KENTUCKY UTILITIES CO, S-3, 1995-12-13

KENTUCKY UTILITIES CO
S-3, 1995-12-13
ELECTRIC SERVICES

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AS FILED WITH SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 13, 1995.

REGISTRATION NO.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

----------------

KENTUCKY UTILITIES COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

KENTUCKY AND VIRGINIA 61-0247570
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)

ONE QUALITY STREET
LEXINGTON, KENTUCKY 40507
606/255-2100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

O.M. GOODLETT, SENIOR VICE PRESIDENT
ONE QUALITY STREET
LEXINGTON, KENTUCKY 40507
606/255-2100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

WITH COPY TO:
ROBERT A. YOLLES, ESQ. D. COLLIER KIRKHAM, ESQ.
JONES, DAY, REAVIS & POGUE CRAVATH, SWAINE & MOORE
77 WEST WACKER DRIVE WORLDWIDE PLAZA
CHICAGO, ILLINOIS 60601-1692 825 EIGHTH AVENUE
312/782-3939 NEW YORK, NEW YORK 10019
212/474-1000

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]

CALCULATION OF REGISTRATION FEE

<TABLE>
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<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT* PRICE* FEE
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<S> <C> <C> <C> <C>
First Mortgage Bonds....... $36,000,000 100% $36,000,000 $12,413
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</TABLE>

* Estimated solely for purpose of calculating the amount of the registration
fee.

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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

- -------------------------------------------------------------------------------
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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED DECEMBER 13, 1995

$36,000,000

KENTUCKY UTILITIES COMPANY

FIRST MORTGAGE BONDS, SERIES S, %, DUE ,

The First Mortgage Bonds, Series S, %, due , (the "Bonds")
are being offered by Kentucky Utilities Company. The Bonds will mature on
, . Interest on the Bonds is payable semi-annually on 1 and
1 of each year, commencing 1, 1996. The maturity date, and
corresponding interest payment dates, and the redemption dates, if any, for the
Bonds will be determined at the time of pricing based on the prevailing market
conditions and will be described in the Final Prospectus. See "Description of
Bonds--Redemption."

The Bonds will be represented by a single Global Security registered in the
name of a nominee of The Depository Trust Company, as depository. Interests in
the Global Security will be shown on, and transfers thereof will be effected
only through, records maintained by the Depository and its participants. See
"Book-Entry System."

-----------

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.

-----------

<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE(1) COMMISSION(2) COMPANY(1)(3)
----------------- ------------- -------------
<S> <C> <C> <C>
Per Bond.......................... 100% % %
Total............................. $36,000,000 $ $
</TABLE>
- -----
(1) Plus accrued interest from , .
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deducting expenses payable by the Company, estimated at $190,000.

-----------

The Bonds are offered severally by the Underwriters, as specified herein,
subject to receipt and acceptance by them and subject to their right to reject
any order in whole or in part. It is expected that delivery of the Bonds will
be made in book-entry form only through the facilities of DTC in New York, New
York, on or about , 1995.

GOLDMAN, SACHS & CO. J.J.B. HILLIARD, W.L. LYONS, INC.

-----------

The date of this Prospectus is , 1995.
<PAGE>

[SIDE:] INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
<PAGE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company may be inspected and copied, at prescribed rates, at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at its regional offices located at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
New York, New York 10048. Copies of such material can be obtained from the
Public Reference Section of the Commission, Washington, D.C. 20549 at
prescribed rates. In addition, reports, proxy statements and other information
concerning the Company may be inspected at the office of the Philadelphia
Stock Exchange, 1900 Market Street, Philadelphia, Pennsylvania 19103. The
Company is not required to, and does not, provide annual reports to holders of
its debt securities unless specifically requested by a holder.

The Company has filed a Registration Statement with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Bonds. This Prospectus does not contain all of the information set forth in
such Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. Reference is made to such
Registration Statement and the exhibits thereto for further information with
respect to the Company and the Bonds.

INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

The Company's Annual Report on Form 10-K for the year ended December 31,
1994 (the "1994 Form 10-K") and the Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1995, June 30, 1995 and September 30, 1995 filed by
the Company with the Commission are incorporated in this Prospectus by
reference and are made a part hereof. All documents subsequently filed by the
Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange 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 in this Prospectus
by reference and to be a part hereof from the respective dates of filing of
such documents. Any statement contained in a document incorporated by
reference in this Prospectus shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement in this Prospectus
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference in this Prospectus modifies or supersedes such
statement. Any 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, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any or all of the documents that have been
incorporated in this Prospectus by reference, other than exhibits to such
documents that have not been specifically incorporated by reference herein or
therein. Requests should be directed to O.M. Goodlett, Senior Vice President,
Kentucky Utilities Company, One Quality Street, Lexington, Kentucky 40507,
606/255-2100.

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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

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<PAGE>

SELECTED INFORMATION

The following information is qualified in its entirety by the detailed
information and the financial statements and notes appearing elsewhere in this
Prospectus or in the documents incorporated in this Prospectus by reference.

THE OFFERING

<TABLE>
<S> <C>
Securities Offered................ $36,000,000 of First Mortgage Bonds, Series
S, %, due ,
Maturity Date..................... To be determined at the time of pricing
based on prevailing market conditions (not
less than 5 years or more than 30 years)
Interest Payment Dates............ Semi-annual dates determined at the time of
pricing based on issue date and maturity
date
Mandatory Redemption.............. None
Optional Redemption............... To be determined at the time of pricing
based on maturity date and prevailing
market conditions
Use of Proceeds................... To retire (through redemption, purchase or
otherwise) the Company's $35,500,000 First
Mortgage Bonds, Series K, 7 3/8%, due
December 1, 2002 (the "Prior Bonds")
THE COMPANY
Business.......................... Electric utility
Service area...................... Central, southeastern and western Kentucky
and southwestern Virginia
Estimated Population of Service
Area............................. Approximately 1,000,000
Customers......................... Approximately 451,300
Sources of KWH Generation for year
ended December 31, 1994.......... 99% coal and 1% other
Estimated 1995-1999 Construction
Expenditures (including Clean Air
Act Construction Expenditures of
approximately $18 million)....... $521 million
</TABLE>

3
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SELECTED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
12 MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------- 1995
1992 1993 1994 (UNAUDITED)
-------- -------- -------- -------------
<S> <C> <C> <C> <C>
SELECTED INCOME STATEMENT DATA:
Operating Revenues................... $575,821 $606,588 $636,652 $675,864
Income Before Interest Charges....... $117,213 $114,000 $111,579 $107,416
Net Income........................... $ 76,298 $ 81,286 $ 77,512 $ 68,457
</TABLE>

RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED):

The ratio of earnings to fixed charges is computed by dividing earnings by
fixed charges. Earnings consist of net income plus fixed charges, current
income taxes, deferred income taxes-net and deferred investment tax credit-net
and excludes undistributed earnings of an equity investment. Fixed charges
consist of interest on long-term debt (net of amortization and debt discount,
premium and expense) and other interest charges.

<TABLE>
<CAPTION>
12 MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------ SEPTEMBER 30,
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges......................... 4.27 4.38 3.80 4.82 4.46 3.67
</TABLE>

CAPITALIZATION (UNAUDITED):

Capitalization of the Company as of September 30, 1995, as adjusted, gives
effect to the sale of the Bonds and the use of the estimated net proceeds
thereof to retire the Prior Bonds.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1995
--------------------- % OF
AS CAPITALIZATION
ACTUAL ADJUSTED AS ADJUSTED
---------- ---------- --------------
<S> <C> <C> <C>
Long-Term Debt, including
unamortized premium............... $ 546,002 $ 546,502 47.2
Preferred Stock.................... 40,000 40,000 3.5
Common Stock Equity................ 570,547 570,547 49.3
---------- ---------- -----
Total Capitalization........... $1,156,549 $1,157,049 100.0%
</TABLE>

4
<PAGE>

THE COMPANY

Kentucky Utilities Company, a Kentucky and Virginia corporation (the
"Company"), is a public utility engaged in producing and selling electric
energy. The Company provides electric service to about 422,800 customers in 77
counties in Kentucky and about 28,500 customers in five counties in
southwestern Virginia. The largest city served is Lexington, Kentucky. The
territory served includes most of the Blue Grass Region in central Kentucky
and parts of the coal mining areas in southeastern and western Kentucky and
southwestern Virginia. Lexington is the center of the Blue Grass Region, in
which thoroughbred horse, burley tobacco and bourbon whiskey distilling
industries are located. KU Energy Corporation, a publicly owned holding
company, is the owner of all of the outstanding Common Stock of the Company.
The Company's executive offices are located at One Quality Street, Lexington,
Kentucky 40507, and its telephone number is 606/255-2100.

USE OF PROCEEDS

The net proceeds from the issuance and sale of the Bonds will be used to
retire (through redemption, purchase or otherwise) the Prior Bonds. Any Prior
Bonds purchased will be purchased at a price not in excess of the then-current
redemption price applicable to the Prior Bonds. In case of the redemption or
purchase of Prior Bonds, proceeds of the Bonds may be applied to pay any
redemption premium or purchase price in excess of the principal amount.

DESCRIPTION OF BONDS

GENERAL

The Bonds will be issued as an additional series under, and secured by, the
Indenture of Trust dated May 1, 1947, as amended and supplemented, and as to
be further amended by a supplemental indenture to be entered into in
connection with the Bonds (the "New Supplemental Indenture"), between the
Company and First Trust of Illinois, National Association, Chicago, Illinois,
as successor to Bank of America Illinois (the "Trustee"), and an individual
successor Co-Trustee (collectively, the "Trustees"). The Indenture of Trust
and the New Supplemental Indenture, copies of which are filed as exhibits to
the Registration Statement, are herein called the "Indenture."

The Indenture is filed as an exhibit to the Registration Statement and is
incorporated herein by reference. The following statements, unless the context
otherwise indicates, are brief summaries of the substance or general effect of
certain provisions of the Indenture. The statements make use of defined terms
and are not complete; they are subject to all the provisions of the Indenture
and are qualified in their entirety by reference to the Indenture.

The Bonds will be limited to $36,000,000 in aggregate principal amount. The
Bonds will mature on , and bear interest at the rate of %
per annum. Interest on the Bonds will accrue from 1, 1995, and will
be payable semi-annually on and , commencing , 1996.
Subject to certain exceptions, the New Supplemental Indenture provides for the
payment of interest on each interest payment date only to persons in whose
names the Bonds are registered on the applicable record date (the immediately
preceding or ). See "Book-Entry System."

The holders of the outstanding first mortgage bonds do not have the right to
tender such first mortgage bonds to the Company for repurchase upon the
Company or KU Energy Corporation becoming involved in a highly leveraged or
change in control transaction. The Indenture does not have any provision which
is designed specifically in response to highly leveraged or change in control
transactions. However, bondholders would have the security afforded by the
first mortgage lien on substantially all the Company's property as described
under "Security" below. In addition, any change in control transaction and any
incurrence of additional indebtedness (as first mortgage bonds or

5
<PAGE>

otherwise) by the Company in such a transaction would require approval of
state utility regulatory authorities and, possibly, of federal utility
regulatory authorities. Management believes that such approvals would be
unlikely in any transaction which would result in the Company, or a successor
to the Company, having a highly leveraged capital structure.

Except as otherwise provided below under "Book-Entry System," principal and
interest on the Bonds will be payable in Chicago, Illinois, or New York, New
York and interest will be payable, at the option of the Company, by check
mailed to the registered owners of the Bonds and the Bonds will be issued only
in fully registered form without coupons, in denominations of $1,000 each or
any integral multiple thereof. Transfers and exchanges of Bonds for other
registered Bonds will be made without charge other than for any taxes or other
governmental charges. The Company will not be required (a) to issue, register,
transfer or exchange any Bonds during a period beginning at the opening of
business on the tenth business day next preceding any selection of Bonds to be
redeemed and ending at the close of business on the day on which the
applicable notice of redemption is given, (b) to register, transfer or
exchange any Bonds selected, called or being called for redemption in whole or
in part or (c) to transfer, exchange or register Bonds during the 10 days next
preceding an interest payment date applicable to such Bonds. See "Book-Entry
System."

At September 30, 1995, the Company had outstanding $542,630,000 in principal
amount of first mortgage bonds issued under the Indenture. Bonds may be
authenticated against an equal principal amount of first mortgage bonds which
have been retired and/or in an amount equal to 60% of net expenditures for
bondable property not theretofore bonded. At September 30, 1995, the principal
amount of retired first mortgage bonds available as a basis for authenticating
additional first mortgage bonds aggregated $36,700,000 and unbonded net
expenditures for bondable property aggregated not less than $390,600,000. See
"Issuance of Additional Bonds" below. For the five year period ended December
31, 1994, gross additions to the utility properties of the Company aggregated
about $584,129,000. Gross retirements for such period were about $55,247,000.

DEBT RETIREMENT

Neither the Bonds nor any series of first mortgage bonds to be outstanding
upon retirement of the Prior Bonds are entitled to any covenant providing for
the retirement or amortization of bonds outstanding or for the certification
of expenditures for bondable property in lieu of such retirement.

REDEMPTION

Provisions relating to redemption at the option of the Company, if any, will
be determined at the time of pricing based on maturity and prevailing market
conditions and will be discussed in the Final Prospectus.

If Bonds are subject to redemption, notice of redemption of any Bonds will
be mailed to the owners of the Bonds not later than the 30th day prior to the
redemption date at their addresses appearing on the registry books; provided,
however, that failure to mail such notice to any registered owners or any
imperfection or defect therein shall not affect the validity of any of the
proceedings for redemption with respect to the Bonds for which notice was
properly given. On and after the day fixed for redemption and upon receipt by
the Trustee on or before the redemption date of a sum in cash sufficient to
redeem the Bonds so called for redemption, the Bonds called for redemption
shall cease to bear further interest and shall cease to be secured by the
Indenture. See "Book-Entry System."

MAINTENANCE AND REPAIR

With respect to the Company's first mortgage bonds of all prior series
issued under the Indenture (other than pollution control series Nos. 7, 8, 1B,
2B, 3B, 4B, 9 and 10), the Indenture provides that so

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<PAGE>

long as such first mortgage bonds are outstanding, and the New Supplemental
Indenture will provide that, so long as the Bonds are outstanding, the Company
will expend during each calendar year, and certify to the Trustees, an amount
equal to 15% of its utility operating revenues for such year, after deducting
from such revenues the cost of electricity, gas and water purchased for
exchange or resale, for (1) the maintenance and repair of its utility
properties, (2) bondable property on which the Indenture is a first mortgage
lien, and/or (3) the retirement of the Company's first mortgage bonds of any
series heretofore or hereafter issued under the Indenture. In lieu of such
requirement, the Company may pay to the Trustees, in cash, any deficiency in
the amount required to be so expended, after deducting any unapplied excess
expenditures previously made for any of such purposes. Any such cash may be
applied to the retirement, through purchase, payment or redemption, of the
Company's first mortgage bonds (such retirement by redemption to be only if
such first mortgage bonds are otherwise redeemable) or be withdrawn by the
Company to the extent of 100% of either gross or net expenditures for bondable
property on which the Indenture is a first mortgage lien. There is no
requirement under the Indenture that future series of the Company's first
mortgage bonds be entitled to a maintenance or repair covenant.

The Indenture also provides that (i) the Company shall maintain the mortgaged
properties in good repair and working order, (ii) the Trustee may, and if
requested by holders of a majority in principal amount of all outstanding first
mortgage bonds of the Company and furnished with the necessary funds therefor
shall, cause such properties to be inspected by an independent engineer (not
more often than at five-year intervals) to determine whether they have been so
maintained and whether any property, not retired on the Company's books, should
be so classified for the purpose of computing net expenditures for bondable
property or otherwise, and (iii) the Company shall make good any deficiency in
maintenance disclosed by such engineer's report as rendered or as modified by
arbitration.

SECURITY

The Bonds will be secured by the lien of the Indenture and will rank equally
with all the Company's first mortgage bonds at any time outstanding under and
secured by the Indenture, except as to differences between series permitted by
the Indenture and not affecting the rank of the lien thereof. In the opinion of
Ogden Newell & Welch, Louisville, Kentucky, counsel for the Company, the
Indenture constitutes a first mortgage lien, subject only to permitted
encumbrances and liens and prepaid liens, on all or substantially all the
permanent fixed properties now owned by the Company. One small hydroelectric
generating station is located on land owned by the United States and is
operated under an annually renewable license; a few small substations are
maintained on land over which the Company holds easements; and certain of the
electric transmission lines and distribution lines are installed on public
streets, alleys and highways or are located on easements or rights-of-way. With
respect to property located in Virginia, no examination of underlying titles as
to easements or rights-of-way for transmission or distribution lines has been
made, but, should the rights of the Company in this respect be questioned,
valid easements and rights-of-way in Virginia may, in the opinion of counsel,
be acquired from private property owners by condemnation proceedings. The
Indenture contains provisions subjecting after-acquired property, other than
excepted property, to the lien thereof. Such provisions might not be effective
(i) as to proceeds, products, rents, issues or profits of property subject to
the lien of the Indenture realized, and additional property acquired, within 90
days prior and subsequent to the filing of a case with respect to the Company
under the United States Bankruptcy Code, state insolvency laws or other similar
laws affecting the enforcement of creditors' rights and (ii) with respect to
property located in Virginia not so affixed to other property as to become
subject to the lien of the Indenture without resort to the after-acquired
property provisions, the lien may be defeated, until recordation of a further
supplemental indenture conveying such property to the Trustees after its
acquisition, (a) by the intervention of bankruptcy proceedings or (b) by the
attachment of a judgment lien or by sale to purchasers for value without
notice. The Indenture excepts or excludes from the lien thereof all cash,
securities, accounts and bills receivable, choses in action and certain
judgments not

7
<PAGE>

deposited or pledged with the Trustees, certain personal property held for
sale, lease, rental or consumption in the ordinary course of business, the
last day of each term under any lease of property, all gas, oil and other
minerals under any property subject thereto, and certain real estate described
therein.

ISSUANCE OF ADDITIONAL BONDS

The Indenture does not fix an overall dollar limitation on the aggregate
principal amount of first mortgage bonds that may be issued or outstanding
thereunder. First mortgage bonds may be issued from time to time under the
Indenture in a principal amount equal to: (a) 60% of eligible net expenditures
made by the Company for bondable property constructed or acquired by it and on
which the Indenture is a first mortgage lien, subject only to permitted
encumbrances and liens and prepaid liens, (b) the principal amount of
previously authenticated first mortgage bonds which have been retired or for
the retirement of which the Trustee holds the necessary funds, other than
certain first mortgage bonds not usable for the purpose under the terms of the
Indenture, and (c) the amount of money deposited with the Trustee for the
purpose, which money may be applied to the retirement of the Company's first
mortgage bonds or may be withdrawn in lieu of the authentication of an
equivalent principal amount of first mortgage bonds under the Indenture
provisions referred to in clauses (a) and (b). Net expenditures for bondable
property are determined as provided in the Indenture. In general, bondable
property means any utility plant, property or equipment owned by the Company
and used or useful in its utility business.

No additional first mortgage bonds may be authenticated under the Indenture
provisions referred to in clauses (a) and (c) above, or authenticated as
provided in clause (b) above, bearing a higher rate of interest than the first
mortgage bonds to be retired (unless such first mortgage bonds to be retired
would mature within five years), unless the Company's net earnings (as
described below) for a 12-month period ending within 90 days next preceding
such authentication were at least equal to twice the interest for one year on
(1) all first mortgage bonds to be outstanding under the Indenture immediately
after such authentication, other than first mortgage bonds for the retirement
of which the Trustee hold the necessary funds, and (2) all other indebtedness
then secured by a lien equal or prior to the Indenture on property of the
Company, with certain exceptions.

Net earnings of the Company for any period are determined under the
Indenture by deducting from the total gross earnings and income of the Company
for the period, all its operating expenses for the period, including current
maintenance and repairs, rentals, insurance, taxes other than income taxes,
and all charges or provisions for depreciation, retirements, renewals and
replacements, but not amortization, computed as provided in the Indenture. The
Indenture presently provides that in computing net earnings, the amounts to be
deducted for maintenance and repairs, and for charges or provisions for
depreciation, retirements, renewals and replacements, shall aggregate not less
than 15% of the Company's utility operating revenues for the period, after
deducting from such revenues the cost of electricity, gas and water purchased
for resale. By a supplemental indenture dated May 1, 1991, the Indenture was
amended to provide in effect that, upon the effectiveness of the amendment as
described below, in computing net earnings for any period, the amounts to be
deducted for charges or provisions for maintenance and repairs, and for
depreciation, retirements, renewals and replacements, shall aggregate not less
than an amount equal to 2 1/4% of the arithmetical average of the amount of
depreciable bondable property (as defined in the Indenture) at the beginning
and at the end of such period. Until the foregoing amendment is effective,
upon the retirement or with the consent of the holders of the Prior Bonds and
all the Company's first mortgage bonds, pollution control series No. 7, the
Company will be required to comply with the Indenture requirements as to the
method of computing net earnings, without regard to such amendment. Holders of
the Bonds, holders of the Company's first mortgage bonds, series P, Q and R
and pollution control series Nos. 8, 1B, 2B, 3B, 4B, 9 and 10 and holders of
the Company's first mortgage bonds of subsequent series will be bound by the
foregoing amendment when it becomes effective as described.

8
<PAGE>

ACQUISITION OF PROPERTY SUBJECT TO A PRIOR LIEN

The Indenture presently provides in effect that the Company will not acquire
any property of a value in excess of $500,000 which at the time of acquisition
is subject to a lien equal or prior to the Indenture (other than permitted
encumbrances and liens and prepaid liens) unless, at that time, (a) the
principal amount of all outstanding obligations secured by such equal or prior
lien shall not exceed 60% of the fair value of any bondable property so
acquired and (b) the net earnings of such property during a 12-month period
ending within 90 days next preceding such acquisition were at least equal to
twice the annual interest charge on such obligations, except any of such
obligations owed by the Company or for the retirement of which the necessary
funds are deposited under such lien or with the Trustee. By supplemental
indenture dated May 15, 1992, the Indenture was amended to provide that, upon
the effectiveness of such amendment as described below, the dollar amount
referred to above shall be the lesser of (i) $25,000,000 or (ii) 10 percent of
utility plant less accumulated depreciation of the Company at the time of
acquisition, but in no event less than $500,000. Such amendment will be
effective upon the retirement or with the consent of the holders of the Prior
Bonds and all the Company's first mortgage bonds, pollution control series Nos.
7 and 8. The foregoing covenant, as amended as described above, will be
extended to the Bonds. Holders of the Bonds, holders of the Company's first
mortgage bonds, series P, Q and R and pollution control series Nos. 1B, 2B, 3B,
4B, 9 and 10 and holders of first mortgage bonds of subsequent series will be
bound by the foregoing amendment when it becomes effective as described.

LIMITATIONS ON COMMON STOCK DIVIDENDS

The Bonds are not entitled to any covenant restricting payment of dividends
on the Company's common stock. However, the Indenture provides in effect that,
so long as the Prior Bonds and any first mortgage bonds, pollution control
series No. 7 are outstanding thereunder, the Company will not declare or pay
any dividends on its common stock (other than in stock), or make any other
distribution on or purchase any of its common stock, unless, for the period
beginning May 1, 1947 to the date of such payment, distribution or purchase,
the total amount expended by the Company for maintenance and repairs and
provided for depreciation of properties subject to the lien of the Indenture,
plus the earned surplus (retained earnings) of the Company earned during such
period and remaining after any such payment, distribution or purchase, shall
aggregate not less than 15% of the Company's total utility operating revenues
for the period, after deducting from such revenues the cost of electricity, gas
and water purchased for exchange or resale. For the period May 1, 1947 to
September 30, 1995, the total of the amounts so expended and provided by the
Company for such maintenance, repairs and depreciation, plus the undistributed
earned surplus accumulated during the period, aggregated about 21% of such
revenues and, exclusive of such earned surplus, aggregated about 18% of such
revenues. The Company's first mortgage bonds, series P, Q and R and pollution
control series Nos. 8, 1B, 2B, 3B, 4B, 9 and 10 are not entitled to the benefit
of any covenant restricting the payment of dividends on the Company's common
stock. First mortgage bonds of the Company may be issued in the future which
are entitled to the benefits of more stringent or less stringent covenants with
respect to payments of dividends by the Company, or may be entitled to no such
covenants.

MODIFICATION OF INDENTURE

The terms and provisions of the Indenture may be modified or amended from
time to time by a supplemental indenture executed by the Company and the
Trustees and without the consent of bondholders, for any one or more of the
purposes provided in the Indenture. Such purposes include, among others, (1)
any change or modification of any of the terms or conditions of the Indenture,
provided that such change or modification would not adversely affect the first
mortgage bonds then outstanding under the Indenture and is made effective only
with respect to first mortgage bonds authenticated under the Indenture after
the execution of such supplemental indenture and (2) any other change or
modification of such terms or conditions which is not inconsistent with the
terms, and which shall not impair the security, of the Indenture.

9
<PAGE>

By supplemental indenture dated August 1, 1979, the Indenture was amended to
provide that upon the effectiveness of such amendment as described below the
Indenture may be amended in any respect with the consent of the holders of not
less than 66 2/3% in principal amount of all of the Company's first mortgage
bonds of all series then outstanding under the Indenture that would be affected
thereby, except that, without the consent of the holder of each outstanding
first mortgage bond affected thereby, no such amendment shall, among other
things, (i) extend the time or times or otherwise affect the terms of payment
of the principal, interest or premium in respect of any first mortgage bond, or
reduce the principal amount of any first mortgage bond or any premium thereon
or the rate of interest thereon, (ii) impair the right of any bondholder to
institute suit for the enforcement of any such payment in respect of his first
mortgage bonds, (iii) permit the creation of any lien ranking prior to, or on a
parity with, the lien of the Indenture, other than permitted encumbrances and
liens or prepaid liens, (iv) deprive any nonassenting bondholder of a lien on
the mortgaged property for the security of his first mortgage bonds or (v)
reduce the percentage in principal amount of first mortgage bonds, the consent
of the holders of which is required for any such amendment. Such amendment will
be effective upon the retirement or with the consent of the holders of the
Prior Bonds. The foregoing amendment is binding upon holders of the Bonds,
holders of the first mortgage bonds, series P, Q and R and pollution control
series Nos. 7, 8, 1B, 2B, 3B, 4B, 9 and 10 and holders of first mortgage bonds
of subsequent series.

By supplemental indenture dated May 15, 1992, the Indenture was further
amended to provide that upon the effectiveness of such amendment as described
below the percentage of bondholders necessary to consent to amendments shall be
51% (instead of 66 2/3% as described above). Such amendment will be effective
upon (i) the effectiveness of the amendment included in the supplemental
indenture of August 1, 1979 described above and (ii) the retirement or with the
consent of the holders of all the Company's first mortgage bonds, pollution
control series Nos. 7 and 8. Holders of the Bonds and holders of first mortgage
bonds, series P, Q and R and pollution control series Nos. 1B, 2B, 3B, 4B, 9
and 10 and holders of first mortgage bonds of subsequent series will be bound
by the foregoing amendment when it becomes effective as described.

OTHER INDENTURE PROVISIONS

Holders of a majority in principal amount of the first mortgage bonds secured
by the Indenture have the right to direct the time, method and place of
conducting proceedings for remedies available to, or exercising any trust or
power of, the Trustees. However, the Trustees may decline to follow such
directions in certain circumstances specified in the Indenture; the Trustees
are not required to exercise powers of entry or sale under the Indenture; and
the Trustees are entitled to be indemnified against expenditures incurred in
connection with taking any directed action or proceeding.

A "default" or an "event of default" under the Indenture means: (a) failure
to pay the principal of any first mortgage bond of the Company when due at
maturity or otherwise; (b) failure to pay first mortgage bond interest within
60 days after its due date; (c) failure to pay the principal of, or interest
on, any prior lien bond, continued beyond the grace period (if any) specified
in the lien securing such bond and also continued beyond 30 days after written
notice to the Company of such failure; (d) failure of the Company for 90 days
after written demand to comply with any other covenant or condition in the
Indenture or in any first mortgage bond or any prior lien bond or lien; or (e)
certain events relating to bankruptcy, insolvency, assignment or receivership.
The Trustees are required to give notice to bondholders of defaults known to
the Trustees, within 90 days after the occurrence thereof; provided that the
Trustees may withhold giving notice to bondholders of defaults (other than any
default in payment of interest, principal or sinking or purchase fund
installment in respect of any first mortgage bond secured by the Indenture) if
the Trustees determine in good faith that such withholding is in the interest
of the bondholders. Upon default, the Trustees may, among other remedies, and
upon written notice from the holders of a majority in principal amount of first
mortgage bonds then outstanding under the Indenture shall, declare the
principal of all first mortgage bonds to be immediately due and payable. Upon
certain terms and conditions, the declaration of acceleration may be rescinded
and waived.

10
<PAGE>

The Company is required to furnish to the Trustees certificates of officers
and engineers and, in certain cases, of accountants in connection with the
authentication of first mortgage bonds, withdrawal of money, release of
property and other matters, and opinions of counsel as to the lien of the
Indenture and other matters. The Company also is required to furnish the
Trustee, not less frequently than annually, a certificate as to the Company's
compliance with the terms of the Indenture, including the satisfaction of the
maintenance and renewal and the debt retirement provisions of the Indenture,
and an opinion of counsel with respect to the lien of the Indenture.

BOOK-ENTRY SYSTEM

The Bonds, as issued initially, will be represented by one fully-registered
global security (the "Global Security"). The Global Security will be deposited
with, or on behalf of, The Depository Trust Company ("DTC"), or its successor
as depository (the "Depository"), and registered in the name of the Depository
or a nominee of the Depository.

So long as the Depository, or its nominee, is the registered owner of the
Global Security, such Depository or such nominee, as the case may be, will be
considered the owner of such Global Security for all purposes, including any
notices and voting. Except in the circumstances described below, the owners of
beneficial interests in the Global Security will not be entitled to have any
individual Bonds registered in their names, will not receive or be entitled to
receive physical delivery of any such Bonds and will not be considered the
owners of Bonds under the Indenture. Accordingly, each person holding a
beneficial interest in the Global Security must rely on the procedures of the
Depository and, if such person is not a Direct Participant (as herein defined),
on procedures of the Direct Participant through which such person holds its
interest, to exercise any of the rights of a registered owner of such Bond.

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 securities in certificated form ("Certificated Securities") in
exchange for the Global Security or Global Securities representing the
corresponding book-entry Bonds represented by one or more Global Securities
and, in such event, will issue Certificated Securities in exchange for the
Global Securities representing the corresponding book-entry Bonds. Further, in
such event, an owner of a beneficial interest in a Global Security representing
book-entry Bonds may, on terms acceptable to the Company and the Depository for
such Global Security, receive such book-entry Bonds as Certificated Securities.
In any such instance, an owner of a beneficial interest in a Global Security
representing book-entry Bonds will be entitled to physical delivery of
individual Certificated Securities equal in principal amount to such beneficial
interest and to have such Certificated Securities registered in the name of
such owner. Certificated Securities will be issued as registered Bonds in
denominations of $1,000. See "Description of Bonds--General."

The following is based solely on information furnished by DTC:

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

11
<PAGE>

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 Commission.

Purchases of Global Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for such purchases of
Global Securities on DTC's records. The ownership interest of each actual
purchaser of each Global Security ("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 Global
Securities are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the Global Securities,
except in the event that use of the book-entry system for the Global Securities
is discontinued.

To facilitate subsequent transfers, all Global Securities deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Global Securities with DTC and their registration in
the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Global Securities; DTC's
records reflect only the identity of the Direct Participants to whose accounts
such Global Securities are credited which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.

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.

If the Global Securities are redeemable, redemption notices shall be sent to
Cede & Co. If less than all of the Global Securities 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.

Neither DTC nor Cede & Co. will consent or vote with respect to the Global
Securities. 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 whose
accounts the Global Securities are credited on the record date (identified in a
listing attached to the omnibus proxy).

Principal and interest payments on the Global Securities 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 the 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
Trustee, or the Company, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of principal and interest on Bonds
represented by Global Securities to DTC is the responsibility of the Company
and 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.

DTC may discontinue providing its services as securities depository with
respect to the Global Securities 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, Bonds in certificated

12
<PAGE>

form are required to be printed and delivered. The Company may decide to
discontinue use of the system of book-entry transfers through DTC (or a
successor securities depository). In that event, Bonds in certificated form are
required to be printed and delivered.

The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources (including DTC) that the Company believes to be
reliable, but the Company takes no responsibility for the accuracy thereof.

The Underwriters 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 SECURITY 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 SECURITY OR FOR MAINTAINING, SUPERVISING
OR REVIEWING ANY RECORDS RELATING TO SUCH BENEFICIAL INTERESTS.

LEGAL OPINIONS

The validity of the Bonds will be passed upon for the Company by Jones, Day,
Reavis & Pogue, 77 West Wacker, Chicago, Illinois 60601-1692, and Ogden Newell
& Welch, 1200 One Riverfront Plaza, Louisville, Kentucky 40202. Certain legal
matters will be passed upon for the Underwriters by Cravath, Swaine & Moore,
825 Eighth Avenue, New York, New York 10019.

The Company is advised that as of September 30, 1995 members of Ogden Newell
& Welch owned 13,987 shares of common stock of KU Energy Corporation.

The statements as to matters of law or legal conclusions with respect to the
jurisdiction of certain federal regulatory commissions expressed under Item 1,
Business--Regulation in the 1994 Form 10-K have been prepared or reviewed by
Jones, Day, Reavis & Pogue. The statements as to matters of law or legal
conclusions (a) relating to the jurisdiction of certain state regulatory
commissions, expressed under Item 1, Business--Regulation in the 1994 Form 10-
K, (b) relating to the Company's compliance with environmental standards and
regulations expressed under Item 1, Business--Environmental Matters in the 1994
Form 10-K and (c) expressed under "Description of Bonds--Security" in this
Prospectus, have been prepared or reviewed by Ogden Newell & Welch. Such
statements are made upon the authority of such counsel, who have given their
opinions that such statements as to such matters are correct.

EXPERTS

The audited financial statements and financial statement schedule of the
Company included in the 1994 Form 10-K and incorporated by reference in this
Prospectus and elsewhere in the Registration Statement, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said report.

13
<PAGE>

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company has agreed to sell to each of the Underwriters named below, and
each of the Underwriters has severally agreed to purchase, the principal amount
of the Bonds set forth opposite its name below:

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER BONDS
----------- -----------
<S> <C>
Goldman, Sachs & Co.......................................... $
J.J.B. Hilliard, W.L. Lyons, Inc.............................
-----------
Total.................................................... $36,000,000
===========
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Bonds, if any are
taken.

The Underwriters propose to offer the Bonds in part directly to the public at
the initial public offering price set forth on the cover page of this
Prospectus and in part to certain securities dealers at such price less a
concession of % of the principal amount of the Bonds. The Underwriters may
allow, and such dealers may reallow, a concession not to exceed % of the
principal amount of the Bonds to certain brokers and dealers. After the Bonds
are released for sale to the public, the offering price and other selling terms
may from time to time be varied by the Underwriters.

The Bonds are a new issue of securities with no established trading market.
The Bonds will not be listed on any national securities exchange. The Company
has been advised by the Underwriters that the Underwriters intend to make a
market in the Bonds but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Bonds.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.

14
<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESEN-
TATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AU-
THORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICI-
TATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN
THIS PROSPECTUS OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAW-
FUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.

-----------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Incorporation of Certain Information by Reference.......................... 2
Selected Information....................................................... 3
The Company................................................................ 5
Use of Proceeds............................................................ 5
Description of Bonds....................................................... 5
Book-Entry System.......................................................... 11
Legal Opinions............................................................. 13
Experts.................................................................... 13
Underwriting............................................................... 14
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

$36,000,000

KENTUCKY UTILITIES COMPANY

FIRST MORTGAGE BONDS,
SERIES S, %,
DUE

-----------

PROSPECTUS

-----------

GOLDMAN, SACHS & CO.

J.J.B. HILLIARD,
W.L. LYONS, INC.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

All amounts estimated except as indicated:

<TABLE>
<S> <C>
Securities and Exchange Commission, registration fee........... $ 12,413*
Printing of Registration Statement, Prospectus, Supplemental
Indenture, Bonds, Etc......................................... 40,000
Fees of Trustee................................................ 25,000
Fees of Rating Agencies........................................ 25,000
Fees of Accountants............................................ 10,000
Expenses and counsel fees for qualification or registration of
the Bonds under "blue sky" laws............................... 1,000
Counsel fees................................................... 75,000
Miscellaneous expenses, including traveling, telephone,
copying, shipping, recording, etc............................. 1,587
--------
Total...................................................... $190,000
========
</TABLE>
- --------
* Exact amount

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Sections 271B.8-500 to 271B.8-580 of the Kentucky Business Corporation Act
provide that the registrant may, and in some cases must, indemnify each
director and each officer of the registrant against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him by reason of the fact that he is or was a director
or officer of the registrant, subject to certain conditions and limitations.
Similar provisions are contained in Sections 13.1-696 to 13.1-704 of the
Virginia Stock Corporation Act.

The registrant's Amended and Restated Articles of Incorporation and By-laws
provide, in general, for mandatory indemnification of directors and officers
by the registrant to the fullest extent permitted by law.

Officers and directors of the registrant are covered by insurance policies
purchased by the registrant under which they are insured (subject to
exceptions and limitations specified in the policies) against expenses and
liabilities arising out of actions, suits or proceedings to which they are
parties by reason of being or having been such directors or officers.

Reference is made to Section 8 of the form of Underwriting Agreement (filed
as Exhibit 1.01), which contemplates indemnification of the Company's
officers, directors and controlling persons by the Underwriters against
certain civil liabilities, including liabilities under the Securities Act of
1933.

II-1
<PAGE>

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
------- ------------------------
<C> <S> <C>
1.01 Form of First Mortgage Bond Underwriting Agreement. (Ex-
hibit 1.01 in File No. 33-69852) Incorporated by refer-
ence.
4.01 Indenture of Mortgage or Deed of Trust dated May 1, 1947
between the Company and Continental Illinois National Bank
and Trust Company of Chicago and Edmond B. Stofft, as
Trustees, (Amended Exhibit 7(a) in File No. 2-7061), and
Supplemental Indentures thereto dated, respectively, Janu-
ary 1, 1949 (Second Amended Exhibit 7.02 in File No. 2-
7802), July 1, 1950 (Amended Exhibit 7.02 in File No. 2-
8499), June 15, 1951 (Exhibit 7.02(a) in File No. 2-8499),
June 1, 1952 (Amended Exhibit 4.02 in File No. 2-9658),
April 1, 1953 (Amended Exhibit 4.02 in File No. 2-10120),
April 1, 1955 (Amended Exhibit 4.02 in File No. 2-11476),
April 1, 1956 (Amended Exhibit 2.02 in File No. 2-12322),
May 1, 1969 (Amended Exhibit 2.02 in File No. 2-32602),
April 1, 1970 (Amended Exhibit 2.02 in File No. 2-36410),
September 1, 1971 (Amended Exhibit 2.02 in File No. 2-
41467), December 1, 1972 (Amended Exhibit 2.02 in File No.
2-46161), April 1, 1974 (Amended Exhibit 2.02 in File No.
2-50344), September 1, 1974 (Exhibit 2.04 in File No. 2-
59328), July 1, 1975 (Exhibit 2.05 in File No. 2-59328),
May 15, 1976 (Amended Exhibit 2.02 in File No. 2-56126),
April 15, 1977 (Exhibit 2.06 in File No. 2-59328), August
1, 1979 (Exhibit 2.04 in File No. 2-64969), May 1, 1980
(Exhibit 2 to Form 10-Q Quarterly Report of the Company
for the quarter ended June 30, 1980), September 15, 1982
(Exhibit 4.04 in File No. 2-79891), August 1, 1984 (Ex-
hibit 4B to Form 10-K Annual Report of the Company for the
year ended December 31, 1984), June 1, 1985 (Exhibit 4 to
Form 10-Q Quarterly Report of the Company for the quarter
ended June 30, 1985), May 1, 1990 (Exhibit 4 to Form 10-Q
Quarterly Report of the Company for the quarter ended June
30, 1990), May 1, 1991 (Exhibit 4 to Form 10-Q Quarterly
Report of the Company for the quarter ended June 30,
1991), March 1, 1992 (Exhibit 4B to Form-10K Annual Report
of the Company for the year ended December 31, 1992), May
15, 1992 (Exhibit 4.02 to Form 8-K of the Company dated
May 14, 1992), August 1, 1992 (Exhibit 4 to Form 10-Q
Quarterly Report of the Company for the quarter ended Sep-
tember 30, 1992), June 15, 1993 (Exhibit 4.02 to Form 8-K
of the Company dated June 15, 1993), December 1, 1993 (Ex-
hibit 4.01 to Form 8-K of the Company dated December 10,
1993), November 1, 1994 (Exhibit 4C to Form 10-K Annual
Report of the Company for the year ended December 31,
1994) and June 1, 1995 (Exhibit 4 to Form 10-Q Quarterly
Report of the Company for the quarter ended June 30,
1995). Incorporated by reference.
4.02 Form of proposed New Supplemental Indenture providing for
the Bonds. (Exhibit 4.02 in File No. 33-69852) Incorpo-
rated by reference.
5.01 Opinion of Jones, Day, Reavis & Pogue regarding legality.
5.02 Opinion of Ogden Newell & Welch regarding legality.
5.03 Opinion of Hunton & Williams regarding legality.
12.01 Computation of Ratio of Earnings to Fixed Charges. (Ex-
hibit 12 to Form 10-Q of the Company for the quarter ended
September 30, 1995). Incorporated by reference.
23.01 Consent of Jones, Day, Reavis & Pogue (included in Exhibit
5.01).
23.02 Consent of Ogden Newell & Welch (included in Exhibit
5.02).
23.03 Consent of Hunton & Williams (included in Exhibit 5.03).
23.04 Consent of Arthur Andersen LLP
25 Form T-1 and Form T-2 statements of eligibility of trust-
ees.
</TABLE>

II-2
<PAGE>

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide public offering thereof.

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions referred to in Item 15, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in that Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in that Act and will be governed by the
final adjudication of such issue.

II-3
<PAGE>

SIGNATURES

THE REGISTRANT. PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933,
AS AMENDED, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE
THAT IT MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 (INCLUDING THE
REASONABLE BELIEF THAT THE SECURITY RATING REQUIREMENTS OF GENERAL INSTRUCTION
I.B.2. WILL BE MET BY THE TIME OF SALE OF ANY BONDS REGISTERED HEREUNDER) AND
HAS DULY CAUSED THIS REGISTRATION STATEMENT OR AMENDMENT THERETO, AS THE CASE
MAY BE, TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF LEXINGTON, AND COMMONWEALTH OF KENTUCKY.

Kentucky Utilities Company

/s/ Michael R. Whitley
By: _________________________________
Michael R. Whitley
Chairman, President and Chief
Executive Officer

Dated: December 13, 1995

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT OR AMENDMENT THERETO, AS THE CASE MAY BE, HAS BEEN
SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.

Dated: December 13, 1995
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----

<S> <C>
/s/ Michael R. Whitley Chairman, President and Chief Executive
___________________________________________ Officer and Director (principal executive
Michael R. Whitley officer)

/s/ O.M. Goodlett Senior Vice President (principal financial
___________________________________________ officer)
O.M. Goodlett

/s/ Michael D. Robinson Controller (principal accounting officer)
___________________________________________
Michael D. Robinson

/s/ Mira S. Ball Director
___________________________________________
Mira S. Ball

/s/ Harry M. Hoe Director
___________________________________________
Harry M. Hoe

/s/ Milton W. Hudson Director
___________________________________________
Milton W. Hudson

/s/ John T. Newton Director
___________________________________________
John T. Newton

</TABLE>

II-4
<PAGE>

<TABLE>
<S> <C>
/s/ Frank V. Ramsey, Jr. Director
___________________________________________
Frank V. Ramsey, Jr.

/s/ Warren W. Rosenthal Director
___________________________________________
Warren W. Rosenthal

/s/ William L. Rouse, Jr. Director
___________________________________________
William L. Rouse, Jr.

/s/ Charles L. Shearer Director
___________________________________________
Charles L. Shearer

/s/ Lee T. Todd, Jr. Director
___________________________________________
Lee T. Todd, Jr.

</TABLE>

II-5

<PAGE>

EXHIBIT 5.01

JONES, DAY, REAVIS & POGUE
77 WEST WACKER
CHICAGO, ILLINOIS 60601-1692

TELEPHONE: 312-782-3939
FACSIMILE: 312-782-8585

December 13, 1995

Kentucky Utilities Company
One Quality Street
Lexington, Kentucky 40507

Ladies and Gentlemen:

We have examined the Form S-3 Registration Statement (the "Registration
Statement") of Kentucky Utilities Company (the "Company"), to which this
opinion is an exhibit, for the registration under the Securities Act of 1933,
as amended, of $36,000,000 in aggregate principal amount of the Company's
First Mortgage Bonds, Series S (the "Bonds") to be issued pursuant to the
Indenture of Trust, dated May 1, 1947, as heretofore amended and supplemented,
from the Company to First Trust of Illinois, National Association (the
"Trustee") and an individual successor co-trustee (collectively, the
"Trustees"), and as further supplemented by a New Supplemental Indenture (the
"New Supplemental Indenture"). Said Indenture of Trust and New Supplemental
Indenture are herein referred to as the "Indenture."

We have also examined such documents, records and matters of law as we have
deemed necessary for purposes of this opinion. Based on the foregoing, and
subject to the qualifications set forth herein, we are of the opinion that:

1. The Company is a corporation duly organized and existing under the
laws of the Commonwealths of Kentucky and Virginia.

2. The Indenture, other than the New Supplemental Indenture, constitutes
a valid and binding instrument of the Company.

3. Subject to the conditions set forth below, the New Supplemental
Indenture, the preliminary form of which is filed as an exhibit to the
Registration Statement, upon the appropriate completion thereof, will be a
valid and binding instrument of the Company and the Bonds will be duly
authorized, valid and binding obligations of the Company and will be
entitled to the benefits of the Indenture, except as the United States
Bankruptcy Code (the "Code") may affect the validity of the lien of the
Indenture with respect to proceeds, products, rents, issues or profits of
the property subject to the lien of the Indenture realized, and additional
property acquired, within 90 days prior and subsequent to the commencement
of a case with respect to the Company under the Code, and except as
enforcement of the provisions of the Indenture may be limited by (i)
general principles of equity, including the possible unavailability of
specific performance or injunctive relief, regardless of whether such
enforceability is considered in a proceeding in equity or at law, (ii)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, and (iii) the laws of Kentucky,
Virginia and Tennessee affecting the remedies for the enforcement of the
security provided for in the Indenture.

The foregoing opinions are subject to the satisfaction of the following
conditions:

(a) the issuance of orders by the Kentucky Public Service Commission, the
Tennessee Public Service Commission, and the Virginia State Corporation
Commission authorizing, approving or permitting the issuance and sale of
the Bonds by the Company on terms contemplated by the Registration
Statement and the continued effectiveness of such orders;

<PAGE>

(b) the due execution and delivery of the New Supplemental Indenture by
the parties thereto, in substantially the form of the proposed New
Supplemental Indenture filed as Exhibit 4.02 to the Registration Statement
and the form of the New Supplemental Indenture approved by the authorizing
resolutions of the Board of Directors of the Company or the Pricing
Committee thereof, and the filing thereof for record as required by law;
and

(c) the due execution of the Bonds by the Company, and the authentication
thereof by the Trustee in accordance with the terms of the Indenture; and
the issuance and sale the Bonds by the Company against receipt by it of the
agreed consideration therefor in accordance with such authorizations of the
Board of Directors or Pricing Committee of the Company and with the orders
of the state commissions referred to above.

The Registration Statement must become effective under the Securities Act of
1933, as amended, prior to the sale of the Bonds.

In rendering the opinions set forth herein, we have relied solely upon the
opinion of Ogden Newell & Welch with respect to all matters governed by the
laws of the Commonwealth of Kentucky and the State of Tennessee and the
opinion of Hunton & Williams with respect to all matters governed by the laws
of the Commonwealth of Virginia. For purposes of this opinion, we express no
opinion with respect to the requirements of any state securities or "blue sky"
laws. Furthermore, we express no opinion as to the title of any person to any
property or as to the priority or perfection of the liens or security
interests created, or intended or purported to be created, by the Indenture.

We have prepared or reviewed the statements as to matters of law or legal
conclusions with respect to the jurisdiction of certain federal regulatory
commissions expressed under Item 1, Business--Regulation in the Company's
Annual Report on Form 10-K for the year ended December 31, 1994, which is
incorporated by reference in the Prospectus which is a part of the
Registration Statement. We are of the opinion that all such statements as to
such matters are correct and we hereby consent to the use of such statements
in the Registration Statement and to the use of our name in connection
therewith.

We hereby consent to the filing of this opinion as Exhibit 5.01 to the
Registration Statement and to the reference to us under the caption "Legal
Opinions" in the Prospectus constituting a part of the Registration Statement.

Very truly yours,

Jones, Day, Reavis & Pogue

<PAGE>

EXHIBIT 5.02

December 13, 1995

Ogden, Newell & Welch
1200 One River Front Plaza
Louisville, Kentucky 40202-2973

Kentucky Utilities Company
One Quality Street
Lexington, Kentucky 40507

Dear Sirs:

We have examined the Form S-3 Registration Statement (the "Registration
Statement"), of Kentucky Utilities Company (the "Company"), to which this
opinion is an exhibit, for the registration under the Securities Act of 1933
of $36,000,000 in aggregate principal amount of the Company's First Mortgage
Bonds, Series S (the "Bonds") to be issued pursuant to the Indenture of Trust,
dated May 1, 1947, from the Company to First Trust of Illinois, National
Association (the "Trustee") and an individual successor co-trustee
(collectively, the "Trustees"), as heretofore amended and supplemented and as
further supplemented by a Supplemental Indenture (the "New Supplemental
Indenture"). The New Supplemental Indenture will relate to the Bonds and will
set forth the maturity, interest rate, payment dates and certain other terms and
conditions of such Bonds. Said Indenture of Trust and New Supplemental Indenture
are herein referred to as the "Indenture."

In connection with our opinion hereinafter given, we have examined originals
or copies certified or otherwise identified to our satisfaction of such
agreements, documents and certificates of public officials and corporate
officers and representatives and such other papers and have made such
investigations as we have deemed relevant and necessary in order to render
such opinion. As to any facts material to our opinion, we have, when relevant
facts were not independently established by us, relied, to the extent we
deemed such reliance proper, upon a certificate or certificates, telegrams or
other written or oral advice of an official, officer or authorized
representative of the particular governmental authority, corporation, firm or
other entity concerned. In our examination, we have assumed the genuineness of
the signatures on documents and instruments, the authenticity of documents
submitted as originals and the conformity to originals of documents submitted
as copies thereof.

Based upon our examination of such documents, records and matters of law as
we have considered relevant, it is our opinion that:

1. The Company is a corporation duly organized and existing under the
laws of the Commonwealths of Kentucky and Virginia.

2. The Indenture, other than the New Supplemental Indenture, constitutes
a valid and binding instrument of the Company.

3. Subject to the conditions set forth below, the New Supplemental
Indenture, the preliminary form of which is filed as an exhibit to the
Registration Statement, upon the appropriate completion thereof, will be a
valid and binding instrument of the Company and the Bonds will be duly
authorized, valid and binding obligations of the Company and will be
entitled to the benefits of the Indenture, except as the United States
Bankruptcy Code (the "Code") may affect the validity of the lien of the
Indenture with respect to proceeds, products, rents, issues or profits of
the property subject to the lien of the Indenture realized, and additional
property acquired, within 90 days prior and subsequent to the commencement
of a case with respect to the Company under the Code, except as enforcement
of the Indenture may be limited by state insolvency laws or other similar
laws affecting the enforcement of creditors' rights, and except as
enforcement of provisions of the Indenture may be limited by the laws of
Kentucky, Virginia and Tennessee affecting the remedies for the enforcement
of the security provided for in the Indenture.

<PAGE>

The foregoing opinions are subject to the satisfaction of the following
conditions:

(a) the due adoption by the Board of Directors of the Company or the
Pricing Committee thereof of appropriate resolutions authorizing the
execution and delivery of the New Supplemental Indenture and the execution,
authentication, issuance and sale of of the Bonds;

(b) the continued effectiveness of orders of the Kentucky Public service
Commission, the Tennessee Public Service Commission and the Virginia State
Corporation Commission authorizing, approving or permitting the issuance and
sale of Securities by the Company;

(c) the due execution and delivery of the New Supplemental Indenture by
the parties thereto, in substantially the form of the proposed Supplemental
Indenture attached as Exhibit 4.02 to the Registration Statement and the
form of the Supplemental Indenture approved by the authorizing resolutions
of the Board of Directors or the Pricing Committee thereof, and the filing
thereof for record as required by law; and

(d) the due execution of the Bonds by the Company and the authentication
thereof by the Trustee, in accordance with the terms of the Indenture; and
the issuance and sale of the Bonds by the Company against receipt by it of
the agreed consideration therefor and in accordance with such
authorizations of the Board of Directors of the Company or the Pricing
Committee thereof and with the order or orders of the state commissions
referred to above.

We have prepared or reviewed the statements as to matters of law or legal
conclusions (a) relating to the jurisdiction of certain state regulatory
commissions, expressed under Item 1, Business-- Regulation in the Company's
Annual Report on Form 10-K for the year ended December 31, 1994 ("1994 Form
10-K"), which is incorporated by reference in the Prospectus constituting a
part of the Registration Statement, (b) relating to the Company's compliance
with environmental standards and regulations expressed under Item 1,
Business--Environmental Matters in the 1994 Form 10-K and (c) expressed under
"Description of Bonds--Security" in the Prospectus constituting a part of the
Registration Statement. We are of the opinion that all such statements as to
such matters are correct and we hereby consent to the use of such statements
in the Registration Statement and to the use of our name in connection
therewith.

This opinion may be relied upon by the Company and its counsel. We are
members of the Bar of the Commonwealth of Kentucky, and in rendering this
opinion, our examination of law has been limited to, and we express no opinion
as to the law of any jurisdiction other than, the laws of the Commonwealths of
Kentucky and Virginia and the State of Tennessee. In rendering the opinions
set forth herein, we have relied solely upon the opinion of Hunton & Williams
with respect to all matters governed by the laws of the Commonwealth of
Virginia. For purposes of this opinion, we express no opinion with respect to
the requirements of any state securities or "blue sky" laws.

We hereby consent to the filing of this opinion as Exhibit 5.02 to the
Registration Statement and to the reference to us under the caption "Legal
Opinions" in the Prospectus constituting a part of the Registration Statement.

Very truly yours,

Ogden Newell & Welch

<PAGE>

EXHIBIT 5.03

DECEMBER 13, 1995

Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219-4074

Kentucky Utilities Company
One Quality Street
Lexington, KY 40507

Ogden, Newell & Welch
1200 One Riverfront Plaza
Louisville, KY 40202

Jones, Day, Reavis & Pogue
77 W. Wacker Drive
Chicago, IL 60601

KENTUCKY UTILITIES COMPANY

DEAR SIRS:

We have examined the Registration Statement on Form S-3 (the "Registration
Statement") of Kentucky Utilities Company (the "Company"), that will be filed
with the Securities and Exchange Commission and to which this opinion is an
exhibit, for the registration under the Securities Act of 1933, as amended, of
an aggregate amount of $36,000,000 of its First Mortgage Bonds, Series S (the
"Bonds") to be issued pursuant to the Indenture of Trust, dated May 1, 1947,
from the Company to First Trust of Illinois, National Association (the
"Trustee"), and an individual co-trustee (collectively, the "Trustees"), as
heretofore amended and supplemented and as further supplemented by a
Supplemental Indenture (the "New Supplemental Indenture"). The New Supplemental
Indenture will relate to the Bonds and will set forth the maturity, interest
rate, payment dates and certain other terms and conditions of the Bonds. The
Indenture of Trust as supplemented by the New Supplemental Indenture is herein
referred to as the "Indenture."

Based upon our examination of Virginia law and such documents, records and
matters of law as we have considered necessary for the purposes of this
opinion, and subject to the qualifications stated herein, we are of the
opinion that:

1. The Company is a corporation duly organized and existing under the
laws of the Commonwealth of Virginia.

2. The Indenture, other than the New Supplemental Indenture, constitutes
a valid and binding instrument of the Company.

The foregoing opinions are subject to the satisfaction of the following
conditions:

(a) the due adoption by the Board of Directors of the Company of
appropriate resolutions authorizing the execution and delivery of the New
Supplemental Indenture and the execution, authentication, issuance and sale
of the Bonds;

<PAGE>

(b) the continued effectiveness of the order by the Virginia State
Corporation Commission (the "SCC") authorizing, approving or permitting the
issuance and sale of the Bonds by the Company;

(c) the due execution and delivery of the New Supplemental Indenture by
the parties thereto, in substantially the form of the proposed New
Supplemental Indenture attached as Exhibit 4.02 to the Registration
Statement, and the filing of the Indenture for record as required by law;

(d) the due execution of the Bonds by the Company and the authentication
thereof by the Trustee, in accordance with the terms of the Indenture; and
the issuance and sale of the Bonds by the Company against receipt by it of
the agreed consideration therefor and in accordance with such authorization
of the Board of Directors of the Company and with the order of the SCC
referred to above.

This opinion may be relied upon by the Company, Ogden, Newell & Welch, and
Jones, Day, Reavis & Pogue for purposes of the transaction described in the
first paragraph hereof. We are members of the Bar of the Commonwealth of
Virginia, and in rendering this opinion, our examination of law has been
limited to, and we express no opinion as to the laws of any jurisdiction other
than, the laws of the Commonwealth of Virginia.

We hereby consent to the filing of this opinion as Exhibit 5.03 to the
Registration Statement.

Very truly yours,

Hunton & Williams

<PAGE>

EXHIBIT 23.04

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 30, 1995,
appearing on page 24 of Kentucky Utilities Company's Form 10-K for the year
ended December 31, 1994, and to all references to our firm included in this
registration statement.

Arthur Andersen LLP

Chicago, Illinois,
December 13, 1995

<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------

FORM T-1

STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION
305(B)(2)

----------------

FIRST TRUST OF ILLINOIS,
NATIONAL ASSOCIATION
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)

36-4046888
(I.R.S. EMPLOYER
IDENTIFICATION NO.)

400 NORTH MICHIGAN AVENUE, 60611
CHICAGO, ILLINOIS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)

----------------

KENTUCKY UTILITIES COMPANY
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)

KENTUCKY AND VIRGINIA 61-0247570
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

ONE QUALITY STREET 40507
LEXINGTON, KENTUCKY (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)

FIRST MORTGAGE BONDS
(TITLE OF INDENTURE SECURITIES)

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

ITEM 1. GENERAL INFORMATION.

FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:

(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.

Comptroller of the Currency, Washington, D.C.

(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.

Yes.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.

The obligor is not an affiliate of the trustee.

ITEM 3. VOTING SECURITIES OF THE TRUSTEE.

FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF VOTING SECURITIES OF
THE TRUSTEE:

AS OF DECEMBER 12, 1995

<TABLE>
<CAPTION>
COL. B
COL. A AMOUNT
TITLE OF CLASS OUTSTANDING
-------------- -----------
<S> <C>
</TABLE>

Not applicable by virtue of response to Item 13.

ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES.

IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY OTHER
SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER
SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, FURNISH THE FOLLOWING INFORMATION:

(A) TITLE OF THE SECURITIES OUTSTANDING UNDER EACH SUCH OTHER INDENTURE.

Not applicable by virtue of response to Item 13.

(B) A BRIEF STATEMENT OF THE FACTS RELIED UPON AS A BASIS FOR THE CLAIM
THAT NO CONFLICTING INTEREST WITHIN THE MEANING OF SECTION 310(B)(1) OF
THE ACT ARISES AS A RESULT OF THE TRUSTEESHIP UNDER ANY SUCH OTHER
INDENTURE, INCLUDING A STATEMENT AS TO HOW THE INDENTURE SECURITIES
WILL RANK AS COMPARED WITH THE SECURITIES ISSUED UNDER SUCH OTHER
INDENTURE.

Not applicable by virtue of response to Item 13.

ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR
OR UNDERWRITERS.

IF THE TRUSTEE OR ANY OF THE DIRECTORS OR EXECUTIVE OFFICERS OF THE TRUSTEE
IS A DIRECTOR, OFFICER, PARTNER, EMPLOYEE, APPOINTEE, OR REPRESENTATIVE OF THE
OBLIGOR OR OF ANY UNDERWRITER FOR THE OBLIGOR, IDENTIFY EACH SUCH PERSON
HAVING ANY SUCH CONNECTION AND STATE THE NATURE OF EACH SUCH CONNECTION.

Not applicable by virtue of response to Item 13.

1
<PAGE>

ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS
OFFICIALS.

FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE
OWNED BENEFICIALLY BY THE OBLIGOR AND EACH DIRECTOR, PARTNER AND EXECUTIVE
OFFICER OF THE OBLIGOR.

AS OF DECEMBER 12, 1995

<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
PERCENTAGE
OF VOTING
SECURITIES
REPRESENTED
BY AMOUNT
NAME OF TITLE OF AMOUNT OWNED GIVEN
OWNER CLASS BENEFICIALLY IN COL. C
------- -------- ------------ -----------
<S> <C> <C> <C>

</TABLE>

Not applicable by virtue of response to Item 13.

ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.

FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF THE TRUSTEE
OWNED BENEFICIALLY BY EACH UNDERWRITER FOR THE OBLIGOR AND EACH DIRECTOR,
PARTNER, AND EXECUTIVE OFFICER OF EACH SUCH UNDERWRITER.

AS OF DECEMBER 12, 1995

</TABLE>

Not applicable by virtue of response to Item 13.

ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.

FURNISH THE FOLLOWING INFORMATION AS TO SECURITIES OF THE OBLIGOR OWNED
BENEFICIALLY OR HELD AS COLLATERAL SECURITY FOR OBLIGATIONS IN DEFAULT BY THE
TRUSTEE:

AS OF DECEMBER 12, 1995

<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
WHETHER
THE
SECURITIES
ARE VOTING
OR AMOUNT OWNED BENEFICIALLY OR PERCENT OF CLASS
TITLE OF NONVOTING HELD AS COLLATERAL SECURITY REPRESENTED BY AMOUNT
CLASS SECURITIES FOR OBLIGATIONS IN DEFAULT GIVEN IN COL. C
-------- ---------- ---------------------------- ---------------------
<S> <C> <C> <C>

</TABLE>

Not applicable by virtue of response to Item 13.

2
<PAGE>

ITEM 9. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.

IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR
OBLIGATIONS IN DEFAULT ANY SECURITIES OF AN UNDERWRITER FOR THE OBLIGOR,
FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH
UNDERWRITER ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.

AS OF DECEMBER 12, 1995

<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
AMOUNT OWNED
BENEFICIALLY OR HELD PERCENT OF CLASS
NAME OF ISSUER AS COLLATERAL SECURITY REPRESENTED BY
AND TITLE OF AMOUNT FOR OBLIGATIONS IN AMOUNT GIVEN IN
CLASS OUTSTANDING DEFAULT BY TRUSTEE COL. C
-------------- ----------- ---------------------- ----------------
<S> <C> <C> <C>

</TABLE>

Not applicable by virtue of response to Item 13.

ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.

IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR
OBLIGATIONS IN DEFAULT VOTING SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF
THE TRUSTEE (1) OWNS 10 PERCENT OR MORE OF THE VOTING SECURITIES OF THE
OBLIGOR OR (2) IS AN AFFILIATE, OTHER THAN A SUBSIDIARY, OF THE OBLIGOR,
FURNISH THE FOLLOWING INFORMATION AS TO THE VOTING SECURITIES OF SUCH PERSON.

AS OF DECEMBER 12, 1995

</TABLE>

Not applicable by virtue of response to Item 13.

ITEM 11. OWNERSHIP OF HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON
OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.

IF THE TRUSTEE OWNS BENEFICIALLY OR HOLDS AS COLLATERAL SECURITY FOR
OBLIGATIONS IN DEFAULT ANY SECURITIES OF A PERSON WHO, TO THE KNOWLEDGE OF THE
TRUSTEE, OWNS 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR,
FURNISH THE FOLLOWING INFORMATION AS TO EACH CLASS OF SECURITIES OF SUCH
PERSON ANY OF WHICH ARE SO OWNED OR HELD BY THE TRUSTEE.

AS OF DECEMBER 12, 1995

</TABLE>

Not applicable by virtue of response to Item 13.

3
<PAGE>

ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.

EXCEPT AS NOTED IN THE INSTRUCTIONS, IF THE OBLIGOR IS INDEBTED TO THE
TRUSTEE, FURNISH THE FOLLOWING INFORMATION:

AS OF DECEMBER 12, 1995

<TABLE>
<CAPTION>
COL. A COL. B COL. C
NATURE OF INDEBTEDNESS AMOUNT OUTSTANDING DATE DUE
- ---------------------- ------------------ --------
<S> <C> <C>
</TABLE>

Not applicable by virtue of response to Item 13.

ITEM 13. DEFAULTS BY THE OBLIGOR.

(A) STATE WHETHER THERE IS OR HAS BEEN A DEFAULT WITH RESPECT TO THE
SECURITIES UNDER THIS INDENTURE. EXPLAIN THE NATURE OF ANY SUCH DEFAULT.

There is not nor has there been a default with respect to the
securities under this indenture.

(B) IF THE TRUSTEE IS A TRUSTEE UNDER ANOTHER INDENTURE UNDER WHICH ANY
OTHER SECURITIES, OR CERTIFICATES OF INTEREST OR PARTICIPATION IN ANY OTHER
SECURITIES, OF THE OBLIGOR ARE OUTSTANDING, OR IS TRUSTEE FOR MORE THAN ONE
OUTSTANDING SERIES OF SECURITIES UNDER THE INDENTURE, STATE WHETHER THERE HAS
BEEN A DEFAULT UNDER ANY SUCH INDENTURE OR SERIES, IDENTIFY THE INDENTURE OR
SERIES AFFECTED, AND EXPLAIN THE NATURE OF ANY SUCH DEFAULT.

There is not nor has there been a default with respect to the
securities under this indenture. The trustee is not a trustee under
other indentures under which securities issued by the obligor are
outstanding.

ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS.

IF ANY UNDERWRITER IS AN AFFILIATE OF THE TRUSTEES, DESCRIBE EACH SUCH
AFFILIATION.

Not applicable by virtue of response to Item 13.

ITEM 15. FOREIGN TRUSTEE.

IDENTIFY THE ORDER OR RULE PURSUANT TO WHICH THE FOREIGN TRUSTEE IS
AUTHORIZED TO ACT AS SOLE TRUSTEE UNDER INDENTURES QUALIFIED OR TO BE
QUALIFIED UNDER THE ACT.

Not applicable.

ITEM 16. LIST OF EXHIBITS.

LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY.

1. A copy of the Articles of Association of First Trust of Illinois,
National Association as now in effect, filed herewith.

2. A copy of the certificate of authority to commence business, filed
herewith.

3. A copy of the authorization to exercise corporate trust powers, filed
herewith.

4. A copy of the existing By-Laws of First Trust of Illinois, National
Association as now in effect, filed herewith.

5. Not applicable by virtue of response to Item 13.

4
<PAGE>

6. The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939, filed herewith.

7. A copy of the latest report of condition of the trustee published
pursuant to law or the requirements of its supervising or examining
authority, filed herewith.

8. Not applicable.

9. Not applicable.

SIGNATURE

PURSUANT TO THE REQUIREMENTS OF THE TRUST INDENTURE ACT OF 1939, THE
TRUSTEE, FIRST TRUST OF ILLINOIS, NATIONAL ASSOCIATION, A NATIONAL BANKING
ASSOCIATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE UNITED STATES OF
AMERICA, HAS DULY CAUSED THIS STATEMENT OF ELIGIBILITY TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ALL IN THE CITY OF
CHICAGO, AND STATE OF ILLINOIS, AS OF THE 12TH DAY OF DECEMBER, 1995.

First Trust of Illinois, National
Association

/s/ Maribeth D. Frommeyer
By __________________________________
Maribeth D. Frommeyer
Secretary

5
<PAGE>

EXHIBIT 1

FIRST TRUST OF ILLINOIS,
NATIONAL ASSOCIATION

ARTICLES OF ASSOCIATION
-----------------------

For the purpose of organizing an association to perform any lawful
activities of national banks, the undersigned do enter into the following
Articles of Association:

FIRST. The title of this Association shall be "First Trust of
Illinois, National Association."

SECOND. The main office of this Association shall be in the City of
Chicago, County of Cook and State of Illinois. The business of this Association
will be limited to that of a national trust bank, and to support activities
incidental thereto. This Association will not amend these Articles of
Association to expand the scope of or alter its business beyond that stated in
this Article Second without the prior approval of the Comptroller of the
Currency. Prior to the transfer of any stock of the Association, the Association
will seek the prior approval of the appropriate federal depository institution
regulatory agency.

THIRD. The board of directors of this Association shall consist of not
less than five nor more than twenty-five persons, the exact number to be fixed
and determined from time to time by resolution of a majority of the full board
of directors or by resolution of a majority of the shareholders at any annual
or special meeting thereof. Each director shall own common or preferred stock of
this Association with an aggregate par value of not less than $1,000, or common
or preferred stock of First Bank System, Inc. with an aggregate par, fair
market, or equity value of not less than $1,000, as of either (i) the date of
purchase, (ii) the date the person became a director or (iii) the date of that
person's most recent election to the board of directors, whichever is more
recent. Any combination of common or preferred stock of this Association or
First Bank System, Inc. may be used.

Any vacancy in the board of directors may be filled by action of a
majority of the remaining directors between meetings of shareholders. The board
of directors may not increase the number of directors between meetings of
shareholders to a number that (1) exceeds by more than two the number of
directors last elected by shareholders where the number was fifteen or less; and
(2) exceeds by more than four the number of directors last elected by
shareholders where the number was sixteen or more, but in no event shall the
number of directors exceed twenty-five.

<PAGE>

Terms of directors, including directors selected to fill vacancies,
shall expire at the next regular meeting of shareholders at which directors are
elected, unless the directors resign or are removed from office.

Despite the expiration of a director's term, the director shall
continue to serve until his or her successor is elected and qualifies or until
there is a decrease in the number of directors and his or her position is
eliminated.

Honorary or advisory members of the board of directors, without voting
power or power of final decision in matters concerning the business of this
Association, may be appointed by resolution of a majority of the full board of
directors, or by resolution of shareholders at any annual or special meeting.
Honorary or advisory directors shall not be counted for purposes of determining
the number of directors of this Association or the presence of a quorum in
connection with any board action, and shall not be required to own qualifying
shares.

FOURTH. There shall be an annual meeting of the shareholders to elect
directors and transact whatever other business may be brought before the
meeting. It shall be held at the main office or any other convenient place the
board of directors may designate, on the day of each year specified therefore in
the bylaws, or if that day falls on a legal holiday in the State in which this
Association is located, on the next following banking day. If no election is
held on the day fixed, or in event of a legal holiday, an election may be held
on any subsequent day within sixty days of the day fixed, to be designated by
the board of directors, or, if the directors fail to fix the day, by
shareholders representing two-thirds of the shares issued and outstanding. In
all cases at least ten-days advance notice of the meeting shall be given to the
shareholders by first class mail.

A director may resign at any time by delivering written or oral notice
to the board of directors, its chairperson, or to this Association, which
resignation shall be effective when the notice is delivered unless the notice
specified a later effective date.

A director may be removed by shareholders at a meeting called to
remove him or her, when notice of the meeting stating that the purpose or one of
the purposes is to remove him or her is provided, if there is a failure to
fulfill one of the affirmative requirements for qualification, or for cause;
provided, however, that a director may not be removed if the number of votes
sufficient to elect him or her under cumulative voting is voted against his or
her removal.

FIFTH. The authorized amount of capital stock of this Association
shall be 10,000 shares of common stock of the par value of one-hundred dollars
($100.00) each; but said capital stock may be increased or decreased from time
to time, according to the provisions of the laws of the United States.

-2-

<PAGE>

No holder of shares of the capital stock of any class of this
Association shall have any preemptive or preferential right of subscription to
any shares of any class of stock of this Association, whether now or hereafter
authorized, or to any obligations convertible into stock of this Association,
issued, or sold, nor any right of subscription to any thereof other than such,
if any, as the board of directors, in its discretion may from time to time
determine and at such price as the hoard of directors may from time to time fix.

Unless otherwise specified in these Articles of Association or
required by law, (1) all matters requiring shareholder action, including
amendments to the articles of Association must be approved by shareholders
owning a majority voting interest in the outstanding voting stock, and (2) each
shareholder shall be entitled to one vote per share.

Unless otherwise provided in the bylaws, the record date for
determining shareholders entitled to notice of and to vote at any meeting is the
close of business on the day before the first notice is mailed or otherwise sent
to the shareholders, provided that in no event may a record date be more than
seventy days before the meeting.

SIXTH. The board of directors shall appoint one of its members
president of this Association and one of its members chairperson of the board.
The board of directors shall also have the power to appoint one or more vice
presidents, a secretary who shall keep minutes of the directors' and
shareholders' meetings and be responsible for authenticating the records of
this Association, and such other officers and employees as may be required to
transact the business of this Association. A duly appointed officer may appoint
one or more officers or assistant officers if authorized by the board of
directors in accordance with the bylaws.

The board of directors shall have the power to:

(1) Define the duties of the officers, employees, and agents of this
Association.

(2) Delegate the performance of its duties, but not the
responsibility for its duties, to the officers, employees, and
agents of this Association.

(3) Fix the compensation and enter into employment contracts with its
officers and employees upon reasonable terms and conditions,
consistent with applicable laws.

(4) Dismiss officers and employees.

-3-

<PAGE>

(5) Require bonds from officers and employees and to fix the penalty
thereof.

(6) Ratify written policies authorized by this Association's
management or committees of the board.

(7) Regulate the manner in which any increase or decrease of the
capital of this Association shall be made; provided, however,
that nothing herein shall restrict the power of shareholders to
increase or decrease the capital of this Association in
accordance with law, and nothing shall raise or lower from two-
thirds the percentage required for shareholder approval to
increase or reduce the capital.

(8) Manage and administer the business and affairs of this
Association.

(9) Adopt bylaws, not inconsistent with law or these Articles of
Association, for managing the business and regulating the affairs
of this Association.

(10) Amend or repeal bylaws, except to the extent that the articles of
Association reserve this power in whole or in part to
shareholders.

(11) Make contracts.

(12) Generally to perform all acts that are legal for a board of
directors to perform.

SEVENTH. The board of directors shall have the power to change the
location of the main office to any other place within the limits of the City of
Chicago without the approval of the shareholders, and shall have the power to
establish or change the location of any branch or branches of this Association
to any other location permitted under applicable law, without the approval of
the shareholders, subject to approval by the Comptroller of the Currency.

EIGHTH. The corporate existence of this Association shall continue
until terminated according to the laws of the United States.

NINTH. The board of directors of this Association, or any three (3) or
more shareholders owning, in the aggregate, not less than twenty-five percent
(25%) of the stock of this Association, may call a special meeting of
shareholders at any time. Unless otherwise provided by the bylaws or the laws of
the United States, or waived by shareholders, a notice of the time, place, and
purpose of every annual and special meeting of the shareholders shall be given
by first-class mail, postage prepaid, mailed at least ten, and no more than
sixty, days prior to the date of the meeting to each shareholder of record at
his/her address as shown upon the books

-4-

<PAGE>

of this Association. Unless otherwise provided by these Articles of Association
or the bylaws, any action requiring approval of shareholders must be effected at
a duly called annual or special meeting.

TENTH. Any action required to be taken at a meeting of the
shareholders or directors or any action that may be taken at a meeting of the
shareholders or directors may be taken without a meeting if consent in writing,
setting forth the action as taken shall be signed by all the shareholders or
directors entitled to vote with respect to the matter thereof. Such action shall
be effective on the date on which the last signature is placed on the writing,
or such earlier data as is set forth therein.

ELEVENTH. Meetings of the board of directors or shareholders, regular
or special, may be held by means of conference telephone or similar
communication equipment by means of which all persons participating in the
meeting can simultaneously hear each other, and participation in such meeting by
such aforementioned means shall constitute presence in person at such meeting.

TWELFTH. Any person, such person's heirs, executors or administrators,
may be indemnified or reimbursed by this Association for reasonable expenses
actually incurred in connection with any action, suit or proceeding, whether
civil, criminal or administrative, to which such person or such person's heirs,
executors, or administrators shall be made a party by reason of such person
being or having been a director, advisory director, officer, employee, or agent
of this Association or of any firm, corporation, or organization that such
person served in any such capacity at the request of this Association. Provided,
however, that no such person shall be so indemnified or reimbursed in relation
to any matter in such action, suit or proceeding: (1) as to which such person
shall finally be adjudged to have been guilty of or liable for gross negligence,
willful misconduct, or (2) which has been made the subject of a compromise
settlement, except with the approval of a court of competent jurisdiction, or
the holders of record of a majority of outstanding shares of this Association,
or the board of directors acting by vote of directors not parties to the same or
substantially the same action, suit, or proceeding, constituting a majority of
the whole number of directors; or (3) against expenses, penalties, or other
payments incurred in an administrative proceeding or action instituted by an
appropriate bank regulatory agency, which proceeding or action results in a
final order assessing civil money penalties or requiring affirmative action by
such person in the form of payment to this Association. The foregoing right of
indemnification or reimbursement shall not be exclusive of other rights to which
such person, such person's heirs, executors, or administrators, may be entitled
as a matter of law.

-5-

<PAGE>

Such expenses actually incurred by such person in connection with such
action, suit, or proceeding may be paid by this Association in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such person to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified by
this Association. Prior to the advancement of any such expenses, the board of
directors shall determine in writing that all of the following conditions are
met: (1) such person has a substantial likelihood of prevailing on the merits;
(2) in the event such person does not prevail, such person will have the
financial capability to reimburse this Association; and (3) payment of such
expenses by this Association will not adversely affect the safety and soundness
of this Association. If at any time the board of directors believes, or should
reasonably believe, that any of the above conditions are not met, this
Association shall cease paying such expenses. Further, this Association shall
enter into a written agreement with such person specifying the conditions under
which such person shall reimburse this Association.

This Association may, upon the affirmative vote of a majority of its
board of directors, purchase insurance for the purpose of indemnifying such
directors, advisory directors, officers, employees, or agents to the extent that
such indemnification is allowed in this Article Twelfth. Such insurance shall
not provide coverage of liability for any formal order issued by a regulatory
authority assessing civil money penalties against a director, advisory director,
officer, employee, or agent. Further, such insurance may, but need not be, for
the benefit of all such directors, advisory directors, officers, employees, or
agents.

THIRTEENTH. These Articles of Association may be amended at any
regular or special meeting of the shareholders by the affirmative vote of the
holders of a majority of the stock of this Association, unless the vote of the
holders of a greater amount of stock is required by law, and in that case by the
vote of the holders of such greater amount. This Association's board of
directors may propose one or more amendments to these Articles of Association
for submission to the shareholders.

-6-

<PAGE>

IN WITNESS WHEREOF, we have hereunto set our hands as of the 23rd day of
October, 1995, effective as of the acceptance thereof by the Comptroller of the
Currency.

ORGANIZERS:

/s/ John M. Murphy /s/ Matthew P. Wagner
------------------ ---------------------
John M. Murphy Matthew P. Wagner

/s/ Elizabeth L. Becker /s/ Suzanne R. Brennan
----------------------- ----------------------
Elizabeth L. Becker Suzanne R. Brennan

/s/ Melissa R. Fogelberg
------------------------
Melissa R. Fogelberg

-7-
<PAGE>

EXHIBIT 2

[COMPTROLLER OF THE CURRENCY]

TREASURY DEPARTMENT [ARTWORK APPEARS HERE] OF THE UNITED STATES

Washington, D.C.

Whereas, satisfactory evidence has been presented to the Comptroller of the
Currency that FIRST TRUST OF ILLINOIS, NATIONAL ASSOCIATION located in CHICAGO,
State of ILLINOIS has complied with all provisions of the statutes of the United
States required to be complied with before being authorized to commence the
business of banking as a National Banking Association;

Now, therefore, I hereby certify that the above-named association is
authorized to commence the business of banking as a National Banking
Association.

In testimony whereof, witness my signature
and seal of office this 1st day of
December 1995

[SIGNATURE OF ROBERT R. KLINZING]

Robert R. Klinzing

Deputy Comptroller of the Currency
Midwestern District

Charter No. 22993

<PAGE>

Exhibit 3

[LOGO]

- --------------------------------------------------------------------------------
Comptroller of the Currency
Administrator of National Banks
- --------------------------------------------------------------------------------

Midwestern District Office
2345 Grand Blvd., Suite 700
Kansas City, Missouri 64108-2625

TRUST PERMIT

WHEREAS, First Trust of Illinois, National Association, located in Chicago,
Illinois, being a national banking association, organized under the statutes of
the United States, has made application for authority to act as fiduciary;

AND WHEREAS, applicable provisions of the statutes of the United States
authorize the grant of such authority;

NOW THEREFORE, I hereby certify that the said association is authorized to act
in all fiduciary capacities permitted by such statutes, effective December 1,
1995.

IN TESTIMONY WHEREOF, witness my
signature and seal of the OCC on December 5, 1995

/s/ Robert R. Klinzing
------------------------------------------
Robert R. Klinzing
Deputy Comptroller
Midwestern District Office

Charter No. 22993

<PAGE>

EXHIBIT 4

FIRST TRUST OF ILLINOIS,
NATIONAL ASSOCIATION

BYLAWS
------

ARTICLE I
---------

Meetings of Shareholders
________________________

Section 1.1. Annual Meeting. The annual meeting of the shareholders, for
the election of directors and the transaction of other business, shall be held
at a time and place as the Chairman or President may designate. Notice of such
meeting shall be given at least ten days prior to the date thereof, to each
shareholder of the Association. If, for any reason, an election of directors is
not made on the designated day, the election shall be held on some subsequent
day, as soon thereafter as practicable, with prior notice thereof.

Section 1.2. Special Meetings. Except as otherwise specially provided by
law, special meetings of the shareholders may be called for any purpose, at any
time by a majority of the board of directors, or by any shareholder or group of
shareholders owning at least ten percent of the outstanding stock. Every such
special meeting, unless otherwise provided by law, shall be called upon not less
than ten days prior notice stating the purpose of the meeting.

Section 1.3. Nominations for Directors. Nominations for election to the
board of directors may be made by the board of directors or by any shareholder.

Section 1.4. Proxies. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing. Proxies shall be valid only
for one meeting and any adjournments of such meeting and shall be filed with the
records of the meeting.

Section 1.5. Quorum. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, unless otherwise provided by law. A majority of the votes cast
shall decide every question or matter submitted to the shareholders at any
meeting, unless otherwise provided by law or by the Articles of Association.

<PAGE>

ARTICLE II
__________

Directors
_________

Section 2.1. Board of Directors. The board of directors (hereinafter
referred to as the "board"), shall have power to manage and administer the
business and affairs of the Association. All authorized corporate powers of the
Association shall be vested in and may be exercised by the board.

Section 2.2. Powers. In addition to the foregoing, the board of directors
shall have and may exercise all of the powers granted to or conferred upon it by
the Articles of Association, the Bylaws and by law.

Section 2.3. Number. The board shall consist of a number of members to be
fixed and determined from time to time by resolution of the board or the
shareholders at any meeting thereof, in accordance with the Articles of
Association.

Section 2.4. Organization Meeting. The newly elected board shall meet for
the purpose of organizing the new board and electing and appointing such
officers of the Association as may be appropriate. Such meeting shall be held
on the day of the election or as soon thereafter as practicable, and, in any
event, within thirty days thereafter. If, at the time fixed for such meeting,
there shall not be a quorum present, the directors present may adjourn the
meeting until a quorum is obtained.

Section 2.5. Regular Meetings. The regular meetings of the board shall be
held, without notice, as the Chairman or President may designate and deem
suitable.

Section 2.6. Special Meetings. Special meetings of the board may be called
by the Chairman or President of the Association, or at the request of two or
more directors. Each member of the board shall be given notice stating the time
and place of each such meeting.

Section 2.7. Quorum. A majority of the directors shall constitute a quorum
at any meeting, except when otherwise provided by law; but fewer may adjourn any
meeting. Unless otherwise provided, once a quorum is established, any act by a
majority of those constituting the quorum shall be the act of the board.

Section 2.8. Vacancies. When any vacancy occurs among the directors, the
remaining members of the board may appoint a director to fill such vacancy at
any regular meeting of the board, or at a special meeting called for that
purpose.

-2-
<PAGE>

ARTICLE III
___________

Committees
__________

Section 3.1. Advisory Board of Directors. The board may appoint persons,
who need not be directors, to serve as advisory directors on an advisory board
of directors established with respect to the business affairs of either this
Association alone or the business affairs of a group of affiliated organizations
of which this Association is one. Advisory directors, shall have such powers and
duties as may be determined by the board, provided, that the board's
responsibility for the business and affairs of this Association shall in no
respect be delegated or diminished.

Section 3.2. Audit Committee. The board shall appoint an Audit Committee
which shall consist of at least two Directors which are not active officers or
employees of the Association. The Audit Committee shall direct and review audits
of the Association's fiduciary activities.

The members of the Audit Committee shall be appointed each year and shall
continue to act until their successors are named. The Audit Committee shall have
power to adopt its own rules and procedures and to do those things which in the
judgment of such Committee are necessary or helpful with respect to the exercise
of its functions or the satisfaction of its responsibilities.

Section 3.3. Executive Committee. The board may appoint an Executive
Committee which shall consist of at least three directors and which shall have,
and may exercise, all the powers of the board between meetings of the board or
otherwise when the board is not meeting.

Section 3.4. Other Committees. The board may appoint, from time to time,
committees of one or more persons who need not be directors, for such purposes
and with such powers as the board may determine. In addition, either the
Chairman or the President may appoint, from time to time, committees of one or
more officers, employees, agents or other persons, for such purposes and with
such powers as either the Chairman or the President deems appropriate and
proper.

Whether appointed by the board, the Chairman, or the President, any such
Committee shall at all times be subject to the direction and control of the
board.

Section 3.5. Meetings, Minutes and Rules. An advisory board of directors
and/or committee shall meet as necessary in consideration of the purpose of the
advisory board of directors or committee, and shall maintain minutes in
sufficient detail to indicate actions taken or recommendations made; unless
required by the members, discussions, votes or other specific details need not
be reported. An advisory board of directors or a committee may, in consideration
of its purpose, adopt its own rules for the exercise of any of its functions or
authority.

-3-

<PAGE>

ARTICLE IV
__________

Officers and Employees
______________________

Section 4.1. Chairman of the Board. The board may appoint one of its
members to be Chairman of the board to serve at the pleasure of the board. The
Chairman shall supervise the carrying out of the policies adopted or approved by
the board; shall have general executive powers, as well as the specific powers
conferred by these Bylaws; shall also have and may exercise such powers and
duties as from time to time may be conferred upon or assigned by the board.

Section 4.2. President. The board may appoint one of its members to be
President of the Association. In the absence of the Chairman, the President
shall preside at any meeting of the board. The President shall have general
executive powers, and shall have and may exercise any and all other powers and
duties pertaining by law, regulation or practice, to the Office of President, or
imposed by these Bylaws. The President shall also have and may exercise such
powers and duties as from time to time may be conferred or assigned by the
Board.

Section 4.3. Vice President. The board may appoint one or more Vice
Presidents who shall have such powers and duties as may be assigned by the board
and to perform the duties of the President on those occasions when the President
is absent, including presiding at any meeting of the board in the absence of
both the Chairman and President.

Section 4.4. Secretary. The board shall appoint a Secretary, or other
designated officer who shall be Secretary of the board and of the Association,
and shall keep accurate minutes of all meetings. The Secretary shall attend to
the giving of all notices required by these Bylaws to be given; shall be
custodian of the corporate seal, records, document and papers of the
Association; shall provide for the keeping of proper records of all transactions
of the Association; shall have and may exercise any and all other powers and
duties pertaining by law, regulation or practice, to the Secretary, or imposed
by these Bylaws; and shall also perform such other duties as may be assigned
from time to time, by the Board.

Section 4.5. Other Officers. The board may appoint, and may authorize the
Chairman or the President to appoint, any officer as from time to time may
appear to the board, the Chairman or the President to be required or desirable
to transact the business of the Association. Such officers shall exercise such
powers and perform such duties as pertain to their several offices, or as may be
conferred upon or assigned to them by these Bylaws, the board, the Chairman or
the President.

Section 4.6. Tenure of Office. The Chairman or the President and all other
officers shall hold office for the current year for which the board was
elected, unless they shall resign, become disqualified, or be removed. Any
vacancy occurring in the Office of Chairman or President shall be filled
promptly by the board.

-4-
<PAGE>

Any officer elected by the board or appointed by the Chairman or the
President may be removed at any time, with or without cause, by the affirmative
vote of a majority of the board or, if such officer was appointed by the
Chairman or the President, by the Chairman or the President, respectively.

ARTICLE V
---------
Stock
-----

Section 5.1. Shares of stock shall be transferable on the books of the
Association, and a transfer book shall be kept in which all transfers of stock
shall be recorded. Every person becoming a shareholder by such transfer shall,
in proportion to such person's shares, succeed to all rights of the prior holder
of such shares. Each certificate of stock shall recite on its face that the
stock represented thereby is transferable only upon the books of the Association
properly endorsed.

ARTICLE VI
----------
Corporate Seal
--------------

Section 6.1. The Chairman, the President, the Secretary, any Assistant
Secretary or other officer designated by the board, the Chairman, or the
President, shall have authority to affix the corporate seal to any document
requiring such seal, and to attest the same. Such seal shall be substantially in
the following form:

ARTICLE VII
-----------
Miscellaneous Provisions
------------------------

Section 7.1. Execution of Instruments. All agreements, checks, drafts,
orders, indentures, notes, mortgages, deeds, conveyances, transfers,
endorsements, assignments, certificates, declarations, receipts, discharges,
releases, satisfactions, settlements, petitions, schedules, accounts,
affidavits, bonds, undertakings, guarantees, proxies and other instruments or
documents may be signed, countersigned, executed, acknowledged, endorsed,
verified, delivered or accepted on behalf of the Association, whether in a
fiduciary capacity or otherwise, by any officer of the Association, or such
employee or agent as may be designated from time to time by the board by
resolution, or by the Chairman or the President by written instrument, which
resolution or instrument shall be certified as in effect by the Secretary or an
Assistant Secretary of the Association. The provisions of this section are
supplementary to any other provision of the Articles of Association or Bylaws.

Section 7.2. Records. The Articles of Association, the Bylaws and the
proceedings of all meetings of the shareholders, the board, and standing
committees of the board, shall be recorded in appropriate minute books provided
for the

-5-
<PAGE>

purpose. The minutes of each meeting shall be signed by the Secretary, or other
officer appointed to act as Secretary of the meeting.

Section 7.3. Trust Files. There shall be maintained in the Association
files all fiduciary records necessary to assure that its fiduciary
responsibilities have been properly undertaken and discharged.

Section 7.4. Trust Investments. Funds held in a fiduciary capacity shall be
invested according to the instrument establishing the fiduciary relationship and
according to law. Where such instrument does not specify the character and class
of investments to be made and does not vest in the Association a discretion in
the matter, funds held pursuant to such instrument shall be invested in
investments in which corporate fiduciaries may invest under law.

Section 7.5. Notice. Whenever notice is required by the Articles of
Association, the Bylaws or law, such notice shall be by mail, postage prepaid,
telegram, in person, or by any other means by which such notice can reasonably
be expected to be received, using the address of the person to receive such
notice, or such other personal data, as may appear on the records of the
Association. Prior notice shall be proper if given not more than 30 days nor
less than 10 days prior to the event for which notice is given.

ARTICLE VIII
------------
Indemnification
---------------

Section 8.1. The association shall indemnify to the full extent permitted
by, and in the manner permissible under, the Articles of Association and the
laws of the United States of America, as applicable and as amended from time to
time, any person made, or threatened to be made, a party to any action, suit or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that such person is or was a director, advisory director, officer or
employee of the Association, or any predecessor of the Association, or served
any other enterprise as a director or officer at the request of the Association
or any predecessor of the Association.

Section 8.2. The board in its discretion may, on behalf of the Association,
indemnify any person, other than a director, advisory director, officer or
employee, made a party to any action, suit or proceeding by reason of the fact
that such person is or was an agent of the Association or any predecessor of the
Association serving in such capacity at the request of the Association or any
predecessor of the Association.

-6-
<PAGE>

ARTICLE IX
----------

Bylaws: Interpretation and Amendment
------------------------------------

Section 9.1. These Bylaws shall be interpreted in accordance with and
subject to appropriate provisions of law, and may be amended, altered or
replaced, at any regular or special meeting of the board.

Section 9.2. A copy of the Bylaws, with all amendments, shall at all times
be kept in a convenient place at the main office of the Association, and shall
be open for inspection to all shareholders during Association hours.

-7-
<PAGE>

EXHIBIT 6

Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of
1939, First Trust of Illinois, National Association hereby consents that reports
of examinations of said trustee by Federal and State authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefore.

FIRST TRUST OF ILLINOIS,
NATIONAL ASSOCIATION

[SIGNATURE OF MARIBETH FROMMEYER]
---------------------------------
Maribeth Frommeyer
Secretary

Dated: December 6, 1995

<PAGE>

EXHIBIT 7

FIRST TRUST OF ILLINOIS, NATIONAL ASSOCIATION

BALANCE SHEET CERTIFICATION

I, Matthew P. Wagner, Chairman of First Trust of Illinois, National Association,
hereby certify and attest to the accuracy of the attached balance sheet, and
declare that it has been prepared in conformity with generally accepted
accounting practices, has been examined by me, and to the best of my knowledge
and belief is true and correct.

IN WITNESS WHEREOF, I have executed this certification and caused the seal of
First Trust of Illinois, National Association to be affixed hereto this 29th day
of November, 1995.

/s/ Matthew P. Wagner
-------------------------------
Matthew P. Wagner, Chairman

(Seal)

<PAGE>

FIRST TRUST OF ILLINOIS, NATIONAL ASSOCIATION
UNAUDITED BALANCE SHEET/REPORT OF CONDITION
NOVEMBER 28, 1995

ASSETS

Cash and Due From Banks $ 97,000,000
Federal Reserve Bank Stock 3,000,000

TOTAL ASSETS $100,000,000

LIABILITIES

-0-

EQUITY
Common Stock $ 1,000,000
Additional Paid In Capital 99,000,000

TOTAL LIABILITIES AND EQUITY $100,000,000

<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------------

FORM T-2

STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF
AN INDIVIDUAL DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION
305(B)(2)

----------------

FRANK SGARAGLINO ###-##-####
(NAME OF TRUSTEE) (SOCIAL SECURITY NUMBER)

400 NORTH MICHIGAN AVENUE 60611
CHICAGO, ILLINOIS (ZIP CODE)
(BUSINESS ADDRESS)

----------------

KENTUCKY UTILITIES COMPANY
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)

KENTUCKY AND VIRGINIA 61-0247570
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

ONE QUALITY STREET 40507
LEXINGTON, KENTUCKY (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)

FIRST MORTGAGE BONDS
(TITLE OF THE INDENTURE SECURITIES)

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

ITEM 1. AFFILIATIONS WITH THE OBLIGOR.

If the obligor is an affiliate of the trustee, describe each such
affiliation.

None.

ITEM 2. TRUSTEESHIPS UNDER OTHER INDENTURES.

If the trustee is trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, file a copy of each such indenture
as an exhibit and furnish the following information:

(a) Title of the securities outstanding under each such other indenture.

Not applicable by virtue of response to Item 9.

(b) A brief statement of the facts relied upon by the trustee as a basis for
the claim that no conflicting interest within the meaning of Section 310(b)(1)
of the Act arises as a result of the trusteeship under such other indenture,
including a statement as to how the indenture securities will rank as compared
with the securities issued under such other indenture.

Not applicable by virtue of response to Item 9.

ITEM 3. CERTAIN RELATIONSHIPS BETWEEN THE TRUSTEE AND THE OBLIGOR OR AN
UNDERWRITER.

If the trustee is a director, officer, partner, employee, appointee or
representative of the obligor or of any underwriter for the obligor, state the
nature of each such connection.

Not applicable by virtue of response to Item 9.

ITEM 4. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.

Furnish the following information as to securities of the obligor owned
beneficially by the trustee or held by the trustee as collateral security for
obligations in default.

AS OF DECEMBER 12, 1995

<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
WHETHER THE
SECURITIES
ARE VOTING AMOUNT OWNED BENEFICIALLY OR PERCENT OF CLASS
OR NONVOTING HELD AS COLLATERAL SECURITY REPRESENTED BY AMOUNT
TITLE OF CLASS SECURITIES FOR OBLIGATIONS IN DEFAULT GIVEN IN COL. C
- -------------- ------------ ---------------------------- ---------------------
<S> <C> <C> <C> <C> <C>
Not applicable by virtue of response to Item 9.
</TABLE>

ITEM 5. SECURITIES OF UNDERWRITERS OWNED OR HELD BY THE TRUSTEE.

If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the obligor,
furnish the following information as to each class of securities of such
underwriter any of which are so owned or held by the trustee.

AS OF DECEMBER 12, 1995

<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
PERCENTAGE OF
VOTING SECURITIES
AMOUNT OWNED BENEFICIALLY OR REPRESENTED BY
NAME OF ISSUER AND HELD AS COLLATERAL SECURITY AMOUNT GIVEN
TITLE OF CLASS AMOUNT OUTSTANDING FOR OBLIGATIONS IN DEFAULT IN COL. C
------------------ ------------------ ---------------------------- -----------------
<S> <C> <C> <C>
Not applicable by virtue of response to Item. 9
</TABLE>

1
<PAGE>

ITEM 6. HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN AFFILIATES OR
PRINCIPAL HOLDERS OF VOTING SECURITIES OF THE OBLIGOR.

If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowledge of
the trustee (1) owns 10 percent or more of the voting securities of the obligor
or (2) is an affiliate, other than a subsidiary, of the obligor, furnish the
following information as to the voting securities of such person.

AS OF DECEMBER 12, 1995

<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D
AMOUNT OWNED BENEFICIALLY OR PERCENT OF CLASS
NAME OF ISSUER AND HELD AS COLLATERAL SECURITY REPRESENTED BY AMOUNT
TITLE OF CLASS AMOUNT OUTSTANDING FOR OBLIGATIONS IN DEFAULT GIVEN IN COL. C
------------------ ------------------ ---------------------------- ---------------------
<S> <C> <C> <C>
Not applicable by virtue of response to Item 9.
</TABLE>

ITEM 7. HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON OWNING 50 PERCENT
OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.

If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge of the
trustee, owns 50 percent or more of the voting securities of the obligor,
furnish the following information as to each class of securities of such person
any of which are so owned or held by the trustee.

AS OF DECEMBER 12, 1995

ITEM 8. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.

Except as noted in the instructions, if the obligor is indebted to the
trustee, furnish the following information.

AS OF DECEMBER 12, 1995

<TABLE>
<CAPTION>
COL. A COL. B COL. C
NATURE OF INDEBTEDNESS AMOUNT OUTSTANDING DATE DUE
---------------------- ------------------ --------
<S> <C> <C>
Not applicable by virtue of response to Item 9.
</TABLE>

ITEM 9. DEFAULTS BY THE OBLIGOR.

(a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such default.

There is not nor has there been a default with respect to the securities
under this indenture.

(b) If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is trustee for more than one
outstanding series or securities under the indenture, state whether there has
been a default under such indenture or series, identify the indenture or series
affected, and explain the nature of any such default.

The trustee is not a trustee under any other indenture under which any
other securities or certificates of interest or participation in any other
securities of the obligor are outstanding. There is not nor has there been
a default with respect to the securities under this indenture.

2
<PAGE>

ITEM 10. AFFILIATIONS WITH THE UNDERWRITERS.

If any underwriter is an affiliate of the trustee, describe each such
affiliation.

Not applicable by virtue of response to Item 9.

ITEM 11. LIST OF EXHIBITS.

List below all exhibits filed as a part of this statement of eligibility and
qualification.

None.

SIGNATURE

PURSUANT TO THE REQUIREMENTS OF THE TRUST INDENTURE ACT OF 1939, I, FRANK
SGARAGLINO, HAVE SIGNED THIS STATEMENT OF ELIGIBILITY AND QUALIFICATION IN THE
CITY OF CHICAGO, AND STATE OF ILLINOIS, AS OF THE 12TH DAY OF DECEMBER, 1995.

/s/ Frank Sgaraglino
By __________________________________
Frank Sgaraglino