EXHIBIT H-1
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- ; 70-___)
SYSTEM ENERGY RESOURCES, INC., ET AL.
Notice of Proposal to Issue and Sell up to $350,000,000 of
First Mortgage Bonds and/or Debentures, to enter into
arrangements for the issuance of up to $500,000,000 of Tax-Exempt
Bonds, including the proposed issuance of up to $565,000,000 in
Collateral First Mortgage Bonds, to enter into arrangements for
the issuance of up to $100,000,000 Municipal Securities, and to
acquire Tax-Exempt Bonds issued on behalf of System Energy.
___________, 2000
Notice is hereby given that the following filing has been
made with the Commission pursuant to provisions of the Act and
rules promulgated thereunder. All interested persons are
referred to the application and/or declaration for complete
statements of the proposed transaction summarized below. The
application and/or 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
on the application and/or declaration should submit their views
in writing by October __, 2000 to the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, and serve a copy on the relevant applicant(s) and/or
declarant(s) of the address(es) as specified below. Proof of
service (by affidavit or, in 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. A person who so requests will be notified of
any hearing, if ordered, and will receive a copy of any notice or
order issued in the matter. After October __, 2000, the
application and/or declaration, as filed or as amended, may be
granted and/or permitted to become effective.
System Energy Resources, Inc. ("System Energy"), Echelon
One, 1340 Echelon Parkway, Jackson, Mississippi 39213, Entergy
Arkansas, Inc. ("EAI"), 425 West Capitol, 40th
Floor, Little Rock, Arkansas 72201, Entergy Louisiana, Inc.
("ELI"), 4809 Jefferson Highway, Jefferson, Louisiana 70121,
Entergy Mississippi, Inc. ("EMI"), 308 East Pearl Street,
Jackson, Mississippi 39201, Entergy New Orleans, Inc. ("ENOI"),
1600 Perdido Building, New Orleans, LA 70112 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, 2005 (1) to issue and sell one or more series of its First
Mortgage Bonds ("Bonds") and/or one or more series of its
Debentures ("Debentures") in a combined aggregate principal
amount of said Bonds and Debentures not to exceed $350,000,000,
(2) 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 $500,000,000 to be issued in one
or more series for the purpose of financing pollution control
facilities or refinancing certain outstanding Tax-Exempt 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 Bonds in an aggregate principal amount
not to exceed $565,000,000 ("Collateral Bonds") as security for
the Tax-Exempt Bonds; and (3) to enter into arrangements for the
issuance of municipal securities in an aggregate principal amount
not to exceed $100,000,000 ("Municipal Securities") to be issued
in one or more series through a state or local municipal entity
("Municipal Entity") to pay certain of System Energy's costs
while benefiting from tax exemptions 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 amended and 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, EAI, ELI, EMI and ENOI, 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. In addition or as an
alternative to the security provided by assignments of the
Availability Agreement and the Capital Funds Agreement, in order
to obtain a more favorable rating on Bonds and consequently
improve the marketability thereof, System Energy may provide an
insurance policy for the payment of the principal of and/or
interest and/or premium, if any, on one or more series of Bonds.
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 will
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. In order to obtain a more favorable
rating on Debentures and consequently improve the marketability
thereof, System Energy may provide an insurance policy for the
payment of the principal of and/or interest and/or premium on one
or more series of Debentures. 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 will 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 Bonds and Debentures and/or Tax-
Exempt Bonds issued on behalf of System Energy, (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 may also seek to enter into arrangements for
the issuance of Municipal Securities. System Energy proposes
from time to time through December 31, 2005 to enter into one or
more agreements, either directly or through an affiliate of
System Energy, with such governmental authority as may be
authorized by state or local law (collectively referred to herein
as the "Municipal Entity"), whereby the Municipal Entity will
issue securities to the public on behalf of System Energy or will
loan money to System Energy through a bank, an affiliate of
System Energy, or other person, where the proceeds of such
financing will be used to pay certain of System Energy's costs.
System Energy will enter into such arrangements to benefit from
certain tax exemptions offered by a state or local taxing
authority. Certain purchasers of Municipal Securities may
benefit from state or local income tax exemptions on interest
they receive from the Municipal Securities.
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, 2005 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 $500,000,000 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 finance on a tax-exempt basis
certain pollution control facilities at Grand Gulf Nuclear
Station ("Facilities") or to refinance certain Tax-Exempt Bonds
that were previously issued with respect thereto. 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 fifty 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 will be sold if the fixed interest rate or initial
adjustable interest rate thereon will exceed 13%.
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") 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, will 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 will enter into
a Reimbursement Agreement ("Reimbursement Agreement") with the
Bank pursuant to which System Energy will 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
the Letter of Credit with interest thereon at a rate not to
exceed the Bank's prime commercial lending rate 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 1% of the face amount of the
Letter of Credit and annual fees not to exceed 2% of the face
amount of the Letter of Credit. Any such Letter of Credit will
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 Collateral Bonds. 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 will be issued on the basis of unfunded
net property additions and/or retired bond credits and will 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 can be issued in several ways. First, if Tax-
Exempt Bonds bear a fixed interest rate, Collateral Bonds can 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 can 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 will bear no interest. Thirdly, Collateral Bonds can 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 can 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 13%) 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 13%. The maximum aggregate principal
amount of the Collateral Bonds to be issued would not exceed
$565,000,000. 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.
For the Commission, by the Division of Investment
Management, pursuant to delegated authority.
Jonathon G. Katz
Secretary
