File No. 70-8511
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
_________________________________
Amendment No. 1
to the
Form U-1/A
__________________________________
APPLICATION - DECLARATION
Under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
_________________________________
System Energy Resources, Inc. Entergy Corporation
1340 Echelon Parkway P.O. Box 61005
Jackson, Mississippi 39213 New Orleans, Louisiana 70161
Telephone: 601-368-5000 Telephone: 504-529-5262
Arkansas Power & Light Company Louisiana Power & Light Company
P.O. Box 551 639 Loyola Avenue
Little Rock, Arkansas 72203 New Orleans, Louisiana 70113
Telephone: 501-377-4000 Telephone: 504-569-4000
Mississippi Power & Light New Orleans Public Service Inc.
Company 639 Loyola Avenue
P.O. Box 1640 New Orleans, Louisiana 70113
Jackson, Mississippi 39205 Telephone: 504-569-4000
Telephone: 601-969-2311
(Names of companies filing this statement and addresses
of principal executive offices)
__________________________________
ENTERGY CORPORATION
(Name of top registered holding company
parent of each applicant or declarant)
_________________________________
Gerald D. McInvale
Senior Vice President and Chief Financial Officer
System Entergy Resources, Inc.
1340 Echelon Parkway
Jackson, Mississippi 39213
(Name and address of agent for service)
_____________________________________
The Commission is also requested to send copies
of communications in connection with this matter to:
Laurence M. Hamric, Esq. Robert B. McGehee, Esq.
Denise C. Redmann, Esq. Wise Carter Child & Caraway
Entergy Services, Inc. 600 Heritage Building
639 Loyola Avenue P.O. Box 651
New Orleans, Louisiana 70113 Congress at Capitol
(504) 576-2095 Jackson, Mississippi 39205
(601) 968-5500
Thomas J. Igoe, Jr., Esq. David P. Falck, Esq.
Reid & Priest Winthrop, Stimson, Putnam &
40 West 57th Street Roberts
New York, New York 10019 One Battery Park Plaza
(212) 603-2110 New York, New York 10004
(212) 858-1438
Steven C. McNeal
Director - Corporate Finance
and Risk Management
Entergy Services, Inc.
639 Loyola Avenue
New Orleans, LA 70113
(504) 569-4363
<PAGE>
The Application-Declaration is hereby amended in its entirety and
restated to read as follows:
Item 1. Description of Proposed Transactions.
Section A. Overview
1. System Energy Resources, Inc. ("System Energy"), a
subsidiary of Entergy Corporation ("Entergy"), a registered holding
company under the Public Utility Holding Company Act of 1935
("Holding Company Act"), proposes from time to time through
December 31, 1996 (1) to issue and sell one or more series of its
First Mortgage Bonds ("Bonds"), (2) to issue and sell one or more
series of its Debentures ("Debentures") in a combined aggregate
principal amount of said Bonds and Debentures not to exceed $265
million, and (3) to enter into arrangements for the issuance and
sale of tax-exempt revenue bonds in an aggregate principal amount
not to exceed $235 million ("Tax-Exempt Bonds") to be issued in one
or more series for the purpose of refinancing outstanding tax-
exempt Pollution Control Revenue Bonds issued for the benefit of
System Energy to finance pollution control facilities, including
the possible issuance and pledge of one or more new series of the
Company's First Mortgage Bonds in an aggregate principal amount not
to exceed $251 million ("Collateral Bonds") as security for the Tax-
Exempt Bonds. Each of these proposed transactions is discussed in
detail below.
Section B. Issuance and Sale of First Mortgage Bonds and
Debentures and Related Matters
1. The Bonds will be issued under System Energy's Mortgage
and Deed of Trust, dated as of June 15, 1977, to United States
Trust Company of New York and Gerard F. Ganey (successor to Malcolm
J. Hood), as Trustees, as heretofore supplemented ("Mortgage"), and
as proposed to be further supplemented by additional Supplemental
Indenture(s).
2. Each series of Bonds will have such interest rate,
maturity date, redemption, and sinking fund provisions, be secured
by such means, be sold in such manner and at such price and have
such other terms and conditions as shall be determined at the time
of sale.
3. Each series of Bonds will be issued on the basis of
unfunded property additions at the rate of 60% of such property
additions, retirement of outstanding First Mortgage Bonds or such
other bases as may be permissible under the Mortgage. Bonds
issued on the basis of property additions will be subject to an
earnings test as provided in the Mortgage. The terms and
conditions of each series of Bonds and the related Supplemental
Indenture will be supplied to the Securities and Exchange
Commission ("Commission") by Rule 24 Certificate in this file.
4. In order to provide additional security for its
obligations with respect to each series of the Bonds, System Energy
may determine to enter into one or more assignments, for the
benefit of the holders of such Bonds, of its rights under the
Availability Agreement, dated as of June 21, 1974, as amended
("Availability Agreement"), pursuant to the terms of one or more
additional Assignments of Availability Agreement, Consent and
Agreement (each, an "Assignment"). In such event, Arkansas Power &
Light Company ("AP&L"), Louisiana Power & Light Company ("LP&L"),
Mississippi Power & Light Company ("MP&L") and New Orleans Public
Service Inc. ("NOPSI")(AP&L, LP&L, MP&L and NOPSI being hereinafter
referred to as the "System Operating Companies"), each of which is
a party to the Availability Agreement, will be required to consent
to and join in any such Assignment. (For further information with
respect to any such Assignment, reference is made to Exhibit B-2
hereto.)
5. In addition, as security for its obligations with respect
to each series of the Bonds, System Energy may determine to enter
into one or more assignments, for the benefit of the holders of
such Bonds, of its rights under the Capital Funds Agreement, dated
as of June 21, 1974 ("Capital Funds Agreement"), pursuant to the
terms of one or more additional Supplementary Capital Funds
Agreements and Assignments (each, a "Supplementary Agreement"). In
such event, Entergy, which is a party to the Capital Funds
Agreement, will be required to consent to and join in the
Supplementary Agreement. (For further information with respect to
the Supplementary Agreement, reference is made to Exhibit B-3
hereto.)
6. Under the Availability Agreement, each of the System
Operating Companies has agreed to pay System Energy each month, in
return for the right to receive capacity and energy from Grand Gulf
1 (a nuclear-powered electric generating station located in
Mississippi), such amounts as would be adequate (together with
other funds received by System Energy) to cover a certain
proportion of System Energy's operating expenses and interest
charges as defined therein. The benefits and rights of System
Energy under the Availability Agreement, as supplemented according
to the terms of successive agreements similar to the Assignment,
have been assigned to various creditors of System Energy since
1977.
7. Under the Capital Funds Agreement, Entergy has agreed to
furnish System Energy capital sufficient to enable System Energy
(a) to maintain a minimum 35% equity ratio, as defined, (b) to pay
certain indebtedness when due, and (c) to continue the commercial
operation of Grand Gulf 1. Since 1977, System Energy has entered
into agreements similar to the Supplementary Agreement to secure
System Energy's creditor group. Such agreements extend terms
comparable to the Capital Funds Agreement to each specific creditor
group.
8. For further information with respect to the Availability
Agreement and the Capital Funds Agreement and previous assignments
of each such Agreement, reference is made to Exhibit B-9 filed
herewith and to File Nos. 70-5399, 70-5890, 70-6259, 70-6592, 70-
6600, 70-6913, 70-6985, 70-7021, 70-7026, 70-7123, 70-7158, 70-
7272, 70-7382,70-7533,70-7534, 70-7561 and 70-7946. Reference is
also made to the Commission's "Supplemental Memorandum in
Connection with Bond Financing", Rel. No. 23579, January 23, 1985.
9. The Debentures will be issued under either System
Energy's Debenture Indenture or Subordinated Debenture Indenture,
to be substantially in the form attached as Exhibit B-10 and B-
11, respectively (each, a "Debenture Indenture"), as may be
supplemented from time to time.
10. Each series of Debentures will have such interest rate,
maturity date, redemption, and sinking fund provisions, be sold
in such manner and at such price and have such other terms and
conditions as shall be determined at the time of sale.
Debentures issued under the Subordinated Debenture Indenture
would be expressly subordinated to Senior Indebtedness, as
defined therein or pursuant thereto, and may also provide that
payment of interest on such Debentures may be deferred, without
creating a default with respect thereto, for specified periods,
so long as no dividends are being paid, or certain actions are
taken related to the retirement of, the capital stock of System
Energy during such period of deferral.
11. The terms and conditions of each series of Debentures
will be supplied to the Commission by Rule 24 Certificates in this
file.
12. Neither any series of Bonds nor any series of Debentures
will be sold if the fixed interest rate or initial adjustable
interest rate thereon would exceed the lower of 15% or rates
generally obtained at the time of pricing for sales of first
mortgage bonds or debentures, respectively, having the same
maturity, issued by companies of comparable credit quality and
having similar terms, conditions and features. As to series having
an adjustable interest rate, the initial interest rate for Bonds or
Debentures of such series would be determined in discussions
between System Energy and the purchasers of such series and would
be based on the current market rate for comparable bonds or
debentures. Thereafter, the interest rate on such Bonds or
Debentures would be adjusted according to a pre-established formula
or method of determination ("Floating Rate Securities") or would be
that rate which would, when set, be sufficient to remarket the
Bonds of such series or Debentures of such series at their
principal amount ("Remarketed Securities").
13. The interest rate for Floating Rate Securities after the
initial interest rate period may be set as a percentage of, or as a
specified spread from, a benchmark rate, such as the London
Interbank Offered Rate or the yield to maturity of specified United
States Treasury securities, or may be established by reference to
orders received in an auction procedure, and will not exceed a
specified maximum rate greater than 15% per annum. Such interest
rate may be adjusted at established intervals or may be adjusted
simultaneously with changes in the benchmark rate.
14. The interest rate for Remarketed Securities after the
initial interest rate period would not be greater than rates
generally obtained at the time of remarketing of bonds or
debentures having the same maturity, issued by specified companies
of comparable credit quality and having comparable terms and would
not exceed a specified maximum rate greater than 15% per annum.
Paragraphs 15-16 below relate to Bonds and Debentures that are
Remarketed Securities.
15. The Supplemental Indenture to the Mortgage for
Bonds and the Debenture Indenture would provide that holders
of Bonds or Debentures, respectively, would have the right
to tender or be required to tender their Bonds or Debentures
and have them purchased at a price equal to the principal
amount thereof, plus any accrued and unpaid interest
thereon, on dates specified in, or established in accordance
with, the Supplemental Indenture or Debenture Indenture. A
Tender Agent may be appointed to facilitate the tender of
any Bonds or Debentures by holders. Any holder of Bonds or
Debentures wishing to have such Bonds or Debentures
purchased may be required to deliver such Bonds or
Debentures during a specified period of time preceding such
purchase date to the Tender Agent, if one shall be
appointed, or to the Remarketing Agent appointed to reoffer
such tendered Bonds or Debentures for sale.
16. System Energy would be obligated to pay amounts equal to
the amounts to be paid by the Remarketing Agent or the Tender Agent
pursuant to the Supplemental Indenture or Debenture Indenture for
the purchase of Bonds or Debentures so tendered, such amounts to be
paid by System Energy on the dates such payments by the Remarketing
Agent or the Tender Agent are to be made; provided, however, that
the obligation of System Energy to make any such payment would be
reduced by the amount of any other moneys available therefor,
including the proceeds of the sale of such tendered Bonds or
Debentures by the Remarketing Agent. Upon the delivery of such
Bonds or Debentures by holders to the Remarketing Agent or the
Tender Agent for purchase, the Remarketing Agent would use its best
efforts to sell such Bonds or Debentures at a price equal to the
principal amount of such Bonds or Debentures.
17. System Energy may cause any series of the Bonds and any
series of the Debentures to be sold by competitive bidding,
negotiated underwritten public offering or private placement with
institutional investors.
18. Reference is made to Exhibits A-1, A-2, A-4 and B-1 for
further information with respect to the terms of each series of
Bonds and to Exhibits A-6, B-10, and B-11 and B-12 hereto for
further information with respect to the terms of each series of
Debentures.
19. System Energy proposes to use the net proceeds derived
from the issuance and sale of the Bonds and the issuance and sale
of the Debentures for general corporate purposes, including, but
not limited to, the repayment of outstanding securities when due
and/or the possible redemption or the acquisition of outstanding
First Mortgage Bonds, as described below, the payment of
construction costs and nuclear fuel costs, the repayment of short-
and long-term borrowings and for other working capital needs.
20. System Energy further proposes to use, in addition to, or
as an alternative for, the net proceeds from the issuance and sale
of the Bonds and the issuance and sale of the Debentures, other
available funds to acquire and retire at any time or from time to
time prior to December 31, 1996, by means of tender offer, open
market, negotiated or other purchases, or redemption, in whole or
in part, prior to their respective maturities, one or more series
of System Energy's outstanding First Mortgage Bonds ("Outstanding
Bonds"). Certain of the Outstanding Bonds may not be redeemed due
to call or refunding restrictions. Accordingly, System Energy may
apply all or a portion of the proceeds from the sale of the Bonds
and the sale of the Debentures either to the purchase for cash of
all or a portion of one or more series of Outstanding Bonds through
tender offers, open market, negotiated, or other forms of purchases
or otherwise or to the redemption of such Outstanding Bonds as are
by their terms redeemable.
21. System Energy will not use the proceeds from the sale of
Bonds to enter into refinancing transactions unless (A) the
estimated present value savings derived from the net difference
between interest payments on a new issue of comparable securities
and those securities refunded or purchased is greater, on an after-
tax basis, than the present value of all repurchasing, redemption,
tendering and issuing costs, assuming an appropriate discount rate,
determined on the basis of the then estimated after-tax cost of
capital of Entergy and its subsidiaries on a consolidated basis, or
(B) System Energy shall have notified the Commission of the
proposed refinancing transaction (including the terms thereof) by
post-effective amendment hereto and obtained appropriate
supplemental authorization from the Commission to consummate such
transaction. System Entergy anticipates that the acquisition of
its Outstanding Bonds so acquired (other than by redemption
provisions already applicable to such Outstanding Bonds) will not
exceed $500 million in aggregate principal amount.
22. System Energy's construction expenditures (including
AFUDC but excluding nuclear fuel), essentially production
expenses, during the years 1995 and 1996 are estimated to be
approximately $21.9 million and $21.6 million, respectively. In
addition to construction expenditure requirements, System Energy
will require $250 million during the period 1995-1996 to meet
long-term debt maturities and to satisfy sinking fund
requirements.
Section C. Issuance and Sale of Tax-Exempt Bonds
and Related Matters
1. System Energy also may seek to enter into
arrangements for the issuance of Tax-Exempt Bonds pursuant
to which System Energy proposes from time to time through
December 31, 1996 to enter into one or more installment
purchase, refunding or other facilities agreements or one or
more supplements and/or amendments thereto (collectively, a
"Facilities Agreement") with one or more issuing
governmental authorities (each an "Issuer") which will
contemplate the issuance and sale by the Issuer(s) of one or
more series of Tax-Exempt Bonds in an aggregate principal
amount not to exceed $235 million pursuant to one or more
trust indentures and/or one or more supplements thereto
(collectively, the "Indenture") between the Issuer(s) and
one or more trustees (collectively, the "Trustee"). Each
series of Tax-Exempt Bonds will have such interest rate,
maturity date, redemption, and sinking fund provisions, be
secured by such means, be sold in such manner and at such
price, and have such other terms and conditions as shall be
determined at the time of sale.
2. The proceeds of the sale of Tax-Exempt Bonds, net
of any underwriters' discounts or other expenses payable
from proceeds, will be applied to refinance certain
Pollution Control Revenue Bonds that were previously issued
to finance pollution control facilities at the Grand Gulf
Nuclear Station ("Facilities"). Pursuant to the terms of
each Facilities Agreement, the Issuer will pay to or provide
for the benefit of System Energy the total amount of the
proceeds of the Tax-Exempt Bonds and System Energy will
agree to pay amounts sufficient to pay the principal or
redemption price of, premium, if any, and interest on the
Tax-Exempt Bonds. Such payments will be made by System
Energy directly to the Trustee pursuant to the Indenture.
If the Facilities Agreement is in the form of an installment
purchase agreement, the Facilities may be transferred by
installment sale between the Issuer and System Energy.
Under the Facilities Agreement, System Energy may also be
obligated to pay (i) the fees and charges of the Trustee and
any registrar or paying agent under the Indenture, and, if
any, a Remarketing Agent and a Tender Agent as hereinafter
referred to, (ii) all expenses incurred by the Issuer in
connection with its rights and obligations under the
Facilities Agreement, (iii) all expenses necessarily
incurred by the Issuer or the Trustee under the Indenture in
connection with the transfer or exchange of Tax-Exempt
Bonds, and (iv) certain other fees and expenses.
3. The Indenture may provide that, upon the
occurrence of certain events relating to the operation of
the Facilities or the Facilities Agreement, Tax-Exempt Bonds
will be redeemable by the Issuer at the direction of System
Energy. Any series of Tax-Exempt Bonds may be made subject
to a mandatory cash sinking fund under which stated portions
of Tax-Exempt Bonds of such series are to be retired at
stated times. Tax-Exempt Bonds may be subject to mandatory
redemption in certain other cases. The payments by System
Energy in such circumstances shall be sufficient (together
with any other moneys held by the Trustee under the
Indenture and available therefor) to pay the principal of
all Tax-Exempt Bonds to be redeemed or retired, the premium,
if any, together with interest accrued or to accrue to the
redemption date on such bonds.
4. It is proposed that each series of the Tax-Exempt
Bonds mature not earlier than five years from the first day
of the month of issuance nor later than forty years from the
date of issuance. Tax-Exempt Bonds will be subject to
optional redemption by the Issuer, at the direction of
System Energy, in whole or in part at the redemption prices
(expressed as percentages of the principal amount thereof)
plus accrued interest to the redemption date, and at the
times, set forth in the Indenture.
5. The Facilities Agreement and the Indenture for
each series of Tax-Exempt Bonds may provide for a fixed
interest rate and/or for an adjustable interest rate as
hereinafter described. No series of Tax-Exempt Bonds would
be sold if the fixed interest rate or initial adjustable
interest rate thereon would exceed the lower of 15% or rates
generally obtained at the time of pricing for sales of tax-
exempt bonds having the same maturity, issued for the
benefit of companies of comparable credit quality and having
similar terms, conditions and features. At October 1, 1994,
such rate is estimated to be approximately 8% per annum for
tax-exempt bonds having a maturity of 30 years, no optional
redemption for the first ten years after initial issuance
and no Collateral Bonds (as defined above) or other security
arrangements. As to series having an adjustable interest
rate, the initial interest rate for Tax-Exempt Bonds of such
series would be determined in discussions between System
Energy and the purchasers of such series from the Issuer and
be based on the current tax-exempt market rate for
comparable bonds. Thereafter, the interest rate on such Tax-
Exempt Bonds would be adjusted according to a pre-
established formula or method of determination ("Floating
Rate Securities") or would be that rate which would, when
set, be sufficient to remarket the Tax-Exempt Bonds of such
series at their principal amount ("Remarketed Securities").
6. The interest rate for Floating Rate Securities
after the initial interest rate period may be fixed as a
percentage of, or as a specified spread from, a benchmark
rate, such as the London Interbank Offered Rate or the yield
to maturity of specified United States Treasury securities,
or may be established by reference to orders received in an
auction procedure, and will not exceed a specified maximum
rate greater than 15% per annum. Such interest rate may be
adjusted at established intervals or may be adjusted
simultaneously with changes in the benchmark rate.
7. The interest rate for Remarketed Securities after
the initial interest rate period would not be greater than
rates generally obtained at the time of remarketing of tax-
exempt bonds having the same maturity, issued for the
benefit of companies of comparable credit quality and having
comparable terms and would not exceed a specified maximum
rate greater than 15% per annum. Paragraphs 8 - 9 below
relate to Tax-Exempt Bonds that are Remarketed Tax-Exempt
Securities.
8. The Facilities Agreement and the Indenture would
provide that holders of Tax-Exempt Bonds would have the
right to tender or be required to tender their Tax-Exempt
Bonds and have them purchased at a price equal to the
principal amount thereof, plus any accrued and unpaid
interest thereon, on dates specified in, or established in
accordance with, the Indenture. A Tender Agent may be
appointed to facilitate the tender of any Tax-Exempt Bonds
by holders. Any holder of Tax-Exempt Bonds wishing to have
such Tax-Exempt Bonds purchased may be required to deliver
such Tax-Exempt Bonds during a specified period of time
preceding such purchase date to the Tender Agent, if one
shall be appointed, or to the Remarketing Agent appointed to
reoffer such tendered Tax-Exempt Bonds for sale.
9. Under the Facilities Agreement, System Energy would be
obligated to pay amounts equal to the amounts to be paid by the
Remarketing Agent or the Tender Agent pursuant to the Indenture for
the purchase of Tax-Exempt Bonds so tendered, such amounts to be
paid by System Energy on the dates such payments by the Remarketing
Agent or the Tender Agent are to be made; provided, however, that
the obligation of System Energy to make any such payment under the
Facilities Agreement would be reduced by the amount of any other
moneys available therefor, including the proceeds of the sale of
such tendered Tax-Exempt Bonds by the Remarketing Agent. Upon the
delivery of such Tax-Exempt Bonds by holders to the Remarketing
Agent or the Tender Agent for purchase, the Remarketing Agent would
use its best efforts to sell such Tax-Exempt Bonds at a price equal
to the principal amount of such Tax-Exempt Bonds.
10. In order to obtain a more favorable rating on any
series of Tax-Exempt Bonds and, thereby, improve the
marketability thereof, System Energy may arrange for one or
more irrevocable letter(s) of credit (a "Letter of Credit")
for an aggregate amount up to $285 million from one or more
banks (the "Bank") in favor of the Trustee. In such event,
payments with respect to principal, premium, if any,
interest and purchase obligations in connection with such
series of Tax-Exempt Bonds, coming due during the term of
the Letter of Credit, which term would not exceed 10 years,
would be secured by, and payable from funds drawn under, the
Letter of Credit. In order to induce the Bank to issue the
Letter of Credit, System Energy would enter into a
Reimbursement Agreement ("Reimbursement Agreement") with the
Bank pursuant to which System Energy would agree to
reimburse the Bank immediately or within a specified period
(not to exceed 60 months) after the date of the draw for all
amounts drawn under Letter of Credit with interest thereon
at a rate not to exceed rates generally obtained at the time
of entering into the Reimbursement Agreement by companies of
comparable credit quality on letters of credit having
comparable terms and, in any event, not in excess of the New
York prime rate as published in The Wall Street Journal plus
2%.
11. It is anticipated that the Reimbursement Agreement
would require the payment by System Energy to the Bank of up-
front letter of credit fees not to exceed $100,000 and
annual fees not to exceed 1-1/4% of the face amount of the
Letter of Credit. Any such Letter of Credit would expire or
be terminable prior to the maturity date of the series of
Tax-Exempt Bonds that Letter of Credit supports and, in
connection with such expiration or termination, such series
of Tax-Exempt Bonds may be made subject to mandatory
redemption or purchase on or prior to the date of expiration
or termination of the Letter of Credit, subject to the right
of owners of Tax-Exempt Bonds of such series not to have
their Tax-Exempt Bonds redeemed or purchased. Provision may
be made, as to any such series of Tax-Exempt Bonds, for
extension of the term of the Letter of Credit or for the
replacement thereof, upon its expiration or termination, by
another Letter of Credit (having substantially the same
terms as the original Letter of Credit) from the Bank or a
different bank or banks.
12. In addition or as an alternative to the security
provided by a Letter of Credit, in order to obtain a more
favorable rating on Tax-Exempt Bonds and consequently
improve the marketability thereof, System Energy may (a)
determine to provide an insurance policy for the payment of
the principal of and/or interest and/or premium on one or
more series of Tax-Exempt Bonds, and/or (b) provide security
for holders of Tax-Exempt Bonds and/or the Bank by obtaining
the authentication of and pledging one or more new series of
First Mortgage Bonds ("Collateral Bonds") under the
Mortgage, as it may be supplemented. Premiums on any
insurance policies will not exceed the rate of premiums
generally obtained at the time of entering into the
insurance arrangements by companies of comparable credit
quality on insurance policies having comparable terms.
Collateral Bonds would be issued on the basis of unfunded
net property additions and/or retired bond credits and would
be delivered to the Trustee under the Indenture and/or the
Bank to evidence, in part, and secure System Energy's
obligations under the Facilities financed and/or System
Energy's obligation to reimburse the Bank under the
Reimbursement Agreement. These Collateral Bonds could be
issued in several ways. First, if Tax-Exempt Bonds bear a
fixed interest rate, Collateral Bonds could be issued in a
principal amount equal to the principal amount of such Tax-
Exempt Bonds and bear interest at a rate equal to the rate
of interest on such Tax-Exempt Bonds. Secondly, they could
be issued in a principal amount equivalent to the principal
amount of such Tax-Exempt Bonds plus an amount equal to
interest on those Bonds for a specified period. In such
case, Collateral Bonds would bear no interest. Thirdly,
Collateral Bonds could be issued in a principal amount
equivalent to the principal amount of such Tax-Exempt Bonds
plus an amount equal to interest on those Tax-Exempt Bonds
for a specified period, but carry a fixed interest rate that
would be lower than the fixed interest rate of the Tax-
Exempt Bonds. Fourthly, they could be issued in a principal
amount equivalent to the principal amount of Tax-Exempt
Bonds at an adjustable rate of interest, varying with such
Tax-Exempt Bonds but having a "cap" (not greater than 15%)
above which the interest on Collateral Bonds could not rise.
For further information with respect to the Reimbursement
Agreement, the proposed insurance arrangements and the
Collateral Bonds, reference is made to Exhibits A-3, A-5, B-
4, B-5, B-6, B-7 and B-8. System Energy will not use a
combination of Letter of Credit, insurance arrangements
and/or Collateral Bonds to secure any series of Tax-Exempt
Bonds unless the resulting effective interest cost savings
on such series is greater than the total cost of providing
such additional security.
13. Each series of the Collateral Bonds that bear
interest would bear interest at a fixed interest rate or
initial adjustable interest rate not to exceed 15%. The
maximum aggregate principal amount of the Collateral Bonds
to be issued would not exceed $251 million. The Collateral
Bonds would be in addition to the aggregate limitation on
the Bonds proposed in Section B above. The terms of the
Collateral Bonds relating to maturity, interest payment
dates, if any, redemption provisions and acceleration will
correspond to the terms of the related Tax-Exempt Bonds.
Upon issuance, the terms of each series of the Collateral
Bonds will not vary during the life of such series except
for the interest rate of any such series that bears interest
at an adjustable rate.
14. As additional security for its obligations to make
payments under the Agreement and/or as security for its
obligation to make payment on the Collateral Bonds, System
Energy may assign, for the benefit of the Trustee under the
Indenture and/or System Energy's Mortgage Trustees,
respectively, its Assignment. In such event, the System
Operating Companies will be required to consent to and join
in the Assignment. (For further information with respect to
any such Assignment, reference is made to Exhibit B-2
hereto).
As additional security for its obligations to make
payments under the Agreement and/or as security for its
obligation to make payments on the Collateral Bonds, System
Energy may assign, for the benefit of the Trustee under the
Indenture and/or System Energy's Mortgage Trustees,
respectively, its rights under the Capital Funds Agreement
pursuant to the terms of a Supplementary Agreement. In such
event, Entergy will be required to consent to and join in
the Supplementary Agreement. (For further information with
respect to any such Supplementary Agreement, reference is
made to Exhibit B-3 hereto).
In the event the Tax-Exempt Bonds are secured by a
Letter of Credit, such Assignment and Supplementary
Agreement may be provided to the Bank furnishing such Letter
of Credit.
15. For further information with respect to the terms
of the Facilities Agreement and Indenture, reference is made
to Exhibits B-4, B-6 and B-7.
16. It is contemplated that Tax-Exempt Bonds may be
sold by the Issuer pursuant to arrangements with an
underwriter or a group of underwriters or by private
placement in a negotiated sale or sales. The underwriting
agreement or placement arrangements will provide that the
terms of Tax-Exempt Bonds, and their sale by the Issuer(s),
shall be satisfactory to System Energy, and System Energy
would provide certain related representations and certain
indemnities for liabilities arising from material
misstatements or omissions in disclosures made by System
Energy in connection with the issuance of Tax-Exempt Bonds.
System Energy understands that interest payable on Tax-
Exempt Bonds will not be included in the gross income of the
holders thereof for Federal income tax purposes under the
provisions of Section 103 of the Internal Revenue Code of
1986, as amended to the day of issuance of Tax-Exempt Bonds
(except for interest on any Tax-Exempt Bond during a period
in which it is held by a person who is a "substantial user"
of the Facilities or a "related person" within the meaning
of Section 147(a) of such Code). The interest rates on tax-
exempt bonds have been, and are expected to be, lower at the
time(s) of issuance of Tax-Exempt Bonds than the interest
rates on bonds of similar tenor, maturities and comparable
quality, interest on which is fully subject to Federal
income tax.
Section D. Other
The proceeds to be received from the issuance and sale of
the Bonds, Debentures and Tax-Exempt Bonds will not be used to
invest directly or indirectly in an exempt wholesale generator
("EWG") or foreign utility company ("FUCO"), as defined in Sections
32 and 33, respectively, of the Holding Company Act.
With respect to compliance with Rule 53 under the Act,
Entergy currently meets, and would continue to meet after giving
effect to the transactions proposed herein, all of the "safe
harbor" conditions under such rule. Entergy's "aggregate
investment" in EWGs and FUCOs is approximately $175.7 million,
representing approximately 7.5% of the Entergy System's
consolidated retained earnings as of September 30, 1994.
Furthermore, Entergy has complied with and will continue to comply
with the record keeping requirements of Rule 53 (a) (2) concerning
affiliated EWGs and FUCOs. In addition, as required by Rule 53 (a)
(3), no more than 2% of the employees of the Entergy System's
domestic public utility subsidiary companies would render services
to affiliated EWGs and FUCOs. Finally, none of the conditions set
forth in Rule 53 (b), under which the provisions of Rule 53 would
not be available, have been met.
Item 2. Fees, Commissions and Expenses
The fees, commissions and expenses, other than those of the
underwriters, to be incurred in connection with the issuance and
sale of the Bonds and the Debentures are not expected to exceed
the following:
Each
Initial Additional
Sale Sale
Registration Statement $156,250 $ -
Application - Declaration 2,000 -
*Rating Agencies' fees 105,000 -
*Trustees' fees 8,000 8,000
Fees of Company's Counsel:
Friday, Eldredge & Clark 15,000 10,000
Monroe & Lemann 15,000 10,000
Wise, Carter, Child & Caraway 37,000 30,000
Reid & Priest 97,000 40,000
*Fees of Entergy Services, Inc. 30,000 20,000
*Accountants' fees 17,000 12,000
*Printing and engraving costs 30,000 20,000
*Miscellaneous expense (including 21,000 8,000
blue-sky expense)
-------- --------
*Total Expenses $533,250 $158,000
======== ========
The fees, commissions and expenses, other than those of the
underwriters, to be incurred in connection with the issuance and
sale of the Tax-Exempt Bonds (including the expenses related to
the issuance and pledge of the Collateral Bonds) are not expected
to exceed the following:
Each
Initial Additional
Sale Sale
*Rating Agencies' fees $ 50,000 $ 35,000
*Trustees' fees 50,000 35,000
*Fees of Bond Counsel 90,000 55,000
*Fees of State Bond Commission 110,000 54,500
*Fees of Company's Counsel:
Friday, Eldredge & Clark 15,000 10,000
Monroe & Lemann 15,000 10,000
Wise, Carter, Child & Caraway 40,000 33,000
Reid & Priest 50,000 40,000
*Fees of Entergy Services, Inc. 30,000 20,000
*Accountants' fees 9,500 9,500
*Printing and engraving costs 25,000 25,000
*Miscellaneous expenses (including
blue-sky expenses) 26,000 23,000
-------- --------
*Total Expenses $510,500 $350,000
======== ========
___________________
*Estimated
The fees, commissions and expenses of the underwriters
expected to be incurred with respect to the Bonds, Debentures or
Tax-Exempt Bonds will not exceed the lesser of 2% (or in the case
of Debentures issued under the Subordinated Debenture Indenture,
3.25%) of the principal amount of the Bonds, Debentures or Tax-
Exempt Bonds, respectively, to be sold or those generally paid at
the time of pricing for sales of first mortgage bonds, debentures
or tax-exempt bonds, respectively, having the same maturity, issued
by companies of comparable credit quality and having similar terms,
conditions and features.
Item 3. Applicable Statutory Provisions
The sections of the Holding Company Act and rules
thereunder which the Applicants-Declarants consider applicable to
the proposed transactions are set forth below:
a. Issuance and sale of the Bonds and the Debentures -
Sections 6(a) and 7 and Rules 23 and 24;
b. Assignments of Availability Agreement and Capital
Funds Agreement (the obligation of the System
Operating Companies and Entergy, respectively, to
indemnify System Energy under such Agreements) -
Section 12 (b) and Rule 45.
c. Tax-exempt financing of the Facilities:
(i) Disposition of the Section 12(d) and
Facilities Rule 44
to the Issuer(s)
(ii) Reacquisition of the Sections 9(a) and
Facilities from the 10
Issuer(s)
(iii) Refunding Agreements Sections 6(a) and
for refunding of 7
outstanding tax-
exempt bonds
(iv) Reimbursement Sections 6(a) and
Agreement 7
(v) Issuance and Pledge Sections 6(a) and
of Collateral Bonds 7
(vi) Acquisition of Sections 9(a), 10,
outstanding tax- 12(c) and
exempt bonds with Rule 42
proceeds
from issuance(s) of
Tax-Exempt Bonds
In the event that the Commission deems any other section
of the Holding Company Act or rule thereunder to be applicable, the
parties request that the Commission's order or orders herein also
be issued under and with respect to such other section or rule.
Item 4. Regulatory Approval
No Federal or State commission, other than the
Commission, has jurisdiction over the transactions proposed in this
Application-Declaration.
Item 5. Procedure
The parties request that the Commission's notice of
proposed transactions published pursuant to Rule 23(e) be issued by
March 10, 1995, or as soon thereafter as practicable, and that the
Commission's order authorizing the remaining transactions proposed
in this proceeding be issued by April 11, 1995, or as soon
thereafter as practicable.
The parties hereby waive a recommended decision by a
hearing officer or any other responsible officer of the Commission;
agree that the Staff of the Division of Investment Management may
assist in the preparation of the Commission's decision; and request
that there be no waiting period between the issuance of the
Commission's order and the date it is to become effective.
Item 6. Exhibits and Financial Statements
Section A. Exhibits
*A-1 Mortgage and Deed of Trust, dated as of June
15, 1977, from System Entergy to United
States Trust Company of New York and Gerard
F. Ganey (successor to Malcolm J. Hood),
Trustees, as supplemented by nineteen (19)
Supplemental Indentures (filed, respectively,
as the exhibits and in the file numbers
indicated: A-1 in 70-5890 (Mortgage); B and
C to Rule 24 Certificate in 70-5890 (First);
B to Rule 24 Certificate in 70-6259 (Second);
20(a)-5 to Form 10-Q for the quarter ended
June 30, 1981, in 1-3517 (Third); A-1(e)-1 to
Rule 24 Certificate in 70-6985 (Fourth); B to
Rule 24 Certificate in 70-7021 (Fifth); B to
Rule 24 Certificate in 70-7021 (Sixth); A-
3(b) to Rule 24 Certificate in 70-7026
(Seventh); A-3(b) to Rule 24 Certificate in
70-7158 (Eighth); B to Rule 24 Certificate in
70-7123 (ninth); B-1 to Rule 24 Certificate
in 70-7272 (Tenth); B-2 to Rule 24
Certificate in 70-7272 (Eleventh); B-3 to
Rule 24 Certificate in 70-7272 (Twelfth); B-1
to Rule 24 Certificate in 70-7382
(Thirteenth); B-2 to Rule 24 Certificate in
70-7382 (Fourteenth); A-2(c) to Rule 24
Certificate in 70-7946 (Fifteenth); A-2(c) to
Rule 24 Certificate in 70-7946 (Sixteenth); A-
2(d) to Rule 24 Certificate in 70-7946
(Seventeenth); A-2(e) to Rule 24 Certificate
in 70-7946 (Eighteenth); and A-2(g) to Rule
24 Certificate in 70-7946 (Nineteenth).
**A-2 Proposed form of additional Supplemental
Indenture(s) to the Mortgage and Deed of
Trust relating to the Bonds.
**A-3 Proposed form of additional Supplemental
Indenture(s) to the Mortgage and Deed of
Trust relating to the Collateral Bonds.
**A-4 Proposed form of Bond.
**A-5 Proposed form of Collateral Bond.
**A-6 Proposed form of Debenture.
**B-1 Proposed form of Underwriting or Purchase
Agreement for sale(s)
of the Bonds.
**B-2 Proposed form of assignment(s) of
Availability Agreement.
**B-3 Proposed form of assignment(s) of Capital
Funds Agreement.
**B-4 Proposed form of Indenture relating to the
Tax-Exempt Bonds.
**B-5 Proposed form of Reimbursement Agreement.
**B-6 Proposed form of Installment Sale Agreement.
**B-7 Proposed form of Refunding Agreement.
**B-8 Proposed form of Provisions relating to
Insurance.
*B-9 Description of Availability and Capital Funds
Agreement and assignments thereof (filed in
the original U-1 File No. 70-8511).
**B-10 Proposed form of Debenture Indenture.
**B-11 Proposed form of Subordinated Debenture
Indenture.
**B-12 Proposed form(s) of Underwriting or Purchase
Agreement for sale(s) of the Debentures.
**C Registration Statement(s) relating to the
Bonds.
**C-1 Registration Statement(s) relating to the
Debentures.
D Inapplicable.
E Inapplicable.
**F-1 Opinion of Wise Carter Child & Caraway,
Professional Corporation, counsel to System
Energy.
**F-2 Opinion of Reid & Priest, counsel to System
Energy.
**F-3 Opinion of Reid & Priest, counsel to Entergy.
**F-4 Opinion of Friday, Eldredge & Clark, counsel
to AP&L.
**F-5 Opinion of Monroe & Lemann, counsel to LP&L
and NOPSI.
**F-6 Opinion of Wise Carter Child & Caraway,
Professional Association, counsel to MP&L.
*G Financial Data Schedule (filed in the
original U-1 File No. 70-8511).
*H Suggested form of Notice of proposed
transactions for publication in the Federal
Register.
H-1 Revised suggested form of Notice of proposed
transactions for publication in the Federal
Register.
________________________
* Incorporated herein by reference as indicated.
** To be filed by amendment.
Section B. Financial Statements
Financial Statements of System Energy as of June 30, 1994
(reference is made to Exhibit G hereto).
Financial Statements of Entergy and subsidiaries,
consolidated, as of June 30, 1994.
Notes to financial statements of System Energy and
Entergy and subsidiaries included in the Annual Report on Form
10-K for the fiscal year ended December 31, 1993 and the
Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1994 (filed in File Nos. 1-9067 and 1-3517,
respectively, and incorporated by reference).
Except as reflected in the Financial Statements, no
material changes not in the ordinary course of business have
taken place since June 30, 1994.
Reference is made to Exhibit G filed in the original U-1
Application-Declaration for a statement of (i) the approximate
amounts, before and after giving effect to the proposed
transactions, of unfunded bondable property of System Energy
available for the issuance of bonds and (ii) the proposed
accounting treatment of the transactions herein contemplated.
Item 7. Information as to Environmental Effects.
(a) As more fully described in Item 1, the proposed
transactions, subject to the jurisdiction of the Commission,
involve the financing activities of System Energy and, as such, do
not involve a major Federal action having a significant impact on
the human environment.
(b) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, the undersigned companies have duly caused this
amendment to be signed on their behalf by the undersigned thereunto
duly authorized.
SYSTEM ENERGY RESOURCES, INC.
ENTERGY CORPORATION
By: /s/ Lee W. Randall
Lee W. Randall
Vice President and
Chief Accounting Officer
ARKANSAS POWER & LIGHT COMPANY
LOUISIANA POWER & LIGHT COMPANY
MISSISSIPPI POWER & LIGHT COMPANY
NEW ORLEANS PUBLIC SERVICE INC.
By: /s/ Lee W. Randall
Lee W. Randall
Vice President,
Chief Accounting Officer
and Assistant Secretary
Dated: March 6, 1995
EXHIBIT H-1
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- ; 70-8511)
SYSTEM ENERGY RESOURCES, INC., ET AL.
Notice of Proposal to Issue and Sell up to $265 Million of First
Mortgage Bonds, to Issue and Sell up to $265 million of
Debentures, and to enter into arrangements for the issuance of up
to $235 Million of Tax-Exempt Bonds, including the proposed
issuance of up to $251 million in Collateral First Mortgage
Bonds.
(DATE)
System Energy Resources, Inc. ("System Energy"),
Echelon One, 1340 Echelon Parkway, Jackson, Mississippi 39213,
Arkansas Power & Light Company ("AP&L"), 425 West Capitol, 40th
Floor, Little Rock, Arkansas 72201, Louisiana Power & Light
Company ("LP&L"), 639 Loyola Avenue, New Orleans, Louisiana
70113, Mississippi Power & Light Company ("MP&L"), 308 East Pearl
Street, Jackson, Mississippi 39201, New Orleans Public Service
Inc. ("NOPSI"), 639 Loyola Avenue, New Orleans, Louisiana 70113,
and Entergy Corporation ("Entergy"), 639 Loyola Avenue, New
Orleans, Louisiana 70113, a registered holding company, have
filed an application-declaration with this Commission pursuant to
Sections 6, 7, 9, 10 and 12 of the Public Utility Holding Company
Act of 1935 ("Act") and Rules 23, 24, 42 and 44 thereunder.
System Energy proposes from time to time through
December 31, 1996 (1) to issue and sell one or more series of its
First Mortgage Bonds ("Bonds"), (2) to issue and sell one or more
series of its Debentures ("Debentures") in a combined aggregate
principal amount of said Bonds and Debentures not to exceed $265
million, and (3) to enter into arrangements for the issuance and
sale of tax-exempt revenue bonds ("Tax-Exempt Bonds") in an
aggregate principal amount not to exceed $235 million to be
issued in one or more series for the purpose of refinancing
certain outstanding tax-exempt Pollution Control Revenue Bonds
issued for the benefit of System Entergy to finance pollution
control facilities, including the possible issuance and pledge of
one or more new series of System Energy's First Mortgage Bonds in
an aggregate principal amount not to exceed $251 million
("Collateral Bonds") as security for the Tax-Exempt Bonds. The
Bonds will be issued under System Energy's Mortgage and Deed of
Trust, dated as of June 15, 1977, to United States Trust Company
of New York and Gerard F. Ganey (successor to Malcolm J. Hood),
as Trustees, as heretofore supplemented ("Mortgage"), and as
proposed to be further supplemented by additional Supplemental
Indentures. Each series of Bonds will have such interest rate,
maturity date, redemption and sinking fund provisions, be secured
by such means and sold in such manner and at such price and have
such other terms and conditions as shall be determined at the
time of sale. In order to provide additional security for its
obligations with respect to the Bonds, System Energy may
determine to enter into one or more assignments, for the benefit
of the holders of the Bonds, of its rights under the Availability
Agreement, dated as of June 21, 1974, as amended ("Availability
Agreement"), pursuant to the terms of one or more additional
Assignments of Availability Agreement, Consent and Agreement
("Assignments"). In such event, AP&L, LP&L, MP&L and NOPSI,
parties to the Availability Agreement, will be required to
consent to and join in any such Assignments. Furthermore, System
Energy may determine to enter into one or more assignments, for
the benefit of the holders of the Bonds, of its rights under the
Capital Funds Agreement, dated as of June 21, 1974 ("Capital
Funds Agreement"), pursuant to the terms of one or more
additional Supplementary Capital Funds Agreement and Assignments
("Supplementary Agreements"). In such event, Entergy, which is a
party to the Capital Funds Agreement, will be required to consent
to and join in any such Supplementary Agreements.
The Debentures are to be issued under System Energy's
Debenture Indenture or Subordinated Debenture Indenture (each a
"Debenture Indenture"). Each series of Debentures will be sold
at such price, will bear interest at such rate and will mature on
such date as will be determined at the time of sale. Each series
of Debentures will have such interest rate, maturity date,
redemption and sinking fund provisions, be sold in such manner
and at such price and have such other terms and conditions,
including subordination and deferral of interest payment, if
applicable, as shall be determined at the time of sale.
Debentures issued under the Subordinated Debenture Indenture
would be expressly subordinated to Senior Indebtedness, as
defined therein or pursuant thereto, and may also provide that
payment of interest on such Debentures may be deferred, without
creating a default with respect thereto, for specified periods,
so long as no dividends are being paid, or certain actions are
taken related to the retirement of, the capital stock of System
Energy during such period of deferral. The terms and conditions
of each series of Debentures will be supplied to the Commission
by Rule 24 Certificate in this file.
The Supplemental Indenture and/or the Debenture
Indenture will provide for either a fixed interest rate or an
adjustable interest rate for the Bonds and/or the Debentures,
respectively. Neither any series of Bonds nor any series of
Debentures will be sold if the fixed interest rate or initial
adjustable interest rate thereon would exceed the lower of 15% or
rates generally obtained at the time of pricing for sales of
first mortgage bonds or debentures, respectively, having the same
maturity, issued by companies of comparable credit quality and
having similar terms, conditions and features or if subsequent
interest rates for adjustable interest rate Bonds or Debentures,
respectively, would exceed 15%.
System Energy may cause any series of the Bonds and any
series of the Debentures to be sold by competitive bidding,
negotiated underwritten public offering or private placement with
institutional investors. System Energy further proposes to use
the net proceeds derived from the issuance and sale of the Bonds
and the issuance and sale of the Debentures for general corporate
purposes, including, but not limited to, (i) the acquisition and
retirement, by means of tender offer, or open market, negotiated
or other forms of purchases, or redemption in whole or in part,
prior to their respective maturities, of one or more series of
System Energy's outstanding First Mortgage Bonds, (ii) the
payment of construction costs and nuclear fuel costs, (iii) the
repayment of long- and short-term borrowings and/or (iv) other
working capital needs.
System Energy also may seek to enter into arrangements
for the issuance of Tax-Exempt Bonds pursuant to which System
Energy proposes from time to time through December 31, 1996 to
enter into one or more installment purchase, refunding or other
facilities agreements or one or more supplements and/or
amendments thereto (collectively, a "Facilities Agreement") with
one or more issuing governmental authorities (each an "Issuer")
which will contemplate the issuance and sale by the Issuer(s) of
one or more series of Tax-Exempt Bonds in an aggregate principal
amount not to exceed $235 million pursuant to one or more trust
indentures and/or one or more supplements thereto (collectively,
the "Indenture") between the Issuer(s) and one or more trustees
(collectively, the "Trustee"). Each series of Tax-Exempt Bonds
will have such interest rate, maturity date, redemption and
sinking fund provisions, be secured by such means, be sold in
such manner and at such price, and have such other terms and
conditions as shall be determined at the time of sale.
System Energy proposes to use the proceeds of the sale
of Tax-Exempt Bonds, net of any underwriters' discounts or other
expenses payable from proceeds, to refinance certain Pollution
Control Revenue Bonds that were previously issued to finance
pollution control facilities at the Grand Gulf Nuclear Station
("Facilities"). Pursuant to the terms of each Facilities
Agreement, the Issuer will pay to or provide for the benefit of
System Energy the total amount of the proceeds of the Tax-Exempt
Bonds and System Energy will agree to pay amounts sufficient to
pay the principal or redemption price of, premium, if any, and
interest on the Tax-Exempt Bonds. Such payments will be made by
System Energy directly to the Trustee pursuant to the Indenture.
If the Facilities Agreement is in the form of an installment
purchase agreement, the Facilities may be transferred by
installment sale between the Issuer and System Energy. Under the
Facilities Agreement, System Energy will also be obligated to pay
certain fees incurred in the transactions.
It is proposed that each series of the Tax-Exempt Bonds
mature not earlier than five years from the first day of the
month of issuance nor later than forty years from the date of
issuance. Tax-Exempt Bonds will be subject to optional
redemption by the Issuer, at the direction of System Energy, in
whole or in part at the redemption prices (expressed as
percentages of the principal amount thereof) plus accrued
interest to the redemption date, and at the times, set forth in
the Indenture.
The Facilities Agreement and the Indenture will provide
for either a fixed interest rate and/or for an adjustable
interest rate for each series of Tax-Exempt Bonds. No series of
Tax-Exempt Bonds would be sold if the fixed interest rate or
initial adjustable interest rate thereon would exceed the lower
of 15% or rates generally obtained at the time of pricing for
sales of tax-exempt bonds having the same maturity, issued for
the benefit of companies of comparable credit quality and having
similar terms, conditions and features, or if subsequent interest
rates for adjustable interest rate Tax-Exempt Bonds would exceed
15%.
In order to obtain a more favorable rating on any
series of Tax-Exempt Bonds and, thereby, improve the
marketability thereof, System Energy may arrange for one or more
irrevocable letter(s) of credit (a "Letter of Credit") for an
aggregate amount up to $285 million from one or more banks (the
"Bank") in favor of the Trustee. In such event, payments with
respect to principal, premium, if any, interest and purchase
obligations in connection with such series of Tax-Exempt Bonds,
coming due during the term of the Letter of Credit, which term
would not exceed 10 years, would be secured by, and payable from
funds drawn under, the Letter of Credit. In order to induce the
Bank to issue the Letter of Credit, System Energy would enter
into a Reimbursement Agreement ("Reimbursement Agreement") with
the Bank pursuant to which System Energy would agree to reimburse
the Bank immediately or within a specified period (not to exceed
60 months) after the date of the draw for all amounts drawn under
Letter of Credit with interest thereon at a rate not to exceed
rates generally obtained at the time of entering into the
Reimbursement Agreement by companies of comparable credit quality
on letters of credit having comparable terms and, in any event,
not in excess of the New York prime rate as published in The Wall
Street Journal plus 2%.
It is anticipated that the Reimbursement Agreement would
require the payment by System Energy to the Bank of up-front
letter of credit fees not to exceed $100,000 and annual fees not
to exceed 1-1/4% of the face amount of the Letter of Credit. Any
such Letter of Credit would expire or be terminable prior to the
maturity date of the series of Tax-Exempt Bonds that Letter of
Credit supports and, in connection with such expiration or
termination, such series of Tax-Exempt Bonds may be made subject
to mandatory redemption or purchase on or prior to the date of
expiration or termination of the Letter of Credit, subject to the
right of owners of Tax-Exempt Bonds of such series not to have
their Tax-Exempt Bonds redeemed or purchased. Provision may be
made, as to any such series of Tax-Exempt Bonds, for extension of
the term of the Letter of Credit or for the replacement thereof,
upon its expiration or termination, by another Letter of Credit
(having substantially the same terms as the original Letter of
Credit) from the Bank or a different bank or banks.
In addition or as an alternative to the security
provided by a Letter of Credit, in order to obtain a more
favorable rating on Tax-Exempt Bonds and consequently improve the
marketability thereof, System Energy may (a) determine to provide
an insurance policy for the payment of the principal of and/or
interest and/or premium on one or more series of Tax-Exempt
Bonds, and/or (b) provide security for holders of Tax-Exempt
Bonds and/or the Bank by obtaining the authentication of and
pledging one or more new series of First Mortgage Bonds
("Collateral Bonds") under the Mortgage, as it may be
supplemented. Premiums on any insurance policies will not exceed
the rate of premiums generally obtained at the time of entering
into the insurance arrangements by companies of comparable credit
quality on insurance policies having comparable terms. Collateral
Bonds would be issued on the basis of unfunded net property
additions and/or retired bond credits and would be delivered to
the Trustee under the Indenture and/or the Bank to evidence, in
part, and secure System Energy's obligations under the Facilities
Agreement and/or System Energy's obligation to reimburse the Bank
under the Reimbursement Agreement. These Collateral Bonds could
be issued in several ways. First, if Tax-Exempt Bonds bear a
fixed interest rate, Collateral Bonds could be issued in a
principal amount equal to the principal amount of such Tax-Exempt
Bonds and bear interest at a rate equal to the rate of interest
on such Tax-Exempt Bonds. Secondly, they could be issued in a
principal amount equivalent to the principal amount of such Tax-
Exempt Bonds plus an amount equal to interest on those Bonds for
a specified period. In such case, Collateral Bonds would bear no
interest. Thirdly, Collateral Bonds could be issued in a
principal amount equivalent to the principal amount of such Tax-
Exempt Bonds plus an amount equal to interest on those Tax-Exempt
Bonds for a specified period, but carry a fixed interest rate
that would be lower than the fixed interest rate of the Tax-
Exempt Bonds. Fourthly, they could be issued in a principal
amount equivalent to the principal amount of Tax-Exempt Bonds at
an adjustable rate of interest, varying with such Tax-Exempt
Bonds but having a "cap" (not greater than 15%) above which the
interest on Collateral Bonds could not rise. System Energy will
not use a combination of Letter of Credit, insurance arrangements
and/or Collateral Bonds to secure any series of Tax-Exempt Bonds
unless the resulting effective interest cost savings on such
series is greater than the total cost of providing such
additional security.
Each series of the Collateral Bonds that bear interest
would bear interest at a fixed interest rate or initial
adjustable interest rate not to exceed 15%. The maximum
aggregate principal amount of the Collateral Bonds to be issued
would not exceed $251 million. The terms of the Collateral Bonds
relating to maturity, interest payment dates, if any, redemption
provisions and acceleration will correspond to the terms of the
related Tax-Exempt Bonds. Upon issuance, the terms of each
series of the Collateral Bonds will not vary during the life of
such series except for the interest rate of any such series that
bears interest at an adjustable rate.
The fees, commissions and expenses of underwriters
expected to be incurred with respect to the Bonds, the Debentures
or the Tax-Exempt Bonds will not exceed the lesser of 2% (or in
the case of Debentures issued under the Subordinated Debenture
Indenture, 3.25%) of the principal amount of Bonds, Debentures or
Tax-Exempt Bonds, respectively, to be sold or those generally
paid at the time of pricing for sales of first mortgage bonds,
debentures or tax-exempt bonds, respectively, having the same
maturity, issued by companies of comparable credit quality and
having similar terms, conditions and features.
The application-declaration and any amendments thereto
are available for public inspection through the Commission's
Office of Public Reference. Interested persons wishing to
comment or request a hearing should submit their views in writing
by [_______, 1995], to the Secretary, Securities and Exchange
Commission, Washington, D.C. 20549 and serve a copy on the
applicants-declarants at the addresses specified above. Proof of
service (by affidavit or, in the case of an attorney-at-law, by
certificate) should be filed with the request. Any request for
hearing shall identify specifically the issues of fact or law
that are disputed. Any person who so requests will be notified
of any hearing, if ordered, and will receive a copy of any notice
or order issued in this matter. After said date, the application-
declaration, as filed or as it may be amended, may be granted
and permitted to become effective.
For the Commission, by the Division of Investment
Management, pursuant to delegated authority.
Secretary
