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614-223-1649
April 27, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-1004
ATTENTION: Filing Desk, Stop 1-4
RE: Kentucky Power Company
Registration Statement on Form S-3
SEC File No. 33-53007
Pursuant to Rule 424(b)(5), transmitted herewith is the Prospectus,
dated April 12, 1994, as supplemented by the Prospectus Supplement,
dated April 27, 1994, to be used in connection with the anticipated
public offering by the Company of $100,000,000 aggregate principle
amount of First Mortgage Bonds, Designated Secured Medium Term
Notes.
Very truly yours,
Ann B. Graf
ABG/brh
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<PAGE>
Prospectus Supplement
(To Prospectus Dated April 12, 1994)
$100,000,000
Kentucky Power Company
First Mortgage Bonds, Designated Secured Medium Term Notes,
Due From Nine Months to Forty-Two Years from Date of Issue
Kentucky Power Company (the "Company") may from time to time offer
its First Mortgage Bonds, Designated Secured Medium Term Notes (the
"Notes"), in the aggregate principal amount of up to $100,000,000,
subject to reduction as a result of the sale of other Debt
Securities as described in the accompanying Prospectus. Each Note
will mature from nine months to forty-two years from its date of
issue.
Each Note will bear interest at a fixed rate. Unless otherwise
indicated in a pricing supplement to this Prospectus Supplement (a
"Pricing Supplement"), interest on each Note will be payable
semiannually in arrears on each February 1 and August 1 and at
redemption, if any, or Stated Maturity.
The interest rate, Issue Price, Stated Maturity, Interest Payment
Dates, redemption provisions, if any, and certain other terms with
respect to each Note will be established at the time of issuance
and set forth in a Pricing Supplement.
Each series of Notes will be represented by a global Note ("Global
Note") registered in the name of a nominee of The Depository Trust
Company, as Depository, or another depository (such a Note, so
represented, being called a "Book-Entry Note"). Beneficial
interests in Global Notes representing Book-Entry Notes will be
shown on, and transfers thereof will be effected only through,
records maintained by the Depository's participants. Book-Entry
Notes will not be issuable as Certificated Notes except under the
circumstances described herein. See "Supplemental Description of
the Notes--Book-Entry Notes".
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 HERETO OR THE
ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
_________________________________________________________________
Price to Agents' Proceeds to
Public(1) Commissions(2) Company(2)(3)
Per Note 100.000% .125%-.875% 99.875%-99.125%
Total $100,000,000 $125,000-$875,000 $99,875,000-$99,125,000
(1) Unless otherwise specified in the applicable Pricing
Supplement, the price to the public will be 100% of the
principal amount.
(2) The Company will pay to Salomon Brothers Inc and CS First
Boston Corporation, each as agent (together, the "Agents"), a
commission of from .125% to .875% of the principal amount of
any Note, depending upon its Stated Maturity, sold through an
Agent. The Company may also sell Notes to any Agent, as
principal, at a discount for resale to one or more investors
or to another broker-dealer (acting as principal for purposes
of resale) at varying prices related to prevailing market
prices at the time of resale, as determined by such Agent.
Unless otherwise indicated in the applicable Pricing
Supplement, any Note sold to an Agent as principal shall be
purchased by such Agent at a price equal to 100% of the
principal amount thereof less the percentage equal to the
commission applicable to an agency sale of a Note of identical
maturity and may be resold by such Agent. The Notes may also
be sold by the Company directly to investors, in which case no
commission will be payable to the Agents. The Company has
agreed to indemnify the Agents for certain liabilities,
including certain liabilities under the Securities Act of
1933, as amended. See "Plan of Distribution" herein.
(3) Before deduction of expenses payable by the Company estimated
at $255,888 including reimbursement of certain expenses of the
Agents.
The Notes are being offered on a continuous basis by the Company
through the Agents which have agreed to use their reasonable best
efforts to solicit offers to purchase Notes. The Company may sell
Notes at a discount to either Agent, as principal, for resale to
one or more investors or other purchasers at varying prices related
to prevailing market prices at the time of resale, as determined by
such Agent. The Company also may sell Notes directly to investors
on its own behalf. The Notes will not be listed on any securities
exchange, and there is no assurance that the maximum amount of
Notes offered by this Prospectus Supplement will be sold or that
there will be a secondary market for the Notes. The Company
reserves the right to withdraw, cancel or modify the offer made
hereby without notice. The Company or an Agent may reject an
order, whether or not solicited, in whole or in part. See "Plan of
Distribution" herein.
Salomon Brothers Inc CS First Boston
The date of this Prospectus Supplement is April 27, 1994.
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IN CONNECTION WITH THIS OFFERING, THE AGENTS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES
OF THE NOTES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
____________________
SUPPLEMENTAL DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes
supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Debt
Securities set forth under "Description of Debt Securities" in the
accompanying Prospectus, to which description reference is hereby
made. Certain capitalized terms used herein are defined under
"Description of Debt Securities" in the accompanying Prospectus.
General
The Notes will be issued in one or more series of Debt Securities
under the Mortgage. The Notes will be limited in aggregate
principal amount to $100,000,000, subject to reduction as a result
of the sale of other Debt Securities as described in the
accompanying Prospectus.
The Notes will be issued in fully registered form only, without
coupons. Each series of Notes will be issued initially as a Book-
Entry Note. Except as set forth herein under "Book-Entry Notes" or
in any Pricing Supplement relating to specific Notes, the Notes
will not be issuable as Certificated Notes. The authorized
denominations of Global Notes will be $1,000 and any integral
multiple thereof.
Each Note will mature from 9 months to 42 years from its date of
issue, as selected by the purchaser and agreed to by the Company.
Each Note may also be subject to redemption at the option of the
Company prior to its Stated Maturity (as defined below).
The Pricing Supplement relating to a Note will describe the
following terms: (i) the price (expressed as a percentage of the
aggregate principal amount thereof) at which such Note will be
issued (the "Issue Price"); (ii) the date on which such Note will
be issued (the "Original Issue Date"); (iii) the date on which such
Note will mature (the "Stated Maturity"); (iv) the rate per annum
at which such Note will bear interest, and the Interest Payment
Dates (as defined below); (v) any applicable discounts or
commissions; (vi) whether such Note may be redeemed at the option
of the Company prior to Stated Maturity and, if so, the provisions
relating to such redemption; and (vii) any other terms of such Note
not inconsistent with the provisions of the Mortgage.
"Business Day" with respect to any Note means any day, other than
a Saturday or Sunday, which is not a day on which banking
institutions or trust companies in The City of New York, New York
or the city in which is located any office or agency maintained for
the payment of principal of or premium, if any, or interest on such
Note are authorized or required by law, regulation or executive
order to remain closed.
Payment of Principal, Premium, if any, and Interest
Payments of interest on the Notes (other than interest payable at
redemption, if any, or Stated Maturity) will be made, except as
provided below, in immediately available funds to the Owners of
such Notes (which, in the case of Global Notes representing Book-
Entry Notes, will be a nominee of the Depository, as defined below)
as of the Regular Record Date (as defined below) for each Interest
Payment Date; provided, however, that if the Original Issue Date of
a Note issued as a Global Note is after a Regular Record Date and
before the corresponding Interest Payment Date, interest for the
period from and including the Original Issue Date for such Note to
but excluding such Interest Payment Date will be paid on the next
succeeding Interest Payment Date to the Owner of such Note on the
related Regular Record Date.
Unless otherwise specified in the applicable Pricing Supplement,
the principal of the Notes and any premium and interest thereon
payable at redemption, if any, or Stated Maturity will be paid in
immediately available funds upon surrender thereof at the office of
Bankers Trust Company at Four Albany Street in New York, New York.
Should any Note be issued other than as a Global Note, interest
(other than interest payable at redemption or Stated Maturity) may,
at the option of the Company, be paid to the person entitled
thereto by check mailed to any such person. See "Book-Entry Notes"
herein.
If, with respect to any Note, any Interest Payment Date, redemption
date or Stated Maturity is not a Business Day, payment of amounts
due on such Note on such date may be made on the next succeeding
Business Day, and, if such payment is made or duly provided for on
such Business Day, no interest shall accrue on such amounts for the
period from and after such Interest Payment Date, redemption date
or Stated Maturity, as the case may be, to such Business Day.
The "Regular Record Date" with respect to a Note (unless otherwise
specified in the applicable Pricing Supplement) will be the January
15 or July 15, as the case may be, next preceding an Interest
Payment Date for Notes or if such January 15 or July 15 is not a
Business Day, the next preceding Business Day.
Each Note issued as a Global Note will bear interest from its
Original Issue Date at the fixed interest 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 the
applicable Pricing Supplement, interest on each Note will be
payable semiannually in arrears on each February 1 and August 1
(each such date, an "Interest Payment Date") and at redemption, if
any, or Stated Maturity. Each payment of interest in respect of an
Interest Payment Date shall include interest accrued through the
day before such Interest Payment Date. Interest on Notes will be
computed on the basis of a 360-day year of twelve 30-day months.
Redemption
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 in whole
or in part, under the terms and conditions and at the prices
specified therein, together with accrued interest to the date of
redemption. Any such redemption may be made upon not less than 30
days' notice.
Book-Entry Notes
Except under the circumstances described below, the Notes will be
issued in whole or in part in the form of one or more Global Notes
that will be deposited with, or on behalf of, The Depository Trust
Company, New York, New York ("DTC"), or such other depository as
may be subsequently designated (the "Depository"), and registered
in the name of a nominee of the Depository.
Book-Entry Notes represented by a Global Note will not be
exchangeable for Certificated Notes and, except under the
circumstances described below, will not otherwise be issuable as
Certificated Notes.
So long as the Depository, or its nominee, is the registered owner
of a Global Note, such Depository or such nominee, as the case may
be, will be considered the sole owner of the individual Book-Entry
Notes represented by such Global Note for all purposes under the
Mortgage. Payments of principal of and premium, if any, and any
interest on individual Book-Entry Notes represented by a Global
Note will be made to the Depository or its nominee, as the case may
be, as the Owner of such Global Note. Except as set forth below,
owners of beneficial interests in a Global Note will not be
entitled to have any of the individual Book-Entry Notes represented
by such Global Note registered in their names, will not receive or
be entitled to receive physical delivery of any such Book-Entry
Notes and will not be considered the Owners thereof under the
Mortgage, including, without limitation, for purposes of consenting
to any amendment thereof or supplement thereto.
If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed, the Company
will issue individual Certificated Notes in exchange for the Global
Note or Notes representing the corresponding Book-Entry Notes. In
addition, the Company may at any time and in its sole discretion
determine not to have any Notes represented by one or more Global
Notes and, in such event, will issue individual Certificated Notes
in exchange for the Global Notes representing the corresponding
Book-Entry Notes. In any such instance, an owner of a Book-Entry
Note represented by a Global Note will be entitled to physical
delivery of individual Certificated Notes equal in principal amount
to such Book-Entry Note and to have such Certificated Notes
registered in its name. Individual Certificated Notes so issued
will be issued as registered Notes in denominations, unless
otherwise specified by the Company, of $1,000 and integral
multiples thereof.
DTC has confirmed to the Company and the Agents the following
information:
1. DTC will act as securities depository for the Global
Notes. The Notes will be issued as fully-registered
securities registered in the name of Cede & Co. (DTC's
partnership nominee). One fully-registered Global Note will
be issued for each series of the Notes, each in the aggregate
principal amount of such series, and will be deposited with
DTC.
2. 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. DTC holds securities that
its participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes
in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers,
banks, and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either
directly or indirectly ("Indirect Participants"). The Rules
applicable to DTC and its Participants are on file with the
Securities and Exchange Commission.
3. Purchases of Notes under the DTC system must be made by
or through Direct Participants, which will receive a credit
for the Notes on DTC's records. The ownership interest of
each actual purchaser of each 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 transaction, 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 Notes
are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing
their ownership interests in Notes, except in the event that
use of the book-entry system for the Notes is discontinued.
4. To facilitate subsequent transfers, all Notes deposited
by Participants with DTC are registered in the name of DTC's
partnership nominee, Cede & Co. The deposit of Notes 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 Notes; DTC's records reflect
only the identity of the Direct Participants to whose accounts
such 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.
5. 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.
6. Redemption notices shall be sent to Cede & Co. If less
than all of the Notes within an issue are being redeemed,
DTC's practice is to determine by lot the amount of the
interest of each Direct Participant in such issue to be
redeemed.
7. Neither DTC nor Cede & Co. will consent or vote with
respect to the Notes. Under its usual procedures, DTC mails
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 Notes are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
8. Principal and interest payments on the Notes will be made
to DTC. DTC's practice is to credit Direct Participants'
accounts on the date on which interest is payable in
accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not
receive payment on such date. Payments by Participants to
Beneficial Owners will be governed by standing instructions
and customary practices, as is the case with securities held
for the accounts of customers in bearer form or registered in
"street name", and will be the responsibility of such
Participant and not of DTC, the Agents 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 or the Trustee,
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.
9. DTC may discontinue providing its services as securities
depository with respect to the Notes at any time by giving
reasonable notice to the Company and the Trustee. Under such
circumstances, in the event that a successor securities
depository is not obtained, Certificated Notes are required to
be printed and delivered.
10. The Company may decide to discontinue use of the system
of book-entry transfers through DTC (or a successor securities
depository). In that event, Certificated Notes will be
printed and delivered.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Company believes to
be reliable, but the Company takes no responsibility for the
accuracy thereof.
The Agents are Direct Participants of DTC.
None of the Company, the Trustee or any agent for payment on or
registration of transfer or exchange of any Global Note will have
any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial interests in
such Global Note or for maintaining, supervising or reviewing any
records relating to such beneficial 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 who have purchased Notes at the initial offering
price thereof and who hold such Notes as capital assets and does
not deal with special situations, such as those of dealers in
securities or currencies, financial institutions, life insurance
companies, persons holding Notes as a part of a hedging or
conversion transaction or a straddle, United States Holders (as
defined below) whose "functional currency" is not the U.S. dollar,
or Non-United States Holders (as defined below) owning (actually or
constructively) ten percent or more of the combined voting power of
all classes of voting stock of the Company. Persons considering
the purchase, ownership or disposition of Notes should consult
their own tax advisors concerning the federal income tax
consequences in light of their particular situations as well as any
consequences arising under the laws of any other taxing
jurisdiction. Furthermore, the discussion below is based upon the
provisions of the Internal Revenue Code of 1986, as amended (the
"Code") and regulations, rulings and judicial decisions thereunder
as of the date hereof, and such authorities may be repealed,
revoked or modified so as to result in federal income tax
consequences different from those discussed below.
United States Holders
As used herein, a "United States Holder" of a Note means a holder
that is a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, or
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 paid or
accrued in accordance with the United States Holder's method of
accounting for tax purposes.
Notes with a maturity of one year or less will be subject to
special tax rules that apply to the timing of inclusion in income
of interest on such obligations ("Short-Term Notes"). An
obligation which is issued for an amount less than its "stated
redemption price at maturity" will generally be considered to be
issued at a discount for federal income tax purposes. Under
Treasury Regulations involving original issue discount ("OID")
which were published in the Federal Register on February 2, 1994
and became effective on April 4, 1994, all payments (including all
stated interest) with respect to a Short-Term Note will be included
in the stated redemption price at maturity and, thus, holders will
be taxable on discount in lieu of stated interest. This discount
will be equal to the excess of the stated redemption price at
maturity over the initial offering price to the public at which a
substantial amount of the Notes is sold (for purposes of this
section of the Prospectus Supplement, the "issue price"), unless a
holder elects to compute this discount as acquisition discount
using tax basis instead of issue price. In general, individuals
and certain other cash method holders of a Short-Term Note are not
required to include accrued discount in income before receiving
cash unless an election is made to do so. United States Holders
who report income for federal income tax purposes on the accrual
method and certain other holders, including banks and dealers in
securities, are required to include discount on such Short-Term
Notes in income on a straight-line method (as ordinary income)
unless an election is made based on daily compounding. The amount
of discount which accrues in respect of a Short-Term Note while
held by a United States Holder will be added to such holder's tax
basis for such Note to the extent included in income.
Sale, Exchange and Retirement of Notes. 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 and the adjusted tax basis of the
Note. A United States Holder's tax basis in a Note will, in
general, be the United States Holder's cost therefor, increased by
any discount included in income by the United States Holder and
reduced by any cash payments on the Note other than "qualified
stated interest" payments. (In general, "qualified stated
interest" includes interest at a single fixed rate unconditionally
payable at least annually, other than interest on Short-Term
Notes.) Except as described below with respect to certain Short-
Term Notes and except to the extent of any accrued but unpaid
qualified stated interest, 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 of individuals
are, under certain circumstances, taxed at lower rates than items
of ordinary income. The deductibility of capital losses is subject
to limitations.
In the case of a cash basis holder who does not include discount
income currently, any gain realized on the sale, exchange or
retirement of the Short-Term Note will be ordinary interest income
to the extent of the discount accrued on a straight-line basis (or,
if elected, according to a constant yield method based on daily
compounding) through the date of sale, exchange or retirement. In
addition, such non-electing holders which are not subject to the
current inclusion requirement described above will be required to
defer deductions for any interest paid on indebtedness incurred or
continued to purchase or carry such Short-Term Notes in an amount
not exceeding the deferred interest income, until such deferred
interest income is realized.
Non-United States Holders
Non-United States Holders will not be subject to United States
federal income taxes, including withholding taxes, on the interest
income (including any OID) on, or gain from the sale or disposition
of, any Note provided that (1) the interest income or gain is not
effectively connected with the conduct by the Non-United States
Holder of a trade or business within the United States, (2) the
Non-United States Holder is not a controlled foreign corporation
related to the Company through stock ownership, (3) with respect to
any gain, the Non-United States Holder, if an individual, is not
present in the United States for 183 days or more during the
taxable year and (4) the Non-United States Holder provides the
correct certification of his status (which may generally be
satisfied by providing an Internal Revenue Service Form W-8
certifying that the beneficial owner is not a United States Holder
and providing the name and address of the beneficial owner).
An individual holder of a Note who is not a citizen or resident of
the United States at the time of the holder's death will not be
subject to United States federal estate tax as a result of the
holder's death, as long as 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 by
such individual in the United States.
Backup Withholding
In general, if a holder other than a corporate holder fails to
furnish a correct taxpayer identification number or certification
of foreign or other exempt status, 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 backup withholding, a 31 percent federal
backup withholding tax may be withheld from amounts paid to such
holder. An individual's taxpayer identification number is such
individual's social security number. 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 Internal
Revenue Service where applicable.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuous basis by the Company
through the Agents, which have agreed to use their reasonable best
efforts to solicit offers to purchase Notes. Initial purchasers
may propose certain terms of the Notes, but the Company will have
the right to accept offers to purchase Notes and may reject
proposed purchases in whole or in part. The Agents will have the
right, in their discretion reasonably exercised and without notice
to the Company, to reject any proposed purchase of Notes in whole
or in part. The Company will pay each Agent a commission of from
.125% to .875% of the principal amount of Notes sold through it,
depending upon Stated Maturity. The Company also may sell Notes to
any Agent, acting as principal, at a discount to be agreed upon at
the time of sale, for resale to one or more investors or to another
broker-dealer (acting as principal for purposes of resale) at
varying prices related to prevailing market prices at the time of
such resale, as determined by such Agent. An Agent may resell a
Note purchased by it as principal to another broker-dealer at a
discount, provided such discount does not exceed the commission or
discount received by such Agent from the Company in connection with
the original sale of such Note. The Company may also sell Notes
directly to investors on its own behalf at a price to be agreed
upon at the time of sale or through negotiated underwritten
transactions with one or more underwriters. In the case of sales
made directly by the Company, no commission or discount will be
paid or allowed.
No Note will have an established trading market when issued. The
Notes will not be listed on any securities exchange. The Agents
may make a market in the Notes, but the Agents are 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, whether acting as agent or principal, may be deemed to
be "underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"). The Company has agreed to
indemnify the Agents against certain liabilities, including certain
liabilities under the Securities Act.
Salomon Brothers Inc and CS First Boston Corporation and certain
affiliates thereof engage in transactions with and perform services
for the Company and its affiliates in the ordinary course of
business.
[94FN0029.KPC]
<PAGE>
<PAGE>
PROSPECTUS
Kentucky Power Company
$100,000,000
Debt Securities
Kentucky Power Company (the "Company") intends to offer, from
time to time, up to $100,000,000 aggregate principal amount of its
Debt Securities consisting of First Mortgage Bonds (the "new
Bonds") in one or more series and/or First Mortgage Bonds,
Designated Secured Medium Term Notes (the "Notes"), in one or more
series, at prices and on terms to be determined at the time or
times of sale (the new Bonds and the Notes are hereinafter
collectively referred to as the "Debt Securities"). The aggregate
principal amount, rate and time of payment of interest, maturity,
initial public offering price, if any, redemption provisions, if
any, credit enhancement, if any, improvement fund, if any, dividend
restrictions in addition to those described herein, if any, and
other specific terms of each series of Debt Securities in respect
of which this Prospectus is being delivered will be set forth in an
accompanying prospectus or pricing supplement ("Prospectus
Supplement").
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.
______________________
The Company may sell the Debt Securities through underwriters,
dealers or agents, or directly to one or more institutional
purchasers. A Prospectus Supplement will set forth the names of
underwriters or agents, if any, any applicable commissions or
discounts and the net proceeds to the Company from any such sale.
_______________________
The date of this Prospectus is April 12, 1994.<PAGE>
No dealer, salesperson or other person has been authorized to
give any information or to make any representation not contained in
this Prospectus in connection with the offer made by this
Prospectus or any Prospectus Supplement relating hereto, and, if
given or made, such information or representation must not be
relied upon as having been authorized by the Company or any
underwriter, agent or dealer. Neither this Prospectus nor this
Prospectus as supplemented by any Prospectus Supplement constitutes
an offer to sell, or a solicitation of an offer to buy, by any
underwriter, agent or dealer in any jurisdiction in which it is
unlawful for such underwriter, agent or dealer to make such an
offer or solicitation. Neither the delivery of this Prospectus or
this Prospectus as supplemented by any Prospectus Supplement nor
any sale made thereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the
Company since the date hereof or thereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934 (the "1934 Act") and in
accordance therewith files reports and other information with the
Securities and Exchange Commission (the "SEC"). Such reports and
other information may be inspected and copied at the public
reference facilities maintained by the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549; Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661; and 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the
SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates.
DOCUMENTS INCORPORATED BY REFERENCE
The following document filed by the Company with the SEC is
incorporated in this Prospectus by reference:
-- The Company's Annual Report on Form 10-K for the year
ended December 31, 1993.
All documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of
this Prospectus and prior to the termination of the offering made
by this Prospectus shall be deemed to be incorporated by reference
in this Prospectus and to be a part hereof from the date of filing
of such documents.
Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other
subsequently filed document which is deemed to be incorporated by
reference herein or in a Prospectus Supplement modifies or
supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will 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 described above which have been incorporated by reference
in this Prospectus, other than exhibits to such documents. Written
requests for copies of such documents should be addressed to Mr. G.
C. Dean, American Electric Power Service Corporation, 1 Riverside
Plaza, Columbus, Ohio 43215 (telephone number: 614-223-1000). The
information relating to the Company contained in this Prospectus or
any Prospectus Supplement relating hereto does not purport to be
comprehensive and should be read together with the information
contained in the documents incorporated by reference.
THE COMPANY
The Company is an electric utility operating in an area in
eastern Kentucky. Its principal executive offices are located at
1701 Central Avenue, Ashland, Kentucky 41101 (telephone number:
606-327-1111). The Company is a subsidiary of American Electric
Power Company, Inc. ("AEP") and is a part of the AEP integrated
utility system (the "AEP System"). Executive offices of AEP are
located at 1 Riverside Plaza, Columbus, Ohio 43215 (telephone
number: 614-223-1000).
The Company is engaged in the generation, purchase,
transmission and distribution of electric power to approximately
161,000 customers in an area in eastern Kentucky and in supplying
electric power at wholesale to other utilities and municipalities
in Kentucky.
USE OF PROCEEDS
The Company proposes to use the proceeds from the sales of the
Debt Securities to refund long-term debt and, to the extent
internally generated funds are insufficient, to fund its
construction program, or to repay short-term unsecured indebtedness
incurred to refund long-term debt or to fund its construction
program. At April 4, 1994, the Company had approximately
$29,395,000 of unsecured short-term debt outstanding. Unsecured
debt has been, and will be, incurred in connection with the
Company's construction program and for other purposes. The Company
has estimated that its construction costs (inclusive of allowance
for funds used during construction) during 1994 will be
approximately $58,400,000.
The Company's First Mortgage Bonds, 7-7/8% Series due 2002
($45,000,000 principal amount outstanding) may be redeemed at their
regular redemption prices of 101.17% from September 1, 1993 and
100.78% from September 1, 1994. Portions of the 7-7/8% Series may
be redeemed at lower special redemption prices of 100.80% from
September 1, 1993 and 100.74% from September 1, 1994 under certain
provisions of the Mortgage. The Company may attempt to acquire
through tender offer, negotiated, open market or other form of
purchase or otherwise by means other than redemption, its First
Mortgage Bonds, Designated Secured Medium Term Notes, 8.95% Series
due May 10, 2001 ($20,000,000 outstanding) and its 8.90% Series due
May 21, 2001 ($40,000,000 outstanding). The 8.95% Series and the
8.90% Series are not redeemable prior to maturity.
RATIO OF EARNINGS TO FIXED CHARGES
Below is set forth the ratio of earnings to fixed charges for
each of the years in the period 1989 through 1993.
Year Ended Ratio
December 31, 1989 ......................... 3.48
December 31, 1990 ......................... 3.21
December 31, 1991 ......................... 2.58
December 31, 1992 ......................... 2.29
December 31, 1993 ......................... 1.95
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under the Mortgage and Deed
of Trust, dated as of May 1, 1949, of the Company, under which
Bankers Trust Company, New York, New York (the "Trustee") is acting
as Trustee, as heretofore supplemented and amended and as to be
further supplemented (the "Mortgage"). All First Mortgage Bonds
(including the Debt Securities) issued and to be issued under the
Mortgage are herein sometimes referred to as "Bonds". Copies of
the Mortgage, including the form of Supplemental Indenture pursuant
to which each series of the Debt Securities will be issued, are
filed as exhibits to the Registration Statement.
The following statements include a brief summary of certain
provisions of the Debt Securities and the Mortgage. Such summary
does not purport to be complete and reference is made to the
Mortgage for a complete statement of such provisions. Such summary
is qualified in its entirety by such reference and does not relate
or give effect to provisions of statutory or common law.
Form and Exchange
Unless otherwise set forth in a Prospectus Supplement, Debt
Securities in definitive form will be issued only as registered
Bonds without coupons in denominations of $1,000 and in multiples
thereof authorized by the Company. Debt Securities will be
exchangeable for a like aggregate principal amount of the same
series of Debt Securities of other authorized denominations, and
will be transferable, at the office or agency of the Company in New
York City, and at such other office or agency of the Company as the
Company may from time to time designate, in either case without
payment, until further action by the Company, of any charge other
than for any tax or taxes or other governmental charge required to
be paid by the Company. Bankers Trust Company is to be designated
by the Company to act as agent for payment, registration, transfer
and exchange of the Debt Securities in New York City.
Maturity, Interest, Redemption, Credit Enhancement, Improvement
Fund, Additional Dividend Restrictions and Payment
Information concerning the maturity, interest, redemption
provisions, if any, credit enhancement, if any, improvement fund,
if any, any dividend restrictions in addition to those described
herein and payment with respect to any series of the Debt
Securities will be contained in a Prospectus Supplement.
Security
The Debt Securities will be secured, pari passu with Bonds of
all other series now or hereafter issued, by the lien of the
Mortgage which constitutes, in the opinion of counsel for the
Company, a first lien on substantially all of the fixed physical
property and franchises of the Company; subject to (i) the
conditions and limitations in the instruments through which the
Company claims title to its properties and (ii) "excepted
encumbrances", as defined in Section 6 of the Mortgage. The
Mortgage contains an after-acquired property clause, but property
acquired after the recordation of the most recent supplemental
indenture may be subject to liens, ranking prior to the Mortgage,
existing thereon at the time of acquisition of such property and,
in the case of such after-acquired property, the lien of the
Mortgage may be defeated by the intervention of bankruptcy
proceedings until the recordation of a further supplemental
indenture conveying such property to the Trustee after its
acquisition. The provisions of the Mortgage, in substance, permit
releases of property from the lien and the withdrawal of cash
proceeds of property released from the lien, not only against new
property then becoming subject to the lien, but also against
property already subject to the Mortgage unless such property was
owned prior to April 30, 1949, or has been made the basis of the
issue of Bonds or a credit under Sections 39 or 40 of the Mortgage.
Accordingly, any increase in the amount of the mortgaged and
pledged property as a result of the after-acquired property clause
may be eliminated by means of such releases and withdrawals.
Issuance of Additional Bonds
Additional Bonds of any series may be issued in a principal
amount equal to:
1. 60% of the cost or the then fair value, whichever
is less, of unfunded property additions after
deduction for retirements;
2. The principal amount of Bonds or prior lien bonds
retired or then to be retired; and
3. The amount of cash deposited with the Trustee;
but, except as otherwise provided in the Mortgage, only if the net
earnings (as defined in Section 7 of the Mortgage) are at least
twice the annual interest requirements on all outstanding Bonds and
indebtedness having an equal or prior lien, including the
additional issue. However, no Bonds may be issued against property
additions subject to prior liens, as defined in Section 6 of the
Mortgage, (a) if the principal amount of outstanding prior lien
bonds secured thereby exceeds 40% of the cost or fair value
(whichever is less) of such property additions or (b) if the
principal amount of all Bonds theretofore issued on such basis and
continuing on such basis, and the amount of certain other items
representing deposited cash withdrawn or property released on such
basis, in the aggregate, exceeds 15% of the aggregate principal
amount of all Bonds theretofore issued (except Bonds issued under
Article VII of the Mortgage upon retirement of Bonds previously
outstanding under the Mortgage), including the additional issue.
(See Sections 4, 6, 7, 25, 26, 27, 28, 29, and 30 of the Mortgage.)
The requirement, referred to above, that net earnings be at
least twice the annual interest requirements on all outstanding
Bonds and indebtedness having an equal or prior lien, including a
proposed additional issue of Bonds, is not applicable under certain
circumstances where additional Bonds are issued in a principal
amount equal to the principal amount of Bonds or prior lien bonds
retired or then to be retired (see Sections 26, 27 and 29 of the
Mortgage). In calculating earnings coverages under the provisions
of the Mortgage, the Company includes, as a component of earnings,
revenues being collected subject to refund and, to the extent not
limited by the terms of the Mortgage, an allowance for funds used
during construction, including amounts positioned and classified as
an allowance for borrowed funds used during construction. The
coverage under such requirement, calculated as of December 31,
1993, based on the amounts then recorded in the accounts of the
Company, was at least 2.19.
It is estimated that as of March 31, 1994, the Company had
available, for use in connection with the authentication of Bonds,
more than $147,000,000 of unbonded bondable property additions.
The Company expects that the Debt Securities will be authenticated
upon the basis of Bonds previously retired or to be retired and/or
property additions.
The Company believes that its ability to issue short and long-
term debt securities in the amounts required to finance its
construction program will depend upon the timely approval of future
rate increase applications. If the Company is unable to continue
the issue and sale of securities on an orderly basis, the Company
will be required to consider the obtaining of additional amounts of
common equity, the use of possibly more costly alternative
financing arrangements, if available, or the curtailment of its
construction program and other outlays.
Other than the security afforded by the lien of the Mortgage
and restrictions on the issuance of additional Bonds described
above, there are no provisions of the Mortgage which afford holders
of Debt Securities protection in the event of a highly leveraged
transaction involving the Company. However, such a transaction
would require regulatory approval, and management of the Company
believes such approval would be unlikely in a transaction which
would result in the Company's having a highly leveraged capital
structure.
Maintenance and Replacement Provisions
Section 40 of the Mortgage provides for the annual deposit
(which the Mortgage requires to be made so long as any of the Bonds
(other than Bonds of any Series issued after April 23, 1993, unless
otherwise disclosed in a Prospectus Supplement) are outstanding) by
the Company with the Trustee on or before April 30 of an amount in
cash or principal amount of Bonds of any series equal to the excess
of the product of a specified percentage (currently 2.25% but
subject to change as provided in the Mortgage) and the average of
the Depreciable Property (as defined) of the Company at the first
and the last day of the preceding calendar year over the sum of (i)
the aggregate amount expended during the preceding calendar year
for property substituted for retired property, and (ii) any credit
applicable to prior years. The Company may under this covenant
certify to the Trustee, in lieu of depositing cash or Bonds,
property additions which are not then funded property (which
thereupon become funded property) at cost or fair value, whichever
is less.
Release and Substitution of Property
The Mortgage permits property to be released from the lien of
the Mortgage upon compliance with the provisions thereof. Such
provisions require that, in certain specified cases, cash be
deposited with the Trustee in an amount equal to the excess of the
fair value of the property to be released over the aggregate of
certain computations required by the Mortgage. (See Sections 65,
66 and 68 of the Mortgage.) The Mortgage also contains certain
requirements relating to the withdrawal of release moneys and other
funds held by the Trustee. (See Sections 67 and 130 of the
Mortgage.)
Modification of the Mortgage
Article XX of the Mortgage provides for modifying or altering
the Mortgage with the consent of the Company and by vote of the
holders of 75% in principal amount of the outstanding Bonds which
are affected by the proposed modification or alteration. No
modification or alteration, without the consent of the holder of a
Bond, may modify the terms of payment of the principal amount of or
interest on such Bond or create an equal or prior lien or deprive
such holder of a lien on the mortgaged property or reduce the above
percentage.
Restriction on Common Stock Dividends
Various restrictions on the use of retained earnings for cash
dividends on Common Stock and other purposes are contained in or
result from other covenants in the Mortgage relating to other
series of Bonds. At December 31, 1993, the Company's retained
earnings amounted to $85,296,000, of which approximately
$34,200,000 were so restricted. Unless otherwise specified in a
Prospectus Supplement, there will be no additional restrictions on
common stock dividends.
Concerning the Trustee
AEP System companies, including the Company, utilize many of
the banking services offered by Bankers Trust Company in the normal
course of their businesses. Among such services are the making of
short-term loans and in certain cases term loans, generally at
rates related to the prime commercial interest rate, and acting as
a depositary.
The Trustee may, and upon written request of the holders of a
majority in principal amount of the Bonds shall, declare the
principal amount of the Bonds and the interest accrued thereon due
and payable upon occurrence of a completed default, but the holders
of a majority in principal amount of the Bonds may annul such
declaration if the default has been cured. (See Sections 71 and
109 of the Mortgage.) The holders of a majority in principal
amount of the Bonds may direct the time, method and place of
conducting any proceeding for the enforcement of the Mortgage.
(See Section 76 of the Mortgage.) No bondholder has the right to
institute any proceeding for the enforcement of the Mortgage unless
such holder shall have given the Trustee written notice of a
completed default and the holders of 25% in principal amount of the
Bonds shall have offered to the Trustee indemnity against costs,
expenses and liabilities, requested the Trustee to take action and
given the Trustee reasonable opportunity to take such action. The
foregoing does not affect or impair the right of a holder of a Bond
to enforce the payment of the principal of and interest on such
Bond on the respective due dates. (See Section 86 of the
Mortgage.) The Trustee is entitled to be indemnified before taking
action to enforce the lien at the request of such bondholders.
(See Section 75 of the Mortgage.)
Defaults
Section 71 of the Mortgage defines the following as "completed
defaults": default in the payment of principal; default for 60
days in the payment of interest; default in payment of principal or
interest on outstanding prior lien bonds (none of which are
currently outstanding) in certain cases; certain events of
bankruptcy, insolvency or reorganization; and default for 60 days
after notice in the performance of any other covenant. Section 59
of the Mortgage provides that a failure to furnish money for the
redemption of Bonds called for redemption also constitutes a
completed default. The Company is required to furnish annually to
the Trustee a certificate as to compliance with all conditions and
covenants under the Mortgage.
LEGAL OPINIONS
Opinions with respect to the legality of the Debt Securities
will be rendered by Simpson Thacher & Bartlett (a partnership which
includes professional corporations), 425 Lexington Avenue, New
York, N.Y., and 1 Riverside Plaza, Columbus, Ohio, counsel for the
Company, and by Winthrop, Stimson, Putnam & Roberts, One Battery
Park Plaza, New York, N.Y., counsel for any agents, underwriters or
dealers. Simpson Thacher & Bartlett and Winthrop, Stimson, Putnam
& Roberts will rely as to matters of Kentucky law upon the opinion
of Gray, Woods & Cooper, Suite 200, 1505 Carter Avenue, Ashland,
KY, counsel for the Company.
EXPERTS
The financial statements and the related financial statement
schedules incorporated in this prospectus by reference from the
Company's Annual Report on Form 10-K have been audited by Deloitte
& Touche, independent auditors, as stated in their reports, which
are incorporated herein by reference, and have been so incorporated
in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The legal conclusions in "Security" under the caption
"Description of Debt Securities", as to those matters governed by
the laws of the State of Kentucky, have been reviewed by Gray,
Woods & Cooper, counsel for the Company. All of such statements
are made on the authority of said firm as experts.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in any of three ways:
(i) through underwriters or dealers; (ii) directly to a limited
number of purchasers or to a single purchaser; or (iii) through
agents. The Prospectus Supplement relating to a series of the Debt
Securities will set forth the terms of the offering of the Debt
Securities, including the name or names of any underwriters,
dealers or agents, the purchase price of such Debt Securities and
the proceeds to the Company from such sale, any underwriting
discounts and other items constituting underwriters' or agents'
compensation, any initial public offering price and any discounts
or concessions allowed or reallowed or paid to dealers. Any
initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to
time after the initial public offering.
If underwriters are used in the sale, the Debt Securities will
be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of the sale. The
underwriters with respect to a particular underwritten offering of
Debt Securities will be named in the Prospectus Supplement relating
to such offering and, if an underwriting syndicate is used, the
managing underwriters will be set forth on the cover page of such
Prospectus Supplement. Unless otherwise set forth in the
Prospectus Supplement, the several obligations of the underwriters
to purchase the Debt Securities will be subject to certain
conditions precedent, and the underwriters will be obligated to
purchase all such Debt Securities if any are purchased.
Debt Securities may be sold directly by the Company or through
agents designated by the Company from time to time. The Prospectus
Supplement will set forth the name of any agent involved in the
offer or sale of the Debt Securities in respect of which the
Prospectus Supplement is delivered as well as any commissions
payable by the Company to such agent. Unless otherwise indicated
in the Prospectus Supplement, any such agent will be acting on a
reasonable best efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers by
certain specified institutions to purchase Debt Securities from the
Company at the public offering price set forth in the Prospectus
Supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. Such
contracts will be subject to those conditions set forth in the
Prospectus Supplement, and the Prospectus Supplement will set forth
the commission payable for solicitation of such contracts.
Subject to certain conditions, the Company may agree to
indemnify any underwriters, dealers, agents or purchasers and their
controlling persons against certain civil liabilities, including
certain liabilities under the Securities Act of 1933.
[94FN0031.KPC]
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