<PAGE>
RULE 424(b)(2)
REGISTRATION NO. 33-56537
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JANUARY 10, 1995
4,000,000 PREFERRED SECURITIES
CL&P CAPITAL
9.30% CUMULATIVE MONTHLY INCOME PREFERRED SECURITIES (MIPS*), SERIES A
(LIQUIDATION PREFERENCE $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT THE ISSUER HAS FUNDS LEGALLY AVAILABLE THEREFOR, AS
SET FORTH HEREIN, BY
THE CONNECTICUT LIGHT AND POWER COMPANY
--------------
The 9.30% Cumulative Monthly Income Preferred Securities, Series A (the
"Series A Preferred Securities"), representing the limited partner interests
offered hereby, are being issued by CL&P Capital, L.P., a limited partnership
formed under the laws of the State of Delaware ("CL&P Capital"). The sole
general partner of CL&P Capital is The Connecticut Light and Power Company
("CL&P" or the "General Partner"). CL&P Capital exists for the sole purpose of
issuing partner interests and lending the proceeds thereof to CL&P. The Series
A Preferred Securities are the initial series of preferred securities
representing limited partner interests in CL&P Capital ("Preferred
Securities") and will rank pari passu with all other series of Preferred
Securities which may be issued by CL&P Capital. The Preferred Securities,
including the Series A Preferred Securities, will have a preference with
respect to cash distributions and amounts payable on redemption or liquidation
over the General Partner's interest in CL&P Capital.
Holders of the Series A Preferred Securities will be entitled to receive, to
the extent funds are available, cumulative preferential cash distributions
("Dividends"), at an annual rate of 9.30% of the stated liquidation preference
of $25 per Series A Preferred Security, accruing from the date of original
issuance and payable monthly in arrears on the last day of each calendar month
of each year, commencing January 31, 1995. The payment of Dividends and
payments in liquidation or redemption with respect to the Series A Preferred
Securities, in each case out of funds on hand legally available therefor held
by CL&P Capital, are guaranteed by CL&P to the extent described herein and in
the accompanying Prospectus (the "Guaranty"). See "Description of the
Guaranty" in the accompanying Prospectus. If CL&P fails to make interest
payments on its 9.30% Junior Subordinated Deferrable Interest Debentures,
Series A (the "Series A Subordinated Debentures") to be purchased by CL&P
Capital with the proceeds of the Series A Preferred Securities and the General
Partner's related capital contribution to CL&P Capital, CL&P Capital will not
have sufficient funds to pay Dividends on the Series A Preferred Securities.
The Guaranty does not cover payment of Dividends when CL&P Capital does not
have sufficient funds to pay such Dividends. In such event the remedy of a
holder of Series A Preferred Securities is to enforce the rights of CL&P
Capital under the Series A Subordinated Debentures. See "Description of the
Subordinated Debentures--Enforcement of Certain Rights by Holders of Preferred
Securities" and "Description of the Guaranty" in the accompanying Prospectus.
The obligations of CL&P under the Guaranty are subordinate and junior in
right of payment to all general liabilities of CL&P and the obligations of
CL&P under the Series A Subordinated Debentures are subordinate and junior in
right of payment to all present and future Senior Indebtedness (as defined
herein) of CL&P, which aggregated approximately $2.1 billion at September 30,
1994. Under the Indenture (as defined herein), CL&P has the right to extend
the interest payment period from time to time for the Series A Subordinated
Debentures to a period not exceeding 60 consecutive months, and, as a
consequence, Dividends on the Series A Preferred Securities will be deferred
by CL&P Capital during any such extended interest payment period. In the event
CL&P exercises its right to extend the interest payment periods on the Series
A Subordinated Debentures, CL&P may not declare or pay dividends on, or
redeem, purchase or acquire, any shares of its capital stock during such
extension period. CL&P Capital and CL&P currently believe that the extension
of an interest payment period is unlikely. See "Description of the Preferred
Securities--Voting Rights" and "Description of the Subordinated Debentures--
Option to Extend Interest Payment Period" in the accompanying Prospectus.
The Series A Preferred Securities are subject to redemption at the option of
the General Partner in whole or in part, from time to time, on or after
January 31, 2000, at $25 per Series A Preferred Security plus accumulated and
unpaid Dividends to the date fixed for redemption (the "Redemption Price").
The Series A Preferred Securities shall be redeemed at the Redemption Price
from the proceeds of any redemption or payment at maturity of the Series A
Subordinated Debentures. See "Certain Terms of the Series A Preferred
Securities--Optional Redemption" and "--Mandatory Redemption" herein. In
addition, upon the occurrence of certain special events (i) the Series A
Preferred Securities will be subject to redemption and (ii) the Subordinated
Debentures may be distributed to holders of the Preferred Securities in
liquidation of CL&P Capital. See "Certain Terms of the Series A Preferred
Securities--Investment Company Act Event Redemption or Distribution" and "--
Tax Event Redemption or Distribution" herein.
In the event of the liquidation of CL&P Capital, holders of the Series A
Preferred Securities will be entitled to receive, for each Series A Preferred
Security, a liquidation preference of $25 plus accumulated and unpaid
Dividends to the date of payment unless, in connection with such liquidation,
the Series A Subordinated Debentures are distributed to the holders of Series
A Preferred Securities. See "Description of the Preferred Securities--
Liquidation Distribution" in the accompanying Prospectus.
The Series A Preferred Securities have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance, under the symbol
"CPMpra".
SEE "CERTAIN INVESTMENT CONSIDERATIONS" FOR CERTAIN INFORMATION RELEVANT TO
AN INVESTMENT IN THE SERIES A PREFERRED SECURITIES, INCLUDING THE PERIOD
DURING WHICH AND CIRCUMSTANCES UNDER WHICH PAYMENT OF DIVIDENDS ON THE SERIES
A PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO CL&P
OFFERING PRICE COMMISSIONS(1) CAPITAL(2)(3)
-------------- -------------- ----------------
<S> <C> <C> <C>
Per Series A Preferred
Security............... $25.00 (2) $25.00
Total................... $100,000,000 (2) $100,000,000
</TABLE>
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(1) CL&P Capital and CL&P have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities
Act of 1933, as amended. See "Underwriting."
(2) As the proceeds of the sale of the Series A Preferred Securities will be
loaned to CL&P, under the Underwriting Agreement CL&P has agreed to pay to
the Underwriters $.7875 per Series A Preferred Security (or $3,150,000 in
the aggregate). See "Underwriting."
(3) Expenses of the offering, excluding underwriting commissions, which are
payable by CL&P are estimated to be $325,000.
--------------
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 delivery of the Series A Preferred Securities will be made only
in book-entry form through the facilities of The Depository Trust Company on
or about January 23, 1995.
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* An application has been filed by Goldman, Sachs & Co. with the United
States Patent and Trademark Office for the registration of the MIPS
servicemark.
GOLDMAN, SACHS & CO. SALOMON BROTHERS INC
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
--------------
The date of this Prospectus Supplement is January 13, 1995.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES A
PREFERRED SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK
EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
The following information supplements and should be read in conjunction with
the information contained in the accompanying Prospectus. Each of the
capitalized terms used in this Prospectus Supplement has the meaning set forth
in this Prospectus Supplement or in the accompanying Prospectus.
CERTAIN INVESTMENT CONSIDERATIONS
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:
SUBORDINATE OBLIGATIONS OF CL&P UNDER THE GUARANTY AND THE SERIES A
SUBORDINATED DEBENTURES
CL&P's obligations under the Guaranty are subordinate and junior in right of
payment to all general liabilities of CL&P, and its obligations under the
Series A Subordinated Debentures are subordinate and junior in right of
payment to all present and future Senior Indebtedness (as defined in the
accompanying Prospectus) of CL&P. At September 30, 1994, the Senior
Indebtedness of CL&P aggregated approximately $2.1 billion. There are no terms
in the Series A Preferred Securities, the Series A Subordinated Debentures or
the Guaranty that limit CL&P's ability to incur additional indebtedness,
including indebtedness that ranks senior to the Series A Subordinated
Debentures and the Guaranty.
The Guaranty guarantees payment to the holders of the Series A Preferred
Securities of accumulated and unpaid monthly Dividends, amounts payable on
redemption, and amounts payable on liquidation of CL&P Capital, in each case,
however, only to the extent that CL&P Capital has funds on hand legally
available therefor. If CL&P were to default in its obligation to pay interest
or amounts payable on redemption or maturity of the Series A Subordinated
Debentures, CL&P Capital would lack legally available funds for the payment of
Dividends or amounts payable on redemption or maturity of the Series A
Preferred Securities, and in such event holders of the Series A Preferred
Securities would not be able to rely upon the Guaranty for payment of such
amounts. Instead, holders of the Series A Preferred Securities would be
required to seek enforcement of CL&P Capital's rights against CL&P pursuant to
the terms of the Indenture (as defined below). See "Description of the
Guaranty--Status of the Guaranty" and "Description of the Subordinated
Debentures--Subordination" in the accompanying Prospectus.
OPTION TO EXTEND INTEREST PAYMENT PERIOD FOR SERIES A SUBORDINATED DEBENTURES;
RESULTING DEFERRAL OF DIVIDENDS ON THE SERIES A PREFERRED SECURITIES; TAX
CONSEQUENCES
Under the Indenture, CL&P has the right from time to time, so long as no
Event of Default has occurred and is continuing, to extend the interest
payment period for the Series A Subordinated Debentures for up to 60
consecutive months. In the event that CL&P exercises such right, Dividends on
the Series A Preferred Securities would be deferred by CL&P Capital for the
length of the extended interest payment period. Dividends in arrears on the
Series A Preferred Securities after the monthly payment date therefor as a
result of any such deferral will, to the extent permitted by law, accumulate
additional distributions thereon at the distribution rate per annum for the
Series A Preferred Securities. The term "Dividends" as used herein includes,
as applicable, monthly distributions and distributions on monthly
distributions in arrears. In the event CL&P exercises its right to extend the
interest payment period on the Series A Subordinated Debentures, CL&P may not
declare or pay dividends on, or redeem, purchase or acquire, any shares of its
capital stock during such extension period. CL&P Capital and CL&P currently
believe that the extension of
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an interest payment period is unlikely. See "Description of Preferred
Securities--Voting Rights" and "Description of the Subordinated Debentures--
Option to Extend Interest Payment Period" in the accompanying Prospectus.
Should an extended interest payment period, and the resulting deferral of
Dividends on the Series A Preferred Securities, occur, CL&P Capital will
continue to accrue income for United States federal income tax purposes, which
will be allocated, but not distributed, to holders of the Series A Preferred
Securities. As a result, a holder 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 CL&P Capital
if the holder disposes of the Series A Preferred Securities prior to the
record date for payment of Dividends. See "United States Taxation--Potential
Extension of Interest Payment Period."
CL&P CAPITAL
CL&P Capital is a limited partnership formed under the Delaware Revised
Uniform Limited Partnership Act (the "Partnership Act") on November 16, 1994.
All of its general partner interests are owned by CL&P, which, as General
Partner, shall maintain a capital account balance equal to at least 3% of the
total positive capital account balances for CL&P Capital. In order to satisfy
this requirement, it is expected that the General Partner will make an
additional capital contribution to CL&P Capital in connection with the
issuance of each series of the Preferred Securities. As a limited partnership,
all of the business and affairs of CL&P Capital will be managed by the General
Partner. CL&P Capital has been created solely for the purpose of issuing the
Preferred Securities and lending the proceeds thereof, plus the General
Partner's capital contributions, to CL&P. Such loans will be evidenced by the
Junior Subordinated Deferrable Interest Debentures (the "Subordinated
Debentures") issued by CL&P under an Indenture dated as of January 1, 1995
(the "Indenture") between CL&P and Bankers Trust Company, as trustee (the
"Trustee"), including the Series A Subordinated Debentures to be issued
concurrently with the issuance of the Series A Preferred Securities. The
Subordinated Debentures will be the only assets of CL&P Capital and the only
revenues of CL&P Capital will be the interest on the Subordinated Debentures.
Assuming a holder of Preferred Securities acts in conformity with the
Amended and Restated Limited Partnership Agreement of CL&P Capital (the
"Limited Partnership Agreement"), such holder (other than the General Partner)
will not be liable for the debts, obligations and liabilities of CL&P Capital,
whether arising in contract, tort or otherwise, solely by reason of being a
limited partner of CL&P Capital, subject to the obligation of a limited
partner to repay any funds erroneously distributed to it.
The place of business of CL&P Capital is the principal executive offices of
the General Partner at Selden Street, Berlin, Connecticut 06037 and its
telephone number is (203) 665-5000.
CL&P
CL&P is a wholly-owned subsidiary of Northeast Utilities ("NU"). The four
wholly-owned operating subsidiaries of NU--CL&P, Public Service Company of New
Hampshire, Western Massachusetts Electric Company ("WMECO") and Holyoke Water
Power Company--furnish electric service in portions of Connecticut and New
Hampshire and in western Massachusetts. CL&P is a Connecticut corporation,
organized in 1907, and is qualified as a foreign corporation in Massachusetts
and New Hampshire. CL&P is the largest electric utility in Connecticut and is
engaged principally in the production, purchase, transmission, distribution
and sale of electricity at retail for residential, commercial, industrial and
municipal purposes within Connecticut.
The principal executive offices of CL&P are located at Selden Street,
Berlin, Connecticut 06037 (telephone 203-665-5000).
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RECENT DEVELOPMENTS--NUCLEAR OPERATIONS
Overall capacity factors for the five nuclear power plants operated by
subsidiaries of NU in 1994 fell to 67.5%, compared to 80.8% in 1993. The lower
1994 composite capacity factor was primarily the result of extended refueling
and maintenance outages at Millstone Unit 1, Millstone Unit 2 and Seabrook
nuclear power plants.
On October 1, 1994, Millstone 2 began a planned refueling and maintenance
outage that was originally scheduled for 63 days. Millstone 2 is 100% owned by
CL&P and WMECO. The outage has encountered several unexpected difficulties
which have lengthened the duration of the outage. The magnitude of the
schedule impact is currently under review, but the outage is presently
expected to last through at least early March. CL&P expects that replacement
power costs in the range of $5 million per month will be attributable to the
extension of the outage. Recovery of these costs will be subject to scrutiny
by the Connecticut Department of Public Utility Control.
The Nuclear Regulatory Commission's (the "NRC") latest Systematic Assessment
of Licensee Performance report for the Millstone Station, issued August 26,
1994, noted significant weaknesses in Millstone 2's operations and
maintenance, in particular, but also observed that the unit had been operated
in a safe manner. In a recent public statement, a senior NRC official
expressed disappointment with the continued weaknesses in Millstone 2's
performance.
Management believes that the primary cause of the NRC's disappointment with
Millstone 2's performance is that, despite its recognition that there has been
significant management attention and action over a period of years, the NRC
does not believe it has seen enough objective evidence of improvement in
reducing procedural non-compliances and other human errors.
Management has acknowledged the basis for the NRC's concern with Millstone 2
and has been devoting increased attention to resolving these issues. If the
NRC continues to have these or heightened concerns, CL&P and WMECO could be
required to expend additional monies to remedy such problems, in amounts not
now determinable but which could be significant.
USE OF PROCEEDS
The proceeds to be received by CL&P Capital from the sale of the Series A
Preferred Securities offered hereby will be loaned to CL&P and will be applied
by CL&P to the redemption, reacquisition or payment at maturity of all or a
portion of CL&P's 1989 Series, 9% Preferred Stock, par value $25 per share, of
which 3,000,000 shares are issued and outstanding as of the date hereof, and
1989 Dutch Auction Rate Transferable Securities, par value $25 per share, of
which 2,000,000 shares are issued and outstanding as of the date hereof.
CERTAIN TERMS OF THE SERIES A PREFERRED SECURITIES
GENERAL
All of the general partner interests in CL&P Capital are owned by CL&P. The
Limited Partnership Agreement authorizes the General Partner to cause CL&P
Capital to issue one or more series of Preferred Securities. The Series A
Preferred Securities are the first series so issued. All series of the
Preferred Securities will rank equally, and will have a preference over the
general partner interests in CL&P Capital, with respect to Dividends and
amounts payable on redemption or liquidation. The Limited Partnership
Agreement does not permit the incurrence of any indebtedness by CL&P Capital.
The summary of certain material terms and provisions of the Series A Preferred
Securities set forth below does not purport to be complete and is subject to,
and qualified in its entirety by reference to, the Limited Partnership
Agreement which has been filed as an exhibit to the Registration Statement of
which this Prospectus Supplement and the accompanying Prospectus form a part,
and the Partnership Act. The following information should be read in
conjunction with the statements under "Description of the Preferred
Securities" in the accompanying Prospectus.
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<PAGE>
DIVIDENDS
The Series A Preferred Securities will be entitled to Dividends out of funds
on hand legally available therefor held by CL&P Capital at the annual rate of
9.30% of the stated liquidation preference of $25 per Series A Preferred
Security, payable monthly in arrears on the last day of each calendar month.
The General Partner may cause CL&P Capital to make distributions on the
general partner interests of CL&P Capital only after payment in full of all
Dividends accrued on the Series A Preferred Securities and any other
outstanding Preferred Securities of CL&P Capital. The first Dividend payment
date for the Series A Preferred Securities will be January 31, 1995, and such
Dividends will be cumulative from the date of original issue. The amount of
Dividends 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 monthly
distribution period, Dividends will be computed on the basis of the actual
number of days elapsed in such period. Accordingly, assuming settlement on
January 23, 1995, Dividends payable on the first Dividend payment date for the
Series A Preferred Securities will be an amount equal to $0.051667 per Series
A Preferred Security.
The Series A Preferred Securities will rank pari passu with all other series
of Preferred Securities which may be issued by CL&P Capital and senior to all
general partner interests. No other series of Preferred Securities have been
issued by CL&P Capital as of the date hereof.
Under the Indenture, CL&P has the right from time to time, so long as no
Event of Default has occurred and is continuing, to extend the interest
payment period for the Series A Subordinated Debentures for up to 60
consecutive months (an "Extension Period"); provided that no Extension Period
shall extend beyond the stated maturity, or acceleration thereof, or any date
of redemption, of the Series A Subordinated Debentures. If such right is
exercised, Dividends on the Series A Preferred Securities would be deferred
(but would continue to accumulate in arrears with additional Dividends
accumulating thereon after the monthly payment date therefor) by CL&P Capital
during any Extension Period. In the event that CL&P exercises its right to
extend the interest payment period on the Series A Subordinated Debentures,
CL&P may not declare or pay dividends on, or redeem, purchase, acquire, or
make a liquidation payment with respect to, any of its capital stock during
the Extension Period. CL&P Capital and CL&P currently believe that the
extension of an interest payment period is unlikely. Prior to the termination
of any Extension Period, CL&P may shorten or further extend the interest
payment period, provided that such Extension Period, together with all such
previous and further extensions thereof, may not exceed 60 consecutive months.
Upon the termination of any Extension Period and the payment of all amounts
then due on the Series A Subordinated Debentures, CL&P may elect to extend the
interest payment period again, subject to the above requirements. See
"Description of the Subordinated Debentures--Option to Extend Interest Payment
Period" in the accompanying Prospectus and "United States Taxation--Potential
Extension of Interest Payment Period" herein. Payments received by CL&P
Capital with respect to the Series A Subordinated Debentures and other series
of CL&P's Subordinated Debentures will not be segregated by CL&P Capital for
the benefit of the holders of the Series A Preferred Securities or holders of
any other particular series of Preferred Securities.
It is anticipated that CL&P Capital's earnings available for distribution to
the holders of the Series A Preferred Securities will be limited to payments
under the Series A Subordinated Debentures in which CL&P Capital will invest
the proceeds from the issuance and sale of the Series A Preferred Securities.
See "Certain Terms of the Series A Subordinated Debentures" in the
accompanying Prospectus. If CL&P does not make interest payments on the Series
A Subordinated Debentures, it is expected that CL&P Capital will not pay
Dividends on the Series A Preferred Securities. Under the Limited Partnership
Agreement, if and to the extent CL&P does make interest payments on the Series
A Subordinated Debentures, CL&P Capital is obligated, to the extent funds are
legally available therefor, to pay Dividends on the Series A Preferred
Securities. The payment of Dividends is guaranteed by CL&P as, and to the
extent, set forth under "Description of the Guaranty" in the accompanying
Prospectus.
Dividends on the Series A Preferred Securities will be payable to the
holders thereof as they appear on the books and records of CL&P Capital on the
relevant record dates, which, as long as the Series A Preferred Securities
remain in book-entry-only form, will be one Business Day (as defined below)
prior to the relevant
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payment dates. Subject to any applicable laws and regulations and the
provisions of the Limited Partnership Agreement, each such payment will be
made as described under "Book-Entry-Only Issuance--The Depositary Trust
Company" in the accompanying Prospectus. In the event the Series A Preferred
Securities shall not continue to remain in book-entry-only form, the General
Partner shall have the right to change such record dates. In the event that
any date on which Dividends are payable on the Series A Preferred Securities
is not a Business Day, then payment of the Dividends 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 is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such date. A "Business Day" shall mean any day
other than a day on which banking institutions in The City of New York, the
State of Connecticut or the State of Delaware are authorized or required by
law to close.
OPTIONAL REDEMPTION
The Series A Preferred Securities are subject to redemption, at the option
of the General Partner, in whole or in part, from time to time, on or after
January 31, 2000, upon not less than 30 nor more than 60 days' notice, at $25
per Series A Preferred Security, plus accumulated and unpaid Dividends, if
any, to the date fixed for redemption (the "Redemption Price"). Any such
notice may state that it is subject to the receipt by CL&P Capital of
redemption monies on or before such date fixed for redemption, which notice
shall be of no effect unless such monies are so received prior to such date.
See "Description of the Preferred Securities--Redemption Provisions" in the
accompanying Prospectus. The Series A Preferred Securities will also be
subject to redemption at the Redemption Price in certain circumstances
described under "--Investment Company Act Event Redemption or Distribution"
and "--Tax Event Redemption or Distribution."
MANDATORY REDEMPTION
If at any time CL&P redeems the Series A Subordinated Debentures or pays the
Series A Subordinated Debentures at maturity as described under "Description
of the Subordinated Debentures" in the accompanying Prospectus, the Series A
Preferred Securities will be subject to mandatory redemption at the Redemption
Price.
The Series A Preferred Securities will not be entitled to any sinking fund.
INVESTMENT COMPANY ACT EVENT REDEMPTION OR DISTRIBUTION
If an Investment Company Act Event (as defined below) shall occur and be
continuing, the General Partner will be required to (i) cause CL&P Capital to
redeem in whole the Series A Preferred Securities at the Redemption Price
within 90 days following the occurrence of such Investment Company Act Event,
or (ii) dissolve CL&P Capital and cause CL&P Capital to distribute the Series
A Debentures to holders of Series A Preferred Securities in liquidation of
CL&P Capital within 90 days following the occurrence of such Investment
Company Act Event; provided, however, that in the case of clause (ii) above
CL&P Capital shall have received an opinion of counsel (which may be regular
tax counsel to CL&P Capital or an affiliate, but not an employee thereof) to
the effect that the holders of Series A Preferred Securities will not
recognize any gain or loss for United States federal income tax purposes as a
result of such distribution. See "United States Taxation--Receipt of Series A
Subordinated Debentures Upon Liquidation of CL&P Capital."
"Investment Company Act Event" means the occurrence of a change in law or
regulation or a change in official interpretation of law or regulation by any
legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law") to the effect that CL&P Capital is or will be
considered an "investment company" which is required to be registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), which Change
in 1940 Act Law becomes effective on or after the date of issuance of the
Series A Preferred Securities; provided, that no Investment Company Act Event
shall be deemed to have occurred if CL&P Capital has, within 45 days after
such Change in 1940 Act Law, received an opinion
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of counsel (which may be regular counsel to CL&P Capital or an affiliate but
not an employee thereof) experienced in such matters, to the effect that CL&P
Capital and/or CL&P has taken reasonable measures, in its discretion, to avoid
such Change in 1940 Act Law so that, notwithstanding such Change in 1940 Act
Law, CL&P Capital is not required to be registered as an "investment company"
within the meaning of the 1940 Act.
TAX EVENT REDEMPTION OR DISTRIBUTION
If a Tax Event (as defined below) shall occur and be continuing, the General
Partner may (i) cause CL&P Capital to redeem the Series A Preferred Securities
at the Redemption Price, within 90 days following the occurrence of such Tax
Event, or (ii) dissolve CL&P Capital and cause CL&P Capital to distribute the
Series A Debentures to holders of Series A Preferred Securities in liquidation
of their interests in CL&P Capital within 90 days following the occurrence of
such Tax Event; provided, however, that in the case of clause (ii) above CL&P
Capital shall have received an opinion of counsel (which may be regular tax
counsel to CL&P Capital or an affiliate, but not an employee thereof) to the
effect that the holders of Series A Preferred Securities will not recognize
any gain or loss for United States federal income tax purposes as a result of
such distribution. See "United States Taxation--Receipt of Series A
Subordinated Debentures Upon Liquidation of CL&P Capital." If the General
Partner does not elect to cause a redemption as permitted by clause (i) above
or a distribution as permitted by clause (ii) above, then the Series A
Preferred Securities will remain outstanding and Additional Interest (as
defined in the accompanying Prospectus) will be payable on the Series A
Subordinated Debentures. See "Description of the Subordinated Debentures--
Additional Interest" in the accompanying Prospectus.
"Tax Event" means that CL&P Capital shall have received an opinion of
counsel (which may be regular tax counsel to CL&P Capital or an affiliate but
not an employee thereof) experienced in such matters 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 affecting
taxation, 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 Series A Preferred
Securities, there is more than an insubstantial risk that (i) CL&P Capital is
subject to United States federal income tax with respect to interest received
on the Series A Subordinated Debentures, (ii) interest payable by CL&P on the
Series A Subordinated Debentures will not be deductible for United States
federal income tax purposes or the Partnership will otherwise not be taxed as
a partnership or (iii) CL&P Capital is subject to more than a de minimis
amount of other taxes, duties or other governmental charges.
LIQUIDATION DISTRIBUTION
In the event of any voluntary or involuntary dissolution and winding up of
CL&P Capital, other than in connection with the distribution of the
Subordinated Debentures of any series upon the occurrence of an Investment
Company Act Event or a Tax Event (see "--Investment Company Act Redemption or
Distribution" and "--Tax Event Redemption or Distribution"), the holders of
the Preferred Securities at the time outstanding will be entitled to receive
out of the assets of CL&P Capital after satisfaction of liabilities to
creditors as required by Delaware law and before any distribution of assets is
made to holders of its general partner interests, the aggregate of the stated
liquidation preference, which shall be $25 per Preferred Security plus all
accumulated and unpaid Dividends to the date of payment (the "Liquidation
Distribution"). If, upon such dissolution and winding up, CL&P Capital has
insufficient assets available to pay the Liquidation Distribution in full,
then the amounts payable on each series of Preferred Securities shall be paid
on a pro rata basis, in proportion to the full Liquidation Distribution to
which each series of Preferred Securities would be entitled.
S-7
<PAGE>
CERTAIN TERMS OF THE SERIES A SUBORDINATED DEBENTURES
The following information should be read in conjunction with the statements
under "Description of the Subordinated Debentures" in the accompanying
Prospectus.
In exchange for, and to evidence the loan of, the proceeds of the sale of
the Series A Preferred Securities, plus the General Partner's related capital
contribution, CL&P will issue the Series A Subordinated Debentures to CL&P
Capital in the principal amount of $103,100,000 and with interest payment and
redemption provisions which correspond to the Dividend and redemption
provisions of the Series A Preferred Securities. The Series A Subordinated
Debentures will mature on January 31, 2044.
The Series A Subordinated Debentures will rank junior and be subordinate in
right of payment to all Senior Indebtedness of CL&P. See "Description of the
Subordinated Debentures--Subordination" in the accompanying Prospectus.
The Series A Debentures are subject to redemption prior to maturity at the
option of CL&P at the price of 100% of the principal amount thereof plus
accrued interest to the redemption date in whole or in part (i) from time to
time on or after January 31, 2000, (ii) from time to time upon or after the
dissolution of CL&P Capital, or (iii) from time to time if CL&P shall be
required to pay Additional Interest thereon. See "Description of the
Subordinated Debentures--Additional Interest" in the accompanying Prospectus.
The Series A Debentures are subject to mandatory redemption prior to
maturity at the price of 100% of the principal amount thereof plus accrued
interest to the redemption date in whole or in part upon a redemption of the
Series A Preferred Securities, but if in part, in an aggregate principal
amount equal to the aggregate stated liquidation preference of the Series A
Preferred Securities redeemed.
UNITED STATES TAXATION
INTRODUCTION
Set forth following this Introduction is a summary of certain United States
federal income tax considerations that may be relevant to prospective
purchasers of Series A Preferred Securities and represents the opinion of Day,
Berry & Howard, counsel to CL&P and CL&P Capital, insofar as it relates to
matters of law and legal conclusions. The summary is based upon current
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
existing and proposed regulations thereunder and current administrative
rulings and court decisions, all of which are subject to change. Subsequent
changes may cause tax consequences to vary substantially from the consequences
described below.
No attempt has been made in the following summary to comment on all United
States federal income tax matters affecting purchasers of Series A Preferred
Securities. Moreover, the summary focuses on holders of Series A Preferred
Securities who are individual citizens or residents of the United States that
hold Series A Preferred Securities as a capital asset and has only limited
application to corporations, estates, trusts or non-resident aliens.
Accordingly, each prospective purchaser of Series A Preferred Securities
should consult, and should depend on, his or her own tax adviser in analyzing
the federal, state, local and foreign tax consequences of the purchase,
ownership or disposition of Series A Preferred Securities.
In April 1994, the IRS issued certain notices generally addressing the
characteristics which distinguish debt from equity for various purposes under
United States federal income tax laws. In these notices, the IRS indicated
that transactions involving securities that, like the Series A Preferred
Securities, have both debt and equity characteristics would be reviewed with
scrutiny to determine how they would be treated for tax purposes. In
particular, the IRS announced that it will carefully scrutinize any
transaction designed to produce interest deductions with respect to a related
stock issuance. CL&P believes that interest on the Series A Subordinated
Debentures will be deductible by CL&P under the tests referred to in these
notices. If, however, there is a change in applicable tax laws or regulations,
or the IRS should subsequently issue a
S-8
<PAGE>
further official administrative pronouncement, or should there be a judicial
decision, pursuant to which there is more than an insubstantial risk that
interest on the Series A Subordinated Debentures would not be deductible (or
any other Tax Event shall occur and be continuing), the Series A Preferred
Securities would be subject to redemption at the option of CL&P Capital, as
described under "Certain Terms of the Series A Preferred Securities--Tax Event
Redemption or Distribution."
INCOME FROM SERIES A PREFERRED SECURITIES
In the opinion of Day, Berry & Howard, CL&P Capital will be treated as a
partnership for United States federal income tax purposes. Accordingly, each
holder of Series A Preferred Securities will be required to include in gross
income such holder's distributive share of the net income of CL&P Capital.
Such income will not exceed distributions received on such Series A Preferred
Securities, except in limited circumstances as described below under
"Potential Extension of Interest Payment Period." No portion of such income
will be eligible for the dividends received deduction.
DISPOSITION OF SERIES A PREFERRED SECURITIES
Gain or loss will be recognized on a sale, exchange or other disposition,
including a redemption for cash, of Series A Preferred Securities in an amount
equal to the difference between the amount realized and the holder's tax basis
in such Series A Preferred Securities. Gain or loss recognized by a holder of
the Series A Preferred Security on the sale or exchange of a Series A
Preferred Security held for more than one year will generally be taxable as
long-term capital gain or loss.
RECEIPT OF SERIES A SUBORDINATED DEBENTURES UPON LIQUIDATION OF CL&P CAPITAL
Under certain circumstances, as described under the captions "Certain Terms
of the Series A Preferred Securities--Investment Company Act Event Redemption
or Distribution" and "--Tax Event Redemption or Distribution," Series A
Subordinated Debentures may be distributed to the holders of the Series A
Preferred Securities in liquidation of CL&P Capital. Under current United
States federal income tax law, such a distribution would be treated as a non-
taxable exchange to each holder of Series A Preferred Securities and would
result in the holder of Series A Preferred Securities receiving an aggregate
tax basis in the Series A Subordinated Debentures equal to such holder's
aggregate tax basis in its Series A Preferred Securities. A holder's holding
period in the Series A Subordinated Debentures so received in liquidation of
CL&P Capital would include the period for which the Series A Preferred
Securities were held by such holder. As a condition to the dissolution of CL&P
Capital and such a distribution, CL&P Capital will be required to obtain an
opinion of counsel (which may be regular tax counsel to CL&P Capital or an
affiliate, but not an employee thereof) to the effect that the holders of the
Series A Preferred Securities will not recognize any gain or loss for United
States federal income tax purposes as a result of such dissolution and
distribution of Series A Subordinated Debentures.
CL&P CAPITAL INFORMATION RETURNS AND AUDIT PROCEDURES
The General Partner will furnish each holder of a Series A Preferred
Security with a Schedule K-1 each year setting forth such holder's allocable
share of income for the prior calendar year. The General Partner is required
to furnish such schedules as soon as practicable following the end of the
year, but in any event prior to March 31.
Any person who holds Series A Preferred Securities as a nominee for another
person is required to furnish to CL&P Capital (a) the name, address and
taxpayer identification number of the beneficial owner and the nominee; (b)
information as to whether the beneficial owners is (i) a person that is not a
United States person, (ii) a foreign government, an international organization
or any wholly owned agency or instrumentality of either of the foregoing, or
(iii) a tax-exempt entity; (c) the amount and description of Series A
Preferred Securities held, acquired or transferred for the beneficial owner;
and (d) certain information including the dates of acquisitions and transfers,
means of acquisitions and transfers, and acquisition cost
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<PAGE>
for purchases, as well as the amount of net proceeds from sales. Brokers and
financial institutions are required to furnish additional information,
including whether they are United States persons, and certain information on
Series A Preferred Securities they acquire, hold or transfer for their own
accounts. A penalty of $50 per failure (up to a maximum of $100,000 per
calendar year) is imposed by the Code for failure to report such information
to CL&P Capital. The nominee is required to supply the beneficial owners of
the Series A Preferred Securities with the information furnished to CL&P
Capital.
POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD
Under the terms of the Indenture, CL&P will be permitted to extend the
interest payment period for the Series A Subordinated Debentures for up to 60
consecutive months (an "Extension Period"). Because the interest payment
period is extendable by CL&P, the interest on the Series A Subordinated
Debentures will be treated as "original issue discount" pursuant to Code
sections 1271 et seq. and the Treasury Regulations promulgated thereunder.
CL&P Capital will therefore be required, during any Extension Period, to
include in gross income the interest on the Series A Subordinated Debentures
as it accrues in accordance with a constant yield method (notwithstanding that
no cash payments will be made during an Extension Period). Likewise,
regardless of its regular method of accounting for tax purposes, each holder
of Series A Subordinated Debentures (after a dissolution of CL&P Capital) will
be required, during any Extension Period, to include in income the interest on
the Series A Subordinated Debentures as it accrues in accordance with such
method.
Accrued income of CL&P Capital will be allocated, but not distributed, to
holders of record on the Business Day preceding the last day of each calendar
month. As a result, holders of Series A Preferred Securities during an
Extension Period will be required to include interest in gross income in
advance of the receipt of cash, and any such persons who dispose of Series A
Preferred Securities prior to the record date for the payment of Dividends
following such Extension Period will include interest in gross income but will
not receive any cash related thereto. A holder's tax basis in a Series A
Preferred Security will be increased by the amount of any interest that is
included in income without a receipt of cash, and will be decreased when and
if such cash is subsequently received from CL&P Capital. The subsequent
receipt of such cash will not be included in gross income.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
holder or beneficial owner who or which is (i) a nonresident alien individual,
(ii) a foreign corporation or partnership or (iii) an estate or trust that has
a foreign fiduciary, in each case not subject to United States federal income
tax on a net income basis in respect of a Series A Preferred Security.
Under present United States federal income tax law, subject to the
discussion below with respect to backup withholding:
(i) payments in respect of a Series A Preferred Security by CL&P Capital
or any of its paying agents to a United States Alien Holder will not be
subject to United States federal withholding tax provided that (a) the
beneficial owner of the Series A Preferred Security does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of CL&P entitled to vote, (b) the beneficial owner of the
Series A Preferred Security is not a controlled foreign corporation that is
related to CL&P through stock ownership, and (c) the beneficial owner
provides the correct certification of United States Alien Holder status,
which may generally be satisfied by providing an IRS Form W-8 certifying
that the beneficial owner is a United States Alien Holder and providing the
name and address of the beneficial owner; and
(ii) a United States Alien Holder of a Series A Preferred Security will
generally not be subject to United States federal income or withholding tax
on any gain realized on the sale or exchange of a Series A Preferred
Security. Under certain conditions, a United States Alien Holder may be
subject to United States federal income tax on gain or income received with
respect to the sale or exchange of a Series A
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<PAGE>
Preferred Security. Such income taxation may occur, for example, if the
United States Alien Holder (a) is engaged in a trade or business in the
United States and gain or income is effectively connected with the conduct
of that trade or business or (b) is an individual present in the United
States for 183 days or more during the taxable year, and certain conditions
are met. Such taxation is beyond the scope of this summary and should be
discussed with a tax adviser. If income is effectively connected with the
conduct of a trade or business in the United States by a United States
Alien Holder, withholding of United States federal income tax may be
required unless the United States Alien Holder files with CL&P Capital or
its paying agent an IRS form to the effect that the income is so
effectively connected.
If the Series A Subordinated Debentures were not treated as debt, or if CL&P
Capital were not treated as a partnership, for United States federal income
tax purposes, United States Alien Holders could experience tax consequences
different from those described above, including consequences related to
withholding on Dividends and United States estate tax consequences.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to payments to
non-corporate United States holders of the proceeds of the sale of Series A
Preferred Securities within the United States and "backup withholding" at a
rate of 31% will apply to such payments if the seller fails to provide a
correct taxpayer identification number.
In general, information reporting requirements will also apply to payments
of principal and interest on a Series A Subordinated Debenture distributed to
a holder of Series A Preferred Securities, and the proceeds of the sale of a
Series A Subordinated Debenture prior to maturity within the United States,
with respect to non-corporate United States holders, and "backup withholding"
at a rate of 31% will apply to such payments if the United States holder fails
to provide an accurate taxpayer identification number or to report all
interest and dividends required to be shown on its United States federal
income tax returns.
Information reporting and backup withholding will not apply to payments of
principal and interest made by CL&P or a paying agent to a United States Alien
Holder on a Series A Subordinated Debenture distributed to a holder of Series
A Preferred Securities if the certification described in clause (i)(c) under
"United States Alien Holders" above is received, provided that the payor does
not have actual knowledge that the holder is a United States holder.
Payments of the proceeds from the sale by a United States Alien Holder of
Series A Preferred Securities or Series A Subordinated Debentures distributed
to such holder made to or through a foreign office of a broker generally will
not be subject to information reporting or backup withholding, except that, if
the broker is a United States person, a controlled foreign corporation for
United States tax purposes or a foreign person 50% or more of whose gross
income is effectively connected with a United States trade or business for a
specified three-year period, information reporting may apply to such payments.
Payments of the proceeds from the sale of Series A Preferred Securities or
Series A Subordinated Debentures distributed to a holder 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 holder or beneficial
owner certifies as to its non-United States status or otherwise establishes an
exemption from information reporting and backup withholding.
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<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement among CL&P
Capital, CL&P and the underwriters named below (the "Underwriters"), for whom
Goldman, Sachs & Co., Salomon Brothers Inc, Merrill Lynch & Co., Morgan
Stanley & Co. Incorporated, Prudential Securities Incorporated and Smith
Barney Inc. are acting as Representatives, CL&P Capital has agreed to sell to
each of the Underwriters and each of the Underwriters has severally agreed to
purchase from CL&P Capital the respective number of Series A Preferred
Securities set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF SERIES A
UNDERWRITER PREFERRED SECURITIES
----------- --------------------
<S> <C>
Goldman, Sachs & Co. ................................... 538,000
Salomon Brothers Inc ................................... 538,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated...... 538,000
Morgan Stanley & Co. Incorporated....................... 538,000
Prudential Securities Incorporated ..................... 538,000
Smith Barney Inc. ...................................... 538,000
Advest, Inc. ........................................... 56,000
J.C. Bradford & Co. .................................... 20,000
Crowell, Weedon & Co. .................................. 20,000
Dain Bosworth Incorporated.............................. 20,000
Dillon, Read & Co. Inc. ................................ 56,000
Donaldson, Lufkin & Jenrette Securities Corporation..... 56,000
A.G. Edwards & Sons, Inc. .............................. 56,000
Fahnestock & Co. Inc. .................................. 20,000
First Albany Corporation................................ 20,000
Furman Selz Incorporated................................ 20,000
Interstate/Johnson Lane Corporation..................... 20,000
Janney Montgomery Scott Inc. ........................... 20,000
Josephthal Lyon & Ross Incorporated..................... 20,000
Legg Mason Wood Walker Incorporated..................... 20,000
Lehman Brothers Inc. ................................... 56,000
McDonald & Company Securities, Inc. .................... 20,000
Morgan Keegan & Company, Inc. .......................... 20,000
Olde Discount Corporation............................... 20,000
PaineWebber Incorporated................................ 56,000
Piper Jaffray Inc. ..................................... 20,000
The Robinson-Humphrey Company, Inc. .................... 20,000
SBCI Swiss Bank Corporation Investment banking Inc. .... 56,000
Muriel Siebert & Co., Inc. ............................. 20,000
Tucker Anthony Incorporated............................. 20,000
U.S. Securities, Inc. .................................. 20,000
Wheat, First Securities, Inc. .......................... 20,000
---------
Total................................................. 4,000,000
=========
</TABLE>
Under the terms and conditions of 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 $.50 per Series A Preferred
Security. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $.25 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.
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<PAGE>
In view of the fact that the proceeds from the sale of the Series A
Preferred Securities will be loaned to CL&P, under the Underwriting Agreement,
CL&P has agreed to pay to the Underwriters $.7875 per Series A Preferred
Security for the accounts of the several Underwriters.
Prior to this offering, there has been no public market for the Series A
Preferred Securities. The Series A Preferred Securities have been approved for
listing on the New York Stock Exchange, subject to official notice of
issuance, under the symbol "CPMpra". In order to meet one of the requirements
for listing the Series A Preferred Securities on the New York Stock Exchange,
the Underwriters have undertaken to sell the Series A Preferred Securities to
a minimum of 400 beneficial holders. Trading of the Series A Preferred
Securities on the New York Stock Exchange is expected to commence within the
seven-day period after the initial delivery of the Series A Preferred
Securities. The Representatives have advised CL&P that they intend to make a
market in the Series A Preferred Securities prior to commencement of trading
on the New York Stock Exchange, but are not obligated to do so and may
discontinue any such market at any time without notice. If the Series A
Subordinated Debentures are distributed to the holders of the Series A
Preferred Securities as described above under "Certain Terms of the Series A
Preferred Securities--Investment Company Act Event Redemption or Distribution"
and "--Tax Event Redemption or Distribution," CL&P will use its best efforts
to have the Series A Subordinated Debentures listed on the New York Stock
Exchange or on such other exchange as the Series A Preferred Securities are
then listed.
The Underwriters do not intend to confirm sales to any discretionary account
unless the customer's prior written consent is obtained.
CL&P and CL&P Capital have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act of
1933, as amended.
CL&P and CL&P Capital have agreed, during the period beginning on the date
of the Underwriting Agreement and continuing to and including the earlier of
(i) the date, after the closing date, on which the distribution of the Series
A Preferred Securities ceases, as determined by Goldman, Sachs & Co., or (ii)
90 days after the closing date, not to offer, sell, contract to sell, or
otherwise dispose of any Series A Preferred Securities, any limited partner
interests of CL&P Capital, or any preferred stock or any other securities of
CL&P Capital or CL&P which are substantially similar to the Series A Preferred
Securities, including the related Guaranty, or any securities convertible into
or exchangeable for Series A Preferred Securities, limited partner interests,
preferred stock or other substantially similar securities of either CL&P
Capital or CL&P, without the prior written consent of Goldman, Sachs & Co.
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