<PAGE> File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION OR DECLARATION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
* * *
KINGSPORT POWER COMPANY
422 Broad Street, Kingsport, Tennessee 37660
(Name of company filing this statement and
address of principal executive office)
* * *
AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of top registered holding company
parent of each applicant or declarant)
* * *
G. P. Maloney, Executive Vice President
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
A. Joseph Dowd, General Counsel
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
(Names and addresses of agents for service)
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
Kingsport Power Company ("Kingsport"), a subsidiary company of
American Electric Power Company, Inc. ("AEP"), a registered holding
company under the Public Utility Holding Company Act of 1935 (the
"Act"), requests authorization herein to issue and sell from time
to time through June 30, 1995 unsecured promissory notes (the
"Notes") in the aggregate principal amount of $5,000,000, to one or
more commercial banks, financial institutions or other institu-
tional investors pursuant to one or more term loan agreements (the
"Proposed Term Loan Agreement") with terms similar to those
contained in the form attached hereto as Exhibit B, with
appropriate insertions or modifications to specific terms thereof
as may be negotiated between Kingsport and a specific lender at the
time of the issuance of the Notes.
The Proposed Term Loan Agreement and the Notes thereunder
would be for a term of not less than nine months nor more than ten
years from the date of borrowing.
The Proposed Term Loan Agreement would provide that the Notes
bear interest at either a fixed rate, a fluctuating rate or some
combination of fixed and fluctuating rates. The actual rate of
interest which each Note shall bear shall be subject to further
negotiation between Kingsport and the lender. Any fixed rate of
interest of the Notes will not be greater than 250 basis points
above the yield at the time of issuance of the Notes to maturity of
United States Treasury obligations that mature on or about the date
of maturity of the Notes. Any fluctuating rate will not be greater
than 200 basis points above the rate of interest announced publicly
by a major bank from time to time as its base or prime rate.
No compensating balances shall be maintained with, or fees in
the form of substitute interest paid to, a lender under the
Proposed Term Loan Agreement. However, in the event a bank or
financial institution arranges for a borrowing from a third party,
such institution may charge Kingsport a placement fee, not to
exceed 7/8% of the principal amount of such borrowing.
A lender may desire to assign, or to sell participations in,
all or any part of the Proposed Term Loan Agreement and the Notes
thereunder to other entities. Such assignee would have the same
rights and benefits under the Proposed Term Loan Agreement as the
lender. Such participant would not have any rights under the
Proposed Term Loan Agreement, but would have rights against the
lender in respect of the agreement between the participant and the
lender.
The Proposed Term Loan Agreement specifies that, in the event
a Note bearing interest at a fixed rate is paid prior to maturity
in whole or in part and the fixed rate at that time exceeds the
yield to maturity of certain United States Treasury securities
maturing on or close to the Note, Kingsport shall pay to the lender
an amount based upon the present value of such prepaid amounts
discounted at such treasury yield.
The Proposed Term Loan Agreement may contain restrictive
covenants which would prohibit Kingsport from, among other things,
(i) creating, incurring, assuming or suffering to exist any liens
on its property, with certain stated exceptions; (ii) creating or
incurring any indebtedness for borrowed money, other than as
specified therein; (iii) failing to maintain a specified level of
capitalization; (iv) entering into certain mergers, consolidations
and dispositions of assets; and (v) permitting certain events to
occur in connection with its pension plans. In addition, the
Proposed Term Loan Agreement may permit the holder of a Note to
require Kingsport to prepay the Note after an ownership change.
Kingsport has been advised that funds for long-term unsecured
note borrowings of the magnitude proposed herein are generally
available for not more than 24 hours. Accordingly, Kingsport
requests an order of this Commission approving the proposed
financings in all respects such that, upon receipt of such order,
and thereafter, Kingsport may unconditionally, and without further
order of this Commission, enter into a definitive agreement with a
lender or lenders, similar to the form of the Proposed Term Loan
Agreement with appropriate insertions or modifications to specific
terms thereof as may be negotiated between Kingsport and a specific
lender subject to the conditions, restrictions and limitations
specified herein.
Proceeds realized from the sale of the Notes will be used to
repay short-term debt of Kingsport. At September 30, 1993, the
outstanding short-term indebtedness of Kingsport was $6,225,000.
Neither AEP nor any subsidiary thereof has an ownership
interest in an exempt wholesale generator ("EWG") or foreign
utility company ("FUCO") as defined in Sections 32 and 33 of the
Act. Further, none of the proceeds from the issuance of the Notes
proposed herein will be used by AEP or any subsidiary thereof for
the acquisition of an interest in an EWG or a FUCO. Additionally,
neither AEP nor any subsidiary thereof, now or as a consequence of
the transactions proposed herein is a party to, or has any rights
under, a service, sales or construction agreement with an EWG or a
FUCO.
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
The expenses of Kingsport in connection with the proposed
issuance of the Notes, other than placement fees, are estimated not
to exceed $10,000, consisting of expenses to be billed at cost by
American Electric Power Service Corporation and the Commission's
$2,000 filing fee.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
Kingsport and AEP consider Sections 6(a) and 7 of the 1935 Act
and Rules 50(a)(2) and 50(a)(5) thereunder to be applicable to the
proposed transactions. The proposed issuance and sale of the Notes
is expressly excepted from Rule 50 by the provisions of Rule
50(a)(2), unless Kingsport pays a placement fee in connection
therewith. Kingsport hereby requests the Commission to find
pursuant to Rule 50(a)(5) that, in the event a placement fee as
described above is paid in connection with the issuance and sale of
the Notes, compliance with the provisions of Rule 50 is not
necessary.
ITEM 4. REGULATORY APPROVAL.
The Tennessee Public Service Commission has jurisdiction over
the proposed transaction. A copy of the Application and of the
Order of said Commission will be supplied by a further amendment.
No commission other than that named above and the Securities and
Exchange Commission has jurisdiction over the proposed
transactions.
ITEM 5. PROCEDURE.
It is requested, pursuant to Rule 23(c) of the Rules and
Regulations of the Commission, that the Commission's Order
granting, and permitting to become effective this Application or
Declaration be issued on or before March 1, 1994. Kingsport waives
any recommended decision by a hearing officer or by any other
responsible officer of the Commission and waives the 30-day waiting
period between the issuance of the Commission's Order and the date
it is to become effective, since it is desired that the
Commission's Order, when issued, become effective forthwith.
Kingsport consents to the Office of Public Utility Regulation
assisting in the preparation of the Commission's decision and/or
Order in this matter, unless the Office opposes the matter covered
by this Application or Declaration.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
The following exhibits and financial statements are filed as
part of this statement:
(a) Exhibits:
Exhibit B Copy of proposed form of Kingsport Term Loan
Agreement
Exhibit C None
Exhibit D-1 Copy of Application to Tennessee Public
Service Commission (to be filed by amendment)
Exhibit D-2 Copy of Order of Tennessee Public Service
Commission (to be filed by amendment)
Exhibit E None
Exhibit F Opinion of Counsel
Exhibit G Form of Notice
(b) Financial Statements:
Balance Sheets, per books and pro forma, of Kingsport as of
September 30, 1993 and statements of income and retained earnings
for the twelve months then ended and of AEP and its subsidiaries
consolidated, together with journal entries reflecting the proposed
transactions.
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
It is believed that the proposed transactions will not have
any environmental effects which would require an environmental
impact statement under Section 102(c)(2) of the National Environ-
mental Policy Act. No other federal agency has prepared or is
preparing an environmental impact statement with respect to the
proposed transactions.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned company has duly caused this
statement to be signed on its behalf by the undersigned thereunto
duly authorized.
KINGSPORT POWER COMPANY
By /s/ G. P. Maloney
Vice President
Dated: January 18, 1994
kgpt.94\formu-1
<PAGE>
<PAGE>
TERM LOAN AGREEMENT
AGREEMENT dated as of the ___ day of _______, 19__ between
_______________________________, an __________ corporation
(herein called the "Company"), and ___________________________
(the "Bank").
SECTION 1. Amounts and Terms of the Loan.
Section 1.01. Definitions. As used herein the following
terms have the following meanings (which are equally applicable
to both the singular and plural forms of such terms):
"Agreement" means this Term Loan Agreement and any
future amendments or supplements hereto.
"Capitalization" of the Company means, as of any
particular time, an amount equal to the sum of the total
principal amount of all indebtedness for borrowed money,
secured or unsecured, of the Company then outstanding
(whether or not such indebtedness matures, pursuant to the
instrument by which such indebtedness shall be created or
incurred, within twelve months after such particular time)
and the aggregate of the par value of, or stated capital
represented by, the outstanding shares of all classes of
stock and of the surplus of the Company, paid in, earned and
other, if any.
"Federal Funds Rate" means, for any period, a
fluctuating interest rate per annum equal for each day
during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a business
day, for the next preceding business day) by the Federal
Reserve Bank of New York, or, if such rate is not so
published for any day which is a business day, the average
of the quotations for such day on such transactions received
by the Bank from three Federal funds brokers of recognized
standing selected by the Bank.
"LIBO rate" means, for any Note in the form of Exhibit
B, the average rate of interest per annum at which deposits
in United States dollars are offered by the principal office
of the Bank to prime banks in the London interbank market at
11:00 a.m. (London time) two Business Days prior to the date
of such Note for the amount and term of such Note.
"Maturity Date" means _________.
"Note" means the promissory note of the Company
substantially in the form of Exhibit A, B or C hereto, with
appropriate insertions.
"Prime Rate" means a fluctuating interest rate per
annum as shall be in effect from time to time, which rate
per annum is at all times equal to the higher of the (i)
rate of interest announced publicly by the Bank in ________
____________ from time to time as the Bank's
__________________ rate and (ii) 1/2 of one percent per
annum above the Federal Funds Rate from time to time.
"Short-Term Debt" means the principal amount of
indebtedness for borrowed money represented by a note or
draft issued, renewed or guaranteed by the Company which has
a maturity at the time of issuance, renewal or guarantee of
not more than twelve months, exclusive of days of grace.
Section 1.02. Loan; Pricing; and Borrowing Procedure. The
Bank agrees, on the terms and conditions hereinafter set forth,
to make a loan (the "Loan") to the Company on _______________
(the "Loan Date") in an amount totaling $_______________.
The Loan shall bear interest from the Loan Date to the
Maturity Date at one or more of the following interest rates per
annum, as selected by the Company from time to time:
(i) at a fixed interest rate for the term of
each Note in the form of Exhibit A, such term to be
designated by the Company at least three Business Days
(as defined in Section 1.13) prior to the date of the
relevant Note and such rate to be quoted by the Bank
for the designated term and accepted by the Company; or
(ii) at a rate per annum for the term of each
Note in the form of Exhibit B, which shall be 1, 2, 3
or 6 months (such term to be selected by the Company at
least three Business Days prior to the date of the
relevant Note) equal to _____ of one percent (1.0%) per
annum above the LIBO rate (the rate of ____ of 1% per
annum above the LIBO rate is hereinafter called the
"LIBO Rate"); or
(iii) at a fluctuating rate per annum for the term
of each Note in the form of Exhibit C, which shall
mature on the Maturity Date, equal to the Prime Rate.
The Company may, from time to time, change the pricing of
the Loan (in whole or in part) from the LIBO Rate to the Prime
Rate or from the Prime Rate to the LIBO Rate, and, in the case of
the LIBO Rate, may continue such interest rate option (in whole
or in part) for a subsequent period, in either case by giving the
Bank at least three Business Days' notice thereof and by
executing and delivering a new promissory note in the form of
Exhibit B or C, as the case may be, with appropriate insertions,
evidencing the changed or continued interest rate option. Each
such notice (which, in the case of a notice requesting the LIBO
Rate, shall be received by the Bank by _____ a.m., ___________
time, at least three Business Days prior to the date of the
proposed change or continuation), shall specify the date of the
proposed change or continuation (which shall be a Business Day
and, in the case of a change from, or continuation of, the LIBO
Rate, shall be the maturity date of the outstanding Note),
whether the proposed interest rate is to be the Prime Rate or the
LIBO Rate, and, in the case of a LIBO Rate, the term of the
related Note.
In addition, the Company may, from time to time, change the
pricing of the Loan (in whole or in part) from the LIBO Rate or
the Prime Rate, as the case may be, to a fixed interest rate for
a term certain, and, in the case of a fixed rate, may continue
such interest rate option, by (i) requesting a fixed interest
rate option from the Bank for a term certain specified by the
Company and (ii) agreeing to the fixed interest rate proposed by
the Bank within the period that such proposal remains effective.
The Company may only convert from the LIBO Rate to a fixed
interest rate or continue a fixed interest rate on the maturity
date of the outstanding Note.
Each such notice given to the Bank by the Company pursuant
to this Section 1.02 shall be irrevocable. In the event that the
Company fails to deliver a proposed change or continuation notice
prior to the third Business Day next preceding the maturity date
of a Note in the form of Exhibit A or B, the interest rate on the
Loan shall be converted on the maturity date of the outstanding
Note in the form of Exhibit A or B into the Prime Rate.
Section 1.03. Making the Loan. Not later than ___________
(________________ time) on the Loan Date and upon fulfillment of
the applicable conditions set forth in Section 2, the Bank will
make the Loan available to the Company in same day funds at the
Bank's address referred to in Section 6.02.
Section 1.04. Optional Prepayments. The Company may prepay
any Note in whole at any time or in part from time to time
without premium or penalty, by giving at least 3 Business Days'
notice to the Bank specifying the amount and date of the proposed
prepayment. If notice is given as prescribed above, the
principal amount of the Note which the Company proposes to
prepay, together with accrued interest on such amount to the date
of payment, shall become due and payable on the specified date of
prepayment. Notwithstanding the foregoing, the Company shall
have no right to prepay a Note in the form of Exhibit A, unless
Company pays the fee specified in Section 1.14 and shall have no
right to prepay a Note in the form of Exhibit B prior to maturity
of such Note.
Section 1.05. Interest and Repayment. The Company shall
repay the Loan in full on the last day of each March, June,
September and December (the "Repayment Date") commencing on the
first such date occurring on or after the Loan Date and shall pay
interest on the unpaid principal amount of the Loan in accordance
with one or more promissory notes of the Company (each, a "Note")
executed and delivered by the Company from time to time to
evidence the indebtedness resulting from the Loan. If the Loan
or any part thereof bears interest at the fixed interest rate,
the Note evidencing such amount shall be substantially in the
form of Exhibit A, with appropriate insertions, and shall be
dated the Loan Date or the date upon which the interest rate has
been continued for a subsequent period at a fixed rate or has
been changed into a fixed interest rate, as the case may be. If
the Loan or any part thereof bears interest the LIBO Rate, the
Note evidencing such amount shall be substantially in the form of
Exhibit B, with appropriate insertions, and shall be dated the
Loan Date or the date upon which the interest rate has been
continued for a subsequent period at the LIBO Rate or has been
changed into the LIBO Rate, as the case may be. If the Loan or
any part thereof bears interest at the Prime Rate, the Note
evidencing such amount shall be substantially in the form of
Exhibit C, with appropriate insertions, and shall be dated the
Loan Date or the date upon which the interest rate has been
changed into the Prime Rate, as the case may be.
Section 1.06. Reborrowings. On each Repayment Date, the
Company shall reborrow and the Bank shall relend the principal so
paid, provided that:
(a) No such reborrowing may be made on or after the
Maturity Date and, after giving effect to each such
reborrowing, the aggregate outstanding principal amount
of the Loan shall not exceed the principal amount of
the Loan outstanding immediately prior to the date of
such reborrowing.
(b) For purposes of this Section 1.06, any payment of
principal of the Loan, or any portion thereof,
represented by a Note in the form of Exhibit A pursuant
to Section 1.05 hereof which (x) the Company is
required to reborrow under this Section 1.06 on the
date of such payment but does not reborrow on such
date, or (y) the Company is not permitted to reborrow
under this Section 1.06 on the date of such payment by
reason of clause (c) below, shall be deemed a
prepayment of the Loan prior to the Due Date (as
defined in Section 1.14), and shall have the effect of
a prepayment, subject to the prepayment provisions in
Section 1.14. Any such payment which is so reborrowed
shall not be deemed a prepayment of the Loan for
purposes of Section 1.14.
(c) After giving effect to such reborrowing, each of the
representations and warranties of the Company set forth
in Section 3.01 shall be true with the exceptions of
Subsections 3.01(e) and (f) on and as of the date of
such reborrowing, and no Event of Default or other
event which, with the giving of notice or the lapse of
time, or both, would constitute such an Event of
Default shall have occurred and be continuing. Each
reborrowing by the Company pursuant to this Section
1.06 shall be deemed to be a representation and
warranty by the Company as to such matters.
Section 1.07. Additional Interest. The Company shall pay
to the Bank, during the time that the Bank shall be required to
maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency liabilities (as defined
in Regulation D of the Board of Governors of the Federal Reserve
System as in effect from time to time), additional interest on
the unpaid principal amount of each Note in the form of Exhibit B
from the date of such Note until such principal amount is paid in
full, payable on the due date of each interest payment for such
Note, at an interest rate per annum equal at all times during the
term of such Note to the excess of (i) the rate obtained by
dividing the LIBO Rate for such Note by a percentage equal to
100% minus the reserve percentage applicable during the term of
such Note under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or if more than one
such percentage is so applicable, minus the daily average for
such percentages for those days during which such percentage
shall be so applicable) for determining the maximum reserve
requirement (including, without limitation, any marginal reserve
requirement) for the Bank in respect of liabilities or assets
consisting of or including Eurocurrency liabilities over (ii) the
LIBO Rate for such Note.
Section 1.08. Increased Costs, etc.
(a) If either (i) the introduction of or any change
(including, without limitation, any change by way of
imposition or increase of reserve requirements) in or
in the interpretation of any law or regulation or (ii)
the compliance by the Bank with any guideline or
request from any central bank or other governmental
authority (whether or not having the force of law),
shall result in any increase in the cost to the Bank of
making, funding or maintaining loans bearing interest
at the LIBO Rate, then the Company shall from time to
time, upon demand by the Bank, pay to the Bank
additional amounts sufficient to indemnify the Bank
against such increased cost. A certificate as to the
amount of such increased cost (including calculations
thereof in reasonable detail), submitted to the Company
by the Bank, shall, in absence of manifest error, be
conclusive.
(b) If it shall become unlawful for the Bank to obtain
funds in the London interbank market in order to fund
or maintain loans bearing interest at the LIBO Rate or
otherwise to perform their obligations hereunder with
respect to any such loans, then, upon at least five
Business Days' notice by the Bank to the Company the
rate of interest on any portion of the Loan then
bearing interest at the LIBO Rate shall thereupon be
the Prime Rate, and the right of the Company to select
the LIBO Rate shall thereupon terminate. In such
event, the Company will execute and deliver a Note
substantially in the form of Exhibit C, with
appropriate insertions.
(c) The Company shall indemnify the Bank against any loss
or expense which the Bank may sustain or incur as a
consequence of any default in payment or prepayment of
the principal amount of any portion of the Loan bearing
interest at the LIBO Rate.
Section 1.09. Inability to Determine LIBO Rate. In the
event that the Bank shall have determined that:
(i) by reason of circumstances affecting the
London interbank market generally, adequate and
reasonable means do not exist for ascertaining the LIBO
Rate with respect to a changed or continued interest
rate option that the Company has requested be made
bearing interest at the LIBO Rate; or
(ii) the LIBO Rate will not adequately and fairly
reflect the cost to the Bank of maintaining or funding
a changed or continued interest rate option that the
Company has requested be made bearing interest at the
LIBO Rate,
then, the Bank shall forthwith give prompt notice, confirmed in
writing, of such determination to the Company, at least one
Business Day prior to the date for such change or continuation.
If such notice is given, the interest rate on such portion of the
Loan shall be the Prime Rate and the Company shall execute and
deliver to the Bank a Note substantially in the form of Exhibit
C, with appropriate insertions.
Section 1.10. Increased Capital. If the Bank determines
(i) that compliance with any law or regulation or any guideline
or request from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect
the amount of capital required or expected to be maintained by
the Bank or any corporation controlling the Bank or would have
the effect of reducing the rate of return on the Bank's capital
or on the capital of such corporation and (ii) that the amount of
such capital is increased by or based upon, or such reduction is
a consequence of the existence of, the Bank's commitment to lend
hereunder and other commitments of this type or the Loan or any
Note in the form of Exhibit B, then the Company shall, within ten
days following demand therefor by the Bank, from time to time as
specified by the Bank pay to the Bank additional amounts
sufficient to compensate the Bank in the light of such
circumstances, to the extent that the Bank reasonably determines
such increase in capital or reduction in rate of return, as the
case may be, to be allocable to the existence of the Bank's
commitment to lend hereunder or the making or maintenance of its
Loan or any Note in the form of Exhibit B. A certificate as to
such amounts submitted to the Company by the Bank accompanied by
an explanation of the basis therefor, shall constitute such
demand and shall be conclusive and binding for all purposes,
absent manifest error.
Section 1.11. Assignments and Participations. The Bank may
assign, or sell participations in, all or any part of the Loan to
another bank or other entity, in which event (a) in the case of
an assignment, upon notice thereof by the Bank to the Company and
receipt by the Bank of the Company's written consent to such
assignment, such consent not to be unreasonably withheld, the
assignee shall have, to the extent of such assignment, the same
rights and benefits as it would have if it were the Bank
hereunder and (b) in the case of a participation, the participant
shall not have any rights under this Agreement and the Notes (the
participant's rights against the Bank in respect of such
participation to be those set forth in the agreement(s) executed
by the Bank in favor of the participant relating thereto) and all
amounts payable by the Company under Section I shall be
determined as if the Bank had not sold such participation. The
Bank may furnish any information concerning the Company in the
possession of the Bank from time to time to assignees and
participants (including prospective assignees and participants).
Section 1.12. Payments and Computations. The Company shall
make each payment hereunder and under an outstanding Note not
later than 12:00 noon (New York Time) on the day when due in
lawful money of the United States of America and in same day
funds to the Bank at its address referred to in Section 6.02.
The Company hereby authorizes the Bank, if and to the extent
payment is not made when due hereunder or under an outstanding
Note, to charge from time to time against the Company's account
with the Bank any amount so due. All computations of interest
under a Note shall be made by the Bank on the basis of a year of
365/366 days for the actual number of days (including the first
day but excluding the last day) elapsed, except that interest
under any Note in the form of Exhibit B shall be computed on the
basis of a year of 360 days for the actual days elapsed.
Section 1.13. Payment on Non-Business Days. Whenever any
payment to be made hereunder or under a Note shall be stated to
be due on a Saturday, a Sunday or a public or bank holiday or the
equivalent for banks generally under the laws of the State of New
York and, if the issuance or payment of a Note bearing interest
at the LIBO Rate is involved, or a day on which banks in the
London interbank market are not open for transactions in dollars
(any other day being a "Business Day"), such payment may be made
on the next succeeding Business Day, provided, however, that in
the case of a Note in the form of Exhibit B, if such extension
would cause such payment to be made in a new calendar month, such
payment shall be made on the next preceding Business Day and such
extension of time shall in such case be included in the
computation of payment of interest. Any prepayments to the Bank
on account of the principal of the Note shall be endorsed on the
Note prior to any transfer by the Bank of the Note.
Section 1.14. Fee for Cancellation or Payment Prior to
Maturity Date.
(a) For purposes of this Section 1.14, the following terms
shall have the following meanings:
"Due Date" means the Due Date (as defined in the
outstanding Note in the form of Exhibit A which governs the
Loan or the portion of the Loan being repaid).
"Liquidation Rate" means one-quarter of the interest
rate per annum equal to the latest three-week moving average
of secondary market midafternoon quotations of yields to
maturity of U.S. Treasury notes trading closest to par value
and maturing on, or within three months of, the Due Date,
such three-week moving average to be determined by the Bank
on the Fee Determination Date on the basis of such yields
reported by dealers of U.S. Treasury notes to and published
by the Federal Reserve Bank of New York or, if such
publication shall be suspended or terminated, on the basis
of quotations of such yields received by the Bank from three
New York dealers of U.S. Treasury notes of recognized
standing.
"Loan Rate" means one-quarter of the Fixed Rate (as
defined in the outstanding Note in the form of Exhibit A
which governs the Loan or the portion of the Loan being
repaid).
"Fee Determination Date" means the Loan Date, if the
Loan has not been made on or before the Loan Date, and means
the date prior to the Due Date on which the Company repays
the Loan or any part thereof pursuant to Section 1.04 or
otherwise, if the Loan has been made.
(b) If the Company prepays the Loan or any part of it,
which is then evidenced by a Note in the form of
Exhibit A, prior to the Due Date (whether or not such
prepayment is due to acceleration of the Loan pursuant
to Section 5.01), the Company shall pay to the Bank a
fee (as liquidated damages, and not as a penalty) equal
to the sum of the present values, each determined at
the Liquidation Rate, of the excess, if any, of (A) the
sum of the quarterly interest payments on the principal
amount of the Loan evidenced by a Note in the form of
Exhibit A that is prepaid between the Fee Determination
Date and the Due Date computed at the Loan Rate over
(B) the sum of the quarterly interest payments on the
principal amount of the Loan evidenced by a Note in the
form of Exhibit A that is prepaid between the Fee
Determination Date and the Due Date computed at the
Liquidation Rate, such fee to be payable five Business
Days after the Fee Determination Date, and such present
value ("PV") to be calculated in accordance with the
following formula:
PV = (P x (R - T)) x [(1 - (1 + T)-n)/T]
where R = the Loan Rate;
T = the Liquidation Rate;
n = the number of quarters or any portion thereof from the
Fee Determination Date to the Due Date; and
P = the principal amount of the Loan being prepaid.
SECTION 2. Conditions of Lending.
Section 2.01. Conditions Precedent to the Loan. The
obligation of the Bank to make the Loan on the Loan Date is
subject to the conditions precedent that:
(a) the Bank shall have received on or before the Loan Date
the following, each dated such day, in form and
substance satisfactory to the Bank:
(i) One or more promissory notes duly executed
by the Company, dated the Loan Date, in the form of one
or more of the Notes appended hereto;
(ii) Certified copies of the resolutions of the
Board of Directors of the Company approving this
Agreement and the transactions contemplated hereby, and
of all documents evidencing other necessary corporate
action and governmental approvals (including, without
limitation, orders of the [state] Commission and
Securities and Exchange Commission approving the
transactions contemplated by this Agreement) with
respect to this Agreement and the transactions
contemplated hereby;
(iii) A certificate of the Secretary or an
Assistant Secretary of the Company certifying the names
and true signatures of the officers of the Company
authorized to sign this Agreement and the Notes and the
other documents to be delivered hereunder;
(iv) A favorable opinion of an attorney of the
American Electric Power Service Corporation, counsel
for the Company, as to matters referred to in Section
3.01 (except subsections (e) and (f) thereof) and as to
such other matters as the Bank may reasonably request;
and
(b) on the Loan Date the following statements shall be true
and the Bank shall have received a certificate signed
by a duly authorized officer of the Company, dated the
Loan Date, stating that:
(i) The representations and warranties contained
in Section 3.01 are correct on and as of the Loan Date
as though made on and as of such date, and
(ii) No event has occurred and is continuing, or
would result from the Loan, which constitutes an Event
of Default (as defined in Section 5.01 hereof) or would
constitute an Event of Default but for the requirement
that notice be given or time elapse or both; and
(c) the Bank shall have received such other approvals,
opinions or documents as the Bank may reasonably
request.
SECTION 3. Representations and Warranties.
Section 3.01. Representations and Warranties of the
Company. The Company represents and warrants as follows:
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the
jurisdiction indicated at the beginning of this
Agreement.
(b) The execution, delivery and performance by the Company
of this Agreement and the transactions contemplated
hereby are within the Company's corporate powers, have
been duly authorized by all necessary corporate action,
and do not contravene (i) the Company's charter or by-
laws or (ii) law or any contractual restriction binding
on or affecting the Company.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or
regulatory body is required for the due execution,
delivery and performance by the Company of this
Agreement or the transactions contemplated hereby,
except for the authorizations of the [state] Commission
and Securities and Exchange Commission, which
authorizations have been duly obtained and are in full
force and effect.
(d) This Agreement is, and the Notes when delivered
hereunder will be, legal, valid and binding obligations
of the Company enforceable against the Company in
accordance with their respective terms, except as the
enforceability thereof may be limited by bankruptcy,
insolvency, or other similar laws affecting the
enforcement of creditors' rights in general, and except
as the availability of the remedy of specific
performance is subject to general principles of equity
(regardless of whether such remedy is sought in a
proceeding in equity or at law).
(e) The balance sheet of the Company as at December 31,
199_, and the related statement of income and retained
earnings of the Company for the year then ended (the
"Financial Statements"), copies of which have been
furnished to the Bank, fairly present the financial
condition of the Company as of such date and the
results of the operations of the Company for the period
ended on such date, all in accordance with generally
accepted accounting principles consistently applied,
and since December 31, 199_, there has been no material
adverse change in such condition or operations or in
the business prospects of the Company.
(f) There is no pending or threatened action or proceeding
affecting the Company, except as otherwise disclosed in
the Financial Statements or otherwise reported to the
Bank prior to the date of this Agreement, before any
court, governmental agency or arbitrator, which may
materially adversely affect the financial condition,
operations or business prospects of the Borrower.
(g) No proceeds of the Loan will be used to acquire any
security in any transaction which is subject to Section
13 or 14 of the Securities Exchange Act of 1934.
(h) The Company is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U issued by the
Board of Governors of the Federal Reserve System), and
no proceeds of the Loan will be used to purchase or
carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin
stock.
SECTION 4. Covenants of the Company.
Section 4.01. Affirmative Covenants. The Company covenants
and agrees that during the term of this Agreement, and so long as
any Note remains outstanding and unpaid, the Company will, unless
the Bank shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material
respects with all applicable laws, rules, regulations
and orders, such compliance to include, without
limitation, paying before the same become delinquent
all taxes, assessments and governmental charges imposed
upon it or upon its property except to the extent
contested in good faith.
(b) Reporting Requirements. Furnish to the Bank: (i) as
soon as available and in any event within 90 days after
the end of each of the first three quarters of each
fiscal year of the Company, the balance sheet of the
Company as of the end of each such quarter and the
statement of income and retained earnings of the
Company for the period commencing at the end of the
previous fiscal year and ending with the end of such
quarter, certified by the chief financial officer of
the Company; (ii) as soon as available and in any event
within 130 days after the end of each fiscal year of
the Company, a copy of the annual report for each such
year, containing financial statements for such year
certified in a manner acceptable to the Bank by
Deloitte & Touche or another independent public
accountant of recognized standing; and (iii) such other
information respecting the condition or operations,
financial or otherwise, of the Company as the Bank may
from time to time reasonably request.
(c) Notices. Promptly give notice to the Bank of (a) any
litigation affecting the Company in which the amount
involved is $____________ or more and is not covered by
insurance and (b) the occurrence of each Event of
Default and each event which, with notice or lapse of
time or both, would constitute an Event of Default.
(d) Maintenance of Corporate Existence; Etc. Preserve and
maintain its corporate existence in the jurisdiction of
its incorporation (except as provided in Section
4.02(c)) and the rights, franchises and privileges
necessary for the ordinary conduct of its business,
maintain its properties and assets in good working
order and condition and maintain, with respect to its
properties and assets and its business, insurance with
financially sound and reputable insurers against loss
or damage of the kinds and in the amounts customarily
carried under similar circumstances by other
corporations engaged in the same or similar businesses
and similarly situated. Notwithstanding the provisions
of the foregoing sentence, however, the Company may
self-insure by deductible provisions in a prudent
amount with respect to each loss.
Section 4.02. Negative Covenants. The Company covenants
and agrees that during the term of this Agreement, and so long as
any Note remains outstanding and unpaid, it will not, without the
written consent of the Bank:
(a) Limitation on Liens, Etc. Create, incur, assume or
suffer to be created, incurred, assumed, or to exist,
any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance of any nature
(all of the foregoing being hereinafter referred to in
this Section as "liens") upon or with respect to any of
its property or assets, whether now owned or hereafter
acquired, except that the foregoing restrictions shall
not apply to:
(i) the lien of the Indenture dated as of
_________________ between the Company and
____________________, as Trustee, as supplemented and
amended, and "Permissible Encumbrances" as therein
defined;
(ii) liens for taxes, assessments or governmental
charges or levies not yet delinquent or being contested
in good faith by appropriate proceedings;
(iii) liens of landlords and liens of carriers,
warehousemen, mechanics and materialmen incurred in the
ordinary course of business for sums not yet due or
being contested in good faith by appropriate
proceedings;
(iv) liens incurred or deposits made in the
ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of
social security, or to secure the performance of or
compliance with statutory obligations, tenders, bids,
leases, surety and appeal bonds, performance and
return-of-money bonds and other similar obligations
(other than obligations for the payment of borrowed
money);
(v) any judgment lien, unless the judgment it
secures shall not, within sixty days after the entry
thereof, have been discharged or execution thereof
stayed pending appeal, or shall not have been
discharged within sixty days after the expiration of
any such stay;
(vi) liens on any property acquired, constructed
or improved by the Company after the date of this
Agreement, or liens on any property existing at the
time of the acquisition thereof, provided that the lien
shall not apply to any property theretofore owned by
the Company other than any theretofore unimproved real
property on which the property so constructed, or the
improvement, is located;
(vii) liens incidental to the conduct of the
Company's business or the ownership of its property and
assets, which were not incurred in connection with the
borrowing of money or the obtaining of credit, none of
which materially interferes with the Company's use and
operation of its properties and assets or detracts from
the value thereof; and
(viii)liens for the sole purpose of extending,
renewing or replacing in whole or in part the
indebtedness secured by any lien referred to in the
foregoing clauses (i) and (vi) or in this clause
(viii); provided, however, that the principal amount of
indebtedness secured thereby shall not exceed the
principal amount of indebtedness so secured at the time
of such extension, renewal or replacement, and that
such extension, renewal or replacement shall be limited
to all or a part of the property which secured the lien
so extended, renewed or replaced (and any improvements
on such property).
(b) Limitations on Borrowing. Create or incur any
indebtedness for borrowed money (other than Short-Term
Debt in an aggregate principal amount not exceeding the
greater of 10% of the Capitalization of the Company,
excluding Short-Term Debt, or such other amount as
shall be approved by the Securities and Exchange
Commission pursuant to the Public Utility Holding
Company Act of 1935) if, immediately after the creation
or incurring of such indebtedness and the application
of the proceeds thereof, if any, the total principal
amount of all indebtedness of the Company for borrowed
money (other than Short-Term Debt to the extent
specified above) shall at any time exceed 65% of the
Capitalization of the Company.
(c) Limitation on Mergers. Merge into or consolidate with
any corporation or other entity, or permit any
corporation or other entity to merge into or
consolidate with it, or sell or otherwise dispose of
all or substantially all of its assets to any other
corporation or entity, if, in any such case, (a) the
indebtedness of such successor corporation or entity
(whether or not the Company) for borrowed money would
exceed the amount permitted by Section 4.02(b) hereof,
or (b) such successor corporation or entity (if other
than the Company) shall fail to assume the obligations
of the Company under any outstanding Note and to
subject itself to the terms of this Agreement.
(d) Limitation on Plan Withdrawals or Terminations. Permit
any employee benefit pension plan (other than a
multiemployer plan of the United Mine Workers of
America) with respect to which the Company may have any
liability to terminate, or withdraw from such a plan,
while there shall exist a deficiency of more than
$50,000,000 in plan assets available to satisfy the
benefits guaranteeable under the Employee Retirement
Income Security Act of 1974, as amended, with respect
to such plan.
SECTION 5. Events of Default.
Section 5.01. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) The Company shall fail to pay the principal of, or any
installment of interest on, any outstanding Note when
due or shall fail to pay any other amounts payable
under this Agreement when due; or
(b) Any representation or warranty made by the Company
herein or by the Company (or any of its officers) in
connection with this Agreement shall prove to have been
incorrect in any material respect when made; or
(c) The Company shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement
on its part to be performed or observed and any such
failure shall remain unremedied for 10 days after
written notice thereof shall have been given to the
Company by the Bank; or
(d) The Company shall fail to pay the principal of, or
interest on, any obligation of the Company for borrowed
money (other than under this Agreement and any
outstanding Note) when due, whether by acceleration, by
required prepayment or otherwise, for a period longer
than any period of grace provided in such obligation,
or fail to perform any other term, condition or
covenant contained in any such obligation, the effect
of which is to cause, or to permit the holder of such
obligation or others on its behalf to cause, such
obligation then to become due prior to its stated
maturity, unless such failure shall have been cured or
effectively waived; or
(e) The Company shall generally not pay its debts as such
debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against the
Company seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee or
other similar official for it or for any substantial
part of its property; or the Company shall take any
corporate action to authorize any of the actions set
forth above in this subsection (e); or
(f) All of the Common Stock, other than directors' qualify-
ing shares, of the Company, or of any successor
corporation or entity, shall not be owned, directly or
indirectly, by American Electric Power Company, Inc.,
or a successor thereto;
then, and in any such event, the Bank may, by notice to the
Company, (i) declare its obligation to make the Loan to be
terminated, whereupon the same shall forthwith terminate, and
(ii) declare any outstanding Note or Notes, all interest thereon
and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon such Note or Notes, all such
interest and all such amounts shall become and be forthwith due
and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by
the Company.
SECTION 6. Miscellaneous.
Section 6.01. Amendments, Etc. No amendment or waiver of
any provision of this Agreement or any Note, nor consent to any
departure by the Company therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Bank and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which
given.
Section 6.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing
(including telegraphic communication) and mailed or telegraphed
or delivered, if to the Company, at its address at 1 Riverside
Plaza, Columbus, Ohio 43215, Attention: G. P. Maloney; and if to
the Bank, at its address at ____________________________________
or, as to each party, at such other address as shall be
designated by such party in a written notice to the other party.
All such notices and communications shall, when mailed or
telegraphed, be effective when deposited in the mails or
delivered to the telegraph company, respectively, addressed as
aforesaid.
Section 6.03. No Waiver; Remedies. No failure on the part
of the Bank to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder
or under any Note preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.
Section 6.04. Right of Set-Off. Upon the occurrence and
during the continuance of any Event of Default the Bank is hereby
authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing
by the Bank to or for the credit or the account of the Company
against any and all of the obligations of the Company now or
hereafter existing under this Agreement and any Note,
irrespective of whether or not the Bank shall have made any
demand under this Agreement or any Note and although such
obligations may be unmatured. The Bank agrees promptly to notify
the Company after any such set-off and application, provided that
the failure to give such notice shall not affect the validity to
such set-off and application. The rights of the Bank under this
Section are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which the Bank may
have.
Section 6.05. Binding Effect; Governing Law. This
Agreement shall be binding upon and inure to the benefit of the
Company and the Bank and their respective successors and assigns,
except that the Company shall not have the right to assign its
rights hereunder or any interest herein without the prior written
consent of the Bank. This Agreement and any Notes shall be
governed by, and construed in accordance with, the laws of the
State of __________.
Section 6.06. Costs, Expenses and Taxes. The Company
agrees to pay or reimburse the Bank for the payment of (i) all
reasonable out-of-pocket expenses of the Bank, including
attorneys' fees, arising in connection with the enforcement or
preservation of any rights under this Agreement and any Note, and
(ii) any and all present and future stamp and other taxes
(including interest and penalties, if any) which may be assessed
or payable in respect of any Note, or of any modification of any
Note, or of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
_______________________________
By: _____________________________
Vice President
______________________________
By: ______________________________
Vice President
<PAGE>
FIXED RATE EXHIBIT A
PROMISSORY NOTE
$_________ Dated:__________, 19__
FOR VALUE RECEIVED, the undersigned,_____________________,
an __________ corporation (the "Borrower"), hereby promises to
pay to the order of ____________________ (the "Bank"), the
principal sum of __________________ Dollars ($__________________)
on _____________________ (the "Due Date"), together with interest
on the principal amount remaining unpaid hereunder from time to
time outstanding from the date hereof until said principal sum
shall be paid in full, payable ________________________ during
the term hereof and on the Due Date, at a rate of interest per
annum equal at all times to ____% per annum (the "Fixed Rate").
Any amount of principal hereof which is not paid when due,
whether at stated maturity, by acceleration or otherwise, shall
bear interest from the day when due until said principal amount
is paid in full, payable on demand, at a rate of interest per
annum equal at all times to one percent (1%) over the Fixed Rate.
Interest shall be computed on the basis of a year consisting of
365 or 366 days, as the case may be, for the actual number of
days elapsed.
Both principal and interest are payable in lawful money of
the United States of America and in same day funds to the Bank at
_________________________________.
This Note evidences indebtedness incurred under a Term Loan
Agreement dated as of _____________________, between the Borrower
and the Bank (the "Agreement"), as the same may be amended,
modified or supplemented from time to time, and is entitled to
the benefits thereof. The Agreement, among other things,
contains provisions for acceleration of the maturity of the
principal amount hereof upon the happening of certain stated
events and also for the payment of a fee in the event of
repayment of principal hereof prior to the Due Date hereof upon
the terms and conditions therein specified.
_______________________________
By:_____________________________
Title:
<PAGE>
LIBO RATE EXHIBIT B
PROMISSORY NOTE
$_____________ Dated: _______________, 19___
FOR VALUE RECEIVED, the undersigned, _____________________,
an __________ corporation (the "Borrower"), hereby promises to
pay to the order of ________________________ (the "Bank"), the
principal sum of __________________________________ Dollars
($_____________) on _____________________, and to pay interest on
the unpaid principal amount hereof from the date hereof as
provided below. For Notes with a term greater than three months,
interest on the unpaid principal amount shall be payable
quarterly on the last day of March, June, September and December
prior to, and at maturity hereof; for Notes with a term of three
months or less, interest on the unpaid principal amount shall be
payable at maturity only; in all cases, without exception,
interest on the unpaid principal amount shall be payable after
such maturity on demand. Said interest shall be: (i) prior to
the maturity hereof, at a rate per annum equal to _____% (the
"Rate"), and (ii) from the maturity hereof (whether by
acceleration or otherwise), at a rate per annum equal at all
times to the sum of 1% plus the Rate until payment in full.
Interest shall be computed on the basis of a year consisting of
360 days for the actual number of days elapsed.
Both principal and interest are payable in lawful money of
the United States of America in immediately available funds to
the Bank at _________________________________________________.
This Note evidences indebtedness incurred under a Term Loan
Agreement dated as of _____________________, between the Borrower
and the Bank (the "Agreement"), as the same may be amended,
modified or supplemented from time to time, and is entitled to
the benefits thereof. The Agreement, among other things,
contains provisions for acceleration of the maturity of the
principal amount hereof upon the happening of certain stated
events and also for optional and mandatory prepayments of
principal prior to the maturity hereof.
_______________________________
By:_________________________
Title:
<PAGE>
PRIME RATE EXHIBIT C
PROMISSORY NOTE
$_____________ Dated: _______________, 19___
FOR VALUE RECEIVED, the undersigned, ______________________,
an __________ corporation (the "Borrower"), hereby promises to
pay to the order of _____________________________ (the "Bank"),
the principal sum of _______________________________________
Dollars ($_____________) on ______________________, and to pay
interest on the unpaid principal amount hereof from the date
hereof as provided below. Interest on the unpaid principal
amount shall be payable quarterly on the last day of March, June,
September and December prior to and, at the maturity hereof
(whether by acceleration or otherwise), and after such maturity
on demand. Said interest shall be: (i) prior to the maturity
hereof, at a fluctuating rate per annum equal at all times to the
Prime Rate (the "Prime Rate") as defined in the Term Loan
Agreement dated as of __________________ between the Borrower and
the Bank (the "Agreement"); and (ii) from the maturity hereof
(whether by acceleration or otherwise), at a fluctuating rate per
annum equal at all times to 1% plus the Prime Rate until payment
in full. Any change in the interest rate hereon resulting from a
change in the Prime Rate shall be effective as of the opening of
business on the date of such change in the Prime Rate. Interest
shall be computed on the basis of a year consisting of 365 or 366
days, as the case may be, for the actual number of days elapsed.
Both principal and interest are payable in lawful money of
the United States of America in immediately available funds to
the Bank at ______________________________________________.
This Note evidences indebtedness incurred under the
Agreement, as the same may be amended, modified or supplemented
from time to time, and is entitled to the benefits thereof. The
Agreement, among other things, contains provisions for
acceleration of the maturity of the principal amount hereof upon
the happening of certain stated events and also for optional and
mandatory prepayments of principal prior to the maturity hereof.
_______________________________
By:_________________________
Title:
<PAGE>
<PAGE>
Exhibit F
614/223-1632
Securities and Exchange Commission
Office of Public Utility Regulation
450 Fifth Street, N.W.
Washington, D.C. 20549-1004
January 18, 1994
Gentlemen:
With respect to the Application or Declaration on Form U-1 of
Kingsport Power Company ("Kingsport") relating to the issuance
and sale by Kingsport of certain unsecured long-term promissory
notes (the "Notes") pursuant to a Term Loan Agreement, I wish to
advise you as follows:
I am of the opinion that, in the event that the proposed
transactions are consummated in accordance with said Application
or Declaration, as the same may be amended, and when the steps
referred to in the next following paragraph shall have been
taken:
(a) All state laws applicable to the proposed transactions
will have been complied with;
(b) The Notes will be valid and binding obligations of
Kingsport in accordance with their terms, except as the
same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws
affecting the enforceability of creditors' rights
generally and by general principles of equity; and
(c) Consummation of the proposed transactions will not
violate the legal rights of the holders of any
securities issued by Kingsport or any associate company
thereof.
The steps to be taken which are referred to in the next preceding
paragraph consist of the following:
1. Appropriate action by the Board of Directors of
Kingsport with respect to the transactions described in
said Application or Declaration;
2. Appropriate action by the Securities and Exchange
Commission and the Tennessee Public Service Commission,
with respect to the transactions described in said
Application or Declaration;
3. Compliance with Federal, state and other securities
laws;
4. Execution and delivery of the proposed Term Loan
Agreement pursuant to which the Notes will be issued;
and
5. Issuance and sale of the Notes in accordance with the
governmental and corporate authorizations aforesaid.
I hereby consent to the filing of this opinion as an exhibit to
the above-mentioned Application or Declaration.
Very truly yours,
/s/ John M. Adams, Jr.
John M. Adams, Jr.
Counsel for
Kingsport Power Company
kgpt.94\opincoun.u-1
<PAGE>
Exhibit G
UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Release No. /February , 1994
________________________________________
In the Matter of :
:
KINGSPORT POWER COMPANY :
422 Broad Street :
Kingsport, Tennessee 37660 :
:
(70- ) :
________________________________________:
NOTICE OF PROPOSED ISSUANCE AND SALE OF LONG-TERM NOTES
Kingsport Power Company ("Kingsport"), an electric utility
subsidiary of American Electric Power Company, Inc., a registered
holding company, has filed with this Commission an Application or
Declaration pursuant to Sections 6(a) and 7 of the Public Utility
Holding Company Act of 1935 (the "Act") and Rule 50 thereunder.
Kingsport proposes, subject to receipt of appropriate authori-
zation, to issue $5,000,000 principal amount of unsecured
promissory notes with a maturity not less than nine months nor
more than ten years (the "Notes") to one or more commercial banks
or other financial institutions pursuant to a proposed term loan
agreement. The proposed term loan agreement would provide that
the Notes bear interest at a fixed rate, fluctuating rate, or
some combination of fixed and fluctuating rates. The actual rate
of interest which each Note shall bear shall be subject to
negotiation between Kingsport and the lender. Any fixed rate of
interest of the Notes will not be greater than 250 basis points
above the yield at the time of issuance of the Notes to maturity
of United States Treasury obligations that mature on or about the
date of maturity of the Notes. Any fluctuating rate will not be
greater than 200 basis points above the rate of interest
announced publicly from time to time as the base or prime rate by
a major bank.
No compensating balances shall be maintained with, or fees in the
form of substitute interest paid to, a lender under the proposed
term loan agreement. However, in the event a bank or financial
institution arranges for a borrowing from a third party, such
institution may charge Kingsport a placement fee, not to exceed
7/8% of the principal amount of such borrowing.
Any proceeds realized from the sale of the Notes will be used to
repay short-term debt.
The Application or Declaration and any amendments thereto are
available for public inspection through the Commission's Office
of Public Reference. Interested persons wishing to comment or
request a hearing should submit their views in writing by
February , 1994 to the Secretary, Securities and Exchange
Commission, Washington, D.C. 20549, and serve a copy on the
applicants at the addresses specified above. Proof of service
(by affidavit or, in case of any attorney at law, by certificate)
should be filed with the request. Any request for a hearing
shall identify specifically the issues of fact or law that are
disputed. A person who so requests will be notified of any
hearing, if ordered, and will receive a copy of any notice or
order issued in this matter. After said date, the Application,
as filed or as it may be amended, may be permitted to become
effective.
For the Commission, by the Office of Public Utility Regulation,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
kgpt.94\notice.u-1
<PAGE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
PAGE 1
KINGSPORT POWER COMPANY
BALANCE SHEET
SEPTEMBER 30, 1993
(UNAUDITED)
<CAPTION>
Pro Forma
Per Books Adjustments Pro Forma
ASSETS (in thousands)
<S> <C> <C> <C>
ELECTRIC UTILITY PLANT:
Transmission . . . . . . . . . . . . . . . . . . . $ 9,674 $ 9,674
Distribution . . . . . . . . . . . . . . . . . . . 49,758 49,758
General. . . . . . . . . . . . . . . . . . . . . . 2,981 2,981
Construction Work in Progress. . . . . . . . . . . 584 584
Total Electric Utility Plant . . . . . . . . . 62,997 62,997
Accumulated Depreciation . . . . . . . . . . . . . 22,542 22,542
NET ELECTRIC UTILITY PLANT . . . . . . . . . . 40,455 40,455
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . 213 213
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . 499 $ - 499
Accounts Receivable. . . . . . . . . . . . . . . . 7,008 7,008
Allowance for Uncollectible Accounts . . . . . . . (30) (30)
Materials and Supplies . . . . . . . . . . . . . . 523 523
Accrued Utility Revenues . . . . . . . . . . . . . 1,683 1,683
Prepayments. . . . . . . . . . . . . . . . . . . . 1,811 1,811
TOTAL CURRENT ASSETS . . . . . . . . . . . . . 11,494 11,494
REGULATORY ASSETS:
Amounts Due From Customers For Future
Federal Income Taxes . . . . . . . . . . . . . . 4,420 4,420
Other. . . . . . . . . . . . . . . . . . . . . . . 382 382
TOTAL REGULATORY ASSETS. . . . . . . . . . . . 4,802 4,802
TOTAL . . . . . . . . . . . . . . . . $56,964 $ - $56,964
The Pro Forma Adjustments are shown on Page 3 of these Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
PAGE 2
KINGSPORT POWER COMPANY
BALANCE SHEET
SEPTEMBER 30, 1993
(UNAUDITED)
<CAPTION>
Pro Forma
Per Books Adjustments Pro Forma
CAPITALIZATION AND LIABILITIES (in thousands)
<S> <C> <C> <C>
CAPITALIZATION:
Common Stock - No Par Value:
Authorized - 500,000 Shares
Outstanding - 410,000 Shares . . . . . . . . . . $ 4,100 $ 4,100
Paid-in Capital. . . . . . . . . . . . . . . . . . 5,800 5,800
Retained Earnings. . . . . . . . . . . . . . . . . 4,878 4,878
Total Common Shareowner's Equity . . . . . . . 14,778 14,778
Long-term Debt - Notes Payable to Banks. . . . . . 17,000 $ 5,000 22,000
TOTAL CAPITALIZATION . . . . . . . . . . . . . 31,778 5,000 36,778
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . 1,300 1,300
CURRENT LIABILITIES:
Notes Payable. . . . . . . . . . . . . . . . . . . 6,225 (5,000) 1,225
Accounts Payable . . . . . . . . . . . . . . . . . 5,512 5,512
Customer Deposits. . . . . . . . . . . . . . . . . 903 903
Taxes Accrued. . . . . . . . . . . . . . . . . . . 1,865 1,865
Other. . . . . . . . . . . . . . . . . . . . . . . 1,070 1,070
TOTAL CURRENT LIABILITIES. . . . . . . . . . . 15,575 (5,000) 10,575
DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . 6,743 6,743
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . 1,345 1,345
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . 223 223
TOTAL . . . . . . . . . . . . . . . . $56,964 $ - $56,964
The Pro Forma Adjustments are shown on Page 3 of these Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
PAGE 3
KINGSPORT POWER COMPANY
BALANCE SHEET
SEPTEMBER 30, 1993
PRO FORMA ADJUSTMENTS
<CAPTION>
Debit Credit
(in thousands)
<S> <C> <C>
1) Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,000
Long-term Debt - Notes Payable. . . . . . . . . . . . . . . . . $5,000
To record the issuance of a $5,000,000 long-term
note payable.
2) Short-term Debt - Notes Payable . . . . . . . . . . . . . . . . . $5,000
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,000
To record the retirement of $5,000,000 short-term debt.
/TABLE
<PAGE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
PAGE 3A
KINGSPORT POWER COMPANY
STATEMENT OF INCOME
TWELVE MONTHS ENDED SEPTEMBER 30, 1993
PRO FORMA ADJUSTMENTS
<CAPTION>
Increase
(Decrease)
(in thousands)
<S> <C>
Interest on Long-term Note at 6.25%* = $313
Interest on Short-term Debt = (92)
Federal Income Taxes at 35%* = (77)
To reflect the pro forma changes in interest
charges associated with the proposed transactions
and the related federal income tax effect.
* Rate assumed solely for the purpose of these
Pro Forma Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
PAGE 4
KINGSPORT POWER COMPANY
STATEMENT OF INCOME
TWELVE MONTHS ENDED SEPTEMBER 30, 1993
(UNAUDITED)
<CAPTION>
Pro Forma
Per Books Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . . $82,698 $82,698
OPERATING EXPENSES:
Purchased Power - Affiliated Company . . . 62,956 62,956
Other Operation. . . . . . . . . . . . . . 6,654 6,654
Maintenance. . . . . . . . . . . . . . . . 2,797 2,797
Depreciation . . . . . . . . . . . . . . . 1,993 1,993
Taxes Other Than Federal Income Taxes. . . 3,535 3,535
Federal Income Taxes . . . . . . . . . . . 1,342 $ (77) 1,265
TOTAL OPERATING EXPENSES. . . . . . 79,277 (77) 79,200
OPERATING INCOME . . . . . . . . . . . . . . 3,421 77 3,498
NONOPERATING INCOME. . . . . . . . . . . . . 101 101
INCOME BEFORE INTEREST CHARGES . . . . . . . 3,522 77 3,599
INTEREST CHARGES . . . . . . . . . . . . . . 1,681 221 1,902
NET INCOME . . . . . . . . . . . . . . . . . $ 1,841 $(144) $ 1,697
The Pro Forma Adjustments are shown on Page 3A of these Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
PAGE 5
KINGSPORT POWER COMPANY
STATEMENT OF RETAINED EARNINGS
TWELVE MONTHS ENDED SEPTEMBER 30, 1993
(UNAUDITED)
<CAPTION>
(in thousands)
<S> <C>
BALANCE AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . $4,616
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,841
CASH DIVIDENDS DECLARED. . . . . . . . . . . . . . . . . . . . . . . . 1,579
BALANCE AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . $4,878
</TABLE>
<PAGE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
PAGE 6
AMERICAN ELECTRIC POWER COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1993
(UNAUDITED)
<CAPTION>
Pro Forma
Per Books Adjustments Pro Forma
ASSETS (in thousands)
<S> <C> <C> <C>
ELECTRIC UTILITY PLANT:
Production . . . . . . . . . . . . . . . . . . . . $ 9,035,222 $ 9,035,222
Transmission . . . . . . . . . . . . . . . . . . . 3,144,134 3,144,134
Distribution . . . . . . . . . . . . . . . . . . . 3,668,424 3,668,424
General (including mining assets and nuclear fuel) 1,393,241 1,393,241
Construction Work in Progress. . . . . . . . . . . 333,262 333,262
Total Electric Utility Plant . . . . . . . . . 17,574,283 17,574,283
Accumulated Depreciation and Amortization. . . . . 6,522,755 6,522,755
NET ELECTRIC UTILITY PLANT . . . . . . . . . . 11,051,528 11,051,528
OTHER PROPERTY AND INVESTMENTS . . . . . . . . . . . 712,026 712,026
CURRENT ASSETS:
Cash and Cash Equivalents. . . . . . . . . . . . . 103,416 $ - 103,416
Accounts Receivable. . . . . . . . . . . . . . . . 460,338 460,338
Allowance for Uncollectible Accounts . . . . . . . (4,523) (4,523)
Fuel . . . . . . . . . . . . . . . . . . . . . . . 356,341 356,341
Materials and Supplies . . . . . . . . . . . . . . 202,231 202,231
Accrued Utility Revenues . . . . . . . . . . . . . 110,479 110,479
Prepayments. . . . . . . . . . . . . . . . . . . . 107,098 107,098
TOTAL CURRENT ASSETS . . . . . . . . . . . . . 1,335,380 1,335,380
REGULATORY ASSETS:
Amounts Due From Customers For
Future Federal Income Taxes. . . . . . . . . . . 1,426,140 1,426,140
Other. . . . . . . . . . . . . . . . . . . . . . . 736,631 736,631
TOTAL REGULATORY ASSETS. . . . . . . . . . . . 2,162,771 2,162,771
TOTAL . . . . . . . . . . . . . . . . $15,261,705 $ - $15,261,705
The Pro Forma Adjustments are shown on Page 8 of these Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
PAGE 7
AMERICAN ELECTRIC POWER COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1993
(UNAUDITED)
<CAPTION>
Pro Forma
Per Books Adjustments Pro Forma
CAPITALIZATION AND LIABILITIES (in thousands)
<S> <C> <C> <C>
CAPITALIZATION:
Common Stock - Par Value $6.50; Shares
Authorized - 300,000,000; Shares Issued -
193,534,992, of which 8,999,992 were held
in the treasury. . . . . . . . . . . . . . . . . $ 1,257,977 $ 1,257,977
Paid-in Capital. . . . . . . . . . . . . . . . . . 1,628,281 1,628,281
Retained Earnings. . . . . . . . . . . . . . . . . 1,235,613 1,235,613
Total Common Shareowners' Equity . . . . . . . 4,121,871 4,121,871
Cumulative Preferred Stocks of Subsidiaries:
Not Subject to Mandatory Redemption. . . . . . . 473,240 473,240
Subject to Mandatory Redemption. . . . . . . . . 292,687 292,687
Long-term Debt . . . . . . . . . . . . . . . . . . 4,976,383 $ 5,000 4,981,383
TOTAL CAPITALIZATION . . . . . . . . . . . . . 9,864,181 5,000 9,869,181
OTHER NONCURRENT LIABILITIES . . . . . . . . . . . . 480,852 480,852
CURRENT LIABILITIES:
Long-term Debt Due Within One Year . . . . . . . . 138,227 138,227
Short-term Debt. . . . . . . . . . . . . . . . . . 202,888 (5,000) 197,888
Accounts Payable . . . . . . . . . . . . . . . . . 174,215 174,215
Taxes Accrued. . . . . . . . . . . . . . . . . . . 299,094 299,094
Interest Accrued . . . . . . . . . . . . . . . . . 117,748 117,748
Obligations Under Capital Leases . . . . . . . . . 61,398 61,398
Other. . . . . . . . . . . . . . . . . . . . . . . 358,412 358,412
TOTAL CURRENT LIABILITIES. . . . . . . . . . . 1,351,982 (5,000) 1,346,982
DEFERRED FEDERAL INCOME TAXES. . . . . . . . . . . . 2,528,159 2,528,159
DEFERRED INVESTMENT TAX CREDITS. . . . . . . . . . . 495,699 495,699
DEFERRED GAIN ON SALE AND LEASEBACK -
ROCKPORT PLANT UNIT 2. . . . . . . . . . . . . . . 433,808 433,808
DEFERRED CREDITS . . . . . . . . . . . . . . . . . . 107,024 107,024
TOTAL . . . . . . . . . . . . . . . . $15,261,705 $ - $15,261,705
The Pro Forma Adjustments are shown on Page 8 of these Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
PAGE 8
AMERICAN ELECTRIC POWER COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1993
PRO FORMA ADJUSTMENTS
<CAPTION>
Debit Credit
(in thousand)
<S> <C> <C>
1) Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,000
Long-term Debt . . . . . . . . . . . . . . . . . . . . . . . $5,000
To record the issuance of a $5,000,000 long-term
note payable by Kingsport Power Company.
2) Short-term Debt. . . . . . . . . . . . . . . . . . . . . . . . $5,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,000
To record the retirement of $5,000,000 of short-term
debt by Kingsport Power Company.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
PAGE 8A
AMERICAN ELECTRIC POWER COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
TWELVE MONTHS ENDED SEPTEMBER 30, 1993
PRO FORMA ADJUSTMENTS
<CAPTION>
Increase
(Decrease)
(in thousands)
<S> <C>
Interest on Long-term Note at 6.25%* = $313
Interest on Short-term Debt = (92)
Federal Income Taxes at 35%* = (77)
To reflect the pro forma changes in interest charges
associated with the proposed transactions and the
related federal income tax effect.
* Rate assumed solely for the purpose of these
Pro Forma Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
PAGE 9
AMERICAN ELECTRIC POWER COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
TWELVE MONTHS ENDED SEPTEMBER 30, 1993
(UNAUDITED)
<CAPTION>
Pro Forma
Per Books Adjustments Pro Forma
(in thousands)
<S> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . . $5,230,026 $5,230,026
OPERATING EXPENSES:
Fuel and Purchased Power . . . . . . . . . 1,652,067 1,652,067
Other Operation. . . . . . . . . . . . . . 941,640 941,640
Maintenance. . . . . . . . . . . . . . . . 527,444 527,444
Depreciation and Amortization. . . . . . . 529,145 529,145
Taxes Other Than Federal Income Taxes. . . 459,496 459,496
Federal Income Taxes . . . . . . . . . . . 199,519 $ (77) 199,442
TOTAL OPERATING EXPENSES. . . . . . 4,309,311 (77) 4,309,234
OPERATING INCOME . . . . . . . . . . . . . . 920,715 77 920,792
DEFERRED ZIMMER PLANT CARRYING CHARGES
(net of tax) . . . . . . . . . . . . . . . 29,821 29,821
OTHER NONOPERATING INCOME. . . . . . . . . . 49,283 49,283
LOSS FROM ZIMMER PLANT DISALLOWANCE:
Disallowed Cost. . . . . . . . . . . . . . 159,067 159,067
Related Income Taxes . . . . . . . . . . . (14,533) (14,533)
NET ZIMMER LOSS . . . . . . . . . . 144,534 144,534
INCOME BEFORE INTEREST CHARGES
AND PREFERRED DIVIDENDS. . . . . . . . . . 855,285 77 855,362
INTEREST CHARGES . . . . . . . . . . . . . . 430,484 221 430,705
PREFERRED STOCK DIVIDEND REQUIREMENTS
OF SUBSIDIARIES. . . . . . . . . . . . . . 59,711 59,711
NET INCOME . . . . . . . . . . . . . . . . . $ 365,090 $(144) $ 364,946
AVERAGE NUMBER OF SHARES OUTSTANDING . . . . 184,535 184,535
EARNINGS PER SHARE . . . . . . . . . . . . . $1.98 $1.98
CASH DIVIDENDS PAID PER SHARE. . . . . . . . $2.40 $2.40
The Pro Forma Adjustments are shown on Page 8A of these Financial Statements.
/TABLE
<PAGE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
PAGE 10
AMERICAN ELECTRIC POWER COMPANY, INC.
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
TWELVE MONTHS ENDED SEPTEMBER 30, 1993
(UNAUDITED)
<CAPTION>
(in thousands)
<S> <C>
BALANCE AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . $1,313,606
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365,090
DEDUCTIONS:
Cash Dividends Declared. . . . . . . . . . . . . . . . . . . . . . . 442,891
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
BALANCE AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . $1,235,613
</TABLE>
