As filed with the Securities and Exchange Commission on April 11 , 1997
Registration No. 333-21149
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
Form S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
Central Power and Light Company CPL Capital I (333-21149-01 )
(Exact name of Registrant as specified CPL Capital II (333-21149-02 )
in charter) (Exact names of Registrants as
specified in Trust Agreements)
Texas Delaware
State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
74-0550600 75-6504093
75-6504094
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
539 North Carancahua Street
Corpus Christi, Texas 78401-2802
(512) 881-5300
(Address, including zip code, and telephone
number, including area code, of Registrants'
principal executive offices)
M. BRUCE EVANS ROBERT B. WILLIAMS, ESQ.
President JORIS M. HOGAN, ESQ.
Central Power and Light Company Milbank, Tweed, Hadley & McCloy
539 North Carancahua Street 1 Chase Manhattan Plaza
Corpus Christi, Texas 78401-2802 New York, New York 10005
(512) 881-5300 (212) 530-5000
(Names, addresses, including zip codes, and
telephone numbers, including area codes, of agents
for service)
Approximate date of proposed sale to the public: From time to time
after the effective date of the Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, 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. |_|
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Proposed Proposed
maximum maximum Amount
Title of each class of ........... Amount to be offering price per aggregate offering of registration
securities being registered ........ registered unit (1) price (1) fee (2)
- ------------------------------------------- ------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Central Power and Light Company Junior
Subordinated Deferrable Interest
Debentures
- ------------------------------------------- ------------- --------------- --------------- --------------
CPL Capital I and II
Preferred Securities
- ------------------------------------------- ------------ --------------- --------------- --------------
Central Power and Light Company
Guarantees with respect to Preferred
Securities (3)(4)
=========================================== ============= =============== =============== ==============
Total ..................................... $ 150,000,000 100% $150,000,000 $45,455
(5) (5) (6)
=========================================== ============= =============== =============== ==============
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee.
(2) The amount of the registration fee has been calculated in accordance with
Rule 457(o) under the Securities Act of 1933.
(3) No separate consideration will be received for the Central Power and Light
Company Guarantees.
(4) This Registration Statement is deemed to include the rights of holders of
the Preferred Securities and the obligations of Central Power and Light
Company ("Back-Up Obligations") under (i) the Guarantees, (ii) the Junior
Subordinated Deferrable Interest Debentures (including Corresponding
Junior Subordinated Deferrable Interest Debentures), (iii) the Trust
Agreements for CPL Capital I and CPL Capital II, (iv) the Indenture and
Supplemental Indentures under which the Junior Subordinated Deferrable
Interest Debentures or Corresponding Junior Subordinated Deferrable
Interest Debentures will be issued and (v) the Expense Agreements in which
Central Power and Light Company undertakes to pay all of the expenses of
CPL Capital I and CPL Capital II, except for obligations under the
Preferred Securities, as described in this Registration Statement.
(5) Represents (a) the principal amount of the Junior Subordinated Deferrable
Interest Debentures issued at their principal amount and (b) the initial
public offering price of CPL Capital I and II Preferred Securities. No
separate consideration will be received for any Central Power and Light
Company Guarantees or Central Power and Light Company Junior Subordinated
Deferrable Interest Debentures in connection with an issuance of Preferred
Securities by CPL Capital I and II. The amount to be registered, the
proposed maximum offering price per unit and the proposed maximum
aggregate offering price for each class of securities being registered
have been omitted in accordance with General Instruction II.D. of Form
S-3.
(6) A registration fee of $45,455 was previously paid on February 5, 1997.
------------------------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<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. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE PROSPECTUS TO WHICH IT
RELATES SHALL CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY JURISDICTION IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SUBJECT TO COMPLETION, DATED APRIL 11 , 1997
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED _______ __, 1997
6,000,000 Preferred Securities*
CPL Capital I
___% Cumulative Quarterly Income Preferred Securities,
Series A (QUIPS(SM))**
(liquidation preference $25 per preferred security)
guaranteed, as described herein, by
Central Power and Light Company
---------
The ___% Cumulative Quarterly Income Preferred
Securities, Series A (the "Series A Preferred Securities"), offered
hereby represent undivided beneficial interests in the assets of CPL
Capital I, a trust created under the laws of the State of Delaware
("CPL Capital I"). Central Power and Light Company, a Texas corporation
("CPL"), will be the owner of all of the beneficial interests
represented by common securities of CPL Capital I ("Series A Common
Securities"). The Bank of New York is the Property Trustee of CPL
Capital I. CPL Capital I exists for the sole purpose of issuing the
Series A Preferred Securities and the Series A Common Securities and
investing the proceeds thereof in __% Junior Subordinated Deferrable
(Continued on next page)
---------
See "Risk Factors" beginning on page S-6 hereof for certain information
relevant to an investment in the Series A Preferred Securities.
---------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------
Proceeds to
Initial Public Underwriting CPL
Offering Price Commission(1) Capital I(2)(3)
Per Series A .... $ (2) $
Preferrred Security......
Total....................$ (2) $
----------
(1) CPL Capital I and CPL have agreed to indemnify the several
Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
See "Underwriting."
(2) In view of the fact that the proceeds of the sale of the
Series A Preferred Securities will be used to purchase the
Series A Debentures, the Underwriting Agreement provides that
CPL will pay to the Underwriters, as compensation
("Underwriters' Compensation") for their arranging the
investment therein of such proceeds, $______ per Series A
Preferred Security; provided, that such compensation will be
$___ per Series A Preferred Security sold to certain
institutions. Accordingly, the maximum aggregate amount of
Underwriters' Compensation will be $_________, but the actual
amount of Underwriters' Compensation will be less than such
amount to the extent that Series A Preferred Securities are
sold to such institutions. See "Underwriting."
(3) Expenses of the offering, which are payable by CPL, are
estimated to be $250,000.
---------
The Series A Preferred Securities offered hereby are offered severally by
the Underwriters, as specified herein, subject to receipt and acceptance by them
and subject to their right to reject any order in whole or in part. It is
expected that the Series A Preferred Securities will be ready for delivery in
book-entry form only through the facilities of The Depository Trust Company in
New York, New York, on or about __________, 1997, against payment therefor in
immediately available funds.
----------
Goldman, Sachs & Co.
Lehman Brothers
Merrill Lynch & Co.
Smith Barney Inc.
---------
The date of this Prospectus Supplement
is ____, 1997.
---------------
* Preliminary, subject to change.
** QUIPS is a servicemark of Goldman, Sachs & Co.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY
ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR
OTHERWISE AFFECT THE PRICE OF THE SERIES A PREFERRED
SECURITIES, INCLUDING OVER-ALLOTMENT, STABILIZING
AND SHORT-COVERING TRANSACTIONS IN SUCH SECURITIES,
AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION
WITH THE OFFERING. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING".
---------
(Continued from previous page)
Interest Debentures, Series A (the "Series A Debentures") to be issued
by CPL. The Series A Debentures will mature on ________, 2037, which
date may be shortened to a date not earlier than ________, 2002. The
Series A Debentures are redeemable prior to maturity at the option of
CPL as described below. The Series A Preferred Securities will have a
preference under certain circumstances with respect to cash
distributions and amounts payable on liquidation, redemption or
otherwise over the Series A Common Securities. See "Description of
Preferred Securities--Subordination of Common Securities" in the
accompanying Prospectus.
Holders of the Series A Preferred Securities will be entitled
to receive preferential cumulative cash distributions accruing from the
date of original issuance and payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year, commencing
__________, 1997, at the annual rate of __% of the liquidation
preference of $25 per Series A Preferred Security ("Distributions").
CPL has the right to defer the payment of interest on the Series A
Debentures at any time or from time to time for one or more periods
(each, an "Extension Period"), provided that such Extension Period,
together with all previous and further extensions thereof prior to its
termination, does not exceed 20 consecutive quarters and does not
extend beyond the maturity of the Series A Debentures. Upon the
termination of any such Extension Period and the payment of all amounts
then due on any Interest Payment Date (as defined herein), CPL may
elect to begin a new Extension Period subject to the requirements set
forth herein. If interest payments on the Series A Debentures are so
deferred, Distributions on the Series A Preferred Securities will also
be deferred and CPL will not be permitted, subject to certain
exceptions set forth herein, to declare or pay any cash distributions
with respect to CPL's capital stock or debt securities that rank pari
passu with or junior to the Series A Debentures. During an Extension
Period, interest on the Series A Debentures will continue to accrue
(and the amount of Distributions to which holders of the Series A
Preferred Securities are entitled will accumulate at the rate of __%
per annum, compounded quarterly) and holders of Series A Preferred
Securities will be required to accrue interest income for United States
federal income tax purposes in advance of receipt of cash related to
such interest income. See "Certain Terms of the Series A
Debentures--Option to Extend Interest Payment Period" and "Certain
Federal Income Tax Considerations--Potential Extension of Interest
Payment Period and Original Issue Discount."
CPL has, through the Series A Guarantee, the Trust Agreement,
the Series A Debentures, the Indenture and the Expense Agreement (each
as defined herein), taken together, fully, irrevocably and
unconditionally guaranteed all of CPL Capital I's obligations under the
Series A Preferred Securities. The Series A Guarantee guarantees the
payment of Distributions and payments on liquidation or redemption of
the Series A Preferred Securities, but only in each case to the extent
of funds held by CPL Capital I, as described herein (the "Series A
Guarantee"). See "Description of Guarantees" in the accompanying
Prospectus. If CPL does not make interest payments on the Series A
Debentures held by CPL Capital I, CPL Capital I will have insufficient
funds to pay Distributions on the Series A Preferred Securities. The
Series A Guarantee does not cover payment of Distributions when CPL
Capital I does not have sufficient funds to pay such Distributions. In
such event, a holder of Series A Preferred Securities may have the
right to institute a legal proceeding directly against CPL to enforce
payment to such holder of the principal of or interest on the
Corresponding Junior Subordinated Debentures as described in
"Description of Preferred Securities--Enforcement of Certain Rights by
Holders of Preferred Securities" in the accompanying Prospectus. The
obligations of CPL under the Series A Guarantee and the Series A
Debentures are subordinate and junior in right of payment to all Senior
Indebtedness (as defined in "Description of Junior Subordinated
Debentures--Subordination" in the accompanying Prospectus) of CPL.
The Series A Preferred Securities are subject to mandatory
redemption, in whole or in part, upon repayment of the Series A
Debentures at maturity or their earlier redemption in an amount equal
to the amount of related Series A Debentures maturing or being redeemed
at a redemption price equal to the aggregate liquidation preference of
such Series A Preferred Securities plus accumulated and unpaid
Distributions thereon to the date of redemption. The Series A
Debentures are redeemable prior to maturity at the option of CPL (i) on
or after _________, 2002 in whole at any time or in part from time to
time, at a redemption price equal to the accrued and unpaid interest on
the Series A Debentures so redeemed to the date fixed for redemption,
plus 100% of the principal amount thereof, or (ii) at any time, in
whole (but not in part), within 90 days of the occurrence of a Special
Event (as defined herein), at a redemption price equal to the accrued
and unpaid interest on the Series A Debentures so redeemed to the date
fixed for redemption, plus 100% of the principal amount thereof, in
each case subject to the further conditions described under
"Description of Junior Subordinated Debentures--Redemption" and
"Description of Corresponding Junior Subordinated Debentures--Optional
Redemption" in the accompanying Prospectus.
At any time, CPL will have the right to terminate CPL Capital
I and, after satisfaction of liabilities to creditors of CPL Capital I
as required by applicable law, cause the Series A Debentures to be
distributed to the holders of the Series A Preferred Securities in
liquidation of CPL Capital I. See "Certain Terms of the Series A
Preferred Securities--Distribution of Series A Debentures."
The Series A Debentures are subordinate and junior in right of
payment to all Senior Indebtedness of CPL. As of December 31, 1996,
CPL had approximately $1,671 million aggregate principal amount of
Senior Indebtedness outstanding. The terms of the Series A Debentures
place no limitation on the amount of Senior Indebtedness that may be
incurred by CPL. In addition, the Series A Debentures will be
effectively subordinated to all existing and future liabilities of
CPL's subsidiaries, if any, and holders of Series A Debentures should
look only to the assets of CPL for payments on Series A Debentures.
See "Description of Junior Subordinated Debentures--Subordination" in
the accompanying Prospectus.
In the event of the termination of CPL Capital I, after
satisfaction of creditors of CPL Capital I as provided by applicable
law, the holders of the Series A Preferred Securities will be entitled
to receive a liquidation preference of $25 per Series A Preferred
Security plus accumulated and unpaid Distributions thereon to the date
of payment, which may be in the form of a distribution of such Like
Amount in Series A Debentures, subject to certain exceptions. See
"Description of Preferred Securities--Liquidation Distribution Upon
Termination" in the accompanying Prospectus.
Application will be made to list the Series A Preferred
Securities on the New York Stock Exchange (the "NYSE") under the symbol
"_______". Trading of the Series A Preferred Securities on the NYSE is
expected to commence within thirty days after the initial delivery of
the Series A Preferred Securities. If the Series A Debentures are
distributed to the holders of Series A Preferred Securities upon the
liquidation of CPL Capital I, CPL will use its best efforts to list the
Series A Debentures on the NYSE or such other stock exchanges or other
organizations, if any, on which the Series A Preferred Securities are
then listed.
The Series A Preferred Securities will be represented by one
or more global certificates registered in the name of The Depository
Trust Company ("DTC") or its nominee. Beneficial interests in the
Series A Preferred Securities will be shown on, and transfers thereof
will be effected only through, records maintained by participants in
DTC. Except as described in the accompanying Prospectus, Series A
Preferred Securities in certificated form will not be issued in
exchange for the global certificates. See "Description of Preferred
Securities--Book-entry Issuance" in the accompanying Prospectus.
<PAGE>
The following information supplements and should be read in
conjunction with the information contained in the accompanying
Prospectus. As used herein, (i) the "Indenture" means the Indenture, as
amended and supplemented from time to time, including the First
Supplemental Indenture relating to the Series A Debentures, between CPL
and The Bank of New York, as trustee (the "Debenture Trustee"), and
(ii) the "Trust Agreement" means the Amended and Restated Trust
Agreement among CPL, as Depositor, The Bank of New York, as Property
Trustee (the "Property Trustee"), The Bank of New York (Delaware), as
Delaware Trustee (the "Delaware Trustee"), and the Administrative
Trustees named therein (collectively, with the Property Trustee and the
Delaware Trustee, the "Issuer Trustees"). Each of the other capitalized
terms used in this Prospectus Supplement and not otherwise defined in
this Prospectus Supplement has the meaning set forth in this Prospectus
Supplement or in the accompanying Prospectus.
RISK FACTORS
Prospective purchasers of the Series A Preferred Securities
should carefully review the information contained elsewhere in this
Prospectus Supplement and in the accompanying Prospectus and should
particularly consider the following matters.
Ranking of Subordinated Obligations Under the Series A Guarantee and
the Series A Debentures
The obligations of CPL under the Series A Guarantee issued by
CPL for the benefit of the holders of Series A Preferred Securities are
unsecured and rank subordinate and junior in right of payment to all
Senior Indebtedness of CPL. The obligations of CPL under the Series A
Debentures are subordinate and junior in right of payment to all such
Senior Indebtedness. At December 31, 1996, the Senior Indebtedness of
CPL aggregated approximately $1,671 million. In addition, the Series A
Debentures will be effectively subordinated to all existing and future
liabilities of CPL's subsidiaries, if any, and holders of Series A
Debentures should look only to the assets of CPL for payments on the
Series A Debentures. None of the Indenture, the Series A Guarantee or
the Trust Agreement places any limitation on the amount of secured or
unsecured debt, including Senior Indebtedness, that may be incurred by
CPL. See "Description of Guarantees--Status of the Guarantees" and
"Description of Junior Subordinated Debentures--Subordination" in the
accompanying Prospectus.
The ability of CPL Capital I to pay amounts due on the Series
A Preferred Securities is solely dependent upon CPL making payments on
the Series A Debentures as and when required.
Option to Extend Interest Payment Period; Tax Consequences; Potential
Market Volatility During Extension Period
CPL has the right under the Indenture to defer the payment of
interest on the Series A Debentures at any time or from time to time
for one or more Extension Periods, each of which, together with all
previous and further extensions of such Extension Period prior to its
termination, may not exceed 20 consecutive quarters and may not extend
beyond the maturity of the Series A Debentures. As a consequence of any
such election, quarterly Distributions on the Series A Preferred
Securities by CPL Capital I will be deferred (and the amount of
Distributions to which holders of the Series A Preferred Securities are
entitled will continue to accumulate at the rate of __% per annum,
compounded quarterly) during any such Extension Period. During any such
Extension Period, CPL may not, and may not permit any subsidiary of CPL
to, (i) declare, set aside or pay any dividend or distribution on, or
repurchase, redeem, or otherwise acquire or make any sinking fund
payment with respect to, any shares of CPL's capital stock or (ii) make
any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities (including other Junior
Subordinated Debentures) that rank pari passu with or junior in
interest to the Series A Debentures or make any guarantee payments with
respect to the foregoing (other than (a) dividends or distributions in
shares of its capital stock or in rights to acquire shares of its
capital stock, (b) conversions into or exchanges for shares of its
capital stock, (c) redemptions, purchases or other acquisitions of
shares of its capital stock made for the purpose of an employee
incentive plan or benefit plan of CPL or any of its subsidiaries and
mandatory redemptions or sinking fund payments with respect to any
series of Preferred Stock of CPL that are subject to mandatory
redemption or sinking fund requirements, provided that the aggregate
stated value of all such series outstanding at the time of any such
payment does not exceed five percent of the aggregate of (1) the total
principal amount of all bonds or other securities representing secured
indebtedness issued or assumed by CPL and then outstanding and (2) the
capital and surplus of CPL to be stated on the books of account of CPL
after giving effect to such payment, provided, however, that any moneys
deposited in any sinking fund and not in violation of this provision
may thereafter be applied to the purchase or redemption of such
Preferred Stock in accordance with the terms of such sinking fund
without regard to the restrictions contained in this provision, and (d)
payments under any guarantee by CPL with respect to any securities of a
subsidiary of CPL, provided that the proceeds from the issuance of such
securities were used to purchase Junior Subordinated Debentures of any
series under the Indenture). Upon the termination of any Extension
Period and the payment of all amounts then due on any Interest Payment
Date, CPL may elect to begin a new Extension Period subject to the
above requirements. Consequently, there could be multiple Extension
Periods of varying lengths throughout the term of the Series A
Debentures. See "Certain Terms of the Series A Preferred
Securities--Distributions" and "Certain Terms of the Series A
Debentures--Option to Extend Interest Payment Period."
Should an Extension Period occur, a holder of Series A
Preferred Securities must accrue interest income (as original issue
discount) on an economic accrual basis in respect of its pro rata share
of the Series A Debentures held by CPL Capital I for United States
federal income tax purposes. As a result, a holder of Series A
Preferred Securities will include such interest in gross income for
United States federal income tax purposes in advance of the receipt of
cash, and will not receive the cash related to such income from CPL
Capital I if the holder disposes of the Series A Preferred Securities
prior to the record date for the payment of Distributions. See "Certain
Federal Income Tax Considerations--Potential Extension of Interest
Payment Period and Original Issue Discount" and "--Sale or Redemption
of Series A Preferred Securities."
CPL has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Series A Debentures. However, should CPL elect to exercise such right
in the future, the market price of the Series A Preferred Securities is
likely to be affected. A holder that disposes of its Series A Preferred
Securities during an Extension Period, therefore, might not receive the
same return on its investment as a holder that continues to hold its
Series A Preferred Securities.
Special Event Redemption
Upon the occurrence of a Special Event, as described in
"Description of Preferred Securities--Redemption or Exchange--Special
Event Redemption or Distribution of Corresponding Junior Subordinated
Debentures" in the accompanying Prospectus, CPL has the right to redeem
the Series A Debentures in whole (but not in part) within 90 days
following the occurrence of such Special Event and thereby cause a
mandatory redemption of the Series A Preferred Securities at the
applicable redemption price. See "Description of Preferred
Securities--Redemption or Exchange--Special Event Redemption or
Distribution of Corresponding Junior Subordinated Debentures" in the
accompanying Prospectus.
Under current United States federal income tax law, such a
redemption of the Series A Preferred Securities would constitute a
taxable event to the holders thereof. See "Certain Federal Income Tax
Considerations--Sale or Redemption of Series A Preferred Securities."
Exchange of Series A Preferred Securities for Series A Debentures
CPL will have the right at any time to terminate CPL Capital I
and, after satisfaction of liabilities to creditors of CPL Capital I as
required by applicable law, cause the Series A Debentures to be
distributed to the holders of the Series A Preferred Securities in
liquidation of CPL Capital I. See "Certain Terms of Series A Preferred
Securities--Distribution of Series A Debentures."
Under current United States federal income tax law, provided
CPL Capital I is treated as a "grantor trust" at the time of the
distribution, a distribution of the Series A Debentures upon
liquidation of CPL Capital I should not be a taxable event to holders
of the Series A Preferred Securities. However, if at the time of the
distribution, CPL Capital I were subject to United States federal
income tax with respect to income received or accrued on the Series A
Debentures, a distribution of the Series A Debentures by CPL Capital I
would be a taxable event to CPL Capital I and the holders of the Series
A Preferred Securities. See "Certain Federal Income Tax
Considerations--Distribution of Series A Debentures to Holders of
Series A Preferred Securities."
There can be no assurance as to the market prices for Series A
Preferred Securities or Series A Debentures that may be distributed in
exchange for Series A Preferred Securities if a liquidation of CPL
Capital I occurs. Accordingly, the Series A Preferred Securities that
an investor may purchase, whether pursuant to the offer made hereby or
in the secondary market, or the Series A Debentures that a holder of
Series A Preferred Securities may receive on liquidation of CPL Capital
I, may trade at a discount to the price that the investor paid to
purchase the Series A Preferred Securities offered hereby. Holders of
Series A Preferred Securities may receive Series A Debentures upon
liquidation of CPL Capital I and prospective purchasers of Series A
Preferred Securities are also making an investment decision with regard
to the Series A Debentures and should carefully review all the
information regarding the Series A Debentures contained herein. See
"Description of the Preferred Securities--Redemption or
Exchange--Special Event Redemption or Distribution of Corresponding
Junior Subordinated Debentures" and "Description of the Corresponding
Junior Subordinated Debentures--General" in the accompanying
Prospectus.
Shortening of Stated Maturity of Series A Debentures; Market Price
CPL will have the right at any time and from time to time to
shorten the maturity of the Series A Debentures to a date not earlier
than _______, 2002 and thereby cause the Series A Preferred Securities
to be redeemed on such earlier date. If CPL does exercise such right,
there can be no assurance that the shortening of the maturity of the
Series A Debentures will not have an effect on the market price of the
Series A Preferred Securities or Series A Debentures that may be
distributed in exchange for Series A Preferred Securities.
Possible Tax Law Changes
On February 6, 1997, President Clinton introduced to Congress
his budget proposal for fiscal year 1998. Included in President
Clinton's budget proposal is a tax provision, which if enacted,
generally would treat as equity, for federal income tax purposes, an
instrument issued by a corporation if the instrument has a maximum
term of more than 15 years and is not shown as indebtedness on the
separate balance sheet of the issuer or, where the instrument is
issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that
is not shown as indebtedness on the issuer's consolidated balance
sheet. The above- described provision is proposed to be effective
generally for instruments issued on or after the date of first action
by Congressional committee. As of the date hereof, no such
Congressional action has occurred. If the proposed provision applied
to the Series A Debentures, CPL would be unable to deduct interest on
the Series A Debentures. A similar tax provision was contained in
President Clinton's budget proposal for fiscal year 1997, which
provision was not enacted before the 104th Congress adjourned. Under
current law, CPL believes and intends to take the position that it is
able to deduct interest on the Series A Debentures. There can be no
assurance that current or future legislative proposals or final
legislation will not affect the ability of CPL to deduct interest on
the Series A Debentures. Such a change could give rise to a Tax
Event, which would permit CPL to cause a redemption of the Series A
Preferred Securities before ________, 2002. See "Certain Terms of
Series A Subordinated Debentures--Redemption" in this Prospectus
Supplement and "Description of Preferred Securities--Redemption or
Exchange--Special Event Redemption or Distribution of Corresponding
Junior Subordinated Debentures" in the accompanying Prospectus. See
also "Certain Federal Income Tax Considerations--Possible Tax Law
Changes."
Rights Under the Series A Guarantee
The Series A Guarantee will be qualified as an indenture under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"). The Bank of New York will act as the indenture trustee under the
Series A Guarantee (the "Guarantee Trustee") for the purposes of
compliance with the Trust Indenture Act and will hold the Series A
Guarantee for the benefit of the holders of the Series A Preferred
Securities. The Bank of New York also will act as Debenture Trustee for
the Series A Debentures and as Property Trustee under the Trust
Agreement. The Series A Guarantee guarantees to the holders of the
Series A Preferred Securities the following payments, to the extent not
paid by CPL Capital I: (i) any accumulated and unpaid Distributions
required to be paid on the Series A Preferred Securities, to the extent
that CPL Capital I has funds on hand available therefor, (ii) the
redemption price with respect to any Series A Preferred Securities
called for redemption to the extent that CPL Capital I has funds on
hand available therefor at the date of redemption, and (iii) upon a
voluntary or involuntary termination, winding up or liquidation of CPL
Capital I (unless the Series A Debentures are distributed to holders of
the Series A Preferred Securities), the lesser of (a) the aggregate of
the liquidation preference and all accumulated and unpaid Distributions
to the date of payment to the extent CPL Capital I has funds on hand
available therefor and (b) the amount of assets of CPL Capital I
remaining available for distribution to holders of the Series A
Preferred Securities. If CPL were to default on its obligation to pay
amounts payable under the Series A Debentures, CPL Capital I would lack
funds for the payment of Distributions or amounts payable on redemption
of the Series A Preferred Securities or otherwise, and, in such event,
holders of the Series A Preferred Securities would not be able to rely
upon the Series A Guarantee for payment of such amounts. Instead,
holders of the Series A Preferred Securities would have the limited
enforcement rights described under "Description of Preferred
Securities--Events of Default; Notice" and "--Enforcement of Certain
Rights by Holders of Preferred Securities" in the accompanying
Prospectus. See "Description of Guarantees" and "Description of
Corresponding Junior Subordinated Debentures" in the accompanying
Prospectus. The Trust Agreement provides that each holder of Series A
Preferred Securities by acceptance thereof agrees to the provisions of
the Series A Guarantee and the Indenture.
Limited Voting Rights
Holders of Series A Preferred Securities will generally have
limited voting rights relating only to the modification of the Series A
Preferred Securities and the dissolution, winding-up or liquidation of
CPL Capital I. Holders of Series A Preferred Securities will not be
entitled to vote to appoint, remove or replace the Property Trustee or
the Delaware Trustee, which voting rights are vested exclusively in the
holder of the Series A Common Securities except upon the occurrence of
certain events. The Issuer Trustees and CPL may amend the Trust
Agreement without the consent of holders of Series A Preferred
Securities to ensure that CPL Capital I will be classified for United
States federal income tax purposes as a "grantor trust," even if such
action adversely affects the interests of such holders in a material
respect. See "Description of Preferred Securities--Voting Rights;
Amendment of Trust Agreement" and "--Removal of Issuer Trustees" in the
accompanying Prospectus.
Trading Characteristics of Series A Preferred Securities
CPL Capital I intends to list the Series A Preferred
Securities on the NYSE. The Series A Preferred Securities may trade at
prices that do not fully reflect the value of accrued but unpaid
interest with respect to the underlying Series A Debentures. A holder
of Series A Preferred Securities that disposes of its Series A
Preferred Securities between record dates for payments of Distributions
(and consequently does not receive a Distribution from CPL Capital I
for the period prior to such disposition) will nevertheless be required
to include as ordinary income, accrued but unpaid interest on the
Series A Debentures through the date of disposition. Such holder will
recognize a capital loss to the extent the amount realized with respect
to the Series A Preferred Securities is less than its adjusted tax
basis. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax
purposes. See "Certain Federal Income Tax Considerations--Sale or
Redemption of Series A Preferred Securities."
CPL CAPITAL I
CPL Capital I is a statutory business trust created under
Delaware law pursuant to (i) a trust agreement executed by CPL, as
Depositor, The Bank of New York, as Property Trustee, The Bank of New
York (Delaware), as Delaware Trustee, and the Administrative Trustee
named therein (which trust agreement was later amended and restated in
the form of the Trust Agreement) and (ii) the filing of a certificate
of trust with the Delaware Secretary of State on January 24, 1997. CPL
Capital I's business and affairs are conducted by the Issuer Trustees:
The Bank of New York, as Property Trustee, The Bank of New York
(Delaware), as Delaware Trustee, and two individual Administrative
Trustees who are employees or officers of or affiliated with CPL. CPL
Capital I exists for the exclusive purposes of (i) issuing and selling
the Series A Preferred Securities and Series A Common Securities, (ii)
using the proceeds from the sale of Series A Preferred Securities and
the Series A Common Securities to acquire Series A Debentures issued by
CPL and (iii) engaging in only those other activities necessary,
convenient or incidental thereto. Accordingly, the Series A Debentures
will be the sole assets of CPL Capital I, and payments under the Series
A Debentures will be the sole revenue of CPL Capital I. All of the
Series A Common Securities will be owned by CPL. The Series A Common
Securities will rank pari passu, and payments will be made thereon pro
rata, with the Series A Preferred Securities, except that upon the
occurrence and continuance of an event of default under the Trust
Agreement resulting from an Event of Default under the Indenture, the
rights of CPL as holder of the Series A Common Securities to payment in
respect of Distributions and payments upon liquidation, redemption or
otherwise will be subordinated to the rights of the holders of the
Series A Preferred Securities. See "Description of Preferred
Securities--Subordination of Common Securities" in the accompanying
Prospectus. CPL will acquire Series A Common Securities having an
aggregate liquidation amount equal to 3% of the total capital of CPL
Capital I. CPL Capital I has a term of 45 years, but may terminate
earlier as provided in the Trust Agreement. The principal executive
office of CPL Capital I is c/o Central and South West Corporation, 1616
Woodall Rodgers Freeway, Dallas, Texas 75202, Attention: Director,
Finance, and its telephone number is (214) 777-1000. See "The Issuer
Trusts" in the accompanying Prospectus.
It is anticipated that CPL Capital I will not be subject to
the reporting requirements of the Exchange Act.
CENTRAL POWER AND LIGHT COMPANY
Central Power and Light Company, a Texas corporation ("CPL"),
is a public utility company engaged in the production, purchase,
transmission, distribution and sale of electricity in South Texas. CPL
serves approximately 614,000 retail customers in the South Texas area.
Central and South West Corporation ("CSW"), a Dallas-based registered
public utility holding company under the Public Utility Holding Company
Act of 1935, as amended (the "1935 Act"), owns all of the issued and
outstanding common stock of CPL. CPL's executive offices are located at
539 North Carancahua Street, Corpus Christi, Texas 78401-2802,
telephone number (512) 881-5300.
The foregoing information relating to CPL does not purport to
be comprehensive and should be read together with the financial
statements and other information contained in the Incorporated
Documents. See "Incorporation of Certain Documents by Reference" in the
accompanying Prospectus.
RECENT DEVELOPMENTS
On March 18, 1997, CSW launched a tender offer for CPL's
4.20% Series and 4.00% Series preferred stock. CPL concurrently
launched a solicitation of proxies from its common and preferred
shareholders for use at a special meeting held on April 7, 1997 which
resulted in a consent to remove a provision in its Restated Articles
of Incorporation which limited the amount of unsecured debt that CPL
could issue.
USE OF PROCEEDS
All of the proceeds from the sale of Series A Preferred
Securities will be invested by CPL Capital I in Series A Debentures.
The proceeds from the sale of such Series A Debentures will initially
become part of the general funds of CPL and will be used to replace or
retire, through redemption, repurchase or otherwise, one or more series
of outstanding preferred stock of CPL, or any combination thereof, to
repay all or a portion of CPL's short-term borrowings outstanding,
including short-term borrowings incurred to repay a currently maturing
first mortgage bond of CPL, and for other general corporate purposes,
subject to applicable regulatory requirements.
<PAGE>
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDEND REQUIREMENTS
The following table sets forth CPL's ratios of earnings to
fixed charges and ratios of earnings to combined fixed charges and
preferred stock dividend requirements for the years indicated:
<TABLE>
Year Ended December 31,
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<CAPTION>
<S> <C> <C> <C> <C> <C>
Earnings to Fixed Charges 2.86 2.63 3.24 2.69 3.23
Earnings to Combined Fixed Charges
and 2.44 2.36 2.82 2.31 2.77
Preferred Stock Dividend
Requirements
(unaudited)
</TABLE>
For computation of the ratios: (i) earnings consist of
operating income plus federal income taxes, deferred income taxes and
investment tax credits, other income and deductions, allowance for
funds (both borrowed and equity) used during construction and mirror
construction work in progress amortization, and (ii) fixed charges
consist of interest on long-term debt and short-term debt, and other
interest charges. Pretax earnings required for preferred stock
dividends were computed using the effective tax rate for the applicable
year.
SELECTED FINANCIAL INFORMATION
(Dollar amounts in thousands)
The selected financial data of CPL for the years ended
December 31, 1994, 1995 and 1996 set forth below were derived from
and should be read in conjunction with the financial statements and
related notes of CPL incorporated by reference in the accompanying
Prospectus. The financial statements for the three-year period ended
December 31, 1996 have been audited by Arthur Andersen LLP, independent
auditors, and the reports of Arthur Andersen LLP thereon are
incorporated by reference in the accompanying Prospectus.
Year Ended December 31,
1996 1995 1994
------ ------- -------
Operating Revenues.............. $1,300,688 $1,073,469 $1,217,979
Operating Income................ 285,647 282,184 256,251
Net Income Before Cumulative
Effect of Changes in -- -- --
Accounting Principles...........
Cumulative Effect of Changes
in Accounting -- -- --
Principles......................
Net Income...................... 147,051 206,447 205,439
Net Utility Plant............... 3,419,018 3,469,945 3,469,826
<TABLE>
Capitalization at
December 31, 1996
(Unaudited)
Amount Actual % Amount as Adjusted(1) %
<CAPTION>
<S> <C> <C> <C> <C>
Long-Term Debt................................... $1,323,054 43.9% $1,323,054 43.1%
Company Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trust Holding Solely
Parent Junior Subordinated Debentures (2)...... -- -- 149,750 4.9
Preferred Stock.................................. 250,351 8.3 157,306 5.1
Common Equity.................................... 1,442,820 47.8 $1,442,365 46.9
---------- ----- ---------- ------
Total...................................... $3,016,225 100.0% $3,072,475 100.0%
========== ====== ========== ======
Short-Term Debt.................................. $52,525 (3,725)
Long-Term Debt Currently Maturing................ $200,000 $ 200,000
</TABLE>
----------------------------
(1) Adjusted to give effect to the consummation of the offering of
6,000,000 Preferred Securities and the application of the estimated
net proceeds therefrom to redeem all of the preferred stock
(except for CPL's Money Market Preferred Stock and Auction
Preferred Stock Series A and B)and short-term debt. Amount as
Adjusted does not take into account the current tender offer by
CSW. See "Recent Developments."
(2) As described herein, the sole assets of CPL Capital I will consist
solely of approximately $150 million of Series A Debentures, issued
by CPL to CPL Capital I, and certain rights under the Series A
Guarantee. The Series A Debentures will bear interest at the annual
rate of ___% of the principal amount thereof and will mature on
_______, 2037 which date may be shortened to a date not earlier
than ________, 2002. CPL owns all of the Series A Common Securities
of CPL Capital I.
ACCOUNTING TREATMENT
For financial reporting purposes, CPL Capital I will be
treated as a subsidiary of CPL and, accordingly, the accounts of CPL
Capital I will be included in the financial statements of CPL. The
Series A Preferred Securities will be presented as a separate line item
in the balance sheet of CPL and appropriate disclosures about the
Series A Preferred Securities, the Series A Guarantee and the Series A
Debentures will be included in the notes to the financial statements.
For financial reporting purposes, CPL will record Distributions payable
on the Series A Preferred Securities as an expense.
CERTAIN TERMS OF THE SERIES A PREFERRED SECURITIES
General
The following summary of certain terms and provisions of the
Series A Preferred Securities supplements the description of the terms
and provisions of the Preferred Securities set forth in the
accompanying Prospectus under the heading "Description of Preferred
Securities," to which description reference is hereby made. This
summary of certain terms and provisions of the Series A Preferred
Securities does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Trust Agreement. The
form of the Trust Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus Supplement and
accompanying Prospectus is a part.
Distributions
The Series A Preferred Securities represent undivided
beneficial interests in the assets of CPL Capital I, and Distributions
on each Series A Preferred Security will be payable at the annual rate
of __% of the stated liquidation preference of $25, payable quarterly
in arrears on March 31, June 30, September 30 and December 31 of each
year. Distributions will accumulate from __________, 1997, the date of
original issuance. The first Distribution payment date for the Series A
Preferred Securities will be __________, 1997. The amount of
Distributions payable for any period will be computed on the basis of a
360-day year of twelve 30-day months and, for any period shorter than a
full calendar month, on the basis of the actual number of days elapsed
in such period. In the event that any date on which Distributions are
payable on the Series A Preferred Securities is not a Business Day,
then payment of the Distributions payable on such date will be made on
the next succeeding day that is a Business Day (and without any
additional Distributions or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding calendar
year, payment of such Distribution shall be made on the immediately
preceding Business Day, in each such case with the same force and
effect as if made on the date such payment was originally payable.
Accrued and unpaid distributions will accumulate additional
Distributions thereon ("Additional Amounts") after the payment date
therefor in an amount equal to the additional interest accrued on
interest in arrears on the Series A Debentures. See "Certain Terms of
the Series A Debentures--General." The term "Distributions" as used
herein shall include any such Additional Amounts. See "Description of
Preferred Securities--Distributions" in the accompanying Prospectus.
So long as no Event of Default under the Indenture has
occurred and is continuing, CPL has the right under the Indenture to
defer the payment of interest on the Series A Debentures at any time or
from time to time for one or more Extension Periods, each of which,
together with all previous and further extensions of such Extension
Period prior to its termination, may not exceed 20 consecutive quarters
and may not extend beyond the maturity of the Series A Debentures. As a
consequence of any such election, quarterly Distributions on the Series
A Preferred Securities will be deferred by CPL Capital I during any
such Extension Period. Distributions to which holders of the Series A
Preferred Securities are entitled will accumulate additional
Distributions thereon at the rate of __% per annum thereof, compounded
quarterly from the relevant payment date for such Distributions. During
any such Extension Period, CPL may not, and may not permit any
subsidiary of CPL to, (i) declare, set aside or pay any dividend or
distribution on, or repurchase, redeem, or otherwise acquire or make
any sinking fund payment with respect to, any shares of CPL's capital
stock or (ii) make any payment of principal, interest or premium, if
any, on or repay, repurchase or redeem any debt securities (including
other Junior Subordinated Debentures) that rank pari passu with or
junior in interest to the Series A Debentures or make any guarantee
payments with respect to the foregoing (other than (a) dividends or
distributions in shares of its capital stock or in rights to acquire
shares of its capital stock, (b) conversions into or exchanges for
shares of its capital stock, (c) redemptions, purchases or other
acquisitions of shares of its capital stock made for the purpose of an
employee incentive plan or benefit plan of CPL or any of its
subsidiaries and mandatory redemptions or sinking fund payments with
respect to any series of Preferred Stock of CPL that are subject to
mandatory redemption or sinking fund requirements, provided that the
aggregate stated value of all such series outstanding at the time of
any such payment does not exceed five percent of the aggregate of (1)
the total principal amount of all bonds or other securities
representing secured indebtedness issued or assumed by CPL and then
outstanding and (2) the capital and surplus of CPL to be stated on the
books of account of CPL after giving effect to such payment, provided,
however, that any moneys deposited in any sinking fund and not in
violation of this provision may thereafter be applied to the purchase
or redemption of such Preferred Stock in accordance with the terms of
such sinking fund without regard to the restrictions contained in this
provision, and (d) payments under any guarantee by CPL with respect to
any securities of a subsidiary of CPL, provided that the proceeds from
the issuance of such securities were used to purchase Junior
Subordinated Debentures of any series under the Indenture). Upon the
termination of any such Extension Period and the payment of all amounts
then due on any Interest Payment Date, CPL may elect to begin a new
Extension Period, subject to the above requirements. See "Certain Terms
of the Series A Debentures--Option to Extend Interest Payment Period"
and "Certain Federal Income Tax Considerations--Potential Extension of
Interest Payment Period and Original Issue Discount."
CPL has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the
Series A Debentures.
Redemption
Upon the repayment or redemption, in whole or in part, of the
Series A Debentures, whether at maturity or upon earlier redemption as
provided in the Indenture, the proceeds from such repayment or
redemption shall be applied by the Property Trustee to redeem a Like
Amount of the Series A Preferred Securities, upon not less than 30 nor
more than 60 days notice prior to the date fixed for repayment or
redemption (the "Redemption Date"), at a redemption price equal to the
aggregate liquidation preference of such Series A Preferred Securities
plus accumulated and unpaid Distributions thereon to the Redemption
Date (the "Redemption Price"). See "Description of Preferred
Securities--Redemption or Exchange" in the accompanying Prospectus and
"Certain Terms of the Series A Debentures--Redemption."
CPL will have the right to redeem the Series A Debentures (i)
on or after _______, 2002 in whole at any time or in part from time to
time, at a redemption price equal to the accrued and unpaid interest on
the Series A Debentures so redeemed to the date fixed for redemption,
plus 100% of the principal amount thereof or (ii) in whole (but not in
part), within 90 days following the occurrence of a Tax Event or an
Investment Company Event (each as defined in the accompanying
Prospectus, and as so collectively defined, a "Special Event"), at a
redemption price equal to the accrued and unpaid interest on the Series
A Debentures so redeemed to the date fixed for redemption, plus 100% of
the principal amount thereof, in each case subject to conditions
described under "Description of Junior Subordinated
Debentures--Redemption or Exchange" and "Description of Corresponding
Junior Subordinated Debentures--Optional Redemption" in the
accompanying Prospectus.
Distribution of Series A Debentures
At any time, CPL will have the right to terminate CPL Capital
I and, after satisfaction of the liabilities of creditors of CPL
Capital I as provided by applicable law, cause the Series A Debentures
to be distributed to the holders of the Series A Preferred Securities
in liquidation of CPL Capital I. See "Certain Terms of the Series A
Debentures--Distribution of Series A Debentures." If such a
distribution should occur, CPL would continue to have the right to
shorten the maturity of the Series A Debentures, subject to certain
conditions as described under "Certain Terms of the Series A Debentures
- General." Under current United States federal income tax law,
provided CPL Capital I is treated as a "grantor trust" at the time of
such distribution, such distribution should not be a taxable event to
CPL Capital I or to holders of the Series A Preferred Securities. If
there were an occurrence of a Special Event pursuant to which CPL
Capital I was determined to be an association taxable as a corporation,
however, such a distribution would be a taxable event to CPL Capital I
and to such holders. See "Certain Federal Income Tax
Considerations--Distribution of Series A Debentures to Holders of
Series A Preferred Securities." If CPL does not elect to redeem or
distribute the Series A Debentures as described above, the Series A
Preferred Securities will remain outstanding until the repayment of the
Series A Debentures.
Liquidation Value
The amount payable on the Series A Preferred Securities in the
event of any liquidation of CPL Capital I is $25 per Series A Preferred
Security plus accumulated and unpaid Distributions, which may be in the
form of a distribution of a Like Amount in Series A Debentures, subject
to certain exceptions. See "Description of Preferred
Securities--Liquidation Distribution Upon Termination" in the
accompanying Prospectus.
CERTAIN TERMS OF THE SERIES A DEBENTURES
General
The following summary of certain terms and provisions of the
Series A Debentures supplements the description of the terms and
provisions of the Corresponding Junior Subordinated Debentures set
forth in the accompanying Prospectus under the headings "Description of
Junior Subordinated Debentures" and "Description of Corresponding
Junior Subordinated Debentures," to which description reference is
hereby made. The summary of certain terms and provisions of the Series
A Debentures set forth below does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the
Indenture. The Indenture has been filed as an exhibit to the
Registration Statement of which this Prospectus Supplement and
accompanying Prospectus is a part.
Concurrently with the issuance of the Series A Preferred
Securities, CPL Capital I will invest the proceeds thereof and the
consideration paid by CPL for the Series A Common Securities in the
Series A Debentures issued by CPL. The Series A Debentures will bear
interest at the annual rate of __% of the principal amount thereof,
payable quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year (each, an "Interest Payment Date"), commencing
_______, 1997, to the person in whose name each Series A Debenture is
registered, subject to certain exceptions, at the close of business on
the fifteenth day of the month immediately preceding the Interest
Payment Date.
It is anticipated that, until the liquidation, if any, of CPL
Capital I, each Series A Debenture will be held in the name of the
Property Trustee in trust for the benefit of the holders of the Series
A Preferred Securities. The amount of interest payable for any period
will be computed on the basis of a 360-day year of twelve 30-day months
and, for any period shorter than a full calendar month, on the basis of
the actual number of days elapsed in such period. In the event that any
date on which interest is payable on the Series A Debentures is not a
Business Day, then payment of the interest payable on such date will be
made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if
such Business Day is in the next succeeding calendar year, payment of
such Distribution shall be made on the immediately preceding Business
Day, in each such case with the same force and effect as if made on the
date such payment was originally payable. Accrued interest that is not
paid on the applicable Interest Payment Date will bear additional
interest on the amount thereof (to the extent permitted by law) at the
rate per annum of __% thereof, compounded quarterly. The term
"interest" as used herein shall include quarterly interest payments,
interest on quarterly interest payments not paid on the applicable
Interest Payment Date and Additional Sums (as defined below), as
applicable.
The Series A Debentures will be issued as a series of Junior
Subordinated Debentures under the Indenture. The Series A Debentures
will mature on _____, 2037, which date may be shortened at any time and
from time to time at the election of CPL, but in no event to a date
earlier than _______, 2002 (such date, as it may be shortened, the
"Maturity Date"), provided, however, that, if CPL exercises its right
to liquidate CPL Capital I and distribute the Series A Debentures to
holders in exchange for the Series A Preferred Securities, effective
upon such exercise the Maturity Date of the Series A Debentures may be
changed to any date elected by CPL that is (i) no earlier than the date
five years after the initial issuance of the Series A Preferred
Securities and (ii) no later than ______, 2037. The Series A Debentures
will be unsecured and will rank junior and be subordinate in right of
payment to all Senior Indebtedness of CPL. In addition, the Series A
Debentures will be effectively subordinated to all existing and future
liabilities of CPL's subsidiaries, and holders of Series A Debentures
should look only to the assets of CPL for payments on the Series A
Debentures. CPL currently has no subsidiaries. The Indenture does not
limit the incurrence or issuance of other secured or unsecured debt of
CPL, whether under the Indenture, any other existing or other indenture
that CPL may enter into in the future or otherwise. See "Description of
Junior Subordinated Debentures--Subordination" in the accompanying
Prospectus.
Option to Extend Interest Payment Period
So long as no Event of Default under the Indenture has
occurred and is continuing, CPL has the right under the Indenture at
any time during the term of the Series A Debentures to defer the
payment of interest at any time or from time to time for one or more
Extension Periods, each of which, together with all previous and
further extensions of such Extension Period prior to its termination,
may not exceed 20 consecutive quarters and may not extend beyond the
maturity of the Series A Debentures. At the end of such Extension
Period, CPL must pay all interest then accrued and unpaid (together
with interest thereon at the annual rate of __%, compounded quarterly,
to the extent permitted by applicable law). During an Extension Period,
interest will continue to accrue and holders of Series A Debentures (or
holders of Series A Preferred Securities while such series is
outstanding) will be required to accrue interest income (as original
issue discount) on an economic accrual basis for United States federal
income tax purposes. See "Certain Federal Income Tax
Considerations--Potential Extension of Interest Payment Period and
Original Issue Discount."
During any such Extension Period, CPL may not, and may not
permit any subsidiary of CPL to, (i) declare, set aside or pay any
dividend or distribution on, or repurchase, redeem, or otherwise
acquire or make any sinking fund payment with respect to, any shares of
CPL's capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities
(including other Junior Subordinated Debentures) that rank pari passu
with or junior in interest to the Series A Debentures or make any
guarantee payments with respect to the foregoing (other than (a)
dividends or distributions in shares of its capital stock or in rights
to acquire shares of its capital stock, (b) conversions into or
exchanges for shares of its capital stock, (c) redemptions, purchases
or other acquisitions of shares of its capital stock made for the
purpose of an employee incentive plan or benefit plan of CPL or any of
its subsidiaries and mandatory redemptions or sinking fund payments
with respect to any series of Preferred Stock of CPL that are subject
to mandatory redemption or sinking fund requirements, provided that the
aggregate stated value of all such series outstanding at the time of
any such payment does not exceed five percent of the aggregate of (1)
the total principal amount of all bonds or other securities
representing secured indebtedness issued or assumed by CPL and then
outstanding and (2) the capital and surplus of CPL to be stated on the
books of account of CPL after giving effect to such payment, provided,
however, that any moneys deposited in any sinking fund and not in
violation of this provision may thereafter be applied to the purchase
or redemption of such Preferred Stock in accordance with the terms of
such sinking fund without regard to the restrictions contained in this
provision, and (d) payments under any guarantee by CPL with respect to
any securities of a subsidiary of CPL, provided that the proceeds from
the issuance of such securities were used to purchase Junior
Subordinated Debentures of any series under the Indenture). Upon the
termination of any such Extension Period and the payment of all amounts
then due on any Interest Payment Date, CPL may elect to begin a new
Extension Period, subject to the above requirements. No interest shall
be due and payable during an Extension Period, except at the end
thereof. CPL must give the Administrative Trustees and the Debenture
Trustee notice of its election of such Extension Period at least one
Business Day prior to the earlier of (i) the date the Distributions on
the Series A Preferred Securities would have been payable except for
the election to begin such Extension Period and (ii) the date the
Administrative Trustees are required to give notice to the NYSE or
other applicable self-regulatory organization or to holders of such
Series A Preferred Securities of the record date or the date such
Distributions are payable, but in any event not less than one Business
Day prior to such record date. The Administrative Trustees shall give
notice of CPL's election to begin a new Extension Period to the holders
of the Series A Preferred Securities within five Business Days of the
receipt of notice thereof. See "Description of Junior Subordinated
Debentures--Option to Extend Interest Payment Date" in the accompanying
Prospectus.
Additional Sums
If CPL Capital I is required to pay any additional taxes,
duties or other governmental charges as a result of a Tax Event, CPL
will pay as additional amounts on the Series A Debentures such amounts
("Additional Sums") as shall be required so that the Distributions
payable by CPL Capital I shall not be reduced as a result of any such
additional taxes, duties or other governmental charges, subject to the
conditions described under "Description of Preferred
Securities--Redemption or Exchange--Special Event Redemption or
Distribution of Corresponding Junior Subordinated Debentures" in the
accompanying Prospectus.
Redemption
The Series A Debentures are redeemable prior to maturity at
the option of CPL (i) on or after _______, 2002, in whole at any time
or in part from time to time, at a redemption price equal to the
accrued and unpaid interest on the Series A Debentures so redeemed to
the date fixed for redemption plus 100% of the principal amount thereof
or (ii) in whole (but not in part), within 90 days of the occurrence of
a Special Event, at a redemption price equal to the accrued and unpaid
interest on the Series A Debentures so redeemed to the date fixed for
redemption, plus 100% of the principal amount thereof, in each case
subject to the further conditions described under "Description of
Junior Subordinated Debentures--Redemption" and "Description of
Corresponding Junior Subordinated Debentures--Optional Redemption" in
the accompanying Prospectus.
Distribution of Series A Debentures
Under certain circumstances involving the termination of CPL
Capital I, Series A Debentures may be distributed to the holders of the
Series A Preferred Securities in liquidation of CPL Capital I after
satisfaction of liabilities to creditors of CPL Capital I as provided
by applicable law. If distributed to holders of Series A Preferred
Securities in liquidation, the Series A Debentures will initially be
issued in the form of one or more global securities and DTC, or any
successor depositary for the Series A Preferred Securities, will act as
depositary for the Series A Debentures. It is anticipated that the
depositary arrangements for the Series A Debentures would be
substantially identical to those in effect for the Series A Preferred
Securities. If the Series A Debentures are distributed to the holders
of Series A Preferred Securities upon the liquidation of CPL Capital I,
CPL will use its best efforts to list the Series A Debentures on the
NYSE or such other stock exchanges or other organizations, if any, on
which the Series A Preferred Securities are then listed. There can be
no assurance as to the market price of any Series A Debentures that may
be distributed to the holders of Series A Preferred Securities. For a
description of DTC and the terms of the depositary arrangements
relating to payments, transfers, voting rights, redemption and other
notices and other matters, see "Description of Preferred
Securities--Book-entry Issuance" in the accompanying Prospectus.
Registration of Series A Debentures
A global security shall be exchangeable for Series A
Debentures registered in the names of persons other than DTC or its
nominee only if (i) DTC notifies CPL that it is unwilling or unable to
continue as a depositary for such global security and no successor
depositary shall have been appointed, or if at any time DTC ceases to
be a clearing agency registered under the Exchange Act, at a time when
DTC is required to be so registered to act as such depositary, (ii) CPL
in its sole discretion determines that such global security shall be so
exchangeable or (iii) the global security was issued pursuant to a
liquidation of CPL Capital I as provided in the Trust Agreement and
there shall have occurred and be continuing a Debenture Event of
Default with respect to such global security and the holders of at
least a majority of the beneficial interests in such global security
advise the Property Trustee in writing that the continuation of a
book-entry system through DTC is no longer in their best interest. Any
global security that is exchangeable pursuant to the preceding sentence
shall be exchangeable for definitive certificates registered in such
names as DTC shall direct. It is expected that such instructions will
be based upon directions received by DTC from its Participants with
respect to ownership of beneficial interests in such global security.
In the event that Series A Debentures are issued in definitive form,
such Series A Debentures will be in denominations of $25 and integral
multiples thereof and may be transferred or exchanged at the offices
described below.
Payments on Series A Debentures represented by a global
security will be made to DTC, as the depositary for the Series A
Debentures. In the event Series A Debentures are issued in definitive
form, principal and interest will be payable, the transfer of the
Series A Debentures will be registrable, and Series A Debentures will
be exchangeable for Series A Debentures of other denominations of a
like aggregate principal amount, at the corporate office of the
Debenture Trustee in New York, New York, or at the offices of any
paying agent or transfer agent appointed by CPL, provided that payment
of interest may be made at the option of CPL by check mailed to the
address of the persons entitled thereto or by wire transfer as provided
under "Description of Junior Subordinated Debentures--Payment and
Paying Agents" in the accompanying Prospectus. In addition, if the
Series A Debentures are issued in certificated form, the record dates
for payment of interest will be the 15th day of the month in which the
relevant Interest Payment Date occurs. For a description of DTC and the
terms of the depositary arrangements relating to payments, transfers,
voting rights, redemptions and other notices and other matters, see
"Description of Preferred Securities--Book-entry Issuance" in the
accompanying Prospectus.
ERISA CONSIDERATIONS
Each fiduciary of a pension, profit-sharing or other employee
benefit plan subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA")(a "Plan"), should consider the fiduciary
standards of ERISA in the context of the Plan's particular
circumstances before authorizing an investment in the Series A
Preferred Securities. Accordingly, among other factors, the fiduciary
should consider whether the investment would satisfy the prudence and
diversification requirements of ERISA and would be consistent with the
documents and instruments governing the Plan.
Section 406 of ERISA and Section 4975 of the Internal Revenue
Code of 1986, as amended (the "Code") prohibit Plans, as well as
individual retirement accounts and Keogh plans subject to Section 4975
of the Code (also "Plans"), from engaging in certain transactions
involving "plan assets" with persons who are "parties in interest"
under ERISA or "disqualified persons" under the Code ("Parties in
Interest") with respect to such Plan. A violation of these "prohibited
transaction" rules may result in an excise tax or other liabilities
under ERISA and/or Section 4975 of the Code for such persons, unless
exemptive relief is available under an applicable statutory or
administrative exemption. Employee benefit plans that are governmental
plans (as defined in Section 3(32) of ERISA), certain church plans (as
defined in Section 3(33) of ERISA) and foreign plans (as described in
Section 4(b)(5) of ERISA) are not subject to the requirements of ERISA
or Section 4975 of the Code.
Under a regulation (the "Plan Assets Regulation") issued by
the U.S. Department of Labor (the "DOL"), the assets of CPL Capital I
would be deemed to be "plan assets" of a Plan for purposes of ERISA and
Section 4975 of the Code if "plan assets" of the Plan were used to
acquire an equity interest in CPL Capital I and no exception were
applicable under the Plan Assets Regulation. An "equity interest" is
defined under the Plan Assets Regulation as any interest in an entity
other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features and
specifically includes a beneficial interest in a trust.
Pursuant to an exception contained in the Plan Assets
Regulation, the assets of CPL Capital I would not be deemed to be "plan
assets" of investing Plans if, immediately after the most recent
acquisition of any equity interest in CPL Capital I, less that 25% of
the value of each class of equity interests in CPL Capital I were held
by Plans, other employee benefit plans not subject to ERISA or Section
4975 of the Code (such as governmental, church and foreign plans), and
entities holding assets deemed to be "plan assets" of any Plan
(collectively, "Benefit Plan Investors"), or if the Series A Preferred
Securities were "publicly-offered securities" for purposes of the Plan
Assets Regulation. No assurance can be given that the value of the
Series A Preferred Securities held by Benefit Plan Investors will be
less than 25% of the total value of such Series A Preferred Securities
at the completion of the initial offering or thereafter, and no
monitoring or other measures will be taken with respect to the
satisfaction of the conditions to this exception. In addition, no
assurance can be given that the Series A Preferred Securities would be
considered to be "publicly-offered securities" under the Plan Assets
Regulation. All of the Series A Common Securities will be purchased and
initially held by CPL.
Certain transactions involving CPL Capital I could be deemed
to constitute direct or indirect prohibited transactions under ERISA
and Section 4975 of the Code with respect to a Plan if the Series A
Preferred Securities were acquired with "plan assets" of such Plan and
the assets of CPL Capital I were deemed to be "plan assets" of Plans
investing in CPL Capital I. For example, if CPL is a Party in Interest
with respect to an investing Plan, extensions of credit between CPL
Capital I and CPL (as represented by the Series A Debentures and the
Guarantee) would likely be prohibited by Section 406(a)(1)(B) of ERISA
and Section 4975(c)(1)(B) of the Code, unless exemptive relief were
available under an applicable administrative exemption (see below). In
addition, if CPL were considered to be a fiduciary with respect to CPL
Capital I as a result of certain powers it holds (such as the powers to
remove and replace the Property Trustee and the Administrative
Trustees), certain operations of CPL Capital I, including the optional
redemption or acceleration of the Series A Debentures, could be
considered to be prohibited transactions under Section 406(b) of ERISA
and Section 4975(c)(1)(E) of the Code. In order to avoid such potential
prohibited transactions, each investing plan, by purchasing the Series
A Preferred Securities, will be deemed to have directed CPL Capital I
to invest in the Series A Debentures and to have appointed the Property
Trustee.
The DOL has issued five prohibited transaction class
exemptions ("PTCEs") that may provide exemptive relief if required for
direct or indirect prohibited transactions that may arise from the
purchase or holding of the Series A Preferred Securities if assets of
CPL Capital I were deemed to be "plan assets" of Plans investing in CPL
Capital I as described above. Those class exemptions are PTCE 96-23
(for certain transactions determined by in-house asset managers), PTCE
95-60 (for certain transactions involving insurance company general
accounts), PTCE 91-38 (for certain transactions involving bank
collective investment funds), PTCE 90-1 (for certain transactions
involving insurance company pooled separate accounts), and PTCE 84-14
(for certain transactions determined by independent qualified asset
managers).
Because the Series A Preferred Securities may be deemed to be
equity interests in CPL Capital I for purposes of applying ERISA and
Section 4975 of the Code, the Series A Preferred Securities may not be
purchased or held by any Plan, any entity whose underlying assets
include "plan assets" by reason of any Plan's investment in the entity
or any person investing "plan assets" of any Plan (each a "Plan Asset
Entity"), unless such purchaser or holder is eligible for the exemptive
relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or
another applicable exemption. Any purchaser or holder of the Series A
Preferred Securities or any interest therein will be deemed to have
represented by its purchase and holding thereof that it either (a) is
not a Plan or an Asset Entity or (b) is eligible for the exemptive
relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or
another applicable exemption with respect to such purchase or holding.
If a purchaser or holder of the Series A Preferred Securities that is a
Plan or a Plan Asset Entity elects to rely on an exemption other than
PTCE 96-23, 95-60, 91-38, 90-1 or 84-14, CPL and CPL Capital I may
require a satisfactory opinion of counsel or other evidence with
respect to the availability of such exemption for such purchase and
holding.
Due to the complexity of these rules and the penalties that
may be imposed upon persons involved in nonexempt prohibited
transactions, it is particularly important that fiduciaries or other
persons considering purchasing the Series A Preferred Securities on
behalf of or with "plan assets" of any Plan consult with their counsel
regarding the potential consequences if the assets of CPL Capital I
were deemed to be "plan assets" and the availability of exemptive
relief under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or any other
applicable exemption.
Government plans, as defined in Section 3(32) of ERISA, are
not subject to ERISA, and are also not subject to the prohibited
transaction requirements similar to those under ERISA and the Code
discussed above. Accordingly, fiduciaries of governmental plans, in
consultation with their advisors, should consider the impact of their
respective state pension codes on investments in the Series A Preferred
Securities and the considerations discussed above, to the extent
applicable.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general summary of certain United States
federal income tax consequences of the purchase, ownership and
disposition of Series A Preferred Securities. This summary only
addresses the tax consequences to a person acquiring Series A Preferred
Securities on their original issue at their original offering price and
that is a "United States Person" within the meaning of the Code, which
includes (i) an individual citizen or resident of the United States,
(ii) a corporation or partnership organized in or under the laws of the
United States or any state thereof or the District of Columbia or (iii)
an estate or trust specified as being a United States Person in the
Code. This summary does not address all tax consequences that may be
applicable to a United States Person that is a beneficial owner of the
Series A Preferred Securities, nor does it address the tax consequences
to (i) persons that are not United States Persons, (ii) persons subject
to special treatment under United States federal income tax law, such
as banks, insurance companies, thrift institutions, regulated
investment companies, real estate investment trusts, tax-exempt
organizations and dealers in securities or currencies, (iii) persons
that will hold Preferred Securities as part of a position in a
"straddle" or as part of a "hedging," "conversion" or other integrated
investment transaction for United States federal income tax purposes,
(iv) persons whose "functional currency" is not the United States
dollar or (v) persons that do not hold the Series A Preferred
Securities as capital assets.
The statements of law or legal conclusion set forth in this
summary constitute the opinion of Christy & Viener, special tax counsel
to CPL and CPL Capital I. This summary is based upon the Code, Treasury
Regulations, Internal Revenue Service rulings and pronouncements and
judicial decisions now in effect, all of which are subject to change at
any time. Such changes may be applied retroactively in a manner that
could cause the tax consequences to vary substantially from the
consequences described below, possibly adversely affecting a beneficial
owner of a Series A Preferred Security. In particular, legislation has
been proposed that could adversely affect CPL's ability to deduct
interest on the Series A Debentures, which would in turn permit CPL to
cause a redemption of the Series A Preferred Securities. See
"--Possible Tax Law Changes." The authorities on which this summary is
based are subject to various interpretations and it is therefore
possible that the United States federal income tax treatment of the
Series A Preferred Securities may differ from the treatment described
below.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN
TAX ADVISORS IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE
UNITED STATES FEDERAL TAX CONSEQUENCES OF PURCHASE, OWNERSHIP AND
DISPOSITION OF SERIES A PREFERRED SECURITIES, AS WELL AS THE EFFECT OF
ANY STATE, LOCAL OR FOREIGN TAX LAWS.
Classification of CPL Capital I
In connection with the issuance of the Series A Preferred
Securities, Christy & Viener will render its opinion to the effect
that, under then current law and assuming compliance with the terms of
the Trust Agreement and certain other documents, and based on certain
facts and assumptions contained in such opinion, CPL Capital I will be
classified as a "grantor trust" and not as an association taxable as a
corporation for United States federal income tax purposes. As a result,
each beneficial owner of a Series A Preferred Security (a
"Securityholder") will be treated as owning an undivided beneficial
interest in the Series A Debentures.
Classification of the Series A Debentures
Based on the advice of its counsel, CPL believes and intends
to take the position that the Series A Debentures will constitute
indebtedness for United States federal income tax purposes. No
assurance can be given that such position will not be challenged by the
Internal Revenue Service or, if challenged, that such challenge will
not be successful. By purchasing and accepting Series A Preferred
Securities, each Securityholder agrees to treat the Series A Debentures
as indebtedness and the Series A Preferred Securities as evidence of an
indirect beneficial ownership in the Series A Debentures. The remainder
of this discussion assumes that the Series A Debentures will be
classified as indebtedness of CPL for United States federal income tax
purposes.
Income from Series A Preferred Securities
Each Securityholder will be required to include in gross
income its pro rata share of the interest income paid or accrued with
respect to the Series A Debentures. Such income inclusion will be in
accordance with the Securityholder's regular method of accounting
except as set forth below under "--Potential Extension of Interest
Payment Period and Original Issue Discount." Because income on the
Series A Preferred Securities will constitute interest (or original
issue discount), no amount included in income with respect to the
Series A Preferred Securities will be eligible for the
dividends-received deduction.
Potential Extension of Interest Payment Period and Original Issue
Discount
Under recently issued Treasury regulations (the
"Regulations"), a contingency that stated interest will not be timely
paid that is "remote" because of the terms of the relevant debt
instrument will be ignored in determining whether such debt instrument
is issued with original issue discount ("OID"). As a result of terms
and conditions of the Series A Debentures that prohibit certain
payments with respect to CPL's capital stock and indebtedness if CPL
elects to extend interest payment periods (see "Certain Terms of the
Series A Debentures--Option to Extend Interest Payment Period"), CPL
believes that the likelihood of its exercising its option to defer
payments is remote. Based on the foregoing, CPL believes that the
Series A Debentures will not be considered to be issued with OID at the
time of their original issuance and, accordingly, a Securityholder
should include in gross income such holder's allocable share of
interest on the Series A Debentures in accordance with such holder's
regular method of tax accounting.
Under the Regulations, if CPL exercises its option to defer
any payment of interest, the Series A Debentures would at that time be
treated as issued with OID, and all stated interest on the Series A
Debentures would thereafter be treated as OID for so long as the Series
A Debentures remained outstanding. In such event, all of a
Securityholder's taxable interest income with respect to the Series A
Debentures would be accounted for as OID on an economic-accrual basis
regardless of such holder's method of tax accounting, and actual
distributions of stated interest would not be reported as taxable
income. Consequently, a Securityholder would be required to include OID
in gross income even though CPL would not make any actual cash payments
during an Extension Period.
The Regulations have not been addressed in any rulings or
other interpretations by the Internal Revenue Service (the "IRS"), and
it is possible that the IRS could take a position contrary to the
interpretation herein.
Distribution of Series A Debentures to Holders of Series A Preferred
Securities
As described under the caption "Certain Terms of the Series A
Preferred Securities--Distribution of Series A Debentures," CPL will
have the right, at any time, to liquidate CPL Capital I and cause the
Series A Debentures to be distributed to the holders of the Series A
Preferred Securities. Under current United States federal income tax
law, provided CPL Capital I is treated as a "grantor trust" at the time
of such distribution, such distribution would not be a taxable event to
Securityholders. Such a distribution would result in a Securityholder
receiving directly such Securityholder's pro rata share of the Series A
Debentures previously held indirectly through CPL Capital I, with a
holding period and aggregate tax basis equal to the holding period and
aggregate tax basis such Securityholder had in such Securityholder's
Series A Preferred Securities before such distribution.
If, however, CPL Capital I were subject to United States
federal income tax as a corporation with respect to income accrued or
received on the Series A Debentures at the time of liquidation, the
distribution of Series A Debentures to Securityholders by CPL Capital I
would be a taxable event to CPL Capital I and each Securityholder, and
each Securityholder would recognize gain or loss as if the
Securityholder had exchanged its Series A Preferred Securities for the
Series A Debentures it received upon the liquidation of CPL Capital I.
A Securityholder would accrue interest in respect of Series A
Debentures received from CPL Capital I in the manner described above
under "--Income from Series A Preferred Securities" and "--Potential
Extension of Interest Payment Period and Original Issue Discount."
Sale or Redemption of Series A Preferred Securities
A Securityholder that sells (including a redemption for cash)
Series A Preferred Securities will recognize gain or loss equal to the
difference between its adjusted tax basis in the Series A Preferred
Securities and the amount of consideration paid for such Series A
Preferred Securities (excluding the portion that represents accrued and
unpaid interest that has not yet been included in income, which portion
will constitute ordinary income). Assuming that CPL does not exercise
its option to defer payment of interest on the Series A Debentures and
the Series A Debentures are not considered issued with OID, a
Securityholder's adjusted tax basis in the Series A Preferred
Securities generally will be its initial purchase price. If CPL does
exercise its option to defer payment of interest or the Series A
Debentures are otherwise deemed to have been issued with OID, a
Securityholder's adjusted tax basis in the Series A Preferred
Securities generally will be its initial purchase price, increased by
OID previously includible in such Securityholder's gross income to the
date of disposition and decreased by Distributions or other payments
received on the Series A Preferred Securities in respect of OID. Gain
or loss on the sale of the Series A Preferred Securities generally will
be a capital gain or loss and generally will be a long-term capital
gain or loss if the Series A Preferred Securities have been held for
more than one year.
The Series A Preferred Securities may trade at a price that
does not fully reflect the value of accrued but unpaid interest with
respect to the underlying Series A Debentures. A Securityholder that
disposes of such Securityholder's Series A Preferred Securities between
record dates for payments of Distributions (and consequently does not
receive a Distribution from CPL Capital I for the period prior to such
disposition) will nevertheless be required to include as ordinary
income accrued but unpaid interest on the Series A Debentures through
the date of disposition. Such Securityholder will recognize a capital
loss on the disposition of Series A Preferred Securities to the extent
the amount realized with respect to the Series A Preferred Securities
is less than the Securityholder's adjusted tax basis in the Series A
Preferred Securities. Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States
federal income tax purposes.
Backup Withholding Tax and Information Reporting
The amount of interest income paid and OID accrued on the
Series A Preferred Securities will be reported to Securityholders and
to the Internal Revenue Service except in the case of corporations and
other exempt Securityholders. "Backup" withholding at a rate of 31%
will apply to payments of interest to non-exempt Securityholders unless
the Securityholder furnishes its taxpayer identification number in the
manner prescribed in applicable Treasury Regulations, certifies that
such number is correct and meets certain other conditions.
Payment of proceeds from disposition of Series A Preferred
Securities to or through the United States office of a broker is
subject to information reporting and backup withholding unless the
Securityholder establishes an exemption from information reporting and
backup withholding.
Any amounts withheld from a Securityholder under the backup
withholding rules will be allowed as a refund or a credit against such
Securityholder's United States federal income tax liability, provided
the required information is furnished to the IRS.
Possible Tax Law Changes
On February 6, 1997, President Clinton introduced to Congress
his budget proposal for fiscal year 1998. Included in President
Clinton's budget proposal is a tax provision, which if enacted,
generally would treat as equity, for federal income tax purposes, an
instrument issued by a corporation if the instrument has a maximum
term of more than 15 years and is not shown as indebtedness on the
separate balance sheet of the issuer or, where the instrument is
issued to a related party (other than a corporation), where the holder
or some other related party issues a related instrument that is not
shown as indebtedness on the issuer's consolidated balance sheet. The
above- described provision is proposed to be effective generally for
instruments issued on or after the date of first action by
Congressional committee. As of the date hereof, no such Congressional
action has occurred. If the proposed provision applied to the Series A
Debentures, CPL would be unable to deduct interest on the Series A
Debentures. A similar tax provision was contained in President
Clinton's budget proposal for fiscal year 1997, which provision was
not enacted before the 104th Congress adjourned. Under current law,
CPL believes and intends to take the position that it is able to
deduct interest on the Series A Debentures. There can be no assurance
that current or future legislative proposals or final legislation will
not affect the ability of CPL to deduct interest on the Series A
Debentures. Such a change could give rise to a Tax Event, which would
permit CPL to cause a redemption of the Series A Preferred Securities
as described more fully under "Description of Preferred
Securities--Redemption or Exchange--Special Event Redemption or
Distribution of Corresponding Junior Subordinated Debentures" in the
accompanying Prospectus.
UNDERWRITING
Subject to the terms and conditions of the Underwriting
Agreement, CPL and CPL Capital I have agreed that CPL Capital I will
sell to each of the Underwriters named below, and each of such
Underwriters, for whom Goldman, Sachs & Co., Lehman Brothers Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Smith Barney
Inc. are acting as representatives (the "Representatives"), has
severally agreed to purchase from CPL Capital I the respective number
of Series A Preferred Securities set forth opposite its name below:
Number of
Series A
Preferred
Underwriter Securities
Goldman, Sachs & Co.................................. _________
Lehman Brothers Inc..................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.........................
Smith Barney Inc. ................................... _________
Total......................................... 6,000,000
Subject to the terms and conditions set forth in the
Underwriting Agreement, the Underwriters are committed to take and pay
for all such Series A Preferred Securities offered hereby, if any are
taken.
The Underwriters propose to offer the Series A Preferred
Securities in part directly to the public at the initial public
offering price set forth on the cover page of this Prospectus
Supplement and in part to certain securities dealers at such price less
a concession of $____ per Series A Preferred Security. The Underwriters
may allow, and such dealers may reallow, a concession not in excess of
$____ per Series A Preferred Security to certain brokers and dealers.
After the Series A Preferred Securities are released for sale to the
public, the offering price and other selling terms may from time to
time be varied by the Representatives.
In view of the fact that the proceeds from the sale of the
Series A Preferred Securities will be used to purchase the Series A
Debentures issued by CPL, the Underwriting Agreement provides that CPL
will pay as Underwriters' Compensation for the Underwriters arranging
the investment therein of such proceeds an amount of $____ per Series A
Preferred Security ($____ per Series A Preferred Security sold to
certain institutions) for the accounts of the several Underwriters.
In connection with the offering, the Underwriters may
purchase and sell the Series A Preferred Securities in the open
market. These transactions may include over-allotment and stabilizing
transactions and purchases to cover syndicate short positions created
in connection with the offering. Stabilizing transactions consist of
certain bids or purchases for the purpose of preventing or retarding a
decline in the market price of the Series A Preferred Securities; and
syndicate short positions involve the sale by the Underwriters of a
greater number of Series A Preferred Securities than they are required
to purchase from CPL Capital I in the offering. The Underwriters
also may impose a penalty bid, whereby selling concessions allowed to
syndicate members or other broker- dealers in respect of the
securities sold in the offering for their account may be reclaimed by
the syndicate if such Series A Preferred Securities are repurchased by
the syndicate in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market
price of the Series A Preferred Securities, which may be higher than
the price that might otherwise prevail in the open market; and these
activities, if commenced, may be discontinued at any time. These
transaction may be effected on the New York Stock Exchange, in the
over-the-counter market or otherwise.
CPL and CPL Capital I have agreed that, during the period
beginning from the date of the Underwriting Agreement and continuing to
and including the earlier of (i) the termination of trading
restrictions on the Series A Preferred Securities, as determined by the
Underwriters, and (ii) 30 days after the closing date, they will not
offer, sell, contract to sell or otherwise dispose of any Preferred
Securities, any other beneficial interests in the assets of CPL Capital
I, or any preferred securities or any other securities of CPL Capital I
or CPL which are substantially similar to the Series A Preferred
Securities, including any guarantee of such securities, or any
securities convertible into or exchangeable for or that represent the
right to receive securities, preferred securities or any such
substantially similar securities of either CPL Capital I or CPL,
without the prior written consent of the Representatives, except for
the Series A Preferred Securities and the Series A Guarantee offered in
connection with the offering.
Prior to this offering, there has been no public market for
the Series A Preferred Securities. The Series A Preferred Securities
will be listed on the NYSE under the symbol "______". Trading of the
Series A Preferred Securities on the NYSE is expected to commence
within thirty days after the initial delivery of the Series A Preferred
Securities. In order to meet one of the requirements for listing the
Series A Preferred Securities on the NYSE, the Underwriters will
undertake to sell lots of 100 or more Series A Preferred Securities to
a minimum of 400 beneficial holders. Trading of the Series A Preferred
Securities on the NYSE is expected to commence within a seven-day
period after the initial delivery of the Series A Preferred Securities.
The Representatives have advised CPL that they intend to make a market
in the Series A Preferred Securities prior to commencement of trading
on the NYSE, but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Series A Preferred Securities.
CPL and CPL Capital I have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended, or to contribute to payments
the Underwriters may be required to make in respect thereof.
Certain of the Underwriters or their affiliates have provided
from time to time, and expect to provide in the future, investment or
commercial banking services to CPL and its affiliates, for which such
Underwriters or their affiliates have received or will receive
customary fees and commissions.
LEGAL OPINIONS
Certain matters of Delaware law relating to the validity of
the Series A Preferred Securities, the enforceability of the Trust
Agreement and the creation of CPL Capital I will be passed upon by
Richards, Layton & Finger, special Delaware counsel to CPL and CPL
Capital I. The validity of the Series A Guarantee and the Series A
Debentures will be passed upon for CPL by Milbank, Tweed, Hadley &
McCloy, New York, New York, and for the Underwriters by Sidley &
Austin, Chicago, Illinois. Sidley & Austin has from time to time
represented CSW and certain of its affiliates, including CPL, in
connection with certain matters. All matters of Texas law will be
passed upon by Vinson & Elkins L.L.P., Dallas, Texas. Certain matters
relating to United States federal income tax considerations will be
passed upon by Christy & Viener, New York, New York, special tax
counsel to CPL and CPL Capital I.
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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 jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
jurisdiction.
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SUBJECT TO COMPLETION, DATED April 11 1997
===============================================================================
$150,000,000
CENTRAL POWER AND LIGHT COMPANY CPL CAPITAL I
CPL CAPITAL II
Junior Subordinated Debentures Preferred Securities
guaranteed, as described herein, by
CENTRAL POWER AND LIGHT COMPANY
Central Power and Light Company, a Texas corporation ("CPL"), may from
time to time offer in one or more series or issuances its junior subordinated
deferrable interest debentures (the "Junior Subordinated Debentures"). The
Junior Subordinated Debentures will be unsecured and subordinate and junior in
right of payment to Senior Indebtedness (as defined herein) of CPL. See
"Description of the Junior Subordinated Debentures--Subordination." If provided
in a related prospectus supplement accompanying this Prospectus (the "Prospectus
Supplement"), CPL will have the right to defer payments of interest on any
series of Junior Subordinated Debentures at any time or from time to time for
such number of consecutive interest payment periods (which shall not extend
beyond the maturity of the Junior Subordinated Debentures) with respect to each
deferral period as may be specified in the Prospectus Supplement (each, an
"Extension Period"). See "Description of Junior Subordinated Debentures--Option
to Extend Interest Payments" and "--Certain Covenants of CPL."
CPL Capital I and CPL Capital II, each a statutory business trust
created under the laws of the State of Delaware (each, an "Issuer Trust," and
collectively, the "Issuer Trusts"), may severally offer, from time to time,
their respective preferred securities (the "Preferred Securities") representing
preferred undivided beneficial interests in the assets of each Issuer Trust. CPL
will be the owner of the common securities (the "Common Securities")
representing common undivided beneficial interests in the assets of each Issuer
Trust. The payment of periodic cash distributions ("Distributions") with respect
to Preferred Securities of each Issuer Trust, and payments on liquidation or
redemption with respect to such Preferred Securities are each guaranteed by CPL
as described herein (each, a "Guarantee," and collectively, the "Guarantees").
See "Description of Guarantees." CPL's obligations under each Guarantee will be
subordinate and junior in right of payment to all Senior Indebtedness of CPL.
Concurrently with the issuance by an Issuer Trust of its Preferred Securities,
such Issuer Trust will invest the proceeds thereof and any contributions made by
CPL
(Continued on next page)
-----------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
-----------------------------------------
The date of this Prospectus is , 1997
<PAGE>
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- iii -
(Continued from previous page)
in respect of CPL's purchase of the Common Securities in a corresponding series
of Junior Subordinated Debentures (the "Corresponding Junior Subordinated
Debentures") with terms corresponding to the terms of such Issuer Trust's
Preferred Securities. The Corresponding Junior Subordinated Debentures will be
the sole assets of each Issuer Trust, and payments under the Corresponding
Junior Subordinated Debentures and the related Expense Agreement (as defined
herein) will be the only revenue of each Issuer Trust. CPL may redeem the
Corresponding Junior Subordinated Debentures (and cause the redemption of the
related Preferred Securities) or may terminate each Issuer Trust at any time and
cause the Corresponding Junior Subordinated Debentures to be distributed to the
holders of Preferred Securities in liquidation of their interests in such Issuer
Trust. See "Description of Preferred Securities--Liquidation Distribution Upon
Termination."
Holders of the Preferred Securities will be entitled to receive
preferential cumulative cash Distributions accumulating from the date of
original issuance and payable periodically as specified in the related
Prospectus Supplement. If provided in the related Prospectus Supplement, CPL
will have the right to defer payments of interest on any series of Junior
Subordinated Debentures at any time or from time to time for one or more
Extension Periods (which shall not extend beyond the maturity of such Junior
Subordinated Debentures). If Corresponding Junior Subordinated Debentures are
issued and interest payments on such Corresponding Junior Subordinated
Debentures are so deferred, Distributions on the related series of Preferred
Securities will also be deferred and CPL will not be permitted, subject to
certain exceptions set forth herein, to declare, set aside or pay any cash
distributions with respect to CPL's capital stock or debt securities that rank
pari passu with or junior to the Corresponding Junior Subordinated Debentures.
During an Extension Period, interest on the Corresponding Junior Subordinated
Debentures will continue to accrue (and the amount of Distributions to which
holders of Preferred Securities are entitled will accumulate) at the rate per
annum set forth in the related Prospectus Supplement. See "Description of Junior
Subordinated Debentures--Option to Extend Interest Payment Date" and "--Certain
Covenants of CPL" and "Description of Preferred Securities--Distributions."
The Junior Subordinated Debentures and the Preferred Securities (the
"Offered Securities") may be offered in amounts, at prices and on terms to be
determined at the time of offering, provided that the aggregate initial public
offering price of all Junior Subordinated Debentures (other than Corresponding
Junior Subordinated Debentures) and Preferred Securities shall not exceed
$150,000,000. Certain specific terms of the Offered Securities will be described
in the Prospectus Supplement, including, without limitation and where applicable
and to the extent not set forth herein: (i) in the case of Junior Subordinated
Debentures, the specific designation, aggregate principal amount, denominations,
maturity (including any provision for shortening thereof), interest payment
dates, interest rate (which may be fixed or variable) or method of calculating
interest, if any, applicable Extension Period or interest deferral terms, if
any, place or places where principal, premium, if any, and interest, if any,
will be payable, terms of redemption, if any, sinking fund provisions, if any,
terms for conversion or exchange, if any, into other securities, the initial
offering or purchase price, methods of distribution and any other special terms;
and (ii) in the case of Preferred Securities, the identity of the Issuer Trust,
specific title, aggregate amount, stated liquidation preference, distribution
rate or the method of calculating such rate, applicable Extension Period or
Distribution deferral terms, if any, dates on which and place or places where
Distributions will be payable, voting rights, any redemption provisions, terms
for any conversion or exchange into other securities, initial offering or
purchase price, methods of distribution, and any other special terms.
The Prospectus Supplement will also contain information, as applicable,
concerning certain United States federal income tax considerations relating to
the Offered Securities.
The Offered Securities may be sold directly by CPL, CPL Capital I
and/or CPL Capital II, as the case may be (each, an "Issuer"), through agents
designated from time to time or through underwriters or dealers. See "Plan of
Distribution." If any agents of an Issuer or underwriters are involved in the
sale of any Offered Securities in respect of which this Prospectus is being
delivered, the names of such agents or underwriters and any applicable
commissions or discounts will be set forth in a Prospectus Supplement. The net
proceeds to an Issuer or Issuers, as the case may be, from such sale also will
be set forth in a Prospectus Supplement or Prospectus Supplements. The
Prospectus Supplement will state whether the Offered Securities will be listed
on any national securities exchange or the Nasdaq National Market. If the
Offered Securities are not listed on any national securities exchange or the
Nasdaq National Market, there can be no assurance that there will be a liquid
secondary market for such Offered Securities.
This Prospectus may not be used to consummate sales of Offered
Securities unless accompanied by a Prospectus Supplement relating to such
Offered Securities.
<PAGE>
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AVAILABLE INFORMATION
CPL 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"). Such reports and other information (including
proxy and information statements) filed by CPL can be inspected and copied at
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the following Regional Offices
of the Commission: New York Regional Office, 7 World Trade Center, 13th Floor,
New York, New York 10048, and Chicago Regional Office, Citicorp Center, 500 W.
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of the prescribed rates. The
Commission also maintains a web site (http://www.sec.gov.) that contains
reports, proxy statements and other information regarding CPL.
CPL and the Issuer Trusts have filed with the Commission a joint
Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities offered hereby. This
Prospectus does not contain all of the information set forth in such
Registration Statement and the exhibits thereto, certain portions of which have
been omitted as permitted by the rules and regulations of the Commission. For
further information with respect to CPL, the Issuer Trusts and the Offered
Securities, reference is hereby made to such Registration Statement, including
the exhibits thereto, which may be examined at the Commission's principal
office, 450 Fifth Street, N.W., Washington, D.C. 20549 or through the
Commission's home page on the Internet, or copies of which may be obtained from
the Commission at such office upon payment of the fees prescribed by the
Commission. Statements made in this Prospectus concerning the contents of any
documents referred to herein are not necessarily complete, and in each instance
are qualified in all respects by reference to the copy of such document filed as
an exhibit to the Registration Statement.
No separate financial statements of the Issuer Trusts have been
included herein. CPL and the Issuer Trusts do not consider that such financial
statements would be material to holders of Preferred Securities offered hereby
because each Issuer Trust is a newly formed special purpose entity, has no
operating history, has no independent operations and is not engaged in, and does
not propose to engage in, any activity other than as set forth below.
Furthermore, taken together, CPL's obligations under each series of
Corresponding Junior Subordinated Debentures, the Indenture, the related Trust
Agreement, the related Expense Agreement and the related Guarantee, provide in
the aggregate, a guarantee of Distributions and other amounts due on the related
Preferred Securities of the Issuer Trusts. See "The Issuer Trusts," "Description
of the Preferred Securities," "Description of Guarantees" and "Description of
Corresponding Junior Subordinated Debentures." In addition, CPL does not expect
that any of the Issuer Trusts will be filing reports under the Exchange Act with
the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
CPL's Annual Report on Form 10-K for the year ended December 31, 1996
filed by CPL with the Commission pursuant to the Exchange Act and CPL's current
reports on Form 8-K dated January 7, 1997, March 31, 1997, March 31, 1997 and
March 31, 1997 as filed with the Commission on January 31, 1997, April 3, 1997,
April 4, 1997 and April 10, 1997 respectively are incorporated in this
Prospectus by reference.
All documents filed by CPL pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of this offering 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 (such documents, and the documents enumerated above, being hereinafter
referred to as "Incorporated Documents"; provided, however, that all documents
subsequently filed by CPL pursuant to Section 13 or 14 of the Exchange Act in
each year during which the offering made by this Prospectus is in effect prior
to the filing with the Commission of CPL's Annual Report on Form 10-K covering
such year shall not be Incorporated Documents or be incorporated by reference in
this Prospectus or be a part hereof from and after such filing of such Annual
Report on Form 10-K).
Any statement contained in an Incorporated Document 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 Incorporated
Document 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.
CPL hereby undertakes to provide without charge to each person to whom
a copy of this Prospectus is delivered, on the written or oral request of any
such person, a copy of any or all of the Incorporated Documents, other than
exhibits to such documents, unless such exhibits are specifically incorporated
by reference therein. Requests should be directed to Central and South West
Corporation, 1616 Woodall Rodgers Freeway, Dallas, Texas 75202, Attention:
Director, Finance, telephone number (214) 777-1000. The information relating to
CPL contained in this Prospectus does not purport to be comprehensive and should
be read together with the information contained in the Incorporated Documents.
No person has been authorized to give any information or to make any
representation not contained in this Prospectus or in any Prospectus Supplement,
and, if given or made, such information or representation should not be relied
upon as having been authorized. This Prospectus and any Prospectus Supplement do
not constitute an offer to sell or a solicitation of an offer to buy any of the
securities offered hereby or thereby in any jurisdiction to any person to whom
it is unlawful to make such offer in such jurisdiction.
Neither the delivery of this Prospectus and the Prospectus Supplement
nor any sale made hereunder or thereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of CPL or its
subsidiaries since the date of this Prospectus or the date of the latest
Prospectus Supplement, as the case may be.
<PAGE>
CENTRAL POWER AND LIGHT COMPANY
Central Power and Light Company, a Texas corporation ("CPL"), is a
public utility company engaged in the production, purchase, transmission,
distribution and sale of electricity in South Texas. Central and South West
Corporation ("CSW"), a registered public utility holding company under the
Public Utility Holding Company Act of 1935, as amended (the "1935 Act"), owns
all of the issued and outstanding common stock of CPL. CPL's executive offices
are located at 539 North Carancahua Street, Corpus Christi, Texas 78401-2802,
telephone number (512) 881-5300.
The foregoing information relating to CPL does not purport to be
comprehensive and should be read together with the financial statements and
other information contained in the Incorporated Documents.
THE ISSUER TRUSTS
Each Issuer Trust is a statutory business trust created under Delaware
law pursuant to (i) a trust agreement executed by CPL, as depositor of such
Issuer Trust, the Delaware Trustee (as defined herein) of such Issuer Trust, the
Property Trustee (as defined herein) of such Issuer Trust and the Administrative
Trustees (as defined herein) of such Issuer Trust and (ii) the filing of a
certificate of trust with the Delaware Secretary of State. Each trust agreement
will be amended and restated in its entirety (each, as so amended and restated,
a "Trust Agreement") substantially in the form filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. Each Trust
Agreement will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). Each Issuer Trust exists for the
exclusive purposes of (i) issuing and selling its Preferred Securities and
Common Securities, (ii) using the proceeds from the sale of such Preferred
Securities and Common Securities to acquire a corresponding series of
Corresponding Junior Subordinated Debentures issued by CPL and (iii) engaging in
only those other activities necessary, convenient or incidental thereto.
Accordingly, such Corresponding Junior Subordinated Debentures will be the sole
assets of such Issuer Trust, and payments under such Corresponding Junior
Subordinated Debentures and the related Expense Agreement (as defined herein)
will be the sole source of revenue of such Issuer Trust.
All of the Common Securities of each Issuer Trust will be owned by CPL.
The Common Securities of an Issuer Trust will rank pari passu, and payments will
be made thereon pro rata, with the Preferred Securities of such Issuer Trust,
except that upon the occurrence and continuance of an event of default under a
Trust Agreement resulting from a Debenture Event of Default (as defined herein),
the rights of CPL as holder of the Common Securities to payment in respect of
Distributions and payments upon liquidation, redemption or otherwise will be
subordinated to the rights of the holders of the Preferred Securities of such
Issuer Trust. See "Description of Preferred Securities--Subordination of Common
Securities." CPL will acquire Common Securities having an aggregate Liquidation
Amount (as defined herein) equal to not less than 3% of the total capital of
each Issuer Trust.
Unless otherwise specified in the applicable Prospectus Supplement,
each Issuer Trust has a term of up to 45 years, but may terminate earlier as
provided in the applicable Trust Agreement. Each Issuer Trust's business and
affairs are conducted by its trustees, which will be appointed by CPL as holder
of the Common Securities.
Unless otherwise specified in the applicable Prospectus Supplement, the
trustees will be The Bank of New York, as Property Trustee, (the "Property
Trustee"), The Bank of New York (Delaware), as the Delaware Trustee (the
"Delaware Trustee"), and two individual trustees (the "Administrative Trustees")
who are employees or officers of or affiliated with CPL (collectively, the
"Issuer Trustees"). The Bank of New York, as Property Trustee, will act as sole
indenture trustee under each Trust Agreement for purposes of compliance with the
Trust Indenture Act. The Bank of New York will also act as trustee under the
Guarantee and the Indenture (each as defined herein). See "Description of
Guarantees" and "Description of Junior Subordinated Debentures." The holder of
the Common Securities, or the holders of a majority in liquidation preference of
the Preferred Securities if a Debenture Event of Default under the Trust
Agreement has occurred and is continuing, will be entitled to appoint, remove or
replace the Property Trustee and/or the Delaware Trustee. In no event will the
holders of the Preferred Securities have the right to vote to appoint, remove or
replace the Administrative Trustees; such voting rights are vested exclusively
in the holder of the Common Securities. The duties and obligations of each
Issuer Trustee are governed by the applicable Trust Agreement. CPL will pay all
fees and expenses related to each Issuer Trust and the offering of the Preferred
Securities and will pay, directly or indirectly, all ongoing costs, expenses and
liabilities of each Issuer Trust. The principal executive office of each Issuer
Trust is 539 North Carancahua Street, Corpus Christi, Texas 78401-2802;
telephone number (512) 881-5300.
USE OF PROCEEDS
Unless otherwise indicated in the Prospectus Supplement, the net
proceeds to be received by CPL from the issuance and sale of the Junior
Subordinated Debentures (including Corresponding Junior Subordinated Debentures
issued to the Issuer Trusts in connection with the investment by the Issuer
Trusts of all of the proceeds from the sale of Preferred Securities) will
initially become part of the general funds of CPL and will be used to replace or
retire, through redemption, repurchase or otherwise, one or more series of
outstanding first mortgage bonds or preferred stock, or any combination thereof,
to repay all or a portion of CPL's short-term borrowings outstanding at the time
of issuance of the Offered Securities and for other general corporate purposes,
subject to applicable regulatory requirements. Reference is made to the
Incorporated Documents with respect to CPL's capital requirements and its
general financing plans. Each Issuer Trust will invest all proceeds received
from the sale of Preferred Securities in Corresponding Junior Subordinated
Debentures.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS
TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDEND
REQUIREMENTS
The following table sets forth CPL's ratios of earnings to fixed
charges and ratios of earnings to combined fixed charges and preferred stock
dividend requirements for the years indicated:
<TABLE>
Year Ended December 31,
1996 1995 1994 1993 1992
----- ------ ------ ------ ------
<CAPTION>
<S> <C> <C> <C> <C> <C>
Earnings to Fixed Charges 2.86 2.63 3.24 2.69 3.23
Earnings to Combined Fixed Charges and
Preferred Stock Dividend 2.44 2.36 2.82 2.31 2.77
Requirements
(unaudited)
</TABLE>
For computation of the ratios: (i) earnings consist of operating income
plus federal income taxes, deferred income taxes and investment tax credits,
other income and deductions, allowance for funds (both borrowed and equity) used
during construction and mirror construction work in progress amortization, and
(ii) fixed charges consist of interest on long-term debt and short-term debt,
and other interest charges. Pretax earnings required for preferred stock
dividends were computed using the effective tax rate for the applicable year.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures may be issued from time to time in
one or more series under an Indenture dated as of , as supplemented and amended
from time to time (the "Indenture"), between CPL and The Bank of New York, as
trustee (the "Debenture Trustee"). The Corresponding Junior Subordinated
Debentures may be issued from time to time in one or more series of
Corresponding Junior Subordinated Debentures under the Indenture between CPL and
the Debenture Trustee. CPL may issue Junior Subordinated Debentures to the
public or to institutional investors as described under "Plan of Distribution"
or Corresponding Junior Subordinated Debentures to the Issuer Trusts in
connection with the issuance of Preferred Securities. The following summary is
subject to the provisions of and is qualified by reference to the Indenture,
which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part, and to the Trust Indenture Act. Whenever particular
provisions or defined terms in the Indenture are referred to herein or in a
Prospectus Supplement, such provisions or defined terms are incorporated herein
or therein by reference. Section and Article references used herein are
references to provisions of the Indenture unless otherwise noted. Except as
otherwise provided herein, this summary of certain terms and provisions of
Junior Subordinated Debentures is also applicable to the Corresponding Junior
Subordinated Debentures. For additional terms and provisions applicable only to
the Corresponding Junior Subordinated Debentures, see "Description of
Corresponding Junior Subordinated Debentures."
General
Each series of Junior Subordinated Debentures will rank pari passu with
all other series of Junior Subordinated Debentures, will be unsecured and will
be subordinated and junior in right of payment to the extent and in the manner
set forth in the Indenture to all Senior Indebtedness (as defined below) of CPL.
See "--Subordination." As the Junior Subordinated Debentures will be issued by
CPL, the Junior Subordinated Debentures effectively will be subordinate to all
obligations of any CPL subsidiaries, and the rights of CPL's creditors,
including holders of Junior Subordinated Debentures, to participate in the
assets of such subsidiaries upon liquidation or reorganization will be junior to
the rights of the holders of all preferred stock, indebtedness and other
liabilities of such subsidiaries, which may include trade payables, obligations
to banks under credit facilities, guarantees, pledges, support arrangements,
bonds, capital leases, notes and other obligations. CPL currently has no
subsidiaries. Except as otherwise provided in the applicable Prospectus
Supplement, the Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of CPL, whether under the Indenture, any other
indenture that CPL may enter into in the future or otherwise. See
"--Subordination" and the Prospectus Supplement relating to any offering of
Preferred Securities or Junior Subordinated Debentures.
The Indenture provides that Junior Subordinated Debentures may be
issued from time to time in one or more series pursuant to an indenture
supplemental to the Indenture or a resolution of CPL's Board of Directors or an
Officer's Certificate (each, a "Supplemental Indenture"). (Section 2.01) The
Indenture does not limit the aggregate principal amount of Junior Subordinated
Debentures that may be issued thereunder. CPL's Restated Articles of
Incorporation, as amended (the "Articles"), currently limit the amount of
unsecured debt that CPL may issue to (i) the equivalent of 20% of the total of
all secured indebtedness and total equity or (ii) as to unsecured debt maturing
in less than ten years, the equivalent of 10% of such aggregate. CPL is
currently seeking to amend its Articles to eliminate such limitations. The
Indenture does not contain any provisions that would limit the ability of CPL to
incur indebtedness or that would afford holders of Junior Subordinated
Debentures protection in the event of a highly leveraged or similar transaction
involving CPL or in the event of a change of control.
Reference is made to the Prospectus Supplement for the following terms
of the series of Junior Subordinated Debentures being offered thereby: (i) the
specific title of such Junior Subordinated Debentures; (ii) any limit on the
aggregate principal amount of such Junior Subordinated Debentures; (iii) the
date or dates on which the principal of such Junior Subordinated Debentures is
payable or the method of determination thereof (including any provision for the
shortening thereof); (iv) the rate or rates at which such Junior Subordinated
Debentures will bear interest, if any, or the manner of calculation of such rate
or rates; (v) the date or dates from which such interest shall accrue, the
interest payment dates on which such interest will be payable or the manner of
determination of such interest payment dates and the record dates for the
determination of holders to whom interest is payable on any such interest
payment dates; (vi) the right, if any, of CPL to extend or defer the interest
payment periods and the duration of such extension or deferral; (vii) the period
or periods within which, the price or prices at which and the terms and
conditions upon which such Junior Subordinated Debentures may be redeemed, in
whole or in part, at the option of CPL; (viii) the obligation, if any, of CPL to
redeem or purchase such Junior Subordinated Debentures pursuant to any sinking
fund or analogous provisions or at the option of a holder thereof and the period
or periods during which, the price or prices at which and the terms and
conditions upon which such Junior Subordinated Debentures shall be redeemed or
purchased, in whole or part, pursuant to such obligation; (ix) the form of such
Junior Subordinated Debentures; (x) if other than denominations of $25 or any
integral multiple thereof, the denominations in which such Junior Subordinated
Debentures shall be issuable; (xi) whether such Junior Subordinated Debentures
are issuable as a global security, and in such case, the identity of the
depositary; and (xii) any and all other terms with respect to such series not
inconsistent with the provisions of the Indenture. (Section 2.01)
Subordination
The Indenture provides that Junior Subordinated Debentures are
subordinate and junior in right of payment to the prior payment in full of all
Senior Indebtedness of CPL, whether outstanding on the date of such issuance of
Junior Subordinated Debentures or thereafter incurred, as provided in the
Indenture. No payment of principal of (including redemption and sinking fund
payments), or premium, if any, or interest on, the Junior Subordinated
Debentures may be made if any Senior Indebtedness is not paid when due, any
applicable grace period with respect to such default has ended and such default
has not been cured or waived, or if the maturity of any Senior Indebtedness has
been accelerated because of a default. Upon any payment or distribution of
assets to creditors upon any dissolution, winding-up, liquidation or
reorganization of CPL, whether voluntary or involuntary or in bankruptcy,
insolvency, receivership or other proceedings, all amounts due or to become due
on all Senior Indebtedness must be paid in full before the holders of the Junior
Subordinated Debentures are entitled to receive or retain any payment. The
rights of the holders of the Junior Subordinated Debentures will be subrogated
to the rights of the holders of Senior Indebtedness to receive payments or
distributions applicable to Senior Indebtedness until all amounts owing on the
Junior Subordinated Debentures are paid in full. (Sections 14.01 to 14.04) The
Junior Subordinated Debentures effectively will also be subordinate to all
obligations of CPL's subsidiaries, if any. See "--General."
The term "Senior Indebtedness" is defined in the Indenture to mean the
principal of and premium, if any, and interest on and any other payment due
pursuant to any of the following, whether outstanding at the date of execution
of the Indenture or thereafter incurred, created or assumed:
(a) all indebtedness of CPL evidenced by notes, debentures, bonds or
other securities sold by CPL for money;
(b) all indebtedness of others of the kinds described in paragraph (a)
above assumed by or guaranteed in any manner by CPL or in effect
guaranteed by CPL through an agreement to purchase, contingent or
otherwise;
(c) all renewals, extensions or refundings of indebtedness of the
kinds described in either of paragraphs (a) and (b) above; and
(d) all payments of money relating to any lease which is capitalized on
the balance sheet or consolidated balance sheet, as the case may be,
of CPL or its subsidiaries, if any, in accordance with generally
accepted accounting principles as in effect from time to time;
unless, in the case of any particular indebtedness, renewal, extension,
refunding or lease payment, the instrument creating or evidencing the same or
the assumption or guarantee of the same expressly provides that such
indebtedness, renewal, extension, refunding or lease payment is not superior in
right of payment to or is pari passu with the Junior Subordinated Debentures.
Such Senior Indebtedness shall continue to be Senior Indebtedness and entitled
to the benefits of the subordination provisions contained in the Indenture
irrespective of any amendment, modification or waiver of any term of such Senior
Indebtedness. (Section 1.01)
The Indenture does not limit the aggregate amount of Senior
Indebtedness which may be issued. As of December 31, 1996, Senior Indebtedness
of CPL aggregated approximately $1,671 million. CPL expects from time to time to
incur additional indebtedness constituting Senior Indebtedness.
Certain Covenants of CPL
If there shall have occurred any event that would, with the giving of
notice or the passage of time, or both, constitute a Debenture Event of Default
under the Indenture, as described under "--Debenture Events of Default" below,
or CPL exercises its option to extend or defer the interest payment period
described in clause (vi) under "--General" above, CPL will not, until all
defaulted interest on the Junior Subordinated Debentures and all interest
accrued on the Junior Subordinated Debentures during any such extended or
deferred interest payment period and all principal and premium, if any, then due
and payable on the Junior Subordinated Debentures shall have been paid in full,
(i) declare, set aside or pay any dividend or distribution on any capital stock
of CPL, except for dividends or distributions in shares of its capital stock or
in rights to acquire shares of its capital stock, or (ii) repurchase, redeem or
otherwise acquire, or make any sinking fund payment for the purchase or
redemption of, any shares of its capital stock (except by conversion into or
exchange for shares of its capital stock and except for a redemption, purchase
or other acquisition of shares of its capital stock made for the purpose of an
employee incentive plan or benefit plan of CPL or any of its subsidiaries and
except for mandatory redemption or sinking fund payments with respect to any
series of Preferred Stock of CPL that are subject to mandatory redemption or
sinking fund requirements, provided that the aggregate stated value of all such
series outstanding at the time of any such payment does not exceed five percent
of the aggregate of (1) the total principal amount of all bonds or other
securities representing secured indebtedness issued or assumed by CPL and then
outstanding and (2) the capital and surplus of CPL to be stated on the books of
account of CPL after giving effect to such payment); provided, however, that any
moneys deposited in any sinking fund and not in violation of this provision may
thereafter be applied to the purchase or redemption of such Preferred Stock in
accordance with the terms of such sinking fund without regard to the
restrictions contained in this provision. (Section 4.06) As of October 31, 1996,
CPL had no such series of Preferred Stock outstanding. With respect to any
issuance of Corresponding Junior Subordinated Debentures in connection with the
issuance of Preferred Securities, CPL will make certain additional covenants as
described under "Description of Corresponding Junior Subordinated Debentures."
Form, Exchange, Registration and Transfer
Each series of Junior Subordinated Debentures will be issued in
registered form and in certificated form or will be represented by one or more
global securities. If not represented by one or more global securities, Junior
Subordinated Debentures may be presented for registration of transfer (with the
form of transfer endorsed thereon duly executed) or exchange, at the office of
the Registrar or at the office of any transfer agent designated by CPL for such
purpose with respect to any series of Junior Subordinated Debentures and
referred to in an applicable Prospectus Supplement, without service charge and
upon payment of any taxes and other governmental charges as described in the
Indenture. Such transfer or exchange will be effected upon the Registrar or such
transfer agent, as the case may be, being satisfied with the documents of title
and identity of the person making the request. (Section 2.05) If a Prospectus
Supplement refers to any transfer agent (in addition to the Registrar) initially
designated by CPL with respect to any series of Junior Subordinated Debentures,
CPL may at any time rescind the designation of any such transfer agent or
approve a change in the location through which any such transfer agent acts,
except that CPL will be required to maintain a transfer agent in each Place of
Payment for such series. (Section 4.02) CPL may at any time designate additional
transfer agents with respect to any series of Junior Subordinated Debentures.
The Junior Subordinated Debentures may be transferred or exchanged without
service charge, other than any tax or governmental charge imposed in connection
therewith. (Section 2.05)
In the event of any redemption in part, CPL shall not be required to
(i) issue, register the transfer of or exchange any Junior Subordinated
Debenture during a period beginning at the opening of business 15 days before
any selection for redemption of Junior Subordinated Debentures of like tenor and
of the series of which such Junior Subordinated Debenture is a part, and ending
at the close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all holders of Junior Subordinated
Debentures of like tenor and of such series to be redeemed and (ii) register the
transfer of or exchange any Junior Subordinated Debentures so selected for
redemption, in whole or in part, except the unredeemed portion of any Junior
Subordinated Debenture being redeemed in part. (Section 2.05)
Payment and Paying Agents
Unless otherwise indicated in the Prospectus Supplement, payment of
principal of and premium, if any, on any Junior Subordinated Debenture will be
made only against surrender to the Paying Agent of such Junior Subordinated
Debenture. Unless otherwise indicated in the Prospectus Supplement, principal of
and premium, if any, and interest on Junior Subordinated Debentures will be
payable, subject to any applicable laws and regulations, at the office of such
Paying Agent or Paying Agents as CPL may designate from time to time, except
that at the option of CPL payments on the Junior Subordinated Debentures may be
made (i) by checks mailed by the Debenture Trustee to the holders entitled
thereto at their registered addresses as specified in the Register for such
Junior Subordinated Debentures or (ii) to a holder of $1,000,000 or more in
aggregate principal amount of such Junior Subordinated Debentures who has
delivered a written request to the Debenture Trustee at least 14 days prior to
the relevant Interest Payment Date electing to have payments made by wire
transfer to a designated account in the United States, by wire transfer of
immediately available funds to such designated account; provided that, in either
case, the payment of principal with respect to any Junior Subordinated Debenture
will be made only upon surrender of such Junior Subordinated Debenture to the
Debenture Trustee. Unless otherwise indicated in the Prospectus Supplement,
payment of interest on a Junior Subordinated Debenture on any Interest Payment
Date will be made to the person in whose name such Junior Subordinated Debenture
(or Predecessor Junior Subordinated Debenture) is registered at the close of
business on the record date for such interest payment. (Sections 2.03 and 4.03)
The Debenture Trustee will initially act as Paying Agent with respect
to the Junior Subordinated Debentures. CPL may at any time designate additional
Paying Agents or rescind the designation of any Paying Agents or approve a
change in the office through which any Paying Agent acts, except that CPL will
be required to maintain a Paying Agent in each Place of Payment for each series
of the Junior Subordinated Debentures. (Sections 4.02 and 4.03)
All moneys paid by CPL to a Paying Agent for the payment of the
principal of or premium, if any, or interest on any Junior Subordinated
Debenture of any series that remain unclaimed at the end of two years after such
principal, premium, if any, or interest shall have become due and payable will
be repaid to CPL and the holder of such Junior Subordinated Debenture will
thereafter look only to CPL for payment thereof. (Section 11.06)
Global Debentures
The Junior Subordinated Debentures of a series may be issued in whole
or in part in the form of one or more global securities ("Global Junior
Subordinated Debentures") that will be deposited with, or on behalf of, a
depositary (the "Depositary") identified in the Prospectus Supplement relating
to such series. Global Junior Subordinated Debentures may be issued only in
fully registered form and in either temporary or permanent form. Unless and
until it is exchanged in whole or in part for the individual Junior Subordinated
Debentures represented thereby, a Global Junior Subordinated Debenture may not
be transferred except as a whole by the Depositary for such Global Junior
Subordinated Debenture to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by the
Depositary or any nominee to a successor Depositary or any nominee of such
successor Depositary. (Section 2.11)
The specific terms of the depositary arrangement with respect to any
portion of a series of Junior Subordinated Debentures to be represented by a
Global Junior Subordinated Debenture will be described in the Prospectus
Supplement relating to such series. CPL anticipates that the following
provisions will generally apply to depositary arrangements.
Upon the issuance of a Global Junior Subordinated Debenture, and the
deposit of such Global Junior Subordinated Debenture with or on behalf of the
Depositary, the Depositary for such Global Junior Subordinated Debenture or its
nominee will credit on its book-entry registration and transfer system, the
respective principal amounts of the individual Junior Subordinated Debentures
represented by such Global Junior Subordinated Debenture to the accounts of
persons that have accounts with such Depositary ("Participants"). Such accounts
shall be designated by the dealers, underwriters or agents with respect to such
Junior Subordinated Debentures or by CPL if such Junior Subordinated Debentures
are offered and sold directly by CPL. Ownership of beneficial interests in a
Global Junior Subordinated Debenture will be limited to Participants or persons
that may hold interests through Participants. Ownership of beneficial interests
in such Global Junior Subordinated Debenture will be shown on, and the transfer
of that ownership will be effected only through, records maintained by the
applicable Depositary or its nominee (with respect to interests of Participants)
and the records of Participants (with respect to interests of persons who hold
through Participants). The laws of some states may require that certain
purchasers of securities take physical delivery of such securities in definitive
form. Such limits and such laws may impair the ability to transfer beneficial
interests in a Global Junior Subordinated Debenture.
So long as the Depositary for a Global Junior Subordinated Debenture,
or its nominee, is the registered owner of such Global Junior Subordinated
Debenture, such Depositary or such nominee, as the case may be, will be
considered the sole owner or holder of the Junior Subordinated Debentures
represented by such Global Junior Subordinated Debenture for all purposes under
the Indenture governing such Junior Subordinated Debentures. Except as provided
below, owners of beneficial interests in a Global Junior Subordinated Debenture
will not be entitled to have any of the individual Junior Subordinated
Debentures of the series represented by such Global Junior Subordinated
Debenture registered in their names, will not receive or be entitled to receive
physical delivery of any such Junior Subordinated Debentures of such series in
definitive form and will not be considered the owners or holders thereof under
the Indenture.
Payments of principal of, premium, if any, and interest on individual
Junior Subordinated Debentures represented by a Global Junior Subordinated
Debenture registered in the name of a Depositary or its nominee will be made to
the Depositary or its nominee, as the case may be, as the registered owner of
the Global Junior Subordinated Debenture representing such Junior Subordinated
Debentures. None of CPL, the Debenture Trustee, any Paying Agent, or the
Registrar for such Junior Subordinated Debentures will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the Global Junior Subordinated
Debentures representing such Junior Subordinated Debentures or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
CPL expects that the Depositary for a series of Junior Subordinated
Debentures or its nominee, upon receipt of any payment of principal, premium, if
any, or interest in respect of a permanent Global Junior Subordinated Debenture
representing any of such Junior Subordinated Debentures, immediately will credit
Participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Junior
Subordinated Debenture representing such Junior Subordinated Debentures as shown
on the records of such Depositary or its nominee. CPL also expects that payments
by Participants to owners of beneficial interests in such Global Junior
Subordinated Debenture held through such Participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name." Such payments will be the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if
a Depositary for a series of Junior Subordinated Debentures is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by CPL within 90 days, CPL will issue individual
Junior Subordinated Debentures of such series in exchange for the Global Junior
Subordinated Debenture representing such series of Junior Subordinated
Debentures. In addition, CPL may at any time and in its sole discretion, subject
to any limitations described in the Prospectus Supplement relating to such
Junior Subordinated Debentures, determine not to have any Junior Subordinated
Debentures of such series represented by one or more Global Junior Subordinated
Debentures and, in such event, will issue individual Junior Subordinated
Debentures of such series in exchange for the Global Junior Subordinated
Debenture representing such series of Junior Subordinated Debentures. Further,
if CPL so specifies with respect to the Junior Subordinated Debentures of a
series, an owner of a beneficial interest in a Global Junior Subordinated
Debenture representing Junior Subordinated Debentures of such series may, on
terms acceptable to CPL, the Debenture Trustee and the Depositary for such
Global Junior Subordinated Debenture, receive individual Junior Subordinated
Debentures of such series in exchange for such beneficial interest, subject to
any limitations described in the Prospectus Supplement relating to such Junior
Subordinated Debentures. In any such instance, an owner of a beneficial interest
in a Global Junior Subordinated Debenture will be entitled to physical delivery
of individual Junior Subordinated Debentures of the series represented by such
Global Junior Subordinated Debenture equal in principal amount to such
beneficial interest and to have such Junior Subordinated Debentures registered
in its name. Individual Junior Subordinated Debentures of such series so issued
will be issued in denominations, unless otherwise specified by CPL, of $25 and
integral multiples thereof. (Section 2.11)
Redemption
Unless otherwise indicated in the applicable Prospectus Supplement,
Junior Subordinated Debentures will not be subject to any sinking fund.
The applicable Prospectus Supplement will specify the period or periods
within which, the price or prices at which and the terms and conditions upon
which the Junior Subordinated Debentures of any series may be redeemed, in whole
or in part, at the option of CPL. Junior Subordinated Debentures in
denominations larger than $25 may be redeemed in part but only in integral
multiples of $25. Except as otherwise specified in the applicable Prospectus
Supplement, the redemption price for any Junior Subordinated Debenture so
redeemed shall equal any accrued and unpaid interest thereon to the redemption
date, plus 100% of the principal amount thereof.
Except as otherwise specified in the applicable Prospectus Supplement,
if a Debenture Tax Event (as defined below) in respect of a series of Junior
Subordinated Debentures shall occur and be continuing, CPL may, at its option,
redeem such series of Junior Subordinated Debentures in whole (but not in part)
at any time within 90 days of the occurrence of such Debenture Tax Event, at a
redemption price equal to 100% of the principal amount of such Junior
Subordinated Debentures then outstanding plus accrued and unpaid interest to the
date fixed for redemption.
"Debenture Tax Event" means the receipt by CPL of an opinion of
counsel, rendered by a law firm having a recognized national tax and securities
practice, to the effect that, as a result of any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is announced on or after the date of issuance of the applicable series
of Junior Subordinated Debentures under the Indenture, there is more than an
insubstantial risk that interest payable by CPL on such series of Junior
Subordinated Debentures is not, or within 90 days of the date of such opinion,
will not be, deductible by CPL, in whole or in part, for United States federal
income tax purposes.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each holder of Junior Subordinated
Debentures to be redeemed at its registered address (Section 3.02). Unless CPL
defaults in payment of the redemption price, on and after the redemption date
interest will cease to accrue on such Junior Subordinated Debentures or portions
thereof called for redemption.
Option to Extend Interest Payment Date
If provided in the applicable Prospectus Supplement, CPL shall have the
right at any time or from time to time during the term of any series of Junior
Subordinated Debentures to defer the payment of interest for such number of
consecutive interest payment periods with respect to each deferred period as may
be specified in the applicable Prospectus Supplement (each, an "Extension
Period"), subject to the terms, conditions and covenants, if any, specified in
such Prospectus Supplement, provided that such Extension Period may not extend
beyond the maturity of such series of Junior Subordinated Debentures. Certain
United States federal income tax consequences and special considerations
applicable to any such Junior Subordinated Debentures will be described in the
applicable Prospectus Supplement. In the event that CPL exercises this right,
certain restrictions will be applicable to CPL as described under "--Certain
Covenants of CPL."
Agreed Tax Treatment
The Indenture provides that each holder of a Junior Subordinated
Debenture, each person that acquires a beneficial ownership interest in a Junior
Subordinated Debenture and CPL agree that for United States federal, state and
local tax purposes it is intended that such Junior Subordinated Debenture
constitute indebtedness. (Section 13.12)
Modification of Indenture
The Indenture contains provisions permitting CPL and the Debenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of the Junior Subordinated Debentures of each series which are
affected by the modification, to modify the Indenture or any supplemental
indenture affecting that series or the rights of the holders of that series of
Junior Subordinated Debentures; provided that no such modification may, without
the consent of the holder of each outstanding Junior Subordinated Debenture
affected thereby, (i) extend the fixed maturity of any Junior Subordinated
Debentures of any series, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon, or reduce any premium
payable upon the redemption thereof or (ii) reduce the percentage of Junior
Subordinated Debentures, the holders of which are required to consent to any
such supplemental indenture. (Section 9.02) In the case of Corresponding Junior
Subordinated Debentures, so long as any of the related series of Preferred
Securities remain outstanding, CPL will covenant in the applicable Supplemental
Indenture that no such modification may be made that adversely affects the
holders of such Preferred Securities in any material respect, and no termination
of the Indenture may occur, and no waiver of any Debenture Event of Default or
non-compliance with any covenant under the Indenture may be effective, without
the prior consent of the holders of at least a majority of the aggregate
liquidation preference of such Preferred Securities unless and until the
principal of the Corresponding Junior Subordinated Debentures and all accrued
and unpaid interest thereon have been paid in full and certain other conditions
are satisfied. See "Description of Corresponding Junior Subordinated
Debentures."
In addition, CPL and the Debenture Trustee may execute, without the
consent of any holder of Junior Subordinated Debentures (including the Junior
Subordinated Debentures being offered hereby), any supplemental indenture for
certain other usual purposes, including the creation of any new series of Junior
Subordinated Debentures. (Sections 2.01, 9.01 and 10.01)
Debenture Events of Default
The Indenture provides that any one or more of the following described
events with respect to a series of Junior Subordinated Debentures, which has
occurred and is continuing, constitutes a "Debenture Event of Default" with
respect to such series of Junior Subordinated Debentures:
(a) failure for 60 days to pay interest on the Junior Subordinated
Debentures of that series when due and payable (subject to CPL's right to defer
interest payments pursuant to an Extension Period as described under "--Option
to Extend Interest Payment Date"); or
(b) failure for 3 days to pay principal of or premium, if any, on the
Junior Subordinated Debentures of that series when due whether at maturity, upon
redemption, by declaration or otherwise, or to make any sinking or analogous
fund payment if established with respect to that series; or
(c) failure to observe or perform any other covenant (other than those
specifically relating to one or more other series of Junior Subordinated
Debentures) contained in the Indenture for 90 days after notice; or
(d) a decree or order by a court having jurisdiction in the premises
shall have been entered adjudging CPL a bankrupt or insolvent, or approving as
properly filed a petition seeking liquidation or reorganization of CPL under the
Federal Bankruptcy Code or any other similar applicable federal or state law,
and such decree or order shall have continued unvacated and unstayed for a
period of 90 days; an involuntary case shall be commenced under such Code in
respect of CPL and shall continue undismissed for a period of 90 days or an
order for relief in such case shall have been entered; or a decree or order of a
court having jurisdiction in the premises shall have been entered for the
appointment on the ground of insolvency or bankruptcy of a receiver, custodian,
liquidator, trustee or assignee in bankruptcy or insolvency of CPL or of its
property, or for the winding up or liquidation of its affairs, and such decree
or order shall have remained in force unvacated and unstayed for a period of 90
days; or
(e) CPL shall institute proceedings to be adjudicated a voluntary
bankrupt, shall consent to the filing of a bankruptcy proceeding against it,
shall file a petition or answer or consent seeking liquidation or reorganization
under the Federal Bankruptcy Code or other similar applicable federal or state
law, shall consent to the filing of any such petition or shall consent to the
appointment on the ground of insolvency or bankruptcy of a receiver or custodian
or liquidator or trustee or assignee in bankruptcy or insolvency of it or of its
property, or shall make an assignment for the benefit of creditors; or
(f) any other Event of Default specified with respect to the Junior
Subordinated Debentures of that series (Section 6.01).
The holders of a majority in aggregate outstanding principal amount of
any series of the Junior Subordinated Debentures have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Debenture Trustee for that series. (Section 6.06) The Debenture Trustee or
the holders of not less than 33% in aggregate outstanding principal amount of
any particular series of the Junior Subordinated Debentures may declare the
principal due and payable immediately upon a Debenture Event of Default with
respect to such series and, in the case of Corresponding Junior Subordinated
Debentures, should the Debenture Trustee or such holders of such Corresponding
Junior Subordinated Debentures fail to make such declaration, the holders of at
least 33% in aggregate liquidation preference of the related series of Preferred
Securities shall have such right.
At any time after a declaration of acceleration with respect to the
Junior Subordinated Debentures of any series has been made and before a judgment
or decree for payment of the money due has been obtained, the Debenture Event or
Events of Default giving rise to such declaration of acceleration will, without
further act, be deemed to have been waived, and such declaration and its
consequences will, without further act, be deemed to have been rescinded and
annulled, if:
(a) CPL has paid or deposited with the Debenture Trustee a sum
sufficient to pay:
(1) all overdue interest on all Junior Subordinated
Debentures of such series;
(2) the principal of and premium, if any, on any Junior
Subordinated Debentures of such series which have become due otherwise
than by such declaration of acceleration and interest thereon at the
rate or rates prescribed therefor in such Junior Subordinated
Debentures;
(3) interest upon overdue interest at the rate or rates
prescribed therefor in such Junior Subordinated Debentures, to the
extent that payment of such interest is lawful;
(4) all amounts due to the Debenture Trustee under the
Indenture; and
(b) any other Debenture Event or Events of Default with respect to
Junior Subordinated Debentures of such series, other than the
nonpayment of the principal of the Junior Subordinated Debentures of
such series which has become due solely by such declaration of
acceleration, have been cured or waived as provided in the Indenture.
(Section 6.01)
The holders of a majority in aggregate outstanding principal amount of
all series of the Junior Subordinated Debentures affected thereby may, on behalf
of the holders of all the Junior Subordinated Debentures of such series, waive
any past default, except a default in the payment of principal, premium, if any,
or interest. (Section 6.06) In the case of Corresponding Junior Subordinated
Debentures, should the holders of such Corresponding Junior Subordinated
Debentures fail to waive such default, the holders of a majority in aggregate
liquidation preference of the related series of Preferred Securities shall have
such right. CPL is required to file annually with the Debenture Trustee a
certificate as to whether or not CPL is in compliance with all the conditions
and covenants under the Indenture. (Section 5.03(d))
In case a Debenture Event of Default shall occur and be continuing as
to a series of Corresponding Junior Subordinated Debentures, the Property
Trustee will have the right to declare the principal of and the interest on such
Corresponding Junior Subordinated Debentures and any other amounts payable under
the Indenture, to be forthwith due and payable and to enforce its other rights
as a creditor with respect to such Corresponding Junior Subordinated Debentures.
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of CPL to pay interest or principal on the
Corresponding Junior Subordinated Debentures on the date such interest or
principal is otherwise payable, then a holder of Preferred Securities may
institute a Direct Action (as defined below under "Description of Preferred
Securities -- Enforcement of Certain Rights by Holders of Preferred Securities")
for payment after the respective due dates specified in the Corresponding Junior
Subordinated Debentures. CPL may not amend the Indenture to remove the foregoing
right to bring a Direct Action without the prior written consent of the holders
of all of the Preferred Securities. CPL shall be subrogated to the rights of the
holder of such Preferred Securities with respect to payments on the Preferred
Securities to the extent of any payments made by CPL to such holder in any
Direct Action.
The holders of the Preferred Securities would not be able to exercise
directly any rights against CPL other than those set forth in the preceding
paragraph available to the holders of the Corresponding Junior Subordinated
Debentures unless the Property Trustee or the Debenture Trustee, acting for the
benefit of the Property Trustee, fails to do so for 60 days. In such event, to
the fullest extent permitted by law, the holders of at least 33% in aggregate
liquidation preference of the outstanding Preferred Securities would have the
right to directly institute proceedings for enforcement of such rights. See
"Description of Preferred Securities -- Enforcement of Certain Rights by Holders
of Preferred Securities."
Consolidation, Merger and Sale
The Indenture does not contain any covenant which restricts CPL's
ability to merge or consolidate with or into any other corporation, sell or
convey all or substantially all of its assets to any corporation or otherwise
engage in restructuring transactions. (Section 10.01)
Conversion or Exchange
Unless otherwise indicated in the applicable Prospectus Supplement, the
Junior Subordinated Debentures of any series may be convertible or exchangeable
into Preferred Securities or other securities. The specific terms on which
Junior Subordinated Debentures of any series may be so converted or exchanged
will be set forth in the applicable Prospectus Supplement. Such terms may
include provisions for conversion or exchange, either mandatory, at the option
of the holder, or at the option of CPL, in which case the number of shares of
Preferred Securities or other securities to be received by the holders of Junior
Subordinated Debentures would be calculated as of a time and in the manner
stated in the applicable Prospectus Supplement.
Defeasance and Discharge
Under the terms of the Indenture, if CPL deposits with the Debenture
Trustee, in trust, moneys or Government Obligations, in an amount sufficient to
pay all the principal of, and interest on, the Junior Subordinated Debentures of
any series on the dates such payments are due in accordance with the terms of
such Junior Subordinated Debentures and if CPL delivers to the Debenture Trustee
an Opinion of Counsel to the effect that the holders of Junior Subordinated
Debentures of such series will not recognize income, gain or loss for federal
income tax purposes as a result of such deposit and the release of certain
obligations of the Company (as described below) and will be subject to federal
income tax on the same amount and in the same manner and at the same times as
would have been the case if such deposit and release had not occurred:
(a) CPL will be released from substantially all of its covenants and
other obligations contained in the Indenture and thereafter any failure
to comply with any such covenant or obligation will not constitute a
Default or a Debenture Event of Default with respect to the Junior
Subordinated Debentures of such series;
(b) the occurrence of an event described in clause (c) under "Debenture
Events of Default" above will no longer constitute a Default or a
Debenture Event of Default with respect to the Junior Subordinated
Debentures of such series; and
(c) the Junior Subordinated Debentures of such series will thereafter
be deemed not to be outstanding for purposes of determining whether the
holders of the requisite aggregate principal amount of Junior
Subordinated Debentures have approved any amendment, modification or
waiver with respect to any covenant or obligation described in clause
(a) above or any event described in clause (b) above;
provided that the foregoing will not relieve CPL of its obligations to make
payments in respect of the Junior Subordinated Debentures of such series.
In addition to discharging certain obligations under the Indenture as
stated above, if CPL delivers to the Debenture Trustee an Opinion of Counsel (in
lieu of the Opinion of Counsel referred to above) to the effect that (a) CPL has
received from, or there has been published by, the Internal Revenue Service a
ruling or (b) since the date of the Indenture there has been a change in
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the holders of Junior
Subordinated Debentures of such series will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount and in
the same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred, and (c) the trust resulting
from the defeasance is a valid trust and will not constitute a regulated
investment company under the Investment Company Act of 1940, as amended, then,
in such event, CPL will be deemed to have paid and discharged the entire
indebtedness on the Junior Subordinated Debentures (except as to any surviving
rights such as rights of registration of transfer or exchange expressly provided
for in the Indenture). In the event of any such defeasance and discharge of
Junior Subordinated Debentures of such series, holders of Junior Subordinated
Debentures of such series would be able to look only to such trust fund for
payment of principal of (and premium, if any) and interest, if any, on the
Junior Subordinated Debentures of such series. (Sections 11.01, 11.02 and 11.03)
Prospective investors are urged to consult their own tax advisors as to the
specific consequences to them of such deposit.
Governing Law
The Indenture and the Junior Subordinated Debentures will be governed
by, and construed in accordance with, the laws of the State of New York.
(Section 13.04)
Information Concerning the Debenture Trustee
The Debenture Trustee, prior to default, undertakes to perform only
such duties as are specifically set forth in the Indenture and, after default,
shall exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. (Section 7.01) Subject to such provision,
the Debenture Trustee is under no obligation to exercise any of the powers
vested in it by the Indenture at the request of any holder of Junior
Subordinated Debentures, unless offered reasonable indemnity by such holder
against the costs, expenses and liabilities which might be incurred thereby.
(Section 7.02) The Debenture Trustee is not required to expend or risk its own
funds or otherwise incur personal financial liability in the performance of its
duties if the Debenture Trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it. (Section 7.01)
The Bank of New York serves as trustee and agent under agreements
involving CPL and its affiliates.
Miscellaneous
CPL will have the right at all times to assign any of its rights or
obligations under the Indenture to a direct or indirect wholly-owned subsidiary
of CPL; provided that, in the event of any such assignment, CPL will remain
liable for all such obligations. Subject to the foregoing, the Indenture will be
binding upon and inure to the benefit of the parties thereto and their
respective successors and permitted assigns. The Indenture provides that it may
not otherwise be assigned by the parties thereto. (Section 13.11)
DESCRIPTION OF PREFERRED SECURITIES
The Preferred Securities and the Common Securities of each Issuer Trust
will be created pursuant to the terms of the Trust Agreement for each Issuer
Trust. The Preferred Securities of a particular issue will represent preferred
undivided beneficial interests in the assets of the related Issuer Trust and the
holders thereof will be entitled to a preference in certain circumstances with
respect to Distributions and amounts payable on redemption or liquidation over
the Common Securities of such Issuer Trust, as well as other benefits as
described in the corresponding Trust Agreement. This summary of certain
provisions of the Preferred Securities and each Trust Agreement does not purport
to be complete and is subject to, and is qualified in its entirety by reference
to, all the provisions of each Trust Agreement, including the definitions
therein of certain terms, and the Trust Indenture Act. Wherever particular
defined terms of a Trust Agreement (as supplemented or amended from time to
time) are referred to herein or in a Prospectus Supplement, such defined terms
are incorporated herein or therein by reference. The form of each Trust
Agreement has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. Each of the Issuer Trusts is a legally separate
entity and the assets of one are not available to satisfy the obligations of any
of the others.
General
The Preferred Securities of an Issuer Trust will rank pari passu, and
payments will be made thereon pro rata, with the Common Securities of that
Issuer Trust except as described below under "--Subordination of Common
Securities." Legal title to the Corresponding Junior Subordinated Debentures
will be held by the Property Trustee in trust for the benefit of the holders of
the related Preferred Securities and Common Securities. Each Guarantee Agreement
executed by CPL for the benefit of the holders of an Issuer Trust's Preferred
Securities (each, a "Guarantee") will be a guarantee on a subordinated basis
with respect to the related Preferred Securities but will not guarantee payment
of Distributions or amounts payable on redemption or liquidation of such
Preferred Securities when the related Issuer Trust does not have funds on hand
available to make such payments. See "Description of Guarantees."
Distributions
Each Issuer Trust's Preferred Securities represent preferred undivided
beneficial interests in the assets of such Issuer Trust, and the Distributions
on each Preferred Security will be payable at a rate specified in the Prospectus
Supplement for such Preferred Securities. The amount of Distributions payable
for any period will be computed on the basis of a 360-day year of twelve 30-day
months unless otherwise specified in the applicable Prospectus Supplement.
Distributions to which holders of Preferred Securities are entitled will
accumulate additional Distributions ("Additional Amounts") if and as specified
in the applicable Prospectus Supplement. The term "Distributions" as used herein
includes any Additional Amounts unless otherwise stated.
Distributions on the Preferred Securities will be cumulative, will
accumulate from the date of original issuance and will be payable on such dates
as specified in the applicable Prospectus Supplement. In the event that any date
on which Distributions are payable on the Preferred Securities is not a Business
Day (as defined below), payment of the Distribution payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, payment of such Distribution shall be
made on the immediately preceding Business Day, in each case with the same force
and effect as if made on such date (each date on which Distributions are payable
in accordance with the foregoing, a "Distribution Date"). A "Business Day" shall
mean any day other than a Saturday or a Sunday, or a day on which banking
institutions in The City of New York are authorized or required by law or
executive order to remain closed or a day on which the corporate trust office of
the Property Trustee or the Debenture Trustee is closed for business.
If provided in the applicable Prospectus Supplement, CPL has the right
under the Indenture to defer the payment of interest on any series of the
Corresponding Junior Subordinated Debentures at any time or from time to time
for one or more Extension Periods, subject to the terms, conditions and
covenants, if any, specified in the applicable Prospectus Supplement, provided
that no Extension Period may extend beyond the maturity of such series of
Corresponding Junior Subordinated Debentures. As a consequence of any such
extension, Distributions on the corresponding Preferred Securities would be
deferred (but would continue to accumulate additional Distributions thereon at
the rate per annum set forth in the Prospectus Supplement for such Preferred
Securities) by the Issuer Trust of such Preferred Securities during any such
Extension Period. During such Extension Period CPL may not, and may not permit
any subsidiary of CPL to, (i) declare, set aside or pay any dividend or
distribution on, or repurchase, redeem, or otherwise acquire or make any sinking
fund payment with respect to, any shares of CPL's capital stock, including the
Common Stock of CPL, or (ii) make any payment of principal, interest or premium,
if any, on or repay, repurchase or redeem any debt securities that rank pari
passu with or junior in interest to the Corresponding Junior Subordinated
Debentures or make any guarantee payments with respect to the foregoing (other
than (a) dividends or distributions in shares of its capital stock or in rights
to acquire shares of its capital stock, (b) conversions into or exchanges for
shares of its capital stock, (c) redemptions, purchases or other acquisitions of
shares of its capital stock made for the purpose of an employee incentive plan
or benefit plan of CPL or any of its subsidiaries and mandatory redemptions or
sinking fund payments with respect to any series of Preferred Stock of CPL that
are subject to mandatory redemption or sinking fund requirements, provided that
the aggregate stated value of all such series outstanding at the time of any
such payment does not exceed five percent of the aggregate of (1) the total
principal amount of all bonds or other securities representing secured
indebtedness issued or assumed by CPL and then outstanding and (2) the capital
and surplus of CPL to be stated on the books of account of CPL after giving
effect to such payment, provided, however, that any moneys deposited in any
sinking fund and not in violation of this provision may thereafter be applied to
the purchase or redemption of such Preferred Stock in accordance with the terms
of such sinking fund without regard to the restrictions contained in this
provision, and (d) payments under any guarantee by CPL with respect to any
securities of a subsidiary of CPL, provided that the proceeds from the issuance
of such securities were issued to purchase Junior Subordinated Debentures of any
series under the Indenture). See "Description of Junior Subordinated
Debentures--Option to Extend Interest Payment Date," and "--Certain Covenants of
CPL" and "Description of Corresponding Junior Subordinated Debentures--Certain
Covenants of CPL."
The revenue of each Issuer Trust available for distribution to holders
of its Preferred Securities will be limited to payments under the Corresponding
Junior Subordinated Debentures in which such Issuer Trust will invest the
proceeds from the issuance and sale of its Preferred Securities and its Common
Securities. See "Description of Corresponding Junior Subordinated Debentures."
If CPL does not make interest payments on such Corresponding Junior Subordinated
Debentures, the Property Trustee will not have funds available to pay
Distributions on the related Preferred Securities. The payment of Distributions
(if and to the extent the Issuer Trust has funds available for the payment of
such Distributions and cash sufficient to make such payments) is guaranteed by
CPL on a limited basis as set forth herein under "Description of Guarantees."
Distributions on the Preferred Securities of each Issuer Trust will be
payable to the holders thereof as they appear on the register of such Issuer
Trust on the relevant record dates, which, as long as the Preferred Securities
remain in book-entry form, will be one Business Day prior to the relevant
Distribution Date. Subject to any applicable laws and regulations and the
provisions of the applicable Trust Agreement, each such payment will be made as
described under "--Book-entry Issuance." In the event any Preferred Securities
are not in book-entry form, the relevant record date for such Preferred
Securities shall be a date at least 15 days prior to the relevant Distribution
Date, as specified in the applicable Prospectus Supplement.
Redemption or Exchange
Mandatory Redemption. Upon the repayment or redemption, in whole or in
part, of any Corresponding Junior Subordinated Debentures, whether at maturity
or upon earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the related Preferred Securities and Common
Securities, upon not less than 30 nor more than 60 days' notice prior to the
date fixed for repayment or redemption (the "Redemption Date"), at a redemption
price equal to the aggregate liquidation preference of such Preferred Securities
plus accumulated and unpaid Distributions thereon to the Redemption Date (the
"Redemption Price") and the related amount of the premium, if any, paid by CPL
upon the concurrent redemption of such Corresponding Junior Subordinated
Debentures. See "Description of Corresponding Junior Subordinated Debentures --
Optional Redemption." If less than all of any series of Corresponding Junior
Subordinated Debentures are to be repaid or redeemed on a Redemption Date, then
the proceeds from such repayment or redemption shall be allocated to the
redemption pro rata of the related Preferred Securities and the Common
Securities. The amount of premium, if any, paid by CPL upon the redemption of
all or any part of any series of any Corresponding Junior Subordinated
Debentures to be repaid or redeemed on a Redemption Date shall be allocated to
the redemption pro rata of the related Preferred Securities and the Common
Securities.
CPL will have the right to redeem any series of Corresponding Junior
Subordinated Debentures at any time, in whole (but not in part), upon the
occurrence of a Tax Event or an Investment Company Event (each as defined below,
a "Special Event") and subject to the further conditions described under
"Description of Corresponding Junior Subordinated Debentures--Optional
Redemption." In addition, the applicable Prospectus Supplement will specify the
period or periods within which, the price or prices at which and the terms and
conditions upon which the Corresponding Junior Subordinated Debentures of any
series may be redeemed, in whole or in part, at the option of CPL. Corresponding
Junior Subordinated Debentures in denominations larger than $25 may be redeemed
in part but only in integral multiples of $25. Except as otherwise specified in
the applicable Prospectus Supplement, the Redemption Price for any Corresponding
Junior Subordinated Debenture so redeemed shall equal any accrued and unpaid
interest thereon to the Redemption Date, plus 100% of the principal amount
thereof.
Special Event Redemption or Distribution of Corresponding
Junior Subordinated Debentures.
If a Special Event in respect of a series of Preferred Securities and
Common Securities shall occur and be continuing, CPL has the right to redeem the
Corresponding Junior Subordinated Debentures in whole (but not in part) and
thereby cause a mandatory redemption of such Preferred Securities and Common
Securities in whole (but not in part) within 90 days following the occurrence of
such Special Event at the Redemption Price. Whether or not a Special Event has
occurred, CPL has the right to terminate the related Issuer Trust at any time
and, after satisfaction of liabilities to creditors of such Issuer Trust, if
any, as provided by applicable law, cause such Corresponding Junior Subordinated
Debentures to be distributed to the holders of such Preferred Securities and
Common Securities in liquidation of the Issuer Trust. If CPL does not elect
either option described above, the applicable series of Preferred Securities
will remain outstanding and, in the event a Tax Event has occurred and is
continuing, Additional Sums (as defined below) may be payable on the
Corresponding Junior Subordinated Debentures.
"Additional Sums" means the additional amounts as may be necessary in
order that the amount of Distributions then due and payable by an Issuer Trust
on the outstanding Preferred Securities and Common Securities of the Issuer
Trust shall not be reduced as a result of any additional taxes, duties and other
governmental charges to which such Issuer Trust has become subject as a result
of a Tax Event.
"Investment Company Event" means the receipt by the applicable Issuer
Trust of an opinion of counsel, rendered by a law firm having a recognized
national tax and securities practice, to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law") the applicable
Issuer Trust is or will be considered an "investment company" that is required
to be registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), which Change in 1940 Act Law becomes effective on or
after the date of original issuance of the series of Preferred Securities issued
by the applicable Issuer Trust.
"Like Amount" means (i) with respect to a redemption of any series of
Preferred Securities, Preferred Securities and Common Securities of such series
having a Liquidation Amount (as defined below) equal to that portion of the
principal amount of Corresponding Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture and the proceeds of
which will be used to pay the Redemption Price of such Preferred Securities and
Common Securities, and (ii) with respect to a distribution of Corresponding
Junior Subordinated Debentures to holders of any series of Preferred Securities
in connection with a termination or liquidation of the related Issuer Trust,
Corresponding Junior Subordinated Debentures having a principal amount equal to
the Liquidation Amount of the Preferred Securities or Common Securities of the
holder to whom such Corresponding Junior Subordinated Debentures are
distributed.
"Liquidation Amount" means the stated amount of $25 per Preferred
Security and Common Security.
"Tax Event" means the receipt by the applicable Issuer Trust of an
opinion of counsel, rendered by a law firm having a recognized national tax and
securities practice, to the effect that, as a result of any amendment to, or
change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States, or any political subdivision or
taxing authority thereof or therein, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or which
pronouncement or decision is announced on or after the date of issuance of the
Preferred Securities under the related Trust Agreement, there is more than an
insubstantial risk that (i) the applicable Issuer Trust is, or will be within 90
days of the date of such opinion, subject to United States federal income tax
with respect to income received or accrued on the corresponding series of
Corresponding Junior Subordinated Debentures, (ii) interest payable by CPL on
such series of Corresponding Junior Subordinated Debentures is not, or within 90
days of the date of such opinion, will not be, deductible by CPL, in whole or in
part, for United States federal income tax purposes, or (iii) the applicable
Issuer Trust is, or will be within 90 days of the date of such opinion, subject
to more than a de minimis amount of other taxes, duties or other governmental
charges.
After the liquidation date fixed for any distribution of Corresponding
Junior Subordinated Debentures for any series of Preferred Securities and Common
Securities (i) such series of Preferred Securities and Common Securities will no
longer be deemed to be outstanding, (ii) The Depository Trust Company ("DTC") or
its nominee, as the record holder of such series of Preferred Securities, will
receive a registered global certificate or certificates representing the
Corresponding Junior Subordinated Debentures to be delivered upon such
distribution and (iii) any certificates representing such series of Preferred
Securities not held by DTC or its nominee will be deemed to represent the
Corresponding Junior Subordinated Debentures having a principal amount equal to
the stated liquidation preference of such series of Preferred Securities, and
bearing accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on such series of Preferred Securities until such certificates are
presented to the Administrative Trustees or their agent for transfer or
reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Corresponding Junior Subordinated Debentures that may be
distributed in exchange for Preferred Securities if a termination and
liquidation of an Issuer Trust were to occur. Accordingly, the Preferred
Securities that an investor may purchase, or the Corresponding Junior
Subordinated Debentures that the investor may receive on termination and
liquidation of an Issuer Trust, may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby.
Redemption Procedures
Preferred Securities redeemed on each Redemption Date shall be redeemed
at the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Corresponding Junior Subordinated Debentures. Redemptions of
the Preferred Securities shall be made and the Redemption Price shall be payable
on each Redemption Date only to the extent that the related Issuer Trust has
funds on hand available for the payment of such Redemption Price. See also
"--Subordination of Common Securities."
If an Issuer Trust gives a notice of redemption in respect of its
Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, to the extent funds are available, the Property Trustee will deposit
irrevocably with DTC, funds sufficient to pay the applicable Redemption Price
and will give DTC irrevocable instructions and authority to pay the Redemption
Price to the holders of such Preferred Securities. See "--Book-entry Issuance."
If such Preferred Securities are no longer in book-entry form, such Issuer
Trust, to the extent funds are available, will irrevocably deposit with the
paying agent for such Preferred Securities funds sufficient to pay the
applicable Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the holders thereof
upon surrender of their certificates evidencing such Preferred Securities.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Preferred Securities called for redemption shall be
payable to the holder of such Preferred Securities as of the relevant record
dates for the related Distribution Dates. If notice of redemption shall have
been given and funds deposited as required, then upon the date of such deposit,
all rights of the holders of such Preferred Securities so called for redemption
will cease, except the right of the holders of such Preferred Securities to
receive the Redemption Price, but without interest on such Redemption Price, and
such Preferred Securities will cease to be outstanding. In the event that any
date fixed for redemption of Preferred Securities is not a Business Day, then
payment of the Redemption Price payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the Redemption Price in
respect of Preferred Securities called for redemption is improperly withheld or
refused and not paid either by the Issuer Trust or by CPL pursuant to the
Guarantee as described under "Description of Guarantees," Distributions on such
Preferred Securities will continue to accrue at the then applicable rate, from
the Redemption Date originally established by the Issuer Trust for such
Preferred Securities to the date such Redemption Price is actually paid, in
which case the actual payment date will be the date fixed for redemption for
purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), CPL or its subsidiaries, if any, may at any time and
from time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement.
Payment of the Redemption Price on the Preferred Securities and any
distribution of Corresponding Junior Subordinated Debentures to holders of
Preferred Securities shall be made to the applicable recordholders thereof as
they appear on the register for such Preferred Securities on the relevant record
date, which shall be one Business Day prior to the relevant Redemption Date or
liquidation date, as applicable; provided, however, that in the event that any
Preferred Securities are not in book-entry form, the relevant record date for
such Preferred Securities shall be the fifteenth day prior to the Redemption
Date or liquidation date, as applicable, as specified in the applicable
Prospectus Supplement.
If less than all of the Preferred Securities and Common Securities
issued by an Issuer Trust are to be redeemed on a Redemption Date, then the
aggregate Liquidation Amount of such Preferred Securities and Common Securities
to be redeemed shall be allocated pro rata among the Preferred Securities and
Common Securities. The particular Preferred Securities to be redeemed shall be
selected on a pro rata basis not more than 60 days prior to the Redemption Date
by the Property Trustee from the outstanding Preferred Securities not previously
called for redemption, by such method as the Property Trustee shall deem fair
and appropriate and which may provide for the selection for redemption of
portions (equal to $25 or an integral multiple of $25 in excess thereof) of the
liquidation preference of Preferred Securities of a denomination larger than
$25. The Property Trustee shall promptly notify the trust registrar in writing
of the Preferred Securities selected for redemption and, in the case of any
Preferred Securities selected for partial redemption, the liquidation preference
thereof to be redeemed. For all purposes of each Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the aggregate
liquidation preference of Preferred Securities which has been or is to be
redeemed.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each holder of Preferred Securities
to be redeemed at its registered address.
Subordination of Common Securities
Payment of Distributions (including Additional Sums, if applicable) on,
and the Redemption Price of, each Issuer Trust's Preferred Securities and Common
Securities, as applicable, shall be made pro rata based on the Liquidation
Amount of such Preferred Securities and Common Securities; provided, however,
that if on any Distribution Date or Redemption Date any Event of Default
resulting from a Debenture Event of Default shall have occurred and be
continuing, no payment of any Distribution (including Additional Sums, if
applicable) on, or Redemption Price of, any of the Issuer Trust's Common
Securities, and no other payment on account of the redemption, liquidation or
other acquisition of such Common Securities, shall be made unless payment in
full in cash of all accumulated and unpaid Distributions (including Additional
Amounts, if applicable) on all of the Issuer Trust's outstanding Preferred
Securities for all Distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price the full amount of such Redemption
Price on all of the Issuer Trust's outstanding Preferred Securities then called
for redemption, shall have been made or provided for, and all funds available to
the Property Trustee shall first be applied to the payment in full in cash of
all Distributions (including Additional Sums, if applicable) on, or Redemption
Price of, the Issuer Trust's Preferred Securities then due and payable.
In the case of any Event of Default resulting from a Debenture Event of
Default, CPL as holder of each Issuer Trust's Common Securities will be deemed
to have waived any right to act with respect to any such Event of Default under
the applicable Trust Agreement until the effect of all such Events of Default
with respect to such Preferred Securities have been cured, waived or otherwise
eliminated. Until any such Events of Default under the applicable Trust
Agreement with respect to the Preferred Securities have been so cured, waived or
otherwise eliminated, the Property Trustee shall act solely on behalf of the
holders of such Preferred Securities and not on behalf of CPL as holder of the
Common Securities, and only the holders of such Preferred Securities will have
the right to direct the Property Trustee to act on their behalf.
Liquidation Distribution Upon Termination
Pursuant to each Trust Agreement, each Issuer Trust shall automatically
terminate upon expiration of its term and shall be terminated on the first to
occur of: (i) certain events of bankruptcy, dissolution or liquidation of CPL;
(ii) the distribution of a Like Amount of the Corresponding Junior Subordinated
Debentures to the holders of its Preferred Securities and Common Securities if
CPL, as Depositor, has given written direction to the Property Trustee to
terminate such Issuer Trust (which direction is optional and wholly within the
discretion of CPL as Depositor); (iii) the redemption of all of such Issuer
Trust's Preferred Securities as described under "--Redemption or Exchange"; and
(iv) the entry by a court of competent jurisdiction of an order for the
dissolution of such Issuer Trust.
If an early termination occurs as described in clause (i), (ii) or (iv)
above, such Issuer Trust shall be liquidated by the Issuer Trustees as
expeditiously as the Issuer Trustees determine to be possible by distributing,
after satisfaction of liabilities to creditors of such Issuer Trust as provided
by applicable law, to the holders of such Preferred Securities and Common
Securities a Like Amount of the Corresponding Junior Subordinated Debentures,
unless such distribution is determined by the Property Trustee not to be
practical, in which event such holders will be entitled to receive out of the
assets of the Issuer Trust available for distribution to holders, after
satisfaction of liabilities to creditors of such Issuer Trust as provided by
applicable law, an amount equal to, in the case of holders of Preferred
Securities, the aggregate of the liquidation preference plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because such Issuer Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by such
Issuer Trust on its Preferred Securities shall be paid on a pro rata basis. The
holders of such Issuer Trust's Common Securities will be entitled to receive
distributions upon any such liquidation pro rata with the holders of its
Preferred Securities, except that if a Debenture Event of Default has occurred
and is continuing, such Preferred Securities shall have a priority over such
Common Securities. A supplemental indenture may provide that if an early
termination occurs as described in clause (iv) above, the Corresponding Junior
Subordinated Debentures may be subject to optional redemption in whole (but not
in part).
Events of Default; Notice
Any one of the following events constitutes an "Event of Default" under
each Trust Agreement (an "Event of Default") with respect to the Preferred
Securities issued thereunder (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) the occurrence of a Debenture Event of Default under the
Indenture with respect to the Corresponding Junior Subordinated
Debentures (see "Description of Junior Subordinated Debentures --
Debenture Events of Default"); or
(ii) default by an Issuer Trust in the payment of any
Distribution with respect to Preferred Securities of that issue when it
becomes due and payable, and continuation of such default for a period
of 30 days; or
(iii) default by an Issuer Trust in the payment of any
Redemption Price of any Preferred Security or Common Security of that
issue when it becomes due and payable; or
(iv) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Issuer Trustees in such
Trust Agreement (other than a covenant or warranty a default in the
performance of which or the breach of which is dealt with in clause
(ii) or (iii) above), and continuation of such default or breach for a
period of 60 days after there has been given, by registered or
certified mail, to the defaulting Issuer Trustee or Trustees by the
holders of at least 33% in aggregate liquidation preference of the
outstanding Preferred Securities of that issue, a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" under such Trust
Agreement; or
(v) the occurrence of certain events of bankruptcy or
insolvency with respect to the Property Trustee and the failure by CPL
to appoint a successor Property Trustee within 60 days thereof.
Within 15 Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of such Issuer Trust's Preferred
Securities, the Administrative Trustees and CPL, as Depositor, unless such Event
of Default shall have been cured or waived. CPL, as Depositor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under each Trust Agreement.
If, in the event of a Debenture Event of Default, the Debenture Trustee
fails or the holders of not less than 33% in aggregate principal amount of the
Corresponding Junior Subordinated Debentures fail to declare the principal due
and payable, the holders of at least 33% in aggregate liquidation preference of
the related series of Preferred Securities shall have such right. Except as set
forth above, the existence of an Event of Default does not entitle the holders
of Preferred Securities to accelerate the maturity thereof or declare amounts
due and payable.
If a Debenture Event of Default with respect to any Corresponding
Junior Subordinated Debentures has occurred and is continuing, the corresponding
Preferred Securities shall have a preference over the related Common Securities
upon termination of the applicable Issuer Trust as described above. See
"--Liquidation Distribution Upon Termination."
Enforcement of Certain Rights by Holders of Preferred Securities
If a Debenture Event of Default has occurred and is continuing, then
the holders of Preferred Securities would rely on the enforcement by the
Property Trustee or the Debenture Trustee, acting for the benefit of the
Property Trustee, of its rights as a holder of the Corresponding Junior
Subordinated Debentures against CPL. Notwithstanding the foregoing, if a
Debenture Event of Default has occurred and is continuing and such event is
attributable to the failure of CPL to pay interest or principal on the
Corresponding Junior Subordinated Debentures on the date such interest or
principal is otherwise payable (or in the case of redemption, on the redemption
date), then a holder of Preferred Securities may directly institute a proceeding
against CPL for enforcement of payment to such holder of the principal of or
interest on the Corresponding Junior Subordinated Debentures having a principal
amount equal to the aggregate liquidation preference of the Preferred Securities
of such holder (a "Direct Action") after the respective due dates specified in
the Corresponding Junior Subordinated Debentures. In connection with such Direct
Action, CPL will be subrogated to the rights of such holder of Preferred
Securities with respect to payments on the Preferred Securities to the extent of
any payment made by CPL to such holder of Preferred Securities in such Direct
Action.
The holders of the Preferred Securities would not be able to exercise
directly against CPL any rights other than those set forth in the preceding
paragraph available to the holders of the Corresponding Junior Subordinated
Debentures unless the Property Trustee or the Debenture Trustee, acting for the
benefit of the Property Trustee, fails to do so for 60 days. In such event, to
the fullest extent permitted by law, the holders of at least 33% in aggregate
liquidation preference of the outstanding Preferred Securities would have the
right to directly institute proceedings for enforcement of such rights.
Removal of Issuer Trustees
Unless a Debenture Event of Default with respect to any Corresponding
Junior Subordinated Debentures shall have occurred and be continuing, the
applicable Issuer Trustee may be removed at any time by the holder of the
related Common Securities. If such a Debenture Event of Default has occurred and
is continuing, the Property Trustee and the Delaware Trustee may be removed at
such time by the holders of a majority in Liquidation Amount of the outstanding
corresponding Preferred Securities. In no event will the holders of the
Preferred Securities have the right to vote to appoint, remove or replace the
Administrative Trustees, which voting rights are vested exclusively in CPL as
the holder of the Common Securities. No resignation or removal of an Issuer
Trustee and no appointment of a successor trustee shall be effective until the
acceptance of appointment by the successor trustee in accordance with the
provisions of the applicable Trust Agreement.
Co-trustees and Separate Property Trustee
Unless an Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the applicable
Trust Property may at the time be located, CPL, as the holder of the Common
Securities, shall have power to appoint one or more persons either to act as a
co-trustee, jointly with the Property Trustee, of all or any part of such Trust
Property, or to act as separate trustee of any such property, in either case
with such powers as may be provided in the instrument of appointment, and to
vest in such person or persons in such capacity any property, title, right or
power deemed necessary or desirable, subject to the provisions of the applicable
Trust Agreement. In case a Debenture Event of Default with respect to any
Corresponding Junior Subordinated Debentures has occurred and is continuing, the
Property Trustee alone shall have power to make such appointment.
Merger or Consolidation of Issuer Trustees
Any entity into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
entity succeeding to all or substantially all the corporate trust business of
such Trustee, shall be the successor of such Trustee under each Trust Agreement,
provided such entity shall be otherwise qualified and eligible.
Mergers, Consolidations, Amalgamations or Replacements of the Issuer Trusts
An Issuer Trust may not merge with or into, consolidate, amalgamate, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below. An Issuer Trust may, at the request of CPL, with the consent of
the Administrative Trustees and without the consent of the holders of the
Preferred Securities of such Issuer Trust, merge with or into, consolidate,
amalgamate, be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the laws
of any State; provided that (i) such successor entity either (a) expressly
assumes all of the obligations of such Issuer Trust with respect to such
Preferred Securities or (b) substitutes for such Preferred Securities other
securities having substantially the same terms as such Preferred Securities (the
"Successor Securities") so long as the Successor Securities rank the same as
such Preferred Securities rank in priority with respect to distributions and
payments upon liquidation, redemption and otherwise, (ii) CPL expressly appoints
a trustee of such successor entity possessing the same powers and duties as the
Property Trustee as the holder of the Corresponding Junior Subordinated
Debentures, (iii) the Successor Securities are listed or traded, or any
Successor Securities will be listed or traded upon notification of issuance, on
any national securities exchange or other organization on which such Preferred
Securities are then listed, if any, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause such
Preferred Securities (including any Successor Securities) to be downgraded by
any nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of such
Preferred Securities (including any Successor Securities) in any material
respect, (vi) such successor entity has a purpose substantially identical to
that of such Issuer Trust, (vii) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, CPL has received an
opinion from independent counsel to such Issuer Trust experienced in such
matters to the effect that (a) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of such Preferred Securities
(including any Successor Securities) in any material respect, and (b) following
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease, neither such Issuer Trust nor such successor entity will be required to
register as an "investment company" under the Investment Company Act and (viii)
CPL or any permitted successor or assignee owns all of the common securities of
such successor entity and guarantees the obligations of such successor entity
under the Successor Securities at least to the extent provided by the applicable
Guarantee. Notwithstanding the foregoing, an Issuer Trust shall not, except with
the consent of holders of 100% in aggregate liquidation preference of the
Preferred Securities of such Issuer Trust, consolidate, amalgamate, merge with
or into, be replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause such Issuer Trust or the successor entity to be classified as other
than a "grantor trust" for United States federal income tax purposes.
Voting Rights; Amendment of Trust Agreement
Except as provided below and under "Description of
Guarantees--Amendments and Assignment" and as otherwise required by law and the
applicable Trust Agreement, the holders of the Preferred Securities will have no
voting rights.
Each Trust Agreement may be amended from time to time by CPL and the
Administrative Trustees, without the consent of the holders of the related
Preferred Securities, (i) to reflect the acceptance of appointment by a
successor Issuer Trustee, (ii) to cure any ambiguity, correct or supplement any
provisions in such Trust Agreement that may be inconsistent with any other
provision, or to make any other provisions with respect to matters or questions
arising under such Trust Agreement, that shall not be inconsistent with the
other provisions of such Trust Agreement, or (iii) to modify, eliminate or add
to any provisions of such Trust Agreement to such extent as shall be necessary
to ensure that the related Issuer Trust will be classified for United States
federal income tax purposes as a "grantor trust" at all times that any Preferred
Securities and Common Securities of such Issuer Trust are outstanding or to
ensure that such Issuer Trust will not be required to register as an "investment
company" under the Investment Company Act, provided, however, that in the case
of clause (ii) above, such action shall not adversely affect in any material
respect the interests of any holder of Preferred Securities or Common Securities
of such Issuer Trust, and, in the case of clause (iii), any amendments of such
Trust Agreement shall become effective when notice thereof is given to the
holders of such Preferred Securities and Common Securities. Such Trust Agreement
may be amended by the Administrative Trustees and CPL with (i) the consent of
holders representing not less than a majority (based upon Liquidation Amounts)
of such outstanding Preferred Securities and Common Securities and (ii) receipt
by the Issuer Trustees of an opinion of counsel to the effect that such
amendment or the exercise of any power granted to the Issuer Trustees in
accordance with such amendment will not affect such Issuer Trust's status as a
"grantor trust" for United States federal income tax purposes or such Issuer
Trust's exemption from status as an "investment company" under the Investment
Company Act, provided, further that without the consent of each holder of such
Preferred Securities and Common Securities, such Trust Agreement may not be
amended to (i) change the amount or timing of any Distribution on such Preferred
Securities and Common Securities or otherwise adversely affect the amount of any
Distribution required to be made in respect of such Preferred Securities and
Common Securities as of a specified date or (ii) restrict the right of holders
of such Preferred Securities and Common Securities to institute suit for the
enforcement of any such payment on or after such date as described under
"--Events of Default; Notice" above.
So long as any Corresponding Junior Subordinated Debentures are held by
the Property Trustee, the Issuer Trustees shall not (i) direct the time, method
and place of conducting any proceeding for any remedy available to the Debenture
Trustee or executing any trust or power conferred on the Property Trustee with
respect to such Corresponding Junior Subordinated Debentures, (ii) waive any
past default that is waivable under the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Corresponding
Junior Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or such Corresponding
Junior Subordinated Debentures, where such consent shall be required, without,
in each case, obtaining the prior approval of the holders of a majority in
aggregate liquidation preference of all outstanding corresponding Preferred
Securities; provided, however, that where a consent under the Indenture would
require the consent of each holder of Corresponding Junior Subordinated
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior consent of each holder of the corresponding Preferred
Securities. The Issuer Trustees shall not revoke any action previously
authorized or approved by a vote of the holders of the Preferred Securities
except by subsequent vote of the holders of the Preferred Securities. The
Property Trustee shall notify each holder of record of the Preferred Securities
of any notice of default with respect to the Corresponding Junior Subordinated
Debentures. In addition to obtaining the foregoing approvals of the holders of
the Preferred Securities, prior to taking any of the foregoing actions, the
Issuer Trustees shall obtain an opinion of counsel experienced in such matters
to the effect that the applicable Issuer Trust will be classified as a "grantor
trust" and will not be classified as an association taxable as a corporation for
United States federal income tax purposes on account of such action.
Any required approval of holders of Preferred Securities may be given
at a meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Property Trustee will cause a notice of any
meeting at which holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such holders is to be taken, to
be given to each holder of record of Preferred Securities in the manner set
forth in the applicable Trust Agreement.
No vote or consent of the holders of Preferred Securities will be
required for an Issuer Trust to redeem and cancel its Preferred Securities in
accordance with the applicable Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by CPL, the Issuer Trustees or any affiliate
of CPL or any Issuer Trustees shall, for purposes of such vote or consent, be
treated as if they were not outstanding.
Payment and Paying Agency
Payments in respect of the Preferred Securities shall be made to DTC,
which shall credit the relevant accounts at DTC on the applicable Distribution
Dates or, if any Issuer Trust's Preferred Securities are not held by DTC, such
payments shall be made by check mailed to the address of the holder entitled
thereto as such address shall appear on the Register. Unless otherwise specified
in the applicable Prospectus Supplement, the paying agent (the "Paying Agent")
shall initially be the Property Trustee and any co-paying agent chosen by the
Property Trustee and acceptable to the Administrative Trustees and CPL. The
Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written
notice to the Property Trustee and CPL. In the event that the Property Trustee
shall no longer be the Paying Agent, the Administrative Trustees shall appoint a
successor (which shall be a bank or trust company acceptable to the Property
Trustee and CPL) to act as Paying Agent.
Book-entry Issuance
DTC will act as securities depositary for all of the Preferred
Securities. The Preferred Securities will be issued only as fully-registered
securities registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global certificates will be issued for the Preferred Securities
of each Issuer Trust, representing in the aggregate the total number of such
Issuer Trust's Preferred Securities, and will be deposited with DTC.
DTC is a limited purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations ("Direct Participants"). DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain custodial
relationships with Direct Participants, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the Commission.
Purchases of Preferred Securities within the DTC system must be made by
or through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Preferred Securities, except in the event that use
of the book-entry system for the Preferred Securities of such Issuer Trust is
discontinued.
To facilitate subsequent transfers, all of the Preferred Securities
deposited by the Participants with DTC are registered in the name of DTC's
nominee, Cede & Co. The deposit of Preferred Securities with DTC and their
registration in the name of Cede & Co. effect no change in beneficial ownership.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities 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.
Redemption notices shall be sent to Cede & Co. as the registered holder
of the Preferred Securities. If less than all of an Issuer Trust's Preferred
Securities are being redeemed, DTC's current practice is to determine by lot the
amount of the interest of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Securities is limited to
the holders of record of the Preferred Securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to Preferred Securities. Under its usual procedures, DTC would mail an
omnibus proxy (the "Omnibus Proxy") to the Property Trustee 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 such Preferred
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy).
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and 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.
Distribution payments on the Preferred Securities will be made by the
Property Trustee to DTC. DTC's practice is to credit Direct Participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payments on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices and will be the responsibility of such Participant and not of DTC, the
Property Trustee, the Issuer Trust thereof or CPL, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
Distributions to DTC is the responsibility of the Property Trustee, disbursement
of such payments to Direct Participants is the responsibility of DTC, and
disbursements of such payments to the Beneficial Owners is the responsibility of
Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary
with respect to any of the Preferred Securities at any time by giving reasonable
notice to the Property Trustee and CPL. In the event that a successor securities
depositary is not obtained, definitive Preferred Security certificates
representing such Preferred Securities are required to be printed and delivered.
CPL, at its option, may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor depositary). After a Debenture Event of
Default, the holders of a majority in liquidation preference of Preferred
Securities may determine to discontinue the system of book-entry transfers
through DTC. In any such event, definitive certificates for such Issuer Trust's
Preferred Securities will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Issuer Trusts and CPL believe to
be accurate, but the Issuer Trusts and CPL assume no responsibility for the
accuracy thereof. None of the Issuer Trusts, any Issuer Trustee nor CPL has any
responsibility for the performance by DTC or its Participants of their
respective obligations as described herein or under the rules and procedures
governing their respective operations.
Registrar and Transfer Agent
Unless otherwise specified in the applicable Prospectus Supplement, the
Property Trustee will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of each Issuer Trust, but upon payment of any tax
or other governmental charges that may be imposed in connection with any
transfer or exchange. The Issuer Trusts will not be required to register or
cause to be registered the transfer of their Preferred Securities after such
Preferred Securities have been called for redemption.
Information Concerning the Property Trustee
The Property Trustee, other than during the occurrence and continuance
of an Event of Default, undertakes to perform only such duties as are
specifically set forth in each Trust Agreement and, after such Event of Default,
must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the applicable Trust Agreement at the request of any
holder of Preferred Securities unless it is offered reasonable indemnity against
the costs, expenses and liabilities that might be incurred thereby. If no Event
of Default has occurred and is continuing and the Property Trustee is required
to decide between alternative causes of action, construe ambiguous provisions in
the applicable Trust Agreement or is unsure of the application of any provision
of the applicable Trust Agreement, and the matter is not one on which holders of
Preferred Securities are entitled under such Trust Agreement to vote, then the
Property Trustee shall take such action as is directed by CPL and if not so
directed, shall take such action as it deems advisable and in the best interests
of the holders of the Preferred Securities and the Common Securities and will
have no liability except for its own bad faith, negligence or willful
misconduct.
Miscellaneous
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Issuer Trusts in such a way that no Issuer Trust
will be deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a corporation
for United States federal income tax purposes and so that the Corresponding
Junior Subordinated Debentures will be treated as indebtedness of CPL for United
States federal income tax purposes. In this connection, CPL and the
Administrative Trustees are authorized to take any action, not inconsistent with
applicable law, the certificate of trust of each Issuer Trust or each Trust
Agreement, that CPL and the Administrative Trustees determine in their
discretion to be necessary or desirable for such purposes, as long as such
action does not materially adversely affect the interests of the holders of the
related Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar
rights.
No Issuer Trust may borrow money or issue debt or mortgage or pledge
any of its assets.
DESCRIPTION OF GUARANTEES
Each Guarantee will be executed and delivered by CPL concurrently with
the issuance by each Issuer Trust of its Preferred Securities for the benefit of
the holders from time to time of such Preferred Securities. The Bank of New York
will act as indenture trustee ("Guarantee Trustee") under each Guarantee for the
purposes of compliance with the Trust Indenture Act and each Guarantee will be
qualified as an indenture under the Trust Indenture Act. This summary of certain
provisions of the Guarantees does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all of the provisions of each
Guarantee, including the definitions therein of certain terms, and the Trust
Indenture Act. The form of each Guarantee has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. Reference in this
summary to the Preferred Securities and the Issuer Trust mean the Preferred
Securities of an Issuer Trust and such Issuer Trust, respectively, to which a
Guarantee relates. The Guarantee Trustee will hold each Guarantee for the
benefit of the holders of the related Issuer Trust's Preferred Securities.
General
CPL will irrevocably agree to pay in full on a subordinated basis, to
the extent set forth herein, the Guarantee Payments (as defined below) to the
holders of the Preferred Securities, as and when due, regardless of any defense,
right of set-off or counterclaim that such Issuer Trust may have or assert other
than the defense of payment. The following payments with respect to the
Preferred Securities, to the extent not paid by or on behalf of the related
Issuer Trust (the "Guarantee Payments"), will be subject to the Guarantees: (i)
any accumulated and unpaid Distributions required to be paid on such Preferred
Securities, to the extent that such Issuer Trust has funds on hand available
therefor, (ii) the Redemption Price with respect to any Preferred Securities
called for redemption to the extent that such Issuer Trust has funds on hand
available therefor, and (iii) upon a voluntary or involuntary termination,
winding up or liquidation of such Issuer Trust (unless the Corresponding Junior
Subordinated Debentures are distributed to holders of such Preferred
Securities), the lesser of (a) the Liquidation Amount plus accumulated and
unpaid Distributions on the Preferred Securities to the date of payment to the
extent that such Issuer Trust has funds on hand available therefor and (b) the
amount of assets of such Issuer Trust remaining available for distribution to
holders of Preferred Securities. CPL's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by CPL to the holders
of the applicable Preferred Securities or by causing the Issuer Trust to pay
such amounts to such holders.
Each Guarantee will be an irrevocable guarantee on a subordinated basis
of the related Issuer Trust's obligations under the Preferred Securities, but
will apply only to the extent that such related Issuer Trust has funds
sufficient to make such payments, and is not a guarantee of collection.
If CPL does not make interest payments on the Corresponding Junior
Subordinated Debentures held by the Issuer Trust, it is expected the Issuer
Trust will not be able to pay Distributions on the Preferred Securities and will
not have funds available therefor. Each Guarantee will rank subordinate and
junior in right of payment to all Senior Indebtedness of CPL. See "--Status of
the Guarantees." Except as otherwise provided in the applicable Prospectus
Supplement, the Guarantees do not limit the incurrence or issuance of other
secured or unsecured debt of CPL, whether under the Indenture or any existing or
other indenture that CPL may enter into in the future or otherwise.
CPL has, through the applicable Guarantee, the applicable Trust
Agreement, the Junior Subordinated Debentures, the Indenture and the Expense
Agreements (as defined below), taken together, fully, irrevocably and
unconditionally guaranteed all of the Issuer Trust's obligations under the
Preferred Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such a
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Issuer Trust's obligations under the Preferred Securities. See "Relationship
Among the Preferred Securities, the Corresponding Junior Subordinated Debentures
and the Guarantees."
Status of the Guarantees
Each Guarantee will constitute an unsecured obligation of CPL and will
rank subordinate and junior in right of payment to all Senior Indebtedness of
CPL.
Each Guarantee will rank pari passu with all other Guarantees issued by
CPL. Each Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
CPL to enforce its rights under the Guarantee without first instituting a legal
proceeding against any other person or entity). Each Guarantee will be held for
the benefit of the holders of the related Preferred Securities. Each Guarantee
will not be discharged except by payment of the related Guarantee Payments in
full to the extent not paid by the related Issuer Trust or upon distribution to
the holders of the Preferred Securities of the Corresponding Junior Subordinated
Debentures. None of the Guarantees places a limitation on the amount of
additional Senior Indebtedness that may be incurred by CPL. CPL may, from time
to time, incur additional indebtedness constituting Senior Indebtedness.
Amendments and Assignment
Except with respect to any changes which do not materially adversely
affect the rights of holders of the related Preferred Securities (in which case
no vote will be required), no Guarantee may be amended without the prior
approval of the holders of not less than a majority of the aggregate Liquidation
Amount of such outstanding Preferred Securities. The manner of obtaining any
such approval will be as set forth under "Description of the Preferred
Securities -- Voting Rights; Amendment of Trust Agreement." All guarantees and
agreements contained in each Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of CPL and shall inure to the benefit of
the holders of the related Preferred Securities then outstanding.
Events of Default
An event of default under each Guarantee will occur upon the failure of
CPL to perform any of its payment or other obligations thereunder. The holders
of not less than a majority in aggregate Liquidation Amount of the related
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of such Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under such Guarantee.
Any holder of the related Preferred Securities may institute a legal
proceeding directly against CPL to enforce its rights under such related
Guarantee without first instituting a legal proceeding against the Issuer Trust,
the Guarantee Trustee or any other person or entity.
CPL, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not CPL is in compliance with all the
conditions and covenants applicable to it under the Guarantees.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during the occurrence and continuance
of a default by CPL in performance of any Guarantee, undertakes to perform only
such duties as are specifically set forth in each Guarantee and, after default
with respect to any Guarantee, must exercise the same degree of care and skill
as a prudent person would exercise or use in the conduct of his or her own
affairs. Notwithstanding this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by any Guarantee at the
request of any holder of any Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might be
incurred thereby.
Termination of the Guarantees
Each Guarantee will terminate and be of no further force and effect
upon full payment of the Redemption Price of the related Preferred Securities,
upon full payment of the amounts payable upon liquidation of the related Issuer
Trust or upon distribution of Corresponding Junior Subordinated Debentures to
the holders of the related Preferred Securities. Each Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
holder of the related Preferred Securities must restore payment of any sums paid
under such Preferred Securities or such Guarantee.
Governing Law
Each Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
The Expense Agreements
Pursuant to the related Agreement as to Expenses and Liabilities
entered into by CPL under each Trust Agreement (the "Expense Agreement"), CPL
will, as holder of the Common Securities, irrevocably and unconditionally
guarantee to each person or entity to whom the Issuer Trust becomes indebted or
liable, the full payment of any costs, expenses or liabilities of the Issuer
Trust, other than obligations of the Issuer Trust to pay to the holders of any
Preferred Securities or other similar interests in the Issuer Trust the amounts
due such holders pursuant to the terms of the Preferred Securities or such other
similar interests, as the case may be.
DESCRIPTION OF CORRESPONDING
JUNIOR SUBORDINATED DEBENTURES
The Corresponding Junior Subordinated Debentures are to be issued in
one or more series under the Indenture with terms corresponding to the terms of
the related Preferred Securities. For a summary of certain terms and provisions
of Junior Subordinated Debentures that, except where noted, pertains in all
respects to the Corresponding Junior Subordinated Debentures, see "Description
of Junior Subordinated Debentures." This summary of certain terms and provisions
of, or relating to, Corresponding Junior Subordinated Debentures and the
Indenture does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, the Indenture, the form of which is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part, and
to the Trust Indenture Act. Whenever particular defined terms of the Indenture
(as supplemented or amended from time to time) are referred to herein or in a
Prospectus Supplement, such defined terms are incorporated herein or therein by
reference.
General
Concurrently with the issuance of each Issuer Trust's Preferred
Securities, such Issuer Trust will invest the proceeds thereof and the
consideration paid by CPL for the Common Securities in a series of Corresponding
Junior Subordinated Debentures issued by CPL to such Issuer Trust. Each series
of Corresponding Junior Subordinated Debentures will be in the principal amount
equal to the aggregate stated Liquidation Amount of the related Preferred
Securities plus CPL's concurrent investment in the Common Securities and will
rank pari passu with all other series of Junior Subordinated Debentures. The
Corresponding Junior Subordinated Debentures will be unsecured and subordinate
and junior in right of payment to the extent and in the manner set forth in the
Indenture to all Senior Indebtedness of CPL. See "Description of Junior
Subordinated Debentures--Subordination" and the Prospectus Supplement relating
to any offering of related Preferred Securities.
Optional Redemption
The applicable Prospectus Supplement will specify the period or periods
within which, the price or prices at which and the terms and conditions upon
which the Corresponding Junior Subordinated Debentures of any series may be
redeemed, in whole or in part, at the option of CPL. Except as otherwise set
forth in the applicable Prospectus Supplement, the redemption price for any
Corresponding Junior Subordinated Debentures so redeemed shall be equal to any
accrued and unpaid interest thereon to the date fixed for redemption, plus 100%
of the principal amount thereof. See "Description of Junior Subordinated
Debentures--Redemption."
If a Special Event in respect of an Issuer Trust shall occur and be
continuing, CPL may, at its option, redeem the Corresponding Junior Subordinated
Debentures at any time within 90 days of the occurrence of such Special Event,
in whole but not in part, subject to the provisions of the Indenture. The
redemption price for any Corresponding Junior Subordinated Debentures shall be
equal to 100% of the principal amount of such Corresponding Junior Subordinated
Debentures then outstanding plus accrued and unpaid interest to the date fixed
for redemption.
For so long as the applicable Issuer Trust is the holder of all the
outstanding series of Corresponding Junior Subordinated Debentures, the proceeds
of any such redemption will be used by the Issuer Trust to redeem the related
Preferred Securities in accordance with their terms. CPL may not redeem a series
of Corresponding Junior Subordinated Debentures in part unless all accrued and
unpaid interest has been paid in full on all outstanding Corresponding Junior
Subordinated Debentures of such series for all interest periods terminating on
or prior to the Redemption Date.
Certain Covenants of CPL
CPL will covenant in the applicable Supplemental Indenture as to each
series of Corresponding Junior Subordinated Debentures, that if and so long as
(i) the Issuer Trust of the corresponding series of Preferred Securities and
Common Securities is the holder of all such Corresponding Junior Subordinated
Debentures, (ii) a Tax Event in respect of such Issuer Trust has occurred and is
continuing and (iii) CPL has elected, and has not revoked such election, to pay
Additional Sums in respect of such Preferred Securities and Common Securities,
CPL will pay to such Issuer Trust such Additional Sums. CPL will also covenant,
as to each series of Corresponding Junior Subordinated Debentures, that it will
not, and will not permit any subsidiary of CPL to, (i) declare, set aside or pay
any dividend or distribution on, or repurchase, redeem or otherwise acquire, or
make any sinking fund payment for the purchase or redemption of, any shares of
its capital stock, including the Common Stock of CPL, or (ii) make any payment
of principal, interest or premium, if any, on or repay or repurchase or redeem
any debt securities (including other Corresponding Junior Subordinated
Debentures) that rank pari passu with or junior in interest to the Corresponding
Junior Subordinated Debentures or make any guarantee payments with respect to
the foregoing (other than (a) dividends or distributions in shares of its
capital stock or in rights to acquire shares of its capital stock, (b)
conversions into or exchanges for shares of its capital stock, (c) redemptions,
purchases or other acquisitions of shares of its capital stock made for the
purpose of an employee incentive plan or benefit plan of CPL or any of its
subsidiaries and mandatory redemptions or sinking fund payments with respect to
any series of Preferred Stock of CPL that are subject to mandatory redemption or
sinking fund requirements, provided that the aggregate stated value of all such
series outstanding at the time of any such payment does not exceed five percent
of the aggregate of (1) the total principal amount of all bonds or other
securities representing secured indebtedness issued or assumed by CPL and then
outstanding and (2) the capital and surplus of CPL to be stated on the books of
account of CPL after giving effect to such payment, provided, however, that any
moneys deposited in any sinking fund and not in violation of this provision may
thereafter be applied to the purchase or redemption of such Preferred Stock in
accordance with the terms of such sinking fund without regard to the
restrictions contained in this provision, and (d) payments under any guarantee
by CPL with respect to any securities of a subsidiary of CPL, provided that the
proceeds from the issuance of such securities were used to purchase Junior
Subordinated Debentures of any series under the Indenture) if at such time (i)
there shall have occurred any event of which CPL has actual knowledge that (a)
with the giving of notice or the lapse of time, or both, would constitute a
"Debenture Event of Default" under the Indenture with respect to Corresponding
Junior Subordinated Debentures of such series and (b) in respect of which CPL
shall not have taken reasonable steps to cure, (ii) CPL shall be in default with
respect to its payment of any obligations under the related Guarantee or (iii)
CPL shall have given notice of its selection of an Extension Period as provided
in the Indenture with respect to Corresponding Junior Subordinated Debentures of
such series and shall not have rescinded such notice, or such Extension Period,
or any extension thereof, shall be continuing.
CPL will also covenant, as to each series of Corresponding Junior
Subordinated Debentures, (i) to maintain directly or indirectly 100% ownership
of the Common Securities of the Issuer Trust to which Corresponding Junior
Subordinated Debentures have been issued, provided that certain successors which
are permitted pursuant to the Indenture may succeed to CPL's ownership of the
Common Securities, (ii) not to voluntarily terminate, wind-up or liquidate any
Issuer Trust, except (a) in connection with a distribution of Corresponding
Junior Subordinated Debentures to the holders of the Preferred Securities and
Common Securities in liquidation of such Issuer Trust or (b) in connection with
certain mergers, consolidations or amalgamations permitted by the related Trust
Agreement and (iii) to use its reasonable efforts, consistent with the terms and
provisions of the related Trust Agreement, to cause such Issuer Trust to remain
classified as a "grantor trust" and not to be classified as an association
taxable as a corporation for United States federal income tax purposes. CPL will
also make certain additional agreements relating to the Indenture as provided in
the last sentence of the first paragraph under "Description of Junior
Subordinated Debentures--Modification of Indenture."
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
AND THE GUARANTEES
As long as payments of interest and other payments are made when due on
each series of Corresponding Junior Subordinated Debentures, such payments will
be sufficient to cover Distributions and other payments due on the related
Preferred Securities, primarily because (i) the aggregate principal amount of
each series of Corresponding Junior Subordinated Debentures will be equal to the
sum of the aggregate Liquidation Amount of the related Preferred Securities and
related Common Securities; (ii) the interest rate and interest and other payment
dates on each series of Corresponding Junior Subordinated Debentures will match
the Distribution rate and Distribution and other payment dates for the related
Preferred Securities; (iii) CPL shall pay for all and any costs, expenses and
liabilities of such Issuer Trust except the Issuer Trust's obligations to
holders of its Preferred Securities under such Preferred Securities; and (iv)
each Trust Agreement further provides that the Issuer Trust will not engage in
any activity that is not consistent with the limited purposes of such Issuer
Trust.
Payments of Distributions and other amounts due on the Preferred
Securities (to the extent the Issuer Trust has funds available for the payment
of such Distributions) are irrevocably guaranteed by CPL as and to the extent
set forth under "Description of Guarantees." Taken together, CPL's obligations
under each series of Corresponding Junior Subordinated Debentures, the
Indenture, the related Trust Agreement, the related Expense Agreement, and the
related Guarantee provide a full, irrevocable and unconditional guarantee of
payments of distributions and other amounts due on the related series of
Preferred Securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Issuer Trust's obligations under the Preferred Securities. If and to the extent
that CPL does not make payments on any series of Corresponding Junior
Subordinated Debentures, such Issuer Trust will not pay Distributions or other
amounts due on related Preferred Securities. The Guarantees do not cover payment
of Distributions when the related Issuer Trust does not have sufficient funds to
pay such Distributions. In such event, the remedies of a holder of a series of
Preferred Securities are as described above under "Description of Junior
Subordinated Debentures--Debenture Events of Default," "Description of Preferred
Securities--Events of Default; Notice" and "--Enforcement of Certain Rights by
Holders of Preferred Securities." The obligations of CPL under each Guarantee
are subordinate and junior in right of payment to all Senior Indebtedness of
CPL.
Notwithstanding anything to the contrary in the Indenture, CPL has the
right to set off any payment it is otherwise required to make thereunder with
and to the extent CPL has theretofore made, or is concurrently on the date of
such payment making, a payment under the related Guarantee.
A holder of any related Preferred Security may institute a legal
proceeding directly against CPL to enforce its rights under the related
Guarantee without first instituting a legal proceeding against the Guarantee
Trustee, the related Issuer Trust or any other person or entity.
Each Issuer Trust's Preferred Securities evidence a beneficial interest
in such Issuer Trust, and each Issuer Trust exists for the sole purpose of
issuing its Preferred Securities and Common Securities and investing the
proceeds thereof in Corresponding Junior Subordinated Debentures. A principal
difference between the rights of a holder of a Preferred Security and the rights
of a holder of a Corresponding Junior Subordinated Debenture is that a holder of
a Corresponding Junior Subordinated Debenture is entitled to receive from CPL
the principal amount of and interest accrued on Corresponding Junior
Subordinated Debentures held, while a holder of Preferred Securities is entitled
to receive Distributions from such Issuer Trust (or from CPL under the
applicable Guarantee) if and to the extent such Issuer Trust has funds available
for the payment of such Distributions.
Upon any voluntary or involuntary termination, winding-up or
liquidation of any Issuer Trust involving the liquidation of the Corresponding
Junior Subordinated Debentures, the holders of the related Preferred Securities
will be entitled to receive, out of assets held by such Issuer Trust and after
satisfaction of liabilities to creditors of such Issuer Trust as provided by
applicable law, the Liquidation Distribution in cash. See "Description of
Preferred Securities--Liquidation Distribution Upon Termination." Upon any
voluntary or involuntary liquidation or bankruptcy of CPL, the Property Trustee,
as holder of the Corresponding Junior Subordinated Debentures, would be a
subordinated creditor of CPL, subordinated in right of payment to all Senior
Indebtedness, but entitled to receive payment in full of principal and interest,
before any shareholders of CPL receive payments or distributions. Since CPL is
the guarantor under each Guarantee and has agreed to pay for all costs, expenses
and liabilities of each Issuer Trust (other than the Issuer Trust's obligations
to the holders of its Preferred Securities), the positions of a holder of such
Preferred Securities and a holder of such Corresponding Junior Subordinated
Debentures relative to other creditors and to shareholders of CPL in the event
of liquidation or bankruptcy of CPL would be substantially the same.
A default or event of default under any Senior Indebtedness of CPL will
not constitute a default or Event of Default under the Indenture. However, in
the event of payment defaults under, or acceleration of, Senior Indebtedness of
CPL, the subordination provisions of the Indenture provide that no payments may
be made in respect of the Corresponding Junior Subordinated Debentures until
such Senior Indebtedness has been paid in full or any payment default thereunder
has been cured or waived. Failure to make required payments on any series of
Corresponding Junior Subordinated Debentures would constitute a Debenture Event
of Default under the Indenture with respect to such series.
PLAN OF DISTRIBUTION
CPL may sell any series of the Junior Subordinated Debentures, and each
Issuer Trust may sell any series of Preferred Securities, through underwriters,
dealers or agents, or directly to one or more purchasers. The Prospectus
Supplement with respect to the securities offered thereby will set forth the
terms of the offering of such Offered Securities, including the name or names of
any underwriters, dealers or agents, the purchase price of such Offered
Securities and the proceeds to CPL or the Issuer Trust, as the case may be, from
such sale, any underwriting discounts and other items constituting underwriters'
or agents' compensation, any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers.
If underwriters are involved in the sale of any Offered Securities,
such Offered Securities will be acquired by the underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The underwriter or underwriters
with respect to a particular underwritten offering of Offered Securities will be
named in the Prospectus Supplement relating to such offering and, if an
underwriting syndicate is used, the managing underwriter or underwriters will be
set forth on the cover page of such Prospectus Supplement. Unless otherwise set
forth in such Prospectus Supplement, the obligations of the underwriters to
purchase the Offered Securities will be subject to certain conditions precedent,
and the underwriters will be obligated to purchase all such Offered Securities
if any are purchased.
If a dealer is used in the sale of any Offered Securities, CPL will
sell such Offered Securities to the dealer, as principal. The dealer may then
resell such Offered Securities to the public at varying prices to be determined
by such dealer at the time of resale. The name of any dealer involved in a
particular offering of Offered Securities and any discounts or concessions
allowed or reallowed or paid to the dealer will be set forth in the Prospectus
Supplement relating to such offering.
The Offered Securities may be sold directly by CPL or through agents
designated by CPL from time to time. Any such agent, who may be deemed to be an
underwriter as that term is defined in the Securities Act, involved in the offer
or sale of any of the Offered Securities will be named, and any commissions
payable by CPL to such agent will be set forth, in the Prospectus Supplement
relating to such offer or sale. Unless otherwise indicated in such Prospectus
Supplement, any such agent will be acting on a reasonable best efforts basis for
the period of its appointment.
Certain of the underwriters, dealers or agents and their associates may
be customers of, engage in the transactions with or perform services for CPL
and/or the applicable Issuer Trust and/or any of their respective affiliates in
the ordinary course of business.
CPL will indicate in a Prospectus Supplement the extent to which it
anticipates that a secondary market for the Offered Securities will be
available.
Underwriters, dealers and agents participating in the distribution of
the Offered Securities may be deemed to be "underwriters" within the meaning of,
and any discounts and commissions received by them and any profit realized by
them on resale of such Offered Securities may be deemed to be underwriting
discounts and commissions under, the Securities Act. Subject to certain
conditions, CPL and the applicable Issuer Trustee may agree to indemnify the
several underwriters, dealers or agents and their controlling persons against
certain civil liabilities, including certain liabilities under the Securities
Act, or to contribute to payments any such person may be required to make in
respect thereof.
LEGAL OPINIONS
Unless otherwise indicated in the applicable Prospectus Supplement,
certain legal matters in connection with the Offered Securities, including the
validity of the Junior Subordinated Debentures, the Indenture and the
Guarantees, will be passed upon for CPL and each Issuer Trust by Milbank, Tweed,
Hadley & McCloy, New York, New York, and for the underwriters by Sidley &
Austin, Chicago, Illinois. Sidley & Austin has from time to time represented CSW
and certain of its affiliates, including CPL, in connection with certain
matters. All matters of Texas law will be passed upon by Vinson & Elkins L.L.P.,
Dallas, Texas. Certain matters of Delaware law relating to the validity of the
Preferred Securities, the enforceability of each Trust Agreement and the
creation of each Issuer Trust will be passed upon by Richards, Layton & Finger,
P.A., as special Delaware counsel to CPL and the Issuer Trusts. Certain tax
matters in connection with the Preferred Securities will be passed upon for CPL
and each Issuer Trust by Christy & Viener, New York, New York.
EXPERTS
The financial statements and schedules incorporated in this Prospectus
by reference from CPL's Annual Report on Form 10-K have been audited by Arthur
Andersen LLP, independent public accountants, as stated in their reports, which
are incorporated herein by reference and have been so incorporated herein in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
<PAGE>
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No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus Supplement or the
Prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized. This Prospectus Supplement and the
Prospectus do not constitute an offer to sell or the solicitation of an offer to
buy any securities other than the securities described in this Prospectus
Supplement and the Prospectus or any offer to sell or the solicitation of an
offer to buy such securities in any circumstances in which such offer or
solicitation is unlawful. Neither the delivery of this Prospectus Supplement and
the Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of CPL since
the date hereof or that the information contained herein or therein is correct
as of any time subsequent to its date.
TABLE OF CONTENTS
Prospectus Supplement
Page
Risk Factors............................................S-5
CPL Capital I...........................................S-8
Central Power and Light Company.........................S-9
Recent Developments.....................................S-9
Use of Proceeds.........................................S-9
Consolidated Ratios of Earnings to Fixed
Charges and Earnings to Combined Fixed
Charges and Preferred Stock Dividend
Requirements.........................................S-10
Selected Financial Information.........................S-10
Accounting Treatment...................................S-11
Certain Terms of the Series A Preferred
Securities...........................................S-11
Certain Terms of the Series A Debentures...............S-13
ERISA Considerations...................................S-16
Certain Federal Income Tax Considerations..............S-18
Underwriting...........................................S-21
Legal Opinions.........................................S-22
Prospectus
Available Information................................. 2
Incorporation of Certain Documents by
Reference........................................... 2
Central Power and Light Company....................... 4
The Issuer Trusts..................................... 4
Use of Proceeds....................................... 5
Consolidated Ratios of Earnings to Fixed
Charges and Earnings to Combined Fixed Charges
and Preferred Stock Dividend Requirements........... 5
Description of Junior Subordinated Debentures......... 6
Description of Preferred Securities................... 19
Description of Guarantees............................. 35
Description of Corresponding Junior
Subordinated Debentures............................ 38
Relationship Among the Preferred Securities,
the Corresponding Junior Subordinated
Debentures and the Guarantees...................... 41
Plan of Distribution.................................. 43
Legal Opinions........................................ 44
Experts............................................... 44
6,000,000
Preferred Securities
CPL Capital I
% Cumulative Quarterly
Income Preferred Securities,
Series A (QUIPSSM)
<PAGE>
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guaranteed, as described herein, by
[LOGO] CENTRAL POWER AND LIGHT COMPANY
--------------------
Prospectus Supplement
--------------------
Goldman, Sachs & Co.
Lehman Brothers
Merrill Lynch & Co.
Smith Barney Inc.
Representatives of the Underwriters
<PAGE>
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<PAGE>
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II-9
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Registration fee...................................... $ 45,455
*Public Utility Holding Company Act filing fee......... 2,000
*Counsel fees.......................................... 80,000
*Accountants' fees..................................... 8,000
*Stock exchange listing fees........................... 51,300
*Trustee fees.......................................... 10,000
*Rating agency fees.................................... 30,000
*Blue sky expenses..................................... 1,250
*Printing and delivery of registration statement,
prospectus, certificates, etc....................... 20,000
*Expenses of Central and South West Services, Inc...... 3,000
*Miscellaneous expenses................................ 4,689
-------
Total............................................. $255,694
========
- -------------------
* Estimated
Item 15. Indemnification of Directors and Officers.
Article 2.02 of the Texas Business Corporation Act provides broadly for
indemnification of directors and officers against claims and liabilities against
them in their capacities as such. CPL's bylaws also provide for the
indemnification of officers and directors by CPL. In addition, CPL has purchased
Directors' and Officers' Liability and Company Reimbursement Liability Insurance
which, in certain circumstances, provide for payments to the directors and
officers of CPL, in the event of such liabilities.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
A list of exhibits included as part of this Registration
Statement is set forth in an Exhibit Index, which immediately
precedes such exhibits.
(b) Financial Statement Schedules
None.
Item 17. Undertakings.
(a) Each of the undersigned registrants 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; provided, however, that any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the registrant 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 liability under the
Securities Act of 1933, each filing of the registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange
Act of 1934 (and, where applicable, 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.
(5) To provide to the underwriters at the closing specified in
the underwriting agreements certificates in such denominations and
registered in such names as required by the underwriter to permit
prompt delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrants pursuant to the provisions described under Item 15,
or otherwise, the registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrants of expenses incurred or paid by a director,
officer or controlling person of the registrants 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
registrants will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, CPL
certifies that it has reasonable grounds to believe that it meets the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Corpus Christi, State of Texas, on
April 11, 1997.
CENTRAL POWER AND LIGHT COMPANY
By: /s/ WENDY G. HARGUS
Wendy G. Hargus
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed by the
following persons in the capacities indicated on April 11, 1997.
Signature Title
/s/M. Bruce Evans* President (principal executive officer);
M. Bruce Evans Director
/s/Wendy G. Hargus* Treasurer (principal financial officer)
Wendy G. Hargus
/s/R. Russell Davis* Controller and Chief Accounting Officer
R. Russell Davis (principal accounting officer)
Director
John R. Brimberry
/s/E.R. Brooks* Director
E.R. Brooks
/s/Glenn Files * Director
Glenn Files
<PAGE>
Director
Ruben M. Garcia
/s/Robert A. McAllen* Director
Robert A. McAllen
/s/Pete J. Morales, Jr.* Director
Pete J. Morales, Jr.
/s/S. Loyd Neal, Jr. * Director
S. Loyd Neal, Jr.
/s/H. Lee Richards* Director
H. Lee Richards
/s/Gonzalo Sandoval* Director
Gonzalo Sandoval
/s/Gerald E. Vaughn* Director
Gerald E. Vaughn
* By: /s/ Wendy G. Hargus
Wendy G. Hargus
Attorney-in-Fact
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, CPL
Capital I certifies that it has reasonable grounds to believe that it meets the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Dallas, State of Texas, on April 11, 1997.
CPL CAPITAL I
By/s/Wendy G. Hargus
Wendy G. Hargus, as Administrative Trustee
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, CPL Capital
II certifies that it has reasonable grounds to believe that it meets the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Dallas, State of Texas, on April 11, 1997.
CPL CAPITAL II
By/s/Wendy G. Hargus
Wendy G. Hargus, as Administrative Trustee
<PAGE>
EXHIBIT INDEX
Exhibit Sequential
No. Description Page
1(a) Form of Underwriting Agreement relating to Junior Subordinated
Debentures not issued in connection with Preferred Securities
(previously filed).
1(b) Form of Underwriting Agreement to be used in connection with the
issuance of Preferred Securities (previously filed).
4(a) Form of Indenture between CPL and The Bank of New York, as Trustee, to
be used in connection with the issuance of the Junior Subordinated
Debentures and Corresponding Junior Subordinated Debentures
(previously filed).
4(b) Form of Supplemental Indenture to Indenture to be used in connection
with the issuance of Junior Subordinated Debentures (other than
Corresponding Junior Subordinated Debentures) (previously filed).
4(c) Form of Supplemental Indenture to Indenture to be used in connection
with the issuance of Corresponding Junior Subordinated Debentures and
Preferred Securities (previously filed).
4(d) Form of Junior Subordinated Debenture (included in Exhibit 4(c) above).
4(e) Certificate of Trust of CPL Capital I (Certificate for CPL Capital II
will be substantially identical except for names and dates) (previously
filed).
4(f) Trust Agreement of CPL Capital I (Trust Agreement for CPL Capital II
will be substantially identical except for names and dates) (previously
filed).
4(g) Form of Amended and Restated Trust Agreement (Agreements for CPL
Capital I and CPL Capital II are substantially identical except for
names and dates) (previously filed).
4(h) Form of Preferred Security Certificate for CPL Capital I and CPL
Capital II. (included in Exhibit 4(g) above).
4(i) Form of Guarantee Agreement (Agreements for CPL Capital I and CPL
Capital II are substantially identical except for names and dates
(previously filed).
5(a) Opinion of Milbank, Tweed, Hadley & McCloy with respect to the Junior
Subordinated Debentures and Guarantees.
5(b) Opinion of Richards, Layton & Finger, special Delaware counsel, with
respect to the Preferred Securities of CPL Capital I.
5(c) Opinion of Richards, Layton & Finger, special Delaware counsel, with
respect to the Preferred Securities of CPL Capital II.
5(d) Opinion of Vinson & Elkins L.L.P. with respect to the Junior
Subordinated Debentures and Guarantees.
8 Opinion of Christy & Viener with respect to United States Federal
Income Tax Matters.
*12(a) Statements re Computation of Ratios of Earnings to Fixed Charges
(Exhibit 12.1, Form 10-K for the Year ended December 31, 1996).
12(b) Statements re Computation of Ratios of Earnings to Combined Fixed
Charges and Preferred Stock Dividend Requirements.
23(a) Consent of Arthur Andersen LLP.
23(b) Consent of Milbank, Tweed, Hadley & McCloy (included in Exhibit 5(a)
above).
23(c) Consents of Richards, Layton & Finger (included in Exhibits 5(b) and 5
(c) above).
23(d) Consent of Christy & Viener (included in Exhibit 8 above).
23(e) Consent of Vinson & Elkins L.L.P. (included in Exhibit 5(d) above).
24 Powers of Attorney (included on page II-3 of Registration Statement)
(previously filed).
25(a) Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee under the Indenture
between CPL and The Bank of New York.
25(b) Statement of Eligibility under the Trust Indenture Act of 1939 of The
Bank of New York, as Guarantee Trustee for the Guarantee for CPL Capital
I.
25(c) Statement of Eligibility under the Trust Indenture Act of 1939 of The
Bank of New York, as Property Trustee for the Amended and Restated
Trust Agreement of CPL Capital I.
25(d) Statement of Eligibility under the Trust Indenture Act of 1939 of The
Bank of New York, as Guarantee Trustee for the Guarantee for CPL Capital
II.
25(e) Statement of Eligibility under the Trust Indenture Act of 1939 of The
Bank of New York, as Property Trustee for the Amended and Restated
Trust Agreement of CPL Capital II.
- ------------------
* Incorporated by reference.
<PAGE>
Exhibit 5(a)
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
April 11, 1997
Central Power and Light Company
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
CPL Capital I
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
CPL Capital II
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Re: Amendment No. 1 to Registration Statement on
Form S-3 of Central
Power and Light Company
Ladies and Gentlemen:
We are acting as special counsel to Central Power and Light
Company, a Texas corporation (the "Company"), in connection with
the proposed issuance and sale by the Company from time to time
of up to $150 million aggregate principal amount of the Company's
Junior Subordinated Debentures (the "Debentures"), to be issued in
one or more series pursuant to an indenture between the Company
and The Bank of New York, as Trustee (the "Indenture"), and the
proposed public offering by CPL Capital I and CPL Capital II,
each a business trust created under the laws of the State of
Delaware (collectively, the "Issuer Trusts"), from time to time
in one or more series, of an amount not to exceed $150 million of
preferred securities, representing preferred undivided beneficial
interests in the assets of such Issuer Trusts (the "Preferred
Securities"), all as contemplated by the Registration Statement
on Form S-3, including Amendment No. 1 thereto (the "Registration Statement"),
filed by the Company and the Issuer Trusts with the Securities and Exchange
Commission (the "Commission") for the registration of the
Debentures and Preferred Securities under the Securities Act of
1933, as amended (the "Act") and their sale pursuant to one or
- 2 -
more underwriting agreements filed as an exhibit to the Registration
Statement (each, an "Underwriting Agreement"). Capitalized terms used herein and
not otherwise defined have the meanings ascribed to them in the Registration
Statement.
As described in the Registration Statement, the Company may issue the
Debentures to (a) the public or institutional investors or (b) the Issuer Trusts
in connection with the issuance of Preferred Securities. If Preferred Securities
are issued by the Issuer Trusts, the proceeds therefrom, together with the
capital contribution of the Company, as owner of the common securities of each
Issuer Trust, will be used to purchase Debentures. The Company will guarantee
pursuant to a Guarantee Agreement between the Company and the Bank of New York
as trustee, the payment by each Issuer Trust of distributions that are required
to be made from time to time with respect to the Preferred Securities and of
amounts due upon liquidation of each Issuer Trust or the redemption of the
Preferred Securities (the "Guarantee," or when referred to collectively, the
"Guarantees"), all to the extent such Issuer Trust has funds available therefor
as set forth in the Guarantees. The Preferred Securities are to be issued by
each Issuer Trust pursuant to a Trust Agreement, each as amended and restated.
We have examined originals, or copies certified to our
satisfaction, of such corporate records of the Company and the
Issuer Trusts, certificates of public officials, certificates of
officers and representatives of the Company and the Issuer Trusts
and other documents, as we have deemed it necessary to require as
a basis for the opinions hereinafter expressed. In our
examination we have assumed the genuineness of all signatures and
the authenticity of all documents submitted to us as originals
and the conformity with the originals of all documents submitted
to us as copies. As to various questions of fact material to
such opinions we have, when relevant facts were not independently
established, relied upon certifications by officers of the
Company and other appropriate persons and statements contained in
the Registration Statement.
Based on the foregoing, and having regard to legal
considerations we deem relevant, we are of the opinion that when
the Indenture has been duly authorized, executed and delivered by
the Company and duly executed and delivered by The Bank of New
York, as Trustee, when the supplemental indenture with respect to
a series of Debentures has been duly authorized, executed and
delivered, when the Guarantee Agreement relating to the Guarantee
with respect to a series of Preferred Securities has been duly
authorized, executed and delivered, when the Amended and Restated
Trust Agreement of the Issuer Trust issuing the Preferred
Securities has been duly authorized, executed and delivered, and
when the Debentures and Preferred Securities of such series have
been duly authorized, executed, and, in the case of the
Debentures, authenticated, and issued in accordance with the
terms of the Indenture and the applicable supplemental indenture
- 3 -
and delivered against payment therefor in accordance with the
terms of the applicable Underwriting Agreement, the Debentures of
such series and the Guarantee relating to such series of Preferred
Securities of such Issuer Trust, will constitute legal, valid and
binding obligations of the Company, entitled to the benefits of,
and subject to the provisions of, the Indenture and the
applicable supplemental indenture, and the Guarantee Agreement,
except (i) as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws of general
applicability affecting the enforcement of creditors' rights and
(ii) that such enforceability may be limited by the application
of general principals of equity (regardless of whether considered
in a proceeding in equity or at law), including without
limitation (x) the possible unavailability of specific
performance, injunctive relief or any other equitable remedies
and (y) concepts of materiality, reasonableness, good faith and
fair dealing.
We do not express any opinion as to matters governed by
any laws other than the Federal laws of the United States and the
laws of the State of New York, and we are expressing no opinion
as to the effects of the laws of any other jurisdiction.
We hereby consent to the use of this opinion as
Exhibit 5(a) to the Registration Statement and further consent to
the use of our name in the Registration Statement, and any
amendment thereto, and in the preliminary Prospectus and the
preliminary Prospectus Supplement constituting a part thereof.
Very truly yours,
/s/ MILBANK, TWEED, HADLEY & McCLOY
RBW/DBB
Exhibit 5(b)
RICHARDS, LAYTON & FINGER
April 11, 1997
CPL Capital I
c/o Central Power and Light Company
Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Re: CPL Capital I
Ladies and Gentlemen:
We have acted as special Delaware counsel for Central Power
and Light Company, a Texas corporation (the "Company"), and CPL Capital I, a
Delaware business trust (the "Trust" ), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth,
our examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated January 24,
1997 as filed with the office of the Secretary of State of the State of Delaware
(the "Secretary of State") on January 24, 1997;
(b) The Trust Agreement of the Trust, dated as of January 23,
1997 between the Company and the trustees of the Trust named therein;
(c) The Registration Statement on Form S-3, as amended by
the Amendment No. 1 to the Registration Statement (collectively the
"Registration Statement"), including a prospectus and prospectus supplement with
respect to the Trust (collectively, the "Prospectus"), relating to the Preferred
Securities of the Trust representing preferred undivided beneficial interests in
the assets of the Trust (each, a "Security" and collectively, the "Securities"),
filed by the Company and the Trust with the Securities and Exchange Commission
on or about April 11, 1997;
(d) A form of Amended and Restated Trust Agreement for the
Trust, to be entered into between the Company, the trustees of the Trust named
therein, and the holders, from time to time, of the undivided beneficial
interests in the assets of the Trust (including Exhibits C and E thereto) (the
"Trust Agreement"), attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated
February 4, 1997, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise
defined are used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any
documents other than the documents listed in paragraphs (a) through (e) above.
In particular, we have not reviewed any document (other than the documents
listed in paragraphs (a) through (e) above) that is referred to in or
incorporated by reference into the documents reviewed by us. We have assumed
that there exists no provision in any document that we have not reviewed that is
inconsistent with the opinions stated herein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed
(i) the authenticity of all documents submitted to us as authentic originals,
(ii) the conformity with the originals of all documents submitted to us as
copies or forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement and the Certificate of Trust are in full force and effect and have not
been amended, (ii) except to the extent provided in paragraph 1 below, the due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Security is to be issued by the Trust (collectively, the "Security Holders")
of a certificate for such Security in the form prescribed by the Trust Agreement
and the payment for such Security, in accordance with the Trust Agreement and
the Registration Statement, and (vii) that the Securities are issued and sold to
the Security Holders in accordance with the Trust Agreement and the Registration
Statement. We have not participated in the preparation of the Registration
Statement and assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Business Trust Act.
2. The Securities of the Trust will represent valid and,
subject to the qualifications set forth in paragraph 3 below, fully paid and
nonassessable undivided beneficial interests in the assets of the Trust.
3. The Security Holders, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Security Holders may
be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Legal Opinions" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder. Except as
stated above, without our prior written consent, this opinion may not be
furnished or quoted to, or relied upon by, any other person for any purpose.
Very truly yours,
/s/ RICHARDS, LAYTON & FINGER
CDK/JLJ
Exhibit 5(c)
RICHARDS, LAYTON & FINGER
April 11, 1997
CPL Capital II
c/o Central Power and Light Company
Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Re: CPL Capital II
Ladies and Gentlemen:
We have acted as special Delaware counsel for Central Power
and Light Company, a Texas corporation (the "Company"), and CPL Capital II, a
Delaware business trust (the "Trust" ), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth,
our examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated January 24,
1997 as filed with the office of the Secretary of State of the State of Delaware
(the "Secretary of State") on January 24, 1997;
(b) The Trust Agreement of the Trust, dated as of January 23,
1997 between the Company and the trustees of the Trust named therein;
(c) The Registration Statement on Form S-3, as amended by the
Amendment No. 1 to the Registration Statement (collectively, the "Registration
Statement"), including a prospectus and prospectus supplement with respect to
the Trust (collectively, the "Prospectus"), relating to the Preferred Securities
of the Trust representing preferred undivided beneficial interests in the assets
of the Trust (each, a "Security" and collectively, the "Securities"), filed by
the Company and the Trust with the Securities and Exchange Commission on or
about April 11, 1997;
(d) A form of Amended and Restated Trust Agreement for the
Trust, to be entered into between the Company, the trustees of the Trust named
therein, and the holders, from time to time, of the undivided beneficial
interests in the assets of the Trust (including Exhibits C and E thereto) (the
"Trust Agreement"), attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated
February 4, 1997, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise
defined are used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any
documents other than the documents listed in paragraphs (a) through (e) above.
In particular, we have not reviewed any document (other than the documents
listed in paragraphs (a) through (e) above) that is referred to in or
incorporated by reference into the documents reviewed by us. We have assumed
that there exists no provision in any document that we have not reviewed that is
inconsistent with the opinions stated herein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed
(i) the authenticity of all documents submitted to us as authentic originals,
(ii) the conformity with the originals of all documents submitted to us as
copies or forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement and the Certificate of Trust are in full force and effect and have not
been amended, (ii) except to the extent provided in paragraph 1 below, the due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to whom
a Security is to be issued by the Trust (collectively, the "Security Holders")
of a certificate for such Security in the form prescribed by the Trust Agreement
and the payment for such Security, in accordance with the Trust Agreement and
the Registration Statement, and (vii) that the Securities are issued and sold to
the Security Holders in accordance with the Trust Agreement and the Registration
Statement. We have not participated in the preparation of the Registration
Statement and assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Business Trust Act.
2. The Securities of the Trust will represent valid and,
subject to the qualifications set forth in paragraph 3 below, fully paid and
nonassessable undivided beneficial interests in the assets of the Trust.
3. The Security Holders, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Security Holders may
be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Legal Opinions" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder. Except as
stated above, without our prior written consent, this opinion may not be
furnished or quoted to, or relied upon by, any other person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
CDK/JLJ
Exhibit 5(d)
(214) 220-7700
(214) 220-7716
April 11, 1997
Central Power and Light Company
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
CPL Capital I
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas Texas 75202
CPL Capital II
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas Texas 75202
Re: Registration Statement on Form S-3, as amended, of
Central Power and Light Company
Ladies and Gentlemen:
We are acting as special Texas counsel to Central Power and
Light Company, a Texas corporation (the "Company"), in connection with the
proposed issuance and sale by the Company from time to time of up to $150
million aggregate principal amount of the Company's Junior Subordinated
Debentures (the "Debentures") to be issued in one or more series pursuant to an
indenture between the Company and The Bank of New York, as Trustee (the
"Indenture"), and the proposed public offering by CPL Capital-I and CPL
Capital-II, each a business trust created under the laws of the State of
Delaware (collectively, the "Issuer Trusts"), from time to time in one or more
series, not to exceed $150 million of their preferred securities, representing
preferred undivided beneficial interests in the assets of such Issuer Trusts
(the "Preferred Securities"), all as contemplated by the Registration Statement
on Form S-3, as amended (File No. 333-21149) (the "Registration Statement"),
filed by the Company and the Issuer Trusts with the Securities and Exchange
Commission (the "Commission") for the registration of the Debentures and
Preferred Securities under the Securities Act of 1933, as amended (the "Act"),
and their sale pursuant to one or more underwriting agreements filed as an
exhibit to the Registration Statement (each, an "Underwriting Agreement").
As described in the Registration Statement, the Company may issue the
Debentures to (a) the public or institutional investors or (b) the Issuer Trusts
in connection with the issuance of Preferred Securities. If Preferred Securities
are issued by the Issuer Trusts, the proceeds therefrom, together with the
capital contribution of the Company, as owner of the common securities of each
Issuer Trust, will be used to purchase Debentures. The Company will guarantee
pursuant to a Guarantee Agreement the payment by each Issuer Trust of
distributions with respect to the Preferred Securities and of amounts due upon
liquidation of each Issuer Trust or redemption of the Preferred Securities
(collectively, the "Guarantees"), all to the extent such Issuer Trust has funds
available therefor as set forth in the Guarantees. The Preferred Securities are
to be issued by each Issuer Trust pursuant to a Trust Agreement, each as amended
and restated. We have examined originals, or copies certified to our
satisfaction, or such corporate records of the Company and the Issuer Trusts,
certificates of public officials, certificates of officers and representatives
of the Company and the Issuer Trusts and other documents as we have deemed
necessary as a basis for the opinions hereinafter expressed. In our examination
we have assumed the genuineness of all signatures and the authenticity of all
documents submitted to us as originals and the conformity with the originals of
all documents submitted to us as copies. As to various questions of fact
material to such opinions we have, when relevant facts were not independently
established, relied upon certifications by officers of the Company and other
appropriate persons and statements contained in the Registration Statement.
Based on the foregoing, and having regard to legal considerations we deem
relevant, we are of the opinion that:
1. All requisite action necessary for the due execution and delivery
of the Guarantees will have been taken when the Board of Directors of the
Company, the Pricing Committee thereof or an officer duly authorized thereby,
shall have taken such action as may be necessary to fix and determine the terms
of the Guarantees and the Guarantees shall have been duly executed and
delivered.
2. All requisite action necessary for the due execution and delivery
of the Debentures will have been taken when the Board of Directors of the
Company, the Pricing Committee thereof or an officer duly authorized thereby,
shall have taken such action as may be necessary to fix and determine the terms
of the Debentures, the Indenture shall have been executed and delivered, and the
Debentures shall have been issued and delivered in exchange for the proceeds
from the Preferred Securities and the capital contribution of the company.
The opinions expressed above are limited to the laws of the State of
Texas.
We hereby consent to the use of this opinion as Exhibit 5(b) to the
Registration Statement. In giving such consent, we do not thereby admit that we
are within the category of persons whose consent is required pursuant to
Section 7 of the Act or the rules and regulations of the Securities and Exchange
Commission.
Very truly yours,
/s/ Vinson & Elkins L.L.P.
Exhibit 8
Christy & Viener
Rockefeller Center
620 Fifth Avenue
New York, New York 10020
April 11, 1997
Central Power and Light Company
CPL Capital I
539 North Carancahua Street
Corpus Christi, Texas 78401-2802
Ladies and Gentlemen:
We have acted as special tax counsel to you in connection
with the proposed offering by CPL Capital I, a Delaware statutory business trust
(the "Trust"), of its Cumulative Quarterly Income Preferred Securities, Series A
(the "Series A Preferred Securities"), as described in the Registration
Statement on Form S-3, as amended by Amendment No. 1 thereto (the "Registration
Statement"), which is being filed by Central Power and Light Company, a Texas
corporation (the "Company"), the Trust, and CPL Capital II, a Delaware statutory
business trust, with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended. The Registration Statement includes the
Prospectus and the Prospectus Supplement (collectively, the "Prospectuses")
relating to such offering.
In rendering the opinion expressed below, we have examined the
Prospectuses and such other documents as we have deemed relevant and necessary,
including, without limitation, the Trust Agreement dated as of January 23, 1997,
the Form of the Amended and Restated Trust Agreement, the Form of the Indenture,
the Form of the First Supplemental Indenture, and the Form of the Guarantee
Agreement attached as Exhibits to the Registration Statement. Such opinion is
conditioned, among other things, upon the accuracy and completeness of the
facts, information, and representations contained in the Prospectuses as of the
date hereof and the continuing accuracy and completeness thereof as of the date
of the issuance of the Series A Preferred Securities. We have not undertaken any
independent investigation of any factual matters set forth in the Prospectuses
or such other documents. We have assumed that the transactions contemplated by
the Prospectuses and such other documents will occur as provided therein and
that there will be no material change to the Prospectuses or any of such other
documents between the date hereof and the date of the issuance of the Series A
Preferred Securities.
Based upon and subject to the foregoing, we are of the opinion that
the discussion set forth in the Prospectus Supplement under the caption "CERTAIN
FEDERAL INCOME TAX CONSIDERATIONS" is a fair and accurate summary of the matters
addressed therein, based upon current law and the assumptions stated or referred
to therein.
We assume no obligation to update or supplement this letter to reflect
any facts or circumstances which may hereafter come to our attention with
respect to the opinion expressed above, including any changes in applicable law
which may hereafter occur.
We hereby consent to the filing of this letter as an Exhibit to the
Registration Statement and to the references to our firm under the captions
"CERTAIN FEDERAL INCOME TAX CONSIDERATIONS" and "LEGAL OPINIONS" in the
Prospectus Supplement.
Very truly yours,
/s/ Christy & Viener
Exhibit 12(b)
Central Power and Light Company
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividend Requirements
(Unaudited)
<TABLE>
Year Ended December 31,
- ------------------------------------------------------------------
1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------
housands, except for ratios)
<CAPTION>
<S> <C> <C> <C> <C> <C>
Operating Income $285,647 $282,184 $256,251 $190,079 $266,665
Adjustments:
Federal income taxes 47,227 51,755 51,329 (18,954) 34,726
Provision for deferred income taxes 51,476 (30,025) 26,659 90,520 48,610
Deferred investment tax credits (5,553) (5,789) (5,789) (5,806) (5,837)
Other income and deductions (11,572) 14,880 1,272 1,663 890
Allowance for borrowed and equity
funds used during construction 1,845 4,514 3,689 2,618 1,171
Mirror CWIP amortization 0 41,000 68,000 75,702 82,527
- ------------------------------------------------------------------------------------
Earnings $369,070 $358,519 $401,411 $335,822 $428,752
======================================================================
Fixed Charges:
Interest on long-term debt $110,375 $116,205 $111,408 $112,939 $125,476
Interest on short-term debt and other 18,494 19,926 12,365 11,993 7,266
Preferred stock dividend requirements 22,155 15,586 18,655 20,537 21,769
- ------------------------------------------------------------------------------------
$151,024 $151,717 $142,428 $145,469 $154,511
===========================================================================
Ratio of earnings to combined fixed
charges and preferred stock dividend
requirements
2.44 2.36 2.82 2.31 2.77
</TABLE>
Exhibit 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of
Central Power and Light Company on Form S-3 of our report dated
February 28, 1997 incorporated by reference in the Annual Report
on Form 10-K of Central Power and Light Company for the year
ended December 31, 1996, and to the reference to us under the
headings "Selected Financial Information" and "Experts" in the
Prospectus, included in or made a part of this Registration
Statement.
/s/ Arthur Andersen LLP
April 11, 1997
================================================================================
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 POWER AND LIGHT COMPANY
(Exact name of obligor as specified in its charter)
Texas 74-0550600
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
539 North Carancahua Street
Corpus Christi, Texas 78401-2802
(Address of principal executive offices) (Zip code)
______________________
Junior Subordinated Deferrable Interest Debentures
(Title of the indenture securities)
===============================================================================
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.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
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
(b) 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. (See Note on page 3.)
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 Rule 24 of
the Commission's Rules of Practice.
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.)
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.
NOTE
Inasmuch as this Form T-1 is filed prior to the
ascertainment by the Trustee of all facts on which to base a responsive answer
to Item 2, the answer to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended
by an amendment to this Form T-1.
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 24th day of April 7, 1997.
THE BANK OF NEW YORK
By: /S/VIVIAN GEORGES
Name: VIVIAN GEORGES
Title: ASSISTANT VICE PRESIDENT
Exhibit 25(b)
================================================================================
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 POWER AND LIGHT COMPANY
(Exact name of obligor as specified in its charter)
Texas 74-0550600
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
539 North Carancahua Street
Corpus Christi, Texas 78401-2802
(Address of principal executive offices) (Zip code)
______________________
Guarantee of Preferred Securities of
CPL Capital I
(Title of the indenture securities)
================================================================================
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.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
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
(b) 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. (See Note on page 3.)
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 Rule 24 of the
Commission's Rules of Practice.
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.)
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.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
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 24th day of April 7, 1997.
THE BANK OF NEW YORK
By: /S/VIVIAN GEORGES
Name: VIVIAN GEORGES
Title: ASSISTANT VICE PRESIDENT
Exhibit 25(c)
================================================================================
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)
CPL CAPITAL I
(Exact name of obligor as specified in its charter)
Delaware To Be Applied For
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
539 North Carancahua Street
Corpus Christi, Texas 78401-2802
(Address of principal executive offices) (Zip code)
______________________
Preferred Securities
(Title of the indenture securities)
===============================================================================
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.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
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
(b) 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. (See Note on page 3.)
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 Rule 24 of the
Commission's Rules of Practice.
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.)
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.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
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 24th day of March, 1997.
THE BANK OF NEW YORK
By: /S/VIVIAN GEORGES
Name: VIVIAN GEORGES
Title: ASSISTANT VICE PRESIDENT
Exhibit 25(d)
================================================================================
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 POWER AND LIGHT COMPANY
(Exact name of obligor as specified in its charter)
Texas 74-0550600
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
539 North Carancahua Street
Corpus Christi, Texas 78401-2802
(Address of principal executive offices) (Zip code)
______________________
Guarantee of Preferred Securities of
CPL Capital II
(Title of the indenture securities)
================================================================================
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.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
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
(b) 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. (See Note on page 3.)
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 Rule 24 of the
Commission's Rules of Practice.
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.)
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.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
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 24th day of March, 1997.
THE BANK OF NEW YORK
By: /S/VIVIAN GEORGES
Name: VIVIAN GEORGES
Title: ASSISTANT VICE PRESIDENT
Exhibit 25(e)
================================================================================
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)
CPL CAPITAL II
(Exact name of obligor as specified in its charter)
Delaware To Be Applied For
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
539 North Carancahua Street
Corpus Christi, Texas 78401-2802
(Address of principal executive offices) (Zip code)
______________________
Preferred Securities
(Title of the indenture securities)
===============================================================================
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.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
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
(b) 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. (See Note on page 3.)
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 Rule 24 of the
Commission's Rules of Practice.
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.)
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.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
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 24th day of March, 1997.
THE BANK OF NEW YORK
By: /S/VIVIAN GEORGES
Name: VIVIAN GEORGES
Title: ASSISTANT VICE PRESIDENT
