PROSPECTUS SUPPLEMENT
(To Prospectus Dated October 14, 1993)
$80,000,000
Mississippi Power & Light Company
General and Refunding Mortgage Bonds,
8.80% Series due April 1, 2005
Interest on the Company's General and Refunding Mortgage Bonds,
8.80% Series due April 1, 2005, (the "New G&R Bonds") is payable
April 1 and October 1 of each year, commencing October 1, 1995. The
New G&R Bonds will not be redeemable prior to April 1, 1998.
Thereafter, the New G&R Bonds will be redeemable at the option of
the Company, in whole or in part, at any time, upon not less than
30 days' notice, at a redemption price of 100% of the principal
amount plus accrued interest. See "Description of the New G&R Bonds
- -- Redemption and Purchase of New G&R Bonds" herein.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTA[HD]
TION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Underwriting
Price Discounts and Proceeds to
to Public (1) Commissions(2) Company(1)(3)
Per Bond 100.00% .65% 99.35%
Total $80,000,000 $520,000 $79,480,000
(1) Plus accrued interest from April 1, 1995.
(2) The Company has agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act
of 1933, as amended.
(3) Before deduction of expenses payable by the Company, estimated
at $105,000.
The New G&R Bonds are offered subject to prior sale, when, as
and if delivered to and accepted by the Underwriters and subject to
certain other conditions. The Underwriters reserve the right to
withdraw, cancel or modify such offer and to reject orders in whole
or in part. It is expected that the New G&R Bonds will be ready for
delivery through the book-entry facilities of The Depository Trust
Company, New York, New York, on or about April 12, 1995.
Bear, Stearns & Co. Inc. Goldman, Sachs & Co.
The date of this Prospectus Supplement is April 5, 1995.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Reference is made to "Incorporation of Certain Documents by
Reference" in the accompanying Prospectus. At the date of this
Prospectus Supplement, the Incorporated Documents include the
Company's Annual Report on Form 10-K for the year ended December
31, 1994.
SELECTED FINANCIAL INFORMATION
(Dollars in Thousands)
The selected financial information of the Company set forth
below has been derived from and should be read in conjunction with
the audited financial statements and other financial information
contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 1994, which is incorporated by reference herein.
<TABLE>
<CAPTION>
Years Ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Operating Revenues $847,888 $895,806 $817,650 $754,632 $761,188
Operating Income 95,757 125,320 124,774 125,961 128,969
Interest Expense (net) 52,764 55,360 64,066 67,641 68,718
Net Income 48,779 101,743 (b) 65,036 63,088 60,830
Ratio of Earnings to Fixed Charges(a) 2.12 3.79 (b) 2.37 2.36 2.42
</TABLE>
<TABLE>
<CAPTION>
As of December 31, 1994
As Adjusted(c)
Percent of Percent of
Amount Capitalization Amount Capitalization
<S> <C> <C> <C> <C>
Balance Sheet Data:
Capitalization:
Common Stock and Paid-in Capital $197,564 19.9% $ 197,564 18.4%
Retained Earnings 232,011 23.3% 232,011 21.6%
Preferred Stock (without sinking fund) 57,881 5.8% 57,881 5.4%
Preferred Stock (with sinking fund) 31,770 3.2% 31,770 2.9%
First Mortgage Bonds (excluding current
maturities)(d) 35,000 3.5% 35,000 3.3%
Other Long-Term Debt (excluding current
maturities)(d) 440,233 44.3% 520,233 48.4%
Total Capitalization $994,459 100.0% $1,074,459 100.0%
</TABLE>
(a) "Earnings" as defined by Item 503(d)(3) of Securities and
Exchange Commission ("SEC") Regulation S-K represent the aggregate
of (1) net income, (2) taxes based on income, (3) investment tax
credit adjustments -- net and (4) fixed charges. "Fixed Charges" as
defined by Item 503(d)(4) of SEC Regulation S-K include interest
(whether expensed or capitalized), related amortization and
interest applicable to rentals charged to operating expenses.
(b) Net income and earnings for the year ended December 31,
1993 include approximately $52 million pre-tax cumulative effect of
a change in accounting principle to provide for the accrual of
estimated unbilled revenues.
(c) Adjusted to reflect the sale of the New G & R Bonds.
(d) Current maturities of First Mortgage Bonds and Other Long-
Term Debt as of December 31, 1994 totaled approximately $66
million. See "Use of Proceeds" below.
USE OF PROCEEDS
The net proceeds to be received from the issuance and sale of
the New G&R Bonds will be added to the Company's general funds, and
are expected to be used (i) to replace a portion of the funds used
to pay (a) $20,000,000 principal amount of the Company's 14.95% G&R
Bonds that matured on February 1, 1995 and (b) $20,000,000
principal amount of the Company's 4.625% First Mortgage Bonds that
matured on March 1, 1995, (ii) to pay (a) $10,000,000 principal
amount of the Company's 11.14% G&R Bonds due to mature on July 15,
1995 and (b) $15,000,000 principal amount of the Company's 5.95%
G&R Bonds due to mature on October 15, 1995 and (iii) for general
corporate purposes.
DESCRIPTION OF THE NEW G&R BONDS
The following description of the particular terms of the New
G&R Bonds, offered hereby, supplements the description of the
general terms and provisions of the New G&R Bonds set forth in the
accompanying Prospectus under the heading "Description of the New
G&R Bonds", to which description reference is hereby made. As used
hereinafter, the terms "G&R Bonds", "Trustee" and "G&R Mortgage"
shall have the same meanings as the same terms used under the
heading "Description of the New G&R Bonds" in the accompanying
Prospectus.
Interest, Maturity and Payment. The New G&R Bonds will mature
on April 1, 2005 and will bear interest at the rate shown in their
title, payable April 1 and October 1 of each year, commencing
October 1, 1995. Interest is payable to holders of record at the
close of business on the March 31 or September 30 next preceding
the interest payment date. Principal and interest are payable at
the office or agency of the Company in New York City. (See "Book-
Entry G&R Bonds" below for information on principal and interest
payments to owners of beneficial interests in the New G&R Bonds.)
The Company has covenanted to pay interest on any overdue principal
and on any overdue installment of interest at the rate of 9.80% per
annum.
Redemption and Purchase of New G&R Bonds. The New G&R Bonds
will not be redeemable for any purpose prior to April 1, 1998.
Thereafter, the New G&R Bonds will be redeemable, in whole at any
time, or in part from time to time, upon not less than 30 days'
notice, at a redemption price of 100% of the principal amount plus
accrued interest to the date fixed for redemption.
If, at the time notice of redemption is given, the redemption
monies are not held by the Trustee, the redemption may be made
subject to receipt of such monies before the date fixed for
redemption, and such notice shall be of no effect unless such
monies are so received.
Cash deposited under any provision of the G&R Mortgage (with
certain exceptions) may be applied to the redemption or purchase
(including the purchase from the Company) of G&R Bonds of any
series.
The New G&R Bonds are not subject to redemption under any
sinking or improvement fund or any maintenance or replacement fund.
Dividend Covenant. The Company will covenant in substance
that, so long as any New G&R Bonds remain outstanding, it will not
pay any cash dividends on common stock or repurchase common stock
after March 31, 1995, unless, after giving effect to such dividend
or purchase, the aggregate amount of such dividends or purchases
after March 31, 1995 (other than dividends that have been declared
by the Company before March 31, 1995) does not exceed credits to
earned surplus after March 31, 1995 plus $250,000,000 plus such
additional amounts as shall be approved by the SEC.
Book-Entry G&R Bonds. The information under the heading
"Description of the New G&R Bonds -- Form and Exchanges" in the
accompanying Prospectus will not be applicable to the New G&R
Bonds. Except under the circumstances described below, the New G&R
Bonds will be issued in the form of one or more fully registered
bonds that will be deposited with, or on behalf of, The Depository
Trust Company, New York, New York ("DTC"), or such other depository
as may be subsequently designated, and registered in the name of
Cede & Co., as nominee for DTC.
So long as DTC, or its nominee, is the owner of the New G&R
Bonds, DTC or such nominee, as the case may be, will be considered
the sole registered holder of the New G&R Bonds for all purposes
under the G&R Mortgage. Payments of principal of and premium, if
any, and interest on the New G&R Bonds will be made to
DTC or its nominee, as the case may be, as the holder of the New
G&R Bonds. Except as set forth below, owners of beneficial
interests in the New G&R Bonds will not be entitled to have any of
the individual New G&R Bonds registered in their names, will not
receive or be entitled to receive physical delivery of any such New
G&R Bonds and will not be considered the holders thereof under the
G&R Mortgage.
If DTC is at any time unwilling or unable to continue as
depository and a successor depository is not appointed, the Company
will issue individual registered New G&R Bonds in exchange for the
New G&R Bonds held by DTC. In addition, the Company may at any time
and in its sole discretion determine not to have the New G&R Bonds
held by DTC and, in such event, will issue individual registered
New G&R Bonds in exchange for the New G&R Bonds held by DTC. In any
such instance, an owner of a beneficial interest in the New G&R
Bonds will be entitled to physical delivery of individual New G&R
Bonds equal in principal amount to its beneficial interest and to
have such New G&R Bonds registered in its name. Individual New G&R
Bonds so issued will be issued as registered New G&R Bonds in
denominations of $1,000 or any multiple thereof.
Upon the issuance of the New G&R Bonds, DTC will credit, on
its book-entry registration and transfer system, the respective
principal amounts of beneficial interests to the accounts of
institutions that have accounts with DTC ("Participants"). The
accounts to be credited will initially be designated by the
Underwriters, as hereinafter defined, or the Company. Ownership of
beneficial interests in the New G&R Bonds will be limited to
Participants or persons that may hold interests through
Participants. Ownership of beneficial interests in the New G&R
Bonds will be shown on, and the transfer of that ownership will be
effected only through, records maintained by DTC (with respect to
the Participants' interests) or by Participants or persons that
hold through Participants (with respect to persons other than
Participants). The laws of some states require that certain
purchasers of securities take physical delivery of such securities.
Such limits and such laws may impair the ability to transfer
beneficial interests in the New G&R Bonds.
Upon receipt of any payment of principal, premium or interest
in respect of the New G&R Bonds, DTC's current practice is to
credit immediately Participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the
principal amount of such New G&R Bonds as shown on the records of
DTC. Payments by Participants to owners of beneficial interests in
the New G&R Bonds will be governed by standing instructions and
customary practices, as is now 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 Participants, subject
to any statutory or regulatory requirements that may be in effect
from time to time. Conveyance of notices and other communications
by DTC to Participants and by Participants to other beneficial
owners will be governed by arrangements among them, subject to any
statutory and regulatory requirements as may be in effect from time
to time.
Each purchaser of New G&R Bonds must rely on (1) the
procedures of DTC, and, if such purchaser is not a Participant, the
procedures of the Participant through which such purchaser holds
its beneficial interest, to receive payments and notices, and (2)
the records of DTC and, if such purchaser is not a Participant, the
records of the Participant through which such purchaser holds its
beneficial interest, to evidence its beneficial ownership of New
G&R Bonds.
DTC is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of
the New York Banking Law, a member of the Federal Reserve System,
a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934,
as amended. DTC holds securities of its Participants and
facilitates the clearance and settlement of securities transactions
among its Participants in such securities through electronic book-
entry changes in accounts of the Participants, thereby eliminating
the need for physical movement of securities certificates. DTC's
Participants include securities brokers and dealers (including the
Underwriters of the New G&R Bonds), banks, trust companies,
clearing corporations, and certain other organizations, some of
whom (and/or their representatives) own DTC. Access to DTC's book-
entry system is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or
indirectly. The rules applicable to DTC and its Participants are on
file with the SEC.
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.
Neither the Company, the Trustee, the Underwriters of the New
G&R Bonds nor any agent for payment on or registration of transfer
or exchange of such New G&R Bonds will have any responsibility or
liability for any of the records relating to or payments made on
account of beneficial interests in any of the New G&R Bonds or for
maintaining, supervising or reviewing any records relating to such
beneficial interests.
EXPERTS AND LEGALITY
Reference is made to "Experts and Legality" in the
accompanying Prospectus. The financial statements and the related
financial statement schedules as of December 31, 1994 and for the
year then ended incorporated in this Prospectus by reference from
the Company's Annual Report on Form 10-K have been incorporated
herein in reliance on the reports of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as
experts in auditing and accounting.
UNDERWRITING
Under the terms and conditions set forth in the Underwriting
Agreement dated the date hereof, the Company has agreed to sell to
each of the Underwriters named below, and each of the Underwriters
has severally agreed to purchase, the respective principal amounts
of the New G&R Bonds set forth below:
Underwriter Principal Amount
Bear, Stearns & Co. Inc. $40,000,000
Goldman, Sachs & Co. 40,000,000
Total $80,000,000
The Underwriting Agreement provides that the several
obligations of the Underwriters to pay for and accept delivery of
the New G&R Bonds are subject to approval of certain legal matters
by their counsel and to certain other conditions. The Underwriters'
obligations are such that they are committed to take and pay for
all of the New G&R Bonds offered hereby if any are taken, provided,
that under certain circumstances involving a default of one
Underwriter, less than all of the New G&R Bonds may be purchased.
Default by one Underwriter would not relieve the non-defaulting
Underwriter from its several obligations, and in the event of such
default, the non-defaulting Underwriter may be required by the
Company to purchase the principal amount of the New G&R Bonds that
it has severally agreed to purchase and, in addition, to purchase
the principal amount of the New G&R Bonds that the defaulting
Underwriter shall have so failed to purchase up to a principal
amount thereof equal to one-ninth of the respective principal
amount of the New G&R Bonds that such non-defaulting Underwriter
has otherwise agreed to purchase.
The Underwriters have advised the Company that they propose to
offer all or part of the New G&R Bonds directly to purchasers at
the initial public offering price set forth on the cover page of
this Prospectus Supplement, and to certain securities dealers at
such price less a concession not in excess of .40% of the principal
amount of the New G&R Bonds. The Underwriters may allow, and such
dealers may reallow to certain brokers and dealers, a concession
not in excess of .25% of the principal amount of the New G&R Bonds.
After the New G&R Bonds are released for sale to the public, the
offering price and other selling terms may from time to time be
varied.
The Company has agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act
of 1933, as amended.
There is presently no trading market for the New G&R Bonds and
there is no assurance that a market will develop. Although they are
under no obligation to do so, the Underwriters presently intend to
act as market makers for the New G&R Bonds in the secondary trading
market, but may discontinue such market-making at any time without
notice.
PROSPECTUS
$350,000,000
Mississippi Power & Light Company
General and Refunding Mortgage Bonds
Preferred Stock, Cumulative, $100 Par Value
Mississippi Power & Light Company (the "Company") may offer
from time to time its General and Refunding Mortgage Bonds (the
"New G&R Bonds") and/or its Preferred Stock, Cumulative, $100 Par
Value (the "New Preferred Stock"), aggregating $350,000,000 in
principal amount and/or par value, as the case may be. The New G&R
Bonds and the New Preferred Stock will each be offered in one or
more series at prices and on terms to be determined at the time of
sale. This Prospectus will be supplemented by a prospectus
supplement (the "Prospectus Supplement") which will set forth, as
applicable (1) the aggregate principal amount, rate and time of
payment of interest, maturity, purchase price, initial public
offering price, if any, redemption provisions and other specific
terms of the series of New G&R Bonds in respect of which this
Prospectus is being delivered, or (2) the specific number of
shares, purchase price, initial public offering price, if any,
dividend rate (or method of calculation thereof), any redemption or
sinking fund terms and other specific terms of the series of New
Preferred Stock in respect of which this Prospectus is being
delivered. The sale of one series of any security will not be
contingent upon the sale of any other series of any security.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Company may sell the New G&R Bonds and/or the New
Preferred Stock through underwriters, dealers or agents, or
directly to one or more purchasers. The Prospectus Supplement will
set forth the names of underwriters, dealers or agents, if any, any
applicable commissions or discounts and the net proceeds to the
Company from any such sale. See "Plan of Distribution" for
possible indemnification arrangements for underwriters, dealers,
agents and purchasers.
The date of this Prospectus is October 14, 1993
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-
ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICE OF THE SECURITIES OFFERED HEREBY OR ANY OTHER SECURITIES OF
THE COMPANY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
Mississippi Power & Light Company ("Company") is subject to
the informational requirements of the Securities Exchange Act of
1934 ("Exchange Act") and in accordance therewith files reports and
other information with the Securities and Exchange Commission
("SEC"). Such reports include information, as of particular dates,
concerning the Company's directors and officers, their
remuneration, the principal holders of the Company's securities and
any material interests of such persons in transactions with the
Company. Such reports and other information can be inspected and
copied at the public reference facilities maintained by the SEC at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549; 500 West
Madison Street, 14th floor, Chicago, Illinois 60661; and Seven
World Trade Center, 13th floor, New York, New York 10048. Copies
of this material can also be obtained at prescribed rates from the
Public Reference Section of the SEC at its principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. Shareholders of the
Company are furnished copies of financial statements as of the end
of the most recent fiscal year audited and reported upon (with an
opinion expressed) by independent certified public accountants.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the SEC pursuant to the
Exchange Act are incorporated in this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1992; and
2. The Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1993 and June 30, 1993.
In addition, all documents subsequently filed with the SEC by
the Company pursuant to Section 13, 14 or 15(d) of the Exchange Act
prior to the termination of this offering shall be deemed to be
incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents (such documents,
and the documents enumerated above, being hereinafter referred to
as "Incorporated Documents").
Any statement contained herein or in an Incorporated Document
shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained in any other
subsequently filed Incorporated Document or in an accompanying
Prospectus Supplement modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this
Prospectus.
The Company hereby undertakes to provide without charge to
each person, including any beneficial owner, to whom a copy of this
Prospectus has been delivered, on the written or oral request of
any such person, a copy of any and all of the Incorporated
Documents, other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference therein.
Requests should be directed to Mr. Christopher T. Screen, Assistant
Secretary, Mississippi Power & Light Company, P.O. Box 61000, New
Orleans, Louisiana 70161, telephone number: 504-569-4212. The
information relating to the Company contained in this Prospectus
and any accompanying Prospectus Supplement does not purport to be
comprehensive and should be read together with the information
contained in the Incorporated Documents.
No person has been authorized to give any information or to
make any representation not contained in this Prospectus or, with
respect to any series of New G&R Bonds or New Preferred Stock, the
Prospectus Supplement relating thereto, and, if given or made, such
information or representation must not be relied upon as having
been authorized by the Company or any underwriter. This Prospectus
and any Prospectus Supplement do not constitute an offer to sell or
a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful to
make such offer in such jurisdiction.
Neither the delivery of this Prospectus and a Prospectus
Supplement nor any sale made thereunder shall, under any
circumstances, create any implication that there has been no change
in the affairs of the Company since the date of that Prospectus
Supplement.
THE COMPANY
The Company was incorporated under the laws of the State of
Mississippi on January 2, 1963 and is successor by merger to a
predecessor Mississippi Power & Light Company which was
incorporated under the laws of the State of Florida on October 3,
1927. The merger of the predecessor Mississippi Power & Light
Company into the Company became effective on May 1, 1963. The
Company's principal executive office is located in the Electric
Building, 308 East Pearl Street, Jackson, Mississippi 39201. Its
telephone number, including area code, is 601-969-2311.
The Company is an electric public utility company with
substantially all of its operations in the State of Mississippi.
Entergy Corporation ("Entergy"), which is a registered public
utility holding company under the Public Utility Holding Company
Act of 1935, as amended ("Holding Company Act"), owns all of the
outstanding common stock of the Company. The Company, Arkansas
Power & Light Company ("AP&L"), Louisiana Power & Light Company
("LP&L") and New Orleans Public Service Inc. ("NOPSI") are the
principal operating electric utility subsidiaries of Entergy.
Entergy also owns all of the common stock of System Energy
Resources, Inc. ("System Energy"), a generating company, Entergy
Services, Inc., a service company, Entergy Enterprises, Inc., a
non-utility company, Entergy Operations, Inc., a nuclear management
services company, and Entergy Power, Inc., a subsidiary formed to
market capacity and energy from certain Entergy System generating
units in wholesale markets. Entergy also has several subsidiaries
formed to participate in utility projects located outside the
Entergy System's retail service territory, both domestically and in
foreign countries.
The Company, AP&L, LP&L and NOPSI own all the capital stock of
System Fuels, Inc., a special purpose company which implements
and/or maintains certain programs for the procurement, delivery and
storage of fuel supplies for Entergy subsidiaries.
USE OF PROCEEDS
The net proceeds to be received from the issuance and sale of
the New G&R Bonds and/or the New Preferred Stock will be used for
general corporate purposes, including the possible redemption or
other acquisition, in whole or in part, of certain of the Company's
outstanding securities. Any specific securities acquired with the
proceeds of sales of a series of New G&R Bonds or New Preferred
Stock will be set forth in the Prospectus Supplement relating to
that series. Reference is made to the Incorporated Documents with
respect to the Company's most significant contingencies, its
general capital requirements, and its general financing plans and
capabilities, including its short term borrowing capability,
earnings coverage requirements under the Company's Restated
Articles of Incorporation, as amended ("Articles of
Incorporation"), which limit the amount of additional preferred
stock which the Company may issue, and earnings coverage and other
requirements under the Company's general and refunding mortgage,
which limit the amount of additional mortgage bonds which the
Company may issue.
DESCRIPTION OF THE NEW G&R BONDS
General. The New G&R Bonds are to be issued under the
Company's Mortgage and Deed of Trust, dated as of February 1, 1988,
as supplemented by various supplemental indentures thereto and as
to be further supplemented by one or more supplemental indentures
relating to the New G&R Bonds (collectively referred to as the "G&R
Mortgage"), to Bank of Montreal Trust Company ("Trustee") and Mark
F. McLaughlin (successor to Z. George Klodnicki), as Trustees
(collectively, "Trustees"). All General and Refunding Mortgage
Bonds issued or to be issued under the G&R Mortgage are referred to
herein as "G&R Bonds."
The statements herein concerning the G&R Bonds, the New G&R
Bonds and the G&R Mortgage are merely an outline. They are subject
to the detailed provisions of the G&R Mortgage, which are
incorporated herein by reference.
Terms of Specific Series of the New G&R Bonds. A Prospectus
Supplement will include descriptions of the following terms of a
series of the New G&R Bonds to be issued: (1) the designation of
such series of the New G&R Bonds; (2) the aggregate principal
amount of such series; (3) the date on which such series will
mature; (4) the rate at which such series will bear interest and
the date from which such interest accrues; (5) the dates on which
interest will be payable; (6) the prices and the other terms and
conditions upon which the particular series may be redeemed by the
Company prior to maturity; (7) whether the dividend covenant
described below will be applicable to any such series; (8) if an
insurance policy will be provided for the payment of the principal
of and/or interest on the New G&R Bonds of such series, the terms
thereof; and (9) any other terms of the New G&R Bonds not
inconsistent with the provisions of the G&R Mortgage.
Form and Exchanges. Unless otherwise indicated in a
Prospectus Supplement, the New G&R Bonds will be delivered in
definitive fully registered form in denominations of $1,000 or any
multiple thereof. No service charge will be made for any transfer
or exchange of the New G&R Bonds.
Security. The New G&R Bonds, together with all other G&R
Bonds now or hereafter issued under the G&R Mortgage, will be
secured by the G&R Mortgage, which constitutes, in the opinion of
General Counsel for the Company, a second mortgage lien on all
properties of the Company (except properties released under the
terms of the G&R Mortgage and except as stated below), subject to
(1) the first lien of the Company's Mortgage and Deed of Trust
dated as of September 1, 1944, to Bank of New York (successor to
Irving Trust Company) and W.T. Cunningham (successor Co-Trustee),
as Trustees, as supplemented ("First Mortgage") and other excepted
encumbrances, (2) minor defects and encumbrances customarily found
in properties of like size and character which do not materially
impair the use of the property affected thereby in the conduct of
the business of the Company, and (3) other liens, defects and
encumbrances, if any, existing or placed thereon at the time of
acquisition thereof by the Company and except as limited by
bankruptcy law. There are excepted from the lien certain property,
including all cash and securities; all merchandise, equipment,
apparatus, materials or supplies held for sale or other disposition
in the usual course of business or consumable during use;
automobiles, vehicles and aircraft; timber, minerals, mineral
rights and royalties; and receivables, contracts, leases and
operating agreements.
The G&R Mortgage contains provisions for subjecting after-
acquired property (subject to the First Mortgage and pre-existing
liens) to the lien thereof, subject to limitations in the case of
consolidation, merger or sale of substantially all of the Company's
assets.
The G&R Mortgage is junior and subordinate to the lien of the
First Mortgage on substantially all of the Company's properties.
At August 31, 1993, approximately $214.9 million principal amount
of bonds were outstanding under the First Mortgage. Such bonds and
all other bonds issued or to be issued under the First Mortgage are
hereinafter referred to as "First Mortgage Bonds." No additional
First Mortgage Bonds are permitted to be issued under the First
Mortgage (except such First Mortgage Bonds as may be issued from
time to time to the Trustees under the G&R Mortgage at the option
of the Company to provide additional security thereunder).
The G&R Mortgage provides that the Trustees shall have a lien
upon the mortgaged property, prior to the New G&R Bonds, for the
payment of their reasonable compensation, expenses and
disbursements and for indemnity against certain liabilities.
The G&R Mortgage contains restrictions on liens and on the
issuance of indebtedness, including bonds, so long as any G&R Bonds
issued prior to January 1, 1993 are outstanding (see "Certain Other
Covenants" below).
Issuance of Additional G&R Bonds. The maximum principal
amount of G&R Bonds that may be issued under the G&R Mortgage is
unlimited. G&R Bonds of any series may be issued from time to time
on the basis of (1) the aggregate uncollected balance of certain
rate deferrals, described below, recorded as assets on the books of
the Company (whether or not subject to the lien of the G&R
Mortgage), but the aggregate principal amount of outstanding G&R
Bonds issued on this basis shall not exceed the lesser of
$400,000,000 or 50% of the uncollected balance of such deferred
costs, (2) 70% of property additions after adjustments to offset
retirements, (3) retirement of G&R Bonds or of First Mortgage
Bonds, and (4) deposit of cash. Deposited cash may be withdrawn
upon the bases stated in (2) or (3). Property additions generally
include electric, gas, steam or hot water property acquired after
December 31, 1987, but may not include, among other things,
securities, automobiles, vehicles or aircraft, or property used
principally for the production or gathering of natural gas.
With certain exceptions in the case of (3) above, the issuance
of G&R Bonds is subject to adjusted net earnings for 12 out of the
preceding 15 months, before income taxes, being at least twice the
annual interest requirements on all First Mortgage Bonds and all
G&R Bonds at the time outstanding, including the additional issue,
and all indebtedness, if any, of prior rank. The Company has
reserved the right, without the consent of the holders of any
series of G&R Bonds created after January 1, 1993, including the
New G&R Bonds, to substitute for the foregoing a requirement that
adjusted net earnings for 12 out of the preceding 18 months, before
income taxes, be at least twice such annual interest requirements.
In general, interest on variable interest bonds, if any, is
calculated using the average rate in effect during such 12 months
period.
Pursuant to an order of the Mississippi Public Service
Commission, issued on September 16, 1985 and modified on September
29, 1988 and September 7, 1989 ("Rate Order"), the Company defers
for future recovery a portion of its costs related to its allocated
share of capacity and energy from System Energy's interest in Unit
No. 1 of the Grand Gulf Nuclear Electric Generating Station ("Grand
Gulf 1"). The Rate Order provides, among other things, for the
recovery by the Company, in equal annual installments over the ten
year period beginning October 1, 1988, of all Grand Gulf 1-related
costs deferred through September 30, 1988. Additionally, the Rate
Order permitted the Company to defer, in decreasing amounts, a
portion of its Grand Gulf 1-related costs over the four annual
periods commencing October 1, 1988. These deferrals will be
recovered by the Company over the succeeding six-year period ending
September 30, 1998 in accordance with the annual recovery schedule
specified in the Rate Order. The Rate Order further allows for the
recovery by the Company of carrying charges on all deferred amounts
on a current basis. Reference is made to the Incorporated
Documents for further information with respect to these matters.
Net property additions available at June 30, 1993 were
sufficient for the issuance of approximately $72.1 million New G&R
Bonds. Deferred Grand Gulf 1-related costs at June 30, 1993 were
approximately $653.7 million, which was sufficient, under the
limitations described in (1) above, to support the issuance of
approximately $141.8 million of New G&R Bonds.
The G&R Mortgage contains restrictions on the issuance of G&R
Bonds against property subject to liens.
Other than the security afforded by the lien of the G&R
Mortgage and restrictions on the issuance of additional G&R Bonds
described above (including particularly those described in the
first paragraph above), there are no provisions of the G&R Mortgage
which afford the holders of the New G&R Bonds protection in the
event of a highly leveraged transaction involving the Company.
However, such a transaction would require regulatory approval, and
management of the Company believes that such approval would be
unlikely in a highly leveraged context.
Release and Substitution of Property. Property may be
released, without applying any earnings test, upon the bases of:
(1) the release of such property from the lien of the First
Mortgage, (2) the deposit of cash or, to a limited extent, purchase
money mortgages, (3) property additions, after adjustments in
certain cases to offset retirements and after making adjustments
for certain prior lien bonds, if any, outstanding against
property additions, and (4) waiver of the right to issue G&R Bonds.
Cash may be withdrawn upon the bases stated in (3) and (4) above.
Property owned by the Company on December 31, 1987 is released on
the basis of its depreciated book value; all other property is
released on the basis of its cost, as defined in the G&R Mortgage.
Unfunded property may also be released if after such release,
outstanding G&R Bonds will not exceed 70% of the aggregate fair
value of the then funded property of the Company. The Company has
reserved the right, without the consent of the holders of any
series of G&R Bonds created after January 1, 1993, including the
New G&R Bonds, to add an additional provision for the release of
unfunded property. Under the new provisions, the Company will be
able to release unfunded property without meeting the 70% test if
after such release, the Company will have at least one dollar ($1)
in unfunded property that remains subject to the lien of the G&R
Mortgage.
Dividend Covenant. The Company may covenant in substance
that, so long as any New G&R Bonds of a particular series remain
outstanding, it will not pay any cash dividends on common stock or
repurchase common stock after a selected date close to the date of
the original issuance of such series of New G&R Bonds (other than
certain dividends that may be declared by the Company prior to such
selected date) except from credits to retained earnings after such
selected date plus an amount not to exceed $250,000,000 and plus
such additional amounts as shall be approved by the SEC. The
Prospectus Supplement relating to a particular series of New G&R
Bonds will state whether this covenant will apply to such series.
Certain Other Covenants. The Company has covenanted that, so
long as any G&R Bonds issued on the basis of Grand Gulf 1-related
deferrals (described above under "Issuance of Additional G&R
Bonds") are outstanding, (1) it will not sell, assign or grant any
lien on its deferred Grand Gulf 1-related costs (except as
contemplated by the First Mortgage and except for the possible
pledge thereof as additional security under the G&R Mortgage for
the equal and proportionate benefit of all G&R Bondholders), and
(2) it will take all reasonable actions to maintain in full force
and effect the Rate Order and to defend the Rate Order against
challenges, and it will not take any action to modify the Rate
Order in any manner that is materially adverse to the interests of
the holders of the G&R Bonds.
In connection with the issuance of G&R Bonds prior to January
1, 1993, the Company has also made certain covenants related to,
among other things, limitations on outstanding indebtedness,
guaranties, dispositions of assets (including accounts receivable
and unbilled revenues), liens, lines of business and transactions
with affiliates. The covenant limiting indebtedness provides that
the Company will not incur or permit to be outstanding any
indebtedness for borrowed money except (1) First Mortgage Bonds;
(2) G&R Bonds; (3) indebtedness in respect of industrial
development or pollution control revenue bonds (subject to certain
conditions, including the Company's meeting the net earnings and
property additions issuance tests under the G&R Mortgage as if an
equal principal amount of G&R Bonds bearing an equal rate of
interest were being issued); (4) not more than $100,000,000 of
indebtedness maturing in one year or less and secured by an
assignment of accounts receivable or unbilled revenues; and (5)
unsecured indebtedness maturing in one year or less in an amount
not exceeding the greater of 10% of capitalization, or 50% of
cumulative deferred and uncollected Grand Gulf 1-related costs
(less the principal amount of outstanding G&R Bonds issued on the
basis of Grand Gulf 1-related deferrals and less outstanding
indebtedness permitted by (4)). The covenant limiting guaranties
provides that the Company will not guarantee any financial
obligations except (1) guaranties in the ordinary course of
business in connection with the leasing of equipment or financing
of fuel purchases; (2) guaranties of obligations of System Fuels,
Inc. in connection with its fuel supply business that are approved
by the SEC under the Holding Company Act; and (3) financial
undertakings of the Company in connection with its obligations to
System Energy. When G&R Bonds issued prior to January 1, 1993 are
no longer outstanding (the latest scheduled maturity of such G&R
Bonds being July 15, 1997), the Company will no longer be bound by
these covenants.
Maintenance and Replacement Fund in First Mortgage. The New
G&R Bonds will not be subject to any maintenance or replacement
provisions. However, the Company has covenanted to comply with the
provisions of Sections 38 and 39(I) of the First Mortgage (which
relate to maintenance and replacement of property), but only so
long as the First Mortgage remains outstanding. Such Section 39(I)
provides that in addition to actual expenditures for maintenance and
repairs, the Company is required to expend or deposit for each year,
for replacements and improvements in respect of mortgaged electric,
gas, steam and/or hot water utility property, and certain
automotive equipment, an amount equal to $600,000 plus 2--% of net
additions to mortgaged utility property made after December 31,
1943 and prior to the beginning of the year for which the
calculation is made. Such requirement may be met by depositing
cash under the First Mortgage or certifying gross property
additions thereunder or expenditures for certain automotive
equipment or by taking credit for First Mortgage Bonds and
qualified lien bonds retired. Any excess in such credits may be
applied against future requirements. Such cash may be used to
redeem or purchase First Mortgage Bonds or may be withdrawn against
gross property additions under the First Mortgage or waiver of the
right to issue First Mortgage Bonds.
Defaults and Notice Thereof. Defaults are defined in the G&R
Mortgage as: default in payment of principal; default for 10 days
in payment of interest; certain events in bankruptcy, insolvency or
reorganization; default in other covenants for 30 days after notice
(unless the Company has in good faith commenced efforts to perform
the covenant); default under a supplemental indenture; and the
occurrence of a "Default" under the First Mortgage (defined as
being default in payment of principal of First Mortgage Bonds,
default for 60 days in payment of interest on or installments of
funds for retirement of First Mortgage Bonds, certain defaults with
respect to qualified lien bonds, certain events in bankruptcy,
insolvency or reorganization, and default for 90 days after notice
in other covenants). The Company has reserved the right, without
the consent of the holders of any series of G&R Bonds created after
January 1, 1993, including the New G&R Bonds, to modify this
definition to provide that default for 30 days (rather than 10
days) in payment of interest and default in other covenants for 90
days (rather than 30 days) after notice constitute defaults under
the G&R Mortgage.
The Trustee or the holders of 25% of the G&R Bonds may declare
the principal and interest due and payable on default but a
majority may annul such declaration if such default has been cured.
No holders of G&R Bonds may enforce the lien of the G&R Mortgage
without giving the Trustees written notice of a default and unless
the holders of 25% of the G&R Bonds have requested the Trustees to
act and offered them reasonable opportunity to act and indemnity
satisfactory to them against the cost, expenses and liabilities to
be incurred thereby and the Trustees shall have failed to act. The
holders of a majority of the G&R Bonds may direct the time, method
and place of conducting any proceedings for any remedy available to
the Trustees or exercising any trust or power conferred on the
Trustees. The Trustees are not required to risk their funds or
incur personal liability if there is reasonable ground for
believing that repayment is not reasonably assured.
The supplemental indentures relating to certain G&R Bonds
issued prior to January 1, 1993 set forth additional events
constituting "defaults" under the G&R Mortgage, including certain
defaults with respect to other indebtedness, capital lease
obligations and guaranties of the Company aggregating more than
$5,000,000. These additional defaults apply only so long as any G&R
Bonds created by such supplemental indentures are outstanding and
may be waived by the holders of such G&R Bonds, without the consent
of the holders of any other G&R Bonds, including the New G&R Bonds.
Evidence to be Furnished to the Trustee. Compliance with G&R
Mortgage provisions is evidenced by written statements of Company
officers or persons selected or paid by the Company. In certain
cases, opinions of counsel and certification of an engineer,
accountant, appraiser or other expert (who in some cases must be
independent) must be furnished. The Company must give the Trustee
an annual statement as to whether or not the Company has fulfilled
its obligations under the G&R Mortgage throughout the preceding
calendar year.
Modification. The rights of holders of G&R Bonds may be
modified with the consent of the holders of a majority of the G&R
Bonds, or, if less than all series of G&R Bonds are adversely
affected, the consent of the holders of a majority of the G&R Bonds
adversely affected (except with respect to amendments or waivers of
the provisions of certain supplemental indentures dated prior to
January 1, 1993 which require the consent of the holders of a
majority of the series created in such supplemental indenture and
not of any other series). In general, no modification of the terms
of payment of principal, premium, if any, or interest and no
modification affecting the lien of the G&R Mortgage or reducing the
percentage required for modification is effective against any
holder of G&R Bonds without his consent.
DESCRIPTION OF THE NEW PREFERRED STOCK
General. The Articles of Incorporation provide for a class of
Preferred Stock, Cumulative, $100 Par Value ("Preferred Stock"),
which may be issued from time to time in one or more series. Except
in certain respects as to which there may be variations between
series, the shares of each series have the same rank and are
identical in all respects. The respects as to which there may be
variations as between series are (a) the number of shares
constituting each series and the distinguishing serial designation
thereof, (b) the annual dividend rate or rates, dividend payment
dates and the date from which dividends shall be cumulative, (c)
the amounts payable on redemption, and (d) the sinking fund
provisions, if any, for the redemption or purchase of shares. When
a new series of Preferred Stock is issued, the number of shares
constituting such series, its distinguishing serial designation and
its distinctive characteristics (in those limited respects as to
which there may be variations between series) are stated and
expressed in the articles of amendment to the Articles of
Incorporation providing for the issuance of such series. The New
Preferred Stock will constitute one or more additional series of
the Preferred Stock.
The statements herein concerning the Preferred Stock and the
New Preferred Stock are merely an outline and do not purport to be
complete. Such statements do not relate or give effect to the
provisions of Mississippi statutory or common law and are subject
in all respects to the detailed provisions of the Articles of
Incorporation and the proposed forms of articles of amendment to be
adopted for each series of New Preferred Stock. The Articles of
Incorporation and the form of articles of amendment are filed as
exhibits to the Registration Statement.
Terms of Specific Series of the New Preferred Stock. A
Prospectus Supplement will describe the following terms of New
Preferred Stock to be issued: (1) the designation of such series of
New Preferred Stock; (2) the number of shares of New Preferred
Stock of such series; (3) the purchase price and initial public
offering price, if any, of the shares of such series; (4) the
dividend rate (or method of calculation thereof); (5) the dividend
payment dates and the date from which dividends will be cumulative;
(6) the terms and conditions pursuant to which, and the prices at
which, the Company may redeem shares of such series; (7) the terms
and amount of any sinking fund requirements applicable to such
series and (8) any other terms of the New Preferred Stock not
inconsistent with the Articles of Incorporation.
Dividend Rights. Each series of the New Preferred Stock, pari
passu with each other series of the Preferred Stock, shall be
entitled, when and as declared by the Board of Directors, in
preference to the common stock, to dividends at the rate stated in
the title thereof, payable quarterly on such dates as are stated in
the articles of amendment providing for the issuance of such
series.
Voting Rights. Except for those purposes for which the right
to vote is expressly conferred upon the Preferred Stock by the
Articles of Incorporation or applicable Mississippi law, no holder
thereof is entitled to notice of or to vote at any meeting of
shareholders. For those purposes for which the Preferred Stock has
a right to vote, the holders are entitled to one vote for each
share held.
The Articles of Incorporation expressly provide that, during
any periods when dividends on the Preferred Stock are in default in
an amount equal to four full quarterly payments or more per share,
the holders of the Preferred Stock, voting separately as a class,
are entitled to elect a majority of the Board of Directors, and the
holders of the common stock, voting separately as a class, are
entitled to elect the remaining directors of the Company.
Restrictions on Issuance of Prior Ranking Stock and on
Altering Rights of Preferred Stock. The vote of the holders of
two-thirds of the Preferred Stock, voting separately as a class, is
required prior to the issuance of any new stock ranking prior
thereto except to provide funds for the redemption of all of the
Preferred Stock then outstanding, and for the amendment or
alteration of any of the rights, preferences or powers of the
Preferred Stock in a manner which would affect adversely any of
such rights, preferences or powers. If any such amendment or
alteration would affect adversely the rights, preferences or powers
of less than all of the Preferred Stock, only the consent of the
holders of two-thirds of the outstanding shares of all series so
affected is required. The increase or decrease in the authorized
amount of the Preferred Stock, or the creation, or
increase or decrease in the amount, of any class of stock ranking
on a parity with the Preferred Stock, shall not be deemed to affect
adversely the rights, preferences or powers of the holders of the
Preferred Stock.
Restrictions on Merger, Sale of Assets, Issuance of Unsecured
Debt and Sale of Additional Preferred Stock. The vote of the
holders of a majority of the Preferred Stock, voting separately as
a class, is required prior to merger, consolidation or the
disposition by the Company of all or substantially all of its
assets, unless such merger, consolidation or disposition has been
ordered, approved or permitted under the Holding Company Act, and
prior to the making of certain unsecured borrowings. Such a vote is
also required for the issue of additional Preferred Stock or any
equally ranking stock unless gross income (as defined in the
Articles of Incorporation) for a period of 12 consecutive calendar
months within the 15 calendar months immediately preceding the
issue, available for the payment of interest, is at least 1-- times
the sum of the annual interest charges on all interest bearing
indebtedness of the Company and the annual dividend requirements on
all outstanding Preferred Stock and any other stock ranking prior
thereto or on a parity therewith, including the shares proposed to
be issued, and unless the aggregate of the capital of the Company
applicable to its common stock and the surplus of the Company shall
be not less than the aggregate amount payable on involuntary
liquidation on all shares of the Preferred Stock, and any other
stock ranking prior thereto or on a parity therewith, outstanding
after the issue of the shares proposed to be issued.
Liquidation Rights. Upon voluntary liquidation, each series
of the New Preferred Stock shall be entitled, on a parity with each
other series of the Preferred Stock and in preference to the common
stock, to an amount equal to its then current redemption price,
plus any accumulated and unpaid dividends. Upon involuntary
liquidation, each series of the New Preferred Stock shall be
entitled, on a parity with each other series of the Preferred Stock
and in preference to the common stock, to $100 per share, plus any
accumulated and unpaid dividends.
Other Rights. The New Preferred Stock will not have any
preemptive or conversion rights.
Liability to Further Calls and Assessments. All of the New
Preferred Stock will be validly issued and fully paid and non-
assessable upon receipt by the Company of the purchase price
thereof.
Certain Limitations on Common Stock Dividends. The Articles
of Incorporation in effect restrict the payment of dividends on
common stock of the Company to 75% of net income available therefor
if the percentage of Common Stock Equity to Total Capitalization,
as defined, is between 20% and 25%, and to 50% of such net income
if such percentage is less than 20%. At any time when Common Stock
Equity is 25% or more of Total Capitalization, the Company may not
declare dividends on the common stock that would reduce Common
Stock Equity below 25% of Total Capitalization, except as
hereinbefore provided. Certain other limitations on the payment of
common stock dividends also exist in the Articles of Incorporation.
In addition, certain limitations on the payment of common stock
dividends exist in the Company's bond indentures.
Certain Terms Applicable to Redemption. In general, at any
time when dividends payable on any Preferred Stock are in default,
the Company may not (1) make any payment, or set aside funds for
payment, into any sinking find for the purchase or redemption of
any shares of the Preferred Stock, or (2) redeem, purchase or
otherwise acquire less than all of the shares of the Preferred
Stock, in either case unless approval is obtained under the Holding
Company Act. Any shares of the Preferred Stock which are redeemed,
purchased or acquired shall be retired and cancelled.
Transfer Agent and Registrar. The transfer agent and
registrar for the New Preferred Stock is Mellon Securities Trust
Company.
RATIOS OF EARNINGS TO FIXED CHARGES AND RATIOS OF EARNINGS
TO FIXED CHARGES AND PREFERRED DIVIDENDS
The Company has calculated ratios of earnings to fixed charges
and ratios of earnings to fixed charges and preferred dividends
pursuant to Item 503 of SEC Regulation S-K as follows:
Twelve Months Ended
December 31, June 30,
1988 1989 1990 1991 1992 1993
Ratios of Earnings to Fixed Charges(a) 2.22 1.04(c) 2.42 2.36 2.37 3.66(d)
Ratios of Earnings to Fixed Charges and
Preferred Dividends(a)(b) 1.72 1.00(c) 1.93 1.94 1.97 2.99(d)
(a) "Earnings", as defined by SEC Regulation S-K, represent
the aggregate of (1) net income, (2) taxes based on income, (3)
investment tax credit adjustments -- net and (4) fixed charges.
"Fixed Charges" include interest (whether expensed or capitalized),
related amortization and interest applicable to rentals charged to
operating expenses.
(b) "Preferred Dividends," as defined by SEC Regulation S-K,
are computed by dividing the preferred dividend requirement by one
hundred percent (100%) minus the effective income tax rate.
(c) Earnings for the twelve months ended December 31, 1989
include the impact of the write-off of $60 million of deferred
Grand Gulf 1-related costs, pursuant to an agreement between the
Company and the Mississippi Public Service Commission.
(d) Earnings for the twelve months ended June 30, 1993 include
the $52.2 million pre-tax cumulative effect as of January 1, 1993
of a change in accounting principle to provide for the accrual of
estimated unbilled revenues.
EXPERTS AND LEGALITY
The financial statements and the related financial statement
schedules incorporated in this Prospectus by reference from the
Company's Annual Report on Form 10-K, have been audited by Deloitte
& Touche, independent auditors, as stated in their reports which
are incorporated herein by reference, and have been so incorporated
in reliance upon the reports of such firm given upon their
authority as experts in auditing and accounting.
With respect to unaudited interim financial information which
is incorporated herein by reference, Deloitte & Touche have applied
limited procedures in accordance with professional standards for
review of such information. However, as stated in their reports
included in the Company's Quarterly Reports on Form 10-Q and
incorporated by reference herein, they did not audit and they do
not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the limited nature of
the review procedures applied. Deloitte & Touche are not subject
to the liability provisions of Section 11 of the Securities Act of
1933 for their reports on the unaudited interim financial
information because those reports are not "reports" or "parts" of
the Registration Statement prepared or certified by an accountant
within the meaning of Sections 7 and 11 of that Act.
The statements as to matters of law and legal conclusions made
under "Description of the New G&R Bonds" and "Description of the
New Preferred Stock" have been reviewed by Wise Carter Child &
Caraway, Professional Association, General Counsel for the Company,
and by Reid & Priest, counsel for the Company, and are set forth
herein in reliance upon the opinions of said firms, respectively,
and upon their authority as experts. The statements made herein or
in the Incorporated Documents as to matters of law and legal
conclusions, based on the belief or opinion of the Company or
otherwise, pertaining to titles to properties, franchises and other
operating rights of the Company, regulations to which the Company
is subject and any legal proceedings to which the Company is a
party, are made on the authority of Wise Carter Child & Caraway,
Professional Association, and such statements are included in such
documents and herein in reliance upon their authority as experts.
The legality of the New G&R Bonds and the New Preferred Stock
will be passed upon for the Company by Wise Carter Child & Caraway,
Professional Association, P.O. Box 651, Jackson, Mississippi, and
Reid & Priest, 40 West 57th Street, New York, New York, and for the
underwriter(s), dealer(s), agent(s) or purchaser(s) by Winthrop,
Stimson, Putnam & Roberts, One Battery Park Plaza, New York, New
York. However, all legal matters pertaining to the organization of
the Company, titles to property, franchises and the lien of the G&R
Mortgage, and all matters of Mississippi law will be passed upon
only by Wise Carter Child & Caraway, Professional Association.
PLAN OF DISTRIBUTION
The Company may sell the New G&R Bonds and the New Preferred
Stock in one or more sales in any of three ways: (1) through one
or more underwriters or dealers; (2) directly to a limited number
of purchasers or to a single purchaser; or (3) through one or more
agents. The Prospectus Supplement relating to a series of the New
G&R Bonds ("Offered G&R Bonds") or a series of the New Preferred
Stock ("Offered Stock") will set forth the terms of the offering,
as applicable, of the Offered G&R Bonds or the Offered Stock,
including the name or names of any underwriters, dealers or agents,
the purchase price of such Offered G&R Bonds or Offered Stock, and
the proceeds to the Company from such sale, any items constituting
underwriters' compensation, any initial public offering price and
any discounts or concessions allowed or reallowed or paid to
dealers. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed
from time to time.
The underwriter or underwriters with respect to a particular
underwritten offering of the Offered G&R Bonds or Offered Stock
will be named in the Prospectus Supplement relating to such
offering.
If underwriters are involved in the sale, the Offered G&R
Bonds or Offered Stock will be acquired by the underwriters for
their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time
of sale. Unless otherwise set forth in the Prospectus Supplement,
the obligations of the underwriters to purchase the Offered G&R
Bonds or Offered Stock will be subject to certain conditions
precedent, and the underwriters will be obligated to purchase all
such Offered G&R Bonds or Offered Stock if any are purchased;
provided that the agreement between the Company and the underwriter
or underwriters providing for the sale of the Offered G&R Bonds or
Offered Stock may provide that under certain circumstances
involving a default of underwriters, less than all of the Offered
G&R Bonds or Offered Stock may be purchased.
Offered G&R Bonds or Offered Stock may be sold directly by the
Company or through agents designated by the Company from time to
time. The Prospectus Supplement will set forth the name of any
agent involved in the offer or sale of the Offered G&R Bonds or
Offered Stock in respect of which the Prospectus Supplement is
delivered as well as any commissions payable by the Company to such
agent. Unless otherwise indicated in the Prospectus Supplement,
any such agent will be acting on a best efforts basis for the
period of its appointment.
If so indicated in the Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers by
certain specified institutions to purchase Offered G&R Bonds or
Offered Stock from the Company at the public offering price set
forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in
the future. Such contracts will be subject to those conditions set
forth in the Prospectus Supplement, and the Prospectus Supplement
will set forth the commission payable for solicitation of such
contracts.
Each Prospectus Supplement relating to a particular offering
of Offered G&R Bonds or Offered Stock will contain a statement (1)
as to whether or not the Company is able to predict the existence
of a secondary market for such securities and, if such existence is
predicted, as to the extent of such secondary market, and (2) if
such securities are to be purchased by an underwriter or
underwriters, as to whether or not such underwriter or underwriters
intend to make a market in such securities.
Subject to certain conditions, the Company may agree to
indemnify any underwriters, dealers, agents or purchasers and their
controlling persons against certain civil liabilities, including
liabilities under the Securities Act of 1933.
