income) on a
straight-line method unless an election is made to accrue the discount
according to a constant interest method based on daily compounding. The amount
of discount which accrues in respect of a Short-Term Note while held by a
Holder will be added to such Holder's tax basis for such Note to the extent
included in income. In the case of a cash method Holder who is not required,
and
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does not elect, to include discount in income currently, any gain realized on
the sale, exchange or retirement of the Short-Term Note will be ordinary
income to the extent of the discount accrued on a straight-line basis (or, if
elected, according to a constant interest method based on daily compounding)
through the date of sale, exchange or retirement. In addition, such non-
electing Holders which are not subject to the current inclusion requirement
described in this paragraph will be required to defer deductions for any
interest paid on indebtedness incurred or continued to purchase or carry such
Short-Term Notes in an amount not exceeding the deferred interest income,
until such deferred interest income is realized.
The applicable Pricing Supplement will contain a discussion of any special
United States Federal income tax rules with respect to any Extendible Notes.
In addition, generally, for Federal income tax purposes, the defeasance of
the Indenture pursuant to Section 12.1 thereof should not result in any
Federal income tax consequences to the Holders of the Notes. However, the
Internal Revenue Service could assert that the deposit and discharge of the
Indenture should be treated as a taxable exchange for the amounts deposited
pursuant to Article 12 thereof. If such assertion were made and upheld, each
Holder of the Notes might be required to recognize gain or loss equal to the
difference between the Holder's cost or other tax basis for the Notes and the
value of the Holder's interest in the trust. Such Holders thereafter might be
required to include in income at different times and in a different amount
than would be includible in the absence of the discharge. Holders should
consult their tax advisors in determining the potential tax consequences to
them of a defeasance under the Indenture pursuant to Section 12.1 thereof.
PLAN OF DISTRIBUTION
Under the terms of the Distribution Agreement, the Notes may be offered on a
continuing basis by the Company through the Agents, each of which has agreed
to use its reasonable efforts to solicit purchases of the Notes. The Company
will pay each Agent a commission of from .125% to 1.750% of the principal
amount of each Note sold through such Agent, depending upon such Note's
Specified Maturity and the credit rating assigned to the Notes. The Company
will have the sole right to accept offers to purchase Notes and may reject any
such offer in whole or in part. Each Agent will have the right, in its
discretion reasonably exercised, to reject in whole or in part any offer to
purchase Notes received by such Agent. The Company also may sell Notes to any
Agent, acting as principal, at a discount to be agreed upon at the time of
sale, for resale to one or more investors or to one or more broker-dealers
(acting as principal for purposes of resale) at varying prices related to
prevailing market prices at the time of resale, as determined by such Agent,
or, if so agreed, at a fixed public offering price. Unless otherwise indicated
in the applicable Pricing Supplement, if any Note is resold by an Agent to any
broker-dealer at a discount, such discount will not be in excess of the
discount or commission received by such Agent from the Company. In addition,
unless otherwise indicated in the applicable Pricing Supplement, any Note
purchased by an Agent as principal will be purchased at 100% of the principal
amount thereof less a percentage equal to the commission applicable to an
agency sale of a Note having an identical Specified Maturity. After the
initial public offering of the Notes, the public offering price (in the case
of Notes to be resold on a fixed public offering price basis), the concession
and the discount may be changed. The Company also reserves the right to sell
the Notes directly to investors on its own behalf in those jurisdictions where
it is authorized to do so or as otherwise provided in the applicable Pricing
Supplement. In such circumstances, the Company will have the sole right to
accept offers to purchase Notes and may reject any proposed purchase of Notes
in whole or in part. In the case of sales made directly by the Company, no
commission will be payable.
Payment of the purchase price of the Notes will be required to be made in
funds immediately available in The City of New York.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Act"). The Company has agreed to
indemnify each Agent against certain liabilities, including liabilities under
the Act, or to contribute to payments each Agent may be required to make in
respect thereof.
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The Company has agreed to reimburse the Agents for certain of the Agents'
expenses, including, but not limited to, the fees and expenses of counsel to
the Agents.
In connection with the offering, the rules of the Commission permit the
Agents to engage in certain transactions that stabilize the price of the
Notes. Such transactions may consist of bids or purchases for the purpose of
pegging, fixing or maintaining the price of the Notes.
If the Agents create a short position in the Notes in connection with the
offering (i.e., if they sell a larger principal amount of the Notes than is
set forth in the cover page of this Prospectus), the Agents may reduce that
short position by purchasing Notes in the open market.
In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases.
None of the Agents makes any representation or prediction as to the
direction or magnitude of any effect that the transactions described above may
have on the price of the Notes. In addition, none of the Agents makes any
representation that the Agents will engage in such transactions or that such
transactions, once commenced will not be discontinued without notice.
The Company has been advised by each Agent that such Agent may from time to
time purchase and sell Notes in the secondary market, but that it is not
obligated to do so. There can be no assurance that there will be a secondary
market for the Notes or liquidity in the secondary market if one develops.
From time to time, each Agent may make a market in the Notes. The Notes will
not be listed on any securities exchange.
LEGAL OPINIONS
The validity of the Notes will be passed upon for the Company by LeBoeuf,
Lamb, Greene & MacRae, L.L.P., a limited liability partnership including
professional corporations, New York, New York, and by William M. Finn, Esq.,
corporate counsel of the Company, and for the Agents, by Choate, Hall &
Stewart, a partnership including professional corporations, Boston,
Massachusetts. Choate, Hall & Stewart from time to time provides legal
services to Maine Yankee Atomic Power Company, an affiliate of the Company.
William M. Finn, Esq. and LeBoeuf, Lamb, Greene & MacRae, L.L.P. will be
passing upon statements under the caption "Description of Notes". Certain
matters involving Connecticut law will be passed upon for the Company by Day,
Berry & Howard, Hartford, Connecticut. LeBoeuf, Lamb, Greene & MacRae, L.L.P.
and Choate, Hall & Stewart may rely upon the opinion of William M. Finn, Esq.,
as to all legal conclusions affected by the laws of Maine (including the
organization and existence of the Company), and the opinion of Day, Berry &
Howard as to all legal conclusions affected by the laws of Connecticut.
EXPERTS
The consolidated financial statements and schedules of the Company, which
are incorporated herein by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1996, have been audited by Coopers &
Lybrand L.L.P., independent certified public accountants, as indicated in
their reports with respect thereto. Such financial statements and schedules
are included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
29
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR ANY AGENT, UNDERWRITER OR DEALER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THOSE DESCRIBED HEREIN OR AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH
JURISDICTION. THIS PROSPECTUS SPEAKS AS OF ITS DATE AND NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY OR ITS SUBSIDIARIES SINCE THE DATE HEREOF OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Risk Factors............................................................... 3
The Company................................................................ 9
Ratio of Earnings to Fixed Charges......................................... 9
Use of Proceeds............................................................ 9
Description of Notes....................................................... 10
Certain Federal Income Tax Consequences.................................... 26
Plan of Distribution....................................................... 28
Legal Opinions............................................................. 29
Experts.................................................................... 29
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$400,000,000
CENTRAL MAINE
POWER COMPANY
MEDIUM-TERM NOTES,
SERIES D
------------------
PROSPECTUS
, 1997
------------------
LEHMAN BROTHERS
BEAR, STEARNS & CO. INC.
SALOMON BROTHERS INC
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Filing Fee--Securities and Exchange Commission.................. $121,212
Auditors' Fees.................................................. 19,000*
Rating Agency Fees.............................................. 60,000*
Fees and Expenses of Trustee.................................... 6,000*
Legal Fees and Expenses......................................... 250,000*
State Securities Law Fees and Expenses.......................... 25,000*
Printing and Engraving.......................................... 15,000*
Miscellaneous................................................... 3,788*
---------
Total......................................................... $500,000*
</TABLE>
- --------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subsection 1 of Section 719 of the Business Corporation Law of Maine
empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as
a director, officer, trustee, partner, fiduciary, employee or agent of another
corporation, partnership, joint venture, trust, pension or other employee
benefit plan or other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding; provided
that no indemnification may be provided for any person with respect to any
matter as to which he shall have been finally adjudicated not to have acted
honestly or in the reasonable belief that his action was in or not opposed to
the best interests of the corporation or its shareholders or, in the case of a
person serving as a fiduciary of an employee benefit plan or trust, in or not
opposed to the best interests of that plan or trust, or its participants or
beneficiaries or, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order or conviction adverse to
such person, or by settlement or plea of nolo contendere or its equivalent,
shall not of itself create a presumption that such person did not act honestly
or in the reasonable belief that his action was in or not opposed to the best
interests of the corporation or its shareholders, or in the case of a person
serving as a fiduciary of an employee benefit plan or trust, in or not opposed
to the best interests of that plan or trust, or its participants or
beneficiaries and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 719 further provides that to the extent that a director, officer,
employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
Subsection 1 of Section 719, or in defense of any claim, issue or matter
referred to therein, he shall be indemnified against expenses, including
attorney's fees, actually and reasonably incurred by him in connection
therewith; that the indemnification provided for by Section 719 shall not be
deemed exclusive of any other rights to which the indemnified party may be
entitled under any by-law, agreement, vote of stockholders or disinterested
directors or otherwise; and that a corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, trustee, partner,
fiduciary, employee or agent of another corporation, partnership, joint
venture, trust, pension or other employee benefit plan or other enterprise
against any liability asserted against him and incurred by him in such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under Section
719.
II-1
<PAGE>
The by-laws of the Company provide, in effect, that the Company will provide
the indemnity described in Section 719 of the Business Corporation Law of
Maine, to the extent and under the circumstances described therein.
The by-laws of the Company also permit the Company to purchase and maintain
insurance to the same extent permitted by Section 719 of the Business
Corporation Law of Maine. The Company has purchased Directors' and Officers'
Liability Insurance insuring the Company and its directors and officers
against Losses (as defined therein) arising from actual or alleged Wrongful
Acts (as defined therein).
ITEM 16. EXHIBITS.
See Exhibit Index immediately preceding the Exhibits included as part of
this Registration Statement.
ITEM 17. UNDERTAKINGS.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8 and the information required
to be included in a post-effective amendment by those paragraphs is contained
in periodic reports filed by the Company pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Company's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the provisions described under Item 15 above, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in said Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in said Act
and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Augusta, Maine, on November 24, 1997.
Central Maine Power Company
/s/ David E. Marsh
By _________________________________
DAVID E. MARSH
CHIEF FINANCIAL OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the date or dates indicated:
SIGNATURES TITLE DATE
President and Chief
* Executive Officer; November 24,
- ------------------------------------- Director 1997
DAVID T. FLANAGAN
(PRINCIPAL EXECUTIVE OFFICER)
/s/ David E. Marsh Chief Financial
- ------------------------------------- Officer November 24,
DAVID E. MARSH 1997
(PRINCIPAL FINANCIAL OFFICER AND
DULY AUTHORIZED OFFICER)
Comptroller
* November 24,
- ------------------------------------- 1997
MICHAEL W. CARON
(PRINCIPAL ACCOUNTING OFFICER)
Chairman of the Board
* of Directors November 24,
- ------------------------------------- 1997
DAVID M. JAGGER
Director
* November 24,
- ------------------------------------- 1997
CHARLES H. ABBOTT
Director
* November 24,
- ------------------------------------- 1997
CHARLEEN M. CHASE
II-4
<PAGE>
SIGNATURES TITLE DATE
Director
* November 24,
- ------------------------------------- 1997
E. JAMES DUFOUR
Director
* November 24,
- ------------------------------------- 1997
DUANE D. FITZGERALD
Director
* November 24,
- ------------------------------------- 1997
ROBERT H. GARDINER
Director
* November 24,
- ------------------------------------- 1997
PETER J. MOYNIHAN
Director
* November 24,
- ------------------------------------- 1997
WILLIAM J. RYAN
Director
* November 24,
- ------------------------------------- 1997
KATHRYN M. WEARE
Director
* November 24,
- ------------------------------------- 1997
LYNDEL J. WISHCAMPER
*By
/s/ William M. Finn
------------------------------------
WILLIAM M. FINN
ATTORNEY-IN-FACT
II-5
<PAGE>
EXHIBIT INDEX
The following exhibits, as indicated below, either are filed herewith or
have been heretofore filed with the Securities and Exchange Commission under
the Securities Act of 1933, the Securities Exchange Act of 1934 or the Public
Utility Holding Company Act of 1935 and are incorporated herein by reference
thereto.
EXHIBIT 1. DISTRIBUTION AGREEMENT
Previously filed:
1.1 Form of Distribution Agreement.
EXHIBIT 4. INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS
<TABLE>
<CAPTION>
DESCRIPTION EXHIBIT SEC DOCKET
----------- ------- ----------
<C> <S> <C> <C>
4.1 Indenture dated as of August 1, 4.1 33-29626
1989 between the Company and The
Bank of New York, as Trustee.
4.2 First Supplemental Indenture dated 4.1 Current Report on Form 8-K,
as of August 7, 1989. dated August 7, 1989
4.3 Second Supplemental Indenture dated 4.1 33-44944
as of
January 10, 1992
4.4 Third Supplemental Indenture dated 4.1 33-56939
as of
December 15, 1994
Filed herewith:
4.4 Form of Fourth Supplemental
Indenture.
</TABLE>
EXHIBIT 5. OPINION RE: LEGALITY
Previously filed:
5.1 Opinion of William M. Finn, Esquire.
5.2 Opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P.
EXHIBIT 12. RATIO OF EARNINGS TO FIXED CHARGES
Filed herewith:
12.1 Computation of Ratio of Earnings to Fixed Charges.
EXHIBIT 23. CONSENTS OF EXPERTS AND COUNSEL
Filed herewith:
23.1 The consent of Coopers & Lybrand L.L.P. to incorporation by reference in
this Registration Statement of its reports included in the Company's Form
10-K for the year ended December 31, 1996, and the reference to its name
under the caption "Experts" in the Prospectus comprising part of this
Registration Statement.
Previously filed:
23.2 The consent of William M. Finn, Esquire, is contained in his opinion
filed as Exhibit 5.1 to this Registration Statement.
23.3 The consent of LeBoeuf, Lamb, Greene & MacRae, L.L.P. is contained in
their opinion filed as Exhibit 5.2 to this Registration Statement.
II-6
<PAGE>
Filed herewith:
23.4 Consent of Day, Berry & Howard.
EXHIBIT 24. POWER OF ATTORNEY
Previously filed:
24.1 Power of Attorney.
EXHIBIT 25. STATEMENT OF ELIGIBILITY OF TRUSTEE
Filed herewith:
25.1 Statement of Eligibility of Trustee on Form T-1 of The Bank of New York.
EXHIBIT 99. OTHER EXHIBITS
<TABLE>
<CAPTION>
DESCRIPTION EXHIBIT SEC DOCKET
----------- ------- ----------
<C> <S> <C> <C>
99.1 Financial Data Schedule 99.1 Annual Report on Form 10-K,
dated for the year ended
December 31, 1996
</TABLE>
II-7
<PAGE>
EXHIBIT 12.1
Central Maine Power Company
Consolidated Computation of Earnings to Fixed Charges
(Dollars in Thousands)
For Nine Months Ending
----------------------
Sept. 30
1997
--------
Earnings:
Net income $ 7,644
Federal and state income taxes 5,248
Fixed Charges 38,645
----------
Registrant's Subtotal 51,537
Majority-owned companies:
Minority interest in income 218
Federal and state income taxes 1,240
Fixed charges 116
Less - Undistributed income of less than
50% - owned subsidiaries 2,718
----------
Total $ 50,393
==========
Fixed Charges:
Interest on long-term debt $ 31,003
Amortization of debt discount and
expense, less premium 739
Interest on short-term debt and other
interest 5,193
Interest component of rental
charges (Note A) 1,709
----------
Registrant's Subtotal 38,644
Fixed charges of majority - owned
companies 116
----------
$ 38,760
Ratio of Earnings to Fixed Charges 1.3
Note A: The interest component of rental charges includes the estimated
interest component of certain lease rental and one-third of all other rentals
<PAGE>
Central Maine Power Company
Consolidated Computation of Earnings to Fixed Charges
(Dollars in Thousands)
<TABLE>
<CAPTION>
For Twelve Months Ending
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Earnings:
Net income $ 60,230 $ 37,978 $ (23,263) $ 61,303 $ 63,583
Federal and state income taxes 32,021 16,032 (14,144) 22,589 18,435
Fixed Charges 51,628 52,559 51,057 48,944 55,998
--------- --------- ---------- -------- ----------
Registrant's Subtotal 143,879 106,569 13,650 132,836 138,016
Majority-owned companies:
Minority interest in income 48 23 23 23 23
Federal and state income taxes 1,435 974 2,135 874 1,290
Fixed charges 20 1 1 1 1
Less - Undistributed income of less than
50% - owned subsidiaries 315 1,335 (76) 206 (59)
--------- --------- ---------- -------- ----------
Total $ 145,067 $ 106,232 $ 15,885 $ 133,528 $ 139,389
========= ========= ========= ========= ==========
Fixed Charges:
Interest on long-term debt $ 43,611 $ 45,823 $ 41,968 $ 39,321 $ 44,275
Amortization of debt discount and
expense, less premium 1,348 1,328 994 607 522
Interest on short-term debt and other
interest 4,341 3,244 5,887 6,784 8,844
Interest component of rental
charges (Note A) 2,328 2,164 2,208 2,232 2,357
--------- --------- ---------- -------- ----------
Registrant's Subtotal 51,628 52,559 51,057 48,944 55,998
Fixed charges of majority - owned
companies 20 1 1 1 1
--------- --------- ---------- -------- ----------
$ 51,648 $ 52,560 $ 51,058 $ 48,945 $ 55,999
========= ========== ========== ========= ==========
Ratio of Earnings to Fixed Charges 2.8 2.0 0.3 2.7 2.5
</TABLE>
Note A: The interest component of rental charges includes the estimated
interest component of certain lease rental and one-third of all other
rentals.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference into this registration statement
on Form S-3 and any amendments thereof, of our report dated January 23, 1997,
on our audits of the consolidated financial statements and financial statement
schedule of Central Maine Power Company and subsidiary as of December 31, 1996
and 1995, and for each of the three years in the period ended December 31,
1996. We also consent to the reference of our firm under the caption "Experts."
Coopers & Lybrand L.L.P.
Portland, Maine
November 21, 1997
<PAGE>
EXHIBIT 23.4
DAY, BERRY & HOWARD CityPlace
Hartford
Connecticut 06103-3499
Telephone (860) 275-0100
Counsellors at Law Facsimile (860) 275-0343
Hartford, Stamford and Boston
November 20, 1997
Central Maine Power Company
Edison Drive
Augusta, ME 04336
Re: $400,000,000 in Aggregate Principal Amount of Medium-Term Notes,
Series D (the "Notes") of Central Maine Power Company (the "Company")
----------------------------------------------------------------------
Ladies and Gentlemen:
We hereby consent to the use of our name under the caption "Legal
Opinions" in the Company's Registration Statement on Form S-3 and amendments
thereto pursuant to which the offering of the Notes is being registered under
the Securities Act of 1933.
Very truly yours,
/s/ Day, Berry & Howard
Day, Berry & Howard
RCM/mcs
<PAGE>
EXHIBIT 25.1
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED
PURSUANT TO RULE 901(d) OF REGULATION S-T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
CENTRAL MAINE POWER COMPANY
(Exact name of obligor as specified in its charter)
Maine 01-0042740
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
83 Edison Drive
Augusta, Maine 04336
(Address of principal executive offices) (Zip code)
______________________
Medium-Term Notes, Series D
(Title of the indenture securities)
================================================================================
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(a) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-
29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust powers.
(Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement
No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration
Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration
Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-
44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 21st day of November, 1997.
THE BANK OF NEW YORK
By: /s/ Walter N. Gitlin
--------------------------
Name: Walter N. Gitlin
Title: Vice President
-4-
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 1997,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin..................... $ 7,769,502
Interest-bearing balances............. 1,472,524
Securities:
Held-to-maturity securities........... 1,080,234
Available-for-sale securities......... 3,046,199
Federal funds sold and Securities pur-
chased under agreements to resell....... 3,193,800
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................35,352,045
LESS: Allowance for loan and
lease losses ..............625,042
LESS: Allocated transfer risk
reserve........................429
Loans and leases, net of unearned
income, allowance, and reserve 34,726,574
Assets held in trading accounts......... 1,611,096
Premises and fixed assets (including
capitalized leases)................... 676,729
Other real estate owned................. 22,460
Investments in unconsolidated
subsidiaries and associated
companies............................. 209,959
Customers' liability to this bank on
acceptances outstanding............... 1,357,731
Intangible assets....................... 720,883
Other assets............................ 1,627,267
-----------
Total assets............................ $57,514,958
===========
LIABILITIES
Deposits:
In domestic offices................... $26,875,596
Noninterest-bearing ......11,213,657
Interest-bearing .........15,661,939
In foreign offices, Edge and
Agreement subsidiaries, and IBFs...... 16,334,270
Noninterest-bearing .........596,369
Interest-bearing .........15,737,901
Federal funds purchased and Securities
sold under agreements to repurchase. 1,583,157
Demand notes issued to the U.S.
Treasury.............................. 303,000
Trading liabilities..................... 1,308,173
Other borrowed money:
With remaining maturity of one year
or less............................. 2,383,570
With remaining maturity of more than
one year through three years............ 0
With remaining maturity of more than
three years......................... 20,679
Bank's liability on acceptances exe-
cuted and outstanding................. 1,377,244
Subordinated notes and debentures....... 1,018,940
Other liabilities....................... 1,732,792
-----------
Total liabilities....................... 52,937,421
-----------
EQUITY CAPITAL
Common stock............................ 1,135,284
Surplus................................. 731,319
Undivided profits and capital
reserves.............................. 2,721,258
Net unrealized holding gains
(losses) on available-for-sale
securities............................ 1,948
Cumulative foreign currency transla-
tion adjustments...................... ( 12,272)
-----------
Total equity capital.................... 4,577,537
-----------
Total liabilities and equity
capital ........................... $57,514,958
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi Directors
J. Carter Bacot
Alan R. Griffith
