SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________to __________
Commission Registrants; State of Incorporation; IRS Employer
File Number Address; and Telephone Number Identification No.
1-11327 Illinova Corporation 37-1319890
(an Illinois Corporation)
500 S. 27th Street
Decatur, IL 62525
(217) 424-6600
1-3004 Illinois Power Company 37-0344645
(an Illinois Corporation)
500 S. 27th Street
Decatur, IL 62525
(217) 424-6600
Indicate by check mark whether the registrants (1) have filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such report), and (2)
have been subject to such filing requirements for the past 90 days.
Illinova Yes X No
Corporation ---- ---
Illinois Power Yes X No
Company ---- ----
Indicate the number of shares outstanding of each of the issuers'
classes of common stock, as of the latest practicable date:
Illinova Corporation Common stock, no par value, 75,681,937
shares outstanding at March 31, 1997
Illinois Power Company Common stock, no par value, 72,031,846
shares outstanding held by Illinova
Corporation at March 31, 1997
ILLINOVA CORPORATION
ILLINOIS POWER COMPANY
This combined Form 10-Q is separately filed by Illinova Corporation and
Illinois Power Company. Information contained herein relating to
Illinois Power Company is filed by Illinova Corporation and separately
by Illinois Power Company on its own behalf. Illinois Power Company makes
no representation as to information relating to Illinova Corporation or
its subsidiaries, except as it may relate to Illinois Power Company.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
INDEX
PAGE NO.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Illinova Corporation
Consolidated Balance Sheets 3 - 4
Consolidated Statements of Income 5
Consolidated Statements of Cash Flows 6
Illinois Power Company
Consolidated Balance Sheets 7 - 8
Consolidated Statements of Income 9
Consolidated Statements of Cash Flows 10
Notes to Consolidated Financial Statements of
Illinova Corporation and
Illinois Power Company 11 - 12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations for Illinova Corporation
and Illinois Power Company 13 - 18
Part II. OTHER INFORMATION
Item 1: Legal Proceedings 19
Item 6: Exhibits and Reports on Form 8-K 19
Signatures 20 - 21
Exhibit Index 22
<TABLE>
PART I. FINANCIAL INFORMATION
ILLINOVA CORPORATION
CONSOLIDATED BALANCE SHEETS
(See accompanying Notes to Consolidated Financial Statements)
<C> <C> <C>
MARCH 31, DECEMBER 31,
1997 1996
ASSETS (Unaudited)
(Millions of Dollars)
Utility Plant, at original cost
Electric (includes construction work
in progress of $183.4 million and
$212.5 million, respectively) $ 6,368.4 $ 6,335.4
Gas (includes construction work
in progress of $14.4 million and
$21.2 million, respectively) 649.0 646.1
---------- --------
7,017.4 6,981.5
Less-Accumulated depreciation 2,456.1 2,419.7
---------- --------
4,561.3 4,561.8
Nuclear fuel in process 19.6 5.3
Nuclear fuel under capital lease 97.1 96.4
---------- ---------
Total utility plant 4,678.0 4,663.5
---------- ---------
Investments and Other Assets 153.7 146.2
---------- ---------
Current Assets
Cash and cash equivalents 31.3 24.6
Accounts receivable (less allowance
for doubtful accounts of $3.0 million)
Service 158.8 138.8
Other 76.3 62.0
Accrued unbilled revenue 86.0 106.0
Materials and supplies, at average cost 107.9 113.2
Prepayments and other 29.0 24.1
---------- ---------
Total current assets 489.3 468.7
---------- ---------
Deferred Charges
Deferred Clinton costs 103.0 103.9
Recoverable income taxes 111.0 101.3
Other 229.4 229.2
---------- ---------
Total deferred charges 443.4 434.4
---------- ---------
$5,764.4 $ 5,712.8
========== ==========
</TABLE>
<TABLE>
ILLINOVA CORPORATION
CONSOLIDATED BALANCE SHEETS
(See accompanying Notes to Consolidated Financial Statements)
<C> <C> <C>
MARCH 31, DECEMBER 31,
1997 1996
CAPITAL AND LIABILITIES
(Unaudited)
(Millions of Dollars)
Capitalization
Common stock -
No par value, 200,000,000 shares authorized;
75,681,937 shares outstanding,
stated at $ 1,425.7 $1,425.7
Less - Deferred compensation - ESOP 13.4 14.3
Retained earnings 253.5 233.0
Less - Capital stock expense 8.2 8.2
Preferred stock of subsidiary 96.2 96.2
Mandatorily redeemable preferred stock of
subsidiary 197.0 197.0
Long-term debt 100.0 --
Long-term debt of subsidiary 1,638.7 1,636.4
---------- ---------
Total capitalization 3,689.5 3,565.8
---------- ---------
Current Liabilities
Accounts payable 170.5 166.7
Notes payable 250.8 387.0
Long-term debt and lease obligations of
subsidiary maturing within one year 46.5 47.7
Other 156.9 146.6
---------- ---------
Total current liabilities 624.7 748.0
---------- ---------
Deferred Credits
Accumulated deferred income taxes 1,073.8 1,034.9
Accumulated deferred investment tax credits 213.8 215.5
Other 162.6 148.6
---------- ---------
Total deferred credits 1,450.2 1,399.0
---------- ----------
$ 5,764.4 $ 5,712.8
========== ==========
</TABLE>
<TABLE>
ILLINOVA CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(See accompanying Notes to Consolidated Financial Statements)
<C> <C> <C>
THREE MONTHS ENDED
MARCH 31,
1997 1996
(Unaudited)
(Millions except per
share)
Operating Revenues:
Electric $ 282.2 $ 278.7
Electric interchange 26.6 31.9
Gas 164.0 136.1
Diversified enterprises 97.4 5.1
---------- ----------
Total 570.2 451.8
---------- ----------
Operating Expenses:
Fuel for electric plants 45.3 66.6
Power purchased 35.8 9.8
Gas purchased for resale 99.7 73.0
Diversified enterprises 102.6 5.4
Other operating expenses 59.4 65.7
Maintenance 19.7 20.5
Depreciation & amortization 49.0 48.1
General taxes 38.7 37.8
---------- ----------
Total 450.2 326.9
---------- ----------
Operating Income 120.0 124.9
---------- ----------
Other Income and Deductions, (2.9) (14.9)
Net ---------- ----------
Income Before Interest Charges
and Income Taxes 117.1 110.0
---------- ----------
Interest Charges
Interest expense 36.4 33.8
Allowance for borrowed funds
during construction (1.4) (1.7)
Preferred dividend requirements 5.5 5.6
of subsidiary
---------- ----------
Total 40.5 37.7
---------- ----------
Income Before Income Taxes 76.6 72.3
---------- ----------
Income Taxes 32.6 29.0
---------- ----------
Net Income Applicable to Common Stock $ 44.0 $ 43.3
========== ==========
Earnings per common share $0.58 $0.57
Cash dividends declared per
common share $0.31 $0.28
Cash dividends paid per common $0.31 $0.28
share
Weighted average number of common 75,681,937 75,674,514
shares outstanding during period
</TABLE>
<TABLE>
ILLINOVA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(See accompanying Notes to Consolidated Financial Statements)
<C> <C> <C>
THREE MONTHS ENDED
MARCH 31,
1997 1996
(Unaudited)
(Millions of Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 44.0 $ 43.3
Items not requiring cash, net 69.6 45.0
Changes in assets and liabilities 1.2 56.0
-------- --------
Net cash provided by operating
activities 114.8 144.3
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures (33.9) (47.9)
Other investing activities (15.2) (3.0)
-------- --------
Net cash used in investing
activities (49.1) (50.9)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends on common stock (23.5) (21.2)
Exercise of stock options -- 1.1
Redemptions -
Short-term debt (136.2) (209.9)
Long-term debt of subsidiary -- (10.0)
Preferred stock of subsidiary -- (0.3)
Issuances -
Short-term debt -- 55.0
Long-term debt 100.0 --
Preferred stock of subsidiary -- 100.0
Other financing activities 0.7 (2.9)
--------- ---------
Net cash used in financing
activities (59.0) (88.2)
--------- ---------
NET CHANGE IN CASH AND
CASH EQUIVALENTS 6.7 5.2
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 24.6 11.3
--------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 31.3 $ 16.5
========= =========
</TABLE>
<TABLE>
ILLINOIS POWER COMPANY
CONSOLIDATED BALANCE SHEETS
(See accompanying Notes to Consolidated Financial Statements)
<C> <C> <C>
MARCH 31, DECEMBER 31,
1997 1996
ASSETS (Unaudited)
(Millions of Dollars)
Utility Plant, at original cost
Electric (includes construction work
in progress of $183.4 million and
$212.5 million, respectively) $ 6,368.4 $ 6,335.4
Gas (includes construction work
in progress of $14.4 million and
$21.2 million, respectively) 649.0 646.1
------------ ----------
7,017.4 6,981.5
Less-Accumulated depreciation 2,456.1 2,419.7
------------ ----------
4,561.3 4,561.8
Nuclear fuel in process 19.6 5.3
Nuclear fuel under capital lease 97.1 96.4
------------ ------------
Total utility plant 4,678.0 4,663.5
------------ -----------
Investments and Other Assets 6.4 14.5
------------ -----------
Current Assets
Cash and cash equivalents 15.9 12.5
Accounts receivable (less allowance
for doubtful accounts of $3.0 million)
Service 158.8 138.8
Other 18.9 51.1
Accrued unbilled revenue 86.0 106.0
Materials and supplies,
at average cost 107.2 112.2
Prepayments and other 27.8 23.7
------------ -----------
Total current assets 414.6 444.3
------------ -----------
Deferred Charges
Deferred Clinton costs 103.0 103.9
Recoverable income taxes 111.0 101.3
Other 239.1 241.0
------------ -----------
Total deferred charges 453.1 446.2
------------ -----------
$ 5,552.1 $ 5,568.5
============ ============
</TABLE>
<TABLE>
ILLINOIS POWER COMPANY
CONSOLIDATED BALANCE SHEETS
(See accompanying Notes to Consolidated Financial Statements)
<C> <C> <C>
MARCH 31, DECEMBER 31,
1997 1996
CAPITAL AND LIABILITIES (Unaudited)
(Millions of Dollars)
Capitalization
Common stock -
No par value, 100,000,000 shares
authorized; 75,643,937 shares issued,
stated at $ 1,424.6 $ 1,424.6
Retained earnings 271.9 245.9
Less - Capital stock expense 8.2 8.2
Less - 3,612,091 and 3,410,897 shares of
common stock in treasury, respectively,
at cost 90.5 86.2
Preferred stock 96.2 96.2
Mandatorily redeemable preferred stock 197.0 197.0
Long-term debt 1,638.7 1,636.4
------------ -----------
Total capitalization 3,529.7 3,505.7
------------ -----------
Current Liabilities
Accounts payable 118.0 149.7
Notes payable 250.8 310.0
Long-term debt and lease
obligations maturing
within one year 46.5 47.7
Other 154.6 148.1
------------ -----------
Total current liabilities 569.9 655.5
------------ -----------
Deferred Credits
Accumulated deferred income taxes 1,082.4 1,048.0
Accumulated deferred investment
tax credits 213.8 215.5
Other 156.3 143.8
------------ -----------
Total deferred credits 1,452.5 1,407.3
------------ -----------
$ 5,552.1 $ 5,568.5
============ ============
</TABLE>
<TABLE>
ILLINOIS POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(See accompanying Notes to Consolidated Financial Statements)
<C> <C> <C>
THREE MONTHS ENDED
MARCH 31,
1997 1996
(Unaudited)
(Millions of Dollars)
Operating Revenues:
Electric $ 282.2 $ 278.7
Electric interchange 26.6 31.9
Gas 164.0 136.1
---------- -----------
Total 472.8 446.7
----------- -----------
Operating Expenses and
Taxes:
Fuel for electric plants 45.3 66.6
Power purchased 35.8 9.8
Gas purchased for resale 99.7 73.0
Other operating expenses 59.4 65.7
Maintenance 19.7 20.5
Depreciation & amortization 49.0 48.1
General taxes 38.7 37.8
Income taxes 36.3 37.1
----------- ----------
Total 383.9 358.6
----------- ----------
Operating Income 88.9 88.1
---------- -----------
Other Income and
Deductions, Net (1.2) (6.9)
---------- -----------
Income Before Interest Charges 87.7 81.2
----------- ----------
Interest Charges and Other:
Interest Expense 34.1 33.8
Allowance for borrowed funds
used during construction (1.7) (1.4)
----------- ----------
Total 32.7 32.1
----------- ----------
Net Income 55.0 49.1
Preferred dividend
requirements 5.5 5.6
---------- ----------
Net Income applicable to
common stock $ 49.5 $ 43.5
========== ===========
</TABLE>
<TABLE>
ILLINOIS POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(See accompanying Notes to Consolidated Financial Statements)
<C> <C> <C>
THREE MONTHS ENDED
MARCH 31,
1997 1996
(Unaudited)
(Millions of Dollars)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income $ 55.0 49.1
Items not requiring cash, net 65.3 45.9
Changes in assets and 8.5 51.7
liabilities ------------ ------------
Net cash provided by operating 128.8 146.7
activities ------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures (33.9) (47.9)
Other investing activities 0.4 3.1
------------- -------------
Net cash used in investing (33.5) (44.8)
activities ------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends on preferred and
common stock (29.0) (24.5)
Repurchase of common stock (4.3) (7.7)
Redemptions -
Short-term debt (59.2) (209.9)
Long-term debt -- (10.0)
Preferred stock -- (0.3)
Common stock -- --
Issuances
Short-term debt -- 55.0
Preferred Stock -- 100.0
Other financing activities 0.6 (2.9)
------------- -------------
Net cash used in financing (91.9) (100.3)
activities ------------- -------------
NET CHANGE IN CASH AND CASH
EQUIVALENTS 3.4 1.6
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 12.5 4.3
------------- -------------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 15.9 $ 5.9
============ =============
</TABLE>
ILLINOVA CORPORATION AND ILLINOIS POWER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
GENERAL
Financial Statement note disclosures, normally included
in financial statements prepared in conformity
with generally accepted accounting principles,
have been omitted from this Form 10-Q pursuant
to the Rules and Regulations of the Securities
and Exchange Commission (SEC). However, in the
opinion of Illinova Corporation (Illinova) and
Illinois Power Company (IP), the disclosures and
information contained in this Form 10-Q are
adequate and not misleading. See the
consolidated financial statements and the
accompanying notes in Illinova's 1996 Annual
Report to Shareholders (included in the Proxy
Statement), the consolidated financial
statements and the accompanying notes in IP's
1996 Annual Report to Shareholders (included in
the Information Statement), Illinova's and IP's
1996 Form 10-K filings to the SEC for
information relevant to the consolidated
financial statements contained herein, including
information as to certain regulatory and
environmental matters and as to the significant
accounting policies followed.
In the opinion of Illinova, the accompanying
unaudited consolidated financial statements for Illinova
reflect all adjustments necessary to present
fairly the Consolidated Balance Sheets as of
March 31, 1997 and December 31, 1996, the
Consolidated Statements of Income for the three
months ended March 31, 1997 and 1996, and the
Consolidated Statements of Cash Flows for the
three months ended March 31, 1997 and 1996. In
addition, it is Illinova's and IP's opinion that
the accompanying unaudited consolidated
financial statements for IP reflect all
adjustments necessary to present fairly the
Consolidated Balance Sheets as of March 31, 1997
and December 31, 1996, the Consolidated
Statements of Income for the three months ended
March 31, 1997 and 1996, and the Consolidated
Statements of Cash Flows for the three months
ended March 31, 1997 and 1996. Due to seasonal
and other factors which are characteristic of
electric and gas utility operations, interim
period results are not necessarily indicative of
results to be expected for the year.
ACCOUNTING MATTERS
CONSOLIDATION
The consolidated financial statements of
Illinova include the accounts of Illinova, IP,
Illinova Generating Company (IGC), Illinova
Insurance Company (IIC), and Illinova Energy
Partners, Inc. (IEPI). All significant
intercompany balances and transactions have been
eliminated from the consolidated financial
statements. All non-utility operating
transactions are included in the sections titled
"Diversified enterprises", "Interest expense"
and "Income taxes" with the exception of some
immaterial transactions recorded in "Other
Income and Deductions, Net" in Illinova's
Consolidated Statements of Income. This
represents a format change to Illinova's
Consolidated Statements of Income and subsequent
reclassification of prior year's amounts to
conform to the new presentation.
The consolidated financial statements of IP
include the accounts of Illinois Power Capital,
L.P. and Illinois Power Financing I (IPFI). All
significant intercompany balances and
transactions have been eliminated from the
consolidated financial statements. All non-
utility operating transactions are included in
the section titled "Other Income and Deductions,
Net" in IP's Consolidated Statements of Income.
IP's consolidated financial position and results
of operations are currently the principal factors
affecting Illinova's consolidated financial
position and results of operations.
REGULATORY AND LEGAL MATTERS
OPEN ACCESS AND COMPETITION
IP continues to work with other interested
parties in the state to propose legislation that would
allow a managed transition to direct access for
all consumers. The proposed legislation, which
was introduced in the Illinois House of
Representatives on January 29, 1997, is designed
to provide an orderly transition to direct
access for all customers, and balance financial
stability for current utility providers with
customer choice.
Other parties have introduced plans that
allow for full competition by as early as 1998.
On February 18, 1997, the Citizen's Utility
Board (CUB) outlined its regulatory reform
proposal which would require utilities to
separate their generation assets, shop for the
cheapest available power in the wholesale
market, and sell that power to consumers, by
January 1999. On March 1, 1997, a new
restructuring bill was introduced in the
Illinois House. This bill, supported by a broad-
based alliance representing residential,
commercial and industrial consumers, would allow
all customers served by investor-owned utilities
to have equal access to a competitive electric
market by May 1, 1998. On March 7, 1997, a
fourth and final bill on this issue was
submitted to the Illinois House that also calls
for all customers to be able to choose their
electric supplier beginning May 1, 1998.
Legislation for regulatory reform is
currently being considered in the spring
legislative session. At this time, it is
impossible to predict what legislation, if any,
will be enacted. Unfavorable legislation could
have a material adverse impact on the financial
position of Illinova, IP and their operations.
IP currently prepares its financial
statements in accordance with Statement of
Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of
Regulation" (FAS 71). The SEC has raised the
issue of continued qualification to report under
FAS 71 for utilities in states that have changed
their utility laws to introduce competition,
even if the legislation provides for a
transition to full competition and for stranded
cost recovery. The Emerging Issues Task Force
(EITF) of the Financial Accounting Standards
Board (FASB) is scheduled to debate this and
related issues at its May 22, 1997 meeting.
Reporting under FAS 71 allows companies whose
service obligations and prices are regulated, to
maintain assets on their balance sheets
representing costs they reasonably expect to
recover from customers in the future, through
inclusion of such costs in their rates. If IP
ceased to qualify for reporting under FAS 71, it
could be required to write off its regulatory
assets, and this could have a material adverse
impact on the financial position of Illinova, IP
and their operations.
MANUFACTURED GAS PLANT SITES
IP's liability for Manufactured Gas Plant
(MGP) site remediation is $70.2 million. This
amount represents IP's best estimate of its
remaining costs to remediate the 24 MGP sites
for which it is responsible. Because of the
unknown and unique characteristics of each site,
IP is not able to determine its ultimate
liability for remediation. IP is recovering MGP
site cleanup costs from its customers through
tariff riders approved by the Illinois Commerce
Commission (ICC) in March 1996. In anticipation
of full recovery of MGP site costs, IP has
recorded a regulatory asset equivalent to its
liability.
IP is continuing settlement discussions
with its insurance carriers regarding the
recovery of estimated MGP site remediation
costs. A settlement has been reached with
thirteen carriers, and settlement negotiations
with nine other carriers are ongoing.
Litigation related to a suit filed by IP in
October 1995 seeking a declaratory judgment and
damages regarding insurance coverage for four
MGP sites is in progress. The trial has been
scheduled for January, 1998. Any insurance
recoveries received will cause the regulatory
asset to be reduced by the amount of the
recovery.
TREASURY STOCK
IP repurchased 201,194 shares of its common
stock from Illinova during the three months
ended March 31, 1997. Through March 31, 1997, IP
has purchased 3,612,091 shares of its common
stock, all of which are held as treasury stock
and are deducted from common equity at the cost
of the shares.
ILLINOVA CORPORATION AND ILLINOIS POWER COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the Notes to the
Consolidated Financial Statements and
Management's Discussion and Analysis of
Financial Condition and Results of Operations
presented in Illinova's 1996 Annual Report to
Shareholders (included in the Proxy Statement),
the Consolidated Financial Statements and
Management's Discussion and Analysis of
Financial Condition and Results of Operations
presented in IP's 1996 Annual Report to
Shareholders (included in the Information
Statement), and Illinova's and IP's Form 10-K
for the year ended December 31, 1996.
ILLINOVA SUBSIDIARIES
IP is the primary business and subsidiary
of Illinova and engages in the generation,
transmission, distribution and sale of electric
energy and the distribution, transportation and
sale of natural gas in the State of Illinois.
IGC is a wholly-owned independent power
subsidiary of Illinova and invests in energy
supply projects throughout the world. IGC's
strategy is to invest in and develop
"greenfield" power plants, acquire existing
generation facilities and provide power plant
operations and maintenance services.
IEPI is a wholly-owned subsidiary of
Illinova formed in May 1996. IEPI develops and
markets energy-related services to the
unregulated energy market throughout the United
States and engages in the brokering and
marketing of electric power and gas.
IIC is a wholly-owned subsidiary of Illinova and
was licensed by the State of Vermont as a captive
insurance company in August 1996. The primary
business of IIC is to insure certain risks of
Illinova and its subsidiaries.
LIQUIDITY AND CAPITAL RESOURCES
CAPITAL RESOURCES AND REQUIREMENTS
Cash flows from operations during the first
three months of 1997 provided sufficient working
capital to meet ongoing operating requirements,
to service existing common and IP preferred
stock dividends and debt requirements and all of
IP's construction requirements. Additionally,
Illinova expects 1997 cash flows will enable it
to meet operating requirements and continue to
service IP's existing debt, IP's preferred and
Illinova's common stock dividends, IP's sinking
fund requirements and IP's anticipated
construction requirements. IP periodically
repurchases shares of its common stock from
Illinova to provide Illinova cash for
operations, in accordance with authority granted
by the ICC. During the first three months of
1997, IP made purchases of 201,194 shares.
On April 10, 1997, IP issued $150 million
of Adjustable Rate Pollution Control Revenue
Refunding Bonds, due April 1, 2032. The
proceeds will be used on June 2, 1997 to retire
$150 million of IP's 7 5/8% pollution control
first mortgage bonds due 2016. IP issued a call
notice on April 28, 1997 to retire the 7 5/8%
bonds at a premium of 103.
IP's capital requirements for construction
were approximately $34 million and $48 million
during the three months ended March 31, 1997 and
1996, respectively.
Illinova and IP currently have total lines
of credit represented by bank commitments of
$150 million and $354 million, respectively.
Both Illinova and IP have adequate short- and
intermediate-term bank borrowing capacity.
Currently, Illinova is reviewing additional
financing alternatives to provide cash for
operations and has remaining shelf authority
with the SEC to issue $200 million in debt
securities.
Presently, IP's mortgage bonds are rated
Baa1 by Moody's, BBB+ by Duff & Phelps, and BBB
by Standard & Poor's. IP's preferred stock is
rated Baa2 by Moody's and BBB- by both Duff &
Phelps and Standard & Poor's.
Illinova's $100 million senior notes issued
February 5, 1997 have a rating of Baa3 and BBB-
from Moody's and Standard & Poor's,
respectively.
ACCOUNTING ISSUES
IP is considering seeking regulatory
approval to increase the rate at which its
generation-related assets are expensed. Because
this change is viewed as discretionary, and
subject to regulatory approval, the rate of such
increase, if any, will be based on then current
conditions and financial performance. The
increase in expense could begin as early as the
second quarter of 1997 and could amount to at
least $400 million in the aggregate through the
year 2001, and potentially more thereafter,
depending on changes in regulation, the
marketplace and financial performance. This
reduction in the net book value of IP's
generating assets should help position the
Company to operate competitively and profitably
in the changing business environment. This
acceleration of expense would have a direct
impact on earnings but not on cash flow.
For further information on accounting
issues, see "Open Access and Competition" under
"Regulatory and Legal Matters" of the "Notes to
Consolidated Financial Statements" on page 12 of
this report.
REGULATORY MATTERS
ACQUISITION OF CLINTON POWER STATION FROM
SOYLAND
On March 13, 1997, the Nuclear Regulatory
Commission (NRC) issued an order approving transfer of the
Clinton Power Station (Clinton) operating
license related to Soyland Power Cooperative's
(Soyland) 13.21% ownership, to IP, in connection
with the transfer from Soyland to IP of all of
Soyland's interest in Clinton pursuant to an
agreement reached in 1996. Soyland's title to
the plant and directly related assets such as
nuclear fuel was transferred to IP on May 1,
1997. Soyland's nuclear decommissioning trust
will also be transferred to IP, consistent with
IP's assumption of all of Soyland's ownership
obligations including those related to
decommissioning. On February 21, 1997, IP filed
with the Federal Energy Regulatory Commission
(FERC) an amended Power Coordination Agreement
(PCA) between Soyland and IP entered into in
furtherance of the transfer. FERC
approval of the amended PCA is expected by the
third quarter of 1997. That Agreement obligates
Soyland to purchase all of its capacity and
energy needs from IP for at least ten years.
OPEN ACCESS AND COMPETITION
See "Open Access and Competition" under
"Regulatory and Legal Matters" of the "Notes to
Consolidated Financial Statements" on Page 12 of
this report.
ENVIRONMENTAL MATTERS
GAS MANUFACTURING SITES
See "Manufactured Gas Plant Sites" under
"Regulatory and Legal Matters" of the Notes to Consolidated
Financial Statements on page 12 of this report.
NITROGEN OXIDE
Regulators in the Chicago and metropolitan
areas of the Northeast are continuing to examine
potential approaches for compliance with current
federal ozone level requirements impacted by
nitrogen oxide (NOx) emissions. A regulatory
initiative to examine recommendations on
reducing the amount of ozone transported across
the eastern United States is expected to release
its findings by June 1997. Any legislative
action resulting from the initiative's findings
could make IP's fossil-fuel generating plants
less competitive.
CLINTON POWER STATION
On September 6, 1996, leakage at a recirculation
pump seal caused IP operations personnel to shut down
Clinton. IP decided not to restart Clinton prior to the
start of the scheduled refueling outage on
October 13, 1996. During the current outage,
Clinton has attempted to modify the first of
three divisions of its electrical power system.
Because of deficiencies in the implementation of
the new transformer design, the decision was
made to return to the old transformers until the
newer design is modified and fully tested. This
unanticipated delay, along with necessary NRC
approval of the action, will delay start up of
Clinton. It is anticipated Clinton will return
to service before the summer cooling season,
when demand is greatest. If Clinton does not
return to service as anticipated, there could be
periods when IP is unable to meet demand.
The seventh refueling outage at Clinton
originally scheduled for the spring of 1998 is
now planned for the fall of 1998.
WOOD RIVER POWER STATION
On December 18, 1996, the control and computer
rooms for Wood River units 4 and 5 were damaged by an
in-plant fire. Current estimates are to return
Unit 4 to service in June 1997, with Unit 5
returning to service in September
1997. The cost associated with restoring the
units to service is not expected to have a
material adverse impact on Illinova, IP and
their operations.
POWER SUPPLY AND RELIABIITY
Electricity may be in short supply
throughout Illinois and Wisconsin this summer
because of an unusually high number of plant
outages in this region. If the weather is
abnormally hot and if IP's major generating
units were to require maintenance and/or
experience delay in returning to service, IP may
be unable to meet demand. Although IP can
purchase replacement power, and has secured
generation and transmission capacity in order to
guard against disruptions in service,
availability of power in the region may be
limited, and recovery of the added expense is
subject to ICC approval in the annual
reconciliation of the Uniform Fuel Adjustment
Clause (UFAC) cost recovery mechanism. IP will
also be incurring additional expense by
reactivating older power plants in cold storage
and upgrading electric transmission facilities
in an attempt to avoid a power supply shortage.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
Electric Operations - Electric revenues for
the first quarter of 1997 increased $3.5 million
compared to the first quarter of 1996. Electric
interchange sales decreased $5.3 million in the
same time frame due to reduced available
capacity to sell. Heating degree days decreased
approximately nine percent during the first
quarter of 1997 compared to the same time frame
in 1996, resulting in a 1.5% decrease in
kilowatt hour (kwh) sales to the temperature
sensitive residential market. Revenue from the
industrial and commercial markets remained
relatively stable. Power purchased increased
$26 million for the period due to lower
equivalent availability at both the nuclear and
fossil facilities. This increase in operating
costs was partially offset by a decrease of
$21.3 million in fuel for electric plants.
The equivalent availability of Clinton was 0.0%
and 99.7% for the three months ended March 31, 1997
and 1996, respectively. Clinton was unavailable
in the first quarter of 1997 due to the
continued outage which began September 6, 1996.
The equivalent availability for IP's coal-fired
plants was 70.9% and 83.2% for the three months
ended March 31, 1997 and 1996, respectively.
The lower equivalent availability for the fossil
plants in 1997 was primarily due to the fire and
subsequent shut-down of the Wood River fossil
station in December, 1996.
Gas Operations - Gas revenues increased
$27.9 million in the first quarter of 1997.
Therms transported increased 65% (35.1 million
therms) resulting in an increase to revenue of
$1.9 million. Gas prices charged by suppliers
drastically increased during the first quarter
of 1997. Nationwide, supplier prices increased
50-70% over 1996.
This in turn caused the Purchased Gas Adjustment
(PGA) rates to rise, which increased gas
revenues by $39.9 million.
This increase was offset by reduced volumes
caused in part by milder weather in 1997 than in
1996. Therm sales
decreased 13.5% (43.2 million therms) resulting
in a total decrease in gas consumption of 2.1%
(8.0 million therms).
Other Income and Deductions, Net - The
current quarter decrease in net deductions of
$12 million is primarily a result of 1996 costs
recorded to reflect the planned disposition of
property, partially offset by 1997 holding
company expenses and decreased interest
revenues.
Operation and Maintenance Expense - The
current quarter decrease of $7.1 million dollars
is primarily due to lower expenses associated
with professional services, maintenance of
dispatch equipment, employee activities and
reduced pension plan contributions. The first
quarter trend in lower Operation and Maintenance
expenses is not expected to continue throughout
1997.
Diversified enterprises revenues increased
$92.3 million for the first quarter of 1997 due
to increased activity at IEPI. However,
diversified enterprises expenses increased $97.2
million which offsets the growth in revenues.
Earnings per Common Share - The earnings
per common share for Illinova during the first
quarter of 1997 and 1996 resulted from the
interaction of all other factors discussed
herein.
PART II. OTHER INFORMATION
ITEM 1.
Legal Proceedings
See "Notes to Consolidated Financial
Statements" in Part I for a discussion of
certain legal proceedings related to
manufactured gas plant sites.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The Exhibits filed with this 10-Q
are listed on the Exhibit Index.
(b) Reports on Form 8-K since January
1, 1997:
Report filed on Form 8-K on
January 29, 1997 Other Events: NRC
informed IP via letter that it
viewed Clinton as having a
declining safety performance trend, but
did not place Clinton on its semiannual "watch
list".
Report filed on Form 8-K on March 6, 1997
Other Events: Communication to the Financial Community
regarding the status of Clinton outage.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
ILLINOVA CORPORATION
(Registrant)
By /s/Leah Manning Stetzner
--------------------------
Leah Manning Stetzner,
General Counsel and
Corporate Secretary
on behalf of
Illinova Corporation
Date: May 14, 1997
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
ILLINOIS POWER COMPANY
(Registrant)
By /s/Leah Manning Stetzner
--------------------------
Leah Manning Stetzner,
Vice President, General
Counsel, and Corporate
Secretary on behalf of
Illinois Power Company
Date: May 14, 1997
EXHIBIT INDEX
PAGE NO. WITHIN
SEQUENTIAL NUMBERING
EXHIBIT DESCRIPTION SYSTEM
4(a) Supplemental Indenture dated 23
April 1, 1997 to Mortgage
and Deed of Trust dated
November 1, 1943.
4(b) Supplemental Indenture dated 34
April 1, 1997 to General
Mortgage Indenture and Deed
of Trust dated
as of November 1, 1992.
27 Financial Data Schedule UT
(filed herewith)
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE BALANCE SHEET,
INCOME STATEMENT AND CASH FLOW STATEMENT OF
ILLINOIS POWER COMPANY AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO THE BALANCE
SHEET, INCOME STATEMENT AND CASH FLOW
STATEMENT OF ILLINOIS POWER COMPANY.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 4678
<OTHER-PROPERTY-AND-INVEST> 6
<TOTAL-CURRENT-ASSETS> 415
<TOTAL-DEFERRED-CHARGES> 453
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 5552
<COMMON> 1326
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 272
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1598
197
96
<LONG-TERM-DEBT-NET> 1577
<SHORT-TERM-NOTES> 75
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 176
<LONG-TERM-DEBT-CURRENT-PORT> 11
0
<CAPITAL-LEASE-OBLIGATIONS> 61
<LEASES-CURRENT> 36
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1725
<TOT-CAPITALIZATION-AND-LIAB> 5552
<GROSS-OPERATING-REVENUE> 473
<INCOME-TAX-EXPENSE> 36
<OTHER-OPERATING-EXPENSES> 348
<TOTAL-OPERATING-EXPENSES> 384
<OPERATING-INCOME-LOSS> 89
<OTHER-INCOME-NET> (1)
<INCOME-BEFORE-INTEREST-EXPEN> 88
<TOTAL-INTEREST-EXPENSE> 33
<NET-INCOME> 55
5
<EARNINGS-AVAILABLE-FOR-COMM> 50
<COMMON-STOCK-DIVIDENDS> 24
<TOTAL-INTEREST-ON-BONDS> 28
<CASH-FLOW-OPERATIONS> 129
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
=========================================================================
ILLINOIS POWER COMPANY
TO
HARRIS TRUST AND SAVINGS BANK,
as Trustee
Supplemental Indenture
DATED AS OF APRIL 1, 1997
TO
General Mortgage Indenture and Deed of Trust
DATED AS OF NOVEMBER 1, 1992
===================================================================
SUPPLEMENTAL INDENTURE dated as of April 1, 1997 (the "Supplemental
Indenture"), made by and between ILLINOIS POWER COMPANY, a corporation
organized and existing under the laws of the State of Illinois (the
"Company"), party of the first part, and HARRIS TRUST AND
SAVINGS BANK, a corporation organized and existing under the laws of
the State of Illinois (the "Trustee"), as Trustee under the General
Mortgage Indenture and Deed of Trust dated as of November 1, 1992,
hereinafter mentioned, party of the second part;
WHEREAS, the Illinois Development Finance Authority Act
(20 ILCS 3505/1 et seq.), as amended and supplemented (the "Act"),
authorizes and empowers the Illinois Development Finance Authority, a
political subdivision and body politic and corporate, duly organized
and validly existing under and by virtue of the Constitution and laws of
the State of Illinois ("IDFA") to issue bonds for the refunding of any
bonds deemed necessary in connection with any purpose of IDFA; and
WHEREAS, pursuant to and in accordance with the provisions of the
Illinois Environmental Facilities Financing Act (20 ILCS 3515/1 et
seq.), as amended and supplemented (the "Environmental Act"), IDFA has
heretofore made a loan to the Company for the purpose of financing the
acquisition, construction and installation of the Company's ownership
interest in certain air and water pollution control, sewage and solid
waste disposal facilities, including all machinery and other equipment
required for said facilities, all located at the Company's Clinton
Generating Station near Clinton, in DeWitt County, Illinois (the
"Project"); and
WHEREAS, IDFA has financed a portion of the costs of the Project
as an authorized project under the Environmental Act by the issuance
of three separate series of its Pollution Control Revenue Bonds
(Illinois Power Company Project) Series 1986A in the aggregate
principal amount of $25,000,000; Series 1986B in the aggregate
principal amount of $50,000,000, and Series 1986C in the aggregate
principal amount of $75,000,000 (all of which are currently outstanding)
(the "Prior Bonds") and by loaning the proceeds therefrom
to the Company; and
WHEREAS, IDFA now intends to issue its Adjustable Rate Pollution
Control Revenue Refunding Bonds in the aggregate principal amount of
$150,000,000 in three separate series consisting of (i) $70,000,000
aggregate principal amount Adjustable Rate Pollution Control Revenue
Refunding Bonds, 1997 Series A (Illinois Power Company Project) (the
"Series A IDFA Bonds"), (ii) $45,000,000 aggregate principal amount of
Adjustable Rate Pollution Control Revenue Refunding Bonds, 1997 Series
B (Illinois Power Company Project) (the "Series B IDFA Bonds"), and
(iii) $35,000,000 aggregate principal amount of Adjustable Rate
Pollution Control Revenue Refunding Bonds, 1997 Series C (Illinois
Power Company Project) (the "Series C IDFA Bonds") (the Series A IDFA
Bonds, Series B IDFA Bonds and Series C IDFA Bonds shall collectively
be referred to as the "Related IDFA Bonds") and to lend the proceeds
of the issuance of the Related IDFA Bonds to the Company pursuant to
three separate Loan Agreements each dated as of April 1, 1997
(individually as from time to time amended or modified a "Loan
Agreement" and collectively the "Loan Agreements"), to assist the
Company in refunding on or about June 1, 1997 the Prior Bonds; and
WHEREAS, the Series A IDFA Bonds, Series B IDFA Bonds and Series
C IDFA Bonds will be issued by IDFA pursuant to three separate
Indentures of Trust (as from time to time amended or modified, the
"IDFA Series A Indenture," the "IDFA Series B Indenture" and the "IDFA
Series C Indenture," respectively), each dated as of April 1, 1997
between IDFA and Harris Trust and Savings Bank as Trustee under each
such Indenture (together with any successor in such capacity the "IDFA
Indenture Trustee");
WHEREAS, the Company has heretofore executed and delivered its
General Mortgage Indenture and Deed of Trust dated as of November 1,
1992 as from time to time amended (the "Indenture"), to the Trustee,
for the security of the Bonds of the Company issued and to be issued
thereunder (the "Bonds"); and
WHEREAS, pursuant to the terms and provisions of the Indenture
there were created and authorized by Supplemental Indentures thereto
bearing the following dates, respectively, the New Mortgage Bonds of
the series issued thereunder and respectively identified opposite such
dates:
<TABLE>
<C> <C> <C>
Date of Identification of Series Called
Supplemental ------------------------ ------
Indenture
------------
February 15, 1993 8% Series due 2023 Bonds of the 2023
Series
March 15, 1993 6-1/8% Series due 2000 Bonds of the 2000
Series
March 15, 1993 6-3/4% Series due 2005 Bonds of the 2005
Series
July 15, 1993 7-1/2% Series due 2025 Bonds of the 2025
Series
August 1, 1993 6-1/2% Series due 2003 Bonds of the 2003
Series
October 15, 1993 5-5/8% Series due 2000 Bonds of the
Second 2000 Series
November 1, 1993 Pollution Control Series M Bonds of the
Pollution Control
Series M
November 1, 1993 Pollution Control Series N Bonds of the
Pollution Control
Series N
November 1, 1993 Pollution Control Series O Bonds of the
Pollution Control
Series O
</TABLE>
and
WHEREAS, the Company desires to create three new series
of Bonds to be issued under the Indenture to be known as New Mortgage
Bonds, Pollution Control Series P (the "Pollution Control Series P
Bonds"), New Mortgage Bonds, Pollution Control Series Q (the
"Pollution Control Series Q Bonds") and New Mortgage Bonds, Pollution Control
Series R (the "Pollution Control Series R Bonds") to secure its
obligations under the Loan Agreements; and
WHEREAS, the Company, in the exercise of the powers and authority
conferred upon and reserved to it under the provisions of the
Indenture, and pursuant to appropriate resolutions of the Board of
Directors, has duly resolved and determined to make, execute and
deliver to the Trustee a Supplemental Indenture in the form hereof for
the purposes herein provided; and
WHEREAS, all conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument have been
done, performed and fulfilled and the execution and delivery hereof
have been in all respects duly authorized;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
THAT Illinois Power Company, in consideration of the
purchase and ownership from time to time of the Bonds and the service by
the Trustee, and its successors, under the Indenture and of One Dollar to
it duly paid by the Trustee at or before the ensealing and delivery of
these presents, the receipt whereof is hereby acknowledged, hereby
covenants and agrees to and with the Trustee and its successors in the
trust under the Indenture, for the benefit of those who shall hold the
Bonds as follows:
ARTICLE I.
DESCRIPTION OF POLLUTION CONTROL SERIES P BONDS.
SECTION 1. The Company hereby creates a new series of Bonds to be
known as "Pollution Control Series P Bonds." The Pollution Control
Series P Bonds shall be executed, authenticated and delivered in
accordance with the provisions of, and shall in all respects be
subject to, all of the terms, conditions and covenants of the
Indenture, as supplemented and modified. The Pollution Control Series
P Bonds shall be issued only to the IDFA Indenture Trustee as security
for the Company's obligations under the Loan Agreement relating to the
Series A IDFA Bonds. The Company shall not cause any Pollution
Control Series P Bonds to be paid or deemed to be paid prior
to the payment of the Series A IDFA Bonds.
The Pollution Control Series P Bonds shall be dated as provided
in Section 3.03 of Article Three of the Indenture. The Pollution
Control Series P Bonds shall mature at the same time as the Series A
IDFA Bonds, and shall not bear interest.
SECTION 2. The Pollution Control Series P Bonds and the Trustee's
Certificate of Authentication shall be substantially in the following
forms respectively:
[FORM OF FACE OF BOND)
ILLINOIS POWER COMPANY
(Incorporated under the laws of the State of Illinois)
NEW MORTGAGE BOND, POLLUTION CONTROL SERIES P
No. ________ $80,500,000
ILLINOIS POWER COMPANY, a corporation organized and existing
under the laws of the State of Illinois (the "Company"), which term
shall include any successor corporation as defined in the Indenture
hereinafter referred to), for value received, hereby promises to pay
to Harris Trust and Savings Bank, as Trustee (the "IDFA Indenture
Trustee") under the Indenture of Trust relating to the Adjustable Rate
Pollution Control Revenue Refunding Bonds, 1997 Series A (the "Series
A IDFA Bonds"), between the Illinois Development Finance Authority
("IDFA") and the IDFA Indenture Trustee (the "IDFA Series A Indenture"),
or registered assigns, the principal sum of $80,500,000
on the date that the Series A IDFA Bonds mature, in any coin or
currency of the United States of America which at the time of payment
is legal tender for public and private debts. This Bond shall not bear
interest. The principal of this Bond is payable at the agency of the
Company in the City of Chicago, Illinois.
This Bond shall not be entitled to any benefit under the
Indenture or any indenture supplemental thereto, or become valid or
obligatory for any purpose, until the form of certificate endorsed
hereon shall have been signed by or on behalf of Harris Trust and
Savings Bank, the Trustee under the Indenture, or a successor trustee
thereto under the Indenture (the "Trustee").
The provisions of this Bond are continued on the reverse hereof
and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
IN WITNESS WHEREOF, Illinois Power Company has caused this Bond
to be signed (manually or by facsimile signature) in its name by an
Authorized Executive Officer, as defined in the aforesaid Indenture,
and its corporate seal (or a facsimile thereof) to be hereto affixed
and attested (manually or by facsimile signature) by an Authorized
Executive Officer, as defined in such Indenture on the date hereof.
Dated __________, 1997 ILLINOIS POWER COMPANY,
By ______________________________
Authorized Executive Officer
ATTEST:
_________________________________
Authorized Executive Officer
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Bonds of the series designated therein
referred to in the within-mentioned Indenture and Supplemental
Indenture dated as of April 1, 1997.
HARRIS TRUST AND SAVINGS BANK,
Trustee,
By ______________________________
Authorized Signatory
[FORM OF REVERSE OF BOND]
This Bond is one of a duly authorized issue of Bonds of the
Company (the "Bonds") in unlimited aggregate principal amount, of the
series hereinafter specified, all issued and to be issued under and
equally secured by the General Mortgage Indenture and Deed of Trust
(the "Indenture"), dated as of November 1, 1992, executed by the
Company to Harris Trust and Savings Bank (the "Trustee"), as Trustee,
to which Indenture and all indentures supplemental thereto reference
is hereby made for a description of the properties mortgaged and
pledged, the nature and extent of the security, the rights of
registered owners of the Bonds and of the Trustee in respect thereof,
and the terms and conditions upon which the Bonds are, and are to be,
secured. The Bonds may be issued in series, for various principal
sums, may mature at different times, may bear interest at different
rates and may otherwise vary as provided in the Indenture. This Bond
is one of a series designated as the "New Mortgage Bonds, Pollution
Control Series P" (the "Pollution Control Series P Bonds") of the
Company, unlimited in aggregate principal amount, issued under and
secured by the Indenture and described in the Supplemental Indenture
dated as of April 1, 1997 (the "Supplemental Indenture of April 1,
1997"), between the Company and the Trustee, supplemental to the
Indenture.
This Pollution Control Series P Bond shall not bear interest.
This Pollution Control Series P Bond is subject to redemption in
accordance with the terms of Section 3 of Article I in the
Supplemental Indenture of April 1, 1997.
In case an Event of Default, as defined in the Indenture, shall
occur, the principal of all Bonds at any such time outstanding under
the Indenture may be declared or may become due and payable, upon the
conditions and in the manner and with the effect provided in the
Indenture. The Indenture provides that such declaration may be
rescinded under certain circumstances.
SECTION 3. The Pollution Control Series P Bonds shall be
redeemed in whole whenever the Trustee receives a written notice from
the trustee under the IDFA Series A Indenture stating that the
principal of any bonds then outstanding under the IDFA Series A
Indenture has been declared to be immediately due and payable pursuant
to the provision of Section 902 thereof. Such redemption shall be on
any date not more than one (1) business day after the receipt of such
notice from the trustee under the IDFA Series A Indenture. Any such
redemption shall be at the redemption price of 100% of the principal
amount of the Bonds to be redeemed, together with accrued interest to
the date selected for redemption. A demand from the trustee under the
IDFA Series A Indenture shall be executed on behalf of such trustee by
its President or a Vice President or a Trust Officer and shall be
deemed received by the Trustee when delivered at its corporate trust
office in Chicago, Illinois. The Trustee may conclusively rely as to
the truth of the statements contained therein upon any such demand.
Subject to the provisions of the Indenture, notice of redemption
of Pollution Control Series P Bonds shall be sent by the Company by
certified mail, postage prepaid, not later than the date fixed for
redemption to the registered owners of such Bonds at their addresses
as the same shall appear, if at all, on the transfer register of the
Company. Any notice which is mailed in the manner herein provided
shall be conclusively presumed to have been duly given whether or not
the holders receive such notice, but failure to give notice by mail,
or any defect in such notice, to the holder of any such Bonds
designated for redemption shall not affect the validity of the
redemption of any other such Bond.
ARTICLE II.
DESCRIPTION OF POLLUTION CONTROL SERIES Q BONDS.
All of the words of Article I of this Supplemental Indenture are
by this reference incorporated in this Article II except:
(a) The words "New Mortgage Bond, Pollution Control Series P"
and "New Mortgage Bonds, Pollution Control Series P" are changed
wherever they appear to "New Mortgage Bond, Pollution Control Series
Q" and "New Mortgage Bonds, Pollution Control Series Q," respectively;
(b) The words "Pollution Control Series P Bond" and "Pollution
Control Series P Bonds" are changed wherever they appear to "Pollution
Control Series Q Bond" and "Pollution Control Series Q Bonds,"
respectively;
(c) The words "Article I" are changed wherever they appear to
"Article II";
(d) The words "Adjustable Rate Pollution Control Revenue
Refunding Bonds, 1997 Series A (Illinois Power Company Project)" are
changed wherever they appear to "Adjustable Rate Pollution Control
Revenue Refunding Bonds, 1997 Series B (Illinois Power Company
Project)";
(e) The words "IDFA Series A Indenture" are changed wherever
they appear to "IDFA Series B Indenture"; and
(f) The amount of $80,500,000 is changed wherever it appears to
$51,750,000.
ARTICLE III.
DESCRIPTION OF POLLUTION CONTROL SERIES R BONDS.
All of the words of Article I of this Supplemental Indenture are
by this reference incorporated in this Article III except:
(a) The words "New Mortgage Bond, Pollution Control Series P"
and "New Mortgage Bonds, Pollution Control Series P" are changed
wherever they appear to "New Mortgage Bond, Pollution Control Series
R" and "New Mortgage Bonds, Pollution Control Series R," respectively;
(b) The words "Pollution Control Series P Bond" and "Pollution
Control Series P Bonds" are changed wherever they appear to "Pollution
Control Series R Bond" and "Pollution Control Series R Bonds,"
respectively;
(c) The words "Article I" are changed wherever they appear to
"Article III";
(d) The words "Adjustable Rate Pollution Control Revenue
Refunding Bonds, 1997 Series A (Illinois Power Company Project)" are
changed wherever they appear to "Adjustable Rate Pollution Control
Revenue Refunding Bonds, 1997 Series C (Illinois Power Company
Project)";
(e) The words "IDFA Series A Indenture" are changed wherever
they appear to "IDFA Series C Indenture"; and
(f) The amount of $80,500,000 is changed wherever it
appears to $40,250,000.
ARTICLE IV.
ISSUE OF POLLUTION CONTROL SERIES P BONDS,
POLLUTION CONTROL SERIES Q BONDS AND POLLUTION CONTROL SERIES R BONDS.
SECTION 1. The Company hereby exercises the right to obtain the
authentication of $172,500,000 principal amount of Bonds pursuant to
the terms of Section 4.02 of the Indenture. Of such Bonds, $80,500,000
shall be Pollution Control Series P Bonds, $51,750,000 shall be
Pollution Control Series Q Bonds and $40,250,000 shall be Pollution
Control Series R Bonds.
SECTION 2. Such Pollution Control Series P Bonds, Pollution
Control Series Q Bonds and Pollution Control Series R Bonds may be
authenticated and delivered prior to the filing for recordation of
this Supplemental Indenture.
ARTICLE V.
THE TRUSTEE.
The Trustee hereby accepts the trusts hereby declared and
provided, and agrees to perform the same upon the terms and conditions
in the Indenture set forth and upon the following terms and conditions:
The Trustee shall not be responsible in any manner whatsoever for
or in respect of the validity or sufficiency of this Supplemental
Indenture or the due execution hereof by the Company or for or in
respect of the recitals contained herein, all of which recitals are
made by the Company solely. In general, each and every term and
condition contained in Article Eleven of the Indenture shall apply to
this Supplemental Indenture with the same force and effect as if the
same were herein set forth in full, with such omissions, variations
and modifications thereof as may be appropriate to make the same
conform to this Supplemental Indenture.
ARTICLE VI.
MISCELLANEOUS PROVISIONS.
This Supplemental Indenture may be simultaneously executed in any
number of counterparts, each of which when so executed shall be deemed
to be an original; but such counterparts shall together constitute but
one and the same instrument.
IN WITNESS WHEREOF, said Illinois Power Company has caused this
Supplemental Indenture to be executed on its behalf by an Authorized
Executive Officer as defined in the Indenture, and its corporate seal
to be hereto affixed and said seal and this Supplemental Indenture to
be attested by an Authorized Executive Officer as defined in the
Indenture; and said Harris Trust and Savings Bank, in evidence of its
acceptance of the trust hereby created, has caused this Supplemental
Indenture to be executed on its behalf by its President or one of its
Vice Presidents and its corporate seal to be hereto affixed and said
seal and this Supplemental Indenture to be attested by its Secretary
or one of its Assistant Secretaries; all as of the first day of April,
1997.
ILLINOIS POWER COMPANY
By /s/ Larry F. Altenbaumer
------------------------------
Larry F. Altenbaumer
Senior Vice President and
Chief Financial Officer
(CORPORATE SEAL)
ATTEST:
/s/ Leah Manning Stetzner
- --------------------------------
Leah Manning Stetzner
Vice President, General Counsel
and Corporate Secretary
HARRIS TRUST AND SAVINGS BANK,
Trustee
By /s/ J. Bartolini
------------------------------
J. Bartolini
Vice President
(CORPORATE SEAL)
ATTEST:
/s/ D. G. Donovan
- --------------------------------
D. G. Donovan
Assistant Secretary
====================================================================
ILLINOIS POWER COMPANY
TO
HARRIS TRUST AND SAVINGS BANK,
as Trustee
_______________
Supplemental Indenture
DATED AS OF APRIL 1, 1997
TO
Mortgage and Deed of Trust
DATED NOVEMBER 1, 1943
====================================================================
SUPPLEMENTAL INDENTURE dated as of April 1, 1997 (the "Supplemental
Indenture"), made by and between ILLINOIS POWER COMPANY, a corporation
organized and existing under the laws of the State of Illinois (the
"Company"), party of the first part, and HARRIS TRUST AND SAVINGS
BANK, a corporation organized and existing under the laws of the State
of Illinois (the "Trustee"), as Trustee under the Mortgage and Deed of
Trust dated November 1, 1943, hereinafter mentioned, party of the
second part;
WHEREAS, the Company has heretofore executed and delivered its
Mortgage and Deed of Trust dated November 1, 1943 ("Original Indenture"),
to the Trustee, for the security of the First Mortgage
Bonds of the Company issued and to be issued thereunder (the "Bonds"); and
WHEREAS, pursuant to the terms and provisions of the Original
Indenture there were created and authorized by Supplemental Indentures
thereto bearing the following dates, respectively, the First Mortgage
Bonds of the series issued thereunder and respectively identified
opposite such dates:
<TABLE>
<C> <C> <C>
Date of Identification of Series Called
Supplemental ------------------------ ------
Indenture
------------
November 1, 1943 4% Series due 1973 Bonds of the 1973
(redeemed) Series
March 1, 1946 2-7/8% Series due 1976 Bonds of the 1976
(paid at maturity) Series
February 1, 1948 3-1/2% Series due 1978 Bonds of the 1978
(paid at maturity) Series
July 1, 1949 2-7/8% Series due 1979 Bonds of the 1979
(paid at maturity) Series
April 1, 1950 2-3/4% Series due 1980 Bonds of the 1980
(paid at maturity) Series
March 1, 1952 3-1/2% Series due 1982 Bonds of the 1982
(paid at maturity) Series
November 1, 1953 3-1/2% Series due 1983 Bonds of the 1983
(paid at maturity) Series
July 1, 1956 3-3/4% Series due 1986 Bonds of the 1986
(paid at maturity) Series
May 1, 1958 4% Series due 1988 Bonds of the 1988
(redeemed) Series
January 1, 1963 4-1/4% Series due 1993 Bonds of the 1993
(paid at maturity) Series
October 1, 1966 5.85% Series due 1996 Bonds of the 1996
(paid at maturity) Series
January 1, 1968 6-3/8% Series due 1998 Bonds of the First
(redeemed) 1998 Series
October 1, 1968 6-3/4% Series due October Bonds of the
1, 1998 (redeemed) Second 1998 Series
October 1, 1969 8.35% Series due 1999 Bonds of the First
(redeemed) 1999 Series
November 1, 1970 9% Series due 2000 Bonds of the 2000
(redeemed) Series
October 1, 1971 7.60% Series due 2001 Bonds of the 2001
(redeemed) Series
June 1, 1973 7-5/8% Series due 2003 Bonds of the First
(redeemed) 2003 Series
May 1, 1974 Pollution Control Series A Bonds of the
Pollution Control
Series A
September 1, 1974 10-1/2% Series due 2004 Bonds of the First
(redeemed) 2004 Series
July 1, 1976 8-3/4% Series due 2006 Bonds of the 2006
(redeemed) Series
May 1, 1977 Pollution Control Series B Bonds of Pollution
Control Series B
November 1, 1977 8-1/4% Series due 2007 Bonds of the 2007
(redeemed) Series
August 1, 1978 8-7/8% Series due 2008 Bonds of the 2008
(redeemed) Series
July 1, 1979 9-7/8% Series due July 1, Bonds of the
2004 Second 2004 Series
(redeemed)
July 31, 1980 11-38% Series due 1987 Bonds of the 1987
(redeemed) Series
August 1, 1980 12-5/8% Series due 2010 Bonds of the 2010
(redeemed) Series
July 1, 1982 14-1/2% Series due 1990 Bonds of the 1990
(redeemed) Series
November 1, 1982 12% Series due 2012 Bonds of the 2012
(redeemed) Series
December 15, 1983 Pollution Control Series C Bonds of the
(redeemed) Pollution Control
Series C
May 15, 1984 Pollution Control Series D Bonds of the
(redeemed) Pollution Control
Series D
March 1, 1985 Pollution Control Series E Bonds of the
(redeemed) Pollution Control
Series E
February 1, 1986 10-1/2% Series due 2016 Bonds of the First
(redeemed) 2016 Series
July 1, 1986 9-7/8% Series due 2016 Bonds of the
(redeemed) Second 2016 Series
September 1, 1986 9-3/8% Series due 2016 Bonds of the Third
(redeemed) 2016 Series
February 1, 1987 Pollution Control Series F Bonds of the
Pollution Control
Series F
February 1, 1987 Pollution Control Series G Bonds of the
Pollution Control
Series G
February 1, 1987 Pollution Control Series H Bonds of the
Pollution Control
Series H
July 1, 1987 Pollution Control Series I Bonds of the
Pollution Control
Series I
July 1, 1988 10% Series due 1998 Bonds of the Third
(redeemed) 1998 Series
July 1, 1991 Pollution Control Series J Bonds of the
Pollution Control
Series J
June 1, 1992 Pollution Control Series K Bonds of the
Pollution Control
Series K
June 1, 1992 Pollution Control Series L Bonds of the
Pollution Control
Series L
July 1, 1992 7.95% Series due 2004 Bonds of the Third
2004 Series
July 1, 1992 8-3/4% Series due 2021 Bonds of the 2021
Series
September 1, 1992 6-1/2% Series due 1999 Bonds of the 1999
Series
February 15, 1993 8% Series due 2023 Bonds of the 2023
Series
March 15, 1993 6-1/8% Series due 2000 Bonds of the 2000
Series
March 15, 1993 6-3/4% Series due 2005 Bonds of the 2005
Series
July 15, 1993 7-1/2% Series due 2025 Bonds of the 2025
Series
August 1, 1993 6-1/2% Series due 2003 Bonds of the
Second 2003 Series
October 15, 1993 5-5/8% Series due 2000 Bonds of the
Second 2000 Series
November 1, 1993 Pollution Control Series M Bonds of the
Pollution Control
Series M
November 1, 1993 Pollution Control Series N Bonds of the
Pollution Control
Series N
November 1, 1993 Pollution Control Series O Bonds of the
Pollution Control
Series O
</TABLE>
and
WHEREAS, the Company desires to create three new series of Bonds
to be issued under the Original Indenture, to be known as Pollution
Control Series P Bonds (the "Pollution Control Series P Bonds"),
Pollution Control Series Q Bonds (the "Pollution Control Series Q
Bonds") and Pollution Control Series R Bonds (the "Pollution Control
Series R Bonds") and to issue additional Bonds under the Original
Indenture; and
WHEREAS, the Pollution Control Series P Bonds, Pollution Control
Series Q Bonds and Pollution Control Series R Bonds are to be issued
to Harris Trust and Savings Bank, as trustee (the "New Mortgage
Trustee") under the Company's General Mortgage Indenture and Deed of
Trust dated as of November 1, 1992 (the "New Mortgage") and are to be
owned and held by the New Mortgage Trustee as "Pledged Bonds" (as
defined in the New Mortgage) in accordance with the terms of the New
Mortgage; and
WHEREAS, the Company, in the exercise of the powers and authority
conferred upon and reserved to it under the provisions of the Original
Indenture, and pursuant to appropriate resolutions of the Board of
Directors, has duly resolved and determined to make, execute and
deliver to the Trustee a Supplemental Indenture in the form hereof for
the purposes herein provided; and
WHEREAS, all conditions and requirements necessary to make this
Supplemental Indenture a valid, binding and legal instrument have been
done, performed and fulfilled and the execution and delivery hereof
have been in all respects duly authorized;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
THAT Illinois Power Company, in consideration of the purchase and
ownership from time to time of the Bonds and the service by the
Trustee, and its successors, under the Original Indenture and of One
Dollar to it duly paid by the Trustee at or before the ensealing and
delivery of these presents, the receipt whereof is hereby
acknowledged, hereby covenants and agrees to and with the Trustee and
its successors in the trust under the Original Indenture, for the
benefit of the New Trustee and any successor holder of the Bonds as
follows:
ARTICLE I.
DESCRIPTION OF POLLUTION CONTROL SERIES P BONDS.
SECTION 1. The Company hereby creates a new series of Bonds to
be known as "Pollution Control Series P Bonds." The Pollution Control
Series P Bonds shall be executed, authenticated and delivered in
accordance with the provisions of, and shall in all respects be
subject to, all of the terms, conditions and covenants of the Original
Indenture, as supplemented and modified. The Pollution Control Series
P Bonds will be issued only to the New Mortgage Trustee as security
for a series of bonds being issued under the Company's New Mortgage
and an indenture supplemental to the New Mortgage dated as of April 1,
1997 ("New Mortgage Pollution Control Series P Bonds") and in the same
principal amount as the New Mortgage Pollution Control Series P Bonds.
Pollution Control Series P Bonds shall be dated as provided in
Section 6 of Article II of the Original Indenture. All Pollution
Control Series P Bonds shall mature at the same time as the New
Mortgage Pollution Control Series P Bonds, and shall not bear
interest. Any payment by the Company of principal of any Pollution
Control Series P Bonds shall be applied by the New Mortgage Trustee to
the payment of any principal in respect of the New Mortgage Pollution
Control Series P Bonds due in accordance with the terms of the New
Mortgage.
SECTION 2. The Pollution Control Series P Bonds and the Trustee's
Certificate shall be substantially in the following forms respectively:
[FORM OF FACE OF BOND]
ILLINOIS POWER COMPANY
(Incorporated under the laws of the State of Illinois)
POLLUTION CONTROL SERIES P BOND
No. __________ $80,500,000
ILLINOIS POWER COMPANY, a corporation organized and existing
under the laws of the State of Illinois (the "Company," which term
shall include any successor corporation as defined in the Indenture
hereinafter referred to), for value received, hereby promises to pay
to Harris Trust and Savings Bank as trustee (the "New Mortgage
Trustee") under the Company's General Mortgage Indenture and Deed of
Trust dated as of November 1, 1992 (the "New Mortgage") or its
respective registered assigns, the principal sum of $80,500,000 on the
date that the bonds issued by the Company pursuant to Article I of the
indenture supplemental to the New Mortgage dated as of April 1, 1997
("New Mortgage Pollution Control Series P Bonds") mature, in any coin
or currency of the United States of America which at the time of
payment is legal tender for public and private debts. This Bond shall
not bear interest. The principal of this Bond is payable at the
agency of the Company in the City of Chicago, Illinois.
This Bond shall not be entitled to any benefit under the
Indenture or any indenture supplemental thereto, or become valid or
obligatory for any purpose, until the form of certificate endorsed
hereon shall have been signed by or on behalf of Harris Trust and
Savings Bank, the Trustee under the Indenture, or a successor trustee
thereto under the Indenture (the "Trustee").
The provisions of this Bond are continued on the reverse hereof
and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
IN WITNESS WHEREOF, Illinois Power Company has caused this Bond
to be signed (manually or by facsimile signature) in its name by its
President or a Vice President, and its corporate seal (or a facsimile
thereof) to be hereto affixed and attested (manually or by facsimile
signature) by its Secretary or an Assistant Secretary.
Dated ______________, 1997 ILLINOIS POWER COMPANY,
By ______________________________
Vice President
ATTEST:
________________________________
Assistant Secretary
[FORM OF TRUSTEE'S CERTIFICATE]
This Bond is one of the Bonds of the series designated therein,
described in the within-mentioned Indenture and Supplemental Indenture
dated as of April 1, 1997.
HARRIS TRUST AND SAVINGS BANK,
Trustee,
By ______________________________
Authorized Officer
[FORM OF REVERSE OF BOND)
This Bond is one of a duly authorized issue of Bonds of the
Company (the "Bonds") in unlimited aggregate principal amount, of the
series hereinafter specified, all issued and to be issued under and
equally secured by the Mortgage and Deed of Trust (the "Indenture"),
dated November 1, 1943, executed by the Company to Harris Trust and
Savings Bank (the "Trustee"), as Trustee, to which Indenture and all
indentures supplemental thereto, including the Supplemental Indenture
dated February 15, 1993, which amended Section 1 of Article IX of the
Indenture, reference is hereby made for a description of the
properties mortgaged and pledged, the nature and extent of the
security, the rights of the registered owners of the Bonds and of the
Trustee in respect thereof, and the terms and conditions upon which
the Bonds are, and are to be, secured. The Bonds may be issued in
series, for various principal sums, may mature at different times, may
bear interest at different rates and may otherwise vary as in the
Indenture provided. This Bond is one of a series designated as the
"Pollution Control Series P Bonds" (the "Pollution Control Series P
Bonds") of the Company, unlimited in aggregate principal amount,
issued under and secured by the Indenture and described in the
supplemental indenture dated as of April 1, 1997 (the "Supplemental
Indenture of April 1, 1997"), between the Company and the Trustee,
supplemental to the Indenture.
To the extent permitted by, and as provided in, the Indenture,
modifications or alterations of the Indenture, or of any indenture
supplemental thereto, and of the rights and obligations of the Company
and of the holders of the Bonds and coupons may be made with the
consent of the Company by an affirmative vote of the holders of not
less than 66-2/3% in amount of the Bonds entitled to vote then
outstanding, at a meeting of Bondholders called and held as provided
in the Indenture, and by an affirmative vote of the holders of not
less than 66-2/3% in amount of the Bonds of any series entitled to
vote then outstanding and affected by such modification or alteration,
in case one or more but less than all of the series of Bonds then
outstanding under the Indenture are so affected; provided however,
that no such modification or alteration shall be made which will
affect the terms of payment of the principal of, or interest or
premium, if any, on this Bond.
This Pollution Control Series P Bond is subject to redemption in
accordance with the terms of Section 5 of Article I in the Supplemental
Indenture of April 1, 1997.
This Pollution Control Series P Bond shall not bear interest.
In case an Event of Default, as defined in the Indenture, shall
occur, the principal of all the Bonds at any such time outstanding
under the Indenture may be declared or may become due and payable,
upon the conditions and in the manner and with the effect provided in
the Indenture. The Indenture provides that such declaration may in
certain events be rescinded by the holders of a majority in principal
amount of the Bonds outstanding.
No recourse shall be had for the payment of the principal of, or
premium or interest on this Bond, or for any claim based hereon or on
the Indenture or any indenture supplemental thereto, against any
incorporator, or against any stockholder, director or officer, as
such, past, present or future, of the Company, or of any predecessor
or successor corporation, either directly or through the Company or
any such predecessor or successor corporation, whether by virtue of
any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability, whether at
common law, in equity, by any constitution, statute, rule of law, or
otherwise, of incorporators, stockholders, directors or officers being
released by every owner hereof by the acceptance of this Bond and as
part of the consideration for the issue hereof, and being likewise
released by the terms of the Indenture; provided, however, that
nothing herein or in the Indenture or any indenture supplemental
thereto contained shall prevent the enforcement of the liability, if
any, of any stockholder or subscriber to capital stock upon or in
respect of shares of capital stock not fully paid up.
Notwithstanding any provision in the Indenture, the Supplemental
Indenture of April 1, 1997 or this Pollution Control Series P Bond to
the contrary, any payment by the Company under the New Mortgage of
principal of Bonds which shall have been authenticated and delivered
under the New Mortgage (the "New Mortgage Pollution Control Series P
Bonds") upon the basis of the issuance and delivery to the New
Mortgage Trustee of the Pollution Control Series P Bonds shall, to the
extent thereof, be deemed to satisfy and discharge the obligation of
the Company to make a payment of principal in respect of this
Pollution Control Series P Bond which is then due.
This Pollution Control Series P Bond constitutes a "Pledged Bond"
(as defined in the New Mortgage) and is subject to all of the rights
and restrictions applicable to Pledged Bonds as set forth in the New
Mortgage. Without limiting the generality of the foregoing, this
Pollution Control Series P Bond shall be subject to surrender by the
New Mortgage Trustee in accordance with the provisions of Section 7.03
of the New Mortgage. To the extent that any provisions in the
Indenture, the Supplemental Indenture of April 1, 1997 or this
Pollution Control Series P Bond are inconsistent with the provisions
relating to Pledged Bonds that are set forth in the New Mortgage, the
provisions of the New Mortgage shall apply.
SECTION 3. Notwithstanding any provision in the Original
Indenture, this Supplemental Indenture dated April 1, 1997 or the
Pollution Control Series P Bonds to the contrary, any payment by the
Company under the New Mortgage of principal of the New Mortgage
Pollution Control Series P Bonds shall, to the extent thereof, be
deemed to satisfy and discharge the obligation of the Company to make
any payment of principal in respect of the Pollution Control Series P
Bonds which is then due.
SECTION 4. The Pollution Control Series P Bonds constitute
"Pledged Bonds" (as defined in the New Mortgage) and are subject to
all of the rights and restrictions applicable to Pledged Bonds as set
forth in the New Mortgage. Without limiting the generality of the
foregoing, the Pollution Control Series P Bonds shall be subject to
surrender by the New Mortgage Trustee in accordance with the
provisions of Section 7.03 of the New Mortgage. To the extent that any
provisions in the Original Indenture, this Supplemental Indenture or
the Pollution Control Series P Bonds are inconsistent with the
provisions relating to Pledged Bonds that are set forth in the New
Mortgage, the provisions of the New Mortgage shall apply.
SECTION 5. The Pollution Control Series P Bonds shall be
redeemed on the same terms, on the same date and in the same manner as
the New Mortgage Pollution Control Series P Bonds shall be redeemed
under the terms of the indenture supplemental to the New Mortgage
dated as of April 1, 1997.
ARTICLE II.
DESCRIPTION OF POLLUTION CONTROL SERIES Q BONDS.
All of the words of Article I of this Supplemental Indenture are
by this reference incorporated in this Article II except:
(a) The words "Pollution Control Series P Bond" and "Pollution
Control Series P Bonds" are changed wherever they appear to "Pollution
Control Series Q Bond" and "Pollution Control Series Q Bonds,"
respectively;
(b) The words "New Mortgage Pollution Control Series P Bond" and
"New Mortgage Pollution Control Series P Bonds" are changed wherever
they appear to "New Mortgage Pollution Control Series Q Bond" and "New
Mortgage Pollution Control Series Q Bonds," respectively;
(c) The words "Article I" are changed wherever they appear to
"Article II"; and
(d) The amount of $80,500,000 is changed wherever it appears to
$51,750,000.
ARTICLE III.
DESCRIPTION OF POLLUTION CONTROL SERIES R BONDS.
All of the words of Article I of this Supplemental Indenture are
by this reference incorporated in this Article III except:
(a) The words "Pollution Control Series P Bond" and "Pollution
Control Series P Bonds" are changed wherever they appear to "Pollution
Control Series R Bond" and "Pollution Control Series R Bonds,"
respectively;
(b) The words "New Mortgage Pollution Control Series P Bond" and
"New Mortgage Pollution Control Series P Bonds" are changed wherever
they appear to "New Mortgage Pollution Control Series R Bond" and "New
Mortgage Pollution Control Series R Bonds," respectively;
(c) The words "Article I" are changed wherever they appear to
"Article III"; and
(d) The amount of $80,500,000 is changed wherever it appears to
$40,250,000.
ARTICLE IV.
ISSUE OF POLLUTION CONTROL SERIES P BONDS.
POLLUTION CONTROL SERIES Q BONDS
AND POLLUTION CONTROL SERIES R BONDS.
SECTION 1. The Company hereby exercises the right to obtain the
authen-tication of $172,500,000 principal amount of additional Bonds
pursuant to the terms of Section 6 of Article III of the Original
Indenture in substitution for refundable Bonds. Of such Bonds,
$80,500,000 shall be Pollution Control Series P Bonds, $51,750,000
shall be Pollution Control Series Q Bonds and $40,250,000 shall be
Pollution Control Series R Bonds.
SECTION 2. Such Pollution Control Series P Bonds, Pollution
Control Series Q Bonds and Pollution Control Series R Bonds may be
authenticated and delivered prior to the filing for recordation of
this Supplemental Indenture.
SECTION 3. Notwithstanding any provision in the Original
Indenture to the contrary, execution of the Pollution Control Series P
Bonds, Pollution Control Series Q Bonds and Pollution Control Series R
Bonds on behalf of the Company, and the attesting of the corporate
seal of the Company affixed to the Pollution Control Series P Bonds,
Pollution Control Series Q Bonds and Pollution Control Series R Bonds,
by the officers of the Company authorized to do such acts by Section
12 of Article II of the Original Indenture may be validly done either
by the manual or the facsimile signatures of such authorized officers
of the Company.
ARTICLE V.
THE TRUSTEE.
The Trustee hereby accepts the trusts hereby declared and
provided, and agrees to perform the same upon the terms and conditions
in the Original Indenture set forth and upon the following terms and
conditions:
The Trustee shall not be responsible in any manner whatsoever for
or in respect of the validity or sufficiency of this Supplemental
Indenture or the due execution hereof by the Company or for or in
respect of the recitals contained herein, all of which recitals are
made by the Company solely. In general, each and every term and
condition contained in Article XIII of the Original Indenture shall
apply to this Supplemental Indenture with the same force and effect as
if the same were herein set forth in full, with such omissions,
variations and modifications thereof as may be appropriate to make the
same conform to this Supplemental Indenture.
ARTICLE VI.
MISCELLANEOUS PROVISIONS.
This Supplemental Indenture may be simultaneously executed in any
number of counterparts, each of which when so executed shall be deemed
to be an original; but such counterparts shall together constitute but
one and the same instrument.
IN WITNESS WHEREOF, Illinois Power Company has caused this
Supplemental Indenture to be executed on its behalf by its Chairman
and President, one of its Executive Vice Presidents, one of its Senior
Vice Presidents or one of its Vice Presidents and its corporate seal
to be hereto affixed and said seal and this Supplemental Indenture to
be attested by its Secretary or one of its Assistant Secretaries; and
said Harris Trust and Savings Bank, in evidence of its acceptance of
the trust hereby created, has caused this Supplemental Indenture to be
executed on its behalf by its President or one of its Vice Presidents
and its corporate seal to be hereto affixed and said seal and this
Supplemental Indenture to be attested by its Secretary or one of its
Assistant Secretaries; all as of the first day of April, 1997.
ILLINOIS POWER COMPANY
By /s/ Larry F. Altenbaumer
------------------------------
Larry F. Altenbaumer
Senior Vice President and
Chief Financial Officer
(CORPORATE SEAL)
ATTEST:
/s/ Leah Manning Stetzner
- --------------------------------
Leah Manning Stetzner
Vice President, General Counsel
and Corporate Secretary
HARRIS TRUST AND SAVINGS BANK,
Trustee
By /s/ J. Bartolini
------------------------------
J. Bartolini
Vice President
(CORPORATE SEAL)
ATTEST:
/s/ D. G. Donovan
- --------------------------------
D. G. Donovan
Assistant Secretary
