Filed pursuant to Rule 424(b)(3)
File Nos. 33-53563 and 33-53563-01
SUBJECT TO COMPLETION, DATED MAY 6, 1996
PRELIMINARY PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED MAY 6, 1996
6,000,000 Preferred Securities
Duquesne Capital
% Cumulative Monthly Income Preferred Securities, Series A
(MIPSsm*)
(Liquidation preference $25 per security)
Guaranteed to the extent Duquesne Capital has funds as set forth
herein by
Duquesne Light Company
------------------
The % Cumulative Monthly Income Preferred Securities, Series A
(the "Series A MIPS") offered hereby are being issued by, and
represent limited partner interests in, Duquesne Capital L.P., a
Delaware special purpose limited partnership ("Duquesne
Capital"). Duquesne Capital was formed for the sole purpose of
issuing its limited partnership interests and lending the
proceeds thereof to Duquesne Light Company ("Duquesne Light"),
the sole General Partner of Duquesne Capital. The proceeds of
the Series A MIPS will be loaned to Duquesne Light in return for
__% Subordinated Deferrable Interest Debentures, Series A (the
"Series A Debentures").
Holders of the Series A MIPS will be entitled to receive,
to the extent of funds held by Duquesne Capital and legally
available therefor, periodic cash distributions ("dividends"), at
an annual rate of % of the liquidation preference of $25 per
security, accumulating from the date of original issuance and
payable monthly in arrears on the last day of each calendar month,
commencing May 31, 1996. The payment of dividends and payments on
liquidation or redemption with respect to the Series A MIPS, to
the extent of funds held by Duquesne Capital and legally available
therefor, will be guaranteed under a Payment and Guarantee Agreement
(the "Guarantee") of Duquesne Light to the extent described herein
and in the accompanying Prospectus. The Guarantee does not cover
payment of amounts in respect of the Series A MIPS to the extent
that Duquesne Capital does not have legally available funds for
the payment thereof and cash on hand sufficient to make such
payment. Duquesne Capital's earnings will be limited to payments
by Duquesne Light on the Series A Debentures and any other
Indenture Securities (as defined in the accompanying Prospectus).
If Duquesne Light fails to make interest payments on the Series A
Debentures, Duquesne Capital will have insufficient funds to pay
dividends on the Series A MIPS and the Guarantee will not cover
payment of such dividends. In such event, the holders of Series
A MIPS may enforce certain rights in respect of the Series A
Debentures. See "Description of the Guarantee" in the
accompanying Prospectus.
(Cover continued on next page)
------------------
SEE "CERTAIN INVESTMENT CONSIDERATIONS" FOR CERTAIN FACTORS WHICH
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE
SERIES A MIPS, INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND
UNDER WHICH DIVIDENDS ON THE SERIES A MIPS AND INTEREST ON THE
SERIES A DEBENTURES MAY BE DEFERRED AND THE RELATED UNITES STATES
FEDERAL INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
------------------
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.
------------------
Initial Public Underwriting Proceeds to
Offering Price (1) Commissions(2) Duquesne Capital (3)(4)
------------------ -------------- -----------------------
Per Series A
MIPS............ $25 (3) $
Total........... $150,000,000 (3) $
----------------------------
(1) Plus accrued dividends, if any, from the date of original
issuance.
(2) Duquesne Capital and Duquesne Light have agreed to
indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities
Act of 1933, as amended. See "Underwriting".
(3) In view of the fact that the proceeds of the sale of the
Series A MIPS will be loaned to Duquesne Light, Duquesne
Light has agreed, in the Underwriting Agreement, to pay to
the Underwriters as compensation for their services $
per security (or $ in the aggregate); provided that
such compensation will be $ per security sold to
certain institutions. Therefore, to the extent that
Series A MIPS are sold to such institutions, the actual
amount of Underwriters' compensation will be less than the
amount specified in the preceding sentence and the
Proceeds to Duquesne Capital will be greater than the
amount set forth in the table above. See "Underwriting".
(4) Expenses of the offering which are payable by Duquesne
Light are estimated to be $550,000.
------------------
The Series A MIPS 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 MIPS will be made only in book-entry form through the
facilities of The Depository Trust Company on or about May , 1996
against payment therefor in immediately available funds.
---------------------
* MIPS is a servicemark of Goldman, Sachs & Co.
GOLDMAN, SACHS & CO.
DEAN WITTER REYNOLDS INC.
LEGG MASON WOOD WALKER,
INCORPORATED
MERRILL LYNCH & CO.
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
WHEAT FIRST BUTCHER SINGER
------------------
The date of this Prospectus Supplement is , 1996
Information contained herein is subject to completion or
amendment. Neither this prospectus supplement nor the related
prospectus shall constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under
the securities laws of any such State.
<PAGE>
(Cover continued)
The Guarantee and the Series A Debentures will rank
subordinate in right of payment to all Senior Indebtedness (as
defined in the accompanying Prospectus) of Duquesne Light. As of
December 31, 1995, Duquesne Light had approximately $1.7 billion
of Senior Indebtedness outstanding.
The Series A MIPS are redeemable, at the option of Duquesne
Capital (with Duquesne Light's consent), in whole or in part,
from time to time, on or after May 31, 2001, at $25 per security
plus accumulated and unpaid dividends to the date fixed for
redemption (the "Redemption Price").
In addition, upon redemption or payment at maturity of the
Series A Debentures, the proceeds from such redemption or payment
will be applied to redeem Series A MIPS. Under certain
circumstances following the occurrence of a Special Event (as
defined in the accompanying Prospectus), Duquesne Light may cause
Duquesne Capital to redeem the Series A MIPS in whole at the
Redemption Price or Duquesne Light may cause Duquesne Capital to
distribute the Series A Debentures in exchange for the Series A
MIPS in whole. If Series A Debentures are distributed, Duquesne
Light will use its best efforts to have such Series A Debentures
listed on the same exchange on which the Series A MIPS are then
listed. See "Certain Terms of the Series A MIPS--Redemption or
Exchange" and "Certain Terms of the Series A Debentures".
In the event of the liquidation of Duquesne Capital, holders
of Series A MIPS will be entitled to receive for each security a
liquidation preference of $25 plus accumulated and unpaid
dividends to the date of payment, subject to certain limitations.
See "Description of the MIPS--Liquidation Distribution" in the
accompanying Prospectus.
Duquesne Light may defer interest payments on the Series A
Debentures for up to 60 months and, as a consequence, dividends
on the Series A MIPS would be deferred during any such interest
deferral period.
The Series A MIPS have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance.
------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-
ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE SECURITIES OFFERED HEREBY AT LEVELS ABOVE
THOSE 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.
<PAGE>
CERTAIN INVESTMENT CONSIDERATIONS
Prospective purchasers of the Series A MIPS should carefully
review the information contained in the Prospectus and elsewhere
in this Prospectus Supplement and should particularly consider
the following matters. Capitalized terms used in this Prospectus
Supplement shall have the meanings ascribed thereto in the
Prospectus unless otherwise defined in this Prospectus
Supplement.
SUBORDINATION OF DUQUESNE LIGHT'S OBLIGATIONS
The payment of dividends and payments on liquidation or
redemption with respect to the Series A MIPS, to the extent of
funds held by Duquesne Capital and legally available to make such
payments, will be guaranteed by Duquesne Light under the
Guarantee. The Guarantee does not cover payment of amounts in
respect of the Series A MIPS to the extent that Duquesne Capital
does not have legally available funds for the payment thereof and
cash on hand sufficient to make such payment.
Duquesne Light's obligations under the Guarantee and the
Series A Debentures will be subordinate in right of payment to
all Senior Indebtedness of Duquesne Light. As of December 31,
1995, Duquesne Light had approximately $1.7 billion of Senior
Indebtedness outstanding (exclusive of certain guarantees and
other contingent obligations, but inclusive of capitalized lease
obligations and current installments and short-term notes
payable). See "Description of the Guarantee--Status of the
Guarantee" and "Description of the Debentures and the
Indenture--Subordination" in the Prospectus. There are no
provisions in the Series A MIPS, the Guarantee, the Partnership
Agreement or the Indenture that limit Duquesne Light's ability to
incur additional indebtedness, including indebtedness that ranks
senior to the Guarantee and the Series A Debentures.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Duquesne Light has the right under the Indenture, from time to
time, to extend interest payment periods on the Series A
Debentures for up to 60 consecutive months, and, as a
consequence, monthly dividends on the Series A MIPS will be
deferred by Duquesne Capital (and will continue to accumulate but
without interest on any amounts so deferred) during any such
extended interest payment period. During any such extended
interest period, Duquesne Light may not declare or pay dividends
on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any shares of its capital stock. Prior to the
end of any such extended interest payment period of less than 60
consecutive months, Duquesne Light may further extend the
interest payment period; provided that such extended interest
payment period, together with all such further extensions
thereof, may not exceed a period of 60 consecutive months.
Following the termination of any extended interest payment
period, if Duquesne Light has paid all amounts then due, Duquesne
Light shall have the right to again extend interest payment
periods for up to 60 consecutive months, subject to the above
requirements. Duquesne Light has no current intention to extend
the interest payment period as described above. See "Description
of the Debentures and the Indenture--Option to Extend Interest
Payment Period" and "Description of the MIPS--Voting Rights" in
the accompanying Prospectus.
TAX CONSEQUENCES OF EXTENDED INTEREST PAYMENT PERIOD
Because Duquesne Light has the right to extend the interest
payment period on the Series A Debentures, the Series A
Debentures will be treated as issued with original issue discount
("OID") for Federal income tax purposes. Should an
extended interest payment period occur, Duquesne Capital will
continue to accrue income for Federal income tax purposes which
will be allocated but not distributed to record holders of Series
A MIPS. As a result, such a holder will include such income in
gross income for Federal income tax purposes in advance of the
receipt of cash, and will not receive the cash related to such
income if such a holder disposes of the Series A MIPS prior to
the record date for payment of dividends. The tax basis of the
Series A MIPS will be increased by the amount of any OID that is
included in a Series A MIPS holder's income without receipt of
cash, and will be decreased when and if such cash is subsequently
received by such Series A MIPS holder from Duquesne Capital. See
"United States Income Taxation--Potential Extension of Interest
Payment Period" in the accompanying Prospectus.
SPECIAL EVENT REDEMPTION OR EXCHANGE
Upon the occurrence and continuation of a Special Event (as
defined in the accompanying Prospectus, which term, as so
defined, relates to a change in law or regulation or official
interpretation thereof), Duquesne Light, as general partner of
Duquesne Capital (the "General Partner"), will elect to either
(i) cause Duquesne Capital to redeem the Series A MIPS in whole
(and not in part) or (ii) cause Duquesne Capital to distribute
the Series A Debentures in exchange for Series A MIPS. In the
case of a Special Event which is a Tax Event, the General Partner
may also elect to cause the Series A MIPS to remain outstanding.
See "Certain Terms of the Series A MIPS--Redemption or Exchange"
herein and "Description of the MIPS--Special Event Redemption or
Exchange" in the accompanying Prospectus.
Such an exchange will generally be treated as a non-taxable
exchange and will result in each Series A MIPS holder receiving
an aggregate basis in its Series A Debentures equal to such
holder's aggregate tax basis in its Series A MIPS. A Series A
MIPS holder's holding period in the Series A Debentures received
in such an exchange will include the period for which the Series
A MIPS were held by such holder, provided the Series A MIPS were
held as a capital asset.
If such an exchange occurs following a determination that, due
to a change in law, Duquesne Capital is subject to Federal income
tax with respect to interest received on the Series A Debentures,
such exchange will generally be taxable to the Series A MIPS
holder. Gain or loss will be recognized in an amount measured by
the difference between the Series A MIPS holder's basis in its
Series A MIPS and the value of the Series A Debentures received
in the exchange. In such case, the holding period of the Series
A MIPS holder for the Series A Debentures will not include the
period for which the Series A MIPS were held.
POSSIBLE TAX LAW CHANGES
On March 19, 1996, the Revenue Reconciliation Bill of 1996
(the "Bill"), the revenue portion of President Clinton's budget
proposal, was released. The Bill would, among other things,
generally deny interest deductions for interest on an instrument
issued by a corporation that has a maximum weighted average
maturity of more than 40 years. The Bill would also generally
treat as equity an instrument issued by a corporation that has a
maximum term of 20 years and that is not shown as indebtedness on
the separate balance sheet of the issuer or, where the instrument
is issued to a related party (other than a corporation), where
the holder or some other related party issues a related
instrument that is not shown as indebtedness on the issuer's
balance sheet. The above-described provisions were proposed to
be effective generally for instruments issued on or after
December 7, 1995. If either provision were to apply to the
Series A Debentures, Duquesne Light would be unable to deduct
interest on the Series A Debentures. However, on March 29, 1996,
the Chairmen of the Senate Finance and House Ways and Means
Committees issued a joint statement to the effect that it was
their intention that the effective date of the President's
legislative proposals, if adopted, will be no earlier than the
date of appropriate Congressional action. There can be no
assurance, however, that current or future legislative proposals
or final legislation will not affect the ability of Duquesne
Light to deduct interest on the Series A Debentures. Such a
change would constitute a Tax Event, which would permit Duquesne
Light to cause a redemption of the Series A MIPS or a distribution
of such Series A Debentures in liquidation of Duquesne Capital,
as described more fully under "Description of the MIPS--Special
Event Redemption or Exchange" in the accompanying Prospectus.
DUQUESNE LIGHT COMPANY
Duquesne Light was formed under the laws of Pennsylvania by
the consolidation and merger in 1912 of three constituent
companies. As part of a corporate reorganization, Duquesne Light
became a wholly-owned subsidiary of DQE, an energy services
holding company formed in 1989. Duquesne Light is engaged in the
production, transmission, distribution and sale of electric
energy. Duquesne Light provides electric service to customers in
Allegheny County, including the City of Pittsburgh, Pennsylvania
and Beaver County, Pennsylvania. This represents a service
territory of approximately 800 square miles.
DUQUESNE CAPITAL
Duquesne Capital is a limited partnership which was formed
under the Delaware Revised Uniform Limited Partnership Act, as
amended (the "Delaware Act"), on April 27, 1994. Duquesne
Capital was formed for the sole purpose of issuing its limited
partnership interests and lending the proceeds thereof to
Duquesne Light. Duquesne Light is the sole general partner of
Duquesne Capital and will manage the business and affairs of
Duquesne Capital. Holders of Series A MIPS and other Preferred
Securities of Duquesne Capital will be limited partners in
Duquesne Capital. Duquesne Light will make capital contributions
from time to time to the extent required so that the total
contributions made by Duquesne Light, as General Partner, shall
at all times be at least equal to 1% of the total contributions
made by all partners. Duquesne Capital will lend such amounts to
Duquesne Light from time to time in return for Indenture
Securities of Duquesne Light, including the Debentures. The
rights and obligations of Duquesne Light, as General Partner, and
the limited partners of Duquesne Capital will be governed by the
Delaware Act and by an Amended and Restated Agreement of Limited
Partnership of Duquesne Capital (the "Partnership Agreement")
substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus Supplement is a part.
USE OF PROCEEDS
The proceeds from the sale of the Series A MIPS will be lent
to Duquesne Light in return for Series A Debentures of Duquesne
Light. Duquesne Light intends to apply the proceeds of such loan
or loans to the payment or provision for payment at maturity, the
purchase, on the open market, in private transactions or
otherwise, or the redemption of outstanding securities of
Duquesne Light, including the payment of $50,000,000 in aggregate
principal amount of long-term debt maturing May 15, 1996, and for
general corporate purposes.
CERTAIN TERMS OF THE SERIES A MIPS
THE FOLLOWING SUMMARY OF CERTAIN TERMS OF THE SERIES A MIPS
SUPPLEMENTS THE DESCRIPTION OF THE MIPS SET FORTH IN THE
ACCOMPANYING PROSPECTUS UNDER THE HEADING "DESCRIPTION OF THE
MIPS", TO WHICH DESCRIPTION REFERENCE IS HEREBY MADE.
GENERAL
The Series A MIPS will be issued as the initial series of
Preferred Securities pursuant to the Partnership Agreement.
DIVIDENDS
Dividends on the Series A MIPS will be cumulative from the
date of issue and will be payable monthly in arrears on the last
day of each calendar month at an annual rate of ___% of the
liquidation preference of $25 per security. The first dividend
payment date for the Series A MIPS will be May 31, 1996.
Dividends on the Series A MIPS are required to be paid to
the extent that, on any scheduled dividend payment date, Duquesne
Capital has (x) funds legally available for the payment of such
dividends, as determined by the General Partner, and (y) cash on
hand sufficient to permit such payment. Duquesne Capital's
earnings will be limited to Duquesne Light's payments of interest
on the Series A Debentures and any other Indenture Securities.
See "Description of the Debentures and the Indenture" in the
accompanying Prospectus. Duquesne Light has the right under the
Indenture, from time to time, to extend the interest payment
periods on the Series A Debentures for up to 60 consecutive
months, and, as a consequence, monthly dividends on the Series A
MIPS will be deferred by Duquesne Capital (and will continue to
accumulate but without interest on any amounts so deferred)
during any such extended interest payment period. See
"Description of the Debentures and the Indenture--Option to Extend
Interest Payment Period" in the accompanying Prospectus.
Dividends on the Series A MIPS will be payable to the
holders thereof as they appear on the books and records of
Duquesne Capital on the relevant record dates, which will be one
Business Day prior to the relevant payment dates; provided,
however, that if the Series A MIPS of any series are not held by
a securities depositary, the General Partner shall have the right
to change such record dates.
REDEMPTION OR EXCHANGE
On or after May 31, 2001, Duquesne Capital may, at its
option and at the direction of Duquesne Light, redeem the Series
A MIPS in whole or in part upon not less than 30 nor more than 60
days' notice at a redemption price of $25 per security plus an
amount equal to accumulated and unpaid dividends thereon, if any,
to the date fixed for redemption.
In addition, upon the payment of the Series A Debentures at
maturity, the proceeds from such payment will be applied to
redeem Series A MIPS at a redemption price of $25 per security
plus an amount equal to accumulated and unpaid dividends, if any,
thereon, to such maturity date. See "Certain Terms of the Series
A Debentures" herein and "Description of the MIPS--Redemption
Procedures" in the accompanying Prospectus.
If a Special Event shall occur, Duquesne Capital may redeem
the Series A MIPS in whole or cause Series A Debentures to be
distributed in exchange for the Series A MIPS. In the event of
any such distribution, each holder of Series A MIPS would receive
Series A Debentures in an aggregate principal amount equal to the
aggregate liquidation preference of $25 per security on the
Series A MIPS held by it and bearing interest at __% per annum
from the last date on which dividends on the Series A MIPS were
paid. Upon any such distribution of Series A Debentures in
exchange for the Series A MIPS, Duquesne Light will use its best
efforts to have the Series A Debentures listed on the same
exchange on which the Series A MIPS are listed. After the date
fixed for any such exchange, (i) the Series A MIPS will no longer
be deemed to be outstanding, (ii) DTC or its nominee, as the
record holder of the Series A MIPS will exchange the global
certificate or certificates representing the Series A MIPS for a
registered global certificate or certificates representing the
Series A Debentures to be delivered upon such exchange and
(iii) any certificates representing Series A MIPS not held by DTC
or its nominee will be deemed to represent Series A Debentures
having a principal amount equal to the aggregate liquidation
preference of such Series A MIPS until such certificates are
presented to Duquesne Capital or its agent for exchange.
MISCELLANEOUS
The Series A MIPS have been approved for listing on the New
York Stock Exchange, subject to official notice of issuance.
CERTAIN TERMS OF THE SERIES A DEBENTURES
THE FOLLOWING SUMMARY OF CERTAIN TERMS AND PROVISIONS OF THE
SERIES A DEBENTURES SUPPLEMENTS THE DESCRIPTION OF THE DEBENTURES
SET FORTH IN THE ACCOMPANYING PROSPECTUS UNDER THE HEADING
"DESCRIPTION OF THE DEBENTURES AND THE INDENTURE", TO WHICH
DESCRIPTION REFERENCE IS HEREBY MADE.
GENERAL
Pursuant to the Indenture and in return for the loan by
Duquesne Capital to Duquesne Light of the proceeds of the
issuance of the Series A MIPS and the related capital
contribution made by the General Partner, Duquesne Light will
issue Series A Debentures to Duquesne Capital in an aggregate
principal amount equal to the sum of the aggregate liquidation
preference of the Series A MIPS and the amount of such capital
contribution.
The entire principal amount of the Series A Debentures will
become due and payable, together with any accrued and unpaid
interest thereon, including Additional Interest (as defined in
the accompanying Prospectus), if any, on May 31, 2044 (subject to
Duquesne Light's rights and obligations to redeem the Series A
Debentures prior to such date). See "Redemption" below.
INTEREST
The Series A Debentures will bear interest at a rate of %
per annum from the date they are issued until maturity. Such
interest will be payable monthly on the last day of each calendar
month of each year, commencing May 31, 1996.
REDEMPTION
The Series A Debentures may be redeemed at the option of
Duquesne Light, at any time on or after May 31, 2001, in whole or
in part, at a redemption price equal to 100% of the principal
amount thereof plus any accrued but unpaid interest, including
Additional Interest, if any, to the date fixed for redemption.
In addition, the Series A Debentures may be subject to mandatory
redemption at any time under the circumstances described under
"Description of the Debentures and the Indenture--Mandatory
Redemption" in the accompanying Prospectus.
UNDERWRITING
Subject to the terms and conditions of the Underwriting
Agreement, Duquesne Capital has agreed to sell to each of the
Underwriters named below, and each of the Underwriters, for whom
Goldman, Sachs & Co., Dean Witter Reynolds Inc., Legg Mason Wood
Walker, Incorporated, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Prudential Securities Incorporated, Smith Barney
Inc., and Wheat, First Securities, Inc. are acting as
Representatives, has severally agreed to purchase from Duquesne
Capital, the respective number of Series A MIPS set forth
opposite its name below:
NUMBER OF
SERIES A
UNDERWRITER MIPS
----------- ---------
Goldman, Sachs & Co...................................
Dean Witter Reynolds Inc..............................
Legg Mason Wood Walker, Incorporated..................
Merrill Lynch, Pierce, Fenner & Smith Incorporated....
Prudential Securities Incorporated....................
Smith Barney Inc......................................
Wheat, First Securites, Inc...........................
Total.................................. 6,000,000
=========
Under the terms and conditions of the Underwriting
Agreement, the Underwriters are committed to take and pay for all
such Series A MIPS offered hereby, if any are taken.
The Underwriters propose to offer the Series A MIPS in part
directly to the public at the initial public offering price set
forth on the cover page of this Prospectus Supplement, and in
part to certain securities dealers at such price less a
concession of $ per security. The Underwriters may allow,
and such dealers may reallow, a concession not in excess of $
per security to certain brokers and dealers. After the Series A
MIPS are released for sale to the public, the offering price and
other selling terms may from time to time be varied by the
Representatives.
In view of the fact that the proceeds of the sale of the
Series A MIPS will be loaned to Duquesne Light, Duquesne Light
has agreed, in the Underwriting Agreement, to pay to the
Underwriters as compensation for their services an amount of $
per security ($ per security sold to certain institutions)
for the accounts of the several Underwriters.
Certain of the Underwriters engage in transactions with, and
from time to time have performed services for, Duquesne Light in
the ordinary course of business.
Prior to this offering, there has been no public market for
the Series A MIPS. The Underwriters have advised Duquesne
Capital and Duquesne Light that they will undertake to sell lots
of 100 or more Series A MIPS to a minimum of 400 beneficial
holders in order to meet one of the requirements for listing the
Series A MIPS on the New York Stock Exchange.
Duquesne Capital and Duquesne Light have agreed to indemnify
the several Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
Duquesne Capital and Duquesne Light have agreed, during the
period beginning on the date of the Underwriting Agreement and
continuing to and including the earlier of (1) the termination of
trading restrictions for the Series A MIPS, as determined by the
Underwriters, or (2) 30 days after the closing date, not to
offer, sell, contract to sell or otherwise dispose of any
Preferred Securities of Duquesne Capital, any limited partnership
interests of Duquesne Capital or any preferred stock of Duquesne
Light or any other securities of Duquesne Capital or Duquesne
Light which are substantially similar to the Preferred
Securities, or any securities convertible into or exchangeable
for Preferred Securities, limited partnership interests,
preferred stock or such substantially similar securities of
either Duquesne Capital or Duquesne Light, without the prior
written consent of the Underwriters.
<PAGE>
$150,000,000
DUQUESNE CAPITAL
Cumulative Monthly Income Preferred Securities (MIPSsm*)
(Liquidation preference $25 per security)
Guaranteed to the extent Duquesne Capital has funds as set forth
herein by
DUQUESNE LIGHT COMPANY
Duquesne Capital L.P. ("Duquesne Capital"), a Delaware
special purpose limited partnership, the sole general partner of
which is Duquesne Light Company ("Duquesne Light"), may offer,
from time to time, in one or more series, up to $150,000,000 of
its Cumulative Monthly Income Preferred Securities (the "MIPS"),
which are preferred securities ("Preferred Securities"),
representing limited partner interests in Duquesne Capital. The
MIPS may be offered in amounts, at prices and on terms to be
determined at the time of offering. Duquesne Capital was formed
for the sole purpose of issuing its limited partnership interests
and lending the proceeds thereof to Duquesne Light. Duquesne
Capital will lend the proceeds of the sale of the MIPS to
Duquesne Light in return for Subordinated Deferrable Interest
Debentures of Duquesne Light in an aggregate principal amount
equal to the aggregate liquidation preference of the MIPS,
bearing interest at an annual rate equal to the annual dividend
rate on the MIPS and having certain redemption terms which
correspond to the redemption terms for the MIPS ("Debentures").
The payment of periodic cash distributions ("dividends") and
payments on liquidation or redemption with respect to the MIPS,
to the extent of funds held by Duquesne Capital and legally
available therefor, will be guaranteed under a Payment and
Guarantee Agreement (the "Guarantee") of Duquesne Light to the
extent described herein. The Guarantee and the Debentures will
rank subordinate in right of payment to all Senior Indebtedness
(as defined herein) of Duquesne Light. Duquesne Capital's
earnings will be limited to payments by Duquesne Light on the
Debentures and other Indenture Securities (as defined herein)
issued under the Indenture (as defined herein). If Duquesne
Light fails to make interest payments on the Debentures, Duquesne
Capital will have insufficient funds to pay dividends on the MIPS
and the Guarantee will not cover payment of such dividends. In
such event, the holders of MIPS may enforce certain rights in
respect of the Debentures under the Indenture. Interest on the
Debentures may be deferred at the option of Duquesne Light as
described under "Description of the Debentures and the
Indenture--Option to Extend Interest Payment Period", and, as a
consequence, monthly dividends on the MIPS may be deferred by
Duquesne Capital. See "Description of the Guarantee" and
"Description of the Debentures and the Indenture" herein for a
description of the terms and limitations of such obligations of
Duquesne Light relating to the MIPS.
Under certain circumstances described herein, Duquesne Light
may cause Duquesne Capital to distribute the Debentures in
exchange for MIPS. See "Description of the MIPS--Special Event
Redemption or Exchange".
Certain specific terms of the MIPS and the related series of
Debentures in respect of which this Prospectus is being delivered
will be set forth in an accompanying Prospectus Supplement
("Prospectus Supplement"), including the series designation,
number of securities and the dividend rate on MIPS, and the
maturity and the interest rate on such Debentures and any other
special terms.
The MIPS will be sold directly, through agents,
underwriters, including Goldman, Sachs & Co., or dealers as
designated from time to time, or through a combination of such
methods. If agents of Duquesne Capital or any dealers or
underwriters are involved in the sale of the MIPS in respect of
which this Prospectus is being delivered, the names of such
agents, dealers or underwriters and any applicable commissions or
discounts will be set forth in or may be calculated from the
accompanying Prospectus Supplement. See "Plan of Distribution".
This Prospectus may not be used to consummate sales of the
MIPS unless accompanied by a Prospectus Supplement.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------
GOLDMAN, SACHS & CO.
------------------
The date of this Prospectus is May 6, 1996.
----------------------------
* MIPS is a servicemark of Goldman, Sachs & Co.
<PAGE>
AVAILABLE INFORMATION
Duquesne Light is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports and other information filed by
Duquesne Light can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following
Regional Offices of the Commission: 7 World Trade Center, New
York, New York 10048; and 500 West Madison Street, Chicago,
Illinois 60661-2511. Copies of such material can be obtained
from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
Certain securities of Duquesne Light are listed on the New York
Stock Exchange. Reports and other information concerning
Duquesne Light may be inspected at the offices of such exchange
at 20 Broad Street, New York, New York 10005. In addition, such
reports and other information concerning Duquesne Light can be
inspected at the principal office of Duquesne Light, 411 Seventh
Avenue, P.O. Box 1930, Pittsburgh, Pennsylvania 15230-1930.
This Prospectus does not contain all the information set
forth in the Registration Statement on Form S-3, which Duquesne
Light and Duquesne Capital have filed with the Commission under
the Securities Act of 1933, as amended (the "Securities Act").
Statements contained or incorporated by reference herein
concerning the provisions of documents are necessarily summaries
of such documents, and each statement is qualified in its
entirety by reference to such Registration Statement, as amended
by Amendment No. 1 thereto, including the documents filed as
exhibits thereto (the "Registration Statement").
No separate financial statements of Duquesne Capital have
been included herein. Duquesne Light and Duquesne Capital do not
consider that such financial statements would be material to
holders of MIPS because Duquesne Capital is a special purpose
entity, has no operating history and no independent operations
and is not engaged in, and does not propose to engage in, any
activity other than as set forth below. See "Description of the
MIPS". Duquesne Capital is a special purpose limited partnership
organized under the laws of the State of Delaware, and Duquesne
Light is the sole general partner. Duquesne Capital exists for
the sole purpose of issuing its limited partnership interests and
lending the proceeds thereof to Duquesne Light.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Duquesne Light's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 has been filed with the Commission
pursuant to the Exchange Act and is hereby incorporated herein by
reference. All documents subsequently filed by Duquesne Light
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
prior to the termination of the offering of the securities
offered hereby shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date of
filing such documents. The documents incorporated or deemed to
be incorporated herein by reference are sometimes referred to
herein as the "Incorporated Documents". Any statement contained
herein or in an Incorporated Document shall be deemed to be
modified or superseded for all purposes to the extent that a
statement contained herein, in any Prospectus Supplement or in
any subsequently filed Incorporated Document modifies or
supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
Any person receiving a copy of this Prospectus may obtain
without charge, upon request, a copy of any of the Incorporated
Documents (not including the exhibits to such documents, unless
such exhibits are specifically incorporated by reference in such
Incorporated Documents). Requests for such copies should be
directed to Ms. Diane S. Eismont, Secretary, Duquesne Light
Company, One Oxford Centre, 301 Grant Street, Pittsburgh,
Pennsylvania 15279, telephone number (412) 393-6080.
DUQUESNE LIGHT COMPANY
Duquesne Light was formed under the laws of Pennsylvania by
the consolidation and merger in 1912 of three constituent
companies. As part of a corporate reorganization, Duquesne Light
became a wholly-owned subsidiary of DQE, an energy services
holding company formed in 1989. Duquesne Light is engaged in the
production, transmission, distribution and sale of electric
energy. Duquesne Light provides electric service to customers in
Allegheny County, including the City of Pittsburgh, Pennsylvania
and Beaver County, Pennsylvania. This represents a service
territory of approximately 800 square miles. The principal
executive office of Duquesne Light is located at 411 Seventh
Avenue, P.O. Box 1930, Pittsburgh, Pennsylvania 15230-1930. Its
telephone number is (412) 393-6000. Additional information
concerning Duquesne Light and its operations is contained in the
Incorporated Documents, to which reference is hereby made.
DUQUESNE CAPITAL
Duquesne Capital is a limited partnership which was formed
under the Delaware Revised Uniform Limited Partnership Act, as
amended (the "Delaware Act"), on April 27, 1994. Duquesne
Capital was formed for the sole purpose of issuing its limited
partnership interests and lending the proceeds thereof to
Duquesne Light. Duquesne Light is the sole general partner of
Duquesne Capital (the "General Partner") and will manage the
business and affairs of Duquesne Capital. Holders of MIPS and
other Preferred Securities of Duquesne Capital will be limited
partners in Duquesne Capital. Duquesne Light will make capital
contributions from time to time to the extent required so that
the total contributions made by Duquesne Light, as General
Partner, shall at all times be at least equal to 1% of the total
contributions made by all partners. Duquesne Capital will lend
such amounts to Duquesne Light from time to time in return for
Indenture Securities of Duquesne Light, including the Debentures.
The rights and obligations of Duquesne Light, as General Partner,
and the limited partners of Duquesne Capital will be governed by
the Delaware Act and by an Amended and Restated Agreement of
Limited Partnership of Duquesne Capital (the "Partnership
Agreement") substantially in the form filed as an exhibit to the
Registration Statement. The principal executive office of
Duquesne Capital is c/o Duquesne Light Company, 411 Seventh
Avenue, P.O. Box 1930, Pittsburgh, Pennsylvania 15230-1930 and
the telephone number is (412) 393-6230.
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS
TO COMBINED FIXED CHARGES AND PREFERRED
AND PREFERENCE STOCK DIVIDEND REQUIREMENTS
YEAR ENDED DECEMBER 31,
---------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Ratio of Earnings to Fixed
Charges 2.71 2.58 2.42 2.40 2.25
Ratio of Earnings to Combined
Fixed Charges and Preferred
and Preference Stock
Dividend Requirements 2.63 2.48 2.30 2.28 2.15
For purposes of computing the foregoing ratios, Duquesne
Light's share of the fixed charges of an unaffiliated coal
supplier, which amounted to approximately $3.4 million for the
year ended December 31, 1995, has been excluded.
Earnings related to income taxes reflect a $13.5 million
decrease for the twelve months ended December 31, 1995, and
December 31, 1994, due to a financial statement reclassification
related to SFAS 109. The Ratio of Earnings to Fixed Charges
absent this reclassification equals 2.81 and 2.67 for the twelve
months ended December 31, 1995, and December 31, 1994,
respectively. The Ratio of Earnings to Fixed Charges and
Preferred and Preference Stock Dividend Requirements absent this
reclassification equals 2.72 and 2.57 for the twelve months ended
December 31, 1995 and December 31, 1994, respectively.
DESCRIPTION OF THE MIPS
SET FORTH BELOW IS A SUMMARY OF CERTAIN TERMS AND PROVISIONS
OF THE MIPS. THIS SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS
SUBJECT TO, AND QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, THE
FORMS OF PARTNERSHIP AGREEMENT AND ACTION OF GENERAL PARTNER
ESTABLISHING THE MIPS FILED AS EXHIBITS TO THE REGISTRATION
STATEMENT.
GENERAL
The Partnership Agreement will authorize Duquesne Light as
the General Partner, to establish various series of Preferred
Securities, including one or more series of MIPS, having such
designations, rights, privileges, restrictions and other terms
and provisions as the General Partner may determine. The MIPS
are limited partner interests in Duquesne Capital, and may be
issued from time to time, having terms described herein and in
the Prospectus Supplement relating thereto. The limited partner
interests represented by the MIPS will have a preference with
respect to cash distributions and amounts payable on liquidation
over the General Partner's interest in Duquesne Capital. The
Action or Actions of General Partner creating the MIPS will not
permit the issuance of any limited partnership interests of
Duquesne Capital ranking, as to participation in profits or the
assets of Duquesne Capital, senior to the MIPS.
Amounts payable in respect of the MIPS will be guaranteed by
Duquesne Light to the extent set forth below under "Description
of the Guarantee".
Under certain circumstances described herein, the MIPS may
be exchanged for Debentures of Duquesne Light. See "Special
Event Redemption or Exchange" below.
DIVIDENDS
Unless otherwise specified in a Prospectus Supplement,
dividends on the MIPS of each series will be cumulative, will
accumulate from the date of issue and will be payable monthly in
arrears on the last day of each calendar month of each year
except as otherwise described below.
The annual dividend rate on the MIPS of each series will be
set forth in a Prospectus Supplement relating to such series.
The amount of dividends payable for any period will be
computed on the basis of twelve 30-day months and a 360-day year
and, for any period shorter than a full monthly dividend period,
will be computed on the basis of the actual number of days
elapsed in such period. Payment of dividends on the MIPS is
limited in relation to the amount of funds held by Duquesne
Capital and legally available therefor.
Dividends on the MIPS are required to be paid to the extent
that, on any scheduled dividend payment date, Duquesne Capital
has (x) funds legally available for the payment of such
dividends, as determined by the General Partner, and (y) cash on
hand sufficient to permit such payment. Duquesne Capital's
earnings will be limited to Duquesne Light's payments of interest
on the Debentures and other Indenture Securities. See
"Description of the Debentures and the Indenture". Duquesne
Light has the right under the Indenture, from time to time, to
extend the interest payment periods on the Debentures for up to
60 consecutive months, and, as a consequence, monthly dividends
on the MIPS will be deferred by Duquesne Capital (and will
continue to accumulate but without interest on any amounts so
deferred) during any such extended interest payment period. See
"Description of the Debentures and the Indenture--Option to Extend
Interest Payment Period".
Dividends on the MIPS will be payable to the holders thereof
as they appear on the books and records of Duquesne Capital on
the relevant record dates, which will be one Business Day (as
hereinafter defined) prior to the relevant payment dates;
provided, however, that if the MIPS of any series are not held by
a securities depositary, the General Partner shall have the right
to change such record dates. Subject to any applicable laws and
regulations and the provisions of the Partnership Agreement, each
such payment will be made as described under "Book-Entry-Only
Issuance" below. In the event that any date on which dividends
are payable on the MIPS 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, and in the same
amount, 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 or the City of Pittsburgh, Pennsylvania are authorized
or required by law to close.
CERTAIN RESTRICTIONS ON DUQUESNE CAPITAL
If dividends have not been paid in full on the MIPS of any
series, Duquesne Capital shall not:
(i) pay, or set aside for payment, any dividends on
any other Preferred Securities ranking pari passu with the
MIPS of such series as regards participation in profits of
Duquesne Capital ("Dividend Parity Securities"), unless, at
the time of such payment or setting aside, there shall also
be paid, or set aside for payment, as the case may be,
dividends on the MIPS of such series on a pro rata basis, so
that, after giving effect to the payment of all such
dividends,
(x) the ratio of (a) the aggregate amount of
dividends paid on the MIPS of such series to (b) the
aggregate amount of dividends paid on such Dividend
Parity Securities is the same as
(y) the ratio of (a) the aggregate of all
accumulated arrears of unpaid dividends in respect of
the MIPS of such series to (b) the aggregate of all
accumulated arrears of unpaid dividends in respect of
such Dividend Parity Securities;
(ii) pay, or set aside for payment, any dividends or
other distributions on any other securities of Duquesne
Capital ranking junior to the MIPS of such series as to
dividends ("Dividend Junior Securities"); or
(iii) redeem, purchase or otherwise acquire any MIPS
of such series, any Dividend Parity Securities or any
Dividend Junior Securities;
until, in each case, such time as all accumulated and unpaid
dividends on the MIPS of such series shall have been paid in full
for all dividend periods terminating on or prior to, in the case
of clauses (i) and (ii), such payment and, in the case of clause
(iii), the date of such redemption, purchase or acquisition.
OPTIONAL REDEMPTION
Unless otherwise provided in a Prospectus Supplement, the
MIPS of each series will be redeemable, at the option of Duquesne
Capital and at the direction of Duquesne Light, in whole or in
part from time to time, on or after the fifth anniversary of the
last day of the month in which such MIPS are issued, upon not
less than 30 nor more than 60 days' notice, at a redemption price
of $25 per security, plus an amount equal to accumulated and
unpaid dividends to the date fixed for redemption (the
"Redemption Price"); provided, however, that prior to giving any
such notice of redemption Duquesne Capital shall have received
from Duquesne Light a notice of redemption of Debentures of the
corresponding series having an aggregate principal amount equal
to the aggregate liquidation preference of the MIPS to be
redeemed. In the event that fewer than all the outstanding MIPS
of any series are to be so redeemed, the MIPS to be redeemed will
be selected as described under "Book-Entry-Only Issuance" below.
If a partial redemption would result in a delisting of the MIPS
of any series by any national securities exchange or other
organization on which the MIPS of such series are then listed,
Duquesne Capital may only redeem the MIPS of such series in
whole.
SPECIAL EVENT REDEMPTION OR EXCHANGE
If a Special Event (as defined below) shall occur and be
continuing, the General Partner will (i) cause Duquesne Capital
to redeem the MIPS in whole (and not in part), upon not less than
30 nor more than 60 days' notice, at the Redemption Price within
90 days following the occurrence of such Special Event, or (ii)
cause Duquesne Capital to distribute Debentures to holders of
MIPS in exchange for such MIPS within 90 days following the
occurrence of such Special Event. Notwithstanding the foregoing,
if the Special Event is solely a Tax Event (as defined below),
neither the General Partner nor Duquesne Capital shall be
required to elect either of the options described in (i) or (ii)
above and may, instead, allow the MIPS to remain outstanding.
In the event of a distribution of Debentures as described in
(ii) above, each holder of MIPS would receive Debentures in an
aggregate principal amount equal to the aggregate liquidation
preference of $25 per security on the MIPS held by it and bearing
interest at a rate per annum equal to the dividend rate per annum
on such MIPS from the last date on which dividends on such MIPS
were paid. Under such circumstances, if there are no other
Preferred Securities then outstanding, Duquesne Light may cause
Duquesne Capital to be dissolved.
After the date fixed for any such exchange, (i) the MIPS
will no longer be deemed to be outstanding, (ii) the Depositary
(as hereinafter defined) or its nominee, as the record holder of
the MIPS, will exchange the global certificate or certificates
representing the MIPS for a registered global certificate or
certificates representing the Debentures to be delivered upon
such exchange and (iii) any certificates representing shares of
MIPS not held by the Depositary or its nominee will be deemed to
represent Debentures having a principal amount equal to the
liquidation preference of such MIPS until such certificates are
presented to Duquesne Light or its agent for exchange.
"Special Event" means an Investment Company Event or a Tax
Event.
"Investment Company Event" means the occurrence of a change
in law or regulation or a written change in official
interpretation of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in
40 Act Law") to the effect that Duquesne Capital is or will be
considered an "investment company" required to be registered
under the Investment Company Act of 1940, as amended (the "1940
Act"), which Change in 40 Act Law becomes effective on or after
the date of the first issuance of MIPS of such series; provided
that no Investment Company Event shall be deemed to have occurred
if Duquesne Light or Duquesne Capital shall have obtained a
written opinion of nationally recognized independent counsel
experienced in practice under the 1940 Act, to the effect that
Duquesne Light or Duquesne Capital has successfully taken either
of the steps set forth in (i) or (ii) below to avoid such Change
in 40 Act Law so that in the opinion of such counsel,
notwithstanding such Change in 40 Act Law, Duquesne Capital is
not required to be registered as an "investment company" within
the meaning of the 1940 Act. Such steps shall be either (i)
issuing an additional or supplemental irrevocable and
unconditional guarantee (x) of accumulated and unpaid dividends
(whether or not moneys are legally available therefor) on the
MIPS and (y) upon a liquidation of Duquesne Capital, of the full
amount of the Liquidation Distribution (as hereinafter defined)
on the MIPS (regardless of the amount of assets of Duquesne
Capital otherwise available for distribution in such
liquidation), or (ii) the use of any other reasonable measures
that do not adversely affect holders of MIPS in any material
respect.
"Tax Event" means that Duquesne Light or Duquesne Capital
shall have obtained an opinion of nationally recognized
independent tax counsel 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 any
amendment to or change in an official interpretation or
application of such laws or regulations, which amendment or
change is effective on or after the date of the first issuance of
MIPS of such series, and which change cannot be avoided by the
use of any reasonable measures available to Duquesne Light or
Duquesne Capital, there is a substantial increase in risk that
(i) Duquesne Capital is subject to Federal income tax with
respect to interest received on the Debentures, (ii) interest
payable on the Debentures will not be deductible for Federal
income tax purposes or (iii) Duquesne Capital is subject to more
than a de minimis amount of other taxes, duties or other
governmental charges.
REDEMPTION PROCEDURES
If at any time Duquesne Light (i) pays at maturity or (ii)
redeems Debentures of any series as described under "Description
of the Debentures and the Indenture--Optional Redemption", the
proceeds from such payment or redemption of principal of such
Debentures will be applied to redeem MIPS of the related series
at the Redemption Price upon not less than 30 nor more than 60
days' notice (except that no such notice will be required in the
case of (i)).
If (a) Duquesne Capital gives a notice of redemption in
respect of MIPS of any series (which notice will be irrevocable)
or (b) MIPS of any series shall become redeemable by virtue of
the maturity of the related Debentures, then, on the date fixed
for redemption (the "Redemption Date"), which in the case of (b)
shall be the applicable Debenture maturity date, Duquesne Capital
will pay the applicable Redemption Price to the record holders of
such MIPS. See "Book-Entry-Only Issuance" below. If notice of
redemption has been given and payment or provision for payment
has been made on the Redemption Date as required, then upon such
date, all rights of holders of such MIPS so called for redemption
will cease, except the right of such holders to receive the
Redemption Price, but without interest. In the event that any
Redemption Date is not a Business Day, payment of the Redemption
Price payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such
Business Day falls in the next calendar year, such payment will
be made on the immediately preceding Business Day. In the event
that payment of the Redemption Price in respect of any MIPS is
not paid either by Duquesne Capital or by Duquesne Light pursuant
to the Guarantee described under "Description of the Guarantee",
dividends on such MIPS will continue to accumulate (but without
any interest on amounts so accumulating) from the original
Redemption Date to the date of payment, in which case the actual
payment date will be considered the Redemption Date for purposes
of calculating the Redemption Price.
Subject to the foregoing and applicable law (including,
without limitation, Federal securities laws), Duquesne Light or
its affiliates may at any time and from time to time purchase
outstanding MIPS by tender, in the open market or by private
agreement. In the event that Duquesne Light surrenders any MIPS
to Duquesne Capital, Duquesne Capital will distribute to or upon
the order of Duquesne Light, Debentures of the corresponding
series in aggregate principal amount equal to the aggregate
liquidation preference on the MIPS so surrendered.
LIQUIDATION DISTRIBUTION
In the event of any voluntary or involuntary dissolution,
liquidation or winding up of Duquesne Capital, the holders of the
MIPS of each series at the time outstanding will be entitled to
receive out of the assets of Duquesne Capital available for
distribution to partners of Duquesne Capital, after satisfaction
of liabilities to creditors, if any, as required by the Delaware
Act, before any distribution of assets is made to the General
Partner or any other series of Preferred Securities ranking
junior to the MIPS of such series with respect to participation
in the assets of Duquesne Capital, but together with the holders
of every other series of Preferred Securities outstanding, if
any, ranking pari passu with the MIPS of such series with respect
to participation in the assets of Duquesne Capital ("Liquidation
Parity Securities"), an amount equal to the aggregate of the
liquidation preference of $25 per security plus an amount equal
to all accumulated and unpaid dividends on the MIPS of such
series to the date of payment (the "Liquidation Distribution").
If, upon any such liquidation, the Liquidation Distribution
for MIPS of any series can be paid only in part because Duquesne
Capital has insufficient assets available to pay in full the
aggregate Liquidation Distribution for such series and the
aggregate maximum liquidation distributions on the Liquidation
Parity Securities, then the amounts payable directly by Duquesne
Capital on the MIPS of such series and on such Liquidation Parity
Securities shall be paid on a pro rata basis, so that
(i) the ratio of (x) the aggregate amount paid in respect
of the Liquidation Distribution to (y) the aggregate amount
paid in respect of liquidation distributions on the
Liquidation Parity Securities is the same as
(ii) the ratio of (x) the aggregate Liquidation Distribution
to (y) the aggregate maximum liquidation distributions on
the Liquidation Parity Securities.
Pursuant to the Partnership Agreement, Duquesne Capital
shall be dissolved and its affairs shall be wound up: (i) on
December 31, 2049, the expiration of the term of Duquesne
Capital, (ii) upon the withdrawal, removal or bankruptcy of the
General Partner, or the assignment by the General Partner of its
general partner interest in Duquesne Capital or the occurrence of
any other event that results in the General Partner ceasing to be
a general partner of Duquesne Capital under the Delaware Act,
except for a transfer to a permitted successor of Duquesne Light
under the Indenture, unless in any such case the business of
Duquesne Capital is continued in accordance with the Delaware
Act, (iii) upon the entry of decree of a judicial dissolution, or
(iv) upon the written consent of all partners of Duquesne
Capital, including the holders of the Preferred Securities.
SOURCE OF PAYMENT FOR THE MIPS
Duquesne Capital is a special purpose limited partnership
formed for the sole purpose of issuing its limited partnership
interests and lending the proceeds thereof to Duquesne Light in
return for debt securities of Duquesne Light. The proceeds of
the MIPS will be loaned to Duquesne Light in return for
Debentures. Duquesne Capital's earnings will be limited to
payments by Duquesne Light on the Debentures and other Indenture
Securities.
Dividends on the MIPS and payments on liquidation or
redemption with respect to the MIPS must be paid to the extent of
funds held by Duquesne Capital and legally available to make such
payments. Under the terms of the Guarantee as described under
"Description of the Guarantee--General" herein, such payments
required to be made on the MIPS will be irrevocably and
unconditionally guaranteed by Duquesne Light. Because the
payment terms of the Debentures will generally correspond to the
payment terms of the MIPS, Duquesne Capital is expected to have
sufficient funds to make payments on the MIPS so long as Duquesne
Light is not in default in payment of the Debentures. In
addition, because Duquesne Light will covenant in the Guarantee
to timely perform all of its duties as General Partner, including
the duty to pay dividends on the MIPS and the duty to pay all
costs and expenses of Duquesne Capital, it is expected that all
payments on the Debentures will be available for the payment of
dividends on the MIPS. Duquesne Light and Duquesne Capital
believe that the obligations of Duquesne Light under the
Guarantee, the Partnership Agreement and the Debentures, taken
together, are substantially equivalent to a full and
unconditional guarantee by Duquesne Light of payments required to
be made on the MIPS. The Guarantee will be one of payment and
not of collection, and holders of MIPS may enforce the Guarantee
directly against Duquesne Light, without first proceeding against
Duquesne Capital. If Duquesne Light fails to make interest
payments on the Debentures, Duquesne Capital will have
insufficient funds to pay dividends on the MIPS, and the
Guarantee will not cover payment of such dividends. In such
event, the holders of MIPS may enforce certain rights in respect
of the Debentures under the Indenture. In addition, under
certain circumstances, to the fullest extent permitted by
applicable law, holders of MIPS will have the right to appoint a
Special Representative to enforce Duquesne Capital's rights as
holder of the Debentures.
See "Description of the Guarantee" and "Description of the
Debentures and the Indenture" herein for a description of the
terms and limitations of the obligations of Duquesne Light
relating to the MIPS.
MERGER, CONSOLIDATION, AMALGAMATION, ETC. OF DUQUESNE CAPITAL
The General Partner is authorized and directed to conduct
its affairs and to operate Duquesne Capital in such a way that
Duquesne Capital would not be deemed to be an "investment
company" required to be registered under the 1940 Act or taxed as
a corporation for Federal income tax purposes and so that the
Debentures will be treated as indebtedness of Duquesne Light for
Federal income tax purposes. In this connection, the General
Partner is authorized to take any action not inconsistent with
applicable law, the Certificate of Limited Partnership or the
Partnership Agreement and that does not adversely affect the
interests of holders of MIPS that the General Partner determines
in its discretion to be necessary or desirable for such purposes.
Duquesne Capital may not consolidate, amalgamate, merge with
or into, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to any
partnership, corporation or other body, except as described
below. Duquesne Light, as General Partner, may, without the
consent of the holders of the MIPS, cause Duquesne Capital to
consolidate, amalgamate, merge with or into, or be replaced by,
or convey or transfer its properties and assets substantially as
an entirety to, a Delaware limited partnership or "other business
entity" (as defined in the Delaware Act but not including any
general partnership) organized under the laws of any state of the
United States or the Turks and Caicos Islands, provided that (i)
such successor entity either (x) expressly assumes all of the
obligations of Duquesne Capital under the MIPS or (y) substitutes
for the MIPS other securities having substantially the same terms
as the MIPS (the "Successor Securities") so long as the Successor
Securities rank with respect to participation in the profits and
assets of the successor entity, at least as high as the MIPS rank
with respect to participation in the profits and assets of
Duquesne Capital, (ii) Duquesne Light expressly acknowledges such
successor entity as the holder of the Debentures relating to the
MIPS, (iii) such merger, consolidation, amalgamation,
replacement, conveyance or transfer does not cause the MIPS to be
delisted by any national securities exchange or other
organization on which the MIPS are then listed unless the MIPS
are promptly relisted, or the Successor Securities are promptly
listed, by such exchange or other organization, (iv) such merger,
consolidation, amalgamation, replacement, conveyance or transfer
does not cause the MIPS to be downgraded or the Successor
Securities to be rated lower than the MIPS immediately prior to
such merger, consolidation, amalgamation, replacement, conveyance
or transfer by any "nationally recognized statistical rating
organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, (v) such
merger, consolidation, amalgamation, replacement, conveyance or
transfer does not adversely affect the powers, preferences and
other special rights of holders of MIPS in any material respect,
and (vi) prior to such merger, consolidation, amalgamation,
replacement, conveyance or transfer Duquesne Light has received
an opinion of nationally recognized independent counsel to
Duquesne Capital experienced in such matters to the effect that
(w) holders of MIPS will not recognize any gain or loss for
Federal income tax purposes as a result of the merger,
consolidation, amalgamation, replacement, conveyance or transfer,
(x) such successor entity will be treated as a partnership for
Federal income tax purposes, (y) following such merger,
consolidation, amalgamation, replacement, conveyance or transfer,
Duquesne Light and such successor entity will be in compliance
with the 1940 Act without registering thereunder as an investment
company, and (z) such merger, consolidation, amalgamation,
replacement, conveyance or transfer will not adversely affect the
limited liability of holders of MIPS.
VOTING RIGHTS
Except as provided below and under "Description of the
Guarantee--Amendments and Assignments" and as otherwise required
by law and the Partnership Agreement, the holders of the MIPS will
have no voting rights.
If (i) Duquesne Capital fails to pay dividends in full on
the MIPS of any series for any period of 18 consecutive months,
(ii) an Event of Default with respect to the corresponding series
of Debentures (as described under "Description of the Debentures
and the Indenture--Events of Default; Remedies") occurs and is
continuing, or (iii) Duquesne Light is in default on any of its
payment or other obligations under the Guarantee (as described
under "Description of the GuaranteeCertain Covenants of Duquesne
Light"), then, to the fullest extent permitted by applicable law,
the holders of the outstanding MIPS of such series, together with
the holders of any other series of Preferred Securities having
the right to vote for the appointment of a special representative
(the "Special Representative") in such event, acting as a single
class, will be entitled, by vote of holders of a majority in
aggregate liquidation preference of all Preferred Securities
having the right to vote, to appoint and authorize a Special
Representative to enforce Duquesne Capital's rights under the
corresponding Indenture Securities (as hereinafter defined),
including the corresponding Debentures, and the Indenture against
Duquesne Light, enforce the obligations undertaken by Duquesne
Light under the Guarantee and pay dividends on the MIPS of such
series (to the extent Duquesne Capital has funds legally
available for the payment of such dividends and cash on hand
sufficient to permit such payment).
For purposes of determining whether Duquesne Capital has
failed to pay dividends in full for 18 consecutive months,
dividends shall be deemed to remain in arrears, notwithstanding
any payments in respect thereof, until full cumulative dividends
have been or contemporaneously are set aside and paid with
respect to all monthly dividend periods terminating on or prior
to the date of payment of such full cumulative dividends. Not
later than 30 days after such right to appoint a Special
Representative arises, the General Partner will convene a general
meeting for the above purpose. If the General Partner fails to
convene such meeting within such 30-day period, the holders of
10% in aggregate liquidation preference of the outstanding MIPS
of any series will be entitled to convene such meeting. The
provisions of the Partnership Agreement relating to the convening
and conduct of the general meetings of partners of Duquesne
Capital will apply with respect to any such meeting. Any Special
Representative so appointed shall vacate office immediately if
Duquesne Capital (or Duquesne Light pursuant to the Guarantee)
shall have paid in full all accumulated and unpaid dividends on
the MIPS of such series or such Event of Default or default under
the Guarantee, as the case may be, shall have been cured.
Notwithstanding the appointment of any such Special
Representative, Duquesne Light shall retain its rights under the
Indenture to extend the interest payment period as provided under
"Description of the Debentures and the Indenture--Option to Extend
Interest Payment Period".
If any proposed amendment to the Partnership Agreement
provides for, or the General Partner otherwise proposes to
effect, (x) any action which would adversely affect the rights,
preferences and privileges of the holders of MIPS of any series,
whether by way of amendment to the Partnership Agreement or
otherwise (including, without limitation, the authorization or
issuance of any limited partnership interests of Duquesne Capital
ranking, as to participation in the profits or assets of Duquesne
Capital, senior to the MIPS of such series), or (y) the
dissolution, liquidation or winding up of Duquesne Capital (other
than in connection with a distribution of Debentures and
dissolution of Duquesne Capital upon the occurrence of a Special
Event or as described under "Description of the MIPS--Merger,
Consolidation, Amalgamation, etc. of Duquesne Capital" above),
then holders of outstanding MIPS of such series will be entitled
to vote on such amendment or proposed action of the General
Partner (but not on any other amendment or action) together as a
class with, in the case of an action described in clause (x)
above which would equally adversely affect the rights,
preferences or privileges of holders of any Dividend Parity
Securities or any Liquidation Parity Securities, holders of such
Dividend Parity Securities or such Liquidation Parity Securities,
as the case may be, or, in the case of any amendment described in
clause (y) above, holders of all Liquidation Parity Securities,
and such amendment or action shall not be effective except with
the approval of the holders of 66 2/3% in aggregate liquidation
preference of such class; provided, however, that no such approval
shall be required if the dissolution, liquidation or winding up of
Duquesne Capital is proposed or initiated pursuant to the Partnership
Agreement or upon the initiation of proceedings, or after proceedings
have been initiated, for the dissolution, liquidation or winding up
of Duquesne Light.
The rights of holders of MIPS of any series will be deemed
not to be adversely affected by the creation or issue of, and no
vote will be required for the creation of, any further limited
partnership interests of Duquesne Capital ranking junior to, or
pari passu with, the MIPS of such series with regard to
participation in the profits or assets of Duquesne Capital.
Holders of MIPS will have no preemptive rights.
The Partnership Agreement provides that the General Partner
will not permit or cause Duquesne Capital to file a voluntary
petition in bankruptcy without the affirmative vote of the
holders of 66 2/3% in aggregate liquidation preference of the
outstanding Preferred Securities.
If any action is, by the terms of the Indenture, not
permitted to be taken by Duquesne Capital without the consent of
holders of Preferred Securities or any Special Representative,
the General Partner shall not, without such requisite consent,
take any such action.
Any required approval of holders of MIPS of any series may
be given at a separate meeting of such holders convened for such
purpose, at a general meeting of partners of Duquesne Capital or
pursuant to written consent. Duquesne Capital will cause a
notice of any meeting at which holders of the MIPS of such series
are entitled to vote, or of any matter upon which action by
written consent of such holders is to be taken, to be mailed to
each holder of record of such MIPS. Each such notice will
include a statement setting forth (i) the date of such meeting or
the date by which such action is to be taken, (ii) a description
of any matter on which such holders are entitled to vote or upon
which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the holders of the MIPS will be
required for Duquesne Capital to redeem and cancel MIPS in
accordance with the Partnership Agreement.
Notwithstanding that holders of MIPS are entitled to vote or
consent under any of the circumstances described above, the
holders of MIPS that are owned by Duquesne Light or any affiliate
of Duquesne Light shall not be entitled to vote or consent and
shall, for the purposes of such vote or consent, be treated as if
they were not outstanding.
BOOK-ENTRY-ONLY ISSUANCE
The Depository Trust Company ("DTC") will initially act as
securities depository for the MIPS. The MIPS will be issued only
as fully-registered securities registered in the name of Cede &
Co. (DTC's nominee). DTC and any other depositary which may
replace DTC as depositary for the MIPS are sometimes referred to
herein as the "Depositary." One or more fully-registered global
certificates will be issued for each series, representing in the
aggregate the total number of MIPS for such series, and will be
deposited with DTC.
DTC is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning
of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act.
DTC holds securities that its participants ("Participants")
deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized
book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates.
Direct Participants ("Direct Participants") include securities
brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is owned by a
number of its Direct Participants and by The New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the
DTC system is also available to others such as securities brokers
and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants"). The
rules applicable to DTC and its Participants are on file with the
Commission.
Purchases of MIPS under the DTC system must be made by or
through Direct Participants, which will receive a credit for the
MIPS on DTC's records. The ownership interest of each actual
purchaser of MIPS ("Beneficial Owner") is in turn to be recorded
on the Direct and Indirect Participants' records. Beneficial
Owners will not receive written confirmation from DTC of their
purchases, but Beneficial Owners are expected to receive written
confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the Direct or
Indirect Participants through which the Beneficial Owners
purchased MIPS. Transfers of ownership interests in the MIPS are
to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will
not receive certificates representing their ownership interests
in MIPS, except in the event that use of the book-entry system
for the MIPS is discontinued.
To facilitate subsequent transfers, all MIPS deposited by
Participants with DTC are registered in the name of Cede & Co.
DTC has no knowledge of the actual Beneficial Owners of the MIPS;
DTC's records reflect only the identity of the Direct
Participants to whose accounts such MIPS are credited, which may
or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to
Direct Participants, by Direct Participants to Indirect
Participants, and by Direct Participants and Indirect
Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices will be sent to Cede & Co. If less than
all of the MIPS of any series are being redeemed, DTC's practice
is to determine by lot the amount of the interest of each Direct
Participant in such series to be redeemed.
Although voting with respect to the MIPS is limited, in
those cases where a vote is required, neither DTC nor Cede & Co.
will consent or vote with respect to MIPS. Under its usual
procedures, DTC would mail its Omnibus Proxy to Duquesne Capital
as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the MIPS are credited on the
record date (identified in a listing attached to the Omnibus
Proxy).
Dividend payments on the MIPS will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the
relevant payable date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe
that it will not receive payments on such payable date. Payments
by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of
such Participant and not of DTC, Duquesne Capital or Duquesne
Light, subject to any statutory or regulatory requirements as may
be in effect from time to time. Payment of dividends to DTC is
the responsibility of Duquesne Capital, disbursement of such
payments to Direct Participants is the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners is the
responsibility of Direct Participants and Indirect Participants.
Except as provided herein, a Beneficial Owner will not be
entitled to receive physical delivery of MIPS. Accordingly, each
Beneficial Owner must rely on the procedures of DTC to exercise
any rights under the MIPS.
DTC may discontinue providing its services as securities
depository with respect to the MIPS at any time by giving
reasonable notice to Duquesne Capital. Under such circumstances,
in the event that a successor securities depository is not
obtained, MIPS certificates are required to be printed and
delivered. Additionally, Duquesne Capital (with the consent of
Duquesne Light) may decide to select another Depositary for the
MIPS or to discontinue use of the system of book-entry transfers
through DTC (or a successor Depositary). In the latter event,
certificates for the MIPS will be printed and delivered.
The information in this section concerning DTC and DTC's
book-entry system has been obtained from DTC. Duquesne Capital
and Duquesne Light believe such information to be reliable, but
neither Duquesne Capital nor Duquesne Light takes any
responsibility for the accuracy thereof.
None of Duquesne Light, Duquesne Capital, any paying agent
or any other agent of Duquesne Light or Duquesne Capital will
have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial
ownership interests in MIPS or for maintaining, supervising or
reviewing any records relating to such beneficial ownership
interests.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
Duquesne Light will act as registrar, transfer agent and
paying agent for the MIPS.
Registration of transfers of MIPS will be effected without
charge by or on behalf of Duquesne Capital, but upon payment in
respect of any tax or other governmental charges which may be
imposed in relation to it, together with the giving of such
indemnity as Duquesne Capital or Duquesne Light may require.
Neither Duquesne Light nor Duquesne Capital will be required
to register or cause to be registered the transfer of any MIPS
which have been called for redemption.
DESCRIPTION OF THE GUARANTEE
SET FORTH BELOW IS A SUMMARY OF CERTAIN TERMS AND PROVISIONS
OF THE PAYMENT AND GUARANTEE AGREEMENT (THE "GUARANTEE") WHICH
WILL BE EXECUTED AND DELIVERED BY DUQUESNE LIGHT FOR THE BENEFIT
OF THE HOLDERS OF ANY SERIES FROM TIME TO TIME OF THE PREFERRED
SECURITIES. THIS SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS
SUBJECT TO, AND QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, THE
FORM OF GUARANTEE FILED AS AN EXHIBIT TO THE REGISTRATION
STATEMENT.
GENERAL
Duquesne Light will irrevocably and unconditionally agree,
to the extent set forth herein, to pay in full, to the holders of
the Preferred Securities of each series (including any series of
MIPS), the Guarantee Payments (as defined below), as and when
due, regardless of any defense, right of set-off or counterclaim
which Duquesne Capital may have or assert. As used herein,
Guarantee Payments means the following payments, without
duplication, to the extent not paid by Duquesne Capital (the
"Guarantee Payments"): (i) any accumulated and unpaid dividends
on the Preferred Securities of such series, but only to the
extent that Duquesne Capital has (a) funds legally available for
the payment of such dividends, as determined by the General
Partner, and (b) cash on hand sufficient to make such payment;
(ii) the Redemption Price payable with respect to Preferred
Securities of such series called for redemption by Duquesne
Capital, but only to the extent that Duquesne Capital has (a)
funds legally available for the payment of such Redemption Price,
as determined by the General Partner, and (b) cash on hand
sufficient to make such payment; and (iii) upon a liquidation of
Duquesne Capital, the lesser of (a) the Liquidation Distribution
and (b) the amount of assets of Duquesne Capital legally
available to Duquesne Capital for distribution to holders of
Preferred Securities. Duquesne Light's obligation to make a
Guarantee Payment may be satisfied by direct payment of the
required amounts by Duquesne Light to holders of Preferred
Securities or by causing Duquesne Capital to pay such amounts to
such holders.
If Duquesne Light fails to make payments of principal of or
interest on the Debentures, Duquesne Capital will not have
sufficient funds to make corresponding payments in respect of the
Redemption Price or Liquidation Distribution, as the case may be,
of, or dividends on, the MIPS. The Guarantee does not cover
payment of amounts in respect of the MIPS to the extent that
Duquesne Capital does not have legally available funds for the
payment thereof and cash on hand sufficient to make such payment.
In such event, a holder of MIPS may enforce certain rights in
respect of the Debentures under the Indenture. See "Description
of the Debentures and the Indenture--Enforcement of Certain Rights
by Holders of MIPS".
CERTAIN COVENANTS OF DUQUESNE LIGHT
In the Guarantee, Duquesne Light will covenant that, so long
as any Preferred Securities remain outstanding, Duquesne Light
shall not declare or pay any dividend on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its
capital stock or make any guarantee payments with respect to the
foregoing (other than payments under the Guarantee) if at such
time Duquesne Light is in default with respect to its payment or
other obligations under the Guarantee or there has occurred and
is continuing a payment default (whether before or after the
expiration of any period of grace) or an Event of Default under
the Indenture.
In the Guarantee, Duquesne Light will also covenant that, so
long as any Preferred Securities of any series remain
outstanding, it will (i) not voluntarily (to the extent permitted
by law) dissolve, liquidate or wind up Duquesne Capital;
(ii) remain the sole General Partner of Duquesne Capital and
timely perform all of its duties as General Partner of Duquesne
Capital (including the duty to pay dividends on the Preferred
Securities), provided that any permitted successor of Duquesne
Light under the Indenture may succeed to Duquesne Light's duties
as General Partner; and (iii) use its reasonable efforts to cause
Duquesne Capital to remain a limited partnership (or permitted
successor under the Partnership Agreement) and otherwise continue
to be treated as a partnership for Federal income tax purposes.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not adversely
affect the rights of holders of Preferred Securities of any
series (in which case no vote will be required), the Guarantee
may be amended only with the prior approval of the holders of not
less than 66 2/3% in aggregate liquidation preference of the
outstanding Preferred Securities of each affected series
(voting together as one class). All guarantees and agreements
contained in the Guarantee will bind the successors, assigns,
receivers and trustees of Duquesne Light and will inure to the
benefit of the holders of the Preferred Securities.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and
effect upon full payment of the Redemption Price of all Preferred
Securities or upon full payment of the amounts payable upon
liquidation of Duquesne Capital. The Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any
time any holder of Preferred Securities must restore payment of
any sums paid under the Preferred Securities or the Guarantee.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of
Duquesne Light and will rank, like the Debentures and other
Indenture Securities, subordinate in right of payment to all
Senior Indebtedness (as hereinafter defined). The Guarantee
provides that each holder of Preferred Securities by acceptance
thereof agrees that (1) amounts payable under the Guarantee will
be subordinate in right of payment to amounts payable upon the
Senior Indebtedness to the same extent that amounts payable under
the Indenture and in respect of Indenture Securities (including
the Debentures) are so subordinated and (2) the subordination
provisions of the Indenture applicable to holders of Indenture
Securities will be equally applicable to it. For a discussion of
the subordination provisions relating to the Debentures and other
Indenture Securities, see "Description of the Debentures and the
Indenture--Subordination".
The Guarantee will constitute a guarantee of payment and not
of collection. A holder of Preferred Securities may enforce the
Guarantee directly against Duquesne Light, and Duquesne Light
will waive any right or remedy to require that any action be
brought against Duquesne Capital or any other person or entity
before proceeding against Duquesne Light. The Guarantee will not
be discharged except by payment of the Guarantee Payments in full
to the extent not paid by Duquesne Capital and by complete
performance of all obligations under the Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed and
interpreted in accordance with the laws of the State of New York.
DESCRIPTION OF THE DEBENTURES AND THE INDENTURE
SET FORTH BELOW IS A SUMMARY OF CERTAIN TERMS AND PROVISIONS
OF THE INDENTURE AND THE DEBENTURES TO BE ISSUED THEREUNDER THAT
WILL EVIDENCE THE LOANS TO BE MADE BY DUQUESNE CAPITAL TO
DUQUESNE LIGHT OF THE PROCEEDS OF MIPS AND DUQUESNE LIGHT'S
RELATED CAPITAL CONTRIBUTIONS TO DUQUESNE CAPITAL. THIS SUMMARY
DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT TO, AND QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO, THE DETAILED PROVISIONS OF THE
FORMS OF INDENTURE AND OFFICER'S CERTIFICATE ESTABLISHING THE
DEBENTURES FILED AS EXHIBITS TO THE REGISTRATION STATEMENT.
UNDER CERTAIN CIRCUMSTANCES FOLLOWING THE OCCURRENCE OF A SPECIAL
EVENT, DEBENTURES MAY BE DISTRIBUTED TO THE HOLDERS OF MIPS AND
DUQUESNE CAPITAL MAY BE DISSOLVED. SEE "DESCRIPTION OF THE
MIPS--SPECIAL EVENT REDEMPTION OR EXCHANGE".
GENERAL
Pursuant to an Indenture (the "Indenture"), between Duquesne
Light and The First National Bank of Chicago, trustee (the
"Indenture Trustee"), Duquesne Light will issue to Duquesne
Capital, with respect to each series of MIPS issued and sold by
Duquesne Capital, a series of Monthly Income Subordinated
Debentures (the "Debentures"), in an aggregate principal amount
equal to the aggregate liquidation preference of such series of
MIPS and the related capital contribution by Duquesne Light,
bearing interest at an annual rate equal to the annual dividend
rate on such series of MIPS and having certain other terms which
correspond to the terms of such series of MIPS.
Unless otherwise provided in a Prospectus Supplement, the
entire principal amount of all Debentures will become due and
payable, together with any accrued and unpaid interest thereon,
including Additional Interest (as hereinafter defined), if any,
on May 31, 2044.
The Indenture provides that, in addition to the Debentures,
additional subordinated debentures may be issued thereunder,
without limitation as to the aggregate principal amount, provided
that such securities are issued to evidence loans by Duquesne
Capital of the proceeds of the issuance of Preferred Securities
and related capital contributions by Duquesne Light to Duquesne
Capital. The Debentures and all other subordinated debentures
hereafter issued under the Indenture are collectively referred to
as the "Indenture Securities". The Indenture does not limit the
amount of other debt, secured or unsecured, which may be issued
by Duquesne Light. The Indenture Securities will be subordinate
and junior to all Senior Indebtedness of Duquesne Light. As of
December 31, 1995, Duquesne Light had approximately $1.7 billion
of Senior Indebtedness outstanding (exclusive of certain
guarantees and other contingent obligations, but inclusive of
capitalized lease obligations and current installments and short-
term notes payable).
The Restated Articles of Incorporation of Duquesne Light
provide that Duquesne Light may not issue any unsecured
indebtedness without the consent of the holders of two-thirds of
its outstanding preferred stock, except for certain limited
purposes, if immediately after such issue the total principal
amount of unsecured indebtedness issued or assumed by Duquesne
Light then outstanding would exceed 20% of the aggregate of (i)
the total principal amount of all secured indebtedness then
outstanding and (ii) the total of the capital stock and earned
and capital surplus of Duquesne Light plus any premiums on
capital stock of Duquesne Light as then to be stated on its books
plus any premiums on capital stock of Duquesne Light of any class
then carried on its books. At December 31, 1995 Duquesne Light
could have issued approximately $216 million of unsecured
indebtedness (such as the Debentures) without violating this
restriction.
MANDATORY REDEMPTION
If Duquesne Capital redeems MIPS of any series in accordance
with the terms thereof, Duquesne Light shall redeem Debentures of
the corresponding series, in a principal amount equal to the
aggregate liquidation preference of the MIPS of such series so
redeemed, at a redemption price equal to 100% of the aggregate
principal amount of such Debentures to be redeemed, plus any
accrued but unpaid interest, including Additional Interest, if
any, any such redemption to be made on the date such MIPS are
redeemed or on such earlier date as Duquesne Capital and Duquesne
Light shall agree.
OPTIONAL REDEMPTION
Unless otherwise provided in a Prospectus Supplement,
Duquesne Light will have the right to redeem the Debentures of
any series at any time on or after the fifth anniversary of the
last day of the month in which such Debentures are issued, in
whole or in part, at a redemption price equal to 100% of the
aggregate principal amount of such Debentures to be redeemed,
plus any accrued but unpaid interest, including Additional
Interest, if any, to the date fixed for redemption, upon not less
than 30 nor more than 60 days' notice.
INTEREST
The Debentures relating to MIPS of any series will bear
interest at the annual rate set forth in the Prospectus
Supplement for such series, accruing from the date they are
issued until maturity. Such interest will be payable monthly in
arrears on the last day of each calendar month to the holder of
record one Business Day prior to the relevant interest payment
date, subject to the right of Duquesne Light to extend any
interest payment period as described below; provided, however,
that if the Debentures of any series are held neither by Duquesne
Capital nor by a securities depositary, Duquesne Light shall have
the right to change such record dates.
The amount of interest payable for any monthly interest
payment period will be computed on the basis of twelve 30-day
months and a 360-day year and, for any period shorter than a full
monthly interest period, will be computed on the basis of the
actual number of days elapsed in such period.
In the event that any date on which interest or principal is
payable on the Debentures is not a Business Day, then payment of
the amounts 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, and in the same
amount, as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Duquesne Light shall have the right at any time or times
during the term of the Indenture Securities of any series,
including any series of Debentures, so long as Duquesne Light is
not in default in the payment of interest under any Indenture
Securities, to extend interest payment periods for up to 60
consecutive months, and at, or at any time prior to, the end of
any such extended interest payment period Duquesne Light will pay
all interest then accrued and unpaid (together with interest
thereon at the rate specified for such Indenture Securities to
the extent permitted by applicable law); provided that, during
any such extended interest payment period, Duquesne Light shall
not declare or pay any dividend on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of its capital
stock or make any guarantee payments with respect to the
foregoing (other than payments under the Guarantee). Prior to
the end of any such extended interest payment period of less than
60 consecutive months, Duquesne Light may further extend the
interest payment period; provided that such extended interest
payment period, together with all such further extensions
thereof, may not exceed a period of 60 consecutive months.
Following the termination of any extended interest payment
period, if Duquesne Light has paid all accrued and unpaid
interest required by the Indenture Securities for such period,
Duquesne Light shall have the right to again extend interest
payment periods for up to 60 consecutive months as herein
described. So long as Duquesne Capital is the sole holder of
Indenture Securities, Duquesne Light shall give Duquesne Capital
notice of its selection of any such extended interest payment
period one Business Day prior to the earlier of (i) the date
dividends on any series of Preferred Securities would otherwise
be payable and (ii) the date Duquesne Capital is required to give
notice of the record or payment date of such dividends to any
national securities exchange on which the Preferred Securities of
such series shall be listed or to holders of the Preferred
Securities of such series, but in any event not less than two
Business Days prior to such record date. Duquesne Light will
cause Duquesne Capital to give such notice of Duquesne Light's
selection of any such extended interest payment period to the
holders of the Preferred Securities. If Duquesne Capital is not
the sole holder of the Indenture Securities, Duquesne Light shall
give the holders of Indenture Securities (including the
Debentures) notice of its selection of such extended interest
payment period ten Business Days prior to the related interest
payment date.
ADDITIONAL INTEREST
If Duquesne Capital shall be required to pay, with respect
to its income derived from the interest payments on the Indenture
Securities of any series, any amounts for or on account of any
taxes, duties, assessments or governmental charges of whatever
nature imposed by the United States, or any other taxing
authority, then, in any such case, Duquesne Light will pay as
interest on such series of Indenture Securities such additional
interest ("Additional Interest") as may be necessary in order
that the net amounts received and retained by Duquesne Capital
after the payment of such taxes, duties, assessments or
governmental charges shall result in Duquesne Capital's having
such funds as it would have had in the absence of the payment of
such taxes, duties, assessments or governmental charges.
BOOK-ENTRY SYSTEM AND SETTLEMENT IN THE EVENT OF EXCHANGE
In the event that Debentures are to be distributed to the
holders of the MIPS, it is anticipated that such distribution
would occur in book-entry form and that DTC, or any successor
Depositary for the MIPS, would act as depositary for the
Debentures and that the depositary arrangements for the
Debentures would be substantially identical to those in effect
for the MIPS. For a description of DTC and the terms of the
depositary arrangements relating to payments, transfers, voting
rights, redemption and other notices and other matters, see
"Description of the MIPS--Book-Entry-Only Issuance".
Except under certain limited circumstances as described
under "Description of the MIPS--Book-Entry-Only Issuance" for
delivery of certificates evidencing beneficial ownership in MIPS,
the Debentures would not be issuable as, or exchangeable for,
Debentures in definitive certificated form. In the event that
Debentures were to be issued in certificated form, such
Debentures would be in denominations of $25.00 and integral
multiples thereof and principal and interest on such Debentures
would be payable at, and transfers or exchanges of such
Debentures would be effected at, the office or agency of Duquesne
Light designated for such purposes.
SUBORDINATION
The Indenture will provide (and each holder of MIPS by
acceptance thereof agrees) that each of the Debentures is
subordinate and junior in right of payment to all Senior
Indebtedness. The Indenture defines "Senior Indebtedness" as all
obligations (other than non-recourse obligations and the
indebtedness issued under the Indenture) of, or guaranteed or
assumed by, Duquesne Light for borrowed money (including both
senior and subordinated indebtedness for borrowed money (other
than the Indenture Securities)) or for the payment of money
relating to any lease which is capitalized on the consolidated
balance sheet of Duquesne Light and its subsidiaries in
accordance with generally accepted accounting principles as in
effect from time to time, or evidenced by bonds, debentures,
notes or other similar instruments, and in each case, amendments,
renewals, extensions, modifications and refundings of any such
indebtedness or obligations, whether existing as of the date of
the Indenture or subsequently incurred by Duquesne Light;
provided that Duquesne Light's obligations under the Guarantee
shall not be deemed to be "Senior Indebtedness" for purposes of
the Indenture (or the Guarantee).
Upon the maturity of any Senior Indebtedness of Duquesne
Light by lapse of time, acceleration or otherwise, all such
Senior Indebtedness then due and owing shall first be paid in
full, before any payment is made on account of, or Duquesne Light
can acquire, any Indenture Securities (including the Debentures).
In the event (a) of any insolvency or bankruptcy
proceedings, or any receivership, liquidation, reorganization or
other similar proceedings in respect of Duquesne Light or a
substantial part of its property or of any proceedings for
liquidation, dissolution or other winding up of Duquesne Light,
whether or not involving insolvency or bankruptcy, or (b) that
(i) a default shall have occurred with respect to the payment of
principal of or interest on or other monetary amounts due and
payable on any Senior Indebtedness or (ii) there shall have
occurred a default (other than a default in the payment of
principal or interest, or other monetary amounts due and payable)
in respect of any Senior Indebtedness, as defined therein or in
the instrument under which the same is outstanding, permitting
the holder or holders thereof to accelerate the maturity thereof
(with notice or lapse of time, or both), and such default shall
have continued beyond the period of grace, if any, in respect
thereof, and, in the cases of subclauses (i) and (ii) of this
clause (b), such default shall not have been cured or waived or
shall not have ceased to exist, or (c) that the principal of and
the accrued interest on the Indenture Securities of any series
shall have been declared due and payable upon an Event of Default
and such declaration shall not have been rescinded and annulled
as provided under the Indenture, then the holders of all Senior
Indebtedness shall first be entitled to receive payment of the
full amount due thereon, or provision shall be made for such
payment in money or money's worth, before the holders of any of
the Indenture Securities are entitled to receive a payment on
account of the principal of or any interest on the indebtedness
evidenced by their Indenture Securities. Any payment or
distribution, whether in cash, securities or other property,
which would otherwise (but for the subordination provisions) be
payable or deliverable in respect of the Indenture Securities
shall be paid or delivered directly to the holders of such Senior
Indebtedness (or their representative or trustee) in accordance
with the priorities then existing among such holders until all
Senior Indebtedness of Duquesne Light shall have been paid in
full before any payment or distribution is made to the holders of
Indenture Securities. In the event that notwithstanding such
subordination provisions, any payment or distribution of assets
of any kind or character is made on the Indenture Securities
before all Senior Indebtedness is paid in full, the Indenture
Trustee or the holders of Indenture Securities receiving such
payment will be required to pay over such payment or distribution
to the holders of such Senior Indebtedness.
No present or future holder of any Senior Indebtedness of
Duquesne Light shall be prejudiced in the right to enforce
subordination of the indebtedness under the Indenture by any act
or failure to act on the part of Duquesne Light.
Senior Indebtedness will not be deemed to have been paid in
full unless the holders thereof shall have received cash (or
securities or other property satisfactory to such holders) in
full payment of such Senior Indebtedness then outstanding. Upon
the payment in full of all Senior Indebtedness, the holders of
Indenture Securities shall be subrogated to all the rights of any
holders of such Senior Indebtedness to receive any further
payments or distributions of cash, property or securities of
Duquesne Light applicable to such Senior Indebtedness until the
Indenture Securities shall have been paid in full, and such
payments or distributions of cash, property or securities
received by the holders of Indenture Securities, by reason of
such subrogation, which otherwise would be paid or distributed to
the holders of such Senior Indebtedness, shall, as between
Duquesne Light and its creditors other than the holders of Senior
Indebtedness, on the one hand, and the holders of Indenture
Securities on the other, be deemed to be a payment on account of
Senior Indebtedness, and not on account of the Indenture
Securities.
CERTAIN COVENANTS OF DUQUESNE LIGHT
The Indenture will provide that, so long as any Preferred
Securities of any series remain outstanding, Duquesne Light will
not declare or pay any dividend on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of its capital
stock or make any guarantee payments with respect to the
foregoing (other than payments under the Guarantee) if at such
time (i) Duquesne Light will be in default with respect to its
payment or other obligations under the Guarantee, (ii) there has
occurred and is continuing a payment default (whether before or
after the expiration of any period of grace) or an Event of
Default under the Indenture or (iii) Duquesne Light has given
notice of its election to extend any interest payment period as
provided in the Indenture, and such period, or any extension
thereof, shall be continuing.
The Indenture will also provide that, so long as Preferred
Securities of any series remain outstanding, Duquesne Light will
(i) maintain direct or indirect ownership of all interests in
Duquesne Capital other than such Preferred Securities, (ii) not
voluntarily (to the extent permitted by law) dissolve, liquidate
or wind up Duquesne Capital, (iii) remain the sole General
Partner of Duquesne Capital and timely perform in all material
respects all of its duties as the General Partner of Duquesne
Capital (including the duty to pay dividends on the MIPS as
described in the fourth paragraph under "Description of the
MIPS--Dividends"), provided that any permitted successor to
Duquesne Light under the Indenture may succeed to Duquesne
Light's duties as General Partner of Duquesne Capital, and (iv)
use reasonable efforts to cause Duquesne Capital to remain a
limited partnership and otherwise continue to be treated as a
partnership for Federal income tax purposes; provided that
Duquesne Light may permit Duquesne Capital to consolidate or
merge with or into another limited partnership or other permitted
successor as described above under "Description of the
MIPS--Merger, Consolidation, Amalgamation, etc. of Duquesne
Capital" so long as Duquesne Light agrees to comply with the
covenants described in clauses (i) through (iv) above with
respect to such successor limited partnership or other permitted
successor.
So long as Duquesne Capital holds the Debentures of any
series, it may not waive compliance or waive any default in
compliance by Duquesne Light with any covenant or other term in
such Debentures or the Indenture, or any past default under the
Indenture, without the approval or consent of the holders of at
least 66 2/3% in aggregate liquidation preference of the
outstanding Preferred Securities affected.
EVENTS OF DEFAULT; REMEDIES
The following events shall constitute Events of Default with
respect to each series of Indenture Securities (including each
series of Debentures) issued under the Indenture:
(a) Duquesne Light shall fail to pay any interest,
including any Additional Interest, on any Indenture
Securities of such series within 30 days after the same
becomes due and payable (whether or not payment is
prohibited by the provisions described above under
"Subordination" or otherwise); provided that a valid
extension of the interest payment period by Duquesne Light
shall not constitute a failure to pay interest for this
purpose;
(b) Duquesne Light shall fail to pay when due any
principal of or premium, if any, on any Indenture Securities
of such series, whether at maturity, upon redemption, by
declaration of acceleration or otherwise (whether or not
payment is prohibited by the provisions described above
under "Subordination" or otherwise);
(c) Duquesne Light shall fail to perform or breach any
covenant or warranty in the Indenture (other than a covenant
or warranty a default in the performance of which or breach
of which is dealt with elsewhere under this paragraph) for a
period of 60 days after there has been given to Duquesne
Light by the Indenture Trustee, or to Duquesne Light and the
Indenture Trustee by the holders of at least 25% in
principal amount of outstanding Indenture Securities of such
series, a written notice specifying such default or breach
and requiring it to be remedied and stating that such notice
is a "Notice of Default", unless the Indenture Trustee, or
the Indenture Trustee and the holders of a principal amount
of Indenture Securities of such series not less than the
principal amount of Indenture Securities of such series the
holders of which gave such notice, as the case may be, agree
in writing to an extension of such period prior to its
expiration; provided, however, that the Indenture Trustee,
or the Indenture Trustee and such holders, as the case may
be, will be deemed to have agreed to an extension of such
period if corrective action has been initiated by Duquesne
Light within such period and is being diligently pursued;
(d) Certain events relating to reorganization,
bankruptcy or insolvency of Duquesne Capital or Duquesne
Light or the appointment of a receiver or trustee for its
property; or
(e) any other Event of Default specified with respect
to Indenture Securities of such series.
No Event of Default with respect to any series of Indenture
Securities (other than that described in (d) above) necessarily
constitutes an Event of Default with respect to the Indenture
Securities of any other series issued under the Indenture.
If an Event of Default due to the default in payment of
principal of or interest on any series of Indenture Securities or
due to the default in the performance or breach of any other
covenant or warranty of Duquesne Light applicable to the
Indenture Securities of such series but not applicable to all
series occurs and is continuing, then either the Indenture
Trustee or the holders of 25% in principal amount of the
outstanding Indenture Securities of such series or a Special
Representative appointed in respect of the Preferred Securities
of the corresponding series as described under "Description of
the MIPS--Voting Rights" may declare the principal of all of the
Indenture Securities of such series and interest accrued thereon
to be due and payable immediately (subject to the subordination
provisions of the Indenture). If an Event of Default due to the
default in the performance of any other covenants or agreements
in the Indenture applicable to all outstanding Indenture
Securities or due to certain events of bankruptcy, insolvency or
reorganization of Duquesne Light or Duquesne Capital has occurred
and is continuing, either the Indenture Trustee or the holders of
not less than 25% in principal amount of all outstanding
Indenture Securities, considered as one class, or the Special
Representative or Special Representatives appointed in respect of
series of outstanding Indenture Securities representing not less
than 25% in principal amount of all Indenture Securities then
outstanding, and not the holders of the Indenture Securities of
any one of such series or the Special Representative appointed in
respect of any one series, may make such declaration of
acceleration (subject to the subordination provisions of the
Indenture).
At any time after the declaration of acceleration with
respect to the Indenture Securities of any series has been made
and before a judgment or decree for payment of the money due has
been obtained, the Event or Events of Default giving rise to such
declaration of acceleration will, without further act, be deemed
to have been waived, and such declaration and its consequences
will, without further act, be deemed to have been rescinded and
annulled, if (a) Duquesne Light has paid or deposited with the
Indenture Trustee a sum sufficient to pay (1) all overdue
interest on all Indenture Securities of such series; (2) the
principal of and premium, if any, on any Indenture Securities of
such series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or
rates prescribed therefor in such Indenture Securities; (3)
interest upon overdue interest at the rate or rates prescribed
therefor in such Indenture Securities to the extent that payment
of such interest is lawful; and (4) all amounts due to the
Indenture Trustee under the Indenture; and (b) any other Event or
Events of Default with respect to the Indenture Securities of
such series, other than the nonpayment of the principal of the
Indenture Securities of such series which has become due solely
by such declaration of acceleration, have been cured or waived as
provided in the Indenture.
If an Event of Default with respect to the Indenture
Securities of any series occurs and is continuing, the holders of
a majority in principal amount of the outstanding Indenture
Securities of such series or the Special Representative appointed
in respect of such series may direct the time, method and place
of conducting any proceeding for any remedy available to the
Indenture Trustee or exercising any trust or power conferred on
the Indenture Trustee with respect to the Indenture Securities of
such series; provided, however, that if an Event of Default
occurs and is continuing with respect to more than one series of
Indenture Securities, the holders of a majority in aggregate
principal amount of the outstanding Indenture Securities of all
such series, considered as one class, or the Special
Representative or Special Representatives appointed with respect
to series of outstanding Indenture Securities representing 66 2/3%
in aggregate principal amount of the outstanding Indenture
Securities of all such series, will have the right to make such
direction, and not the holders of the Indenture Securities of any
one of such series or the Special Representative of any one of
such series; and provided, further, that such direction will not
be in conflict with any rule of law or with the Indenture. Before
proceeding to exercise any right or power under the Indenture at
the direction of such holders or any such Special Representative,
the Indenture Trustee shall be entitled to receive from such holders
or any such Special Representative reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred
by it in compliance with any such direction.
Duquesne Light will be required to furnish to the Indenture
Trustee annually a statement of an officer of Duquesne Light to
the effect that, to the best of such officer's knowledge,
Duquesne Light is not in default in the performance of the terms
of the Indenture or, if such officer has knowledge that Duquesne
Light is in default, specifying such default.
The Indenture provides that no holder of Indenture
Securities issued under the Indenture may institute any
proceeding against Duquesne Light with respect to the Indenture
unless (a) the holder has previously given to the Indenture
Trustee written notice of a continuing Event of Default and
unless the holders of not less than 25% in principal amount of
the Indenture Securities of all series of Indenture Securities in
respect of which an Event of Default has occurred and is
continuing (considered as one class) have requested the Indenture
Trustee to institute such action and shall have offered the
Indenture Trustee reasonable indemnity, (b) the Indenture Trustee
shall not have instituted such action within 60 days of such
request, and (c) the Indenture Trustee shall not have received
direction inconsistent with such written request by the holders
of a majority in principal amount of the outstanding Indenture
Securities of such affected series (considered as one class).
Furthermore, no holder will be entitled to institute any such
action if and to the extent that such action would disturb or
prejudice the rights of other holders of Indenture Securities.
Notwithstanding the foregoing, each holder of an Indenture
Security has a right, which is absolute and unconditional, to
receive payment of the principal of and premium, if any, and
interest, subject to the right of Duquesne Light to extend
interest payment periods in accordance with the Indenture, if
any, on such Indenture Security when due and to institute suit
for the enforcement of any such payment, and such rights may not
be impaired without the consent of such holder.
The Indenture requires the Indenture Trustee to give to all
holders of outstanding Indenture Securities of any series notice
of any default to the extent required by the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"), unless such
default has been cured or waived; provided that in the case of
any default of the character specified above in clause (c) under
"Events of Default", no such notice will be given to such holders
until at least 45 days after the occurrence thereof. The Trust
Indenture Act currently permits the Indenture Trustee to withhold
notices of default (except for certain payment defaults) if the
Indenture Trustee in good faith determines the withholding of
such notice to be in the interests of the holders.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF MIPS
Holders of MIPS will have the rights referred to under
"Description of the MIPS--Voting Rights", including the right under
certain circumstances to appoint a Special Representative, which
Special Representative shall be authorized to exercise Duquesne
Capital's right to accelerate the principal amount of the
Debentures and to enforce Duquesne Capital's other rights under
the Debentures and the Indenture.
The Indenture provides that for so long as any Preferred
Securities remain outstanding, the obligations of Duquesne Light
thereunder are for the benefit of the holders of Preferred
Securities. The holders may, to the fullest extent permitted by
applicable law, enforce Duquesne Light's obligations under the
Indenture and the Debentures directly against Duquesne Light to
the same extent as if such holders of Preferred Securities held a
principal amount of Debentures equal to the liquidation
preference of the Preferred Securities held by such holders.
MODIFICATION OF INDENTURE
Without the consent of any holders of Indenture Securities,
Duquesne Light and the Indenture Trustee may enter into one or
more supplemental indentures for any of the following purposes:
(a) to evidence the assumption by any successor to Duquesne Light
of the covenants of Duquesne Light in the Indenture and the
Indenture Securities; or (b) to add one or more covenants of
Duquesne Light or other provisions for the benefit of the holders
of all or any series of outstanding Indenture Securities or to
surrender any right or power conferred upon Duquesne Light by the
Indenture; or (c) to add any additional Events of Default with
respect to all or any series of outstanding Indenture Securities;
or (d) to change or eliminate any provision of the Indenture or
to add any new provision to the Indenture, provided that if such
change, elimination or addition will adversely affect the
interests of the holders of Indenture Securities of any series in
any material respect, such change, elimination or addition will
become effective with respect to such series only when there is
no Indenture Security of such series remaining outstanding under
the Indenture; or (e) to provide collateral security for the
Indenture Securities; or (f) to establish the form or terms of
Indenture Securities of any series as permitted by the Indenture;
or (g) to evidence and provide for the acceptance of appointment
of a successor Indenture Trustee under the Indenture with respect
to the Indenture Securities of one or more series and to add to
or change any of the provisions of the Indenture as shall be
necessary to provide for or to facilitate the administration of
the trusts under the Indenture by more than one trustee; or (h)
to provide for the procedures required to permit the utilization
of a noncertificated system of registration for any series of
Indenture Securities; or (i) to change any place where (1) the
principal of and premium, if any, and interest, if any, on any
Indenture Securities shall be payable, (2) any Indenture
Securities may be surrendered for registration of transfer or
exchange and (3) notices and demands to or upon Duquesne Light in
respect of Indenture Securities and the Indenture may be served;
or (j) to cure any ambiguity or inconsistency or to make or
change any other provisions with respect to matters and questions
arising under the Indenture, provided such changes or additions
shall not adversely affect the interests of the holders of
Indenture Securities of any series in any material respect.
Without limiting the generality of the foregoing, if the
Trust Indenture Act is amended after the date of the original
Indenture in such a way as to require changes to the Indenture or
the incorporation therein of additional provisions or so as to
permit changes to, or the elimination of, provisions which, at
the date of the original Indenture or at any time thereafter,
were required by the Trust Indenture Act to be contained in the
Indenture, Duquesne Light and the Indenture Trustee may, without
the consent of any holders, enter into one or more supplemental
indentures to effect or reflect any such amendment.
The consent of the holders of not less than a majority in
aggregate principal amount of the Indenture Securities of all
series then outstanding under the Indenture, considered as one
class, is required for the purpose, pursuant to an indenture or
supplemental indenture, of adding any provisions to, or changing
in any manner or eliminating any of the provisions of, the
Indenture or modifying in any manner the rights of the holders of
such series; provided, however, that if less than all of the
series of Indenture Securities outstanding under the Indenture
are directly affected by a supplemental indenture, then the
consent only of the holders of a majority in aggregate principal
amount of the outstanding Indenture Securities of all series so
directly affected, considered as one class, will be required; and
provided, further, that no such supplemental indenture will,
without the consent of the holder of each Indenture Security
outstanding under the Indenture of each such series directly
affected thereby, (a) change the stated maturity of, or any
installment of principal of or the rate of interest on or method
of calculating the rate of interest on (or the amount of any
installment of interest on), any Indenture Security, or reduce
the principal thereof or redemption premium thereon, if any, or
change the currency in which any Indenture Security is payable,
or impair the right to institute suit for the enforcement of
payment on any Indenture Security, (b) reduce the percentage in
principal amount of the Indenture Securities outstanding under
such series (or, if applicable, in liquidation preference of any
series of Preferred Securities) required to consent to any
supplemental indenture or waiver under the Indenture or to reduce
the requirements for quorum and voting or (c) modify the
provisions in the Indenture relating to supplemental indentures,
waivers of certain covenants and waivers of past defaults.
A supplemental indenture which changes or eliminates any
covenant or other provision of the Indenture which has expressly
been included solely for the benefit of one or more particular
series of Indenture Securities, or which modifies the rights of
the holders of Indenture Securities of such series with respect
to such covenant or other provision, shall be deemed not to
affect the rights under the Indenture of the holders of any other
Indenture Securities.
Notwithstanding the foregoing, so long as any of the
Preferred Securities remain outstanding, Duquesne Capital shall
not agree to any such amendment that affects the holders of
Preferred Securities then outstanding, without the prior consent
of the holders of not less than 66 2/3% in aggregate liquidation
preference of all such affected Preferred Securities outstanding
considered as one class (or, in the case of changes described in
(a), (b) or (c) above, 100% in aggregate liquidation preference of
all such affected Preferred Securities then outstanding considered
as one class).
DEFEASANCE
The Indenture Securities of any series, or any portion of
the principal amount thereof, will be deemed to have been paid
for purposes of the Indenture, and the entire indebtedness of
Duquesne Light in respect thereof will be deemed to have been
satisfied and discharged, if there shall have been irrevocably
deposited with the Indenture Trustee or any paying agent other
than Duquesne Light, in trust: (a) money in the amount which
will be sufficient, or (b) Government Obligations (as defined
below), which do not contain provisions permitting the redemption
or other prepayment thereof at the option of the issuer thereof,
the principal of and the interest on which when due, without any
regard to reinvestment thereof, will provide monies which,
together with the money, if any, deposited with or held by the
Indenture Trustee, will be sufficient, or (c) a combination of
(a) and (b) which will be sufficient, to pay when due the
principal of and premium, if any, and interest, if any, due and
to become due on such Indenture Securities or portions thereof on
and prior to the maturity thereof. For this purpose, Government
Obligations include direct obligations of, or obligations
unconditionally guaranteed by, the United States of America
entitled to the benefit of the full faith and credit thereof and
certificates, depositary receipts or other instruments which
evidence a direct ownership interest in such obligations or in
any specific interest or principal payments due in respect
thereof.
GOVERNING LAW
The Indenture and Debentures will be governed by and
construed in accordance with the laws of the State of New York,
except to the extent that the laws of any other jurisdiction
shall be mandatorily applicable.
MISCELLANEOUS
The Indenture provides that Duquesne Light may consolidate
or merge with, or convey, transfer or lease its properties and
assets substantially as an entirety to any other corporation,
provided that such successor corporation expressly assumes all
obligations of Duquesne Light under the Indenture and certain
other conditions are met.
RESIGNATION OF THE INDENTURE TRUSTEE
The Indenture Trustee may resign at any time by giving
written notice thereof to Duquesne Light or may be removed at any
time by act of the holders of a majority in aggregate principal
amount of Indenture Securities then outstanding delivered to the
Indenture Trustee and Duquesne Light; provided that so long as
any Preferred Securities remain outstanding, Duquesne Capital
shall not enter into any act to remove the Indenture Trustee
without the consent of the holders of 66 2/3% in aggregate
liquidation preference of Preferred Securities outstanding. No
resignation or removal of the Indenture Trustee and no
appointment of a successor trustee will become effective until
the acceptance of appointment by a successor trustee in
accordance with the requirements of the Indenture. So long as no
Event of Default or event which, after notice or lapse of time,
or both, would become an Event of Default has occurred and is
continuing, if Duquesne Light has delivered to the Indenture
Trustee a resolution of its Board of Directors appointing a
successor trustee and such successor has accepted such
appointment in accordance with the terms of the Indenture, the
Indenture Trustee will be deemed to have resigned and the
successor will be deemed to have been appointed as trustee in
accordance with the Indenture.
UNITED STATES INCOME TAXATION
IN GENERAL
This section is a summary of certain Federal income tax
considerations that may be relevant to prospective purchasers of
MIPS and represents the opinion of Reid & Priest LLP, counsel to
Duquesne Light and Duquesne Capital, insofar as it relates to
matters of law and legal conclusions. This section 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 discussion to
comment on all Federal income tax matters affecting purchasers of
MIPS. Moreover, the discussion focuses on holders of MIPS who
are individual citizens or residents of the United States and has
only limited application to corporations, estates, trusts or non-
resident aliens. In addition, this discussion does not address
the tax consequences to persons who purchase MIPS other than
pursuant to their initial issuance and distribution.
Accordingly, each prospective purchaser of MIPS should consult,
and should depend upon, his or her own tax advisor in analyzing
the Federal, state, local and foreign income tax consequences of
the purchase, ownership, or disposition of MIPS.
INCOME FROM MIPS
In the opinion of Reid & Priest LLP, Duquesne Capital will
be treated as a partnership for Federal income tax purposes.
Accordingly, each MIPS holder will be required to include in
gross income his or her distributive share of Duquesne Capital's
net income. Any amount so included in a MIPS holder's gross
income will increase his or her tax basis in the MIPS, and the
amount of cash distributed to the MIPS holder will be a non-
taxable reduction in his or her tax basis in the MIPS. The
income included in a MIPS holder's gross income should not exceed
cash received on such MIPS, except in the limited circumstances
described below under "Potential Extension of Interest Payment
Period." No portion of such income will be eligible for the
dividends received deduction.
DISPOSITION OF MIPS
Upon the sale or redemption for cash of MIPS, gain or loss
will be recognized by each MIPS holder in an amount equal to the
difference between (i) the amount realized by the MIPS holder for
such MIPS, and (ii) such holder's tax basis in such MIPS.
Depending upon the particular circumstances of a MIPS holder,
gain or loss recognized by such holder on the sale or exchange of
MIPS held for more than one (1) year will generally be taxable as
long-term capital gain or loss.
EXCHANGE OF THE MIPS FOR DEBENTURES
Under certain circumstances, as described under the caption
"Description of the MIPS--Special Event Redemption or Exchange",
Duquesne Capital may distribute the Debentures to MIPS holders in
exchange for the MIPS. Such an exchange will generally be
treated as a non-taxable exchange and will result in each MIPS
holder receiving an aggregate basis in its Debentures equal to
such holder's aggregate tax basis in its MIPS. A MIPS holder's
holding period in the Debentures received in such an exchange
will include the period for which the MIPS were held by such
holder, provided the MIPS were held as a capital asset.
If such an exchange occurs following a determination that,
due to a change in law, Duquesne Capital is subject to Federal
income tax with respect to interest received on the Debentures,
such exchange will generally be taxable to the MIPS holder.
Gain or loss will be recognized in amount measured by the
difference between the MIPS holder's basis in its MIPS and the
value of the Debentures received in the exchange. In such a
case, the holding period of the MIPS holder for the Debentures
will not include the period for which the MIPS were held.
POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD
Under the terms of the Debentures, Duquesne Light will be
permitted to extend from time to time interest payment periods
for up to 60 consecutive months. Because the interest payment
period is extendable, the Debentures will be treated as issued
with "original issue discount" ("OID") pursuant to Code sections
1271 et seq. and the Treasury Regulations promulgated thereunder.
Pursuant thereto, Duquesne Capital will be required to include
the interest on the Debentures in income as it accrues in
accordance with a constant yield method before actual receipt of
the cash payment representing interest.
Accrued income includible by Duquesne Capital during an
extended interest payment period pursuant to the OID rules will
be allocated, but not distributed, to MIPS holders of record on
the Business Day preceding the last day of each calendar month.
As a result, during an extended interest payment period holders
of MIPS will include interest in gross income in advance of the
receipt of cash. The tax basis of MIPS will be increased by the
amount of any interest that is included in a MIPS holder's income
without receipt of cash, and will be decreased when and if such
cash is subsequently received by such MIPS holder from Duquesne
Capital.
However, in the event that interest payable on the
Debentures is not deductible by Duquesne Light for Federal income
tax purposes, during an extended interest payment period holders
of the MIPS will not include any amount in gross income with
respect to the MIPS until Duquesne Capital is required to include
such amounts in its income, which should occur at approximately
the same time as the receipt of cash from Duquesne Capital.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien
Holder" is any holder of MIPS who is (i) a nonresident alien
individual, foreign corporation, partnership, estate or trust,
and (ii) not subject to Federal income tax on a net income basis
in respect of such MIPS.
Under current Federal income tax law:
(i) payments by Duquesne Capital or any of its paying
agents to any United States Alien Holder will not be subject
to Federal withholding tax provided that (a) the beneficial
owner of MIPS does not actually or constructively own ten
percent (10%) or more of the total combined voting power of
all classes of stock of Duquesne Light entitled to vote, (b)
the beneficial owner of MIPS is not a controlled foreign
corporation that is related to Duquesne Light through stock
ownership, and (c) either (1) the beneficial owner of MIPS
certifies to Duquesne Capital or its agent, under penalties
of perjury, that it is a United States Alien Holder and
provides its name and address, or (2) the holder of MIPS is
a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary
course of its trade or business (a "Financial Institution")
and such holder certifies to Duquesne Capital or its agent
under penalties of perjury that such statement has been
received from the beneficial owner by it or by a Financial
Institution between it and the beneficial owner and
furnishes Duquesne Capital or its agent with a copy thereof;
and
(ii) a United States Alien Holder will generally not be
subject to Federal tax on any gain realized upon the sale or
exchange of MIPS unless such holder is present in the United
States for 183 days or more in the taxable year of the sale
and either has a "tax home" in the United States or certain
other requirements are met.
The above paragraphs (i) and (ii) are subject to the following
discussion on backup withholding and assume satisfaction by
Duquesne Light of its withholding tax obligations.
DUQUESNE CAPITAL INFORMATION RETURNS AND AUDIT PROCEDURES
Duquesne Light, as the general partner of Duquesne Capital,
will furnish each MIPS holder with a Schedule K-1 for each year
setting forth such MIPS holder's allocable share of income for
the prior calendar year. Duquesne Light is currently required to
furnish such Schedule K-1's as soon as practicable following the
end of each year, but in any event prior to March 31.
Any person who holds MIPS as a nominee for another person is
required to furnish to Duquesne Light: (i) the name, address and
taxpayer identification number of the beneficial owner and
nominee; (ii) information as to whether the beneficial owner is
(a) a person that is not a United States person, (b) a foreign
government, an international organization or any wholly-owned
agency or instrumentality of the foregoing, or (c) a tax-exempt
entity; (iii) the amount and description of the MIPS held,
acquired or transferred for the beneficial owner; and (iv)
certain information including the dates of acquisitions and
transfers, means of acquisitions and transfers, and acquisition
costs 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 MIPS that 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
Duquesne Light. The nominee is required to supply the beneficial
owners of the MIPS with the information furnished to Duquesne
Light.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to
payments of the proceeds of the sale of MIPS within the United
States to noncorporate U.S. holders of MIPS, and "backup
withholding" at a rate of thirty-one percent (31%) will apply to
such payments if such holder fails to provide to Duquesne Capital
an accurate taxpayer identification number or fails to report in
full dividend and interest income.
Payments of the proceeds from the sale by a United States
Alien Holder of MIPS made to or through a foreign office or a
broker will not be subject to information reporting or backup
withholding. However, if the broker is a United States person, a
controlled foreign corporation for United States tax purposes, or
a foreign person fifty percent (50%) or more of whose gross
income is effectively connected with a United States trade or
business for a specified three (3) year period, information
reporting may apply to such payments. Payments of the proceeds
from the sale of MIPS 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 United
States Alien Holder status or otherwise establishes an exemption
from information reporting and backup withholding.
POSSIBLE TAX LAW CHANGES
On March 19, 1996, the Revenue Reconciliation Bill of 1996
(the "Bill"), the revenue portion of President Clinton's budget
proposal, was released. The Bill would, among other things,
generally deny interest deductions for interest on an instrument
issued by a corporation that has a maximum weighted average
maturity of more than 40 years. The Bill would also generally
treat as equity an instrument issued by a corporation that has a
maximum term of 20 years and that is not shown as indebtedness on
the separate balance sheet of the issuer or, where the instrument
is issued to a related party (other than a corporation), where
the holder or some other related party issues a related
instrument that is not shown as indebtedness on the issuer's
balance sheet. The above-described provisions were proposed to
be effective generally for instruments issued on or after
December 7, 1995. If either provision were to apply to the
Debentures, Duquesne Light would be unable to deduct interest on
the Debentures. However, on March 29, 1996, the Chairmen of the
Senate Finance and House Ways and Means Committees issued a joint
statement to the effect that it was their intention that the
effective date of the President's legislative proposals, if
adopted, will be no earlier than the date of appropriate
Congressional action. There can be no assurance, however, that
current or future legislative proposals or final legislation will
not affect the ability of Duquesne Light to deduct interest on
the Debentures. Such a change would constitute a Tax Event,
which would permit Duquesne Light to cause a redemption of the
MIPS or a distribution of such Debentures in liquidation of
Duquesne Capital, as described more fully under "Description of
the MIPS--Special Event Redemption or Exchange" above.
PLAN OF DISTRIBUTION
Duquesne Capital may sell MIPS (i) through underwriters,
including Goldman, Sachs & Co., (ii) through dealers, (iii)
through agents or (iv) directly to purchasers. The Prospectus
Supplement relating to the MIPS of any series will set forth the
terms of such offering, including the names of any underwriters,
dealers or agents involved in the sale of such MIPS, the number
of MIPS of such series to be purchased by any underwriters,
dealers or agents and any applicable commissions or discounts.
The net estimated proceeds to Duquesne Capital from such series
of MIPS will also be set forth in the Prospectus Supplement.
If underwriters are used in the sale, the MIPS being sold
will be acquired by the underwriters for their own account and
may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale.
Unless otherwise set forth in the Prospectus Supplement relating
to the MIPS of any series, the obligations of the underwriters to
purchase such MIPS will be subject to certain conditions
precedent and the underwriters will be obliged to purchase all of
such MIPS if any of such MIPS are purchased. Any initial public
offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
If dealers are used in the sale, unless otherwise indicated
in the Prospectus Supplement relating to the MIPS of any series,
Duquesne Capital will sell such MIPS to the dealers as
principals. The dealers may then resell such MIPS to the public
at varying prices to be determined by such dealers at the time of
resale.
MIPS of any series may also be sold through agents
designated by Duquesne Capital from time to time or directly by
Duquesne Capital. Any agent involved in the offering and sale of
any such MIPS will be named, and any commissions payable by
Duquesne Capital to such agent will be set forth, in the
Prospectus Supplement relating to the MIPS of such series.
Unless otherwise indicated in such Prospectus Supplement, any
such agent will act on a reasonable efforts basis for the period
of its appointment.
Underwriters, dealers and agents may be entitled under
agreements entered into with Duquesne Light or Duquesne Capital
to indemnification by Duquesne Light or Duquesne Capital against
certain civil liabilities, including liabilities under the
Securities Act, or to contribution with respect to payments which
the underwriters, dealers or agents may be required to make in
respect thereof. Underwriters, dealers and agents may be
customers of, engage in transactions with, or perform services
for, Duquesne Light and Duquesne Capital in the ordinary course
of business.
Each series of MIPS will be a new issue of securities and
will have no established trading market. Any underwriter to whom
MIPS of any series are sold by Duquesne Capital for public
offering and sale may make a market in such series of MIPS, but
such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. If so
indicated in the accompanying Prospectus Supplement for any
series of MIPS, the MIPS of such series will be listed on a
national securities exchange. No assurance can be given as to
the liquidity of, or the trading markets for, any MIPS.
LEGAL OPINIONS
Certain matters of Delaware law relating to the validity of
the MIPS will be passed upon by Richards, Layton & Finger, P.A.
as special Delaware counsel to Duquesne Capital. The validity of
the Debentures and the Guarantee will be passed upon on behalf of
Duquesne Light by David R. High, Esq., Assistant General Counsel
of Duquesne Light and Reid & Priest LLP, special counsel to
Duquesne Light. The validity of the MIPS, the Debentures and the
Guarantee will be passed upon on behalf of the Underwriters by
Milbank, Tweed, Hadley, & McCloy, counsel to the Underwriters.
Mr. High may rely on Reid & Priest LLP as to all matters of New
York law, and Reid & Priest LLP and Milbank, Tweed, Hadley &
McCloy may rely on the opinion of Mr. High as to all matters of
Pennsylvania law. Mr. High, Reid & Priest LLP and Milbank,
Tweed, Hadley & McCloy may rely on the opinion of Richards,
Layton & Finger, P.A. as to certain matters of Delaware law.
Statements as to United States Federal income taxation under
"United States Income Taxation" herein have been passed upon for
Duquesne Light and Duquesne Capital by Reid & Priest LLP, New
York, New York, counsel to Duquesne Light and Duquesne Capital,
and are stated herein on their authority.
EXPERT
The consolidated financial statements and related financial
statement schedule incorporated in this Prospectus by reference
to Duquesne Light's Annual Report on Form 10-K for the year ended
December 31, 1995, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated
in reliance upon such report given upon the authority of such
firm as experts in auditing and accounting.
<PAGE>
==================================== ==============================
No person has been authorized
to give any information or to
make any representations other 6,000,000 PREFERRED SECURITIES
than those contained in this
Prospectus Supplement or the
Prospectus and, if given or
made, such information or
representations must not be
relied upon as having been DUQUESNE CAPITAL
authorized. This Prospectus
Supplement and the Prospectus
do not constitute an offer to
sell or the solicitation of % CUMULATIVE MONTHLY
an offer to buy any securities INCOME PREFERRED SECURITIES,
other than the securities SERIES A (MIPsm)
described in this Prospectus
Supplement and the Prospectus
or an offer to sell or the
solicitation of an offer to
buy such securities in any
circumstances in which such
offer or solicitation is GUARANTEED TO THE EXTENT
unlawful. Neither the DUQUESNE CAPITAL HAS FUNDS
delivery of this Prospectus AS SET FORTH HEREIN BY
Supplement and the Prospectus
nor any sale made hereunder
shall, under any circumstances,
create any implication that the
information contained herein or
therein is correct as of any
time subsequent to the date of
such information.
----------- DUQUESNE LIGHT COMPANY
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Page ----------
----
Certain Investment Considerations.... S-3
Duquesne Light Company............... S-5 LOGO
Duquesne Capital..................... S-5
Use of Proceeds...................... S-5
Certain Terms of the Series A MIPS... S-5 ----------
Certain Terms of the Series
A Debenture........................ S-7
Underwriting......................... S-8
GOLDMAN, SACHS & CO.
PROSPECTUS
DEAN WITTER REYNOLDS INC.
Available Information....................2
Incorporation of Certain Documents by LEGG MASON WOOD WALKER,
Reference.............................2 INCORPORATED
Duquesne Light Company...................3
Duquesne Capital.........................3 MERRILL LYNCH & CO.
Ratio of Earnings to Fixed
Charges and Ratio of Earnings PRUDENTIAL SECURITIES
to Combined Fixed Charges and INCORPORATED
Preferred and Preference Stock
Dividend Requirements.................3 SMITH BARNEY INC.
Description of the MIPS..................4
Description of the Guarantee............13 WHEAT FIRST BUTCHER SINGER
Description of the Debentures
and the Indenture....................15
United States Income Taxation...........25
Plan of Distribution....................28 REPRESENTATIVES OF THE
Legal Opinions..........................29 UNDERWRITERS
Expert..................................29
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