SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form U-1
APPLICATION OR DECLARATION
under
The Public Utility Holding Company Act of 1935
GEORGIA POWER COMPANY
333 Piedmont Avenue, N.E.
Atlanta, Georgia 30308
(Name of company or companies filing this statement
and addresses of principal executive offices)
THE SOUTHERN COMPANY
(Name of top registered holding company parent
of each applicant or declarant)
Judy M. Anderson
Vice President and Corporate Secretary
Georgia Power Company
333 Piedmont Avenue, N.E.
Atlanta, Georgia 30308
(Names and addresses of agents for service)
The Commission is requested to mail signed copies
of all orders, notices and communications to:
W. L. Westbrook John F. Young
Financial Vice President Vice President
The Southern Company Southern Company Services, Inc.
64 Perimeter Center East One Wall Street, 42nd Floor
Atlanta, Georgia 30346 New York, New York 10005
Warren Y. Jobe John D. McLanahan, Esq.
Executive Vice President and Troutman Sanders
Chief Financial Officer 600 Peachtree Street, N.E.
Georgia Power Company Suite 5200
333 Piedmont Avenue, N.E. Atlanta, Georgia 30308-2216
Atlanta, Georgia 30308<PAGE>
INFORMATION REQUIRED
Item 1. Description of Proposed Transactions.
1.1 Georgia Power Company ("Georgia") is a wholly-
owned subsidiary of The Southern Company ("Southern"), a
registered holding company under the Public Utility Holding
Company Act of 1935, as amended (the "Act").
Georgia proposes to incur, from time to time or at any
time on or before December 31, 1997, obligations in connection
with the issuance and sale by public instrumentalities of one or
more series of pollution control revenue bonds in an aggregate
principal amount of up to $900,000,000.
1.2 Each issue of the proposed pollution control
revenue bonds will be issued for the purpose of financing or
refinancing the costs of certain air and water pollution control
facilities and sewage and solid waste disposal or other
facilities at one or more of Georgia's electric generating plants
or other facilities located in various counties in the State of
Georgia. It is proposed that the Development Authority or other
appropriate instrumentality with respect to each such
jurisdiction (the "Authority") will issue its revenue bonds (the
"Revenue Bonds") to finance or refinance the costs of the
acquisition, construction, installation and equipping of said
facilities at the plant or other facility located in its
jurisdiction (the "Project"). The Project at any of the plants
or other facilities may consist of, among other things, solid
waste management systems, liquid waste processing systems, boron<PAGE>
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thermal regeneration systems, gaseous waste management systems,
effluent collection and disposal systems, circulating water
closed loop systems, steam generator blowdown processing systems,
precipitation systems and scrubber systems. Each Authority is
authorized by relevant laws of the State of Georgia to issue its
Revenue Bonds for such purposes.
While the actual amount of Revenue Bonds to be issued
by each Authority has not yet been determined, such amount will
be based upon the cost of refunding outstanding bonds or the cost
of the Project located in its jurisdiction.
Georgia proposes to enter into a Loan or Installment
Sale Agreement with the Authority, substantially in the form of
Exhibit B-1 hereto, relating to each issue of the Revenue Bonds
(the "Agreement"). Under the Agreement, the Authority will loan
to Georgia the proceeds of the sale of the Authority's Revenue
Bonds, and Georgia may issue a non-negotiable promissory note
therefor (the "Note"), or the Authority will undertake to acquire
and sell the related Project to Georgia. Such proceeds will be
deposited with a Trustee (the "Trustee") under an indenture to be
entered into between the Authority and such Trustee (the "Trust
Indenture"), pursuant to which such Revenue Bonds are to be
issued and secured, and will be applied by Georgia to payment of
the Cost of Construction (as defined in the Agreement) of the
Project or to refund outstanding pollution control revenue
obligations.<PAGE>
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The Note or Agreement will provide for payments to be
made by Georgia at times and in amounts which shall correspond to
the payments with respect to the principal of, premium, if any,
and interest on the related Revenue Bonds whenever and in
whatever manner the same shall become due, whether at stated
maturity, upon redemption or declaration or otherwise.
The Agreement will provide for the assignment to the
Trustee of the Authority's interest in, and of the moneys
receivable by the Authority under, the Agreement and the Note.
The Agreement will also obligate Georgia to pay the
fees and charges of the Trustee and may provide that Georgia may
at any time, so long as it is not in default thereunder, prepay
the amount due under the Agreement or the Note, including
interest thereon, in whole or in part, such payment to be
sufficient to redeem or purchase outstanding Revenue Bonds in the
manner and to the extent provided in the Trust Indenture.
The Trust Indenture will provide that the Revenue Bonds
issued thereunder will be redeemable (i) at any time on or after
a specified date or dates from the date of issuance, in whole or
in part, at the option of Georgia, and may require the payment of
a premium at a specified percentage of the principal amount which
may decline at annual or other intervals thereafter, and (ii) in
whole, at the option of Georgia, in certain other cases of undue
burdens or excessive liabilities imposed with respect to the
related Project, its destruction or damage beyond practicable or
desirable repairability or condemnation or taking by eminent<PAGE>
- 4 -
domain, or if operation of the related facility is enjoined and
Georgia determines to discontinue operation thereof, such
redemption of all such outstanding Revenue Bonds to be at the
principal amount thereof plus accrued interest, but without
premium. It is proposed that the Revenue Bonds will mature not
more than 40 years from the first day of the month in which they
are initially issued and may, if it is deemed advisable for
purposes of the marketability of the Revenue Bonds, be entitled
to the benefit of a mandatory redemption sinking fund calculated
to retire a portion of the aggregate principal amount of the
Revenue Bonds prior to maturity.
The Trust Indenture and the Agreement may give the
holders of the Revenue Bonds the right, during such time as the
Revenue Bonds bear interest at a fluctuating rate or otherwise,
to require Georgia to purchase the Revenue Bonds from time to
time, and arrangements may be made for the remarketing of any
such Revenue Bonds through a remarketing agent. Georgia also may
be required to purchase the Revenue Bonds, or the Revenue Bonds
may be subject to mandatory redemption, at any time if the
interest thereon is determined to be subject to federal income
tax. Also in the event of taxability, interest on the Revenue
Bonds may be effectively converted to a higher variable or fixed
rate, and Georgia also may be required to indemnify the
bondholders against any other additions to interest, penalties,
and additions to tax; such terms are not considered to constitute
the issuance of a separate security under Sections 6(a) and 7 of<PAGE>
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the Act, but rather possible additional terms of the Revenue
Bonds and Georgia's obligations with respect thereto.
In order to obtain the benefit of ratings for the
Revenue Bonds equivalent to the rating of Georgia's first
mortgage bonds outstanding under the indenture dated as of March
1, 1941 between Georgia and Chemical Bank, as trustee, as
supplemented and amended (the "Mortgage"), which ratings Georgia
has been advised may be thus attained, Georgia may determine to
secure its obligations under the Note and the related Agreement
by delivering to the Trustee, to be held as collateral, a series
of its first mortgage bonds (the "Collateral Bonds") in principal
amount either (i) equal to the principal amount of the Revenue
Bonds or (ii) equal to the sum of such principal amount of the
Revenue Bonds plus interest payments thereon for a specified
period. Such series of Collateral Bonds will be issued under an
indenture supplemental to the Mortgage (the "Supplemental
Indenture"), will mature on the maturity date of such Revenue
Bonds and will be non-transferable by the Trustee. The
Collateral Bonds, in the case of clause (i) above, would bear
interest at a rate or rates equal to the interest rate or rates
to be borne by the related Revenue Bonds and, in the case of
clause (ii) above, would be non-interest bearing.
The Supplemental Indenture will provide, however, that
the obligation of Georgia to make payments with respect to the
Collateral Bonds will be satisfied to the extent that payments
are made under the Note or Agreement sufficient to meet payments<PAGE>
- 6 -
when due in respect of the related Revenue Bonds. The
Supplemental Indenture will provide that, upon acceleration by
the Trustee of the principal amount of all related outstanding
Revenue Bonds under the Trust Indenture, the Trustee may demand
the mandatory redemption of the related Collateral Bonds then
held by it as collateral at a redemption price equal to the
principal amount thereof plus accrued interest, if any, to the
date fixed for redemption. The Supplemental Indenture may also
provide that, upon the optional or mandatory redemption of the
Revenue Bonds, in whole or in part, a related principal amount of
the Collateral Bonds will be redeemed at the redemption price of
the Revenue Bonds.
In the case of interest bearing Collateral Bonds,
because interest accrues in respect of such Collateral Bonds
until satisfied by payments under the Note or the Agreement,
"annual interest charges" in respect of such Collateral Bonds
will be included in computing the "interest earnings requirement"
of the Mortgage which restricts the amount of first mortgage
bonds which may be issued and sold to the public in relation to
Georgia's net earnings. In the case of non-interest bearing
Collateral Bonds, since no interest would accrue in respect of
such Collateral Bonds, the "interest earnings requirement" would
be unaffected.
The Trust Indenture will provide that, upon deposit
with the Trustee of funds sufficient to pay or redeem all or any
part of the related Revenue Bonds, or upon direction to the<PAGE>
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Trustee by Georgia to so apply funds available therefor, or upon
delivery of such outstanding Revenue Bonds to the Trustee by or
for the account of Georgia, the Trustee will be obligated to
deliver to Georgia the Collateral Bonds then held as collateral
in an aggregate principal amount as they relate to the aggregate
principal amount of such Revenue Bonds for the payment or
redemption of which such funds have been deposited or applied or
which shall have been so delivered.
As an alternative to or in conjunction with Georgia's
securing its obligations through the issuance of the Collateral
Bonds as above described, Georgia may cause an irrevocable Letter
of Credit or other credit facility (the "Letter of Credit") of a
bank or other financial institution (the "Bank") to be delivered
to the Trustee. The Letter of Credit would be an irrevocable
obligation of the Bank to pay to the Trustee, upon request, up to
an amount necessary in order to pay principal of and accrued
interest on the Revenue Bonds when due. Pursuant to a separate
agreement with the Bank, Georgia would agree to pay to the Bank,
on demand or pursuant to a borrowing under such agreement, all
amounts that are drawn under the Letter of Credit, as well as
certain fees and expenses. Such delivery of the Letter of Credit
to the Trustee would obtain for the Revenue Bonds the benefit of
a rating equivalent to the credit rating of the Bank. In the
event that the Letter of Credit is delivered to the Trustee as an
alternative to the issuance of the Collateral Bonds, Georgia may
also convey to the Authority a subordinated security interest in<PAGE>
- 8 -
the Project or other property of Georgia as further security for
Georgia's obligations under the Agreement and the Note. Such
subordinated security interest would be assigned by the Authority
to the Trustee.
As a further alternative to, or in conjunction with,
securing its obligations under the Agreement and Note as above
described, and in order to obtain a "AAA" rating for the Revenue
Bonds by one or more nationally recognized securities rating
services, Georgia may cause an insurance company to issue a
policy of insurance guaranteeing the payment when due of the
principal of and interest on such series of the Revenue Bonds.
Such insurance policy would extend for the term of the related
Revenue Bonds and would be non-cancelable by the insurance
company for any reason. Georgia's payment of said insurance
policy could be in various forms, including a non-refundable,
one-time insurance premium paid at the time the policies are
issued, and/or an additional interest percentage to be paid to
said insurer in correlation with regular interest payments. In
addition, Georgia may be obligated to make payments of certain
specified amounts into separate escrow funds and to increase the
amounts on deposit in such funds under certain circumstances.
The amount in each escrow fund would be payable to the insurance
company as indemnity for any amounts paid pursuant to the related
insurance policy in respect of principal of or interest on the
related Revenue Bonds. In the event that an insurance policy is
issued as an alternative to the issuance of the Collateral Bonds,<PAGE>
- 9 -
Georgia may also convey to the Authority a subordinated security
interest in the Project or other property of Georgia as further
security for Georgia's obligations under the Agreement and the
Note. Such subordinated security interest would be assigned by
the Authority to the Trustee.
If, due to insufficiency of coverages or for other
reasons, Georgia is unable or determines not to issue the
Collateral Bonds or to deliver the Letter of Credit to the
Trustee as above described or to cause an insurance policy to be
issued, the Revenue Bonds would be issued without the benefit of
such security. In that event Georgia may convey to the Authority
a subordinated security interest in the Project or other property
of Georgia as security for its obligations under the Agreement
and the Note. Such subordinated security interest would be
assigned by the Authority to the Trustee. Georgia also may
guarantee the payment of the principal of, premium, if any, and
interest on the Revenue Bonds.
It is contemplated that the Revenue Bonds will be sold
by the Authority pursuant to arrangements with one or more
purchasers, placement agents or underwriters. In accordance with
the laws of the State of Georgia, the interest rate to be borne
by the Revenue Bonds will be approved by the Authority and will
be either a fixed rate, which fixed rate may be convertible to a
rate which will fluctuate in accordance with a specified prime or
base rate or rates or may be determined pursuant to certain
remarketing or auction procedures, or a fluctuating rate, which<PAGE>
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fluctuating rate may be convertible to a fixed rate. While
Georgia may not be party to the purchase, placement or
underwriting arrangements for the Revenue Bonds, such
arrangements will provide that the terms of the Revenue Bonds and
their sale by the Authority shall be satisfactory to Georgia.
Bond Counsel will issue an opinion that, based upon existing law,
interest on the Revenue Bonds will generally be excludable from
gross income for federal income tax purposes. Georgia has been
advised that the interest rates on obligations, the interest on
which is tax exempt, recently have been and can be expected at
the time of issue of the Revenue Bonds to be approximately two
percentage points lower than the rates on obligations of like
tenor and comparable quality, interest on which is fully subject
to federal income taxation.
Georgia also proposes that it may enter into
arrangements providing for the delayed or future delivery of
Revenue Bonds to one or more purchasers, placement agents or
underwriters. The obligations of the purchasers, placement
agents or underwriters to purchase Revenue Bonds under any such
arrangements may be secured by U.S. Treasury securities, letters
of credit or other collateral.
1.3 Georgia may determine to use the proceeds from the
sale of the Revenue Bonds to redeem or otherwise retire its
presently outstanding pollution control bonds if such use is
considered advisable. Such outstanding pollution control bonds
retired or redeemed by Georgia may be purchased on the open<PAGE>
- 11 -
market or by tender offer as authorized by HCAR No. 35-25751,
dated February 26, 1993.
Georgia will not use the proceeds from securities sales
proposed herein to refund outstanding securities unless the
estimated present value savings derived from the net difference
between interest payments on any Revenue Bonds to be issued for
refunding purposes and the specific securities to be refunded is,
on an after-tax basis, greater than the present value of all
redemption and issuing costs, assuming an appropriate discount
rate. Such discount rate is based on the estimated after-tax
interest rate on the Revenue Bonds issued for refunding purposes.
1.4 Pursuant to orders of the Commission, Georgia has
authority with respect to the issuance and sale of $750,000,000
of pollution control revenue bonds (of which the record was
completed and supplemental orders have been issued relating to
$415,865,000) as set forth in Commission File No. 70-7832 (HCAR
No. 35-25342, dated July 3, 1991; HCAR No. 35-25355, dated July
29, 1991; HCAR No. 35-25531, dated May 12, 1992; HCAR No. 35-
25593, dated July 30, 1992; HCAR No. 35-25642, dated September
24, 1992; HCAR No. 35-25767, dated March 25, 1993; HCAR No. 35-
25893, dated September 27, 1993; and HCAR No. 35-25985, dated
February 4, 1994). Georgia hereby requests that the authority
described in the above-mentioned orders remain in effect until
December 31, 1994 or until such earlier time as the order with
respect to the matters requested herein is issued. Unless
otherwise ordered by the Commission, Georgia's common stock<PAGE>
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equity ratio will not be less than 30%.
1.5 None of the proceeds from any Agreement or from
the issuance of any of the Notes proposed herein will be used by
Southern or any subsidiary thereof for the acquisition of any
interest in an "exempt wholesale generator" or a "foreign utility
company", each as defined in the Act.
Item 2. Fees, Commissions and Expenses.
The fees, commissions and expenses to be paid or
incurred, directly or indirectly, in connection with the proposed
transactions relating to the Revenue Bonds will be filed by
amendment.
Item 3. Applicable Statutory Provisions.
Georgia considers that the issuance of the Notes and
Collateral Bonds is subject to Sections 6(a), 7 and 12(c) of the
Act and Rule 42 thereunder.
Georgia further considers that the sale or granting of
subordinated security interests in the Projects or other property
of Georgia, as set forth above, may be subject to Section 12(d)
of the Act, and that the exception afforded by subparagraph
(b)(3) of Rule 44 thereunder may be applicable.
Georgia considers that any guarantee of payment of the
Revenue Bonds may be subject to Sections 6(a) and 7 of the Act.
Georgia considers that Sections 9(a) and 10 of the Act
may be applicable to any purchase of Revenue Bonds by Georgia as
described herein and to the extent that the transactions<PAGE>
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contemplated herein in connection with the Revenue Bonds involve
an Installment Sale Agreement or Agreements pursuant to which the
Authority undertakes to sell the related Project to Georgia.
The proposed transactions will be carried out in
accordance with the procedure specified in Rule 23 and pursuant
to an order or orders of the Commission in respect thereto.
Item 4. Regulatory Approval.
Georgia's obligations with respect to the Collateral
Bonds, the borrowings under the Agreements, and the issuance of
the Notes in respect thereof will have been expressly authorized
by the Georgia Public Service Commission, which has jurisdiction
over the issuance of stocks, bonds and certain evidences of
indebtedness by public utility companies operating in Georgia.
Such transactions are not subject to the jurisdiction
of any federal commission other than the Securities and Exchange
Commission.
Item 5. Procedure.
Georgia requests that the Commission's order herein be
issued as soon as the rules allow and that there be no 30-day
waiting period between the issuance of the Commission's order and
the date on which it is to become effective. Georgia hereby
waives a recommended decision by a hearing officer or other
responsible officer of the Commission and hereby consents that
the Division of Investment Management may assist in the
preparation of the Commission's decision and/or order in this<PAGE>
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matter unless such Division opposes the matters covered hereby.
Item 6. Exhibits and Financial Statements.
(a) Exhibits.
A-1(a) - Indenture dated as of March 1, 1941, between
GEORGIA and Chemical Bank, as Trustee, and
indentures supplemental thereto dated as of
March 1, 1941, March 3, 1941 (3 indentures),
March 6, 1941 (139 indentures), March 1, 1946
(88 indentures) and December 1, 1947, through
January 1, 1994. (Designated in Registration
Nos. 2-4663 as Exhibits B-3 and B-3(a), 2-7299
as Exhibit 7(a)-2, 2-61116 as Exhibit 2(a)-3
and 2(a)-4, 2-62488 as Exhibit 2(a)-3, 2-63393
as Exhibit 2(a)-4, 2-63705 as Exhibit 2(a)-3,
2-68973 as Exhibit 2(a)-3, 2-70679 as Exhibit
4(a)-(2), 2-72324 as Exhibit 4(a)-2, 2-73987
as Exhibit 4(a)-(2), 2-77941 as Exhibits 4(a)-
(2) and 4(a)-(3), 2-79336 as Exhibit 4(a)-(2),
2-81303 as Exhibit 4(a)-(2), 2-90105 as
Exhibit 4(a)-(2), 33-5405 as Exhibit 4(a)-(2),
33-14367 as Exhibits 4(a)-(2) and 4(a)-(3),
33-22504 as Exhibits 4(a)-(2), 4(a)-(3) and
4(a)-(4), 33-32420 as Exhibit 4(a)-(2), 33-
35683 as Exhibit 4(a)-(2), in GEORGIA's Form
10-K for the year ended December 31, 1990,
File No. 1-6468, as Exhibit 4(a)(3), in Form
10-K for the year ended December 31, 1991,
File No. 1-6468, as Exhibit 4(a)(5), in
Registration No. 33-48895 as Exhibit 4(a)-(2),
in Form 8-K dated August 26, 1992, File No. 1-
6468, as Exhibit 4(a)-(3), in Form 8-K dated
September 9, 1992, File No. 1-6468, as
Exhibits 4(a)-(3) and 4(a)-(4), in Form 8-K
dated September 23, 1992, File No. 1-6468, as
Exhibit 4(a)-(3), in Form 8-A dated October
12, 1992, as Exhibit 2(b), in Form 8-K dated
January 27, 1993, File No. 1-6468, as Exhibit
4(a)-(3), in Registration No. 33-49661 as
Exhibit 4(a)-(2), in Form 8-K dated July 26,
1993, File No. 1-6468, as Exhibit 4, in
Certificate of Notification, File No. 70-7832,
as Exhibit M and in Certificate of
Notification, File No. 70-7832, as Exhibit C.)
A-1(b) - Draft of Supplemental Indenture between
Georgia and Chemical Bank, as Trustee,
relating to the Collateral Bonds. (To be
filed by amendment.)<PAGE>
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B-1 - Form of Loan or Installment Sale Agreement
between Georgia and the Authority relating to
the Revenue Bonds. (To be filed by
amendment.)
B-2 - Form of Trust Indenture between the Authority
and the Trustee relating to the Revenue Bonds.
(To be filed by amendment.)
D-1 - Petition of Georgia to the Georgia Public
Service Commission. (To be filed by
amendment.)
D-2 - Copy of order of Georgia Public Service
Commission. (To be filed by amendment)
E - None.
F - Opinion of Troutman Sanders, counsel for
Georgia. (To be filed by amendment.)
G - Sources of funds for plant additions estimated
and summary of estimates of plant additions.
(To be filed by amendment.)
H - Form of Notice.
Exhibits heretofore filed with the Securities and
Exchange Commission and designated as set forth above are hereby
incorporated herein by reference and made a part hereof with the
same effect as if filed herewith.
(b) Financial Statements. (To be filed by
amendment.)
Balance sheet of Georgia at March 31, 1994.
Statement of income of Georgia for the twelve
months ended March 31, 1994.
Pro forma journal entries giving effect to the
proposed sale of Revenue Bonds.<PAGE>
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Item 7. Information as to Environmental Effects.
(a) The proposed transactions are strictly financial
in nature in the ordinary course of Georgia's business.
Accordingly, the Commission's action in these matters will not
constitute any major federal action significantly affecting the
quality of the human environment within the meaning of the
National Environmental Policy Act.
(b) No other federal agency has prepared or is
preparing an environmental impact statement with regard to the
proposed transactions.
SIGNATURE
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, the undersigned company has duly
caused this statement to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: July 8, 1994 GEORGIA POWER COMPANY
By :/s/ Wayne Boston
Wayne Boston
Assistant Secretary<PAGE>
Exhibit H
Form of Notice
Georgia Power Company ("Georgia"), 333 Piedmont Avenue,
N.E., Atlanta, Georgia 30308, an electric utility subsidiary of
The Southern Company, a registered holding company, has filed an
application declaration with this Commission pursuant to Sections
6(a), 7, 9(a), 10, 12(c) and 12(d) of the Public Utility Holding
Company Act of 1935 ("Act") and Rules 42 and 44 thereunder.
Georgia proposes to incur, from time to time or at any time
on or before December 31, 1997, obligations in connection with
the issuance and sale by public instrumentalities of one or more
series of pollution control revenue bonds in an aggregate
principal amount of up to $900,000,000.
Each issue of the proposed pollution control revenue bonds
will be issued for the purpose of financing or refinancing the
costs of certain air and water pollution control facilities and
sewage and solid waste disposal or other facilities at one or
more of Georgia's electric generating plants or other facilities
located in various counties in the State of Georgia. It is
proposed that the Development Authority or other appropriate
instrumentality with respect to each such jurisdiction (the
"Authority") will issue its revenue bonds (the "Revenue Bonds")
to finance or refinance the costs of the acquisition,
construction, installation and equipping of said facilities at
the plant or other facility located in its jurisdiction (the
"Project"). The Project at any of the plants or other facilities<PAGE>
may consist of, among other things, solid waste management
systems, liquid waste processing systems, boron thermal
regeneration systems, gaseous waste management systems, effluent
collection and disposal systems, circulating water closed loop
systems, steam generator blowdown processing systems,
precipitation systems and scrubber systems. Each Authority is
authorized by relevant laws of the State of Georgia to issue its
Revenue Bonds for such purposes.
While the actual amount of Revenue Bonds to be issued by
each Authority has not yet been determined, such amount will be
based upon the cost of refunding outstanding bonds or the cost of
the Project located in its jurisdiction.
Georgia proposes to enter into a Loan or Installment Sale
Agreement with the Authority relating to each issue of the
Revenue Bonds (the "Agreement"). Under the Agreement, the
Authority will loan to Georgia the proceeds of the sale of the
Authority's Revenue Bonds, and Georgia may issue a non-negotiable
promissory note therefor (the "Note"), or the Authority will
undertake to acquire and sell the related Project to Georgia.
Such proceeds will be deposited with a Trustee (the "Trustee")
under an indenture to be entered into between the Authority and
such Trustee (the "Trust Indenture"), pursuant to which such
Revenue Bonds are to be issued and secured, and will be applied
by Georgia to payment of the Cost of Construction (as defined in
the Agreement) of the Project or to refund outstanding pollution
control revenue obligations.
The Note or Agreement will provide for payments to be made<PAGE>
by Georgia at times and in amounts which shall correspond to the
payments with respect to the principal of, premium, if any, and
interest on the related Revenue Bonds whenever and in whatever
manner the same shall become due, whether at stated maturity,
upon redemption or declaration or otherwise.
The Agreement will provide for the assignment to the Trustee
of the Authority's interest in, and of the moneys receivable by
the Authority under, the Agreement and the Note.
The Agreement will also obligate Georgia to pay the fees and
charges of the Trustee and may provide that Georgia may at any
time, so long as it is not in default thereunder, prepay the
amount due under the Agreement or the Note, including interest
thereon, in whole or in part, such payment to be sufficient to
redeem or purchase outstanding Revenue Bonds in the manner and to
the extent provided in the Trust Indenture.
The Trust Indenture will provide that the Revenue Bonds
issued thereunder will be redeemable (i) at any time on or after
a specified date or dates from the date of issuance, in whole or
in part, at the option of Georgia, and may require the payment of
a premium at a specified percentage of the principal amount which
may decline at annual or other intervals thereafter, and (ii) in
whole, at the option of Georgia, in certain other cases of undue
burdens or excessive liabilities imposed with respect to the
related Project, its destruction or damage beyond practicable or
desirable repairability or condemnation or taking by eminent
domain, or if operation of the related facility is enjoined and
Georgia determines to discontinue operation thereof, such<PAGE>
redemption of all such outstanding Revenue Bonds to be at the
principal amount thereof plus accrued interest, but without
premium. It is proposed that the Revenue Bonds will mature not
more than 40 years from the first day of the month in which they
are initially issued and may, if it is deemed advisable for
purposes of the marketability of the Revenue Bonds, be entitled
to the benefit of a mandatory redemption sinking fund calculated
to retire a portion of the aggregate principal amount of the
Revenue Bonds prior to maturity.
The Trust Indenture and the Agreement may give the holders
of the Revenue Bonds the right, during such time as the Revenue
Bonds bear interest at a fluctuating rate or otherwise, to
require Georgia to purchase the Revenue Bonds from time to time,
and arrangements may be made for the remarketing of any such
Revenue Bonds through a remarketing agent. Georgia also may be
required to purchase the Revenue Bonds, or the Revenue Bonds may
be subject to mandatory redemption, at any time if the interest
thereon is determined to be subject to federal income tax. Also
in the event of taxability, interest on the Revenue Bonds may be
effectively converted to a higher variable or fixed rate, and
Georgia also may be required to indemnify the bondholders against
any other additions to interest, penalties, and additions to tax.
In order to obtain the benefit of ratings for the Revenue
Bonds equivalent to the rating of Georgia's first mortgage bonds
outstanding under the indenture dated as of March 1, 1941 between
Georgia and Chemical Bank, as trustee, as supplemented and
amended (the "Mortgage"), which ratings Georgia has been advised<PAGE>
may be thus attained, Georgia may determine to secure its
obligations under the Note and the related Agreement by
delivering to the Trustee, to be held as collateral, a series of
its first mortgage bonds (the "Collateral Bonds") in principal
amount either (i) equal to the principal amount of the Revenue
Bonds or (ii) equal to the sum of such principal amount of the
Revenue Bonds plus interest payments thereon for a specified
period. Such series of Collateral Bonds will be issued under an
indenture supplemental to the Mortgage (the "Supplemental
Indenture"), will mature on the maturity date of such Revenue
Bonds and will be non-transferable by the Trustee. The
Collateral Bonds, in the case of clause (i) above, would bear
interest at a rate or rates equal to the interest rate or rates
to be borne by the related Revenue Bonds and, in the case of
clause (ii) above, would be non-interest bearing.
The Supplemental Indenture will provide, however, that the
obligation of Georgia to make payments with respect to the
Collateral Bonds will be satisfied to the extent that payments
are made under the Note or Agreement sufficient to meet payments
when due in respect of the related Revenue Bonds. The
Supplemental Indenture will provide that, upon acceleration by
the Trustee of the principal amount of all related outstanding
Revenue Bonds under the Trust Indenture, the Trustee may demand
the mandatory redemption of the related Collateral Bonds then
held by it as collateral at a redemption price equal to the
principal amount thereof plus accrued interest, if any, to the
date fixed for redemption. The Supplemental Indenture may also<PAGE>
provide that, upon the optional or mandatory redemption of the
Revenue Bonds, in whole or in part, a related principal amount of
the Collateral Bonds will be redeemed at the redemption price of
the Revenue Bonds.
In the case of interest bearing Collateral Bonds, because
interest accrues in respect of such Collateral Bonds until
satisfied by payments under the Note or the Agreement, "annual
interest charges" in respect of such Collateral Bonds will be
included in computing the "interest earnings requirement" of the
Mortgage which restricts the amount of first mortgage bonds which
may be issued and sold to the public in relation to Georgia's net
earnings. In the case of non-interest bearing Collateral Bonds,
since no interest would accrue in respect of such Collateral
Bonds, the "interest earnings requirement" would be unaffected.
The Trust Indenture will provide that, upon deposit with the
Trustee of funds sufficient to pay or redeem all or any part of
the related Revenue Bonds, or upon direction to the Trustee by
Georgia to so apply funds available therefor, or upon delivery of
such outstanding Revenue Bonds to the Trustee by or for the
account of Georgia, the Trustee will be obligated to deliver to
Georgia the Collateral Bonds then held as collateral in an
aggregate principal amount as they relate to the aggregate
principal amount of such Revenue Bonds for the payment or
redemption of which such funds have been deposited or applied or
which shall have been so delivered.
As an alternative to or in conjunction with Georgia's
securing its obligations through the issuance of the Collateral<PAGE>
Bonds as above described, Georgia may cause an irrevocable Letter
of Credit or other credit facility (the "Letter of Credit") of a
bank or other financial institution (the "Bank") to be delivered
to the Trustee. The Letter of Credit would be an irrevocable
obligation of the Bank to pay to the Trustee, upon request, up to
an amount necessary in order to pay principal of and accrued
interest on the Revenue Bonds when due. Pursuant to a separate
agreement with the Bank, Georgia would agree to pay to the Bank,
on demand or pursuant to a borrowing under such agreement, all
amounts that are drawn under the Letter of Credit, as well as
certain fees and expenses. Such delivery of the Letter of Credit
to the Trustee would obtain for the Revenue Bonds the benefit of
a rating equivalent to the credit rating of the Bank. In the
event that the Letter of Credit is delivered to the Trustee as an
alternative to the issuance of the Collateral Bonds, Georgia may
also convey to the Authority a subordinated security interest in
the Project or other property of Georgia as further security for
Georgia's obligations under the Agreement and the Note. Such
subordinated security interest would be assigned by the Authority
to the Trustee.
As a further alternative to, or in conjunction with,
securing its obligations under the Agreement and Note as above
described, and in order to obtain a "AAA" rating for the Revenue
Bonds by one or more nationally recognized securities rating
services, Georgia may cause an insurance company to issue a
policy of insurance guaranteeing the payment when due of the
principal of and interest on such series of the Revenue Bonds.<PAGE>
Such insurance policy would extend for the term of the related
Revenue Bonds and would be non-cancelable by the insurance
company for any reason. Georgia's payment of said insurance
policy could be in various forms, including a non-refundable,
one-time insurance premium paid at the time the policies are
issued, and/or an additional interest percentage to be paid to
said insurer in correlation with regular interest payments. In
addition, Georgia may be obligated to make payments of certain
specified amounts into separate escrow funds and to increase the
amounts on deposit in such funds under certain circumstances.
The amount in each escrow fund would be payable to the insurance
company as indemnity for any amounts paid pursuant to the related
insurance policy in respect of principal of or interest on the
related Revenue Bonds. In the event that an insurance policy is
issued as an alternative to the issuance of the Collateral Bonds,
Georgia may also convey to the Authority a subordinated security
interest in the Project or other property of Georgia as further
security for Georgia's obligations under the Agreement and the
Note. Such subordinated security interest would be assigned by
the Authority to the Trustee.
If, due to insufficiency of coverages or for other reasons,
Georgia is unable or determines not to issue the Collateral Bonds
or to deliver the Letter of Credit to the Trustee as above
described or to cause an insurance policy to be issued, the
Revenue Bonds would be issued without the benefit of such
security. In that event Georgia may convey to the Authority a
subordinated security interest in the Project or other property<PAGE>
of Georgia as security for its obligations under the Agreement
and the Note. Such subordinated security interest would be
assigned by the Authority to the Trustee. Georgia also may
guarantee the payment of the principal of, premium, if any, and
interest on the Revenue Bonds.
It is contemplated that the Revenue Bonds will be sold by
the Authority pursuant to arrangements with one or more
purchasers, placement agents or underwriters. In accordance with
the laws of the State of Georgia, the interest rate to be borne
by the Revenue Bonds will be approved by the Authority and will
be either a fixed rate, which fixed rate may be convertible to a
rate which will fluctuate in accordance with a specified prime or
base rate or rates or may be determined pursuant to certain
remarketing or auction procedures, or a fluctuating rate, which
fluctuating rate may be convertible to a fixed rate. While
Georgia may not be party to the purchase, placement or
underwriting arrangements for the Revenue Bonds, such
arrangements will provide that the terms of the Revenue Bonds and
their sale by the Authority shall be satisfactory to Georgia.
Bond Counsel will issue an opinion that, based upon existing law,
interest on the Revenue Bonds will generally be excludable from
gross income for federal income tax purposes. Georgia has been
advised that the interest rates on obligations, the interest on
which is tax exempt, recently have been and can be expected at
the time of issue of the Revenue Bonds to be approximately two
percentage points lower than the rates on obligations of like
tenor and comparable quality, interest on which is fully subject<PAGE>
to federal income taxation.
Georgia also proposes that it may enter into arrangements
providing for the delayed or future delivery of Revenue Bonds to
one or more purchasers, placement agents or underwriters. The
obligations of the purchasers, placement agents or underwriters
to purchase Revenue Bonds under any such arrangements may be
secured by U.S. Treasury securities, letters of credit or other
collateral.
Georgia may determine to use the proceeds from the sale of
the Revenue Bonds to redeem or otherwise retire its presently
outstanding pollution control bonds if such use is considered
advisable.
Georgia will not use the proceeds from securities sales
proposed herein to refund outstanding securities unless the
estimated present value savings derived from the net difference
between interest payments on any Revenue Bonds to be issued for
refunding purposes and the specific securities to be refunded is,
on an after-tax basis, greater than the present value of all
redemption and issuing costs, assuming an appropriate discount
rate. Such discount rate is based on the estimated after-tax
interest rate on the Revenue Bonds issued for refunding purposes.
None of the proceeds from any Agreement or from the issuance
of any of the Notes proposed herein will be used by Southern or
any subsidiary thereof for the acquisition of any interest in an
"exempt wholesale generator" or a "foreign utility company", each
as defined in the Act.<PAGE>
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