<PAGE> 1
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND MAY BE
CHANGED. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IS
NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER
TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
FILED PURSUANT TO RULE 424(b)(5)
REGISTRATION STATEMENT NO. 333-50808-04
SUBJECT TO COMPLETION, DATED DECEMBER 11, 2000
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED DECEMBER 7, 2000)
8,000,000 TRUST PREFERRED SECURITIES
TECO CAPITAL TRUST I
% TRUST PREFERRED SECURITIES (TRUPS(R))
($ LIQUIDATION AMOUNT PER TRUST PREFERRED SECURITY)
REPRESENTING A CORRESPONDING AMOUNT OF
COMPANY PREFERRED SECURITIES
OF
TECO FUNDING COMPANY I, LLC
FULLY AND UNCONDITIONALLY GUARANTEED ON A
JUNIOR SUBORDINATED BASIS BY
TECO ENERGY, INC.
A brief description of the % Trust Preferred Securities (TRUPS(R)) can
be found under "PROSPECTUS SUPPLEMENT SUMMARY" in this prospectus supplement.
------------------------
We have applied to list the % Trust Preferred Securities (TRUPS(R)) on
the New York Stock Exchange. If the application is approved, we expect trading
of the % Trust Preferred Securities (TRUPS(R)) to begin within 30 days after
they are first issued.
INVESTING IN THE % TRUST PREFERRED SECURITIES (TRUPS(R)) INVOLVES
RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE S-9.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS SUPPLEMENT OR
THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
PER TRUST PREFERRED SECURITY TOTAL
---------------------------- ------------
<S> <C> <C>
Public offering price.................................. $ $
Underwriting commissions, to be paid by TECO Energy,
Inc.................................................. See below See below
Proceeds to TECO Capital Trust I....................... $ $
</TABLE>
------------------------
Underwriting commissions of $ per % Trust Preferred Security (or
$ for all % Trust Preferred Securities) (TRUPS(R)) will be paid by TECO
Energy, Inc.
We expect that the % Trust Preferred Securities (TRUPS(R)) will be ready
for delivery, in book-entry form only, through The Depository Trust Company on
or about , 200 .
"TRUPS(R)" is a registered service mark of Salomon Smith Barney Inc.
SALOMON SMITH BARNEY
MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER
PRUDENTIAL SECURITIES
UBS WARBURG LLC
, 200
<PAGE> 2
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not, and the underwriters have not, authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities or soliciting an
offer to buy these securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information appearing in this prospectus
supplement and the accompanying prospectus is accurate as of the date on the
front of this prospectus supplement only. Our business, financial condition,
results of operations and prospects may have changed since that date.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Supplement Summary............................... S-3
Risk Factors................................................ S-9
Use of Proceeds............................................. S-12
Selected Financial Information.............................. S-13
Capitalization.............................................. S-14
Accounting Treatment........................................ S-15
Description of Securities................................... S-15
Terms of the Trust Preferred Securities..................... S-16
Terms of the Company Preferred Securities................... S-18
Terms of the Junior Subordinated Notes...................... S-19
Book-Entry Issuance and Global Securities................... S-20
United States Taxation...................................... S-22
Underwriting................................................ S-27
PROSPECTUS
About This Prospectus....................................... 1
Risk Factors................................................ 1
Forward-Looking Statements.................................. 1
TECO Energy................................................. 2
The TECO Limited Liability Companies........................ 3
The TECO Trusts............................................. 4
Ratio of Earnings to Fixed Charges.......................... 6
Description of the Trust Preferred Securities............... 7
Description of the Company Preferred Securities............. 13
Description of the Junior Subordinated Notes................ 20
Description of the Guarantees............................... 28
Relationship Among the Trust Preferred Securities, Company
Preferred Securities, the Junior Subordinated Notes and
the Guarantees............................................ 30
Book-Entry Issuance......................................... 32
Use of Proceeds............................................. 33
Plan of Distribution........................................ 34
Legal Matters............................................... 35
Experts..................................................... 35
Where You Can Find More Information......................... 35
</TABLE>
S-2
<PAGE> 3
PROSPECTUS SUPPLEMENT SUMMARY
QUESTIONS & ANSWERS
The following information supplements, and should be read together with,
the information contained in other parts of this prospectus supplement and in
the accompanying prospectus. This summary highlights selected information from
this prospectus supplement and the accompanying prospectus to help you
understand the % Trust Preferred Securities (TRUPS(R)). You should
carefully read this prospectus supplement and the accompanying prospectus to
understand fully the terms of the trust preferred securities as well as the tax
and other considerations that are important to you in making a decision about
whether to invest in the trust preferred securities. You should pay special
attention to the "RISK FACTORS" section beginning on page S-9 of this prospectus
supplement to determine whether an investment in the trust preferred securities
is appropriate for you.
WHAT ARE THE TRUST PREFERRED SECURITIES?
Each trust preferred security represents an undivided beneficial interest
in the assets of TECO Capital Trust I. Each trust preferred security will
entitle the holder to receive quarterly cash distributions as described in this
prospectus supplement. The trust is offering 8,000,000 trust preferred
securities at a price of $ for each trust preferred security.
WHAT IS THE TRUST?
The trust is a Delaware business trust. Its principal place of business is
c/o The Bank of New York, 101 Barclay Street, Floor 8th, New York, New York
10286 and its telephone number is (212) 815-5088.
The trust will sell trust preferred securities to the public. The trust
will use the proceeds from these sales to buy a corresponding amount of company
preferred securities from TECO Funding Company I, LLC.
The Bank of New York will act as property trustee of the trust. The Bank of
New York (Delaware) will be the Delaware trustee.
WHAT IS TECO FUNDING COMPANY I, LLC?
TECO Funding Company I, LLC is a Delaware limited liability company. Its
principal place of business is 300 Delaware Avenue, Suite 900, Wilmington,
Delaware 19801 and its telephone number is (302) 552-3137.
The limited liability company will sell company preferred securities to the
trust and common securities to TECO Energy. The limited liability company will
use the proceeds from the sale of the company preferred securities and the
common securities to buy from TECO Energy a series of % junior subordinated
notes due , 2041, with the same financial terms as the company
preferred securities. TECO Energy will guarantee payments to be made on the
company preferred securities, and indirectly, the trust preferred securities as
described below.
WHAT IS TECO ENERGY?
We are an electric and gas utility holding company with important
diversified activities. See "-- TECO Energy." We were organized under the laws
of Florida in 1981. We have our principal office at 702 North Franklin Street,
Tampa, Florida 33602. Our telephone number is (813) 228-4111.
We will issue to TECO Funding Company I, LLC a series of % junior
subordinated notes under an indenture pursuant to which The Bank of New York
will act as trustee. In addition, we will guarantee certain payments by TECO
Funding Company I, LLC under a guarantee under which The Bank of New York will
act as trustee.
S-3
<PAGE> 4
WHEN WILL QUARTERLY DISTRIBUTIONS BE PAID TO YOU?
If you purchase the trust preferred securities, you are entitled to receive
cumulative cash distributions at an annual rate of % of the liquidation
amount of $ per trust preferred security. Distributions will accumulate from
the date the trust issues the trust preferred securities and will be paid
quarterly in arrears on , , and
of each year, beginning , 2001.
WHEN CAN PAYMENT OF DISTRIBUTIONS TO YOU BE DEFERRED?
TECO Energy can, on one or more occasions, defer interest payments on the
junior subordinated notes held by the limited liability company for up to 20
consecutive quarterly periods. TECO Energy cannot defer interest payments beyond
the maturity date of the junior subordinated notes, which is , 2041.
If TECO Energy defers interest payments on the junior subordinated notes
held by the limited liability company, then the limited liability company will
defer distributions on the company preferred securities.
If the limited liability company defers distributions on the company
preferred securities, then the trust will defer distributions on the trust
preferred securities. During this deferral period, distributions will continue
to accrue on the trust preferred securities at an annual rate of % of the
liquidation amount of $ per trust preferred security. Also, the deferred
distributions will themselves accrue interest, compounded quarterly, at an
annual rate of % (to the extent permitted by law). Once TECO Energy makes
all interest payments on the junior subordinated notes, with accrued interest,
it can again defer interest payments on the junior subordinated notes if no
event of default under the junior subordinated notes has occurred and is
continuing. Holders of company preferred securities will not be entitled to
receive payments under TECO Energy's guarantee while distributions are deferred
on the company preferred securities.
During any period in which TECO Energy defers interest payments on the
junior subordinated notes, TECO Energy will not be permitted to (with limited
exceptions):
- pay a dividend or make any distributions on its capital stock or redeem,
purchase, acquire or make a liquidation payment on any of its capital
stock, or make any guarantee payments with respect to the foregoing; or
- make an interest, principal or premium payment on, or repurchase or
redeem, any of its debt securities that rank equal to or junior to the
junior subordinated notes.
If TECO Energy defers payments of interest on the junior subordinated notes
and, consequently, the limited liability company concurrently defers payments of
interest on the company preferred securities, the limited liability company will
nonetheless be required to continue to accrue interest (in the form of original
issue discount) on the junior subordinated notes during the period of the
deferral. This means you will be required to recognize interest income and
include those amounts in your gross income for United States federal income tax
purposes even though you will not have received any cash distributions relating
to that interest income. See "UNITED STATES TAXATION -- U.S. Holders -- Interest
Income and Original Issue Discount."
WHEN CAN THE TRUST REDEEM THE TRUST PREFERRED SECURITIES?
The trust must redeem all of the outstanding trust preferred securities
when the limited liability company redeems the company preferred securities held
by the trust. The limited liability company will redeem the company preferred
securities when TECO Energy pays the junior subordinated notes held by the
limited liability company at maturity on , 2041.
In addition, if TECO Energy redeems in full the junior subordinated notes
held by the limited liability company before their maturity date, then the
limited liability company is required to use the cash it receives from the
redemption to redeem, on a pro rata basis based upon respective liquidation
preferences, company preferred securities and, subject to the preferential
redemption rights of the company preferred securities, common securities having
a liquidation preference equal to the principal amount of the junior
subordinated notes redeemed, and the trust is required to use the cash that it
receives from the redemption of the company
S-4
<PAGE> 5
preferred securities to redeem, on a pro rata basis, trust preferred securities
having a liquidation amount equal to the liquidation preference of the company
preferred securities redeemed. If TECO Energy redeems in part the junior
subordinated notes held by the limited liability company before their maturity
date, then the limited liability company will redeem the company preferred
securities in full prior to any payment being made on the common securities.
TECO Energy can redeem some or all of the junior subordinated notes before
their maturity at 100% of their principal amount on one or more occasions at any
time on or after , 200 , a date approximately five years after the
issuance of the junior subordinated notes. TECO Energy may also redeem the
junior subordinated notes, in whole but not in part, at any time if certain
changes in tax or investment company law occur and other specified conditions
are satisfied, as more fully described under "TERMS OF THE TRUST PREFERRED
SECURITIES -- Special Redemption Events." In any event, TECO Energy will pay
accrued interest to the date of redemption.
WHAT IS TECO ENERGY'S GUARANTEE OF THE TRUST PREFERRED SECURITIES?
TECO Energy will guarantee the payments to the holders of the company
preferred securities and, indirectly, the payments to the holders of the trust
preferred securities as a result of their beneficial interest in the company
preferred securities, based on:
- our obligations to make payments on the junior subordinated notes;
- our obligations under the guarantee agreement;
- the provisions of the trust agreement;
- the provisions of the limited liability company agreement; and
- the provisions of the supplemental indenture.
TECO Energy's obligations under the junior subordinated notes are subordinate
and rank junior in right of payment to all of our senior debt. At September 30,
2000, TECO Energy's senior debt totaled about $355 million, and our subsidiaries
had additional aggregate senior debt of approximately $2.169 billion.
TECO Energy's obligations under the guarantee are subordinate and junior in
right of payment to our other senior liabilities.
WHEN COULD THE COMPANY PREFERRED SECURITIES BE DISTRIBUTED TO YOU?
If certain changes in tax or investment company law occur with respect to
the trust, then the trust may be dissolved. Upon such dissolution, the trust
will liquidate (after satisfaction of any liabilities to creditors of the trust
as provided by applicable law) by distributing the company preferred securities
held by it to you and the other holders of trust preferred securities, on a
pro-rata basis.
If the company preferred securities are distributed as described above,
TECO Energy is required to use its best efforts to list the company preferred
securities on the New York Stock Exchange, or NYSE, or any other exchange on
which the trust preferred securities are then listed or to ensure that the
company preferred securities remain so listed, in place of the trust preferred
securities. In addition, upon such distribution you would become subject to Form
K-1 reporting requirements under the Internal Revenue Code of 1986, as amended.
WHEN COULD THE JUNIOR SUBORDINATED NOTES BE DISTRIBUTED TO YOU?
If both the limited liability company and the trust dissolve, then the
junior subordinated notes may be distributed directly to you.
TECO Energy, as the holder of the common securities, may dissolve the
limited liability company at any time. Upon such dissolution, the limited
liability company will liquidate (after satisfaction of any liabilities to
creditors of the limited liability company as provided by applicable law) by
distributing the junior
S-5
<PAGE> 6
subordinated notes held by it to the holders of the company preferred securities
until they have received their liquidation preference in full, plus accrued but
unpaid distributions, and all remaining junior subordinated notes will be
distributed to us as the holder of the common securities. If the trust were
subsequently dissolved and the assets of the trust were distributed to you, then
the junior subordinated notes would be distributed to you. If the trust were not
dissolved, then an entity wholly-owned and controlled by TECO Energy would
succeed the limited liability company as the depositor of the trust.
If the junior subordinated notes are distributed as described above, TECO
Energy is required to use its best efforts to list the junior subordinated notes
on the NYSE or any other exchange on which the trust preferred securities are
then listed, in place of the trust preferred securities.
WILL THE TRUST PREFERRED SECURITIES BE LISTED ON A STOCK EXCHANGE?
We have applied to list the trust preferred securities on the NYSE. If
approved, trading of the trust preferred securities is expected to begin within
30 days after they are first issued.
WILL HOLDERS OF THE TRUST PREFERRED SECURITIES HAVE ANY VOTING RIGHTS?
If the holders of company preferred securities are entitled to vote under
the limited liability company agreement, then the trust's property trustee will
notify you, as a holder of trust preferred securities, of the voting right and
ask you for specific direction as to the vote with respect to the company
preferred securities represented by the trust preferred securities. Your vote or
consent is not required for the trust to redeem and cancel the trust preferred
securities in accordance with the trust agreement.
See "DESCRIPTION OF THE TRUST PREFERRED SECURITIES -- Voting Rights;
Amendment of Each Trust Agreement" in the accompanying prospectus.
IN WHAT FORM WILL THE TRUST PREFERRED SECURITIES BE ISSUED?
The trust preferred securities will be represented by one or more global
securities that will be deposited with and registered in the name of The
Depository Trust Company, or DTC, or its nominee. This means that you will not
receive a certificate for your trust preferred securities and that your broker
will maintain your position in the trust preferred securities. TECO Energy
expects that the trust preferred securities will be ready for delivery through
DTC on or about , 200 .
TECO ENERGY
OVERVIEW
We are an electric and gas utility holding company, exempt from
registration under the Public Utility Holding Company Act of 1935, with
important diversified activities. Our diversified businesses include independent
power generation and distribution, marine transportation, coal mining, coalbed
methane natural gas production, the marketing of natural gas, energy services
and engineering and, indirectly, the sale of propane gas. The following
describes our principal operations.
- Tampa Electric Company provides electric energy and related services to
over 550,000 residential, commercial and industrial customers in its West
Central Florida service area covering approximately 2,000 square miles,
including the City of Tampa. Tampa Electric has approximately 3,800
megawatts of generating capacity in operation. It is in the process of
repowering an older coal fired station to become a combined-cycle natural
gas-fired facility resulting in the addition of 658 megawatts of
generating capacity by 2004 and enhancing fuel diversity.
- Peoples Gas System, acquired in 1997, is Florida's leading provider of
natural gas. With a presence in most of Florida's major metropolitan
areas, it serves over 250,000 residential and commercial customers. In
early 2000, it completed a major expansion to Southwest Florida to market
natural gas to a previously unserved high-growth area of the state.
S-6
<PAGE> 7
- TECO Power Services develops, builds, owns and operates electric
generation facilities and electric distribution and transmission
facilities primarily in the United States and Central America. It has
approximately 6,800 net megawatts of generating capacity in operation,
under construction or in the late stages of development. The operating
generating units include the Hardee Power Station in Florida, the San
Jose and Alborada generating plants in Guatemala, the Hamakua plant in
Hawaii, the Chesapeake Commonwealth Station in Virginia on the Delmarva
peninsula, wind and hydro power facilities in Central and South America
and coal-fired facilities in Eastern Europe. It owns two combined-cycle
plants in the early stages of construction in Mississippi and Arkansas,
has an economic interest in two combined-cycle plants under construction
in Texas and is in a joint venture to build, own and operate two
combined-cycle natural gas fired generating stations in Arizona and
Arkansas. It also has entered into a memorandum of understanding
regarding the development with an affiliate of Texaco Inc. of an
integrated gasification combined-cycle generation (IGCC) facility at the
CITGO refinery in Lake Charles, Louisiana using Texaco gasification
technology.
- TECO Transport is a marine transportation business that operates a
U.S.-flag fleet of oceangoing vessels, a river barge fleet and a dry-bulk
commodity transfer and storage deep-water terminal. Its business is
primarily moving commodities via domestic inland rivers, the Gulf of
Mexico and the Caribbean, and to worldwide markets, including South
America, Asia, Africa and Europe.
- TECO Coal owns and operates several low-sulfur coal mines and handling
facilities in Kentucky and Tennessee. It mines and ships more than eight
million tons of coal annually for sale to domestic and European steel
companies, as well as domestic utilities and industrial customers. In
addition, it owns and operates two synthetic fuel production facilities
that qualify for Section 29 tax credits through 2007.
STRATEGY
Our business growth strategy is focused on the following three areas:
- Capitalize on a growing Florida economy and the expected shift to a more
competitive energy market in Florida with our electric and gas operations
and energy services business. Tampa Electric believes that it has the
competitive generating capacity to serve increased demand and expand its
market share in a deregulated environment in Florida.
- Increase TECO Power Services' portfolio of quality projects, particularly
in the United States market, to become a leading generation company
positioned to take advantage of competitive energy markets, including in
Florida.
- Expand our marine transportation business through improved asset
utilization and asset additions.
RECENT DEVELOPMENTS
INVESTMENTS IN PANDA ENERGY PROJECTS
On September 25, 2000, TECO Power Services announced a $93 million
investment with an affiliate of Panda Energy International relating to two Texas
projects totaling 2,000 gross megawatts. These projects are planned to be
brought online in phases beginning in December 2000, with all the capacity
anticipated to be in-service in the third quarter of 2001.
On November 14, 2000, TECO Power Services announced a joint venture with
Panda Energy International to build, own and operate two merchant power plants
with an expected capital cost of $2.3 billion. The plant sites, which would have
a combined capacity of nearly 4,600 megawatts, are located in El Dorado,
Arkansas and Gila Bend, Arizona. The first phase of the El Dorado project is
expected to begin commercial operation in the summer of 2002, with commercial
operation of the entire facility expected in summer 2003. The Gila Bend project
is expected to begin commercial operation in the spring of 2003, with all phases
expected to be completed by the summer of the same year.
S-7
<PAGE> 8
ACQUISITION OF GENPOWER PROJECTS
On October 30, 2000, TECO Power Services announced its acquisition of
GenPower's interests in two independent power projects being developed by
GenPower in Arkansas and Mississippi. The combined capacity of the two plants,
which are expected to begin operation during the second half of 2002, is nearly
1,200 megawatts. TECO Power Services' equity investment in the projects is
expected to be about $330 million, with total capital costs of the projects
being $730 million.
DEVELOPMENT RIGHTS FOR CITGO PROJECT
On November 16, 2000, TECO Power Services announced the signing of a
memorandum of understanding with CITGO Petroleum Corporation providing for the
exclusive right to develop a 574-net megawatt integrated gasification
combined-cycle power plant adjacent to CITGO's Lake Charles Manufacturing
Complex in Louisiana using Texaco proprietary gasification technology. Texaco
Power and Gasification Global, Inc. will have the right to participate in the
development of the project. The plant is not expected to begin commercial
operation before January 2005.
RATINGS DOWNGRADE
In July and October 2000, Fitch Investors Service, Inc. and Standard &
Poor's Ratings Services, respectively, lowered the ratings on the debt
securities of TECO Energy and Tampa Electric, as described below. Each rating
agency indicated that the rating outlook remained negative.
<TABLE>
<CAPTION>
FITCH STANDARD & POOR'S
ISSUER SECURITY INVESTORS SERVICE RATINGS SERVICES
------ ---------------- ------------------ ------------------
PREVIOUS CURRENT PREVIOUS CURRENT
RATING RATING RATING RATING
-------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
TECO Energy Senior Unsecured AA- A AA- A-
Tampa Electric Senior Secured AA+ AA AA A
Senior Unsecured AA AA- AA A
</TABLE>
In addition, in November 2000, Moody's Investors Service, Inc., or Moody's,
placed the ratings of these securities on review for potential downgrade. These
actions were attributed to our increased debt levels and changing risk profile
associated with the expansion of our independent power development activities,
as well as the required capital outlays of Tampa Electric and the uncertainties
related to industry restructuring.
The foregoing ratings do not apply to the trust preferred securities, the
company preferred securities or the junior subordinated notes described in this
prospectus supplement, each of which is junior and subordinate to the rated
senior debt securities.
An explanation of the significance of the ratings of the rating agencies
may be obtained from each rating agency furnishing the same. The ratings express
only the views of the rating agencies. Generally, a rating agency bases its
rating on the information and materials furnished to it and on investigations,
studies and assumptions of its own. There is no assurance that those ratings
will be maintained for any given period of time or that they may not be lowered
or withdrawn entirely by the rating agency if in its judgment circumstances so
warrant. Any such downward change in or withdrawal of any of the ratings of TECO
Energy or Tampa Electric may have an adverse effect on the market price of the
trust preferred securities.
Moody's is contemplating a change in its ratings criteria, which could
result in a reassignment of the rating of the trust preferred securities by
Moody's. Moody's proposed move to a single scale is not a credit event, but is
instead intended to increase the comparability of financial instruments.
S-8
<PAGE> 9
RISK FACTORS
Your investment in the trust preferred securities will involve certain
risks. You should carefully consider the following discussion of risks related
to investment in the trust preferred securities, and the other information in
this prospectus supplement and the accompanying prospectus, before deciding
whether an investment in the trust preferred securities is suitable for you.
TECO ENERGY'S OBLIGATIONS UNDER THE JUNIOR SUBORDINATED NOTES AND THE GUARANTEE
ARE SUBORDINATED.
TECO Energy's obligations under the junior subordinated notes will rank
junior in priority of payment to all of our senior debt. In addition, although
an event of default under our senior debt would not necessarily constitute a
default under the junior subordinated note indenture, TECO Energy will not be
permitted to make any payments on the junior subordinated notes:
- if we default on a payment of senior debt and the default is not cured or
waived within the applicable grace period; or
- until the senior or subordinated indebtedness is paid in full if the
indebtedness has become immediately due because of a default.
The junior subordinated notes are obligations exclusively of TECO Energy,
which, as a holding company, has no material assets other than our ownership of
the common stock of our subsidiaries, including Tampa Electric Company.
Dividends and other distributions from subsidiaries are TECO Energy's only
ongoing source of revenues from which to repay the junior subordinated notes.
Although the default provisions described above do not apply to a default by one
of TECO Energy's subsidiaries, a subsidiary may be prohibited from paying
dividends or making other distributions to TECO Energy when it is in default. At
September 30, 2000, senior debt of TECO Energy totaled approximately $355
million and the aggregate senior debt of all of our subsidiaries equaled
approximately $2.169 billion.
TECO Energy's obligations under the guarantee will rank subordinate and
junior in right of payment to all of our senior debt. As a result, TECO Energy
will be prohibited from making any payments on the guarantee if we default on a
payment on any of our other senior liabilities. In addition, in the event of the
bankruptcy, liquidation or dissolution of TECO Energy, our assets would be
available to pay obligations under the guarantee only after TECO Energy made all
payments on our other senior liabilities.
Neither the trust preferred securities, the company preferred securities,
the junior subordinated notes nor the guarantee limit the ability of TECO Energy
or its subsidiaries to incur additional debts, including debts that rank senior
in priority of payment to the junior subordinated notes and the guarantee. See
"DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES -- Ranking of the Junior
Subordinated Notes" and "DESCRIPTION OF THE GUARANTEES -- Status of the
Guarantees" in the accompanying prospectus.
TECO ENERGY'S SUBSIDIARIES MAY BE RESTRICTED IN PROVIDING FUNDS FOR PAYMENTS TO
THE TRUST.
TECO Energy's subsidiaries are separate and distinct legal entities and
have no obligation, contingent or otherwise, to pay amounts due under the junior
subordinated notes or otherwise to make any funds available to TECO Energy,
including the payment of dividends or other distributions or the extension of
loans or advances. The ability of those subsidiaries to make any payments to
TECO Energy depends upon the terms of any credit facilities of the subsidiaries
and upon the subsidiaries' earnings, which are subject to various business
risks.
The indenture does not limit TECO Energy or our subsidiaries if any of them
decides to issue additional debt.
THE TRUST WILL PAY SCHEDULED DISTRIBUTIONS ON THE TRUST PREFERRED SECURITIES
ONLY IF THE TRUST RECEIVES CASH PAYMENTS FROM THE LIMITED LIABILITY COMPANY OR
FROM TECO ENERGY.
The ability of the trust to pay scheduled distributions on the trust
preferred securities, the redemption price of the trust preferred securities and
the liquidation amount of each trust preferred security is dependent
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<PAGE> 10
upon TECO Energy making the related payments to the limited liability company on
the junior subordinated notes when due, or making payments on the company
preferred securities under the related guarantee.
If TECO Energy defaults on the obligations to pay principal or interest to
the limited liability company on the junior subordinated notes, then the limited
liability company will not have sufficient funds to pay distributions, the
redemption price or the liquidation amount of each company preferred security
held by the trust. If the trust does not have sufficient funds, it will be
unable to pay distributions, the redemption price or the liquidation preference
of the trust preferred securities held by you.
Instead you:
- may sue TECO Energy directly or seek other remedies to collect your pro
rata share of payments owed; or
- may rely on the property trustee to enforce the trust's rights under the
company preferred securities and, indirectly, the junior subordinated
notes.
DEFERRAL OF DISTRIBUTIONS WILL HAVE TAX CONSEQUENCES FOR YOU AND MAY AFFECT THE
TRADING PRICE OF THE TRUST PREFERRED SECURITIES.
So long as no event of default under the junior subordinated notes has
occurred and is continuing, TECO Energy can, on one or more occasions, defer
interest payments on the junior subordinated notes for up to 20 consecutive
quarterly periods. If TECO Energy defers interest payments on the junior
subordinated notes, the limited liability company will defer distributions on
the company preferred securities and the trust will defer distributions on the
trust preferred securities during any deferral period. However, distributions
would still accumulate on each of the company preferred securities and the trust
preferred securities and the deferred distributions would themselves accrue
interest, compounded quarterly, at the rate of % per annum (to the extent
permitted by law).
If TECO Energy defers interest payments on the junior subordinated notes,
you generally will be required to recognize interest income for United States
federal income tax purposes (based on your pro rata share of the trust's share
of the accrued interest on the junior subordinated notes held by the limited
liability company) before you receive any cash relating to that interest. In
addition, you will not receive the cash if you sell the trust preferred
securities before the end of any deferral period or before the record date
relating to distributions which are paid.
TECO Energy has no current intention of deferring interest payments on the
junior subordinated notes. However, if it exercises its right in the future, the
trust preferred securities may trade at a price that does not fully reflect the
value of accrued but unpaid interest on the junior subordinated notes. If you
sell the trust preferred securities during an interest deferral period, you may
not receive the same return on investment as someone else who continues to hold
the trust preferred securities. In addition, the existence of TECO Energy's
right to defer payments of interest on the junior subordinated notes may mean
that the market price for the trust preferred securities (which ultimately
represent an undivided beneficial interest in the junior subordinated notes) may
be more volatile than other securities that do not have these rights.
See "UNITED STATES TAXATION" for more information regarding the tax
consequences of purchasing, holding and selling the trust preferred securities.
TRUST PREFERRED SECURITIES MAY BE REDEEMED AT ANY TIME IF SPECIFIED CHANGES IN
TAX OR INVESTMENT COMPANY LAWS OCCUR.
If certain changes in tax or investment company laws occur and are
continuing, and other conditions are satisfied, TECO Energy has the right to
redeem the junior subordinated notes, in whole but not in part, at any time. Any
redemption will cause a mandatory redemption by the limited liability company of
all company preferred securities and common securities having a liquidation
preference equal to the aggregate amount of the junior subordinated notes to be
redeemed. Consequently, any such redemption will cause a mandatory redemption by
the trust of the trust preferred securities at a redemption price equal to $
per trust preferred
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<PAGE> 11
security plus any accrued and unpaid distributions. For more information, see
the discussion under "DESCRIPTION OF THE JUNIOR SUBORDINATED
NOTES -- Redemption" and "DESCRIPTION OF THE COMPANY PREFERRED
SECURITIES -- Redemption or Exchange" in the accompanying prospectus.
TRUST PREFERRED SECURITIES MAY BE REDEEMED AT THE OPTION OF TECO ENERGY.
TECO Energy may elect to redeem the junior subordinated notes in whole, at
any time, or in part, from time to time, on or after , 200 , at a
redemption price equal to 100% of the principal amount to be redeemed plus any
accrued and unpaid interest to the redemption date. See "TERMS OF THE JUNIOR
SUBORDINATED NOTES -- Redemption" in this prospectus supplement and "DESCRIPTION
OF THE JUNIOR SUBORDINATED NOTES -- Redemption" in the accompanying prospectus.
You should assume that TECO Energy will exercise its redemption option if TECO
Energy is able to refinance at a lower interest rate or if it is otherwise in
TECO Energy's interest to redeem the junior subordinated notes. If the junior
subordinated notes are redeemed, the limited liability company must redeem the
company preferred securities and the common securities having an aggregate
liquidation preference equal to the aggregate principal amount of the junior
subordinated notes redeemed, subject to the preferential redemption rights of
the company preferred securities, and, consequently, the trust must redeem the
trust preferred securities having an aggregate liquidation amount equal to the
aggregate liquidation preference of the company preferred securities redeemed.
See "DESCRIPTION OF THE TRUST PREFERRED SECURITIES -- Redemption" and
"DESCRIPTION OF THE COMPANY PREFERRED SECURITIES -- Redemption or Exchange" in
the accompanying prospectus.
THE MARKET PRICE OF THE TRUST PREFERRED SECURITIES, THE COMPANY PREFERRED
SECURITIES OR THE JUNIOR SUBORDINATED NOTES MAY BE LOWER THAN THE PRICE THAT YOU
PAID AND MAY BE VOLATILE.
The trust preferred securities that you purchase, the company preferred
securities that you may receive upon dissolution of the trust or upon withdrawal
of the company preferred securities from the trust, or the junior subordinated
notes that you as a holder of trust preferred securities may receive upon a
dissolution of both the limited liability company and the trust, may trade at a
discount to the price that you paid to purchase the trust preferred securities
offered by this prospectus supplement. Because TECO Energy has the right to
defer interest payments on the junior subordinated notes, the market price of
the trust preferred securities may be lower than the price that you paid and may
be volatile.
TECO ENERGY MAY DISSOLVE THE LIMITED LIABILITY COMPANY, OR THE LIMITED LIABILITY
COMPANY MAY DIRECT THE TRUST TO DISTRIBUTE ALL OF ITS ASSETS, WHICH MAY RESULT
IN ADVERSE TAX CONSEQUENCES FOR YOU.
TECO Energy, as the holder of the common securities, has the right to
dissolve the limited liability company at any time. Upon such dissolution, the
limited liability company will liquidate (after satisfaction of any liabilities
to creditors of the limited liability company as provided by applicable law) by
distributing the junior subordinated notes held by it first to the holders of
the company preferred securities, including the trust, until they have received
their liquidation preference in full plus accrued but unpaid distributions and
all remaining junior subordinated notes will be distributed to the holders of
the common securities.
If the limited liability company is characterized for United States federal
income tax purposes as an association taxable as a corporation at the time it
distributes all of its assets, or if there is a change in law, the distribution
of junior subordinated notes may be a taxable event to holders of the company
preferred securities. Under current United States federal income tax law, so
long as the limited liability company is not taxable as a corporation, a
distribution of junior subordinated notes should not be a taxable event.
In addition, if a Tax Event or an Investment Company Event occurs with
respect to the trust, the limited liability company has the right to direct the
property trustee to distribute all assets of the trust, consisting of company
preferred securities or junior subordinated notes (if the limited liability
company has previously dissolved), to the holders of the trust preferred
securities on a pro rata basis. Upon such distribution of
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<PAGE> 12
company preferred securities, the holders of the company preferred securities,
or their nominees, will become subject to Form K-1 reporting requirements under
the Internal Revenue Code of 1986, as amended.
If the trust is characterized for United States federal income tax purposes
as an association taxable as a corporation at the time it distributes all of its
assets, or if there is a change in law, the distribution to you of junior
subordinated notes or company preferred securities, as the case may be, may be a
taxable event to you. Under current United States federal income tax law, so
long as the trust is not taxable as a corporation, a distribution to you of
junior subordinated notes or company preferred securities should not be a
taxable event to you.
TECO Energy and the limited liability company will likely exercise these
rights if unfavorable changes in tax law or investment company law occur. See
"DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES -- Redemption" and "DESCRIPTION OF
THE COMPANY PREFERRED SECURITIES -- Redemption or Exchange" in the accompanying
prospectus.
USE OF PROCEEDS
The trust will use all of the proceeds it receives from the sale of its
trust preferred securities to purchase from the limited liability company the
corresponding company preferred securities. The limited liability company will
use all of the proceeds it receives from the sale of its company preferred
securities and common securities to purchase from us the corresponding junior
subordinated notes. We intend to use the proceeds from our sale of the junior
subordinated notes to the limited liability company to reduce the commercial
paper balances of TECO Finance, which as of November 30, 2000 had a weighted
average interest rate of 6.59% and a weighted average maturity of 44 days. We
may also use the proceeds for general corporate purposes, which may include
investment in subsidiaries, working capital, capital expenditures and other
business opportunities. Pending such uses, we will invest the net proceeds in
short-term, interest bearing, investment grade securities or guaranteed
obligations of the United States or other governments or their agencies.
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SELECTED FINANCIAL INFORMATION
At November 30, 2000, TECO Energy had no short-term indebtedness and TECO
Finance had short-term indebtedness of approximately $1.1 billion outstanding
with various remaining terms until maturity of 112 days or less and with fixed
interest rates ranging from 6.5% to 6.7%.
The table below presents selected historical financial information of TECO
Energy and its subsidiaries. We derived this information from the audited
financial statements for the years ended December 31, 1995 through December 31,
1999 and from unaudited financial statements for the nine months ended September
30, 1999 and September 30, 2000. This information is only a summary. You should
read it in connection with our historical financial statements and related notes
and the "Management's Discussion and Analysis of Financial Condition and Results
of Operations," which are incorporated by reference in this document. See "Where
You Can Find More Information" in the accompanying prospectus.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------- ------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- --------
(MILLIONS, EXCEPT PER SHARE AMOUNT)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $1,698.7 $1,493.0 $1,983.0 $1,955.7 $1,860.8 $1,773.2(4) $1,656.6(4)
======== ======== ======== ======== ======== ======== ========
Net income:
From continuing
operations......... $ 193.0 $ 158.2 $ 200.9(1) $ 204.2(2) $ 211.5(3) $ 217.6(4) $ 201.9(4)
From discontinued
operations......... -- (2.5) (2.5) (3.8) (6.6) (1.1) (1.6)
Disposal of
discontinued
operations......... -- (12.3) (12.3) 6.1 (3.0) -- --
-------- -------- -------- -------- -------- -------- --------
Net income.............. $ 193.0 $ 143.4 $ 186.1(1) $ 206.5(2) $ 201.9(3) $ 216.5(4) $ 200.3(4)
======== ======== ======== ======== ======== ======== ========
Total assets............ $5,170.1 $4,353.6 $4,690.1 $4,179.3 $3,960.4 $3,901.6(4) $3,801.0(4)
Earnings per average
share (EPS)
outstanding -- basic:
From continuing
operations......... $ 1.53 $ 1.20 $ 1.53(1) $ 1.55(2) $ 1.62(3) $ 1.68(4) $ 1.57(4)
From discontinued
operations......... -- (0.02) (0.02) (0.03) (0.05) (0.01) (0.01)
Disposal of
discontinued
operations......... -- (0.09) (0.09) .05 (0.03) -- --
-------- -------- -------- -------- -------- -------- --------
Earnings per average
common share
outstanding -- basic... $ 1.53 $ 1.09 $ 1.42(1) $ 1.57(2) $ 1.54(3) $ 1.67(4) $ 1.56(4)
======== ======== ======== ======== ======== ======== ========
Common dividends paid
per common share(5)... $ 0.995 $ 0.960 $ 1.285 $ 1.225 $ 1.165 $ 1.105 $ 1.0475
======== ======== ======== ======== ======== ======== ========
</TABLE>
---------------
(1) Includes the effect of charges discussed in Note L of the Notes to the
Financial Statements contained in our Annual Report on Form 10-K for the
year ended December 31, 1999 as filed with the SEC on March 29, 2000, which
reduced net income by $19.6 million and earnings per share by $0.15 in 1999.
(2) Includes the effect of charges discussed in Note L of the Notes to the
Financial Statements contained in our Annual Report on Form 10-K for the
year ended December 31, 1999 as filed with the SEC on March 29, 2000, which
reduced net income by $19.6 million and earnings per share by $0.15 in 1998.
(3) Includes the effect of merger-related transaction expenses, which reduced
net income by $5.3 million and earnings per share by $0.04 in 1997.
(4) Amounts shown prior to 1997 have been restated to include the results of the
Peoples Gas companies merger.
(5) Dividend paid for TECO Energy Common Stock (not restated for Peoples Gas
companies merger).
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<PAGE> 14
CAPITALIZATION
The following table summarizes the historical capitalization of TECO Energy
and its subsidiaries at September 30, 2000, and our capitalization as adjusted
to reflect the assumed issuance and sale of an aggregate $200 million
liquidation amount of trust preferred securities. The long-term debt shown does
not include $228 million of long-term debt due within one year.
<TABLE>
<CAPTION>
SEPTEMBER 30, 2000
---------------------------
ACTUAL AS ADJUSTED
------ -----------------
AMOUNT AMOUNT PERCENT
------ ------ -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Capital Structure:
Long-term debt............................................ $1,360 $1,360 44.0%
Company preferred securities of TECO Funding I, LLC
holding solely junior subordinated notes of the
company................................................ -- 200 6.5%
Common equity............................................. 1,530 1,530 49.5%
------ ------ -----
Total capitalization................................... $2,890 $3,090 100.0%
====== ====== =====
Short-term debt........................................... $ 936 $ 736 23.8%
====== ====== =====
</TABLE>
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<PAGE> 15
ACCOUNTING TREATMENT
The limited liability company will be treated as a TECO Energy subsidiary,
and the accounts of the limited liability company will be included in our
financial statements. The existence of the trust is for the sole purpose of
issuing trust preferred securities and using the proceeds to purchase company
preferred securities from the limited liability company. The accounts of the
trust will not be consolidated with our financial statements. The company
preferred securities will be presented as a separate line item in our balance
sheet and disclosures concerning the trust preferred securities, the company
preferred securities, the guarantee and the junior subordinated notes will be
included in the notes to the financial statements. We will record distributions
paid on the company preferred securities as an expense.
DESCRIPTION OF SECURITIES
This prospectus supplement discloses the specific terms and provisions of
the trust preferred securities, the company preferred securities and the junior
subordinated notes and supplements the general description of the terms and
provisions of these securities in the accompanying prospectus. These summaries
are not meant to be a complete description of each security. However, this
prospectus supplement and the accompanying prospectus contain the material terms
and conditions for each security. For more information, please refer to the
trust agreement, limited liability company agreement, the indenture, the
guarantee and the supplemental indenture of TECO Energy authorizing the issuance
of the junior subordinated notes. The indenture and forms of the other documents
are filed as exhibits to the registration statement of which this prospectus
supplement and the accompanying prospectus are a part. All terms used in this
prospectus supplement have the meanings given to them in these documents.
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<PAGE> 16
TERMS OF THE TRUST PREFERRED SECURITIES
DISTRIBUTIONS
The trust preferred securities represent undivided beneficial interests in
the assets of the trust, which consist of a corresponding amount of the company
preferred securities together with related rights under the guarantee.
Distributions on the company preferred securities will be passed on to you as a
holder of the trust preferred securities. The trust is required to make
distributions on the trust preferred securities concurrently with, and in the
same amount as, the distributions on the company preferred securities. See
"TERMS OF THE COMPANY PREFERRED SECURITIES."
The revenue of the trust available for distribution to holders of the trust
preferred securities will be limited to payments under the company preferred
securities it owns. The trust will invest the proceeds from the issuance and
sale of its trust preferred securities in the company preferred securities. It
will have no other assets. If we do not make interest payments on the junior
subordinated notes and as a result the limited liability company is unable to
make distributions on the company preferred securities, the property trustee
will not have funds available to pay distributions on the trust preferred
securities. We have guaranteed the payment of distributions on the company
preferred securities as set forth under the caption "DESCRIPTION OF THE
GUARANTEES" in the accompanying prospectus.
At any time and from time to time, so long as no event of default has
occurred and is continuing under the junior subordinated notes held by the
limited liability company, we may defer interest payments on the junior
subordinated notes for up to 20 consecutive quarters. However, no deferral
period will extend beyond the maturity date of the junior subordinated notes.
During any deferral period, the limited liability company will defer quarterly
distributions on the company preferred securities, and the trust will defer
quarterly distributions on the trust preferred securities, but the amount of
distributions due to you will continue to accumulate at the rate stated above,
compounded quarterly to the extent permitted by law.
TECO Energy has no current intention to exercise its right to defer
interest payments on the junior subordinated notes issued to the limited
liability company. If we defer interest payments on the junior subordinated
notes, we would be subject to restrictions relating to the payment of dividends
on or purchases of our capital stock and payments on our debt securities ranking
equal with or junior to the junior subordinated notes. See "DESCRIPTION OF THE
JUNIOR SUBORDINATED NOTES -- Option to Extend Interest Payment Date" in the
accompanying prospectus.
Distributions on the trust preferred securities will be payable to the
holders as they appear on the register of the trust on the relevant record
dates, which as long as the trust preferred securities remain in book-entry
form, will be one business day prior to the relevant distribution date. Subject
to any applicable laws and regulations, and to the provisions of the trust
agreement, distribution payments will be made as described under the section
captioned "BOOK-ENTRY ISSUANCE AND GLOBAL SECURITIES" in this prospectus
supplement. In the event that any trust preferred securities are not in
book-entry form, the relevant record date for such trust preferred securities
shall be a date at least 15 days prior to the distribution date.
See the accompanying prospectus for additional terms of the trust preferred
securities, including provisions relating to the deferral of distributions and
the payment of distributions.
REDEMPTION
The trust preferred securities can be redeemed only upon redemption of the
company preferred securities and junior subordinated notes. If the limited
liability company redeems the company preferred securities in accordance with
its limited liability company agreement, then the limited liability company is
required to give the property trustee at least 35 days' and not more than 60
days' prior notice before doing so. The property trustee is required to mail the
notice of redemption to the holders of trust preferred securities not less than
25 days prior to the date fixed for redemption of the company preferred
securities.
When TECO Energy pays the junior subordinated notes at maturity on
, 2041, or upon early redemption, the limited liability company is
required to redeem the company preferred securities. If less than
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<PAGE> 17
all of the company preferred securities are redeemed by the limited liability
company, then the aggregate redemption amount payable on the company preferred
securities to be redeemed will be allocated pro rata among the trust preferred
securities. The property trustee is required to use the proceeds from the
redemption of the company preferred securities to redeem a like amount of the
trust preferred securities. The trust preferred securities (unless there is a
default under the junior subordinated notes) will be redeemed at a price equal
to the liquidation amount of $ per trust preferred security plus accrued and
unpaid distributions to the date of redemption.
SPECIAL REDEMPTION EVENTS
If a Tax Event or an Investment Company Event, each as defined in the
accompanying prospectus under the heading "DESCRIPTION OF THE TRUST PREFERRED
SECURITIES -- Redemption," has occurred and is continuing, TECO Energy may
redeem the junior subordinated notes, in whole but not in part. This will cause
a mandatory redemption of the company preferred securities and the common
securities by the limited liability company, and a mandatory redemption of the
trust preferred securities by the trust, in whole but not in part, within 90
days following the occurrence of the Tax Event or the Investment Company Event,
as the case may be, at the liquidation amount of $ per trust preferred security
plus accrued and unpaid distributions to the date of redemption.
However, if a Tax Event occurs, and we can eliminate the Tax Event within
the 90-day period by taking some action, such as filing a form or making an
election, or pursuing some other similar reasonable measure which has no adverse
effect on TECO Energy, the limited liability company, the trust or the trust
preferred security holders, we will pursue that action instead. TECO Energy may
not redeem the junior subordinated notes while the trust or the property trustee
is pursuing any similar action based on its obligations under the trust
agreement.
See the accompanying prospectus for other redemption provisions and for
redemption procedures.
WITHDRAWAL OF THE COMPANY PREFERRED SECURITIES
Any holder of the trust preferred securities may withdraw all, but not less
than all, of the company preferred securities represented by such trust
preferred securities by providing a written notice to the property trustee, with
evidence of beneficial ownership in form satisfactory to the property trustee,
and providing to the limited liability company such documents or information as
the limited liability company may request for tax reporting purposes. The
holder's notice will also be deemed to be the agreement of the beneficial owner
to be subject to the terms of the limited liability company agreement applicable
to the holders of the company preferred securities. Income earned from the
company preferred securities after their withdrawal will be reported annually to
you and the Internal Revenue Service on Schedule K-1 and not on Form 1099. See
"DESCRIPTION OF THE TRUST PREFERRED SECURITIES -- Withdrawal of the Company
Preferred Securities" in the accompanying prospectus.
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<PAGE> 18
TERMS OF THE COMPANY PREFERRED SECURITIES
DISTRIBUTIONS
Distributions on the company preferred securities are cumulative and will
accumulate from the date they are first issued at the annual rate of % of
the $ per company preferred security liquidation preference. Distributions will
be payable quarterly in arrears on , , and
of each year, beginning , 2001. Distributions not paid
when due will accumulate additional distributions, compounded quarterly, at the
annual rate of % on the amount of unpaid distributions (to the extent
permitted by law). The term "distributions" includes any of these distributions.
The amount of distributions payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months.
The limited liability company is required to distribute all payments it
receives on the junior subordinated notes to holders of the company preferred
securities and common securities, subject to the preferential rights of the
company preferred securities. If the limited liability company fails to make a
payment on the company preferred securities after having received payment on the
junior subordinated notes, holders of the company preferred securities may
enforce their rights under the guarantee.
If distributions are payable on a date that is not a business day, payment
will be made on the next business day, without any interest or other payment in
respect for any delay. However, if the next business day is in the next calendar
year, payment of distributions will be made on the preceding business day. A
"business day" means a day on which banks are open for business in New York and
Delaware.
See the accompanying prospectus for additional terms of the company
preferred securities, including provisions relating to the deferral of
distributions, the payment of distributions and the subordination of the common
securities.
REDEMPTION
When TECO Energy pays the junior subordinated notes at maturity on
, 2041, or upon early redemption, the limited liability company is
required to use the proceeds to redeem a like amount of the company preferred
securities and common securities, subject to the preferential rights of the
company preferred securities. The company preferred securities and, subject to
the preferential rights of the company preferred securities, the common
securities, will be redeemed at a price equal to the liquidation amount of $
per security plus accrued and unpaid distributions to the date of redemption.
If less than all of the company preferred securities and common securities
are to be redeemed on a redemption date, then the company preferred securities
shall be redeemed prior to any redemption of the common securities. See
"DESCRIPTION OF THE COMPANY PREFERRED SECURITIES -- Redemption or Exchange" and
" -- Redemption and Exchange Procedures" in the accompanying prospectus.
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<PAGE> 19
TERMS OF THE JUNIOR SUBORDINATED NOTES
The junior subordinated notes will be issued as a series under a
supplemental indenture supplementing the indenture. The junior subordinated
notes are unsecured and rank subordinate and junior in right of payment to all
of our senior debt securities and subordinated debt securities, if any.
INTEREST RATE AND MATURITY
The junior subordinated notes will mature on , 2041, and will
bear interest at the annual rate of % of the principal amount thereof,
payable quarterly in arrears on , , and
of each year, beginning , 2001. Interest payments not
paid when due will accrue additional interest compounded quarterly, at the
annual rate of % on the amount of unpaid interest (to the extent permitted
by law). The term "interest payments" includes this additional interest. The
amount of interest payable for any period will be computed based on a 360-day
year of twelve 30-day months. The interest payment provisions for the junior
subordinated notes correspond to the distribution provisions of the company
preferred securities.
See the accompanying prospectus for other terms of the junior subordinated
notes, including provisions relating to the deferral of interest payments, under
"DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES."
REDEMPTION
TECO Energy has the option to redeem the junior subordinated notes prior to
maturity at a redemption price equal to 100% of the principal amount plus
accrued and unpaid interest to the redemption date in whole or in part at any
time on or after , 200 , a date approximately five years after
the issuance of the junior subordinated notes, or in whole but not in part if a
Tax Event or an Investment Company Event has occurred and is continuing.
DISTRIBUTION OF JUNIOR SUBORDINATED NOTES
If the property trustee ultimately distributes the junior subordinated
notes to the trust preferred securities holders upon the dissolution and
liquidation of the limited liability company and the trust, the junior
subordinated notes will be issued in denominations of $ and integral multiples
thereof. TECO Energy anticipates that the junior subordinated notes would be
distributed in the form of one or more global securities and DTC, or any
successor depositary for the trust preferred securities, would act as depositary
for the junior subordinated notes. The depositary arrangements for the junior
subordinated notes would be substantially similar to those in effect for the
trust preferred securities.
If the junior subordinated notes are distributed, TECO Energy will use its
best efforts to cause the listing of the junior subordinated notes on the NYSE,
or any other exchange on which the trust preferred securities are then listed,
in place of the trust preferred securities.
For a description of DTC and the terms of the depository arrangements
relating to payments, transfers, voting rights, redemption and other notices and
other matters, see "BOOK-ENTRY ISSUANCE AND GLOBAL SECURITIES" below.
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<PAGE> 20
BOOK-ENTRY ISSUANCE AND GLOBAL SECURITIES
The trust preferred securities and, if held by the holders of the trust
preferred securities after dissolution of the limited liability company and
trust, as the case may be, the junior subordinated notes and the company
preferred securities, may be issued in whole or in part in the form of one or
more global securities. If securities are issued in the form of one or more
global securities, then the global securities will be registered in the name of
the depositary or the nominee of the depositary. The global securities will be
delivered to the depositary for credit to the accounts of the holders of
beneficial interests in the securities.
Neither TECO Energy, the limited liability company, the trust, the property
trustee, any payment agent or the security registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a global security
or for maintaining, supervising or reviewing any records relating to these
beneficial ownership interests.
The depositary will be DTC. Book-entry securities may be issued only in
fully registered form and in either temporary or permanent form. Unless and
until it is exchanged for the individual securities that it represents, a
book-entry security may not be transferred except as a whole to a nominee of the
depositary or to a successor depositary or any nominee of the successor.
DTC has advised us that it 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. DTC holds securities that its participants
deposit with it. 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. DTC is owned
by a number of its participants and by the NYSE, the American Stock Exchange and
the National Association of Securities Dealers. 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 custodial relationships with
participants, either directly or indirectly. The rules applicable to DTC and its
participants are on file with the SEC.
Purchases of book-entry securities within the DTC system must be made by or
through direct participants, which will receive a credit for the book-entry
securities on DTC's records. The ownership interest of each actual purchaser of
each book-entry security, or 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 book-entry
securities. Transfers of ownership interests in the book-entry securities 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 book-entry securities, except in the event that use
of the book-entry system is discontinued. The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a global security.
To facilitate subsequent transfers, all book-entry securities deposited by
participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of book-entry securities with DTC and their registration
in the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the book-entry securities; DTC's
records reflect only the identity of the direct participants to whose accounts
such book-entry securities 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.
TECO Energy, the limited liability company and the trust expect that
conveyance of notices and other communications by DTC to direct participants, by
direct participants to indirect participants, and by direct
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<PAGE> 21
participants and indirect participants to Beneficial Owners and the voting
rights of direct participants, indirect participants and 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 Cede & Co. as the registered holder of
the book-entry securities.
Although voting with respect to the book-entry securities is limited to the
holders of record of the book-entry securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to book-entry securities. Under its usual procedures, DTC would mail an
omnibus proxy to the relevant trustee or entity 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 such book-entry securities are
credited on the record date identified in a listing attached to the omnibus
proxy.
Distribution payments on the trust preferred securities, company preferred
securities or the junior subordinated notes held in book-entry form will be made
to DTC. We have been advised that 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 and will be the responsibility of such participant and not of DTC, the
relevant trustee, the limited liability company, the trust or TECO Energy,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment on book-entry securities to DTC is TECO Energy's
responsibility or the responsibility of the limited liability company or
property trustee, as applicable, disbursement of such payments to direct
participants is the responsibility of DTC and disbursements of such payments to
the Beneficial Owners is the responsibility of direct and indirect participants.
If a depositary for a series of trust preferred securities is at any time
unwilling, unable or ineligible to continue as depositary and the limited
liability company does not appoint a successor depositary within 90 days, the
trust will issue individual trust preferred securities of such series in
exchange for the global security representing that series of trust preferred
securities. In addition, the limited liability company may at any time and in
its sole discretion determine not to have any trust preferred securities of a
series represented by one or more global securities and, in that event, the
trust will issue individual trust preferred securities of that series in
exchange for the global security or securities representing that series of trust
preferred securities. In case the trust preferred securities are no longer held
in book-entry form, a Beneficial Owner in the global security will be entitled
to physical delivery of individual trust preferred securities of the series
represented by the global security equal in liquidation amount to such
beneficial interest and to have such trust preferred securities registered in
its name. Individual trust preferred securities of the series so issued will be
issued in denominations of $ or integral multiples of $ .
If the trust issues certificated trust preferred securities, they will be
registered in the name of the security holder. The trust preferred securities
may be transferred or exchanged, based on administrative procedures in the trust
agreement, without the payment of any service charge, other than any tax or
other governmental charge, by contacting the registrar and transfer agent, The
Bank of New York, at 101 Barclay Street, Floor 8th, New York, New York 10286;
and its telephone number is (212) 815-5088.
Distribution payments will be made by check if the trust issues
certificated trust preferred securities. Payment of the redemption price or
liquidation amount will be made in immediately available funds when you
surrender the preferred securities.
The information in this prospectus concerning DTC and DTC's book-entry
system has been obtained from sources that we believe to be accurate, but we
assume no responsibility for the accuracy thereof. We do not have any
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.
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<PAGE> 22
UNITED STATES TAXATION
The following is a summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of the trust preferred
securities. The statements of United States federal income tax law or legal
conclusion set forth in this summary, subject to the limitations set forth
herein, constitute the opinion of Palmer & Dodge LLP, counsel to TECO Energy.
This discussion is based upon laws, regulations, rulings and decisions now in
effect or, in the case of certain regulations, in proposed form, all of which
are subject to change, possibly with retroactive effect, or possible differing
interpretations. It deals only with purchasers who hold the trust preferred
securities as capital assets and does not purport to deal with persons in
special tax situations, such as banks, thrifts, and other financial
institutions, insurance companies, tax-exempt organizations, partnerships, S
corporations, regulated investment companies, real estate investment trusts or
real estate mortgage investment conduits, financial asset securitization
investment trusts, dealers in securities or currencies, persons subject to
alternative minimum tax, persons holding the trust preferred securities as a
part of a hedging, conversion, short sale or integrated transaction or as a
position in a "straddle" for tax purposes, persons whose functional currency is
not the U.S. dollar, holders of 10% or more, by voting power or value, of the
stock of TECO Energy, persons who have ceased to be U.S. citizens or to be taxed
as resident aliens, or foreign persons whose income or gain from the trust
preferred securities is effectively connected with the conduct of a United
States trade or business. In addition, this discussion does not deal with
holders other than original purchasers. The discussion set forth herein with
respect to taxes addresses the material United States federal income tax
consequences of the purchase, ownership and disposition of the trust preferred
securities and does not address any tax consequences arising under the law of
any state, local, foreign or other taxing jurisdiction.
PERSONS CONSIDERING THE PURCHASE OF TRUST PREFERRED SECURITIES SHOULD
CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION OF UNITED STATES
FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY
CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF TRUST PREFERRED
SECURITIES ARISING UNDER THE LAWS OF ANY STATE, LOCAL, FOREIGN OR OTHER TAXING
JURISDICTION.
Prospective investors should note that no rulings have been or are expected
to be sought from the Internal Revenue Service with respect to any of the tax
consequences discussed below, and no assurance can be given that the IRS will
not take contrary positions.
As used herein, the term "U.S. Holder" means a beneficial owner of trust
preferred securities that is for United States federal income tax purposes (i) a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States or
of any political subdivision thereof (other than a partnership that is not
treated as a United States person under any applicable regulations of the U.S.
Department of the Treasury), (iii) an estate whose income is subject to United
States federal income tax regardless of its source, or (iv) a trust if a court
within the United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust. Notwithstanding the
preceding sentence, to the extent provided in Treasury regulations and guidance,
certain trusts in existence on August 20, 1996, and treated as United States
persons prior to such date, that elect to continue to be treated as United
States persons also will be U.S. Holders. As used herein, the term "non-U.S.
Holder" means a beneficial owner of trust preferred securities that is not a
U.S. Holder.
CHARACTERIZATION OF THE TRUST AND THE LIMITED LIABILITY COMPANY
Under current law and based on the representations, facts and assumptions
described in this prospectus, and assuming full compliance with the terms of the
trust agreement, the underwriting agreement governing the sale of the trust
preferred securities to the underwriters, the indenture and other relevant
documents, the trust will be characterized for United States federal income tax
purposes as a grantor trust and will not be taxable as a corporation.
Accordingly, for United States federal income tax purposes, you will be treated
as the beneficial owner of a pro rata undivided interest in the assets of the
trust, consisting of the company preferred securities issued by the limited
liability company, and will include in your income your pro rata share of the
trust's income.
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<PAGE> 23
Under current law and assuming full compliance with the terms of the
limited liability company agreement and that the limited liability company does
not file a registration under the Investment Company Act of 1940 and ninety
percent or more of its gross income consists of interest on, or gain or loss
from the disposition of, the junior subordinated notes, the limited liability
company will be treated as a partnership (and the holders of company preferred
securities as partners in that partnership) for United States federal income tax
purposes. A partnership is not a taxable entity and incurs no United States
federal income tax liability. Instead, each partner is required to take into
account its allocable share of items of income, gain, loss and deduction of the
partnership in computing its United States federal income tax liability,
regardless of whether distributions are made to the partner. These items
generally will be treated as if realized by the partner directly from the same
source realized by the partnership.
CHARACTERIZATION OF THE JUNIOR SUBORDINATED NOTES
TECO Energy, the limited liability company and the trust will agree to
treat the junior subordinated notes as debt for United States federal income tax
purposes. By accepting the trust preferred securities, you agree to treat the
junior subordinated notes as debt and to accept the trust preferred securities
as evidence of an indirect beneficial ownership interest in the junior
subordinated notes. We can give no assurance that this position will not be
challenged by the IRS, however, or that such a challenge would not be
successful.
U.S. HOLDERS
Interest Income and Original Issue Discount
Under the limited liability company agreement, the limited liability
company will be required to include stated interest on the junior subordinated
notes in its gross income as the interest accrues, regardless of when the
interest is paid. As a consequence, you will be required to include your pro
rata share of the trust's allocable share of the stated interest on the junior
subordinated notes in your gross income for your taxable year that includes
December 31 of the calendar year in which the interest accrues, regardless of
when the interest is paid and distributed to you. If you dispose of all of your
trust preferred securities, however, your pro rata share of the amount allocated
to the trust for the calendar year of that disposition will be includable in
your gross income for your taxable year that includes the date of that
disposition. Under the limited liability company agreement and the trust
agreement, quarterly payments of interest on the junior subordinated notes will
be passed through to the trust as quarterly cash distributions on the company
preferred securities and then to you as quarterly cash distributions on the
trust preferred securities. These quarterly cash distributions will not be
separately reported as taxable income and should equal your share of the daily
accruals of income allocated to the trust for that quarterly interest period, so
long as there is no interest deferral period, as discussed below.
So long as no event of default under the junior subordinated notes has
occurred and is continuing, TECO Energy can, on one or more occasions, defer
interest payments on the junior subordinated notes for up to 20 consecutive
quarterly periods. Under applicable income tax regulations, if there is only a
remote likelihood that a company will not make its interest payments on time,
then the debt will not be considered to be issued with original issue discount,
or OID. TECO Energy believes that the likelihood that it will elect to defer
interest payments is remote, since this would prevent it from declaring
dividends on any of its capital stock or making payments on its debt securities
which rank equal with or junior to the junior subordinated notes, until it made
up all of the missed interest payments. Accordingly, TECO Energy will take the
position that the junior subordinated notes will not be issued with OID.
If TECO Energy were to elect to defer payments of interest, the junior
subordinated notes would at that time be treated as re-issued with OID, and all
remaining interest payments would be treated as OID. In that case, taxable
interest income on the junior subordinated notes would have to be included in
your gross income for United States federal income tax purposes as it accrued
daily on an economic accrual basis, even though you would not receive any cash
distributions with respect to such accrued interest amount until after the end
of the interest deferral period. In addition, if interest income is required to
be included as OID, the calculation of
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<PAGE> 24
the amount of such income could differ from the amount otherwise required to be
accrued under the general rules described above.
If the likelihood that TECO Energy will decide to defer any payments of
interest were not treated as remote, the junior subordinated notes would be
considered as issued initially with OID in an amount equal to the sum of all the
interest payable over the term of the junior subordinated notes. Again, this
would mean that you would have to include interest income in gross income for
United States federal income tax purposes as it accrued daily on an economic
accrual basis.
The IRS has not issued any rulings or interpretation which define the
meaning of the term "remote" as used in the applicable income tax regulations.
The IRS could take a position that differs from what we state in this
prospectus.
Corporate U.S. Holders
Because the income from the trust preferred securities will not be
considered to be dividends for United States federal income tax purposes,
corporate holders of the trust preferred securities will not be entitled to a
dividends-received deduction for any income from the trust preferred securities.
Withdrawal or Distribution of Preferred Securities
Your receipt of company preferred securities in exchange for trust
preferred securities at your option or upon termination of the trust will not be
a taxable event, so long as the trust is not taxable as a corporation. For a
description of the tax treatment of liquidating distributions from the trust in
the event that the trust is taxable as a corporation, see the discussion below
in "Receipt of Company Preferred Securities or Junior Subordinated Notes Upon
Liquidation of the Trust or the Limited Liability Company." Your tax basis and
holding period for the company preferred securities immediately after such
exchange or distribution will equal your tax basis and holding period for the
trust preferred securities surrendered in such exchange or distribution. Income
earned from the company preferred securities after their withdrawal or
distribution will be reported annually to you and the Internal Revenue Service
on Schedule K-1 and not on Form 1099.
Dispositions of the Trust Preferred Securities or Company Preferred
Securities.
You will recognize gain or loss on a sale, taxable exchange or other
taxable disposition of your trust preferred securities or (if previously
distributed to you) company preferred securities equal to the difference between
the amount realized from the disposition and your adjusted tax basis in the
trust preferred securities or company preferred securities. Your adjusted tax
basis in the trust preferred securities or (assuming the trust was not taxable
as a corporation when the company preferred securities were distributed to you)
the company preferred securities generally will equal the initial purchase price
that you paid for the trust preferred securities, increased by the amount of
income allocated to you and reduced by the amount of any cash or property
distributed to you. A gain or loss on the sale of the trust preferred securities
or the company preferred securities generally will be a capital gain or loss if
the trust preferred securities or the company preferred securities are held as
capital assets. The maximum regular United States federal income tax rate on
capital gains for individual taxpayers is currently 20% for sales and exchanges
of capital assets held for more than one year. All net capital gains of a
corporate taxpayer are subject to tax at ordinary corporate income tax rates of
up to 35%. Subject to limited exceptions, capital losses cannot be applied to
offset ordinary income for United States federal income tax purposes.
If you sell your trust preferred securities or your company preferred
securities between record dates for payments of distributions on the trust
preferred securities or the company preferred securities, you will be required
to include in gross income for United States federal income tax purposes accrued
and unpaid interest not previously included in gross income through the date of
sale, but you will not receive any cash related thereto from the trust or the
limited liability company, as applicable. Your tax basis in the trust preferred
securities or the company preferred securities will be increased by the amount
of any interest income that is included in your gross income without a
corresponding receipt of cash.
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<PAGE> 25
Receipt of Company Preferred Securities or Junior Subordinated Notes Upon
Liquidation of the Trust or the Limited Liability Company.
Upon the occurrence of a Tax Event or an Investment Company Event, the
trust may be dissolved. If the trust is dissolved, then the trust will liquidate
(after satisfaction of any liabilities to creditors of the trust as provided by
applicable law) by distributing the company preferred securities (or the junior
subordinated notes, if the limited liability company has liquidated first, as
described below) held by it to you, as a holder of trust preferred securities,
on a pro rata basis. Unless the liquidation of the trust occurs as a result of
the trust being taxable as a corporation, such a distribution will not be a
taxable event for United States federal income tax purposes. You will have an
aggregate tax basis in the company preferred securities or the junior
subordinated notes equal to your aggregate tax basis in your trust preferred
securities, and your holding period in the company preferred securities or the
junior subordinated notes will include the period during which you held the
trust preferred securities. If, however, the liquidation of the trust were to
occur because the trust is taxable as a corporation, the distribution of the
company preferred securities or the junior subordinated notes to you would
likely be a taxable event, in which case, you would recognize gain or loss equal
to the difference between your aggregate tax basis in your trust preferred
securities surrendered in the exchange and the aggregate fair market value of
the company preferred securities or the junior subordinated notes received in
the exchange, and your holding period for the company preferred securities or
the junior subordinated notes would not include the period during which you held
the trust preferred securities.
TECO Energy, as the holder of the common securities, has the right to
dissolve the limited liability company at any time. If the limited liability
company is dissolved, then the limited liability company will liquidate (after
satisfaction of any liabilities to creditors of the limited liability company as
provided by applicable law) by distributing the junior subordinated notes held
by it to the holders of the company preferred securities, which holders could
include the trust, if the trust has not liquidated, or you, if you previously
received a distribution of company preferred securities. Unless the liquidation
of the limited liability company occurs as a result of the limited liability
company being taxable as a corporation, holders of the company preferred
securities would not recognize any gain or loss for United States federal income
tax purposes as a result of such distribution. Each such holder would have an
aggregate tax basis in the junior subordinated notes equal to his or her
aggregate tax basis in the company preferred securities surrendered in the
exchange, and such holder's holding period for the junior subordinated notes so
received would include your holding period for the company preferred securities.
If, however, the liquidation of the limited liability company were to occur
because the limited liability company is taxable as a corporation, the
distribution of the junior subordinated notes would likely be a taxable event,
in which case, a holder of company preferred securities would recognize gain or
loss equal to the difference between his or her aggregate tax basis in the
company preferred securities surrendered in the exchange and the aggregate fair
market value of the junior subordinated notes received in the exchange, and such
holder's holding period for the junior subordinated notes would not include his
or her holding period for the company preferred securities. Receipt of the
junior subordinated notes would affect the amount and timing of interest and OID
inclusions thereafter.
Information Reporting and Backup Withholding.
The amount of income paid or accrued on the trust preferred securities and
payment of the proceeds from the sale, exchange or retirement of the trust
preferred securities generally will be reported to U.S. Holders, other than
certain exempt recipients, such as corporations, on Internal Revenue Service
Form 1099. In addition, a 31% backup withholding tax may apply to those amounts
if the U.S. Holder fails to furnish the payor with a correct taxpayer
identification number or other required certification or fails to report
interest or dividends required to be shown on the holder's federal income tax
returns. Backup withholding is not an additional tax, and amounts withheld as
backup withholding will be creditable against the U.S. Holder's federal income
tax liability, provided that the required information is furnished to the IRS.
NON-U.S. HOLDERS.
A non-U.S. Holder will not be subject to United States federal income taxes
on the income paid or accrued on the trust preferred securities, provided that
such income is not effectively connected with the
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<PAGE> 26
conduct of a United States trade or business of the holder and that such
non-U.S. Holder: (i) does not own actually or constructively 10% or more of the
total combined voting power of TECO Energy, (ii) is not a controlled foreign
corporation related to TECO Energy through actual or constructive stock
ownership and (iii) is not a bank receiving interest described in Section
881(c)(3)(A) of the Code. In addition, to qualify for this exemption from
taxation, the non-U.S. Holder, or a securities clearing organization, bank, or
other financial institution that holds customer securities in the ordinary
course of its trade or business and that holds the trust preferred securities
for the account of such holder, must provide to the last United States payor in
the chain of payment prior to payment to the non-U.S. Holder required
certification of the non-U.S. status of the holder (generally made on an IRS
Form W-8BEN).
Generally, a non-U.S. Holder will not be subject to United States federal
income taxes on any amount which constitutes gain upon retirement or disposition
of the trust preferred securities or the company preferred securities, provided
the gain is not effectively connected with the conduct of a trade or business in
the United States by the non-U.S. Holder. Certain other exceptions to this rule
for nontaxability may be applicable (for example, exceptions applicable to
certain individuals present in the U.S. for 183 or more days in the year of
retirement or disposition, or to U.S. expatriates), and a non-U.S. Holder is
urged to consult its tax advisor in this regard.
Special rules may be applicable to a non-U.S. Holder if its holding of the
trust preferred securities is effectively connected with the conduct of a U.S.
trade or business of such holder. Non-U.S. Holders who hold the trust preferred
securities in connection with the conduct of a U.S. trade or business are urged
to consult their own tax advisors regarding the U.S. federal income tax
consequences to them of the purchase, ownership, or disposition of the trust
preferred securities.
Non-U.S. Holders of the trust preferred securities are urged to consult
their tax advisors regarding the application of information reporting and backup
withholding in their particular situations, the availability of exemptions and
the procedure for obtaining such exemptions, if available. Any amount withheld
from a payment to a Non-U.S. Holder under the backup withholding rules is
allowable as a credit against the holder's federal income tax, provided that the
required information is furnished to the IRS.
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<PAGE> 27
UNDERWRITING
Under the terms and subject to the conditions of the underwriting agreement
dated , 200 , each underwriter named below, for whom Salomon Smith
Barney Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley
& Co. Incorporated, Prudential Securities Incorporated and UBS Warburg LLC are
acting as representative, has severally agreed to purchase from the trust, and
the trust has agreed to sell to such underwriter, the number of trust preferred
securities set forth opposite the name of such underwriter below.
<TABLE>
<CAPTION>
NUMBER OF TRUST
NAME PREFERRED SECURITIES
---- --------------------
<S> <C>
Salomon Smith Barney Inc....................................
Merrill Lynch, Pierce, Fenner & Smith Incorporated..........
Morgan Stanley & Co. Incorporated...........................
Prudential Securities Incorporated..........................
UBS Warburg LLC.............................................
Total....................................................... 8,000,000
=========
</TABLE>
The underwriters are obligated to take and pay for the total number of
trust preferred securities offered hereby if any such trust preferred securities
are purchased. In the event of default by any underwriter, the underwriting
agreement provides that, in some circumstances, purchase commitments of the
non-defaulting underwriters may be increased or the underwriting agreement may
be terminated.
The underwriting agreement provides that TECO Energy, the limited liability
company and the trust will indemnify the several underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
TECO Energy's expenses associated with the offer and sale of the trust
preferred securities are estimated to be $ .
In view of the fact that the proceeds of the sale of the trust preferred
securities will ultimately be used to purchase TECO Energy's junior subordinated
notes, the underwriting agreement provides that TECO Energy will pay as
compensation to the underwriters $ per trust preferred security for the
accounts of the several underwriters and $ in the aggregate.
The underwriters propose to offer the trust preferred securities, in part,
directly to the public at the initial public offering price set forth on the
cover page of this prospectus supplement, and to certain dealers at such price
less a concession of $ per trust preferred security. The underwriters may
allow, and such dealers may reallow, a concession not exceeding $ per trust
preferred security to certain brokers and dealers. After the trust preferred
securities are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the representatives of the
underwriters.
Application has been made to list the trust preferred securities on the
NYSE. If approved, trading of the trust preferred securities on the NYSE is
expected to commence within a 30-day period after the initial delivery of the
trust preferred securities. Prior to this offering, there has been no public
market for the trust preferred securities. In order to meet one of the
requirements for listing the trust preferred securities on the NYSE, the
underwriters will undertake to sell lots of 100 or more trust preferred
securities to a minimum of 400 beneficial holders.
TECO Energy, the limited liability company and the trust have agreed,
during the period of 30 days from the date of the underwriting agreement, not to
sell, offer to sell, grant any option for the sale of, or otherwise dispose of
any trust preferred securities, any security convertible into or exchangeable
into or exercisable for trust preferred securities, the company preferred
securities or the junior subordinated notes or any debt securities substantially
similar to the junior subordinated notes or equity securities substantially
similar to the company preferred securities or trust preferred securities,
except for the junior subordinated notes, company
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<PAGE> 28
preferred securities and the trust preferred securities issued pursuant to the
underwriting agreement, without the prior written consent of the
representatives.
In order to facilitate the offering of the trust preferred securities, the
underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the trust preferred securities. Specifically, the
underwriters may overallot in connection with the offering, creating a short
position in the trust preferred securities for their own account. In addition,
to cover overallotments or to stabilize the price of the trust preferred
securities, the underwriters may bid for, and purchase, the trust preferred
securities in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an underwriter or a dealer for distributing the
trust preferred securities in the offering, if the syndicate repurchases
previously distributed trust preferred securities in transactions to cover
syndicate short positions, in stabilization transactions or otherwise. Any of
these activities may stabilize or maintain the market price of the trust
preferred securities above independent market levels. The underwriters are not
required to engage in these activities, and if commenced, may end any of these
activities at any time.
Some of the underwriters and their affiliates have in the past provided,
and may in the future provide, investment and/or commercial banking services to
us and our affiliates in the ordinary course of business.
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<PAGE> 29
PROSPECTUS
TECO CAPITAL TRUST I
TECO CAPITAL TRUST II
TECO CAPITAL TRUST III
TRUST PREFERRED SECURITIES
REPRESENTING A CORRESPONDING AMOUNT OF
COMPANY PREFERRED SECURITIES
OF
TECO FUNDING COMPANY I, LLC
TECO FUNDING COMPANY II, LLC
TECO FUNDING COMPANY III, LLC
FULLY AND UNCONDITIONALLY GUARANTEED ON A JUNIOR SUBORDINATED BASIS BY
TECO ENERGY, INC.
THE TECO TRUSTS:
- will issue and sell trust preferred securities to the public;
- will use the proceeds from these sales to buy company preferred
securities from a TECO limited liability company; and
- will pass distributions and redemption and liquidation payments paid by a
TECO limited liability company on the company preferred securities
through to you as distributions and redemption and liquidation payments
on the trust preferred securities.
THE TECO LIMITED LIABILITY COMPANIES:
- will issue and sell company preferred securities to a TECO trust;
- will issue and sell common securities to TECO Energy; and
- will use the proceeds from these sales to buy a series of junior
subordinated notes from TECO Energy with terms that correspond to the
company preferred securities.
TECO ENERGY:
- will pay principal and interest on its junior subordinated notes, subject
to payment on its more senior debt; and
- will fully and unconditionally guarantee, on a junior subordinated basis,
the distribution, redemption and liquidation payment obligations under
the company preferred securities.
We urge you to read this prospectus and the prospectus supplement carefully
before you make your investment decision.
------------------------
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS MAY NOT BE USED TO SELL SECURITIES UNLESS ACCOMPANIED BY A
PROSPECTUS SUPPLEMENT.
------------------------
The date of this prospectus is December 7, 2000
<PAGE> 30
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ABOUT THIS PROSPECTUS....................................... 1
RISK FACTORS................................................ 1
FORWARD-LOOKING STATEMENTS.................................. 1
TECO ENERGY................................................. 2
THE TECO LIMITED LIABILITY COMPANIES........................ 3
THE TECO TRUSTS............................................. 4
RATIO OF EARNINGS TO FIXED CHARGES.......................... 6
DESCRIPTION OF THE TRUST PREFERRED SECURITIES............... 7
DESCRIPTION OF THE COMPANY PREFERRED SECURITIES............. 13
DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES................ 20
DESCRIPTION OF THE GUARANTEES............................... 28
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, COMPANY
PREFERRED SECURITIES, THE JUNIOR SUBORDINATED NOTES AND
THE GUARANTEES............................................ 30
BOOK-ENTRY ISSUANCE......................................... 32
USE OF PROCEEDS............................................. 33
PLAN OF DISTRIBUTION........................................ 34
LEGAL MATTERS............................................... 35
EXPERTS..................................................... 35
WHERE YOU CAN FIND MORE INFORMATION......................... 35
</TABLE>
i
<PAGE> 31
ABOUT THIS PROSPECTUS
In this prospectus, "we" and "TECO Energy" refer to TECO Energy, Inc., a
"limited liability company" or "TECO Limited Liability Company" refers to TECO
Funding Company I, LLC, TECO Funding Company II, LLC or TECO Funding Company
III, LLC, which are Delaware limited liability companies that we have formed to
issue the company preferred securities, and a "trust" or "TECO Trust" refers to
TECO Capital Trust I, TECO Capital Trust II or TECO Capital Trust III, which are
Delaware statutory business trusts that we have formed to issue the trust
preferred securities.
This prospectus is part of a registration statement that we filed with the
SEC using a "shelf" registration process. That registration statement registered
both the securities described in this prospectus as well as other securities
issuable by TECO Energy, including its common and preferred stock, debt
securities and securities convertible into those securities. Under the shelf
process, TECO Energy, the TECO Limited Liability Companies and the TECO Trusts
may issue and sell to the public any combination of the securities described in
the registration statement in one or more offerings up to a total dollar amount
of $1,200,000,000.
This prospectus provides you with only a general description of the TECO
Limited Liability Companies' securities, the TECO Trusts' preferred securities
and TECO Energy's junior subordinated notes. Each time we, the limited liability
companies or the trusts issue and sell those securities, we will provide a
prospectus supplement that will contain specific information about the
particular securities and terms of that offering. In the prospectus supplement,
we will describe the interest rate, payment dates, maturity and other terms of
any junior subordinated notes that we issue and sell, and the rights to periodic
cash distributions, payments on liquidation and other terms of a limited
liability company's and trust's securities. The prospectus supplement will also
describe the proceeds and uses of proceeds from the securities, together with
the names and compensation of any underwriters through whom the securities are
being issued and sold, and other important considerations for investors. It may
also add to, update or change information contained in this prospectus.
RISK FACTORS
For any securities offered and sold under this prospectus, we will include
risk factors, if appropriate, in the applicable prospectus supplement or term
sheet relating to those securities.
FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement or term sheet, and the documents
we have incorporated by reference may contain forward-looking statements. Such
statements relate to future events or our future financial performance. We use
words such as "anticipate," "believe," "expect," "intend," "may," "project,"
"will" or other similar words to identify forward-looking statements.
Without limiting the foregoing, any statements relating to our
- anticipated capital expenditures;
- future cash flows and borrowings;
- potential future merger opportunities; and
- sources of funding
are forward-looking statements. These forward-looking statements are based on
numerous assumptions that we believe are reasonable, but they are open to a wide
range of uncertainties and business risks and actual results may differ
materially from those discussed in these statements.
Among the factors that could cause actual results to differ materially are:
- our ability to successfully complete our projects on schedule and within
budget;
- our ability to find and successfully implement attractive investments in
unregulated businesses;
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- interest rates and other factors that could impact our ability to obtain
access to sufficient capital on satisfactory terms;
- variations in weather conditions affecting energy sales and operating
costs;
- potential competitive changes in the electric and gas industries,
particularly in the area of retail competition;
- commodity price changes, including energy price changes affecting our
merchant plants;
- changes in environmental regulation that may impose additional costs or
curtail some of our activities;
- federal and state regulatory initiatives that increase competition or
costs, threaten investment recovery, or impact rate structure;
- the degree to which we are able to successfully develop and operate our
diversified businesses and our ability to operate our synthetic fuel
production facilities in a manner qualifying for Section 29 federal
income tax credits;
- available sources and costs of commodities; and
- inflationary trends, interest rates and other general economic
conditions, particularly those affecting energy sales in our service
area.
When considering forward-looking statements, you should keep in mind the
cautionary statements in this prospectus, any prospectus supplement or term
sheet and the documents incorporated by reference, including the information
included in our Annual Report on Form 10-K under the caption "Investment
Considerations."
TECO ENERGY
We are an electric and gas utility holding company with important
diversified activities. Our diversified businesses include marine
transportation, coal mining, natural gas production from coalbeds, independent
power generation and distribution, the marketing of natural gas, energy services
and engineering and, indirectly, the sale of propane gas. Our operating
companies have facilities in several states and Central America. You can find a
more complete description of our business and recent activities in the documents
listed under "WHERE YOU CAN FIND MORE INFORMATION." The principal executive
office of TECO Energy is 702 North Franklin Street, Tampa, Florida 33602 and our
telephone number is (813) 228-4111.
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THE TECO LIMITED LIABILITY COMPANIES
Each TECO Limited Liability Company is a limited liability company that we
have formed under Delaware law. For each limited liability company there is a
limited liability company agreement signed by us as the sole initial member. For
each limited liability company there is also a certificate of formation filed
with the Delaware Secretary of State. When we are ready to issue and sell
securities through a limited liability company, its limited liability company
agreement will be amended to read substantially like the form of amended and
restated limited liability agreement that has been filed with the SEC as an
exhibit to the registration statement of which this prospectus is a part. Each
TECO Limited Liability Company will be treated as a partnership for U.S. federal
income tax purposes. The principal executive office of each of TECO Funding
Company I LLC, TECO Funding Company II LLC and TECO Funding Company III LLC is
300 Delaware Avenue, Suite 900, Wilmington, Delaware 19801 and its telephone
number is (302) 552-3137.
THE ISSUANCE AND SALE OF THE COMPANY SECURITIES
We have created each TECO Limited Liability Company solely to:
- issue and sell its company preferred securities and common securities,
which represent proportionate beneficial ownership interests in that TECO
Limited Liability Company and its assets, subject to the preferential
rights of the company preferred securities;
- use the proceeds from the sale of the company preferred securities and
common securities to buy from us a series of our junior subordinated
notes;
- maintain its status as a partnership for federal income tax purposes; and
- engage in only those other activities necessary or convenient to
accomplish these purposes.
Because each TECO Limited Liability Company's only assets will be the
junior subordinated notes that we issue to it and the related rights under the
TECO Energy junior subordinated guarantee, our payments on those debt securities
and the guarantee will be the only source of funds to be paid to purchasers or
owners of the limited liability company's securities. Each TECO Limited
Liability Company will be obligated to pass through any payment on the junior
subordinated notes to the holders of the company preferred securities and common
securities. If the TECO Limited Liability Company fails to make a payment on its
company preferred securities after having received payments on the junior
subordinated notes held by it, holders of the company preferred securities may
enforce their rights under the TECO Energy junior subordinated guarantee
agreement. See "DESCRIPTION OF THE GUARANTEES". Each of the TECO Limited
Liability Companies is a separate legal entity, so the assets of one will not be
available to satisfy the obligations of the other or of any other similar
limited liability company we may create.
We will acquire and own all of the common securities of each TECO Limited
Liability Company, which, unless an event of default has occurred and is
continuing with respect to the junior subordinated notes, represent 100% of the
voting rights in a TECO Limited Liability Company. The common securities of a
TECO Limited Liability Company will have an aggregate liquidation preference of
at least 3% of the total capital of that limited liability company. The
remainder, representing up to 97% of the ownership interests in the limited
liability company, will be company preferred securities of that TECO Limited
Liability Company which will be sold to a TECO Trust. The company preferred
securities will have preferential rights to payments in respect of distributions
and payments upon redemption, liquidation or otherwise.
Each TECO Limited Liability Company will be managed by a board of directors
having not less than one member. The directors will be designated as "managers"
of a TECO Limited Liability Company within the meaning of Delaware law. The
directors will serve until their successors are duly elected and qualified. The
directors may appoint officers of the limited liability company from time to
time to manage the day-to-day affairs of the limited liability company. It is
currently expected that each of the initial directors and officers of a TECO
Limited Liability Company will be an individual who is an officer or employee of
TECO Energy. All voting rights in each TECO Limited Liability Company will be
vested in TECO Energy, as the sole holder of the common securities, including
the right to elect the board of directors. The holders of the company
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preferred securities will have no voting rights, unless an event of default has
occurred and is continuing with respect to the junior subordinated notes.
We will agree with each TECO Limited Liability Company in its limited
liability company agreement that, as long as any company preferred securities
are outstanding, we will continue to own, directly or indirectly, 100% of the
outstanding common securities.
Under Delaware law, a TECO Limited Liability Company may not pay dividends
or other distributions on company preferred securities or common securities if,
after making the distributions, that TECO Limited Liability Company's
liabilities would exceed the fair value of its assets. However, each TECO
Limited Liability Company does not expect to have any material liabilities, so
each TECO Limited Liability Company does not anticipate that this restriction
will affect its ability to pay distributions on the company preferred
securities.
Before issuing the company preferred securities, a TECO Limited Liability
Company will enter into an administration agreement with TECO Energy under which
TECO Energy will provide (or cause others to provide) accounting, legal, tax and
other support services to the limited liability company, assist the limited
liability company in complying with pertinent U.S. local, state and federal
laws, and provide administrative, recordkeeping and secretarial services to the
limited liability company.
Unless we say otherwise in the applicable prospectus supplement, each TECO
Limited Liability Company will have a term of approximately 50 years. However, a
TECO Limited Liability Company may dissolve earlier than its full term as
provided in the applicable limited liability company agreement and described in
the prospectus supplement.
Under the junior subordinated note indenture and the applicable limited
liability company agreement, we promise to pay all fees and expenses related to
each TECO Limited Liability Company and the offering of the company preferred
securities and common securities and will pay, directly or indirectly, all
ongoing costs, expenses and liabilities of each TECO Limited Liability Company,
except obligations under the company preferred securities and the common
securities.
The TECO Limited Liability Companies have no separate financial statements.
Separate financial statements would not be material to holders of the trust
preferred securities because the TECO Limited Liability Companies have no
independent operations. They exist solely for the limited functions summarized
above.
THE TECO TRUSTS
Each TECO Trust is a statutory business trust that we have formed under
Delaware law. For each trust there is a trust agreement signed by a TECO Limited
Liability Company as depositor, by The Bank of New York as property trustee, and
by The Bank of New York (Delaware) as Delaware trustee. For each trust there is
also a certificate of trust filed with the Delaware Secretary of State. When we
are ready to issue and sell securities through a trust, its trust agreement will
be amended to read substantially like the form of amended and restated trust
agreement that has been filed with the SEC as an exhibit to the registration
statement of which this prospectus is a part. Each trust agreement will be
qualified as an indenture under the Trust Indenture Act of 1939. The principal
executive offices of each of the TECO Trusts is c/o The Bank of New York, 101
Barclay Street, Floor 8th, New York, NY 10286 and its telephone number is (212)
815-5088.
THE ISSUANCE AND SALE OF THE TRUST SECURITIES
We have created each TECO Trust solely to:
- issue and sell its trust preferred securities, which represent
proportionate beneficial ownership interests in that TECO Trust and its
assets;
- use the proceeds from the sale of the trust preferred securities to buy
company preferred securities from a TECO Limited Liability Company;
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<PAGE> 35
- maintain its status as a grantor trust for federal income tax purposes;
and
- engage in only those other activities necessary or convenient to
accomplish these purposes.
Because each TECO Trust's only assets will be the company preferred
securities that a TECO Limited Liability Company issues to it and the related
rights under the TECO Energy junior subordinated guarantee, payments on the
company preferred securities and the guarantee will be the only source of funds
to be paid to purchasers or owners of the trust preferred securities. A TECO
Trust is required to pass the payments it receives on the company preferred
securities through to you as payments on the trust preferred securities. The
TECO Trust cannot engage in other activities. Each of the TECO Trusts is a
separate legal entity, so the assets of one will not be available to satisfy the
obligations of the other or of any other similar trust we may create.
Unless we say otherwise in the applicable prospectus supplement, each TECO
Trust will have a term of approximately 50 years. However, a TECO Trust may
dissolve earlier than its full term as provided in the applicable trust
agreement and described in the prospectus supplement.
In accordance with the trust agreement of each TECO Trust, we will appoint
the trustees for each trust, who will conduct that trust's business and affairs.
The initial trustees will be:
- The Bank of New York, as the property trustee; and
- The Bank of New York (Delaware) as Delaware trustee.
We refer to these trustees collectively as the "issuer trustees." The Bank
of New York will act as sole indenture trustee under each trust agreement for
purposes of compliance with the Trust Indenture Act. It will also act as trustee
under our guarantee agreement relating to the company preferred securities. See
"DESCRIPTION OF THE GUARANTEES."
Under the applicable trust agreement, the TECO Limited Liability Company
that is the depositor of the trust ordinarily will have the right to appoint,
remove or replace the property trustee or the Delaware trustee for that trust.
However, if we are in default with respect to the particular junior subordinated
notes issued to the TECO Limited Liability Company that has issued company
preferred securities to that TECO Trust (and we have not cured that default
within the time specified in the junior subordinated note indenture), then the
holders of a majority in liquidation amount of that TECO Trust's outstanding
trust preferred securities will be entitled to appoint, remove or replace the
property trustee and/or the Delaware trustee. The duties and obligations of the
property trustee and the Delaware trustee are governed by the applicable trust
agreement.
Under the governing junior subordinated note indenture and the trust
agreement, we promise to pay all fees and expenses related to each TECO Trust
and the offering of the trust preferred securities and will pay, directly or
indirectly, all ongoing costs, expenses and liabilities of each TECO Trust,
except obligations under the trust preferred securities.
The TECO Trusts have no separate financial statements. Separate financial
statements would not be material to holders of the trust preferred securities
because the TECO Trusts have no independent operations. They exist solely for
the limited functions summarized above.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratios of earnings to fixed
charges for the periods shown. If any series of debt securities should be used
to repay our outstanding debt or retire other securities, we will present a pro
forma ratio in the applicable prospectus supplement if the change in a ratio
would be ten percent or greater.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
NINE MONTHS ENDED TWELVE MONTHS ENDED --------------------------------------
SEPTEMBER 30, 2000 SEPTEMBER 30, 2000 1999 1998 1997 1996 1995
------------------ ------------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
2.77x 2.73x(1) 3.25x(2) 3.67x(3) 3.77x(4) 3.72x 3.50x
</TABLE>
For the purposes of calculating these ratios, earnings consist of income
from continuing operations before income taxes and fixed charges. Fixed charges
consist of interest on indebtedness, amortization of debt premium, the interest
component of rentals and preferred stock dividend requirements.
---------------
(1) Includes the effect of a non-recurring pretax charge totaling $3.5 million
recorded in the fourth quarter of 1999 at Tampa Electric Company to resolve
litigation filed by the U.S. Environmental Protection Agency. The effect of
this charge was to reduce the ratio of earnings to fixed charges. Had this
charge been excluded from the calculation, the ratio of earnings to fixed
charges would have been 2.76x for the twelve-month period ended September
30, 2000.
(2) Includes the effect of non-recurring pretax charges totaling $21.0 million
recorded in the third and fourth quarters of 1999. The effect of these
charges was to reduce the ratio of earnings to fixed charges. Had these
charges been excluded from the calculation, the ratio of earnings to fixed
charges would have been 3.60x for the year ended December 31, 1999.
(3) Includes the effect of the non-recurring pretax charges totaling $30.5
million associated with write-offs at TECO Coal Corporation, a wholly-owned
subsidiary of TECO Energy, and Tampa Electric Company, and $.6 million
pretax of merger-related costs. The effect of these charges was to reduce
the ratio of earnings to fixed charges. Had these charges been excluded from
the calculation, the ratio of earnings to fixed charges would have been
3.95x for the year ended December 31, 1998.
(4) Includes a $2.6 million pretax charge for all costs associated with the
mergers completed in June 1997. The effect of this charge was to reduce the
ratio of earnings to fixed charges. Had this charge been excluded from the
calculation, the ratio of earnings to fixed charges would have been 3.79x
for the year ended December 31, 1997.
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DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The following describes the general terms and provisions of the trust
preferred securities to which any prospectus supplement may relate. The
particular terms of the trust preferred securities offered by any TECO Trust and
the extent to which any of these general provisions do not apply to its trust
preferred securities will be described in the prospectus supplement relating to
that TECO Trust and its trust preferred securities.
The trust preferred securities will represent beneficial ownership
interests in the assets of the TECO Trust, namely a corresponding amount of the
company preferred securities together with related rights under the TECO Energy
junior subordinated guarantee. Holders of trust preferred securities will also
have other benefits as described in the corresponding trust agreement.
We have summarized selected provisions of the trust preferred securities
and each trust agreement below. This summary is not complete. The form of trust
agreement has been filed as an exhibit to the registration statement of which
this prospectus forms a part. You should read the form of trust agreement for
provisions that may be important to you. You should also consider applicable
provisions of the Trust Indenture Act and the Delaware Business Trust Act. Each
of the TECO Trusts is a legally separate entity, and the assets of one are not
available to satisfy the obligations of the other.
GENERAL
Legal title to the company preferred securities will generally be held by
the property trustee in trust for the benefit of the holders of the related
trust preferred securities. The amended and restated trust agreement will
provide that, to the fullest extent permitted by law, without the need for any
other action of any person, including the issuer trustees or any other holder of
trust preferred securities, each holder of trust preferred securities will be
entitled to enforce, in the name of that TECO Trust, the rights of that TECO
Trust under the company preferred securities and the TECO Energy junior
subordinated guarantee represented by the trust preferred securities held by
such holder. A holder of trust preferred securities, as the holder of a
beneficial interest in the corresponding company preferred securities, may
institute a legal proceeding directly against us to enforce rights to payment of
distributions and amounts in redemption or liquidation. A holder of trust
preferred securities may at any time upon written notice withdraw and hold
directly the underlying company preferred securities represented by such trust
preferred securities, in which case such holder will be entitled to directly
enforce its rights under the company preferred securities and TECO Energy junior
subordinated guarantee.
DISTRIBUTIONS
Distributions on the company preferred securities will be passed on to you
as a holder of the trust preferred securities. A TECO Trust is required to make
distributions on the trust preferred securities concurrently with, and in the
same amount as, the distributions on the company preferred securities. Except as
specified in the applicable prospectus supplement, in the event that a date on
which distributions are payable on the trust preferred securities is not a
business day, payment of the distribution will be made on the next succeeding
business day (without any interest or other payment in respect to the delay),
with the same force and effect as if made on the originally specified date.
However, if the next business day is in the next calendar year, payment of
distributions will be made on the preceding business day. Each date on which
distributions are payable is referred to in this prospectus as a distribution
date.
The revenue of each TECO Trust available for distribution to holders of its
trust preferred securities will be limited to payments under the company
preferred securities it owns. Each TECO Trust will invest the proceeds from the
issuance and sale of its trust preferred securities in the company preferred
securities. It will have no other assets. See "DESCRIPTION OF THE COMPANY
PREFERRED SECURITIES." If we do not make interest payments on the junior
subordinated notes and as a result the applicable limited liability company is
unable to make distributions on the company preferred securities, the property
trustee will not have funds available to pay distributions on the related trust
preferred securities. We have guaranteed the payment of distributions as set
forth below under "DESCRIPTION OF THE GUARANTEES."
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Distributions on the trust preferred securities will be payable to the
holders as they appear on the register of the TECO Trust on the record date,
which will be the fifteenth day (whether or not a business day) prior to the
relevant distribution date unless otherwise specified in the applicable
prospectus supplement. Subject to any applicable laws and regulations and to the
provisions of the applicable trust agreement, each distribution payment will be
made as described in the section of the applicable prospectus supplement
addressing the treatment of book-entry and global securities.
PAYMENT OF EXPENSES
We will agree to pay all debts and obligations (other than distributions on
the trust preferred securities) and all costs and expenses of the TECO Trusts
and to pay any and all taxes, duties, assessments or other governmental charges
of the TECO Trust (other than United States withholding taxes) imposed by the
United States or any other taxing authority. This includes, but is not limited
to, all costs and expenses relating to the organization of the TECO Trusts, the
fees and expenses of the property trustee and the Delaware trustee and all costs
and expenses relating to the operation of the TECO Trusts. As a result, the net
amounts received and retained by a TECO Trust after paying these fees, expenses,
debts and obligations will be equal to the amounts the TECO Trust would have
received and retained had no fees, expenses, debts and obligations been incurred
by or imposed on it. Our promise to pay these obligations is for the benefit of,
and shall be enforceable by, any creditor to whom the fees, expenses, debts and
obligations are owed, whether or not the creditor has received notice of the
promise. Any creditor may enforce these obligations directly against us. We have
agreed to irrevocably waive any right or remedy that would otherwise require
that any creditor take any action against the TECO Trust or any other person
before proceeding against us. We will execute any additional agreements as may
be necessary to give full effect to these promises.
REDEMPTION
The trust preferred securities can be redeemed only upon redemption of the
company preferred securities and junior subordinated notes. If a TECO Limited
Liability Company redeems the company preferred securities in accordance with
its limited liability company agreement, then the TECO Limited Liability Company
must give the property trustee at least 35 and not more than 60 days' prior
notice before doing so. The property trustee will mail the notice of redemption
not less than 25 days prior to the date fixed for redemption of the company
preferred securities to the holders of trust preferred securities.
If a TECO Trust gives notice of the redemption of its trust preferred
securities, then, by 12:00 noon, New York City time on the redemption date, to
the extent funds are available, the property trustee will deposit irrevocably
with the depositary or other appropriate agent funds sufficient to pay the
redemption price and will give that depositary or agent irrevocable instructions
and authority to pay the redemption price to the holders of the trust preferred
securities. If the trust preferred securities are no longer in book-entry form,
the property trustee, to the extent funds are available, will irrevocably
deposit with the paying agent for the trust preferred securities funds
sufficient to pay the redemption price and will give the paying agent
irrevocable instructions and authority to pay the redemption price to the
holders upon surrender of their certificates evidencing the trust preferred
securities.
Nevertheless, distributions payable on or prior to the redemption date for
trust preferred securities called for redemption shall be payable to the holders
of those trust preferred securities on the relevant record dates for the related
distribution dates. If notice of redemption has been given and funds deposited
as required, then on the date that the funds are deposited, all rights of the
holders of the trust preferred securities called for redemption will cease,
except their right to receive the redemption price, without interest and the
trust preferred securities will no longer be deemed outstanding.
Except as specified in the applicable prospectus supplement, if a date
fixed for redemption of trust preferred securities is not a business day, then
payment of the redemption price will be made on the next business day (and
without any interest or other payment for that delay). However, if that next
business day falls in the next calendar year, the redemption price will be
payable on the preceding business day.
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Subject to applicable law (including, without limitation, United States
federal securities law), we or our subsidiaries may at any time and from time to
time purchase outstanding trust preferred securities by tender, in the open
market or by private agreement.
Payment of the redemption price on the trust preferred securities will be
made to the record holders as they appear on the register for the trust
preferred securities. The record date will be the fifteenth day (whether or not
a business day) prior to the redemption date or liquidation date, as applicable
unless otherwise specified in the applicable prospectus supplement.
If less than all of the trust preferred securities issued by a TECO Trust
are to be redeemed on a redemption date, then the particular trust preferred
securities to be redeemed shall be selected on a pro rata basis not more than 60
days prior to the redemption date by the property trustee from the outstanding
trust preferred securities not previously called for redemption. The property
trustee shall promptly notify the trust registrar in writing of the trust
preferred securities selected for redemption and, in the case of any trust
preferred securities selected for partial redemption, the liquidation amount to
be redeemed. For all purposes of each trust agreement, unless the context
otherwise requires, all provisions relating to the redemption of trust preferred
securities shall relate, in the case of any trust preferred securities redeemed
or to be redeemed only in part, to the portion of the aggregate liquidation
amount of trust preferred securities which has been or is to be redeemed.
WITHDRAWAL OF THE COMPANY PREFERRED SECURITIES
Any beneficial owner of the trust preferred securities may withdraw all,
but not less than all, of the company preferred securities represented by such
trust preferred securities by providing a written notice to the property
trustee, with evidence of beneficial ownership in form satisfactory to the
property trustee, and providing to the TECO Limited Liability Company such
documents or information as such TECO Limited Liability Company may request for
tax reporting purposes. The holder's notice will also be deemed to be such
beneficial owner's agreement to be subject to the terms of the TECO Limited
Liability Company's limited liability company agreement applicable to the rights
of the holders of the company preferred securities.
Within a reasonable period after such a request has been properly made, the
property trustee must instruct the depositary to reduce the trust preferred
securities represented by the global certificate held by the depositary by the
corresponding amount of the company preferred securities to be so withdrawn by
the withdrawing owner. The TECO Limited Liability Company will issue to the
withdrawing owner a certificate representing the amount of the company preferred
securities withdrawn, and the property trustee will reduce the amount of the
company preferred securities represented by the global certificate held by the
trust accordingly. The company preferred securities initially will be issued
only in certificated fully-registered form. If the related TECO Trust is
dissolved, the company preferred securities will be issued in the form of one or
more global securities that will be registered in the name of the depositary for
the global securities or a nominee of the depositary. The global securities will
be delivered by the limited liability company to the depositary for credit to
the accounts of the holders of beneficial interests in the company preferred
securities. Under U.S. tax reporting rules, holders of company preferred
securities will thereafter receive an annual Form K-1 instead of the Form 1099
that holders of trust preferred securities will receive.
Any holder of company preferred securities may redeposit withdrawn company
preferred securities by delivering to the property trustee the certificates for
the company preferred securities to be deposited, which are (i) if required by
the property trustee, properly endorsed or accompanied by a properly executed
instrument of transfer or endorsement in form satisfactory to the property
trustee and in compliance with the terms of the TECO Limited Liability Company's
limited liability company agreement and (ii) accompanied by all such
certifications as may be required by the property trustee in its sole discretion
and in accordance with the provisions of the amended and restated trust
agreement. Within a reasonable period after such deposit is properly made, the
property trustee will instruct the depositary to increase the amount of the
trust preferred securities represented by the global certificate held by the
depositary accordingly.
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VOTING RIGHTS; AMENDMENT OF EACH TRUST AGREEMENT
If at any time, the holders of the company preferred securities are
entitled to vote under the TECO Limited Liability Company's limited liability
company agreement, the property trustee will:
- notify the holders of trust preferred securities of such right;
- request specific direction from each holder of trust preferred securities
as to the vote with respect to the company preferred securities
represented by such trust preferred securities; and
- vote the relevant company preferred securities only in accordance with
such specific directions.
Upon receiving notice of any meeting at which the holders of company preferred
securities are entitled to vote, the property trustee will, as soon as
practicable, mail to the holders of trust preferred securities a notice. The
TECO Limited Liability Company will provide the form of notice to the trustee to
be forwarded to the holders of trust preferred securities. The notice will
contain:
- all the information that is contained in the notice announcing the
meeting of the company preferred securities;
- a statement that the holders of trust preferred securities will be
entitled, subject to any applicable provision of law, to direct the
property trustee specifically as to the exercise of the voting rights
pertaining to the number of the company preferred securities represented
by their respective trust preferred securities; and
- a brief description of the manner in which the holders may give such
specific directions.
If the property trustee receives a written direction from a holder of trust
preferred securities, the property trustee will vote, or cause to be voted, the
amount of the company preferred securities represented by such trust preferred
securities in accordance with the instructions set forth in the direction. If
the property trustee does not receive specific instructions from the holder of
any trust preferred securities, the property trustee will abstain from voting
the company preferred securities represented by those trust preferred
securities.
The applicable TECO Limited Liability Company and the property trustee may
amend each trust agreement from time to time, without the consent of the holders
of the trust preferred securities:
- to cure any ambiguity, correct or supplement any provisions in the trust
agreement that may be inconsistent with any other provision, or to
address matters or questions arising under the trust agreement in a way
which is consistent with the agreement's other provisions; or
- to modify, eliminate or add to any provisions of the trust agreement if
necessary to ensure that the TECO Trust will be classified for United
States federal income tax purposes as a grantor trust or to ensure that
the TECO Trust will not be required to register as an "investment
company" under the Investment Company Act.
However, in the case of the first clause, the action must not adversely affect
in any material respect the interests of any holder of trust preferred
securities. Any amendment becomes effective when the property trustee gives
notice of the amendment to the holders of the trust preferred securities.
The TECO Limited Liability Company and the property trustee may amend each
trust agreement:
- with the consent of holders representing not less than a majority (based
upon liquidation amounts) of the outstanding trust preferred securities;
and
- upon receipt by the property trustee of an opinion of counsel experienced
in such matters to the effect that the amendment or the exercise of any
power granted to the property trustee in accordance with the amendment
will not affect the TECO Trust's status as a grantor trust for United
States federal income tax purposes or require the TECO Trust to be
registered as an "investment company" under the Investment Company Act.
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However, without the consent of each holder of trust securities, no amendment
may:
- change the amount or timing of any distribution on the trust preferred
securities or otherwise adversely affect the amount of any distribution
required to be made in respect of the trust preferred securities as of a
specified date; or
- restrict the right of a holder of trust preferred securities to sue for
the enforcement of any distribution payment.
Any required approval of holders of trust preferred securities may be given
either at a meeting of holders of trust preferred securities or by written
consent. The property trustee must notify record holders of trust preferred
securities of any meeting in the manner described in each trust agreement.
No vote or consent of the holders of trust preferred securities will be
required for a TECO Trust to redeem and cancel its trust preferred securities in
accordance with the applicable trust agreement.
Whenever holders of trust preferred securities are entitled to vote or
consent under any of the circumstances described above, neither we nor the
issuer trustees will be permitted to vote. For purposes of any vote or consent,
any of the trust preferred securities that we own (or that are owned by the
issuer trustees or our affiliates) will be treated as if they were not
outstanding.
TERMINATION OF TRUST AGREEMENT
The trust agreement will terminate upon the earliest to occur of the
redemption of all of the trust preferred securities, the delivery of a final
distribution in respect of the company preferred securities to the holders of
trust preferred securities, withdrawal of all the company preferred securities
from the TECO Limited Liability Company or the entry of an order for dissolution
of the TECO Trust by a court of competent jurisdiction or as described in the
following paragraph.
In case of either a Tax Event as to a TECO Trust or an Investment Company
Event as to a TECO Trust, as each is defined under "DESCRIPTION OF JUNIOR
SUBORDINATED NOTES -- Redemption," the related TECO Limited Liability Company
may instruct the property trustee to distribute the company preferred securities
on a pro rata basis to the holders of trust preferred securities, which
distribution will permit dissolution of the trust.
REMOVAL OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
Unless an event of default with respect to the junior subordinated notes
has occurred, the TECO Limited Liability Company may remove the property trustee
or the Delaware trustee at any time. Upon an event of default with respect to
the junior subordinated notes, the holders of a majority in aggregate
liquidation amount of the trust preferred securities may remove the property
trustee or the Delaware trustee. No resignation or removal of an issuer trustee
and no appointment of a successor trustee will be effective until the successor
trustee accepts its appointment in accordance with the provisions of the
applicable trust agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
For the purpose of meeting the legal requirements of the Trust Indenture
Act or of any jurisdiction in which any part of the trust property may at the
time be located, the TECO Limited Liability Company shall have power to appoint
one or more persons either to act as a co-trustee, jointly with the property
trustee, of all or any part of the trust property, or to act as separate trustee
of any such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the applicable trust agreement.
PAYMENT AND PAYING AGENCY
The depositary for the trust preferred securities will make payments in
respect of the trust preferred securities by crediting the relevant accounts at
the depositary on the applicable distribution dates. If any of a
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TECO Trust's trust preferred securities are not held by the depositary, then the
paying agent will mail checks to registered holders of those trust preferred
securities to the addresses appearing on its register. Unless otherwise
specified in the applicable prospectus supplement, the paying agent will
initially be the property trustee and any co-paying agent chosen by the property
trustee and acceptable to the TECO Limited Liability Company. The paying agent
can resign upon 30 days' written notice to the property trustee and to the TECO
Limited Liability Company. If the property trustee resigns as paying agent, the
TECO Limited Liability Company will appoint a bank or trust company acceptable
to it to act as paying agent.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable prospectus supplement, the
property trustee will act as registrar and transfer agent for the trust
preferred securities.
Each TECO Trust will register transfers of trust preferred securities
without charge, but will require payment of any tax or other governmental
charges imposed in connection with any transfer or exchange. The TECO Trusts
will not register transfers of trust preferred securities that are called for
redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee undertakes to perform only the duties specifically
provided for in the trust agreement. The property trustee has no obligation to
exercise any of its powers under the trust agreement at the request of any
holder of trust preferred securities unless it is offered indemnity satisfactory
to it against the costs, expenses and liabilities that it might incur by doing
so. If the property trustee is required to decide between alternative courses of
action, construe ambiguous provisions in the trust agreement or is unsure of the
application of any provision of the trust agreement, then the property trustee
may request instructions as to the action to be taken from the TECO Limited
Liability Company unless the matter is one on which holders of trust preferred
securities are entitled to vote. If the TECO Limited Liability Company does not
provide any directions, the property trustee will take whatever action it deems
advisable and in the best interests of the holders of the trust preferred
securities. The property trustee will have no liability except for its own bad
faith, gross negligence or willful misconduct.
MISCELLANEOUS
Holders of the trust preferred securities have no preemptive or similar
rights.
No TECO Trust may borrow money or issue debt or mortgage or pledge any of
its assets.
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DESCRIPTION OF THE COMPANY PREFERRED SECURITIES
The following describes the general terms and provisions of the company
preferred securities to which any prospectus supplement may relate. The
particular terms of the company preferred securities offered by any TECO Limited
Liability Company and the extent to which any of these general provisions do not
apply to its company preferred securities will be described in the prospectus
supplement relating to that TECO Limited Liability Company and its company
preferred securities.
Under the terms of the limited liability company agreement for each TECO
Limited Liability Company, the board of directors is authorized to issue the
company preferred securities and the common securities on behalf of the TECO
Limited Liability Company. The company preferred securities are preferred
limited liability company interests in the TECO Limited Liability Company, the
terms of which are set forth in the limited liability company agreement. The
company preferred securities will have preferential rights relative to the
common securities to payments in respect of distributions and payments upon
redemption, liquidation or otherwise. Any payments in respect of distributions
or in respect of redemption, liquidation or otherwise shall be made to the
holders of company preferred securities prior to any payments being made to the
holders of common securities. Holders of company preferred securities shall
share ratably in any such payments. After payment of the full amount to which
the holders of the company preferred securities are entitled, the holders of the
common securities shall share ratably in any amount left available for payment.
Holders of company preferred securities will also have other benefits as
described in the corresponding limited liability company agreement.
We have summarized selected provisions of the company preferred securities
and each limited liability company agreement below. This summary is not
complete. The form of limited liability company agreement has been filed as an
exhibit to the registration statement of which this prospectus forms a part. You
should read the form of limited liability company agreement for provisions that
may be important to you. You should also consider applicable provisions of the
Trust Indenture Act and the Delaware Limited Liability Company Act. Each TECO
Limited Liability Company is a legally separate entity, and the assets of one
are not available to satisfy the obligations of the other.
GENERAL
Legal title to the junior subordinated notes will be held by the limited
liability company. Each guarantee agreement we execute for the benefit of the
holders of company preferred securities will be a guarantee on a junior
subordinated basis with respect to the related company preferred securities. See
"DESCRIPTION OF THE GUARANTEES" below. A TECO Limited Liability Company is
required to pass on all payments it receives on the junior subordinated notes
through to the holders of the company preferred securities and common securities
on a pro-rata basis subject to the preference of the company preferred
securities. If the TECO Limited Liability Company fails to make a payment on its
company preferred securities after having received payment on the junior
subordinated notes held by it, holders of the company preferred securities may
enforce their rights under the TECO Energy junior subordinated guarantee
agreement.
DISTRIBUTIONS
Distributions on the company preferred securities will be cumulative. They
will accumulate from the date of original issuance and will be payable on the
dates specified in the applicable prospectus supplement. Except as specified in
the applicable prospectus supplement, in the event that a date on which
distributions are payable on the company preferred securities is not a business
day, payment of the distribution will be made on the next succeeding business
day (without any interest or other payment in respect to the delay), with the
same force and effect as if made on the originally specified date. However, if
the next business day is in the next calendar year, payment of distributions
will be made on the preceding business day. Each date on which distributions are
payable is referred to in this prospectus as a distribution date.
The distributions on each company preferred security will be payable at a
rate specified in the prospectus supplement for that company preferred security.
The amount of distributions payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months unless otherwise specified in the
applicable
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prospectus supplement. Distributions on company preferred securities as used in
this prospectus includes any additional distributions on accumulated unpaid
distributions, compounded quarterly or semi-annually at the rate per year
specified in the applicable prospectus supplement, unless otherwise stated.
The revenue of each TECO Limited Liability Company available for
distribution to holders of its company preferred securities will be limited to
payments under the junior subordinated notes it owns. Each TECO Limited
Liability Company will invest the proceeds from the issuance and sale of its
securities in the junior subordinated notes. It will have no other assets. See
"DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES." If we do not make interest
payments on the junior subordinated notes, the limited liability company will
not have funds available to pay distributions on the related company preferred
securities.
Distributions on the company preferred securities will be payable to the
holders as they appear on the register of the TECO Limited Liability Company on
the record date, which will be the fifteenth day (whether or not a business day)
prior to the relevant distribution date, unless otherwise specified in the
applicable prospectus supplement. Subject to any applicable laws and regulations
and to the provisions of the applicable limited liability company agreement,
each distribution payment will be made directly to the property trustee under
the related trust agreement or to a holder of trust preferred securities who has
exchanged such securities for company preferred securities.
PAYMENT OF EXPENSES
Under the junior subordinated note indenture and the limited liability
company agreement, we will agree to pay all debts and obligations (other than
distributions on the limited liability company securities) and all costs and
expenses of the TECO Limited Liability Company receiving the junior subordinated
notes and to pay any and all taxes, duties, assessments or other governmental
charges of the TECO Limited Liability Company (other than United States
withholding taxes) imposed by the United States or any other taxing authority.
This includes, but is not limited to, all costs and expenses relating to the
organization of the TECO Limited Liability Company, the fees and expenses of the
board of directors and officers, if any, and all costs and expenses relating to
the operation of the TECO Limited Liability Company. As a result, the net
amounts received and retained by a TECO Limited Liability Company after paying
these fees, expenses, debts and obligations will be equal to the amounts the
TECO Limited Liability Company would have received and retained had no fees,
expenses, debts and obligations been incurred by or imposed on it. Our promise
to pay these obligations is for the benefit of, and shall be enforceable by, any
creditor to whom the fees, expenses, debts and obligations are owed, whether or
not the creditor has received notice of the promise. Any creditor may enforce
these obligations directly against us. We have agreed to irrevocably waive any
right or remedy that would otherwise require that any creditor take any action
against the TECO Limited Liability Company or any other person before proceeding
against us. We will execute any additional agreements as may be necessary to
give full effect to these promises.
REDEMPTION OR EXCHANGE
If we repay or redeem, in whole or in part, any junior subordinated notes
that have been issued to a TECO Limited Liability Company, whether at maturity
or earlier, the proceeds from the repayment or redemption will be applied to
redeem a like amount of the limited liability company's securities, subject to
the preferential rights of the company preferred securities. The limited
liability company must give at least 35 and no more than 60 days' notice, and
the redemption price will equal the sum of:
- the aggregate liquidation amount of the limited liability company
securities being redeemed; plus
- accumulated but unpaid distributions on the redeemed limited liability
company securities to the date of redemption; plus
- the related amount of the premium, if any, that we pay upon the
concurrent redemption of junior subordinated notes.
See "DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES -- Redemption."
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If we are repaying or redeeming less than all of any series of junior
subordinated notes on a redemption date, then the proceeds from that repayment
or redemption will be allocated to redeem the related company preferred
securities pro rata based upon their respective liquidation preferences. The
amount of premium, if any, that we pay to redeem all or any part of any series
of any junior subordinated notes will also be allocated to the redemption pro
rata of the related limited liability company securities, subject to the
preferential rights of the company preferred securities.
We will have the right to redeem any series of junior subordinated notes:
- subject to the conditions described under "DESCRIPTION OF THE JUNIOR
SUBORDINATED NOTES -- Redemption"; or
- as may be otherwise specified in the applicable prospectus supplement.
We have the right to dissolve a TECO Limited Liability Company at any time
and, after satisfaction of any liabilities to creditors of the TECO Limited
Liability Company as provided by applicable law, to cause the junior
subordinated notes owned by the TECO Limited Liability Company to be distributed
to the TECO Trust or the holders of the company preferred securities.
If provided in the applicable prospectus supplement, we will have the right
to extend or shorten the maturity of any series of junior subordinated notes at
the time that we elect to dissolve the related TECO Limited Liability Company
and cause the junior subordinated notes to be distributed to the holders of the
related company preferred securities and common securities in liquidation of the
TECO Limited Liability Company. However, we can extend the maturity only if the
conditions specified in the applicable prospectus supplement are met at the time
the election is made and at the time of the extension.
After the liquidation date fixed for any distribution of junior
subordinated notes to the holders of any series of company preferred securities:
- that series of company preferred securities will no longer be deemed to
be outstanding; and
- the limited liability company will receive a registered global
certificate or certificates representing the junior subordinated notes to
be delivered in the distribution.
REDEMPTION AND EXCHANGE PROCEDURES
Any company preferred securities that are redeemed will receive the
redemption price from the simultaneous redemption of the junior subordinated
notes. Redemptions of the company preferred securities will be made and the
redemption price will be payable on each redemption date only to the extent that
the related TECO Limited Liability Company has funds on hand available to pay
that redemption price. See "Subordination of Common Securities."
If a TECO Limited Liability Company gives notice of the redemption of its
company preferred securities, then, by 12:00 noon, New York City time on the
redemption date, to the extent funds are available, the limited liability
company will deposit irrevocably with the property trustee under the related
trust agreement funds sufficient to pay the redemption price with respect to the
company preferred securities. If the company preferred securities are no longer
in book-entry form, the TECO Limited Liability Company, to the extent funds are
available, will irrevocably deposit with the paying agent for the company
preferred securities funds sufficient to pay the redemption price and will give
the paying agent irrevocable instructions and authority to pay the redemption
price to the holders upon surrender of their certificates evidencing the company
preferred securities.
Nevertheless, distributions payable on or prior to the redemption date for
company preferred securities called for redemption shall be payable to the
holders of those company preferred securities on the relevant record dates for
the related distribution dates. If notice of redemption has been given and funds
paid as required, then on the date that the funds are paid, all rights of the
holders of the company preferred securities called for redemption will cease,
except their right to receive the redemption price, without interest and the
company preferred securities will no longer be deemed outstanding.
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Except as specified in the applicable prospectus supplement, if a date
fixed for redemption of company preferred securities is not a business day, then
payment of the redemption price will be made on the next business day (and
without any interest or other payment for that delay). However, if that next
business day falls in the next calendar year, the redemption price will be
payable on the preceding business day. If payment of the redemption price for
company preferred securities called for redemption is improperly withheld or
refused and not paid by the TECO Limited Liability Company then:
- distributions on those company preferred securities will continue to
accrue at the then applicable rate, from the redemption date originally
established by the TECO Limited Liability Company to the date on which
the redemption price is actually paid; and
- in calculating the redemption price, the actual payment date will be
treated as the date fixed for redemption.
Payment of the redemption price on the company preferred securities and any
distribution of junior subordinated notes to holders of company preferred
securities will be made to the record holders as they appear on the register for
the company preferred securities. The record date will be the fifteenth day
(whether or not a business day) prior to the redemption date or liquidation
date, as applicable, unless otherwise specified in the applicable prospectus
supplement.
If less than all of the company preferred securities and common securities
issued by a TECO Limited Liability Company are to be redeemed on a redemption
date, then the company preferred securities shall be redeemed prior to any
redemption of the common securities. The particular company preferred securities
to be redeemed shall be selected on a pro rata basis not more than 60 days prior
to the redemption date by the board of directors from the outstanding company
preferred securities not previously called for redemption. The limited liability
company shall promptly notify the property trustee under the related trust
agreement in writing of the company preferred securities selected for redemption
and, in the case of any company preferred securities selected for partial
redemption, the liquidation amount to be redeemed. For all purposes of each
limited liability company agreement, unless the context otherwise requires, all
provisions relating to the redemption of company preferred securities shall
relate, in the case of any company preferred securities redeemed or to be
redeemed only in part, to the portion of the aggregate liquidation amount of
company preferred securities which has been or is to be redeemed.
Notice of any redemption will be mailed within 30 to 60 days before the
redemption date to each holder of limited liability company securities to be
redeemed at the holder's registered address. Unless we default in payment of the
redemption price on the junior subordinated notes, on and after the redemption
date interest ceases to accrue on the junior subordinated notes or portions of
those junior subordinated notes (and distributions cease to accrue on the
related company preferred securities or portions of those securities) called for
redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the redemption price of, each TECO Limited
Liability Company's company preferred securities and common securities, as
applicable, generally shall be made pro rata based on the liquidation amount of
the company preferred securities and of the common securities, subject to the
preferential rights of the company preferred securities.
Neither we nor the TECO Limited Liability Company will pay any distribution
on, or redemption price of, any of the TECO Limited Liability Company's common
securities, and neither we nor the TECO Limited Liability Company will make any
other payment relating to the redemption, liquidation or other acquisition of
those common securities, unless
- all accumulated and unpaid distributions on all of the TECO Limited
Liability Company's outstanding company preferred securities are paid in
cash for distribution periods ending on or before any payment on the
common securities, and
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- in the case of a payment of the redemption price, the full amount of the
redemption price on all of the TECO Limited Liability Company's
outstanding company preferred securities then called for redemption has
been paid or provided for; and
- all funds available to the TECO Limited Liability Company shall be
applied first to the payment in full in cash of all distributions on, or
redemption price of, the TECO Limited Liability Company's company
preferred securities then due and payable.
In the case of any event of default relating to any junior subordinated
notes, we (as the holder of the TECO Limited Liability Company's common
securities) will be deemed to have waived any right to act with respect to the
event of default until the effect of all events of default with respect to the
company preferred securities has been cured, waived or otherwise eliminated.
Until any events of default relating to any junior subordinated notes with
respect to the company preferred securities have been cured, waived or otherwise
eliminated, a holder of any company preferred security or trust preferred
security, as the holder of a beneficial interest in the corresponding company
preferred security, may institute a legal proceeding directly against us to
enforce rights to payment of distributions and amounts in redemption or
liquidation, and the board of directors must act solely on behalf of the holders
of the company preferred securities and not on our behalf as holder of the TECO
Limited Liability Company's common securities. Likewise, only the holders of
those company preferred securities will have the right to direct the board of
directors to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Under each limited liability company agreement, each TECO Limited Liability
Company will automatically dissolve when its term expires. Also, it will
dissolve on the first to occur of:
- the liquidation of TECO Energy;
- our written direction, as holder of the common securities, to the board
of directors to dissolve the TECO Limited Liability Company and
distribute the junior subordinated notes to the holders of the company
preferred securities in exchange for the company preferred securities
(which direction is optional and wholly within our discretion);
- the redemption of all of the TECO Limited Liability Company's limited
liability company securities;
- specified events relating to the bankruptcy or insolvency of the TECO
Limited Liability Company; and
- the entry of a decree of judicial dissolution under the Delaware Limited
Liability Company Act.
If an early dissolution occurs in any manner except by the redemption of
all of the limited liability company securities, then the TECO Limited Liability
Company will be liquidated by the board of directors as expeditiously as they
determine possible. The board of directors will distribute (after satisfying any
liabilities to the TECO Limited Liability Companies' creditors as provided by
applicable law) to the holders of the limited liability company securities a
like amount of the junior subordinated notes. However, if that distribution is
determined to be impractical by the board of directors, the holders of the
limited liability company securities will be entitled to receive out of the TECO
Limited Liability Company's assets available for distribution to holders (after
any liabilities to the TECO Limited Liability Company's creditors as provided by
applicable law) a liquidation distribution in an amount equal to, in the case of
holders of company preferred securities, the aggregate of the liquidation amount
plus accrued and unpaid distributions to the date of payment. If the liquidation
distribution can be paid only in part because the TECO Limited Liability Company
has insufficient assets available to pay in full the aggregate liquidation
distribution, then the amounts payable directly by the TECO Limited Liability
Company on its company preferred securities will be paid on a pro rata basis.
As the holder of the TECO Limited Liability Company's common securities, we
will be entitled to receive distributions upon any liquidation pro rata with the
holders of its company preferred securities, subject to the preferential rights
of the company preferred securities.
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VOTING RIGHTS; AMENDMENT OF EACH LIMITED LIABILITY COMPANY AGREEMENT
All voting rights of holders of the company preferred securities will be
exercised by the holders of the trust preferred securities of the related trust.
Such holders will have only the voting rights described below and under
"DESCRIPTION OF GUARANTEES -- Amendments and Assignment," plus any voting rights
required by law.
We may amend each limited liability company agreement from time to time,
without the consent of the holders of the company preferred securities:
- to cure any ambiguity, correct or supplement any provisions in the
limited liability company agreement that may be inconsistent with any
other provision, or to address matters or questions arising under the
limited liability company agreement in a way which is consistent with the
agreement's other provisions; or
- to modify, eliminate or add to any provisions of the limited liability
company agreement if necessary to ensure that the TECO Limited Liability
Company will be classified for United States federal income tax purposes
as a partnership or to ensure that the TECO Limited Liability Company
will not be required to register as an "investment company" under the
Investment Company Act.
However, in the case of the first clause, the action must not adversely affect
in any material respect the interests of any holder of company preferred
securities. Any amendment becomes effective when we give notice of the amendment
to the holders of the company preferred securities.
We may amend each limited liability company agreement:
- with the consent of holders representing not less than a majority (based
upon liquidation amounts) of the outstanding company preferred
securities; and
- upon receipt of an opinion of counsel experienced in such matters to the
effect that the amendment or the exercise of any power granted in
accordance with the amendment will not affect the TECO Limited Liability
Company's status as a partnership for United States federal income tax
purposes or the TECO Limited Liability Company's exemption from status as
an "investment company" under the Investment Company Act.
However, without the consent of each holder of company preferred securities, no
amendment may:
- change the amount or timing of any distribution on the limited liability
company securities or otherwise adversely affect the amount of any
distribution required to be made in respect of the limited liability
company securities as of a specified date; or
- restrict the right of a holder of company preferred securities to sue for
the enforcement of any distribution payment.
The limited liability company is required to notify each holder of company
preferred securities whenever it is notified of a default with respect to the
junior subordinated notes.
If an event of default has occurred and is continuing under the junior
subordinated indenture or if TECO Energy is in default on any of its payment or
other obligations under the junior subordinated guarantee, the holders of a
majority of the aggregate liquidation preference of the outstanding company
preferred securities may appoint a special representative of the TECO Limited
Liability Company and the holders of company preferred securities to enforce the
TECO Limited Liability Company's rights under the junior subordinated notes. If
a special representative has been appointed, the special representative shall
have the exclusive right to enforce, or direct the enforcement of, the TECO
Limited Liability Company's rights under the junior subordinated notes.
No vote or consent of the holders of company preferred securities will be
required for a TECO Limited Liability Company to redeem and cancel its company
preferred securities in accordance with the applicable limited liability company
agreement.
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Whenever holders of company preferred securities are entitled to vote or
consent under any of the circumstances described above, we will not be permitted
to vote.
REMOVAL OF DIRECTORS
As the holder of the TECO Limited Liability Company's common securities, we
may remove that limited liability company's directors at any time. In no event
will holders of the company preferred securities have the right to vote to
appoint, remove or replace the directors; that right belongs exclusively to us
as the holder of the common securities.
PAYMENT
The limited liability company will make payments in respect of the company
preferred securities by check or by crediting the account of the property
trustee of the related trust and the other holders of the company preferred
securities on the applicable distribution dates.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable prospectus supplement, the
limited liability company or a third party appointed by the limited liability
company will act as registrar and transfer agent for the company preferred
securities.
Each TECO Limited Liability Company or a third party registrar transfer
agent will register transfers of company preferred securities without charge,
but will require payment of any tax or other governmental charges imposed in
connection with any transfer or exchange. The TECO Limited Liability Companies
will not register transfers of company preferred securities that are called for
redemption.
MISCELLANEOUS
Each TECO Limited Liability Company's board of directors is authorized and
directed to operate the TECO Limited Liability Company in such a way that:
- the TECO Limited Liability Company will not be:
-- deemed to be an "investment company" required to be registered under
the Investment Company Act; or
-- classified as an association taxable as a corporation for United
States federal income tax purposes; and
- the junior subordinated notes will be treated as our indebtedness for
United States federal income tax purposes.
We and the board of directors are authorized to take any lawful action
(consistent with each TECO Limited Liability Company's certificate of formation
and limited liability company agreement) that we and they deem to be necessary
or desirable for these purposes, as long as the action does not materially and
adversely affect the interests of the holders of the trust preferred securities.
Holders of the company preferred securities have no preemptive or similar
rights.
No TECO Limited Liability Company may borrow money or issue debt or
mortgage or pledge any of its assets.
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DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES
The junior subordinated notes will be issued by us in one or more series
under an Indenture dated August 17, 1998 between us and The Bank of New York, as
trustee, as supplemented by a supplemental indenture relating to that series. We
have summarized below the terms applying generally to a series of our junior
subordinated notes. The summary is not complete. The indenture and a general
form of supplemental indenture for a series of junior subordinated notes are
filed as exhibits to the registration statement of which this prospectus is a
part.
The particular supplemental indenture for each series has been or will be
filed or incorporated by reference as an exhibit to the registration statement.
You should read the indenture and the relevant supplemental indenture for
provisions that may be important to you. We will also describe in the applicable
prospectus supplement the particular terms of the junior subordinated notes then
to be issued, including any modifications of or additions to the discussion
below of the general terms of the junior subordinated notes. Therefore, for a
description of the terms of a particular series of junior subordinated notes
relevant to you, you should also review both the prospectus supplement relating
to that series and the description of the junior subordinated notes in this
prospectus before making an investment decision.
GENERAL
The junior subordinated notes will be issued by us to a TECO Limited
Liability Company in one or more series. The governing indenture does not limit
the amount or number of junior subordinated notes or other types of debt
securities that we can issue from time to time under the indenture.
The terms of the junior subordinated notes will correspond to the terms of
a series of company preferred securities issued by the TECO Limited Liability
Company receiving the junior subordinated notes and to the terms of a series of
trust preferred securities issued by a TECO Trust receiving the related company
preferred securities. When a TECO Limited Liability Company issues and sells its
company preferred securities, the limited liability company will use the
proceeds from the sale and from the consideration we pay for the limited
liability company's common securities to purchase the corresponding series of
junior subordinated notes.
Each series of junior subordinated notes will:
- be unsecured;
- be in the principal amount equal to the aggregate stated liquidation
amount of the company preferred securities and the common securities of
the TECO Limited Liability Company that holds such series of junior
subordinated notes; and
- rank equally with all other series of our junior subordinated debt
securities in terms of priority of payment.
The applicable prospectus supplement will describe specific terms of the
junior subordinated notes that correspond to the trust preferred securities
being offered. The terms will include some or all of the following:
- the designation, aggregate principal amount, currency or composite
currency and denominations of the junior subordinated notes;
- the price at which the junior subordinated notes will be issued and sold
to the TECO Limited Liability Company;
- the maturity date and other dates, if any, on which the principal of the
junior subordinated notes will be payable;
- the interest rate or rates, if any, or method of calculating the interest
rate or rates which the junior subordinated notes will bear;
- the date or dates from which interest will accrue and on which interest
will be payable, and the record dates for the payment of interest;
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- the terms of any mandatory or optional redemption of the junior
subordinated notes by us;
- if payments of principal or interest may be made in a currency other than
U.S. Dollars, the manner for determining such payments;
- whether and upon what terms the junior subordinated notes may be defeased
(which means that we would be discharged from our obligations by
depositing sufficient cash or government securities to pay the principal,
interest, any premiums and other sums due to the stated maturity date or
a redemption date of the junior subordinated notes);
- whether any events of default or covenants in addition to or instead of
those found in the indenture or described in this prospectus apply;
- provisions relating to the subordination of the junior subordinated
notes;
- any provisions relating to extending or shortening the date on which the
principal and premium, if any, of the junior subordinated notes of the
series is payable;
- any provisions relating to the deferral of payment of any interest;
- the forms of the related limited liability company agreement with the
TECO Limited Liability Company being issued the junior subordinated
notes, the related trust agreement with the TECO Trust being issued the
company preferred securities and the guarantee agreement;
- the additions or changes, if any, to the indenture with respect to that
series of junior subordinated notes to permit or facilitate the issuance
of that series of the junior subordinated notes to a TECO Limited
Liability Company; and
- any other terms not inconsistent with the provisions of the indenture,
including any covenants or other terms that may be required or advisable
under United States or other applicable laws or regulations, or advisable
in connection with the issuance of the junior subordinated notes.
Unless otherwise specified in the applicable prospectus supplement, we will
covenant, as to each series of the junior subordinated notes:
- to maintain, directly or indirectly, 100% ownership of the common
securities of the TECO Limited Liability Company to which the junior
subordinated notes have been issued (provided that successors which are
permitted under to the indenture may succeed to our ownership of the
common securities); and
- to use our reasonable efforts, consistent with the terms and provisions
of the related limited liability company agreement, to cause that TECO
Limited Liability Company to remain classified as a partnership for
United States federal income tax purposes and to use our reasonable
efforts, consistent with the terms and provisions of the related trust
agreement, to cause that TECO Trust to remain classified as a grantor
trust and not as an association taxable as a corporation for United
States federal income tax purposes.
Additional covenants, relating to payment of the TECO Trusts' and TECO Limited
Liability Companies' expenses, are described above under "DESCRIPTION OF THE
TRUST PREFERRED SECURITIES -- Payment of Expenses" and "DESCRIPTION OF THE
COMPANY PREFERRED SECURITIES -- Payment of Expenses."
OPTION TO EXTEND INTEREST PAYMENT DATE
We will have the right at any time and from time to time during the term of
any series of junior subordinated notes to defer payments of interest for a
specified number of consecutive interest payment, or extension, periods. No
extension period may extend beyond the maturity date of that series of junior
subordinated notes at any time. We may pay at any time all or any portion of the
interest accrued to that point during a deferral period. At the end of the
deferral period or at a redemption date, we will be obligated to pay all
interest accrued and unpaid (together with interest on the unpaid interest to
the extent permitted by
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applicable law.) United States federal income tax consequences and special
considerations applicable to any junior subordinated notes for which an
extension period has been elected will be described in the applicable prospectus
supplement. During any extension period, or while we are in default, we will be
restricted in our ability to make payments or incur obligations related to our
stock or debt securities ranking equal to or below the junior subordinated
notes.
Before the end of any extension period, we may further extend the interest
payment period. However, the deferral period, together with all prior and
further extensions, cannot exceed 20 consecutive quarters or ten semi-annual
periods or extend beyond the maturity date of the junior subordinated notes.
After the termination of any deferral period and the payment of all amounts due,
we may decide to begin a new deferral period, subject to the same requirements
described above.
If the property trustee is the sole holder of the company preferred
securities, we will give the property trustee and the indenture trustee notice
of our selection of any deferral period one business day prior to the earlier
of:
- the next date distributions on the preferred securities are payable; or
- the date the TECO Trust is required to give notice to the New York Stock
Exchange (or other applicable self-regulatory organization) or to holders
of the trust preferred securities of the record date or the date any
distribution is payable.
If the property trustee is not the sole holder, we will give the holders of the
company preferred securities and the indenture trustee notice of our selection
of any deferral period ten business days prior to the earlier of:
- the next interest payment date; or
- the date we are required to give notice to the New York Stock Exchange
(or other applicable self-regulatory organization) or to holders of the
junior subordinated notes of the record or payment date of any related
interest payment.
REDEMPTION
The junior subordinated notes and the applicable supplemental indenture
will provide the terms under which we can redeem the junior subordinated notes
at our option. They will specify a date prior to which we cannot redeem the
junior subordinated notes, and after which we will have the right to redeem the
junior subordinated notes, in whole or in part, upon 30 to 60 days notice to the
holder of the junior subordinated notes at a redemption price or prices stated
in this prospectus supplement.
If the junior subordinated notes are redeemed only in part, they will be
redeemed pro rata, by lot or other method selected by the trustee. If a partial
redemption would result, however, in the delisting of the TECO Trusts'
corresponding trust preferred securities from the national securities exchange
or other self-regulatory organization on which the securities are listed, or if
the TECO Limited Liability Company's corresponding company preferred securities
are then listed on a national securities exchange or other self-regulatory
organization and such partial redemption would result in the delisting of the
corresponding company preferred securities from such national securities
exchange or self-regulatory organization, we will not be permitted to effect the
partial redemption and may redeem the junior subordinated notes only as a whole.
Unless otherwise specified in the applicable prospectus supplement and
subject to the provisions of the applicable prospectus supplement, if a Tax
Event (as defined below) or an Investment Company Event (as defined below) in
respect of a TECO Trust or TECO Limited Liability Company occurs and is
continuing, we can redeem the junior subordinated notes, in whole but not in
part, at any time within the next 90 days.
"Tax Event" means that the applicable TECO Trust or TECO Limited Liability
Company has received an opinion of counsel (which may be counsel to us or an
affiliate) experienced in such matters to the effect that, as a result of any
- amendment to, or change (including any announced proposed change) in, the
laws or regulations of the United States, any political subdivision or
taxing authority, or
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- official administrative written decision, pronouncement or action or
judicial decision interpreting or applying those laws or regulations,
in each case which amendment or change is effective or which proposed change,
pronouncement, action or decision is announced on or after the date of issuance
of the series of junior subordinated notes, there is more than an insubstantial
risk that:
- the TECO Trust or TECO Limited Liability Company is, or will be within 90
days of the date of the opinion, subject to United States federal income
tax with respect to income received or accrued on the junior subordinated
notes or company preferred securities;
- interest we pay on the junior subordinated notes is not, or will not be
within 90 days of the date of the opinion, deductible, in whole or in
part, for United States federal income tax purposes; or
- the TECO Trust or TECO Limited Liability Company is, or will be within 90
days of the date of the opinion, subject to more than a de minimis amount
of other taxes, duties or other governmental charges.
"Investment Company Event" means that the applicable TECO Trust or TECO
Limited Liability Company will have received an opinion of counsel (which may be
counsel to us or an affiliate) experienced in such matters to the effect that,
as a result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority on or after the date of
issuance of the series of junior subordinated notes, there is more than an
insubstantial risk that the trust or limited liability company is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act.
RESTRICTIONS ON CERTAIN PAYMENTS
If:
- we have actual knowledge that an event has occurred that (a) with the
giving of notice or the lapse of time, or both, would constitute an event
of default under the indenture with respect to the junior subordinated
notes of that series and (b) we have not taken reasonable steps to cure
the event;
- we are in default with respect to payment of any obligations under the
guarantee relating to related trust preferred securities; or
- we have given notice of our selection of a deferral of interest extension
period as provided under the supplemental indenture with respect to the
junior subordinated notes and have not rescinded the notice, or the
extension period shall be continuing;
then, unless otherwise provided in the applicable prospectus supplement, we will
promise, as to each series of junior subordinated notes issued, that we and our
subsidiaries will not:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of our stock;
- make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any of our debt securities (including other junior
subordinated notes) that rank equally with or junior in interest to the
junior subordinated notes;
- make any guarantee payments with respect to any of the debt securities of
any of our subsidiaries if the guarantee ranks equally with or junior in
interest to the junior subordinated notes
other than:
- as a result of a reclassification of our capital stock or the exchange or
conversion of one class or series of our capital stock for another class
or series;
- dividends or distributions payable in our common stock;
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- redemptions or purchases of any rights pursuant to our shareholder rights
plan, or any successor rights agreement, and the declaration of a
dividend of rights or the issuance of stock under a rights agreement in
the future;
- payments under any guarantee relating to the trust preferred securities
of a TECO Trust;
- purchases of common stock related to the issuance of common stock under
any benefit plans for our or our subsidiaries' directors, officers or
employees;
- obligations under any dividend reinvestment plan or stock purchase plan;
and
- purchases of fractional interests in shares of our stock pursuant to the
conversion or exchange provisions of a security being converted or
exchanged for our stock.
RANKING OF THE JUNIOR SUBORDINATED NOTES
The junior subordinated notes will be subordinate in right of payment to
our senior indebtedness, which, generally speaking, consists of our indebtedness
for borrowed money and indebtedness of others guaranteed by us or secured by our
property, capital lease obligations, debts due under credit arrangements not
including ordinary accounts payable, and similar indebtedness.
The indenture under which we will issue the junior subordinated notes does
not restrict the total amount of debt that we or our subsidiaries may incur or
contain any covenant or other provision that is specifically intended to afford
any holder of the junior subordinated notes or other debt securities special
protection in the event of highly leveraged transactions or any other
transactions resulting in a decline in our ratings or credit quality.
Our default or event of default under any other senior or subordinated
indebtedness would not necessarily constitute an event of default under the
indenture. However, in the event of payment defaults under, or acceleration of,
our senior or subordinated indebtedness, the subordination provisions of the
applicable supplemental indenture will provide that no payments may be made in
respect of the junior subordinated notes until the senior or subordinated
indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Our failure to make required payments on any series of junior
subordinated notes would constitute an event of default.
The junior subordinated notes are obligations exclusively of TECO Energy,
which, as a holding company, has no material assets other than its ownership of
the common stock of its subsidiaries, including Tampa Electric Company. We will
rely entirely upon distributions from our subsidiaries to meet the payment
obligations under the junior subordinated notes. Our subsidiaries are separate
and distinct legal entities and have no obligation, contingent or otherwise, to
pay amounts due under the junior subordinated notes or otherwise to make any
funds available to us including the payment of dividends or other distributions
or the extension of loans or advances. Furthermore, the ability of our
subsidiaries to make any payments to us would be dependent upon the terms of any
credit facilities of the subsidiaries and upon the subsidiaries' earnings, which
are subject to various business risks. In a bankruptcy or insolvency proceeding,
claims of holders of the junior subordinated notes would be satisfied solely
from our equity interests in our subsidiaries remaining after the satisfaction
of claims of creditors of the subsidiaries. Thus, the junior subordinated notes
are effectively subordinated to existing and future liabilities of our
subsidiaries to their respective creditors.
CONSOLIDATION, MERGER, ETC.
We will not consolidate or merge with or into any other corporation or
other organization, or sell, convey or transfer all or substantially all of our
assets to any individual or organization, unless:
- the successor is an individual or organization organized under the laws
of the United States or any state thereof or the District of Columbia or,
upon the effectiveness of the currently proposed amendment to the
indenture, under the laws of a foreign jurisdiction and such successor
consents to the jurisdiction of the courts of the United States or any
state thereof;
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- the successor or transferee expressly assumes our obligations under the
indenture; and
- the consolidation, merger, sale or transfer does not cause the occurrence
of a default under the indenture.
Upon the assumption by the successor of our obligations under the indenture and
the debt securities issued thereunder, and the satisfaction of any other
conditions required by the indenture, the successor will succeed to and be
substituted for us under the indenture.
DENOMINATIONS, REGISTRATION AND TRANSFER OF JUNIOR SUBORDINATED NOTES
The junior subordinated notes will be denominated in U.S. dollars in
registered form without coupons, unless otherwise indicated in the applicable
prospectus supplement and except as otherwise indicated under the heading
"BOOK-ENTRY ISSUANCE" below.
A holder of registered junior subordinated notes may request registration
of a transfer upon surrender of the junior subordinated note being transferred
at any agency we maintain for that purpose and upon fulfillment of all other
requirements of the agent.
EXCHANGE OF JUNIOR SUBORDINATED NOTES
In the event a person other than the property trustee or the applicable
limited liability company holds any registered junior subordinated notes, those
junior subordinated notes may be exchanged for an equal principal amount of
registered junior subordinated notes of the same series and date of maturity in
the denominations requested by the holders upon surrender of the registered
junior subordinated notes at an agency we maintain for that purpose and upon
fulfillment of all other requirements of the agent.
DEFAULTS AND REMEDIES
Unless the supplemental indenture establishing the series provides for
different events of default, in which event the prospectus supplement will
describe the change, an event of default with respect to a series of junior
subordinated notes will occur if:
- we fail to pay any interest on any note of that series when due, and such
failure has continued for 30 days;
- we fail to pay principal of or premium, if any, on any note of that
series when due;
- we fail to perform any other covenant in the indenture (other than a
covenant included in the indenture solely for the benefit of a series of
junior subordinate notes other than that series), and that failure has
continued for 90 days after we receive written notice as provided in the
indenture;
- events of bankruptcy, insolvency or reorganization; and
- any other event defined as an event of default with respect to junior
subordinated notes of that series.
If an event of default occurs and is continuing on a series of junior
subordinated notes, the trustee by notice to us, or, to the extent permitted by
applicable law, the holders of at least 25% in principal amount of the series by
notice both to us and to the trustee, may declare the principal of and accrued
interest on all the junior subordinated notes of the series to be due and
payable immediately. If, upon an event of default, the trustee or the holders of
not less than 25% in aggregate principal amount of the series fail to declare
the principal of all the junior subordinated notes of that series to be
immediately due and payable, then the holders of 25% in aggregate liquidation
amount of the related trust preferred securities then outstanding shall have the
right to do so by notice to us and to the trustee.
Except as provided in the next sentence, the holders of a majority in
principal amount of a series of junior subordinated notes, by notice to the
trustee, may rescind an acceleration and its consequences if the rescission
would not conflict with any judgment or decree and if all existing events of
default on the series have been cured or waived except nonpayment of principal
or interest that has become due solely because of the
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acceleration. However, so long as any of the related trust preferred securities
are still outstanding, then the holders of a majority in aggregate liquidation
amount of those trust preferred securities shall have the sole right to rescind
the acceleration and its consequences with respect to that series, subject to
the same conditions set forth above.
If an event of default occurs and is continuing on a series, the trustee
may pursue any available remedy to collect principal or interest then due on the
series, to enforce the performance of any provision applicable to the series, or
otherwise to protect the rights of the trustee and holders of the series.
Any holder of the related trust preferred securities of the applicable TECO
Trust shall have the right, upon the occurrence and continuance of an event of
default with respect to the series following our failure to pay timely interest,
principal or premium as described above, to sue us directly. In that lawsuit the
holder of the related trust preferred securities can force us to pay to the
holder the principal of, and premium, if any, and interest on, the junior
subordinated notes having a principal amount equal to the aggregate liquidation
amount of the trust preferred securities held by that holder.
Subject to the provisions of the indenture relating to the duties of the
indenture trustee in case an event of default occurs and is continuing, the
indenture trustee is not obligated to exercise any of its rights or powers under
the indenture at the request or direction of any of the holders of the junior
subordinated notes, whether it be the property trustee or otherwise, unless the
holders have offered to the trustee reasonable security or indemnity. Subject to
such provisions for security and indemnification of the trustee and other rights
of the trustee, the holders of a majority in principal amount of the outstanding
junior subordinated notes of any series have the right to direct the time,
method and place of conducting any proceedings for any remedy available to the
trustee or exercising any trust or power conferred on the trustee with respect
to the junior subordinated notes of that series.
The holder of any junior subordinated note, whether it be the property
trustee or otherwise, will have an absolute and unconditional right to receive
payment of the principal of and any premium and, subject to limitations
specified in the indenture, interest on that note on its stated maturity date
(or, in the case of redemption, on the redemption date) and to institute suit
for the enforcement of any of these payments.
Annually, we must furnish to the indenture trustee a statement that to the
best of our knowledge we are not in default in the performance and observance of
any terms, provisions or conditions of the indenture or, if there has been such
a default, specifying each default and its status.
The indenture does not have a cross-default provision. Thus, a default by
us on any other debt, including any other series of junior subordinated notes,
would not constitute an event of default under the indenture. A supplemental
indenture may provide for a cross-default provision; in that case the prospectus
supplement will describe the terms of that provision.
MODIFICATION OF THE INDENTURE
The indenture provides that we or the trustee may modify or amend its terms
with the consent of (i) the holders of not less than a majority in aggregate
principal amount of the outstanding debt securities of each affected series and
(ii) 66 2/3% in aggregate principal amount of the outstanding debt securities of
all affected series. However, without the consent of each holder of all of the
outstanding debt securities affected by that modification, we may not:
- change the date stated on the debt security on which any payment of
principal or interest is stated to be due;
- reduce the principal amount or any premium or interest on, any debt
security, in the case of a discounted debt security, the amount payable
upon acceleration of the maturity thereof;
- change the place of payment or currency of payment of principal of, or
premium, if any, or interest on, any debt security;
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- impair the right to institute suit for the enforcement of any payment on
or with respect to any debt security after the stated maturity (or, in
the case of redemption, on or after the redemption date); or
- reduce the percentage in principal amount of outstanding debt securities
of any series, the consent of the holders of which is required for
modification or amendment of the indenture, for waiver of compliance with
some provisions of the indenture or for waiver of some defaults.
Under limited circumstances and only upon the fulfillment of conditions, we
and the trustee may make modifications and amendments of the indenture without
the consent of any holders of the debt securities.
However, unless stated otherwise in the applicable prospectus supplement:
- we are not permitted to adopt an amendment that adversely affects the
holders of the trust preferred securities in any material respect, and
- no termination of the indenture shall occur,
without the prior consent of the holders of not less than a majority in
aggregate liquidation amount of the trust preferred securities then outstanding
unless and until the principal (and premium, if any) of the junior subordinated
notes of that series and all accrued and unpaid interest thereon have been paid
in full. Furthermore, no amendment can be made to the provisions of the
indenture allowing holders of trust preferred securities to sue directly
following our failure to make timely payments on the junior subordinated notes
as described above without the prior consent of the holder of each trust
preferred security then outstanding unless and until the principal (and premium,
if any) of the junior subordinated notes of the series and all accrued and
unpaid interest thereon have been paid in full.
SATISFACTION AND DISCHARGE OF THE INDENTURE
We will have satisfied and discharged the indenture and it will cease to be
in effect (except as to our obligations to compensate, reimburse and indemnify
the trustee pursuant to the indenture and some other obligations), when we
deposit or cause to be deposited with the trustee, in trust, an amount
sufficient to pay and discharge the entire indebtedness on the debt securities
not previously delivered to the trustee for cancellation, for the principal (and
premium, if any) and interest to the date of the deposit (or to the stated
maturity date or earlier redemption date for debt securities that have been
called for redemption).
DEFEASANCE OF THE JUNIOR SUBORDINATED NOTES
Unless otherwise provided in the applicable prospectus supplement, we may
cause ourself (subject to the terms of the indenture) to be discharged from any
and all obligations with respect to any junior subordinated notes or series of
junior subordinated notes (except for certain obligations to register the
transfer or exchange of the junior subordinated notes, to replace the junior
subordinated notes if stolen, lost or mutilated, to maintain paying agencies and
to hold money for payment in trust) on and after the date that the conditions
provided for in the indenture are satisfied. Those conditions include the
deposit with the trustee, in trust for this purpose, of money and/or U.S.
government obligations, whose scheduled payments of principal and interest, will
provide money in an amount sufficient to pay the principal of and any premium
and interest on the junior subordinated notes on the stated maturity date of
those payments or upon redemption, as the case may be, under the terms of the
indenture and the junior subordinated notes.
REGARDING THE TRUSTEE
The Bank of New York will act as trustee and registrar for the junior
subordinated notes issued under the indenture. Unless otherwise indicated in a
prospectus supplement, the trustee will also act as transfer agent and paying
agent with respect to the junior subordinated notes. The Bank of New York
maintains banking relationships with us in the ordinary course of business and
serves as trustee under other indentures with us and certain of our affiliates.
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DESCRIPTION OF THE GUARANTEES
When the trust preferred securities and the company preferred securities
are issued, we will execute and deliver a guarantee agreement for the benefit of
the holders of the company preferred securities and, indirectly, the holders of
the trust preferred securities as a result of their beneficial interest in the
company preferred securities. The guarantee agreement will be qualified as an
indenture under the Trust Indenture Act. The Bank of New York will act as
guarantee trustee under each guarantee for the purposes of compliance with the
Trust Indenture Act. It will hold the guarantee for the benefit of the holders
of the corresponding TECO Limited Liability Company's company preferred
securities and, indirectly, the holders of the corresponding TECO Trust's trust
preferred securities.
We have summarized certain provisions of the guarantee below. This summary
is not complete. The form of the guarantee agreement has been filed as an
exhibit to the registration statement of which this prospectus forms a part. You
should read the guarantee agreement for provisions that may be important to you.
Reference in this summary to company preferred securities and trust preferred
securities means the company preferred securities and trust preferred securities
to which a guarantee relates.
GENERAL
We will promise to pay the guarantee payments to the holders of the company
preferred securities, as and when due, regardless of any defense, right of
set-off or counterclaim that the TECO Limited Liability Company may have or
assert, other than the defense of payment. The guarantee payments will rank
equal to the junior subordinated notes and will be junior and subordinated to
our senior debt and subordinated debt. The guarantee payments include the
following, to the extent not paid by or on behalf of the TECO Limited Liability
Company:
- any accumulated and unpaid distributions required to be paid on the
company preferred securities;
- the redemption price for any company preferred securities called for
redemption; and
- upon a voluntary or involuntary dissolution, winding up or liquidation of
a TECO Limited Liability Company (unless the junior subordinated notes
are distributed to the holders of the company preferred securities), the
greater of:
-- the liquidation distribution payable on the company preferred
securities; and
-- the amount of assets of the TECO Limited Liability Company remaining
available for distribution to holders of company preferred securities.
Our obligation to make a guarantee payment may be satisfied either by our
direct payment of the required amounts to the holders of the company preferred
securities or by causing the TECO Limited Liability Company to pay them.
Each guarantee will be an irrevocable guarantee, on a junior subordinated
basis, of the TECO Limited Liability Company's obligations under the company
preferred securities.
All of our consolidated operating assets are owned by our subsidiaries, and
most are owned by regulated utilities. Accordingly, our obligations under the
guarantees will be effectively subordinated to all existing and future
liabilities of our subsidiaries and could be affected by regulatory limitations.
See "DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES -- General" and "-- Ranking of
the Junior Subordinated Notes." Except as otherwise provided in the applicable
prospectus supplement, we and our subsidiaries are not limited in the amount of
secured or unsecured debt that we may have outstanding.
Our obligations described in this prospectus and any accompanying
prospectus supplement, through the applicable guarantee agreement, limited
liability company agreement, trust agreement, junior subordinated notes, and
supplemental indenture, taken together, constitute our full, irrevocable and
unconditional guarantee of payments due on the company preferred securities. No
single document standing alone or operating in conjunction with fewer than all
of the other documents constitutes the guarantee. It is only the combined
operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of
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the TECO Limited Liability Company's obligations under the company preferred
securities. See "THE TECO TRUSTS," "THE TECO LIMITED LIABILITY COMPANIES,"
"DESCRIPTION OF THE TRUST PREFERRED SECURITIES," "DESCRIPTION OF COMPANY
PREFERRED SECURITIES," and "DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES."
STATUS OF THE GUARANTEES
Each guarantee will constitute our unsecured obligation and will rank
subordinate and junior in right of payment to all of our senior debt and
subordinated debt.
Each guarantee will rank equally with all other guarantees we issue
relating to company preferred securities issued by the TECO Limited Liability
Companies. Each guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against us as the guarantor to enforce its rights under the guarantee without
first suing anyone else). Each guarantee will be held for the benefit of the
holders of the company preferred securities. Each guarantee will be discharged
only by payment of the guarantee payments in full (to the extent not paid by the
TECO Limited Liability Company) or by distribution of the junior subordinated
notes to the holders of the company preferred securities. None of the guarantees
places a limitation on the amount of additional senior indebtedness or
subordinated indebtedness that we may incur. We expect from time to time to
incur additional indebtedness constituting senior indebtedness or subordinated
indebtedness.
AMENDMENTS AND ASSIGNMENT
A guarantee may be amended without the prior approval of any holders of the
related company preferred securities if the change does not adversely affect the
rights of those holders in any material respect. Otherwise, an amendment will
require prior approval of holders of a majority of the aggregate liquidation
amount of the related outstanding company preferred securities. The manner of
obtaining the required approval will be as set forth under "DESCRIPTION OF THE
COMPANY PREFERRED SECURITIES -- Voting Rights; Amendment of Each Limited
Liability Company Agreement." All guarantees and agreements contained in each
guarantee agreement will bind our successors, assigns, receivers, trustees and
representatives and will benefit the holders of the company preferred securities
then outstanding.
EVENTS OF DEFAULT
We will be in default under any guarantee agreement if (a) we do not make
required payments or (b) we are notified that we have not performed some other
obligation and have not cured that failure within 90 days.
The holders of a majority in aggregate liquidation amount of the related
company preferred securities have the right to:
- direct the time, method and place of conducting any proceeding for any
remedy available to the guarantee trustee in respect of the guarantee
agreement; or
- direct the exercise of any power conferred upon the guarantee trustee
under the guarantee agreement.
Holders of a majority in aggregate liquidation amount of the related company
preferred securities also have the right to waive any past event of default and
its consequences.
The guarantee agreement provides that, to the fullest extent permitted by
law, without the need for any other action of any person, including the
guarantee trustee or any other holder of the trust preferred securities or
company preferred securities, each holder of trust preferred securities or
company preferred securities will be entitled to enforce the rights of the
holders of the company preferred securities under the guarantee agreement.
As guarantor, we are required to file annually with the guarantee trustee a
certificate stating whether or not we are in compliance with all the conditions
and covenants applicable to us under the guarantee agreement.
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INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee promises to perform only the duties that are
specifically set forth in each guarantee agreement, other than during the
occurrence and continuance of a default by us in performance of any guarantee.
After we default and while the default continues, the guarantee trustee must
exercise the same degree of care and skill as a prudent person would exercise or
use in the conduct of his or her own affairs. Subject to this provision, the
guarantee trustee is under no obligation to exercise any of the powers vested in
it by any guarantee agreement at the request of any holder of trust preferred
securities or company preferred securities unless it is offered indemnity
satisfactory to it against the costs, expenses and liabilities that it might
incur by doing so.
TERMINATION OF THE GUARANTEES
Each guarantee will terminate upon full payment of the redemption price of
the related company preferred securities, upon full payment of the amounts
payable upon liquidation of the related TECO Limited Liability Company or upon
the later to occur of distribution of junior subordinated notes to the holders
of the company preferred securities or to the holders of the trust preferred
securities. Each guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any holder of the related company preferred
securities must restore payment of any sums paid under the company preferred
securities or the guarantee.
GOVERNING LAW
Each guarantee agreement will be governed by and construed in accordance
with the laws of the State of New York.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, COMPANY
PREFERRED SECURITIES, THE JUNIOR SUBORDINATED NOTES
AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
We will irrevocably guarantee payments of distributions and other amounts
due on the company preferred securities as and to the extent described above
under "DESCRIPTION OF THE GUARANTEES." Taken together, our obligations under
each series of junior subordinated notes, the related supplemental indenture,
the indenture, the related limited liability company agreement, the related
trust agreement and the related guarantee agreement provide, in the aggregate, a
full, irrevocable and unconditional guarantee of payments of distributions and
other amounts due on the related company preferred securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes the full guarantee. It is only the combined
operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the TECO Limited Liability Company's
obligations under the company preferred securities.
If and to the extent that we do not make payments on a series of junior
subordinated notes, the TECO Limited Liability Company will not pay
distributions or other amounts due on the related company preferred securities.
In that event, the remedy for a holder of company preferred securities is to
institute a legal proceeding directly against us to enforce payment of the
distributions to the holder or to seek such holder's rights under the guarantee.
Our obligations under each guarantee are subordinate and junior in right of
payment to all of our senior indebtedness and subordinated indebtedness.
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SUFFICIENCY OF PAYMENTS
As long as all payments are made when due on each series of junior
subordinated notes, those payments will be sufficient to cover distributions and
other payments due on the related company preferred securities. This is
primarily because:
- the aggregate principal amount of each series of junior subordinated
notes will be equal to the sum of the aggregate stated liquidation amount
of the related company preferred securities and common securities and the
aggregate principal amount of each series of company preferred securities
will be equal to the sum of the aggregate stated liquidation amount of
the related trust preferred securities and;
- the interest rate and interest and other payment dates on each series of
junior subordinated notes will match the distribution rate and
distribution and other payment dates for the related company preferred
securities;
- we have promised to pay any and all costs, expenses and liabilities of
each TECO Trust except the TECO Trust's obligations under its trust
preferred securities;
- we have promised to pay any and all costs, expenses and liabilities of
each TECO Limited Liability Company except the limited liability
company's obligations under its securities;
- each trust agreement provides that the TECO Trust will not engage in any
activity that is not consistent with the limited purposes of the TECO
Trust; and
- each limited liability company agreement provides that the TECO Limited
Liability Company will not engage in any activity that is inconsistent
with the limited purposes of the TECO Limited Liability Company.
We have the right to set-off any payment we are otherwise required to make
under the indenture if and to the extent we have already made, or are
concurrently making, a payment under the related guarantee agreement.
In the event of payment defaults under, or acceleration of, our senior or
subordinated indebtedness, the subordination provisions of the applicable
supplemental indenture will provide that no payments may be made in respect of
the junior subordinated notes until the senior or subordinated indebtedness has
been paid in full or any payment default thereunder has been cured or waived.
ENFORCEMENT RIGHTS OF HOLDERS OF TRUST PREFERRED SECURITIES
A holder of any trust preferred security may institute a legal proceeding
directly against us to enforce its rights under the related guarantee agreement
without first instituting a legal proceeding against the guarantee trustee, the
related TECO Trust, the related TECO Limited Liability Company or anyone else.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of any TECO Trust involving
the liquidation of the assets that it holds, the holders of the trust preferred
securities will be entitled to receive the liquidation distribution in cash, out
of assets of the TECO Trust (after satisfaction of creditors of the TECO Trust
as provided by applicable law). If we become subject to any voluntary or
involuntary liquidation or bankruptcy, the property trustee, as holder of the
junior subordinated notes, would be one of our junior subordinated creditors.
The property trustee would be subordinated in right of payment to all of our
senior indebtedness and subordinated indebtedness, but it would be entitled to
receive payment in full of principal and interest before our stockholders
receive payments or distributions. We are the guarantor under each guarantee
agreement and under the indenture, and as borrower, have agreed to pay all
costs, expenses and liabilities of each TECO Trust (other than the TECO Trust's
obligations to the holders of its trust preferred securities). Accordingly, in
the event of our liquidation or bankruptcy the positions of a holder of trust
preferred securities and of a holder of junior subordinated notes are expected
to be substantially the same relative to our other creditors and our
stockholders.
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BOOK-ENTRY ISSUANCE
The trust preferred securities, company preferred securities and
corresponding series of junior subordinated notes may be issued in whole or in
part in the form of one or more global securities that will be deposited with,
or on behalf of, the depositary identified in the prospectus supplement relating
to that series. The depositary will be DTC unless otherwise indicated in the
applicable prospectus supplement. Book-entry securities may be issued only in
fully registered form and in either temporary or permanent form. Unless and
until it is exchanged for the individual securities that it represents, a
book-entry security may not be transferred except as a whole to a nominee of the
depositary or to a successor depositary or any nominee of the successor.
DTC has advised us that it 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. DTC holds securities that its participants
deposit with it. 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. DTC is owned
by a number of its 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 custodial relationships with participants, either directly or
indirectly. The rules applicable to DTC and its participants are on file with
the SEC.
Purchases of book-entry securities within the DTC system must be made by or
through direct participants, which will receive a credit for the book-entry
securities on DTC's records. The ownership interest of each actual purchaser of
each book-entry security, or 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 book-entry
securities. Transfers of ownership interests in the book-entry securities 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 book-entry securities, except in the event that use
of the book-entry system is discontinued. The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a global security.
To facilitate subsequent transfers, all book-entry securities deposited by
participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of book-entry securities with DTC and their registration
in the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the book-entry securities; DTC's
records reflect only the identity of the direct participants to whose accounts
such book-entry securities 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.
We expect that 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 and the
voting rights of direct participants, indirect participants and 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 Cede & Co. as the registered holder of
the book-entry securities.
Although voting with respect to the book-entry securities is limited to the
holders of record of the book-entry securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to book-entry securities. Under its usual procedures, DTC would mail an
omnibus proxy
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to the relevant trustee or entity 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 such book-entry securities are credited on the
record date identified in a listing attached to the omnibus proxy.
Distribution payments on the trust preferred securities, company preferred
securities or the junior subordinated notes held in book-entry form will be made
to DTC. We have been advised that 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 and will be the responsibility of such participant and not of DTC, the
relevant trustee, the TECO Limited Liability Company (as applicable), the TECO
Trust (as applicable) or us, subject to any statutory or regulatory requirements
as may be in effect from time to time. Payment on book-entry securities to DTC
is our responsibility or the responsibility of the limited liability company,
the relevant trustee (as applicable), disbursement of such payments to direct
participants is the responsibility of DTC and disbursements of such payments to
the Beneficial Owners is the responsibility of direct and indirect participants.
Unless otherwise specified in the applicable prospectus supplement, if a
depositary for a series of trust preferred securities is at any time unwilling,
unable or ineligible to continue as depositary and the TECO Limited Liability
Company does not appoint a successor depositary within 90 days, the trust will
issue individual trust preferred securities of such series in exchange for the
global security representing that series of trust preferred securities. In
addition, the TECO Limited Liability Company may at any time and in its sole
discretion, subject to any limitations described in the prospectus supplement
relating to the trust preferred securities, determine not to have any trust
preferred securities of a series represented by one or more global securities
and, in that event, the trust will issue individual trust preferred securities
of that series in exchange for the global security or securities representing
that series of trust preferred securities. Further, if we so specify with
respect to trust preferred securities of a series, an owner of a beneficial
interest in a global security representing trust preferred securities of that
series may, on terms acceptable to us, the property trustee and the depositary
for such global security, receive individual trust preferred securities of that
series in exchange for that owner's beneficial interests, subject to any
limitations described in the prospectus supplement relating to those trust
preferred securities. In that instance, a Beneficial Owner in the global
security will be entitled to physical delivery of individual trust preferred
securities of the series represented by the global security equal in liquidation
amount to such beneficial interest and to have such trust preferred securities
registered in its name. Individual trust preferred securities of the series so
issued will be issued in the denominations described in the related prospectus
supplement.
If the TECO Trust issues certificated trust preferred securities, they will
be registered in the name of the security holder. The trust preferred securities
may be transferred or exchanged, based on administrative procedures in the trust
agreement, without the payment of any service charge (other than any tax or
other governmental charge) by contacting the registrar and transfer agent as
specified in the applicable prospectus supplement.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be accurate, but we assume no
responsibility for the accuracy thereof. Neither we nor the TECO Limited
Liability Company or TECO Trusts have any 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.
USE OF PROCEEDS
Each TECO Trust will use all of the proceeds it receives from the sale of
its trust preferred securities to purchase from a TECO Limited Liability Company
the corresponding company preferred securities. Each TECO Limited Liability
Company will use all of the proceeds it receives from the sale of its company
preferred securities and common securities to purchase from us the corresponding
junior subordinated notes. Except as otherwise described in the applicable
prospectus supplement, we intend to use the proceeds from our sale of the junior
subordinated notes to a TECO Limited Liability Company for general corporate
purposes, which may include investment in subsidiaries, working capital, capital
expenditures, repayment of debt and other business opportunities.
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PLAN OF DISTRIBUTION
At our direction, a TECO Trust may sell the trust preferred securities in
any one or more of the following ways from time to time: (a) to or through
underwriters or dealers; (b) directly to one or more purchasers; or (c) through
agents. The applicable prospectus supplement will set forth with respect to the
securities being offered the terms of the offering, including the name or names
of any underwriters, the purchase price of the securities and the proceeds to
the TECO Trust from such sale, any underwriting discounts and other items
constituting underwriters' compensation, any initial public offering price, any
discounts or concessions allowed or reallowed or paid to dealers, and any
securities exchange on which the securities may be listed. Only underwriters so
named in the applicable prospectus supplement are deemed to be underwriters in
connection with the securities being offered.
If underwriters are used in the sale, the securities 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. The
obligations of the underwriters to purchase those securities will be subject to
certain conditions precedent, and the underwriters will be obligated to purchase
all the securities of the series offered by us and/or the applicable TECO Trust
and described in the applicable prospectus supplement if any of those securities
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.
Securities may also be sold directly by a TECO Trust at our direction or
through agents designated by us from time to time. Any agent involved in the
offering and sale of the securities in respect of which this prospectus is
delivered will be named, and any commissions payable by us and/or a TECO Trust
to such agent will be set forth in the applicable prospectus supplement. Unless
otherwise indicated in the prospectus supplement, the agent will be acting on a
best efforts basis for the period of its appointment.
If so indicated in the applicable prospectus supplement, we and/or a TECO
Trust will authorize agents, underwriters or dealers to solicit offers by
certain institutional investors to purchase securities providing for payment and
delivery on a future date specified in the prospectus supplement. There may be
limitations on the minimum amount which may be purchased by any institutional
investor or on the portion of the aggregate principal amount of the particular
securities which may be sold pursuant to those arrangements. Institutional
investors to which those offers may be made, when authorized, include commercial
and savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and such other institutions as may be
approved by us and/or a TECO Trust. The obligations of any of those purchasers
under such delayed delivery and payment arrangements will not be subject to any
conditions except (a) the purchase by an institution of the particular
securities shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject, and (b)
if the particular securities are being sold to underwriters, a TECO Trust shall
have sold to those underwriters all of those securities other than the
securities covered by those arrangements. Underwriters will not have any
responsibility in respect of the validity of those arrangements or the
performance by us or those institutional investors under those arrangements.
If any underwriter or any selling group member intends to engage in
stabilizing, syndicate short covering transactions, penalty bids or any other
transaction in connection with the offering of securities that may stabilize,
maintain, or otherwise affect the price of those securities, that intention and
a description of those transactions will be described in the applicable
prospectus supplement.
Agents and underwriters may be entitled under agreements entered into with
us and/or the applicable TECO Trust and TECO Limited Liability Company to
indemnification by us against certain civil liabilities, including liabilities
under the Securities Act of 1933, or to contribution with respect to payments
which the agents or underwriters may be required to make in respect thereof.
Agents and underwriters may engage in transactions with, or perform services
for, us and our subsidiaries in the ordinary course of business.
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LEGAL MATTERS
Unless otherwise indicated in the applicable prospectus supplements,
certain legal matters in connection with the securities will be passed upon (a)
for us by Palmer & Dodge LLP, Boston, Massachusetts, (b) for the TECO Trusts
(with respect to the validity of the trust preferred securities under Delaware
law) by Richards, Layton & Finger, P.A., Wilmington, Delaware, special Delaware
counsel to us and the TECO Trusts, (c) for the TECO Limited Liability Companies
(with respect to the validity of the company preferred securities under Delaware
law) by Richards, Layton & Finger, P.A., Wilmington, Delaware, special Delaware
counsel to us and the TECO Limited Liability Companies, and (d) for any
underwriters by Ropes & Gray, Boston, Massachusetts.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K of TECO Energy for the year ended
December 31, 1999 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent certified public accountants, given on
the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any of these documents at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
on the SEC's web site at http://www.sec.gov.
We and the TECO Trusts and TECO Limited Liability Companies filed a
registration statement on Form S-3 with the SEC covering the junior subordinated
notes, company preferred securities and trust preferred securities. For further
information on us, the TECO Trusts, the junior subordinated notes, the limited
liability companies' securities and the trusts' securities, you should refer to
the registration statement and its exhibits. This prospectus discusses material
provisions of the indenture under which the junior subordinated notes will be
issued. Because the prospectus may not contain all the information that you may
find important, you should review the full text of the indenture and other
documents we have filed as exhibits to the registration statement.
The SEC allows us to "incorporate by reference" the information that we
file with the SEC, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 until all of the securities discussed are registered in the
above mentioned registration statement are sold.
- Our Annual Report on Form 10-K for the fiscal year ended December 31,
1999;
- our Quarterly Reports on Form 10-Q for the quarterly periods ended March
31, 2000, June 30, 2000 and September 30, 2000; and
- our Current Reports on Form 8-K dated February 16, 2000, February 29,
2000, July 20, 2000, September 20, 2000, September 25, 2000, October 30,
2000, November 14, 2000 and November 16, 2000.
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You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Director of Investor Relations
TECO Energy, Inc.
TECO Plaza
702 North Franklin Street
Tampa, Florida 33602
(813) 228-4111
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement or term sheet. We have not
authorized anyone to provide you with different information. We are not making
an offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any supplement or
term sheet is accurate as of any date other than the date on the front of these
documents.
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