File Pursuant to Rule 424(b)(5)
Registration Nos. 333-53299
333-53299-01
333-53299-02
333-53299-03
Prospectus Supplement to Prospectus Dated June 30, 1998
$225,000,000
(ALABAMA POWER LOGO)
SERIES H 5.49% SENIOR NOTES DUE NOVEMBER 1, 2005
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MATURITY
- - The Series H Senior Notes will mature on November 1, 2005.
INTEREST
- - Interest on the Series H Senior Notes will be payable on May 1 and November
1 of each year, beginning May 1, 1999.
- - Interest will accrue from the date the Series H Senior Notes are issued.
THE COMPANY
- - Our principal offices are at 600 North 18th Street, Birmingham, Alabama
35291.
- - Our telephone number is (205) 257-1000.
REDEMPTION
- - We may redeem some or all of the Series H Senior Notes at any time. The
Redemption Prices are described on page S-5.
- - There is no sinking fund.
LISTING
- - We do not intend to list the Series H Senior Notes on any securities
exchange.
RANKING
- - The Series H Senior Notes are unsecured and unsubordinated. The Series H
Senior Notes rank equally with all our unsecured and unsubordinated
obligations and are effectively subordinated to all our secured debt.
----------------------------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SERIES H SENIOR NOTES OR
DETERMINED THAT THIS PROSPECTUS SUPPLEMENT OR THE ATTACHED PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------------------------------------------------------
<TABLE>
<CAPTION>
Per Note Total
<S> <C> <C>
Initial Price to Public 100.000% $225,000,000
Underwriting Discount .625% $ 1,406,250
Proceeds to Us (Before Expenses) 99.375% $223,593,750
</TABLE>
The purchase price to the public will also include any interest that has accrued
from the date the Series H Senior Notes are issued.
----------------------------------------------------------------------
- - We expect that you will receive delivery of the Series H Senior Notes in
global form through the book-entry delivery system of The Depository Trust
Company on November 3, 1998.
- - The underwriters listed below will purchase the Series H Senior Notes from
us on a firm commitment basis and offer them to you, subject to certain
conditions.
CHASE SECURITIES INC.
LEHMAN BROTHERS
SALOMON SMITH BARNEY
A.G. EDWARDS & SONS, INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
----------------------------------------------------------------------
The date of this Prospectus Supplement is October 28, 1998
<PAGE>
You should rely only on the information contained or incorporated by reference
in this Prospectus Supplement and the attached Prospectus. We have not
authorized anyone to provide you with any other information. You should not rely
on any other information in making your investment decision.
We are offering to sell the Series H Senior Notes only in places where sales are
permitted.
You should not assume that the information in this Prospectus Supplement or the
attached Prospectus, including information incorporated by reference, is
accurate as of any date other than October 28, 1998, which is the date of this
Prospectus Supplement.
----------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
The Company S-3
Capitalization S-3
Use of Proceeds S-4
Recent Results of Operations S-4
Recent Developments S-4
Description of the Series H Senior
Notes S-4
Underwriting S-8
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS
Available Information 2
Incorporation of Certain Documents by
Reference 2
Selected Information 3
Alabama Power Company 4
The Trusts 5
Accounting Treatment 5
Use of Proceeds 5
Recent Results of Operations 5
Description of the Senior Notes 6
Description of the Junior Subordinated
Notes 9
Description of the Preferred
Securities 14
Description of the Guarantees 15
Relationship Among the Preferred
Securities, the Junior Subordinated
Notes and the Guarantees 17
Plan of Distribution 19
Legal Matters 19
Experts 19
</TABLE>
S-2
<PAGE>
THE COMPANY
Alabama Power Company (the "Company") is a corporation organized under the
laws of the State of Alabama on November 10, 1927, by the consolidation of a
predecessor Alabama Power Company, Gulf Electric Company and Houston Power
Company. The Company has its principal office at 600 North 18th Street,
Birmingham, Alabama 35291, telephone (205) 257-1000. The Company is a wholly
owned subsidiary of The Southern Company ("Southern").
The Company is a regulated public utility engaged in the generation,
transmission, distribution and sale of electric energy within an approximately
44,500 square mile service area comprising most of the State of Alabama.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1998, and as adjusted to reflect the transactions described in note (1)
below. The following data is qualified in its entirety by reference to and,
therefore, should be read together with the detailed information and financial
statements appearing in the documents incorporated herein by reference. See also
"Selected Information" in the accompanying Prospectus.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1998
-------------------------------
ACTUAL AS ADJUSTED(1)
---------- ------------------
(THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C>
Common Stock Equity......................................... $2,758,372 $2,758,372 44.4%
Cumulative Preferred Stock.................................. 255,512 317,512 5.1
Company Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trusts Holding Company Junior
Subordinated Notes........................................ 297,000 297,000 4.8
Senior Notes................................................ 583,800 1,393,800 22.4
Other Long-Term Debt........................................ 2,145,630 1,448,022 23.3
---------- ---------- -----
Total, excluding amounts due within one year...... $6,040,314 $6,214,706 100.0%
========== ========== =====
</TABLE>
- ---------------
(1) Reflects (i) the issuance in August 1998 of $225,000,000 aggregate principal
amount of Series D 6.50% Senior Insured Quarterly Notes due September 30,
2018; (ii) the issuance in August 1998 of 8,000,000 shares ($200,000,000
aggregate stated capital) of Class A Preferred Stock; (iii) the issuance in
September 1998 of $100,000,000 aggregate principal amount of Series E 6.25%
Senior Notes due September 30, 2010; (iv) the issuance in September 1998 of
$100,000,000 aggregate principal amount of Series F 6.375% Senior Insured
Quarterly Notes due September 30, 2018; (v) the redemption in September 1998
of the outstanding $198,000,000 aggregate principal amount of First Mortgage
Bonds, 8 1/2% Series due May 1, 2022; (vi) the issuance in October 1998 of
$160,000,000 aggregate principal amount of Series G 5 3/8% Senior Notes due
October 1, 2008; (vii) the redemption in October 1998 of the outstanding
$99,608,000 aggregate principal amount of First Mortgage Bonds, 8.30% Series
due July 1, 2022; (viii) the redemption in October 1998 of the outstanding
1,520,000 shares ($38,000,000 aggregate stated capital) of 6.80% Preferred
Stock; (ix) the proposed redemption in November 1998 of the outstanding
2,000,000 shares ($50,000,000 aggregate stated capital) of 6.40% Class A
Preferred Stock; (x) the proposed redemption in November 1998 of the
outstanding $175,000,000 aggregate principal amount of First Mortgage Bonds,
7 1/4% Series due August 1, 2007; (xi) the proposed redemption in January
1999 of the outstanding 2,000,000 shares ($50,000,000 aggregate stated
capital) of Adjustable Rate Class A Preferred Stock (1993 Series); and (xii)
the issuance of the Series H Senior Notes and the use of proceeds therefrom
to redeem outstanding first mortgage bonds (see "USE OF PROCEEDS" below).
S-3
<PAGE>
USE OF PROCEEDS
The proceeds from the sale of the Series H Senior Notes, together with
other funds of the Company, will be applied by the Company to redeem in December
1998 the $100,000,000 outstanding principal amount of its First Mortgage Bonds,
6.85% Series due August 1, 2002 and in January 1999 the $125,000,000 outstanding
principal amount of its First Mortgage Bonds, 7.00% Series due January 1, 2003.
Such redemption is subject to the Company's closing the sale of the Series H
Senior Notes.
RECENT RESULTS OF OPERATIONS
For the twelve months ended September 30, 1998, "Operating Revenues,"
"Income Before Interest Charges" and "Net Income After Dividends on Preferred
Stock" were $3,392,016,000, $721,226,000 and $397,944,000, respectively. In the
opinion of the management of the Company, the above amounts for the twelve
months ended September 30, 1998 reflect all adjustments necessary to present
fairly the results of operations for such period. The "Ratio of Earnings to
Fixed Charges" and the "Ratio of Earnings to Fixed Charges Plus Preferred
Dividend Requirements (Pre-Income Tax Basis)" for the twelve months ended
September 30, 1998 were 2.99 and 2.85, respectively.
RECENT DEVELOPMENTS
Reference is made to Notes 3 and 7 to the Company's financial statements in
Item 8 of the Company's Annual Report on Form 10-K and to Note F in the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31 and
June 30, 1998 for a discussion of the proceedings initiated by the Federal
Energy Regulatory Commission (the "FERC") regarding the reasonableness of the
return on common equity on certain of the Southern electric system's wholesale
rate schedules and contracts, a discussion of the long-term power sales
agreements and a discussion of a complaint filed by three customers in April
1998 under such agreements. On September 21, 1998, the FERC entered separate
orders (i) affirming the outcome of the Administrative Law Judges' opinions in
both the 1991 and 1994 proceedings, resulting in no change in the wholesale
power contracts or rate schedules which were the subject of such proceedings and
(ii) dismissing the complaint filed by the three customers under the long-term
power sales agreements. These customers have filed applications for rehearing
regarding both FERC orders.
DESCRIPTION OF THE SERIES H SENIOR NOTES
Set forth below is a description of the specific terms of the Series H
5.49% Senior Notes due November 1, 2005 (the "Series H Senior Notes"). This
description supplements, and should be read together with, the description of
the general terms and provisions of the Senior Notes set forth in the
accompanying Prospectus under the caption "Description of the Senior Notes." The
following description does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the description in the accompanying
Prospectus and the Senior Note Indenture (the "Senior Note Indenture") dated as
of December 1, 1997, as supplemented, between the Company and The Chase
Manhattan Bank, as trustee (the "Senior Note Indenture Trustee").
GENERAL
The Series H Senior Notes will be issued as a series of Senior Notes under
the Senior Note Indenture. The Series H Senior Notes will be limited in
aggregate principal amount to $225,000,000.
The entire principal amount of the Series H Senior Notes will mature and
become due and payable, together with any accrued and unpaid interest thereon,
on November 1, 2005. The Series H Senior Notes are not subject to any sinking
fund provision. The Series H Senior Notes are available for purchase in
denominations of $1,000 and any integral multiple thereof.
S-4
<PAGE>
INTEREST
Each Series H Senior Note shall bear interest at the rate of 5.49% per
annum (the "Securities Rate") from the date of original issuance, payable
semiannually in arrears on May 1 and November 1 of each year (each, an "Interest
Payment Date") to the person in whose name such Series H Senior Note is
registered at the close of business on the fifteenth calendar day prior to such
payment date. The initial Interest Payment Date is May 1, 1999. The amount of
interest payable will be computed on the basis of a 360-day year of twelve
30-day months. In the event that any date on which interest is payable on the
Series H Senior Notes is not a Business Day, then payment of the interest
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),
with the same force and effect as if made on such date.
RANKING
The Series H Senior Notes will be direct, unsecured and unsubordinated
obligations of the Company and will rank equally with all other unsecured and
unsubordinated obligations of the Company. The Series H Senior Notes will be
effectively subordinated to all secured debt of the Company, including its first
mortgage bonds, aggregating approximately $2,236,000,000 outstanding at June 30,
1998. The Senior Note Indenture contains no restrictions on the amount of
additional indebtedness that may be incurred by the Company.
OPTIONAL REDEMPTION
The Series H Senior Notes will be redeemable by the Company in whole or in
part at any time upon not less than 30 nor more than 60 days' notice, at
redemption prices (each, a "Redemption Price") equal to the greater of (i) 100%
of the principal amount of the Series H Senior Notes being redeemed or (ii) the
sum of the present values of the remaining scheduled payments of principal of
and interest on the Series H Senior Notes being redeemed discounted to the date
of redemption on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at a discount rate equal to the Treasury Yield plus 10.0
basis points, plus, for (i) and (ii) above, whichever is applicable, accrued
interest on the Series H Senior Notes to the date of redemption.
"Treasury Yield" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Series H Senior Notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Series H Senior Notes.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day in New York City preceding such redemption date, as set forth in
the daily statistical release (or any successor release) published by the
Federal Reserve Bank of New York and designated "H.15(519)" or (ii) if such
release (or any successor release) is not published or does not contain such
prices on such Business Day, the Reference Treasury Dealer Quotation for such
redemption date.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Company and reasonably
acceptable to the Senior Note Indenture Trustee.
"Reference Treasury Dealer" means a primary US Government securities dealer
in New York City appointed by the Company and reasonably acceptable to the
Senior Note Indenture Trustee.
"Reference Treasury Dealer Quotation" means, with respect to the Reference
Treasury Dealer and any redemption date, the average, as determined by the
Senior Note Indenture Trustee, of the bid and asked
S-5
<PAGE>
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount and quoted in writing to the Senior Note Indenture
Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day
in New York City preceding such redemption date).
If notice of redemption is given as aforesaid, the Series H Senior Notes so
to be redeemed shall, on the date of redemption, become due and payable at the
applicable Redemption Price together with any accrued interest thereon, and from
and after such date (unless the Company shall default in the payment of the
applicable Redemption Price and accrued interest) such Series H Senior Notes
shall cease to bear interest. If any Series H Senior Note called for redemption
shall not be paid upon surrender thereof for redemption, the principal shall,
until paid, bear interest from the date of redemption at the Securities Rate.
See "Description of the Senior Notes -- Events of Default" in the accompanying
Prospectus.
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), the Company or its
affiliates may, at any time and from time to time, purchase outstanding Series H
Senior Notes by tender, in the open market or by private agreement.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as the initial securities
depositary for the Series H Senior Notes. The Series H Senior Notes will be
issued only as fully registered securities registered in the name of Cede & Co.,
DTC's nominee. One or more fully registered global Series H Senior Notes
certificates will be issued, representing in the aggregate the total principal
amount of Series H Senior Notes, 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 Securities Exchange
Act of 1934, as amended (the "1934 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 include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations ("Direct Participants"). DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain 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 Securities and Exchange Commission.
Purchases of Series H Senior Notes within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Series H Senior
Notes on DTC's records. The ownership interest of each actual purchaser of
Series H Senior Notes ("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 Series H Senior
Notes. Transfers of ownership interests in the Series H Senior Notes 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 Series H Senior Notes, except in the event that use
of the book-entry system for the Series H Senior Notes is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Series H Senior
Notes. DTC's records reflect only the identity of the Direct Participants to
whose accounts such Series H Senior Notes 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.
S-6
<PAGE>
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 shall be sent to DTC. If less than all of the Series H
Senior Notes are being redeemed, DTC will reduce the amount of the interest of
each Direct Participant in the Series H Senior Notes in accordance with its
procedures.
Although voting with respect to the Series H Senior Notes is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Series H Senior Notes. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Company 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 Series H Senior
Notes are credited on the record date (identified in a listing attached to the
Omnibus Proxy).
Payments on the Series H Senior Notes will be made to DTC. DTC's practice
is to credit Direct Participants' accounts on the relevant payment date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the account of customers registered in "street name," and will be the
responsibility of such Participant and not of DTC or the Company, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment to DTC is the responsibility of the Company, 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 and
Indirect Participants.
Except as provided herein, a Beneficial Owner of a global Series H Senior
Note will not be entitled to receive physical delivery of Series H Senior Notes.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the Series H Senior Notes. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of securities in definitive form. Such laws may impair the ability to
transfer beneficial interests in a global Series H Senior Note.
DTC may discontinue providing its services as securities depositary with
respect to the Series H Senior Notes at any time by giving reasonable notice to
the Company. Under such circumstances, in the event that a successor securities
depositary is not obtained, Series H Senior Notes certificates will be printed
and delivered to the holders of record. Additionally, the Company may decide to
discontinue use of the system of book-entry transfers through DTC (or a
successor depositary) with respect to the Series H Senior Notes. In that event,
certificates for the Series H Senior Notes will be printed and delivered to the
holders of record.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof. The Company has no
responsibility for the performance by DTC or its Participants of their
respective obligations as described herein or under the rules and procedures
governing their respective operations.
S-7
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to each of Chase Securities Inc., Lehman Brothers
Inc., Salomon Smith Barney Inc., A. G. Edwards & Sons, Inc. and First Chicago
Capital Markets, Inc. (collectively, the "Underwriters"), and the Underwriters
have severally agreed to purchase from the Company, the principal amount of the
Series H Senior Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
SERIES H
NAME SENIOR NOTES
---- -------------------
<S> <C>
Chase Securities Inc........................................ $108,000,000
Lehman Brothers Inc......................................... 40,500,000
Salomon Smith Barney Inc.................................... 40,500,000
A. G. Edwards & Sons, Inc................................... 18,000,000
First Chicago Capital Markets, Inc.......................... 18,000,000
------------
Total............................................. $225,000,000
============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters have committed, subject to the terms and conditions set forth
therein, to take and pay for all of the Series H Senior Notes offered hereby if
any of the Series H Senior Notes are purchased. The Underwriters are not
obligated to purchase any of the Series H Senior Notes unless certain conditions
contained in the Underwriting Agreement are satisfied.
The Underwriters have advised the Company that they propose to offer the
Series H Senior Notes to the public at the public offering price that appears on
the cover page of this Prospectus Supplement. The Underwriters may offer the
Series H Senior Notes to selected dealers at the public offering price minus a
selling concession of up to 0.375% of the principal amount. In addition, the
Underwriters may allow, and such selected dealers may reallow, a selling
concession of up to 0.25% of the principal amount to certain other dealers.
After the initial public offering, the Underwriters may change the public
offering price and any other selling terms.
The Series H Senior Notes are a new issue of securities with no established
trading market. The Company has been advised by the Underwriters that they
intend to make a market in the Series H Senior Notes but are not obligated to do
so and may discontinue market making at any time without notice. No assurance
can be given as to the liquidity of the trading market for the Series H Senior
Notes.
The Company will pay its expenses associated with the offer and sale of the
Series H Senior Notes, which are estimated to be $275,000.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
In connection with the offering, Chase Securities Inc. ("CSI"), on behalf
of the Underwriters, may engage in overallotment, stabilizing transactions and
syndicate covering transactions in accordance with Regulation M under the 1934
Act. Overallotment involves sales in excess of the offering size, which creates
a short position for the Underwriters. Stabilizing transactions involve bids to
purchase the Series H Senior Notes in the open market for the purpose of
pegging, fixing or maintaining the price of the Series H Senior Notes. Syndicate
covering transactions involve purchases of the Series H Senior Notes in the open
market after the distribution has been completed in order to cover short
positions. Stabilizing transactions and syndicate covering transactions may
cause the price of the Series H Senior Notes to be higher than it would
otherwise be in the absence of those transactions. If CSI engages in stabilizing
or syndicate covering transactions, it may discontinue them at any time.
The Underwriters and their affiliates engage in transactions with, and,
from time to time, have performed services for, the Company and its affiliates
in the ordinary course of business. The Chase Manhattan Bank, the Senior Note
Indenture Trustee, is an affiliate of CSI.
S-8
<PAGE>
(Alabama Power Logo)
