PROSPECTUS SUPPLEMENT
(To Prospectus dated August 10, 1995)
$300,000,000
GEORGIA POWER COMPANY
a subsidiary of The Southern Company
First Mortgage Bonds
Secured Medium-Term Notes
Due From One to 40 Years From Date of Issue
Georgia Power Company (the "Company") may from time to time offer its
First Mortgage Bonds, Secured Medium-Term Notes (the "Notes"), in an
aggregate principal amount of up to $300,000,000, subject to reduction as a
result of the sale of other new First Mortgage Bonds or new Class A
Preferred Stock as described in the accompanying Prospectus. The Notes will
be offered at varying maturities from one to 40 years from their dates of
issue and may be subject to redemption at the option of the Company or
repayment at the option of the holder prior to maturity. Each Note
will bear interest at a fixed rate (a "Fixed Rate Note") or at a floating
rate (a "Floating Rate Note") determined by reference to the Commercial Paper
Rate, LIBOR, the Treasury Rate, the CD Rate, the Prime Rate, the J.J. Kenny
Rate, the CMT Rate or any other Base Rate set forth in a pricing supplement
(each a "Pricing Supplement") to this Prospectus Supplement, as adjusted
by the Spread or Spread Multiplier, if any, applicable
to such Note. See "Description of Notes."
The issue price, any applicable interest rate or interest formula, the
maturity, any interest payment dates, any redemption or repayment provisions
and any other terms relating to each Note will be established at the time of
issuance of such Note and set forth therein and in the applicable Pricing
Supplement.
Each Note will be represented by either a global security registered in the
name of The Depository Trust Company, as Depositary, a nominee thereof, or
another depositary (a "Book-Entry Note"), or a certificate issued in definitive
form (a "Certificated Note"), as set forth in the applicable Pricing
Supplement. Interests in Book-Entry Notes will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary and
its participants. See "Description of Notes--Book-Entry Notes."
Unless otherwise indicated in the applicable Pricing Supplement, Notes will
be issued in denominations of $1,000 and integral multiples thereof.
Unless otherwise indicated in the applicable Pricing Supplement, interest
on each Fixed Rate Note will accrue from its date of issue and will be payable
either semi-annually on each June 1 and December 1 or annually on each June 1,
at maturity or upon earlier redemption. Interest on each Floating Rate Note
will accrue from its date of issue and will be payable monthly, quarterly,
semi-annually or annually, as set forth in the applicable Pricing Supplement,
at maturity or upon earlier redemption.
_________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT, ANY PRICING SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Price to Agents' Commission or Proceeds to Company(2)(3)
Public(1) Discount (2)<PAGE>
Per Note 100.000% .150%-.750% 99.850%-99.250%
Total . . $300,000,000 $450,000 - $2,250,000 $299,550,000 - $297,750,000
</TABLE>
(1) The Notes will be issued at 100% of their principal amount except as may be
provided in the applicable Pricing Supplement.
(2) The Company will pay Lehman Brothers, Lehman Brothers Inc., Donaldson,
Lufkin & Jenrette Securities Corporation, J.P. Morgan Securities Inc.,
Salomon Brothers Inc and Smith Barney Inc. (each an "Agent" and
collectively, the "Agents") a commission ranging from .150% to .750% of the
principal amount of any Note, depending upon the maturity of the Note, sold
through such Agent; provided that the commission paid to an Agent with
regard to the sale of a Note with a term of 30 years to up to and including
40 years will be determined at the time of such sale. The Company has
agreed to indemnify each Agent against certain liabilities, including
liabilities under the Securities Act of 1933, as amended. See "Plan of
Distribution of Notes."
(3) Before deducting other expenses payable by the Company estimated to be
$370,000.
The Notes are being offered on a continuing basis by the Company through
the Agents, each of which has agreed to use its reasonable best efforts to
solicit offers to purchase such Notes. In addition, the Notes may be sold to
any Agent, as principal, for resale to investors and other purchasers at a
fixed public offering price or at varying prices related to prevailing market
prices at the time of resale, in either case as determined by such Agent. The
Company also may sell the Notes directly to investors on its own behalf or to
or through such other agents as the Company shall designate from time to time.
The Notes will not be listed on any securities exchange, and there can be no
assurance that the Notes will be sold or that there will be a secondary market
for any of the Notes. The Company reserves the right to withdraw, cancel or
modify the offer made hereby without notice. The Company or the Agent that
solicits any offer may reject such offer in whole or in part. See "Plan of
Distribution of Notes."
LEHMAN BROTHERS
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
J.P. MORGAN SECURITIES INC.
SALOMON BROTHERS INC
SMITH BARNEY INC.
November 29, 1995
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DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith supersedes, the
description of the general terms and provisions of the new First Mortgage Bonds
set forth under "Description of New Bonds" in the accompanying Prospectus, to
which reference is hereby made. The following description will apply to the
Notes unless otherwise specified in the applicable Pricing Supplement.
General
The Notes will be issued as one or more series of new Bonds under the
Mortgage referred to in the accompanying Prospectus. The Notes offered hereby
will be limited in aggregate principal amount to $300,000,000, subject to
reduction as a result of the sale of other new First Mortgage Bonds or new
Class A Preferred Stock as described in the accompanying Prospectus.
Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note in fully registered form without coupons. Except as set
forth under "Book-Entry Notes," Book-Entry Notes will not be issuable in
certificated form.
The Notes will be offered on a continuing basis and will mature on any
Business Day (as defined below) from one to 40 years from the date of issue, as
selected by the initial purchaser and agreed to by the Company, and may be
subject to redemption prior to maturity at the price or prices specified in the
applicable Pricing Supplement. The Notes may be subject to prepayment or
repurchase by the Company at the option of the holder at the prices and during
the periods specified in the applicable Pricing Supplement. Each Note will
bear interest at either (a) a fixed rate, or (b) a floating rate determined by
reference to the interest rate basis or combination of interest rate bases (the
"Base Rate") specified in the applicable Pricing Supplement that may be
adjusted by a Spread or Spread Multiplier (each as defined below).
The authorized denominations of the Notes will be $1,000 and integral
multiples thereof, unless otherwise indicated in the applicable Pricing
Supplement.
"Business Day" means any day, other than a Saturday or Sunday, that is (a)
neither a legal holiday nor a day on which banking institutions are generally
authorized or required by law or regulation to close in The City of New York
and (b) with respect to LIBOR Notes (as defined below), a London Banking Day.
"London Banking Day" means any day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
The Pricing Supplement relating to each Note will describe the following
terms: (1) whether such Note is a Fixed Rate Note or a Floating Rate Note; (2)
the price (expressed as a percentage of the aggregate principal amount thereof)
at which such Note will be issued (the "Issue Price"); (3) the date on which
such Note will be issued (the "Original Issue Date"); (4) the date on which
such Note will mature (the "Stated Maturity"); (5) if such Note is a Fixed Rate
Note, the rate per annum at which such Note will bear interest; (6) if such
Note is a Floating Rate Note, the Base Rate, the Initial Interest Rate, the
Interest Reset Period, the Interest Reset Dates, the Interest Payment Period,
the Interest Payment Dates, the Index Maturity, the Maximum Interest Rate and
the Minimum Interest Rate, if any, and the Spread or Spread Multiplier, if any
(all as defined below), and any other terms relating to the particular method
of calculating the interest rate for such Note; (7) whether such Note may be
redeemed or is subject to repayment or repurchase prior to Stated Maturity and,
if so, the provisions relating to such redemption, repayment or repurchase; (8)
whether such Note will be issued as a Book-Entry or Certificated Note; and (9)
any other terms of such Note not inconsistent with the provisions of the
Mortgage.
"Maturity" means the date on which the principal of a Note becomes due and
payable in full in accordance with its terms and the terms of the Mortgage,
whether at Stated Maturity, upon acceleration, redemption, repayment or
otherwise.
Investors should consult their own tax advisor in determining the federal,
state, local and any other tax consequences to them of the purchase, ownership
and disposition of the Notes.
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Payment of Principal and Interest
Unless otherwise specified in the applicable Pricing Supplement, principal
and any premium and interest payable at Maturity in respect of a Note will be
paid in immediately available funds upon surrender of such Note at the
principal corporate trust office of the Trustee.
Unless otherwise specified in the applicable Pricing Supplement, payments
of interest on Notes (other than Global Securities (as hereinafter defined) and
other than interest payable at Maturity) will be made by mailing a check to the
holder at the address of such holder appearing on the register maintained by
the Trustee on the applicable Regular Record Date (as defined below) or, at the
option of the Company, by wire transfer to an account at a bank located within
the United States as designated by such holder not less than 15 calendar days
prior to the applicable Interest Payment Date. Notwithstanding the foregoing,
a holder of $10,000,000 or more in aggregate principal amount of Notes of like
tenor and terms with the same Interest Payment Date shall upon written request
be entitled to receive payments of interest (other than at Maturity) by wire
transfer but only if appropriate payment instructions have been received in
writing by the Trustee not less than 15 calendar days prior to the applicable
Interest Payment Date.
Except as provided below with respect to Floating Rate Notes, any payment
required to be made in respect of a Note on a date that is not a Business Day
for such Note need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on such date,
and no additional interest shall accrue as a result of such delayed payment.
Interest payable and punctually paid or duly provided for on any Interest
Payment Date will be paid to the person in whose name a Note is registered at
the close of business on the Regular Record Date next preceding such Interest
Payment Date; provided, however, that interest payable at Maturity will be
payable to the person to whom principal shall be payable. The first payment of
interest on any Note with an Original Issue Date between a Regular Record Date
and an Interest Payment Date will be made on the Interest Payment Date
following the next succeeding Regular Record Date to the registered owner on
such next Regular Record Date (unless the Company elects, in its sole
discretion, to pay such interest on the first Interest Payment Date after the
Original Issue Date). The "Regular Record Date" with respect to any Interest
Payment Date shall be the date fifteen calendar days (unless otherwise
specified in the applicable Pricing Supplement) immediately preceding such
Interest Payment Date whether or not such date shall be a Business Day.
Fixed Rate Notes
Each Fixed Rate Note will bear interest from its Original Issue Date at the
rate per annum stated on the face thereof until the principal amount thereof is
paid or made available for payment. Unless otherwise set forth in an
applicable Pricing Supplement, interest on each Fixed Rate Note will be payable
semi-annually on each June 1 and December 1 or annually on each June 1 (each an
"Interest Payment Date") and at Maturity. Each payment of interest in respect
of an Interest Payment Date shall include interest accrued to but excluding
such Interest Payment Date. Interest on Fixed Rate Notes will be computed on
the basis of a 360-day year of twelve 30-day months.
Floating Rate Notes
Each Floating Rate Note will bear interest from its Original Issue Date at
rates determined by reference to the Base Rate plus or minus the Spread, if
any, or multiplied by the Spread Multiplier, if any (each as specified in the
applicable Pricing Supplement), until the principal thereof is paid or made
available for payment. The "Spread" is the number of basis points (one basis
point equals one-hundredth of a percentage point) specified in the applicable
Pricing Supplement as being applicable to such Floating Rate Note, and the
"Spread Multiplier" is the percentage specified in the applicable Pricing
Supplement as being applicable to such Note. Any Floating Rate Note may also
have either or both of the following: (a) a maximum numerical interest rate
limitation, or ceiling, on the rate of interest which may accrue during any
interest period (the "Maximum Interest Rate"); and (b) a minimum numerical
interest rate limitation, or floor, on the rate of interest which may accrue
during any interest period (the "Minimum Interest Rate"). The applicable
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Pricing Supplement will designate one of the following Base Rates as applicable
to each Floating Rate Note: (1) the Commercial Paper Rate (a "Commercial Paper
Rate Note"), (2) LIBOR (a "LIBOR Note"), (3) the Treasury Rate (a "Treasury
Rate Note"), (4) the CD Rate (a "CD Rate Note"), (5) the Prime Rate (a "Prime
Rate Note"), (6) the J.J. Kenny Rate (a "J.J. Kenny Rate Note"), (7) the CMT
Rate (a "CMT Rate Note") or (8) such other Base Rate as is set forth in the
Pricing Supplement.
The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semi-annually or annually (the "Interest Reset
Period"), as specified in the applicable Pricing Supplement. Unless otherwise
specified in the applicable Pricing Supplement, the date or dates on which
interest will be reset (each an "Interest Reset Date") will be, in the case of
Floating Rate Notes that reset daily, each Business Day; in the case of
Floating Rate Notes (other than Treasury Rate Notes) that reset weekly,
Wednesday of each week; in the case of Treasury Rate Notes that reset weekly,
Tuesday of each week (except as set forth below); in the case of Floating Rate
Notes that reset monthly, the third Wednesday of each month; in the case of
Floating Rate Notes that reset quarterly, the third Wednesday of each March,
June, September and December; in the case of Floating Rate Notes that reset
semi-annually, the third Wednesday of the two months of each year specified in
the applicable Pricing Supplement; and in the case of Floating Rate Notes that
reset annually, the third Wednesday of the month of each year specified in the
applicable Pricing Supplement. If any Interest Reset Date for any Floating
Rate Note would otherwise be a day that is not a Business Day, such Interest
Reset Date shall be postponed to the next day that is a Business Day, except,
in the case of a LIBOR Note, if such Business Day is in the next succeeding
calendar month, such Interest Reset Date shall be the immediately preceding
Business Day. If an auction falls on a day that is an Interest Reset Date for
Treasury Rate Notes, the Interest Reset Date shall be the following day that is
a Business Day.
Interest on each Floating Rate Note will be payable monthly, quarterly,
semi-annually or annually (the "Interest Payment Period"). Except as provided
below or in the applicable Pricing Supplement, the date or dates on which
interest will be payable (each an "Interest Payment Date") will be, in the case
of Floating Rate Notes with a monthly Interest Payment Period, the third
Wednesday of each month; in the case of Floating Rate Notes with a quarterly
Interest Payment Period, the third Wednesday of March, June, September and
December of each year; in the case of Floating Rate Notes with a semi-annual
Interest Payment Period, the third Wednesday of the two months of each year
specified in the applicable Pricing Supplement; and in the case of Floating
Rate Notes with an annual Interest Payment Period, the third Wednesday of the
month of each year specified in the applicable Pricing Supplement. If any
Interest Payment Date for any Floating Rate Note would otherwise be a day that
is not a Business Day, such Interest Payment Date shall be postponed to the
next day that is a Business Day, except that in the case of a LIBOR Note, if
such Business Day is in the next succeeding calendar month, such Interest
Payment Date shall be the immediately preceding Business Day.
Interest payments on each Interest Payment Date for Floating Rate Notes
(except in the case of Floating Rate Notes which reset daily or weekly) will
include accrued interest from and including the Original Issue Date or from and
including the last date in respect of which interest has been paid or duly
provided for, as the case may be, to, but excluding, such Interest Payment
Date. In the case of Floating Rate Notes that reset daily or weekly, interest
payments will include accrued interest from and including the Original Issue
Date or from but excluding the last date in respect of which interest has been
paid or duly provided for, as the case may be, to, and including, the Record
Date immediately preceding the applicable Interest Payment Date. At Maturity
the interest payable will include interest accrued from and including the
Original Issue Date or from and including the last date in respect of which
interest has been paid or duly provided for (except in the case of Floating
Rate Notes that reset daily or weekly for which such last date is excluded), as
the case may be, to, but excluding, Maturity. Accrued interest will be
calculated by multiplying the principal amount of a Floating Rate Note by an
accrued interest factor. This accrued interest factor will be computed by
adding the interest factors calculated for each day in the period for which
accrued interest is being calculated. The interest factor (expressed as a
decimal) for each such day will be computed by dividing the interest rate
applicable to such day by 360, in the case of Commercial Paper Rate Notes,
LIBOR Notes, CD Rate Notes, Prime Rate Notes and J.J. Kenny Rate Notes, or by
the actual number of days in the year, in the case of Treasury Rate Notes and
CMT Rate Notes. The interest rate in effect on each day will be (a) if such
day is an Interest Reset Date, the interest rate with respect to the Interest
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Determination Date (as defined below) pertaining to such Interest Reset Date,
or (b) if such day is not an Interest Reset Date, the interest rate with
respect to the Interest Determination Date pertaining to the next preceding
Interest Reset Date, subject in either case to any Maximum or Minimum Interest
Rate limitation referred to above and to any adjustment by a Spread or a Spread
Multiplier referred to above; provided, however, that (i) the interest rate in
effect for the period from the Original Issue Date to the first Interest Reset
Date set forth in the Pricing Supplement with respect to a Floating Rate Note
will be the "Initial Interest Rate" specified in the applicable Pricing
Supplement; and (ii) the interest rate in effect for the ten calendar days
immediately prior to Maturity will be that in effect on the tenth calendar day
preceding such Maturity.
The "Interest Determination Date" pertaining to an Interest Reset Date for
a Commercial Paper Rate Note, a CD Rate Note, a Prime Rate Note, a J.J. Kenny
Rate Note and a CMT Rate Note will be the second Business Day next preceding
such Interest Reset Date. The Interest Determination Date pertaining to an
Interest Reset Date for a LIBOR Note will be the second London Banking Day next
preceding such Interest Reset Date. The Interest Determination Date pertaining
to an Interest Reset Date for a Treasury Rate Note will be the day of the week
in which such Interest Reset Date falls on which Treasury bills of the Index
Maturity specified on the face of the Treasury Rate Notes are auctioned.
Treasury bills are normally sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is normally held on the
following Tuesday, except that such auction may be held on the preceding
Friday. If, as the result of a legal holiday, an auction is so held on the
preceding Friday, such Friday will be the Interest Determination Date
pertaining to the Interest Reset Date occurring in the next succeeding week.
The "Calculation Date," where applicable, pertaining to an Interest
Determination Date is the tenth calendar day after such Interest Determination
Date or, if any such day is not a Business Day, the next succeeding Business
Day.
"Index Maturity" means, with respect to a Floating Rate Note, the period to
maturity of the instrument or obligation on which the interest rate formula is
based, as specified in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, Chemical
Bank shall be the calculation agent (the "Calculation Agent") with respect to
the Floating Rate Notes. Upon request of the holder of any Floating Rate Note,
the Calculation Agent will provide the interest rate then in effect and, if
determined, the interest rate which will become effective on the next Interest
Reset Date with respect to such Floating Rate Note. For purposes of
calculating the rate of interest payable on Floating Rate Notes, the Company
will enter into an agreement with the Calculation Agent. The Calculation
Agent's determination of any interest rate shall be final and binding in the
absence of manifest error.
Commercial Paper Rate Notes
Commercial Paper Rate Notes will bear interest at the interest rates
(calculated with reference to the Commercial Paper Rate and the Spread or
Spread Multiplier, if any) specified in the Commercial Paper Rate Notes and in
the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to any Interest Determination Date,
the Money Market Yield (calculated as described below) of the rate on such date
for commercial paper having the Index Maturity designated in the applicable
Pricing Supplement as published by the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") in "Statistical Release H.
15(519), Selected Interest Rates," or any successor publication of the Federal
Reserve Board ("H. 15(519)"), under the heading "Commercial Paper." In the
event that such rate is not published by 3:00 p.m., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, then the
Commercial Paper Rate with respect to such Interest Determination Date shall
be the Money Market Yield of the rate on such Interest Determination Date for
commercial paper having the Index Maturity designated in the applicable Pricing
Supplement as published by the Federal Reserve Bank of New York in its daily
statistical release, "Composite 3:30 p.m. Quotations for U.S. Government
Securities" or any successor publication ("Composite Quotations") under the
heading "Commercial Paper." If by 3:00 p.m., New York City time, on such
Calculation Date such rate is not yet published in either H.15 (519) or
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Composite Quotations, the Commercial Paper Rate for such Interest Determination
Date shall be calculated by the Calculation Agent and shall be the Money Market
Yield of the arithmetic mean of the offered rates as of 11:00 a.m., New York
City time, on such Interest Determination Date of three leading dealers of
commercial paper in The City of New York selected by the Calculation Agent for
commercial paper having the Index Maturity designated in the applicable Pricing
Supplement placed for an industrial issuer whose bond rating is "AA", or the
equivalent, from a nationally recognized securities rating agency; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the Commercial Paper Rate with
respect to such Interest Determination Date will be the Commercial Paper Rate
in effect on such Interest Determination Date (or, if there is no previous
Interest Reset Period, the Initial Interest Rate).
"Money Market Yield" shall be a yield (expressed as a percentage rounded,
if necessary, to the nearest one hundred-thousandth of a percent) calculated in
accordance with the following formula:
Money Market Yield = D x 360 X 100
360 - (D x M)
where "D" refers to the per annum rate for commercial paper, quoted on a bank
discount basis and expressed as a decimal; and "M" refers to the actual number
of days in the period for which interest is being calculated.
LIBOR Notes
LIBOR Notes will bear interest at the interest rates (calculated with
reference to LIBOR and the Spread or Spread Multiplier, if any) specified in
the LIBOR Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "LIBOR"
will be determined by the Calculation Agent in accordance with the following
provisions:
(i) With respect to any Interest Determination Date relating to a
LIBOR Note, LIBOR will be either, as specified in the applicable Pricing
Supplement: (a) the arithmetic mean of the offered rates for deposits in
U.S. dollars for the period of the Index Maturity specified in the
applicable Pricing Supplement, commencing on the second London Business Day
immediately following such Interest Determination Date, that appear on the
Reuters Screen LIBO Page as of 11:00 A.M., London time, on the Interest
Determination Date, if at least two such offered rates appear on the
Reuters Screen LIBO Page ("LIBOR Reuters"), or (b) the rate for deposits in
U.S. dollars having the Index Maturity designated in the applicable Pricing
Supplement, commencing on the second London Business Day immediately
following such Interest Determination Date, that appears on the Telerate
Page 3750 as of 11:00 A.M., London time, on such Interest Determination
Date ("LIBOR Telerate"). Unless otherwise indicated in the applicable
Pricing Supplement, "Reuters Screen LIBO Page" means the display designated
as page "LIBO" on the Reuters Monitor Money Rate Service (or such other
page as may replace the LIBO page on that service for the purpose of
displaying London interbank offered rates of major banks) and "Telerate
Page 3750" means the display designated as page "3750" on the Telerate
Service (or such other page as may replace the 3750 page on that service or
such other service or services as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates
for U.S. dollar deposits). If neither LIBOR Reuters nor LIBOR Telerate is
specified in the applicable Pricing Supplement, LIBOR will be determined as
if LIBOR Telerate had been specified. In the case where (a) above applies,
if fewer than two offered rates appear on the Reuters Screen LIBO Page, or,
in the case where (b) above applies, if no rate appears on the Telerate
Page 3750, as applicable, LIBOR in respect of such Interest Determination
Date will be determined as if the parties had specified the rate described
in (ii) below.
(ii) With respect to any Interest Determination Date to which this
provision applies, LIBOR will be determined on the basis of the rates at
which deposits in U.S. dollars having the Index Maturity designated in the
applicable Pricing Supplement are offered at approximately 11:00 A.M.,
London time, on such Interest Determination Date by four major banks
("Reference Banks") in the London interbank market selected by the
Calculation Agent to prime banks in the London interbank market commencing
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on the second London Business Day immediately following such Interest
Determination Date and in a principal amount of not less than U.S.
$1,000,000 that is representative for a single transaction in such market
at such time. The Calculation Agent will request the principal London
office of each of the Reference Banks to provide a quotation of its rate.
If at least two such quotations are provided, LIBOR for such Interest
Determination Date will be the arithmetic mean of such quotations. If
fewer than two quotations are provided, LIBOR for such Interest
Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 A.M., New York City time, on such Interest
Determination Date by three major banks in The City of New York selected by
the Calculation Agent for loans in U.S. dollars to leading European banks
having the Index Maturity designated in the applicable Pricing Supplement
commencing on the second London Business Day immediately following such
Interest Determination Date and in a principal amount equal to an amount of
not less than U.S. $1,000,000 that is representative for a single
transaction in such market at such time; provided, however, that if the
banks selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, LIBOR with respect to such Interest
Determination Date will be LIBOR then in effect on such Interest
Determination Date (or, if there is no previous Interest Reset Period, the
Initial Interest Rate).
Treasury Rate Notes
Treasury Rate Notes will bear interest at the interest rates (calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if
any) specified in the Treasury Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date, the rate for the
most recent auction of direct obligations of the United States ("Treasury
bills") having the Index Maturity designated in the applicable Pricing
Supplement as published in H.15(519) under the heading "U.S. Government
Securities-Treasury bills-auction average (investment)" or, if not so published
by 3:00 p.m., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the auction average rate (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United States
Department of the Treasury. In the event that the results of the auction of
Treasury bills having the Index Maturity designated in the applicable Pricing
Supplement are not published or reported as provided above by 3:00 p.m., New
York City time, on such Calculation Date or if no such auction is held in a
particular week, then the Treasury Rate shall be calculated by the Calculation
Agent and shall be a yield to maturity (expressed as a bond equivalent, on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) of the arithmetic mean of the secondary market bid rates, as of
approximately 3:30 p.m., New York City time, on such Interest Determination
Date, of three leading primary United States government securities dealers
selected by the Calculation Agent for the issue of Treasury bills with a
remaining maturity closest to the Index Maturity designated in the applicable
Pricing Supplement; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the Treasury Rate with respect to such Interest Determination Date
will be the Treasury Rate in effect on such Interest Determination Date (or, if
there is no previous Interest Reset Period, the Initial Interest Rate).
CD Rate Notes
CD Rate Notes will bear interest at the interest rates (calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any) as
specified in the CD Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Determination Date, the rate on such date
for negotiable certificates of deposit having the Index Maturity designated in
the applicable Pricing Supplement as published in H.15(519) under the heading
"CDs (Secondary Market)." In the event that such rate is not published by 3:00
p.m., New York City time, on the Calculation Date pertaining to such Interest
Determination Date, the CD Rate will be the rate on such Interest Determination
Date for negotiable certificates of deposit having the Index Maturity
designated in the applicable Pricing Supplement as published in Composite
Quotations under the heading "Certificates of Deposit." If by 3:00 P.M., New
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York City time, on such Calculation Date such rate is not published in either
H.15(519) or Composite Quotations, then the CD Rate on such Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the secondary market offered rates as of 10:00 A.M., New
York City time, on such Interest Determination Date of three leading non-bank
dealers in negotiable U.S. dollar certificates of deposit in The City of New
York selected by the Calculation Agent for negotiable certificates of deposit
of major United States money market banks of the highest credit standing (in
the market for negotiable certificates of deposit) with a remaining maturity
closest to the Index Maturity designated in the applicable Pricing Supplement
in a denomination of $5,000,000; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the CD Rate with respect to such Interest Determination Date
will be the CD Rate in effect on such Interest Determination Date (or, if there
is no previous Interest Reset Period, the Initial Interest Rate).
Prime Rate Notes
Prime Rate Notes will bear interest at the interest rates (calculated with
reference to the Prime Rate and the Spread or Spread Multiplier, if any)
specified in the Prime Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Determination Date, the rate on such
date published in H.15(519) under the heading "Bank Prime Loan." In the event
that such rate is not published by 9:00 A.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, then the Prime
Rate with respect to such Interest Determination Date will be determined by the
Calculation Agent and will be the arithmetic mean of the rates of interest
publicly announced by each bank that appears on the Reuters Screen NYMF Page as
such bank's prime rate or base lending rate as in effect for such Interest
Determination Date. If fewer than four such rates but more than one such rate
appear on the Reuters Screen NYMF Page for such Interest Determination Date,
the Prime Rate shall be the arithmetic mean of the prime rates quoted on the
basis of the actual number of days in the year divided by a 360-day year as of
the close of business on such Interest Determination Date by four major money
center banks in The City of New York selected by the Calculation Agent. If
fewer that two such rates appear on the Reuters Screen NYMF Page, the Prime
Rate will be determined by the Calculation Agent on the basis of the rates
furnished in The City of New York by the appropriate number of substitute banks
or trust companies organized and doing business under the laws of the United
States, or any State thereof, having total equity capital of at least
$500,000,000 and being subject to supervision or examination by federal or
state authority, selected by the Calculation Agent to provide such rate or
rates; provided, however, that if the banks selected as aforesaid are not
quoting as mentioned in this sentence, the Prime Rate with respect to such
Interest Determination Date will be the Prime Rate in effect on such Interest
Determination Date (or, if there is no previous Interest Reset Period, the
Initial Interest Rate). "Reuters Screen NYMF Page" means the display
designated as page "NYMF" on the Reuters Monitor Money Rates Service (or such
other page as may replace the NYMF page on that service for the purpose of
displaying prime rates or base lending rates of major United States banks).
J.J. Kenny Rate Notes
J.J. Kenny Rate Notes will bear interest at the interest rates (calculated
with reference to the J.J. Kenny Rate and the Spread or Spread Multiplier, if
any) as specified in the J.J. Kenny Rate Notes and in the applicable Pricing
Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "J.J.
Kenny Rate" means, with respect to any Interest Determination Date, the rate
equal to the rate in the high grade weekly index (the "Weekly Index") on such
date made available by Kenny Information Systems ("Kenny") to the Calculation
Agent. The Weekly Index is, and shall be, based upon 30-day yield evaluations
at par of bonds, the interest on which is exempt from Federal income taxation
under the Internal Revenue Code of 1986, as amended, of not less than five high
grade component issuers selected by Kenny which shall include, without
limitation, issuers of general obligation bonds. The specific issuers included
among the component issuers may be changed from time to time by Kenny in its
discretion. The bonds on which the Weekly Index is based shall not include any
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bonds on which the interest is subject to a minimum tax or similar tax under
the Internal Revenue Code of 1986, as amended, unless all tax-exempt bonds are
subject to such tax. In the event Kenny fails to make available such Weekly
Index prior to the relevant Calculation Date, a successor indexing agent will
be selected by the Calculation Agent, such index to reflect the prevailing rate
for bonds rated in the highest short-term rating category by Moody's Investors
Service, Inc. and Standard & Poor's Corporation in respect of issuers most
closely resembling the high grade component issuers selected by Kenny for its
Weekly Index, the interest on which is (A) variable on a weekly basis, (B)
exempt from Federal income taxation under the Internal Revenue Code of 1986, as
amended, and (C) not subject to a minimum tax or similar tax under the Internal
Revenue Code of 1986, as amended, unless all tax-exempt bonds are subject to
such tax. If such successor indexing agent is not available, the rate for any
Interest Determination Date shall be 67% of the rate determined if the Treasury
Rate option had been originally selected.
CMT Rate Notes
CMT Rate Notes will bear interest at the interest rates (calculated with
reference to the CMT Rate and the Spread or Spread Multiplier, if any) as
specified in the CMT Rate Notes and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Determination Date, the rate displayed on
the Designated CMT Telerate Page (as defined below) under the caption
"...Treasury Constant Maturities... Federal Reserve Board Release H.15...
Mondays Approximately 3:45 P.M.," under the column for the Designated CMT
Maturity Index (as defined below) for (i) if the Designated CMT Telerate Page
is 7055, the rate on such Interest Determination Date and (ii) if the Desig-
nated CMT Telerate Page is 7052, the week, or the month, as applicable, ended
immediately preceding the week in which such Interest Determination Date
occurs. If such rate is no longer displayed on the relevant page, or if not
displayed by 3:00 P.M., New York City time, on the related Calculation Date,
then the CMT Rate for such Interest Determination Date will be such Treasury
Constant Maturity rate for the Designated CMT Maturity Index as published in
the relevant H.15(519). If such rate is no longer published, or if not
published by 3:00 P.M., New York City time, on the related Calculation Date,
then the CMT Rate for such Interest Determination Date will be such Treasury
Constant Maturity rate for the Designated CMT Maturity Index (or other United
States Treasury rate for such Designated CMT Maturity Index) for the applicable
Interest Determination Date with respect to such Interest Reset Date as may
then be published by either the Federal Reserve Board or the United States
Department of the Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate Page
and published in the relevant H.15(519). If such information is not provided by
3:00 P.M., New York City time, on the related Calculation Date, then the CMT
Rate for the applicable Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity, based on the arithmetic mean
of the secondary market closing offer side prices as of approximately 3:30
P.M., New York City time, on such Interest Determination Date reported, accord-
ing to their written records, by three leading primary United States government
securities dealers (each, a "Reference Dealer") in The City of New York
selected by the Calculation Agent (from five such Reference Dealers selected by
the Calculation Agent and eliminating the highest quotation (or, in the event
of equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for the most recently issued direct noncallable
fixed rate obligations of the United States ("Treasury Notes") with an original
maturity of approximately the Designated CMT Maturity Index and a remaining
term to maturity of not less than such Designated CMT Maturity Index minus one
year. If the Calculation Agent cannot obtain three such Treasury Note
quotations, the CMT Rate for such Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity based on
the arithmetic mean of the secondary market offer side prices as of
approximately 3:30 P.M., New York City time, on the applicable Interest
Determination Date of three Reference Dealers in The City of New York (from
five such Reference Dealers selected by the Calculation Agent and eliminating
the highest quotation (or, in the event of equality, one of the highest) and
the lowest quotation (or, in the event of equality, one of the lowest)), for
Treasury Notes with an original maturity of the number of years that is the
next highest to the Designated CMT Maturity Index and a remaining term to
maturity closest to such Designated CMT Maturity Index and in an amount of at
least $100,000,000. If three or four (and not five) of such Reference Dealers
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are quoting as described above, then the CMT rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided, however, that if fewer than
three Reference Dealers selected by the Calculation Agent are quoting as
described herein, the CMT Rate will be the CMT Rate in effect on the applicable
Interest Determination Date (or, if there is no previous Interest Reset Period,
the Initial Interest Rate). If two Treasury Notes with an original maturity as
described in the third preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes for the Treasury
Note with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519).
If no such page is specified in the applicable Pricing Supplement, the
Designated CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20, or 30 years)
specified in the applicable Pricing Supplement with respect to which the CMT
Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designed CMT Maturity Index shall be 2 years.
Extension of Maturity
The Pricing Supplement relating to each Note (other than an Amortizing Note
(as defined below)) will indicate whether the Company will have the option to
extend the Stated Maturity of such Note for one or more periods up to but not
beyond a date set forth in such Pricing Supplement (an "Extendible Note"). If
the Company has such option with respect to any such Note, the procedures
relating thereto will be as set forth in the applicable Pricing Supplement.
Renewable Notes
The Pricing Supplement relating to each Note (other than an Amortizing
Note) will indicate whether the term of all or any portion of any such Note may
be renewed by the holder in accordance with the procedures described in such
Pricing Supplement.
Redemption and Repurchase
The Pricing Supplement relating to each Note will indicate either that such
Note cannot be redeemed prior to Stated Maturity or that such Note will be
redeemable at the option of the Company on a date or dates specified prior to
Stated Maturity at a price or prices, set forth in the applicable Pricing
Supplement, together with accrued interest to the date of redemption. The
Notes will not be subject to any sinking fund.
Notes may be subject to prepayment or repurchase by the Company at the
option of the holder at the prices and during the periods specified in the
applicable Pricing Supplement and may otherwise be subject to repayment prior
to Stated Maturity as set forth therein.
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may be held or
resold or, at the discretion of the Company, may be surrendered to the Trustee
for cancellation.
Amortizing Notes
The Company may from time to time offer Notes for which payments of
principal and interest are made in installments over the life of the Note
("Amortizing Notes"). Interest on each Amortizing Note will be computed as set
forth in the Pricing Supplement relating to such Note. If so specified in such
Pricing Supplement, payments with respect to Amortizing Notes will be applied
first to interest due and payable thereon and then to the reduction of the
unpaid principal amount thereof. A table setting forth repayment information
with respect to each Amortizing Note and other information regarding such Note
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will be included in the applicable Pricing Supplement or will be provided to
the original purchaser of such Note and will be available, upon request, to
subsequent holders thereof.
Book-Entry Notes
The Depository Trust Company, New York, New York ("DTC") will act as
securities depositary for the Book-Entry Notes. The Book-Entry Notes will be
issued as fully-registered securities registered in the name of Cede & Co.
(DTC's partnership nominee). One fully-registered Global Security will be
issued for each issue of the Notes, each in the aggregate principal amount of
such issue, and will be deposited with DTC. If, however, the aggregate
principal amount of any issue exceeds $200,000,000 one Global Security will be
issued with respect to each $200,000,000 of principal amount and an additional
Global Security will be issued with respect to any remaining principal amount
of such issue.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants ("Direct Participants") include
securities brokers and dealers, banks, trust companies, clearing corporations,
and certain other organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc.
Access to DTC's system is also available to others such as securities brokers
and dealers, banks and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants
are on file with the Securities and Exchange Commission.
Purchases of Book-Entry Notes under DTC's system must be made by or through
Direct Participants, which will receive a credit for the Book-Entry Notes on
DTC's records. The ownership interest of each actual purchaser of each Book-
Entry Note ("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 purchase, 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 Participant
through which the Beneficial Owner entered into the transaction. Transfers of
ownership interests in the Book-Entry Notes are to be accomplished by entries
made on the books of Participants acting on behalf of the Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Book-Entry Notes, except in the event that use of the book-entry
system for one or more Book-Entry Notes is discontinued.
To facilitate subsequent transfers, all Global Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Global 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 Notes; DTC's
records reflect only the identity of the Direct Participants to whose accounts
such Book-Entry Notes are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Book-Entry Notes within an issue are being redeemed, DTC's current practice is
to determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.
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Neither DTC nor Cede & Co. will consent or vote with respect to Book-Entry
Notes. Under its usual procedures, DTC will mail an "Omnibus Proxy" to the
Company as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts the Book-Entry Notes are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Principal and interest payments on the Book-Entry Notes will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on the payable
date in accordance with their respective holdings shown on DTC's records unless
DTC has reason to believe that it will not receive payment on the payable date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as in the case of securities held for the
accounts of customers in bearer form or registered in "street name," and will
be the responsibility of such Participant and not of DTC, or the Company,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of principal and interest to DTC is the responsibility
of the Company, disbursement of such payments to Direct Participants shall be
the responsibility of DTC, and disbursement of such payments to the Beneficial
Owners shall be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to the Book-Entry Notes at any time by giving reasonable notice to the
Company or the Agents. Under such circumstances, in the event that a successor
securities depositary is not obtained, Certificated Notes will be printed and
delivered in exchange for the Book-Entry Notes represented by the Global
Securities held by DTC.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depositary). In that event,
Certificated Notes will be printed and delivered in exchange for the Book-Entry
Notes represented by the Global Securities held by DTC.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but
the Company takes no responsibility for the accuracy thereof.
Neither the Company, the Trustee, any paying agent nor the registrar for
the Notes 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 such beneficial ownership interests.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain United States federal income tax
consequences of the ownership of Notes as of the date hereof. Except where
noted, it deals only with Notes held by initial purchasers as capital assets
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended (the "Code"), and does not deal with special situations, such as those
of dealers in securities, financial institutions, life insurance companies,
United States Holders (as defined below) whose "functional currency" is not the
U.S. dollar, tax exempt organizations, persons holding Notes as a hedge against
currency risks or as a position in a "straddle," or persons owning (actually or
constructively) ten percent or more of the combined voting power of all classes
of voting stock of the Company. In addition, the discussion below must be read
in conjunction with the discussion of certain federal income tax consequences
which may appear in the applicable Pricing Supplement for such Notes. The
discussion below is based upon the provisions of the Code and Treasury
Regulations (including proposed Treasury Regulations), rulings, and judicial
decisions thereunder as of the date hereof. Such authorities may be amended,
repealed, revoked, modified (which changes may have retroactive effect) or, in
the case of proposed Treasury Regulations, withdrawn or finalized in a form
different from such proposed Treasury Regulations, so as to result in federal
income tax consequences different from those discussed below. This summary
does not purport to cover all the possible tax consequences of the purchase,
ownership and disposition of Notes, and it is not intended as tax advice. This
summary does not discuss the tax consequences under state, local, or foreign
tax laws. Persons considering the purchase, ownership, or disposition of Notes
should consult their own tax advisors concerning the federal income tax
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consequences in light of their particular situations as well as any
consequences arising under the laws of any other taxing jurisdiction.
United States Holders
As used herein, a "United States Holder" of a Note means a holder that is
(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 any political subdivision thereof, or (iii) an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source. A "Non-United States Holder" is a holder that is not a United States
Holder.
Payments of Interest. Except as set forth below, interest on a Note will
generally be taxable to a United States Holder as ordinary income from domestic
sources at the time it is received or accrued in accordance with the United
States Holder's method of accounting for tax purposes.
Original Issue Discount. The following is a summary of the principal
United States federal income tax consequences of the ownership of Original
Issue Discount Notes (as defined below) by United States Holders.
A Note may be issued for an amount that is less than its stated redemption
price at maturity (the sum of all payments to be made on the Note other than
"qualified stated interest" payments). The difference between the stated
redemption price at maturity of the Note and its "issue price," if such
difference is at least 0.25 percent of the stated redemption price at maturity
multiplied by the number of complete years to maturity, will be "original issue
discount" ("OID"). The "issue price" of each Note will be the initial offering
price to the public at which a substantial amount of the particular offering is
sold.
Generally, a "qualified stated interest" payment is stated interest that is
unconditionally payable at least annually at a single fixed rate, or at a rate
("Variable Rate") which varies among payment periods if such rate can
reasonably be expected to measure contemporaneous variations in the cost of
newly borrowed funds or which is based upon the changes in the yield or price
of certain actively traded property or a combination thereof. A rate that
reflects a fixed rate minus such Variable Rate (an "Inverse Floating Rate")
also constitutes a Variable Rate. Interest is payable at a single fixed rate
only if the rate appropriately takes into account the length of the interval
between payments. Notes that may be redeemed prior to their maturity date at
the option of the issuer are treated from the time of issuance as having a
maturity date for federal income tax purposes on such redemption date if such
redemption would result in a lower yield to maturity. Notice will be given in
the applicable Pricing Supplement when the Company issues Notes that are
redeemable prior to maturity and determines that such Notes will be deemed to
have a maturity date for federal income tax purposes prior to their maturity.
In certain cases (e.g., where interest payments are deemed not to be
qualified stated interest payments), Notes that bear interest from a non-tax
standpoint may be deemed instead to be Original Issue Discount Notes for
federal income tax purposes, with the result that the inclusion of interest in
income for federal income tax purposes may vary from the actual payments of
interest made on such Notes, generally accelerating income for cash method
taxpayers. For those purposes, the Treasury Regulations provide rules for
determining whether payments on a Note with a Variable Rate will be treated as
payments of qualified stated interest. The Pricing Supplement for any series
of Notes will specify whether they are Original Issue Discount Notes.
United States Holders of Original Issue Discount Notes with a maturity upon
issuance of more than one year must, in general, include OID in income in
advance of the receipt of some or all of the related cash payments. The amount
of OID includible in income with respect to the Note is the sum of the "daily
portions" of OID with respect to the Note for each day during the taxable year
or portion of the taxable year in which such United States Holder held such
Note ("accrued OID"). The daily portion is determined by allocating to each
day in any "accrual period" a pro rata portion of the OID allocable to that
accrual period. Accrual periods may be of any length and may vary in length
over the term of the Note provided that each accrual period is no longer than
one year and each scheduled payment of principal or interest occurs at the
beginning or the end of an accrual period. The amount of OID allocable to any
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accrual period is an amount equal to the excess (if any) of (a) the product of
the Note's "adjusted issue price" at the beginning of such accrual period and
its yield to maturity (determined on the basis of compounding at the close of
each accrual period and properly adjusted for the length of the accrual period)
over (b) the sum of any qualified stated interest allocable to the accrual
period. In determining OID allocable to an accrual period, if an interval
between payments of qualified stated interest contains more than one accrual
period, the amount of qualified stated interest payable at the end of the
interval is allocated on a pro rata basis to each accrual period in the
interval and the adjusted issue price at the beginning of each accrual period
in the interval must be increased by the amount of any qualified stated
interest that has accrued prior to the beginning of the first day of the
accrual period but is not payable until the end of the interval. If all
accrual periods are of equal length, except for an initial short accrual
period, the amount of OID allocable to the initial short accrual period may be
computed under any reasonable method. The adjusted issue price of the Note at
the start of any accrual period is equal to its issue price increased by the
accrued OID for each prior accrual period and reduced by any prior payments on
such Note that did not constitute qualified stated interest payments. Under
these rules, a United States Holder generally will have to include in income
increasingly greater amounts of OID in successive accrual periods. The Company
is required to report the amount of OID accrued on Notes held of record by
persons other than corporations and other exempt holders.
In the case of Original Issue Discount Notes having a term of one year
("Short-Term Original Issue Discount Notes"), OID is included in income
currently either on a straight-line basis or, if the United States Holder so
elects, under the constant yield method used generally for OID as described
above. However, certain categories of United States Holders (such as
individual cash method taxpayers) are not required to include accrued OID on
Notes of this type in their income currently unless they elect to do so. If
such a United States Holder that does not elect to currently include the OID in
income subsequently recognizes a gain upon the disposition of the Note, such
gain will be treated as ordinary interest income to the extent of the accrued
OID to the date of disposition. Furthermore, such United States Holder may be
required to defer deductions for a portion of such United States Holder's
interest expense with respect to any indebtedness incurred or maintained to
purchase or carry such Note.
Amortization of Premium. A Note may be considered to have "premium" to the
extent that the United States Holder's tax basis in the Note exceeds the amount
payable at maturity. A United States Holder generally may elect to amortize
the premium over the remaining term of the Note on a constant yield method.
Any such election shall apply to all debt securities (other than debt
securities the interest on which is excludible from gross income) held by the
United States Holder at the beginning of the first taxable year to which the
election applies (or thereafter acquired by the United States Holder) and is
irrevocable without the consent of the Internal Revenue Service ("IRS"). The
amount amortized in any year will be treated as a reduction of the United
States Holder's interest income from the Note. Bond premium on a Note held by
gain or increase the loss otherwise recognized on disposition of the Note.
Acquisition Premium. An initial purchaser of Original Issue Discount Notes
that pays more than the issue price therefor will have acquisition premium. If
a United States Holder purchases an Original Issue Discount Note at a premium
(i.e., an amount in excess of the stated redemption price at maturity), it does
not include any OID in gross income. A Note purchased in the initial offering
for more than the issue price but less than the stated redemption price at
maturity possesses acquisition premium. The daily portion of accrued OID on
such a Note is reduced by the product of the daily portion of OID (determined
without regard to this adjustment) and a fraction the numerator of which is the
excess described in the preceding sentence and the denominator of which is all
payments to be made on the Note other than qualified stated interest.
Election to Treat All Interest as OID. A cash or accrual basis United
States Holder may elect to treat all interest on any Note as OID and calculate
the amount includible in gross income under the constant yield method described
above. For the purposes of this election, interest includes stated interest,
acquisition discount, OID, de minimis OID, market discount, de minimis market
discount and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium. If a United States Holder makes this election for a Note
with amortizable bond premium, the election is treated as an election under the
amortizable bond premium provisions described above and the electing United
States Holder will be required to amortize bond premium for all of the holder's
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other debt instruments with amortizable bond premium. The election is to be
made for the taxable year in which the United States Holder acquires the Note,
and may not be revoked without the consent of the IRS. United States Holders
should consult with their own tax advisors about this election.
Sale, Exchange, and Retirement of Notes. A United States Holder's tax basis
in a Note will, in general, be the United States Holder's cost therefor,
increased by all accrued OID and reduced by any amortized premium and any cash
payments on the Note other than qualified stated interest payments. Upon the
sale, exchange, or retirement of a Note, a United States Holder will recognize
gain or loss equal to the difference between the amount realized upon the sale,
exchange, or retirement (except to the extent attributable to accrued interest)
and the adjusted tax basis of the Note. Except as described above with respect
to certain Short-Term Original Issue Discount Notes, such gain or loss will be
capital gain or loss and will be long-term capital gain or loss if at the time
of sale, exchange, or retirement the Note has been held for more than one year.
Under current law, net capital gains are, under certain circumstances, taxed at
lower rates than ordinary income. The deductibility of capital losses is
subject to limitations.
Extendible Notes. A Note may provide that the Company has the option to
extend the maturity of a Note at maturity or that a holder may have the option
of causing the Company to prepay or repurchase a Note. A discussion of the
federal income tax consequences to a United States Holder of these events will
be contained in the applicable Pricing Supplement.
Non-United States Holders
Non-United States Holders generally will not be subject to United States
federal withholding tax on the interest income (including any OID) on any Note,
provided that (i) the Non-United States Holder does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of the Company entitled to vote within the meaning of Code
Section 871(h)(3), (ii) the Non-United States Holder is not a controlled
foreign corporation related to the Company through stock ownership, and (iii)
the Non-United States Holder provides the correct certification of Non-United
States Holder status (which may generally be satisfied by providing an IRS Form
W-8 certifying that the beneficial owner is not a United States Holder and
providing the name and address of the beneficial owner).
A Non-United States Holder generally will not be subject to United States
federal income tax on gain realized from the sale or exchange of a Note. Under
certain conditions, a Non-United States Holder may be subject to United States
federal income taxes on gain and interest received with respect to a Note (even
if no withholding of taxes is required). Such income taxation may occur, for
example, if the Non-United States Holder (i) is engaged in a trade or business
in the United States and gain and interest on a Note are effectively connected
with the conduct of that trade or business or (ii) is an individual present in
the United States for 183 days or more during the taxable year. Such taxation
is beyond the scope of this summary and should be discussed with a tax advisor.
If interest is effectively connected with the conduct of a trade or business in
the United States by a Non-United States Holder, withholding of United States
federal income tax may be required unless the Non-United States Holder files
with the Company or its paying agent an IRS form stating that the interest is
so effectively connected.
A Note held by an individual who is not a citizen or resident of the United
States at the time of such holder's death will not be subject to United States
federal estate tax, provided that any interest received on the Note, if
received by the holder at the time of the holder's death, would not be
effectively connected with the conduct of a trade or business in the United
States and the individual does not own, actually or constructively, at the date
of death, 10% or more of all classes of stock of the Company entitled to vote
within the meaning of Code Section 871(h)(3).
Backup Withholding and Information Reporting
In general, if a United States Holder fails to furnish a correct taxpayer
identification number, fails to report dividend and interest income in full, or
fails to certify that such holder has provided a correct taxpayer
identification number and that the holder is not subject to withholding, the
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<PAGE>
Company may withhold a 31 percent federal backup withholding tax on amounts
paid to the holder. An individual's taxpayer identification number is such
person's social security number.
Payments in respect of a Note made within the United States by the Company
or any of its paying agents are generally subject to backup withholding at a
rate of 31 percent. Information reporting and backup withholding do not apply
to payments made on a Note if the certification described in clause (iii) under
"Non-United States Holders" above is received, provided the payor does not have
actual knowledge that the holder is a United States person. Special rules may
apply with respect to the payment of the proceeds from the sale of a Note to or
through foreign offices of certain brokers.
The backup withholding tax is not an additional tax and may be credited
against a holder's regular federal income tax liability or refunded by the IRS
where applicable.
PLAN OF DISTRIBUTION OF NOTES
The Notes are being offered on a continuing basis by the Company through
the Agents, each of which has agreed to use its reasonable best efforts to
solicit purchases of the Notes. The Company will pay each Agent a commission
of .150% to .750% of the principal amount of each Note, depending on its
maturity, sold through such Agent on an agency basis; provided that the
commission paid to an Agent with regard to the sale of a Note with a term of 30
years to up to and including 40 years will be determined at the time of such
sale. The Company may also sell Notes to any Agent, acting as principal, for
resale to investors and other purchasers. Unless otherwise indicated in the
applicable Pricing Supplement, any Note sold to an Agent as principal will be
purchased by such Agent at a price equal to 100% of the principal amount
thereof less a percentage equal to the commission applicable to an agency sale
of a Note of identical maturity. Any such Note may be resold by such Agent to
one or more investors or other purchasers, including other dealers, from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices related to prevailing market
prices at the time of resale. Unless otherwise indicated in the applicable
Pricing Supplement, if any Note is resold by an Agent to any dealer at a
discount, such discount will not be in excess of the discount received by such
Agent from the Company. After the initial public offering of any Notes to be
resold by an Agent to investors and other purchasers at a fixed public offering
price, the public offering price and discounts may be changed. The Company has
agreed to reimburse the Agents for certain expenses in connection with the
offering of the Notes.
The Notes may also be sold by the Company directly to investors or to or
through such other agents as the Company shall designate from time to time. No
commission will be payable on Notes sold directly to investors by the Company.
The Company will have the sole right to accept offers to purchase Notes and
may reject any proposal to purchase Notes in whole or in part. Each Agent will
have the right, in its discretion reasonably exercised, to reject in whole or
in part any offer to purchase Notes received by it.
The Notes will not have an established trading market when issued. The
Notes will not be listed on any securities exchange. Each Agent may make a
market in the Notes, but such Agent is not obligated to do so and may
discontinue any market-making at any time without notice. There can be no
assurance of a secondary market for any Notes, or that the Notes will be sold.
The Agents and certain affiliates thereof engage in transactions with and
perform services for the Company and its affiliates in the ordinary course of
business.
The Company has agreed to indemnify each Agent against certain liabilities,
including certain liabilities under the Securities Act of 1933, as amended (the
"Securities Act"). Each Agent (and each other dealer, if any, who purchases
Notes for resale to the public) may be deemed to be an "underwriter" within the
meaning of the Securities Act with respect to Notes sold through it.
S-16
<PAGE>
PROSPECTUS
Georgia Power Company
a subsidiary of The Southern Company
First Mortgage Bonds
Class A Preferred Stock
(Stated Value $25 Per Share)
Georgia Power Company ("GEORGIA") may sell its First Mortgage Bonds (the
"new First Mortgage Bonds") and Class A Preferred Stock, stated value $25 per
share (the "new Class A Preferred Stock"), aggregating up to $300,000,000 in
principal amount or stated value, as the case may be, in one or more
transactions. See "Plan of Distribution."
An accompanying Prospectus Supplement (the "Prospectus Supplement") will
set forth the original principal amount, maturity date, interest rate
provisions, redemption provisions and other terms of each series of the new
First Mortgage Bonds and the number of shares, dividend rate provisions,
redemption provisions and other terms of each class of the new Class A
Preferred Stock.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_______________
Dated: August 10, 1995<PAGE>
<PAGE>
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained in this Prospectus or
any accompanying Prospectus Supplement and, if given or made, such information
or representation must not be relied upon as having been authorized. This
Prospectus and any accompanying Prospectus Supplement do not constitute an
offer to sell or a solicitation of an offer to buy any of the securities
offered hereby or thereby in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction. Neither the
delivery of this Prospectus or any accompanying Prospectus Supplement nor any
sale made hereunder or thereunder shall under any circumstances create the
implication that there has been no change in the affairs of GEORGIA since the
respective dates of this Prospectus and any such Prospectus Supplement.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
SECURITIES HEREBY OFFERED OR OTHER SECURITIES OF GEORGIA AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
GEORGIA is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "SEC"). Such reports and other information can be inspected
and copied at the offices of the SEC at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C.; 500 West Madison Street, Suite 1400, Chicago,
Ill.; and 13th Floor, Seven World Trade Center, New York, N.Y. Copies of this
material can also be obtained at prescribed rates from the Public Reference
Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Certain
securities of GEORGIA are listed on the New York Stock Exchange, and reports
and other information concerning GEORGIA can be inspected at the office of
such Exchange.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have heretofore been filed by GEORGIA
with the SEC pursuant to the Exchange Act, are incorporated by reference in
this Prospectus and shall be deemed to be a part hereof:
1. Annual Report on Form 10-K for the year ended December 31, 1994.
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1995.
3. Current Reports on Form 8-K dated February 15, 1995 and May 17, 1995.
All documents subsequently filed by GEORGIA with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of the offering hereunder shall be deemed to be incorporated by reference in
this Prospectus and to be made a part hereof from their respective dates of
filing.
GEORGIA hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, on the written or oral
request of any such person, a copy of any or all of the documents referred to
above which have been or may be incorporated by reference in this Prospectus,
other than exhibits to such documents. Requests for such copies should be
directed to Warren Y. Jobe, Executive Vice President, Treasurer and Chief
Financial Officer, Georgia Power Company, 333 Piedmont Avenue, N.E., Atlanta,
Georgia 30308, (404) 526-6526.
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<PAGE>
SELECTED INFORMATION
The following material, which is presented herein solely to furnish
limited introductory information regarding GEORGIA, has been selected from, or
is based upon, the detailed information and financial statements appearing in
the documents incorporated herein by reference or elsewhere in this
Prospectus, is qualified in its entirety by reference thereto and, therefore,
should be read together therewith.
<TABLE>
<CAPTION>
Georgia Power Company
<S> <C>
Business . . . . . . . . . . . . . . . . Generation, transmission, distribution
and sale of electric energy
Service Area . . . . . . . . . . . . . . Approximately 57,200 square miles
comprising most of the State of Georgia
Service Area Population (1990 Census) . . Approximately 6,200,000
Customers at December 31, 1994 . . . . . 1,673,432
Generating Capacity at December 31, 1994
(kilowatts) . . . . . . . . . . . . . . . 13,943,725
Sources of Generation during 1994
(kilowatt-hours) . . . . . . . . . . . . Coal (75%), Nuclear (22%), Hydro (3%),
Oil and Gas (less than 0.5%)
Sources of Generation Estimated for 1995
(kilowatt-hours) . . . . . . . . . . . . Coal (76%), Nuclear (21%), Hydro (2%),
Oil and Gas (1%)
</TABLE>
<TABLE>
<CAPTION>
Selected Financial Information 12 Months
Ended
Year Ended December 31, May 31,
1995(3)
1990(1) 1991(2) 1992 1993 1994(3) (Unaudited)
(Millions, Except Ratios)
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues(4) . . . . . $4,446 $4,301 $4,297 $4,451 $4,162 $4,192
Income Before Interest Charges $769 $1,006 $1,003 $1,033 $925 $979
Net Income After Dividends
on Preferred Stock . . . . . $208 $475 $521 $570 $526 $596
Ratio of Earnings to
Fixed Charges(5) . . . . . . 1.91 2.85 3.15 3.46 3.65 4.10
Ratio of Earnings to Fixed
Charges Plus Preferred
Dividend Requirements
(Pre-Income Tax Basis)(6) . . 1.57 2.36 2.59 2.88 2.99 3.33
</TABLE>
<TABLE> Capitalization as of
<CAPTION> March 31, 1995
Actual As Adjusted(7)
(Millions Except
Percentages)
<S> <C> <C> <C>
Common Stock Equity . . . . . . . . . . . . . . . . . . $4,144 $4,144 48.5%
Cumulative Preferred Stock . . . . . . . . . . . . . . 693 768 9.0
Guaranteed Interest in Preferred Securities of
Partnership . . . . . . . . . . . . . . . . . . . . . . 100 100 1.2
Long-Term Debt . . . . . . . . . . . . . . . . . . . . 3,508 3,532 41.3
Total, excluding amounts due within one year of
$790 million . . . . . . . . . . . . . . . . . . . . . $8,445 $8,544 100.0%
(1) Reflects a write-off of certain costs of Plant Vogtle, a two-unit nuclear
generating facility, recorded in 1990 in the after-tax amount of $218,000,000.
</TABLE>
3
<PAGE>
(2) "Income Before Interest Charges" and "Net Income After
Dividends on Preferred Stock" for the year ended December
31, 1991 reflect (i) an increase of approximately
$89,000,000 as the result of the consummation of a settlement
with Gulf States Utilities Company of litigation arising out
of certain power sales contracts and (ii) a charge of
approximately $33,000,000 after taxes relating to
benefits provided pursuant to a voluntary work force reduction
program announced in late 1991.
(3) See "Recent Results of Operations" herein. "Income Before
Interest Charges" and "Net Income After Dividends on
Preferred Stock" for the year ended December 31,
1994 and the twelve months ended May 31, 1995 reflect
charges of approximately $55,000,000 and $3,000,000,
respectively, after taxes relating to benefits
provided pursuant to work force reduction programs announced in
the first quarter of 1994.
(4) "Operating Revenues" for the year ended December 31, 1990
includes amounts
relating to certain energy sales (including sales to
affiliates) that formerly were classified as purchased and
interchanged power, net. Such amounts were reclassified to
"Operating Revenues" effective December 31, 1991 in accordance
with current accounting requirements of the Federal Energy
Regulatory Commission.
(5) This ratio is computed as follows: (i) "Earnings" have been
calculated by adding to "Income Before Interest Charges" all
income taxes deducted therefrom and the debt portion of
allowance for funds used during construction; and
(ii) "Fixed Charges" consist of "Net Interest Charges" plus the
debt portion of allowance for funds used during construction.
(6) In computing this ratio, "Preferred Dividend Requirements"
represent the before income tax earnings necessary to pay
such dividends, computed at the effective tax rates for the
applicable periods.
(7) Reflects (i) the sale in April 1995 of $73,535,000 principal
amount of Pollution Control Revenue Bonds, 6.10% Series due
April 1, 2025, and $75,000,000 principal amount of Pollution
Control Revenue Bonds, Variable Rate Series due April 1,
2025, and the redemption in June 1995 of $148,535,000
principal amount of Pollution Control Revenue Bonds, 10 1/8%
Series due June 1, 2015; (ii) the sale in May 1995 of
$75,000,000 principal amount of First Mortgage Bonds, 7.70%
Series due May 1, 2025; (iii) the repurchase in May 1995 of
$15,500,000 principal amount of First Mortgage Bonds, 8 3/4%
Series due April 1, 2022, $4,000,000 principal amount of
First Mortgage Bonds, 8 5/8% Series due June 1, 2022, and
$20,856,000 principal amount of First Mortgage Bonds, 9.23%
Series due December 1, 2019; (iv) the redemption in July 1995
of $84,500,000 principal amount of First Mortgage
Bonds, 8 3/4% Series due April 1, 2022, $35,632,000
principal amount of First Mortgage Bonds, 8 5/8% Series due
June 1, 2022, $15,301,000 principal amount of First Mortgage
Bonds, 9.23% Series due December 1, 2019, and
$100,000,000 principal amount of First Mortgage Bonds,
Variable Rate Remarketed Series due July 1, 2032; and (v)
the sale of the new First Mortgage Bonds and new Class A
Preferred Stock, assuming amounts of $225,000,000 and
$75,000,000, respectively, and no corresponding redemptions or
other retirements of outstanding securities.
GEORGIA POWER COMPANY
GEORGIA is a wholly-owned subsidiary of The Southern Company, a
holding company registered under the Public Utility Holding
Company Act of 1935. GEORGIA was incorporated under the laws of
the State of Georgia on June 26, 1930. It is engaged in
the generation and purchase of electric energy and the transmission,
distribution and sale of such energy within the State of Georgia at
retail in over 600 communities (including Athens, Atlanta, Augusta,
Columbus, Macon, Rome and Valdosta), as well as in rural areas, and at
wholesale currently to 39 electric cooperative associations through
Oglethorpe Power Corporation, a corporate cooperative of
electric membership corporations in Georgia, and to 50
municipalities, 47 of which are served through the
Municipal Electric Authority of Georgia, a public corporation and an
instrumentality of the State of Georgia. GEORGIA and one of its
affiliates, Alabama Power Company, each owns 50% of the common stock of
Southern Electric Generating Company ("SEGCO"). SEGCO owns electric
generating units near Wilsonville, Alabama. The principal executive
4
<PAGE>
offices of GEORGIA are located at 333 Piedmont Avenue, N.E., Atlanta,
Georgia 30308, and the telephone number is (404) 526-6526.
USE OF PROCEEDS
Except as may be otherwise described in a Prospectus
Supplement, the proceeds from the sale of the new First Mortgage
Bonds and the new Class A Preferred Stock will be used to pay a
portion of GEORGIA's construction program and for other
general corporate purposes.
RECENT RESULTS OF OPERATIONS
For the twelve months ended May 31, 1995, "Operating Revenues",
"Income Before Interest Charges" and "Net Income After
Dividends on Preferred Stock" were $4,192,000,000, $979,000,000
and $596,000,000, respectively. In the opinion of the
management of GEORGIA, the above amounts for the twelve months
ended May 31, 1995 reflect all adjustments (which were only normal
recurring adjustments) necessary to present fairly the results of
operations for such period, subject to the effect of such adjustments,
if any, as might have been required had the outcome of the
uncertainty with respect to the actions of the regulators regarding the
recoverability of GEORGIA's investment in the Rocky Mountain pumped
storage hydroelectric project been known. The "Ratio of Earnings to
Fixed Charges" and the "Ratio of Earnings to Fixed Charges Plus
Preferred Dividend Requirements (Pre-Income Tax Basis)" for the
twelve months ended May 31, 1995 were 4.10 and 3.33, respectively.
For information regarding the uncertainty referred to in the
preceding paragraph, reference is made to "Item 1 - Business -
Construction Programs" in GEORGIA's Annual Report on Form 10-K
for the year ended December 31, 1994, incorporated herein by
reference.
DESCRIPTION OF NEW BONDS
The new First Mortgage Bonds may be issued and sold by
GEORGIA in one or more series. In the following description,
references to the "new Bonds" and the "new Supplemental Indenture"
(as hereinafter defined) are to new First Mortgage Bonds of the
particular series referred to in the Prospectus Supplement and the
new Supplemental Indenture pursuant to which such series is issued.
General: The new Bonds are to be issued under the Indenture dated
as of March 1, 1941, between GEORGIA and Chemical Bank, as Trustee,
as supplemented by various supplemental indentures and as to be
further supplemented by a supplemental indenture to be dated
(except as otherwise indicated in the Prospectus Supplement) as of the
first day of the calendar month during which the new Bonds are
issued (the "new Supplemental Indenture"), all of which are exhibits
to the registration statement or incorporated by reference therein
and are collectively referred to as the "Mortgage". The statements
herein concerning the new Bonds and the Mortgage are an outline
and do not purport to be complete descriptions thereof. They make use
of defined terms and are qualified in their entirety by express
reference to the cited sections and articles of the Mortgage.
The new Bonds will mature on the date shown in their
title set forth in the Prospectus Supplement.
New Bonds in definitive form will be issued only as
registered bonds without coupons in denominations of $1,000 or
authorized multiples thereof, or in such other denominations as
set forth in the Prospectus Supplement. New Bonds will be exchangeable
for a like aggregate principal amount of new Bonds of other
authorized denominations, and will be transferable, at the principal
corporate trust office of the Trustee in New York City, or at such
other office or agency of GEORGIA as GEORGIA may from time to
time designate, without payment of any charge other than for any tax
or taxes or other governmental charge.
Any proposed listing of the new Bonds on a securities exchange
will be described in the Prospectus Supplement.
5
<PAGE>
Except as otherwise may be indicated in the Prospectus
Supplement, there are no provisions of the Mortgage which are
specifically intended to afford holders of the new Bonds
protection in the event of a highly leveraged transaction
involving GEORGIA.
Interest Rate Provisions: The Prospectus Supplement will set
forth the interest rate provisions of the new Bonds, including
the payment dates, the record dates and the rate or rates, or the
method of determining the rate or rates (which may involve
periodic interest rate settings through remarketing or auction
procedures or pursuant to one or more formulae, as described in
the Prospectus Supplement).
Redemption Provisions: The redemption provisions applicable to
the new Bonds will be described in the Prospectus Supplement.
Priority and Security: The new Bonds will rank equally as to
security with the bonds of other series presently outstanding under
the Mortgage, which is a direct first lien on substantially all
GEORGIA's fixed property and franchises, used or useful in
its public utility business, subject only to excepted encumbrances,
as defined in the Mortgage (Section 1.02).
The Mortgage permits, within certain limitations specified in
Section 7.05, the acquisition of property already subject to prior
liens. Under certain conditions specified in Section 7.14, additional
indebtedness secured by such prior liens may be issued to the extent
of 60% of the cost to GEORGIA or the fair value at date of
acquisition, whichever is less, of the net property additions made
by GEORGIA to the property subject to such prior lien.
Improvement Fund Requirement: Pursuant to the new Supplemental
Indenture and similar provisions of the supplemental indentures
creating other series of bonds currently outstanding under the
Mortgage (other than 31 series of bonds aggregating $1,026,970,000
in principal amount issued and outstanding at March 31, 1995,
as collateral security for certain pollution control obligations),
the annual improvement fund requirement applicable to the new Bonds
and the bonds of each such other series, which must be satisfied on
or before June 1 in each year, is equal to 1% of the principal
amount of bonds of each such series authenticated prior to the
preceding January 1 (less bonds of such series retired directly or
indirectly as a result of the release of property). The improvement
fund requirements may be satisfied in cash or in principal amount
of bonds authenticated under the Mortgage or to the extent of 60% of
the cost or fair value, whichever is less, of unfunded net property
additions. Any cash so deposited is to be used by the Trustee for
the redemption at their then special redemption prices or other
retirement of bonds of such series as may be designated by
GEORGIA (subject to such limitation, if any, as to the new Bonds
as set forth in the Prospectus Supplement and except as to
limitations which have been or may be established in the
supplemental indentures creating other series of bonds) or may
be withdrawn by GEORGIA against the deposit of bonds or to the
extent of 60% of unfunded net property additions.
Replacement Requirement: By Section 4 of the Supplemental
Indenture dated as of November 1, 1962, GEORGIA is required to
certify to the Trustee unfunded net property additions or to
deposit with the Trustee cash or bonds in an amount equal to the
amount by which annual expenditures for renewals and replacements
of the mortgaged property are less than 2.25% of the average annual
amount of depreciable mortgaged property or such revised percentage
as shall be authorized or approved by the SEC, or any successor
commission, under the Public Utility Holding Company Act of
1935. Any available replacement credit may be carried forward and
deposited cash or bonds may be withdrawn, used or applied in accordance
with the provisions of such section.
Any limitation on the right of GEORGIA to redeem new Bonds
through the operation of the replacement provisions of the Mortgage
will be described in the Prospectus Supplement.
The Mortgage (Section 7.17) provides for an examination of the
mortgaged property by an independent engineer at least once in every
five years. GEORGIA covenants to make good any maintenance deficiency
shown by the certificate of such engineer and to record retirements
as called for thereby.
Issuance of Additional Bonds: Additional bonds may be issued
under the Mortgage (a) under Article IV to the extent of 60% of the cost
or fair value at date of
6
<PAGE>
acquisition, whichever is less, of unfunded net property additions, as
defined in the Mortgage (Section 1.07), or (b) under Article V against
the retirement of other bonds theretofore outstanding under the
Mortgage, or (c) under Article VI against the deposit of cash equal to
the principal amount of bonds to be issued. However, such additional
bonds may be issued, except in certain cases when issued under Article
V, only if, for any period of 12 consecutive calendar months within
the 15 preceding calendar months, GEORGIA's net earnings, as defined
in the Mortgage (Section 1.09, as amended), shall have been at
least twice the annual interest charges on all bonds outstanding,
including the additional bonds applied for and all outstanding prior
lien bonds and other indebtedness of the character described in the
Mortgage. Such net earnings are computed, in effect, after deducting
(i) all operating expenses other than taxes measured by income and
(ii) the amount, if any, by which the charges for depreciation are
less than 2.25% of the average of the amounts of depreciable property
on the first and last days of such period.
Cash deposited as the basis for the issuance of bonds may be
applied to the retirement of bonds or be withdrawn against the deposit
of bonds or be withdrawn to the extent of 60% of the cost or fair
value, whichever is less, of unfunded net property additions
(Article VI).
Section 2.01 of the Mortgage, as amended by Section 1 of
the Supplemental Indenture dated as of October 25, 1972, as further
amended by Section 5 of the First Supplemental Indenture dated as of
April 1, 1978 and as further amended by Section 5 of the Supplemental
Indenture dated as of October 1, 1982, provides that the aggregate
principal amount of bonds which may be secured thereby shall
be such aggregate principal amount as may now or hereafter from
time to time be authenticated and delivered under the provisions
thereof, provided, however, that until an indenture or
indentures supplemental thereto shall be executed and delivered by
GEORGIA to the Trustee pursuant to authorization by the Board of
Directors and stockholders of GEORGIA and filed for record in all
counties in which the mortgaged property is located, increasing or
decreasing the amount of future advances and other indebtedness and
sums which may be secured thereby, the Mortgage may secure future
advances and other indebtedness and sums not to exceed in the
aggregate $5,000,000,000. Said Section 2.01, as amended, also provides
that such a supplemental indenture shall be executed and delivered
by GEORGIA and the Trustee upon the delivery by GEORGIA to the Trustee
of evidence conforming to the requirements of the Mortgage of the
due authorization thereof by the Board of Directors and stockholders of
GEORGIA. No action by bondholders is required.
Release and Substitution of Property: The Mortgage (Article X)
provides that, subject to various limitations, property may be released
from the lien thereof when sold or exchanged, upon the basis of cash
deposited with the Trustee, bonds or purchase money obligations
delivered to the Trustee, prior lien bonds delivered to the Trustee or
reduced or assumed, or property additions certified to the Trustee
or acquired in exchange for the property released.
The Mortgage (Section 10.05) permits the cash proceeds of released
property and other funds to be withdrawn upon a showing that unfunded
net property additions exist or against the deposit of bonds, or to be
applied to the retirement of bonds.
Restrictions on Common Stock Dividends: By Section 4 of
the Supplemental Indenture dated as of May 1, 1995, so long as any of
the bonds issued thereunder are outstanding, cash dividends may not be
paid or distributions be made on Common Stock (except where an equal
amount is concurrently repaid as a capital contribution or as the
purchase price of Common Stock) or Common Stock be purchased in an
aggregate amount which would exceed earned surplus accumulated after
March 31, 1995, plus earned surplus accumulated prior to April 1,
1995 in an amount not exceeding $518,000,000, plus such additional
amount as shall be authorized or approved by the SEC, or any
successor commission, under the Public Utility Holding Company Act
of 1935. There are various other dividend restrictions in the
Mortgage which remain in effect so long as bonds of other series
are outstanding.
Any restrictions on dividends and distributions on Common Stock
in the new Supplemental Indenture will be set forth in the Prospectus
Supplement.
See also "Description of New Stock -- Restrictions on Common
Stock Dividends" herein.
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Modification of the Mortgage: By Section 5(f) of the Supplemental
Indenture dated as of June 1, 1981, after the bonds of all series
created prior to June 1, 1981 have been retired, the Mortgage may be
modified with the consent of the holders of not less than a majority in
principal amount of the bonds at the time outstanding which would be
affected by the action proposed to be taken. However, the bondholders
shall have no power (i) to extend the fixed maturity of any bonds, or
reduce the rate or extend the time of payment of interest thereon, or
reduce the principal amount thereof, without the express consent of
the holder of each bond which would be so affected, or (ii) to
reduce the aforesaid percentage of bonds, the holders of which are
required to consent to any such modification, without the consent of
the holders of all bonds outstanding, or (iii) to permit the creation
by GEORGIA of any mortgage or pledge or lien in the nature thereof,
not otherwise permitted under the Mortgage, ranking prior to or equal
with the lien of the Mortgage on any of the mortgaged and pledged
property, or (iv) to deprive the holder of any bond outstanding under
the Mortgage of the lien thereof on any of the mortgaged and pledged
property. The Trustee shall not be obligated to enter into a
supplemental indenture which would affect its own rights, duties or
immunities under the Mortgage or otherwise.
Regarding the Trustee: Chemical Bank is Trustee under the
Mortgage. Such bank is a depositary of GEORGIA, and GEORGIA
and affiliates of GEORGIA from time to time make borrowings from
such bank.
Enforcement Provisions: The Mortgage (Section 11.05) provides
that, upon the occurrence of certain events of default, the Trustee
or the holders of not less than 20% in principal amount of outstanding
bonds may declare the principal of all outstanding bonds immediately
due and payable, but that, upon the curing of any such default, the
holders of a majority in principal amount of outstanding bonds may waive
such default and its consequences.
The holders of a majority in principal amount of outstanding bonds
may direct the time, method and place of conducting any proceedings
for the enforcement of the Mortgage (Section 11.12). No holder of
any bond has any right to institute any proceedings to enforce the
Mortgage or any remedy thereunder, unless such holder shall previously
have given to the Trustee written notice of a default, and unless
such holder or holders shall have tendered to the Trustee indemnity
against costs, expenses and liabilities, and unless the holders of
not less than 20% in principal amount of outstanding bonds shall have
tendered such indemnity and requested the Trustee to take action and
the Trustee shall have failed to take action within 60 days
(Section 11.14).
Defaults: By Section 11.01 of the Mortgage, the following events
are defined as "defaults": failure to pay principal; failure for 60
days to pay interest; failure for 90 days to pay any sinking or
other purchase fund installment; certain events in bankruptcy,
insolvency or reorganization; and failure for 90 days after
notice to perform other covenants. By Section 9.03 of the Mortgage,
a failure by GEORGIA to deposit or direct the application of money
for the redemption of bonds called for redemption also constitutes
a default.
Evidence as to Compliance with Conditions and Covenants: The
Mortgage requires GEORGIA to furnish to the Trustee, among other things,
a certificate of officers and an opinion of counsel as evidence of
compliance with conditions precedent provided for therein; a
certificate of an engineer (who, in certain instances, must
be an independent engineer) with respect to the fair value of
property certified or released; and a certificate of an accountant
(who, in certain instances, must be an independent public accountant)
as to compliance with the earnings, improvement fund and replacement
requirements. Various certificates and other documents are
required to be filed periodically or upon the happening of certain
events.
DESCRIPTION OF NEW STOCK
The new Class A Preferred Stock may be issued and sold by GEORGIA
in one or more classes (constituting series of Class A Preferred Stock).
In the following description, references to the "new Stock" are to
new Class A Preferred Stock of the particular class referred to in the
Prospectus Supplement.
General: The new Stock is to be created by amendment to the
charter of GEORGIA. The statements herein concerning the new Stock are
an outline and do not purport to be complete descriptions thereof.
They make use of defined terms and are qualified in their entirety
by express reference to the cited provisions of the charter and
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amendments thereto, copies of which are filed as exhibits to the
registration statement or incorporated by reference therein.
In addition to the Class A Preferred Stock, which is without par
value but which has a stated value of $25 per share, GEORGIA
has authorized and there are also outstanding shares of Preferred
Stock without par value but which have a stated value of $100 per
share. The Class A Preferred Stock ranks on a parity as to dividends
and assets with the outstanding Preferred Stock and has the same
rights and preferences as the outstanding Preferred Stock. As more
fully stated below, on all matters submitted to a vote of the holders
of the Preferred Stock and the Class A Preferred Stock (other than a
change in the rights and preferences of only one, but not the other,
such kind of stock), both kinds of stock vote together as a single
class, each share of Preferred Stock being counted as one and each
share of Class A Preferred Stock being counted as one-quarter.
The new Stock will not be subject to further calls or to
assessment by GEORGIA. Of the consideration to be received
therefor, $25 per share will be credited to Preferred Capital
Stock Account and any amount received in excess of $25 per share will
be credited to Premium on Preferred Stock Account.
The new Stock will be transferable at the office of Southern
Company Services, Inc., 64 Perimeter Center East, Atlanta, Georgia
30346. The registrar will be Southern Company Services, Inc.
Any proposed listing of the new Stock on a securities exchange
will be described in the Prospectus Supplement.
Dividend Rights and Provisions: The holders of the Preferred
Stock and the Class A Preferred Stock of each class are entitled to
receive cumulative dividends,payable when and as declared by the Board
of Directors, at the rates determined for the respective classes,
before any dividends may be declared or paid on the Common Stock.
Dividends on the Preferred Stock and the Class A Preferred Stock must
have been or be contemporaneously declared and set apart for
payment, or paid, on the Preferred Stock and the Class A Preferred
Stock of all classes for all dividend periods terminating on the
same or on an earlier date (General Provisions a and b).
The Prospectus Supplement will set forth the dividend rate
provisions of the new Stock, including the payment dates and the rate
or rates, or the method of determining the rate or rates (which
may involve periodic dividend rate settings through remarketing
or auction procedures or pursuant to one or more formulae, as described
in the Prospectus Supplement). Dividends payable on the new Stock will
be cumulative from the date of original issue.
Restrictions on Common Stock Dividends: GEORGIA's charter limits
cash dividends on Common Stock to 50% of net income available for such
stock during a prior period of 12 months if, calculated on a
corporate basis, the ratio of Common Stock equity to total
capitalization, including surplus, adjusted to reflect the
payment of the proposed dividend, is below 20%, and to 75% of such
net income if such ratio is 20% or more but less than 25% (General
Provisions b).
See also "Description of New Bonds -- Restrictions on Common
Stock Dividends" herein.
Redemption Provisions: The redemption provisions applicable to
the new Stock will be described in the Prospectus Supplement.
The charter provides that, so long as any shares of the
Preferred Stock originally issued after December 31, 1952 or any
shares of the Class A Preferred Stock are outstanding, GEORGIA shall
not redeem, purchase or otherwise acquire any shares of the Preferred
Stock or Class A Preferred Stock, if, at the time of such redemption,
purchase or other acquisition, dividends payable on the Preferred
Stock or Class A Preferred Stock of any class shall be in default
in whole or in part, unless, prior to or concurrently with such
redemption, purchase or other acquisition, all such defaults
shall be cured or unless such redemption, purchase or other
acquisition shall have been ordered, approved or permitted by the
SEC, or by any successor commission thereto, under the Public
Utility Holding Company Act of 1935 (General Provisions d).
Voting Rights: Except as otherwise provided by law or
in the charter, the exclusive right to vote is vested in the
holders of the Common Stock; provided, however, that, if and so
long as four quarterly dividends payable on the Preferred
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Stock or Class A Preferred Stock of any class shall be in default, the
holders of the Preferred Stock and Class A Preferred Stock of all
classes will have the exclusive right, voting separately from any
other kind of stock and as a single class (each share of Preferred Stock
being counted as one and each share of Class A Preferred Stock being
counted as one-quarter), to elect the smallest number of
directors which shall constitute a majority of the then authorized
number of directors and one vote per share for each share of
Preferred Stock and one-quarter vote per share for each share of
Class A Preferred Stock on all other matters (Voting Powers).
The affirmative vote of 66 % of the total number of shares of
Preferred Stock and Class A Preferred Stock at the time outstanding
(each share of Preferred Stock being counted as one and each share
of Class A Preferred Stock being counted as one-quarter) is required
to authorize the issuance (within 180 days after such vote) of any kind
of stock preferred as to dividends or assets over the Preferred
Stock or the Class A Preferred Stock or any security convertible
into any such kind of stock, or to adopt a charter amendment which
would either authorize or create any kind of stock preferred as
to dividends or assets over the Preferred Stock or the Class A
Preferred Stock or change any of the rights and preferences of
the outstanding Preferred Stock or Class A Preferred Stock in any
manner so as to affect adversely the holders thereof; provided,
however, that, if any such change would adversely affect the holders
of only one, but not the other, such kind of stock, only the vote of
the holders of at least 66 % of the outstanding shares of the kind
so affected would be required (General Provisions e).
The affirmative vote of a majority of the total number of
shares of Preferred Stock and Class A Preferred Stock at the time
outstanding (each share of Preferred Stock being counted as one
and each share of Class A Preferred Stock being counted as one-quarter)
is required for --
(1) a disposition of substantially all of GEORGIA's property
or a merger or consolidation, unless such action has been
approved by the SEC, or by any successor commission thereto,
under the Public Utility Holding Company Act of 1935;
(2) the issue or assumption of securities representing unsecured
debt (other than for the purpose of refunding or renewing
outstanding unsecured securities resulting in equal or longer
maturities or redeeming or otherwise retiring all outstanding
shares of the Preferred Stock and Class A Preferred Stock or of
any senior or equally ranking stock) if immediately after such
issue or assumption (i) the total outstanding principal amount
of all securities representing unsecured debt will thereby
exceed 20% of the aggregate of all existing secured debt and
the capital stock, premiums thereon, and surplus, as stated
on the books, or (ii) the total outstanding principal
amount of all securities representing unsecured debt of
maturities of less than ten years will thereby exceed 10% of
such aggregate. For the purpose of this provision, the payment
due upon the maturity of unsecured debt having an original
single maturity in excess of ten years or the payment due
upon the final maturity of any unsecured serial debt which
had original maturities in excess of ten years shall not be
regarded as unsecured debt of a maturity of less than ten years
until such payment shall be required to be made within three
years; or
(3) the issue of shares of Preferred Stock if the total number of
shares thereof to be outstanding would exceed 548,439 shares,
or the issue of any shares of Class A Preferred Stock, or
the issue of any stock ranking equally with the Preferred
Stock and Class A Preferred Stock, or the reissue of any
shares of Preferred Stock or Class A Preferred Stock or
equally ranking stock which have been redeemed, purchased or
otherwise acquired by GEORGIA, unless (a) net income
available for dividends for a period of 12 consecutive calendar
months within the 15 preceding calendar months is at least
equal to two times annual dividend requirements on all shares
of Preferred Stock and Class A Preferred Stock and
senior or equally ranking stock to be outstanding; (b) gross
income available for interest for a period of 12 consecutive
calendar months within the 15 preceding calendar months
is at least equal to one and one-half times the aggregate
of annual interest requirements and annual dividend
requirements on all shares of Preferred Stock and Class A
Preferred Stock and senior or equally ranking stock
to be outstanding; and (c) the aggregate of Common Stock
capital and surplus is not less than the aggregate amount
payable upon involuntary liquidation on all shares of
Preferred Stock and Class A Preferred Stock and senior
or equally ranking stock to be outstanding (General Provisions f).
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With respect to the limitations described in (2) above,
pursuant to the affirmative vote in favor thereof of a majority
of the total number of outstanding shares of Preferred Stock and
Class A Preferred Stock at a special meeting of the holders thereof
held on September 29, 1993, GEORGIA is authorized, notwithstanding such
limitations, to issue or assume until July 1, 2003 securities
representing unsecured short-term debt in excess of 10% of capital,
surplus and secured debt, provided that (a) none of such additional
short-term debt outstanding on July 1, 2003 shall mature on or after
January 1, 2004, and (b) GEORGIA's total indebtedness represented by
unsecured securities shall at no time exceed 20% of capital, surplus
and secured debt.
Liquidation Rights: Upon voluntary or involuntary liquidation,
the holders of the Preferred Stock and Class A Preferred Stock of
each class, without preference between kinds or classes of stock,
are entitled to receive the amount specified to be payable on the
shares of such class (which, in the case of the new Stock, is $25
per share on involuntary liquidation or an amount equivalent to
the then current regular redemption price per share on voluntary
liquidation, plus accrued dividends in each case) before any
distribution of assets may be made to the holders of the Common
Stock. Available assets, if insufficient to pay such amounts to
the holders of the Preferred Stock and Class A Preferred Stock,
are to be distributed pro rata to the payment, first of $100
per share on each outstanding share of Preferred Stock and of
$25 per share on each outstanding share of Class A Preferred Stock,
second of accrued dividends, and third of any premium (General
Provisions c).
Sinking Fund: The terms and conditions of a sinking or purchase
fund, if any, for the benefit of the holders of the new Stock will be
set forth in the Prospectus Supplement.
Other Rights: The holders of the new Stock do not have any
pre-emptive or conversion rights, except as otherwise described in the
Prospectus Supplement.
LEGAL OPINIONS AND EXPERTS
Troutman Sanders, Atlanta, Georgia, general counsel for GEORGIA,
will render an opinion as to the legality of the new First
Mortgage Bonds and the new Class A Preferred Stock. A separate firm
may act as counsel for the underwriters or purchasers and render an
opinion to them as to the legality of the new First Mortgage Bonds and
the new Class A Preferred Stock.
The financial statements and schedules of GEORGIA included in
GEORGIA's Annual Report on Form 10-K for the year ended
December 31, 1994, incorporated by reference in this Prospectus,
have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and
are incorporated herein in reliance upon the authority of said
firm as experts in accounting and auditing in giving said reports.
Reference is made to said reports, which include explanatory
paragraphs which refer to an uncertainty with respect to the actions
of the regulators regarding the recoverability of GEORGIA's investment
in the Rocky Mountain pumped storage hydroelectric project and to
the changes in the methods of accounting for postretirement benefits
other than pensions and for income taxes. With respect to the GEORGIA
unaudited interim financial information for the periods ended March 31,
1995 and 1994 included in GEORGIA's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1995, and incorporated by reference herein,
Arthur Andersen LLP has applied limited procedures in accordance with
professional standards for a review of such information. However,
their separate report thereon states that they did not audit and
they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their report on that information
should be restricted in light of the limited nature of the review
procedures employed. In addition, the accountants are not subject
to the liability provisions of Section 11 of the Securities Act of 1933
for their report on the unaudited interim financial information because
that report is not a "report" or a "part" of the registration
statement prepared or certified by the accountants within the meaning
of Sections 7 and 11 of the Act.
Statements as to matters of law and legal conclusions in
GEORGIA's Annual Report on Form 10-K for the year ended December
31, 1994, relating to titles to property of GEORGIA and SEGCO
under "Item 2--Properties--Titles to Property", relating to GEORGIA
and SEGCO under "Item 1--Business--Regulation" and relating
to GEORGIA under "Item 1--Business--Competition" and
"Item 1--Business--Rate Matters", have been reviewed as to
GEORGIA by Troutman Sanders, general counsel for GEORGIA, and as to
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SEGCO by Balch & Bingham, general counsel for SEGCO, and such
statements are made, respectively, upon the authority of such
firms as experts.
PLAN OF DISTRIBUTION
GEORGIA may sell the new First Mortgage Bonds and new Class
A Preferred Stock in one or more transactions. Purchasers of the new
First Mortgage Bonds and new Class A Preferred Stock from GEORGIA
may include underwriters, dealers or purchasers acting for themselves.
A Prospectus Supplement will set forth the purchase price of the new
First Mortgage Bonds and new Class A Preferred Stock with respect
to which an agreement of sale has been entered into by GEORGIA,
the proceeds to GEORGIA from such sale, and the terms of any
re-offering, including the names of any underwriters, any
underwriting discounts and other items consisting of
underwriters' compensation, any fixed public offering price and
any discounts or concessions allowed or reallowed or paid to
dealers. Any fixed public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be
changed from time to time.
If underwriters are involved in the sale, new First Mortgage
Bonds or new Class A Preferred Stock will be acquired by the
underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices
determined at the time of sale. Unless otherwise set forth in a
Prospectus Supplement, the obligations of the underwriters to
purchase new First Mortgage Bonds or shares of new Class A
Preferred Stock will be subject to certain conditions precedent,
and the underwriters will be obligated to purchase all such new
First Mortgage Bonds or shares of new Class A Preferred Stock
if any are purchased.
New First Mortgage Bonds and new Class A Preferred Stock
may be sold directly by GEORGIA or through agents designated by
GEORGIA from time to time. A Prospectus Supplement will set
forth the name of any agent involved in any such offer or sale, as
well as any commissions payable by GEORGIA to such agent. Unless
otherwise indicated in the Prospectus Supplement, any such agent will
be acting on a best efforts basis for the period of its appointment.
The Prospectus Supplement will set forth the name or names
and terms of appointment of any remarketing agent or agents or any
auction agent or agents which may be appointed by GEORGIA in
connection with any remarketing procedures or auction procedures,
as the case may be, that may be applicable as described in the
Prospectus Supplement.
GEORGIA may agree to indemnify underwriters and purchasers of
the new First Mortgage Bonds and new Class A Preferred Stock, and any
agents designated by GEORGIA as aforesaid, against certain civil
liabilities, including liabilities under the Securities Act of 1933.
Underwriters or purchasers of the new Class A Preferred Stock
may include one or more of the following: Robert W. Baird & Co.
Incorporated; Bear, Stearns & Co. Inc.; J.C. Bradford & Co.; Alex.
Brown & Sons Incorporated; Chase Securities Inc.; Chemical
Securities, Inc.; Citicorp Securities, Inc.; Dain Bosworth
Incorporated; Daiwa Securities America Inc.; Dillon, Read &
Co. Inc.; Donaldson, Lufkin & Jenrette Securities Corporation;
A.G. Edwards & Sons, Inc.; CS First Boston Corporation;
Goldman, Sachs & Co.; Interstate/Johnson Lane Corporation;
Raymond James and Associates, Inc.; Edward D. Jones & Co.; Kemper
Securities Group, Inc.; W.R. Lazard; Legg Mason Wood Walker
Incorporated; Lehman Brothers Inc.; Merrill Lynch, Pierce,
Fenner & Smith Incorporated; Morgan Keegan & Company, Inc.; J.P.
Morgan Securities Inc.; Morgan Stanley & Co. Incorporated;
Nomura Securities International, Inc.; PaineWebber Incorporated;
Prudential Securities Incorporated; Pryor, McClendon, Counts
& Co., Inc.; Rauscher Pierce Refsnes, Inc.; The Robinson-Humphrey
Company, Inc.; L.F. Rothschild and Co. Incorporated; Salomon
Brothers Inc; Smith Barney Inc.; Swiss Bank Corporation
International Securities Inc.; Thomson McKinnon Securities Inc.;
Tucker Anthony Inc.; UBS Securities Inc.; Wertheim Schroder &
Co. Incorporated; and Dean Witter Reynolds Inc.
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