Filed Pursuant to Rule 424(b)(5)
333-45069
333-45069-01
333-45069-02
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED WITHOUT THE DELIVERY OF A FINAL PROSPECTUS +
+SUPPLEMENT AND ACCOMPANYING PROSPECTUS. THIS PROSPECTUS SUPPLEMENT AND THE +
+ACCOMPANYING PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE +
+SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MAY 7, 1998.
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED FEBRUARY 9, 1998
RATINGS:
STANDARD & POOR'S: "AAA"
MOODY'S: "AAA"
(SEE "RATINGS" HEREIN)
$55,000,000
LOGO
SERIES A % SENIOR INSURED QUARTERLY NOTES DUE JUNE 30, 2038 (IQ NOTESSM*)
-----------
Interest on the Series A % Senior Insured Quarterly Notes due June 30, 2038
(the "Series A Senior Notes") at the rate of % per annum (the "Securities
Rate") will be payable quarterly in arrears on March 31, June 30, September 30
and December 31 of each year (each, an "Interest Payment Date"), commencing
June 30, 1998. The Series A Senior Notes will be redeemable at 100% of the
principal amount redeemed plus accrued interest to the redemption date at the
option of Mississippi Power Company (the "Company") in whole or in part on or
after June 1, 2003. In addition, at the option of any deceased Beneficial
Owner's Representative (each as defined herein), interests in the Series A
Senior Notes are redeemable at 100% of their principal amount, plus accrued
interest, subject to certain limitations. See "Description of the Series A
Senior Notes--Limited Right of Redemption upon Death of Beneficial Owner." The
Series A Senior Notes will be available for purchase in denominations of $1,000
and any integral multiple thereof.
The Series A Senior Notes will be direct, unsecured and unsubordinated
obligations of the Company ranking pari passu with all other unsecured and
unsubordinated obligations of the Company. The Series A Senior Notes will be
effectively subordinated to all secured debt of the Company, including its
first mortgage bonds, aggregating approximately $248,800,000 outstanding at
December 31, 1997. The Senior Note Indenture contains no restrictions on the
amount of additional indebtedness that may be incurred by the Company.
Payment of the principal of and interest on the Series A Senior Notes when
due will be insured by a financial guaranty insurance policy (the "Policy") to
be issued by Ambac Assurance Corporation (the "Insurer") simultaneously with
the delivery of the Series A Senior Notes.
LOGO
The Series A Senior Notes initially will be represented by a global
certificate or certificates registered in the name of The Depository Trust
Company ("DTC") or its nominee. Beneficial interests in the Series A Senior
Notes will be shown on, and transfers thereof will be effected only through,
records maintained by Participants (as defined herein) in DTC. Except as
described herein, Series A Senior Notes in certificated form will not be issued
in exchange for the global certificates. See "Description of the Series A
Senior Notes--Book-Entry Only Issuance--The Depository Trust Company."
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO
WHICH ITRELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
-----------
The Underwriter has agreed to purchase the Series A Senior Notes at % of
their principal amount ($ aggregate proceeds to the Company, before
deducting expenses payable by the Company estimated at $ ), subject to
the terms and conditions set forth in the Underwriting Agreement.
The Underwriter proposes to offer the Series A Senior Notes from time to time
for sale in one or more negotiated transactions, or otherwise, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. For further information with respect to the
plan of distribution and any discounts, commissions or profits on resale that
may be deemed underwriting discounts or commissions, see "Underwriting" herein.
-----------
The Series A Senior Notes are offered by the Underwriter, as specified
herein, subject to receipt and acceptance by it and subject to its right to
reject any order in whole or in part. It is expected that delivery of the
Series A Senior Notes will be made in book-entry form only through the
facilities of DTC in New York, New York on or about May , 1998 against payment
therefor in immediately available funds.
- -----
*IQ Notes is a service mark of Edward D. Jones & Co., L.P.
EDWARD D. JONES & CO., L.P.
-----------
The date of this Prospectus Supplement is May , 1998.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SERIES A SENIOR
NOTES OFFERED HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS AND
PURCHASING SERIES A SENIOR NOTES TO COVER SHORT POSITIONS. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING" HEREIN.
SUMMARY OF OFFERING
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the accompanying Prospectus. Capitalized terms not otherwise defined shall
have the meanings assigned in the Glossary.
The Company.................. The Company was incorporated under the laws of
the State of Mississippi on July 12, 1972, was
admitted to do business in Alabama on November
28, 1972, and, effective December 21, 1972, by
the merger into it of the predecessor
Mississippi Power Company, succeeded to the
business and properties of the latter company.
The predecessor Mississippi Power Company was
incorporated under the laws of the State of
Maine on November 24, 1924, and was admitted to
do business in Mississippi on December 23,
1924, and in Alabama on December 7, 1962. The
Company has its principal office at 2992 West
Beach, Gulfport, Mississippi 39501, telephone
(228) 864-1211.
The Company is a regulated public utility
engaged in the generation, transmission,
distribution and sale of electric energy within
an approximately 1,200 square mile service area
within the 23 counties of southeastern
Mississippi.
Series A Senior Notes The Company is offering $55,000,000 aggregate
Offered..................... principal amount of its Series A Senior Notes.
Interest on the Series A Senior Notes will be
payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year,
commencing on June 30, 1998.
Record Date.................. The regular record date for each Interest
Payment Date will be the close of business on
the 15th calendar day prior to such Interest
Payment Date.
Ranking...................... The Series A Senior Notes will be direct,
unsecured and unsubordinated obligations of the
Company ranking pari passu with all other
unsecured and unsubordinated obligations of the
Company. The Series A Senior Notes will be ef-
fectively subordinated to all secured debt of
the Company, including its first mortgage
bonds, aggregating approximately $248,800,000
outstanding at December 31, 1997. The Senior
Note Indenture contains no restrictions on the
amount of additional indebtedness that may be
incurred by the Company.
Company's Optional The Series A Senior Notes will be redeemable by
Redemption.................. the Company (in whole or in part), from time to
time on or after June 1, 2003, at 100% of the
principal amount to be redeemed plus accrued
interest to the redemption date. See
"Description of the Series A Senior Notes--
Optional Redemption" herein.
S-2
<PAGE>
Beneficial Owner's
Redemption Privilege ....... At the option of any deceased Beneficial
Owner's Representative, interests in the Series
A Senior Notes are redeemable at 100% of their
principal amount, plus accrued interest,
subject to the maximum principal amounts of
$25,000 per deceased Beneficial Owner and
$1,100,000 in the aggregate for all deceased
Beneficial Owners during the initial period
ending June 1, 1999 and during each twelve-
month period thereafter. See "Description of
the Series A Senior Notes--Limited Right of
Redemption upon Death of Beneficial Owner."
Insurance.................... Payment of the principal of and interest on the
Series A Senior Notes when due will be insured
by the Policy to be issued by the Insurer
simultaneously with the delivery of the Series
A Senior Notes. See "The Policy and the
Insurer."
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
December 31, 1997, and as adjusted to reflect the transactions described in
note (1) below. The following data is qualified in its entirety by reference
to and, therefore, should be read together with the detailed information and
financial statements appearing in the documents incorporated herein by
reference. See also "Selected Information" in the accompanying Prospectus.
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
-----------------------
ACTUAL AS ADJUSTED(1)
-------- --------------
(THOUSANDS, EXCEPT
PERCENTAGES)
<S> <C> <C> <C>
Common Stock Equity................................... $387,824 $387,824 46.4%
Cumulative Preferred Stock............................ 31,896 31,896 3.8
Company Obligated Manditorily Redeemable Preferred
Securities of Subsidiary Trust Holding Company Junior
Subordinated Notes................................... 35,000 35,000 4.2
Senior Notes.......................................... -- 90,000 10.8
Other Long-Term Debt.................................. 291,665 291,665 34.8
-------- -------- -----
Total, excluding amounts due within one year........ $746,385 $836,385 100.0%
======== ======== =====
</TABLE>
- --------
(1) Reflects (i) the issuance of the Series A Senior Notes; and (ii) the
proposed issuance in May 1998 of $35,000,000 aggregate principal amount of
Series B Senior Notes due May 1, 2003.
USE OF PROCEEDS
The proceeds from the sale of the Series A Senior Notes will be used by the
Company to repay a portion of its outstanding short-term indebtedness, which
aggregated approximately $60,500,000 as of May 6, 1998.
RECENT RESULTS OF OPERATIONS
For the twelve months ended March 31, 1998, "Operating Revenues," "Income
Before Interest Charges" and "Net Income After Dividends on Preferred Stock"
were $548,842,000, $79,504,000 and $51,752,000, respectively. In the opinion
of the management of the Company, the above amounts for the twelve months
ended March 31, 1998 reflect all adjustments (which were only normal recurring
adjustments) necessary to present fairly the results of operations for such
period. The "Ratio of Earnings to Fixed Charges" and the "Ratio of Earnings to
Fixed Charges Plus Preferred Dividend Requirements (Pre-Income Tax Basis)" for
the twelve months ended March 31, 1998 were 4.33 and 3.76, respectively.
S-3
<PAGE>
DESCRIPTION OF THE SERIES A SENIOR NOTES
Set forth below is a description of the specific terms of the Series A
Senior Notes. This description supplements, and should be read together with,
the description of the general terms and provisions of the Senior Notes set
forth in the accompanying Prospectus under the caption "Description of the
Senior Notes." The following description does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, the
description in the accompanying Prospectus and the Senior Note Indenture (as
defined therein).
GENERAL
The Series A Senior Notes will be issued as a series of Senior Notes under
the Senior Note Indenture. The Series A Senior Notes will be limited in
aggregate principal amount to $55,000,000.
The entire principal amount of the Series A Senior Notes will mature and
become due and payable, together with any accrued and unpaid interest thereon,
on June 30, 2038. The Series A Senior Notes are not subject to any sinking
fund provision.
INTEREST
Each Series A Senior Note shall bear interest at the Securities Rate from
the date of original issuance, payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year to the person in whose name such
Series A Senior Note is registered at the close of business on the fifteenth
calendar day prior to such payment date. The initial Interest Payment Date is
June 30, 1998. The amount of interest payable will be computed on the basis of
a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Series A Senior Notes is not a Business Day, then
payment of the interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
OPTIONAL REDEMPTION
The Company shall have the right to redeem the Series A Senior Notes, in
whole or in part, without premium, from time to time, on or after June 1,
2003, upon not less than 30 nor more than 60 days' notice, at a Redemption
Price equal to 100% of the principal amount to be redeemed plus any accrued
and unpaid interest to the Redemption Date.
OPTIONAL REDEMPTION PROCEDURES
If the Senior Note Indenture Trustee gives a notice of redemption in respect
of Series A Senior Notes (which notice will be irrevocable), then, by 2:00
P.M., New York City time, on the redemption date, the Senior Note Indenture
Trustee will irrevocably deposit with the securities depositary, so long as
the Series A Senior Notes are in book-entry only form, sufficient funds to pay
the Redemption Price. See "--Book-Entry Only Issuance--The Depository Trust
Company" below. If the Series A Senior Notes are no longer in book-entry only
form, the Senior Note Indenture Trustee shall irrevocably deposit with the
Paying Agent funds sufficient to pay the applicable Redemption Price and will
give the Paying Agent irrevocable instructions to pay the Redemption Price to
the holders thereof upon surrender of their Series A Senior Notes
certificates. If notice of redemption shall have been given and funds
deposited as required, then immediately prior to the close of business on the
date of such deposit, interest will cease to accrue and all rights of holders
of such Series A Senior Notes so called for redemption will cease, except the
right of the holders of such Series A Senior Notes to receive the Redemption
Price, but without interest on such Redemption Price. In the event that any
date fixed for redemption of Series A Senior Notes is not a Business Day, then
payment of the Redemption Price payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day falls
in the next calendar year, such payment will be made on the
S-4
<PAGE>
immediately preceding Business Day. In the event that payment of the
Redemption Price in respect of Series A Senior Notes is improperly withheld or
refused and not paid by the Company, interest on such Series A Senior Notes
will continue to accrue at the Securities Rate, from such redemption date
originally established by the Company for such Series A Senior Notes to the
date such Redemption Price is actually paid. See "Description of the Senior
Notes--Events of Default" in the accompanying Prospectus.
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), the Company or its
affiliates may, at any time and from time to time, purchase outstanding Series
A Senior Notes by tender, in the open market or by private agreement.
LIMITED RIGHT OF REDEMPTION UPON DEATH OF BENEFICIAL OWNER
Unless the Series A Senior Notes have been declared due and payable prior to
their maturity by reason of an Event of Default (as defined in the
accompanying Prospectus), the Representative (as defined herein) of a deceased
Beneficial Owner (as defined herein) has the right to request redemption at
par of all or part of his interest, expressed in integral multiples of $1,000
principal amount, in the Series A Senior Notes for payment prior to maturity,
and the Company will redeem the same subject to the limitations that the
Company will not be obligated to redeem during the period from the original
issuance of the Series A Senior Notes through and including June 1, 1999 (the
"Initial Period"), and during any twelve-month period which ends on and
includes each June 1 thereafter (each such twelve-month period being
hereinafter referred to as a "Subsequent Period") (i) on behalf of a deceased
Beneficial Owner any interest in the Series A Senior Notes which exceeds an
aggregate principal amount of $25,000 or (ii) interests in the Series A Senior
Notes in an aggregate principal amount exceeding $1,100,000. A request for
redemption may be presented to the Senior Note Indenture Trustee by the
Representative of a deceased Beneficial Owner at any time and in any principal
amount. Representatives of deceased Beneficial Owners must make arrangements
with the Participant (as defined herein) through whom such interest is owned
in order that timely presentation of redemption requests can be made by the
Participant and, in turn, by DTC to the Senior Note Indenture Trustee. If the
Company, although not obligated to do so, chooses to redeem interests of a
deceased Beneficial Owner in the Series A Senior Notes in the Initial Period
or in any Subsequent Period in excess of the $25,000 limitation, such
redemption, to the extent that it exceeds the $25,000 limitation for any
deceased Beneficial Owner, shall not be included in the computation of the
$1,100,000 aggregate limitation for such Initial Period or such Subsequent
Period, as the case may be, or for any succeeding Subsequent Period.
Subject to the $25,000 and the $1,100,000 limitations, the Company will upon
the death of any Beneficial Owner redeem the interest of the Beneficial Owner
in the Series A Senior Notes within 60 days following receipt by the Senior
Note Indenture Trustee of a Redemption Request (as defined herein) from such
Beneficial Owner's personal representative or other person authorized to
represent the estate of the Beneficial Owner or from a surviving joint
tenant(s) or tenant(s) by the entirety (each, a "Representative"). If, during
the Initial Period or any Subsequent Period, Redemption Requests exceed the
aggregate principal amount of interests in Series A Senior Notes required to
be redeemed, then such excess Redemption Requests will be applied to
successive Subsequent Periods, regardless of the number of Subsequent Periods
required to redeem such interests.
A request for redemption of an interest in the Series A Senior Notes may be
made by delivering a request to the Participant through whom the deceased
Beneficial Owner owned such interest, in form satisfactory to the Participant,
together with evidence of the death of the Beneficial Owner, evidence of the
authority of the Representative satisfactory to the Participant and Senior
Note Indenture Trustee and such waivers, notices or certificates as may be
required under applicable state or federal law. A Representative of a deceased
Beneficial Owner may make the request for redemption and shall submit such
other evidence of the right to such redemption as the Participant or Senior
Note Indenture Trustee shall require. The request shall specify the principal
amount of interest in the Series A Senior Notes to be redeemed. A request for
redemption in form satisfactory to the Participant and accompanied by the
documents relevant to the request as above provided, together with a
S-5
<PAGE>
certification by the Participant that it holds the interest on behalf of the
deceased Beneficial Owner with respect to whom the request for redemption is
being made (a "Redemption Request"), shall be provided to DTC by a
Participant, and DTC will forward the request to the Senior Note Indenture
Trustee. Redemption Requests shall be in form satisfactory to the Senior Note
Indenture Trustee.
The price to be paid by the Company for an interest in the Series A Senior
Notes to be redeemed pursuant to a request on behalf of a deceased Beneficial
Owner is one hundred percent (100%) of the principal amount thereof plus
accrued but unpaid interest to the date of payment. Subject to arrangements
with DTC, payment for interests in the Series A Senior Notes which are to be
redeemed shall be made to DTC upon presentation of Series A Senior Notes to
the Senior Note Indenture Trustee for redemption in the aggregate principal
amount specified in the Redemption Requests submitted to the Senior Note
Indenture Trustee by DTC which are to be fulfilled in connection with such
payment. Any acquisition of Series A Senior Notes by the Company other than by
redemption at the option of any Representative of a deceased Beneficial Owner
shall not be included in the computation of either the $25,000 or the
$1,100,000 limitation for the Initial Period or for any Subsequent Period.
Interests in the Series A Senior Notes held in tenancy by the entirety,
joint tenancy or by tenants in common will be deemed to be held by a single
Beneficial Owner, and the death of a tenant in common, tenant by the entirety
or joint tenant will be deemed the death of a Beneficial Owner. The death of a
person who, during such person's lifetime, was entitled to substantially all
of the rights of a Beneficial Owner of an interest in the Series A Senior
Notes will be deemed the death of the Beneficial Owner, regardless of the
recordation of such interest on the records of the Participant, if such rights
can be established to the satisfaction of the Participant and the Senior Note
Indenture Trustee. Such interest shall be deemed to exist in typical cases of
nominee ownership, ownership under the Uniform Gifts to Minors Act or the
Uniform Transfers to Minors Act, community property or other similar joint
ownership arrangements, including individual retirement accounts or Keogh
[H.R.10] plans maintained solely by or for the decedent or by or for the
decedent and any spouse, and trust and certain other arrangements where one
person has substantially all of the rights of a Beneficial Owner during such
person's lifetime.
In the case of a Redemption Request which is presented on behalf of a
deceased Beneficial Owner and which has not been fulfilled at the time the
Company gives notice of its election to redeem the Series A Senior Notes, the
interests in the Series A Senior Notes which are the subject of such
Redemption Request shall not be eligible for redemption pursuant to the
Company's option to redeem but shall remain subject to redemption pursuant to
such Redemption Request.
Subject to the provisions of the immediately preceding paragraph, any
Redemption Request may be withdrawn upon delivery of a written request for
such withdrawal given to the Senior Note Indenture Trustee by DTC prior to
payment for redemption of the interest in the Series A Senior Notes by reason
of the death of a Beneficial Owner.
The Company is legally obligated to redeem Series A Senior Notes and
interests of Beneficial Owners therein properly presented for redemption
pursuant to a Redemption Request in accordance with and subject to the terms,
conditions and limitations of the Senior Note Indenture, as summarized above.
The Company's redemption obligation is not cumulative. Nothing in the Senior
Note Indenture prohibits the Company from redeeming, in fulfillment of
Redemption Requests made pursuant to the Senior Note Indenture, Series A
Senior Notes or interests therein of Beneficial Owners in excess of the
principal amount the Company is obligated to redeem, nor does anything in the
Senior Note Indenture prohibit the Company from purchasing any Series A Senior
Notes or interests therein in the open market. However, the Company may not
use any Series A Senior Notes redeemed or purchased as described in the
immediately preceding sentence as a credit against its redemption obligation.
Because of the limitations of the Company's requirement to redeem, no
Beneficial Owner can have any assurance that its interest in the Series A
Senior Notes will be paid prior to maturity.
S-6
<PAGE>
BOOK-ENTRY ONLY ISSUANCE--THE DEPOSITORY TRUST COMPANY
DTC will act as the initial securities depositary for the Series A Senior
Notes. The Series A Senior Notes will be issued only as fully registered
securities registered in the name of Cede & Co., DTC's nominee. One or more
fully registered global Series A Senior Notes certificates will be issued,
representing in the aggregate the total principal amount of Series A Senior
Notes, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the 1934 Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect Participants").
The rules applicable to DTC and its Participants are on file with the
Commission.
Purchases of Series A Senior Notes within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Series A
Senior Notes on DTC's records. The ownership interest of each actual purchaser
of Series A Senior Notes ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the
Direct or Indirect Participants through which the Beneficial Owners purchased
Series A Senior Notes. Transfers of ownership interests in the Series A Senior
Notes are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in Series A Senior Notes,
except in the event that use of the book-entry system for the Series A Senior
Notes is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Series A Senior
Notes. DTC's records reflect only the identity of the Direct Participants to
whose accounts such Series A Senior Notes are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to DTC. If less than all of the Series A
Senior Notes are being redeemed, DTC will reduce the amount of the interest of
each Direct Participant in the Series A Senior Notes in accordance with its
procedures.
Although voting with respect to the Series A Senior Notes is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Series A Senior Notes. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Company as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts the Series A
Senior Notes are credited on the record date (identified in a listing attached
to the Omnibus Proxy).
S-7
<PAGE>
Payments on the Series A Senior Notes will be made to DTC. DTC's practice is
to credit Direct Participants' accounts on the relevant payment date in
accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the account of customers registered in "street name," and will be the
responsibility of such Participant and not of DTC or the Company, subject to
any statutory or regulatory requirements as may be in effect from time to
time. Payment to DTC is the responsibility of the Company, disbursement of
such payments to Direct Participants is the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners is the responsibility
of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner of a global Series A Senior
Note will not be entitled to receive physical delivery of Series A Senior
Notes. Accordingly, each Beneficial Owner must rely on the procedures of DTC
to exercise any rights under the Series A Senior Notes. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of securities in definitive form. Such laws may impair the ability to
transfer beneficial interests in a global Series A Senior Note.
DTC may discontinue providing its services as securities depositary with
respect to the Series A Senior Notes at any time by giving reasonable notice
to the Company. Under such circumstances, in the event that a successor
securities depositary is not obtained, Series A Senior Notes certificates will
be printed and delivered to the holders of record. Additionally, the Company
may decide to discontinue use of the system of book-entry transfers through
DTC (or a successor depositary) with respect to the Series A Senior Notes. In
that event, certificates for the Series A Senior Notes will be printed and
delivered to the holders of record.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but
the Company takes no responsibility for the accuracy thereof. The Company has
no responsibility for the performance by DTC or its Participants of their
respective obligations as described herein or under the rules and procedures
governing their respective operations.
THE POLICY AND THE INSURER
The information set forth in this section has been provided by Ambac
Assurance Corporation (the "Insurer"). No representation is made by the
Company or the Underwriter as to the accuracy or completeness of any such
information.
THE POLICY
The Insurer will issue a financial guaranty insurance policy relating to the
Series A Senior Notes (the "Policy"), the form of which is attached to this
Prospectus Supplement as Appendix A. The following summary of the terms of the
Policy does not purport to be complete and is qualified in its entirety by
reference to the Policy.
The Insurer has made a commitment to issue the Policy effective as of the
date of issuance of the Series A Senior Notes. Under the terms of the Policy,
the Insurer will pay to the United States Trust Company of New York, in New
York, New York, or any successor thereto (the "Insurance Trustee") that
portion of the principal of and interest on the Series A Senior Notes which
shall become Due for Payment but shall be unpaid by reason of Nonpayment (as
such terms are defined in the Policy) by the Company. The Insurer will make
such payments to the Insurance Trustee on the later of the date on which such
principal and interest becomes Due for Payment or within one business day
following the date on which the Insurer shall have received notice of
Nonpayment from the Senior Note Indenture Trustee. The insurance will extend
for the term of the Series A Senior Notes and, once issued, cannot be canceled
by the Insurer.
The Policy will insure payment only on the stated maturity date, in the case
of principal, and on Interest Payment Dates, in the case of interest. In the
event of any acceleration of the principal of the Series A Senior
S-8
<PAGE>
Notes, the insured payments will be made at such times and in such amounts as
would have been made had there not been an acceleration.
In the event the Senior Note Indenture Trustee has notice that any payment
of principal of or interest on a Series A Senior Note which has become Due for
Payment and which is made to a holder by or on behalf of the Company has been
deemed a preferential transfer and theretofore recovered from its registered
owner pursuant to the United States Bankruptcy Code in accordance with a
final, nonappealable order of a court of competent jurisdiction, such
registered owner will be entitled to payment from the Insurer to the extent of
such recovery if sufficient funds are not otherwise available.
The Policy does NOT insure any risk other than Nonpayment, as defined in the
Policy. Specifically, the Policy does NOT cover:
1. payment on acceleration, as a result of a call for redemption or as a
result of any other advancement of maturity.
2. payment of any redemption, prepayment or acceleration premium.
3. nonpayment of principal or interest caused by the insolvency or
negligence of the Senior Note Indenture Trustee.
If it becomes necessary to call upon the Policy, payment of principal
requires surrender of Series A Senior Notes to the Insurance Trustee together
with an appropriate instrument of assignment so as to permit ownership of such
Series A Senior Notes to be registered in the name of the Insurer to the
extent of the payment under the Policy. Payment of interest pursuant to the
Policy requires proof of holder entitlement to interest payments and an
appropriate assignment of the holder's right to payment to the Insurer.
Upon payment of the insurance benefits, the Insurer will become the owner of
the Series A Senior Note or the right to payment of principal or interest on
such Series A Senior Note and will be fully subrogated to the surrendering
holder's rights to payment.
THE INSURER
The Insurer is a Wisconsin-domiciled stock insurance corporation regulated
by the office of the Commissioner of Insurance of the State of Wisconsin and
licensed to do business in 50 states, the District of Columbia, the
Commonwealth of Puerto Rico and Guam. The Insurer primarily insures newly
issued municipal and structured finance obligations. The Insurer is a wholly-
owned subsidiary of Ambac Financial Group, Inc. (formerly AMBAC Inc.), a 100%
publicly-held company. Moody's, S&P (each as defined herein) and Fitch IBCA,
Inc. have each assigned a triple-A claims-paying ability rating to the
Insurer.
The consolidated financial statements of the Insurer and its subsidiaries as
of December 31, 1997 and December 31, 1996 and for the three years ended
December 31, 1997 prepared in accordance with generally accepted accounting
principles, included in the Annual Report on Form 10-K of Ambac Financial
Group, Inc. (which was filed with the Commission on March 31, 1998; Commission
File No. 1-10777), are hereby incorporated by reference into this Prospectus
Supplement and shall be deemed to be a part hereof. Any statement contained in
a document incorporated herein by reference shall be modified or superseded
for the purposes of this Prospectus Supplement to the extent that a statement
contained herein or in any other subsequently filed document which also is
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus Supplement.
All financial statements of the Insurer and its subsidiaries included in
documents filed by Ambac Financial Group, Inc. with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, subsequent to the date of this Prospectus Supplement and prior to the
termination of the
S-9
<PAGE>
offering of the Series A Senior Notes shall be deemed to be incorporated by
reference into this Prospectus Supplement and to be a part hereof from the
respective dates of filing such documents.
The following table sets forth the capitalization of the Insurer as of
December 31, 1994, December 31, 1995, December 31, 1996 and December 31, 1997,
respectively, in conformity with generally accepted accounting principles.
AMBAC ASSURANCE CORPORATION
CONSOLIDATED CAPITALIZATION TABLE
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1994 1995 1996 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Unearned premiums.......... $ 840 $ 906 $ 995 $1,184
Other liabilities.......... 136 295 259 520
------ ------ ------ ------
Total liabilities.......... $ 976 $1,201 $1,254 $1,704
------ ------ ------ ------
Stockholder's equity
Common Stock.............. $ 82 $ 82 $ 82 $ 82
Additional paid-in
capital.................. 444 481 515 521
Unrealized gains (losses)
on investments net of
tax...................... (46) 87 66 118
Retained earnings......... 782 907 992 1,180
------ ------ ------ ------
Total stockholder's
equity.................... $1,262 $1,557 $1,655 $1,901
------ ------ ------ ------
Total liabilities and
stockholder's equity...... $2,238 $2,758 $2,909 $3,605
====== ====== ====== ======
</TABLE>
For additional financial information concerning the Insurer, see the audited
financial statements of the Insurer incorporated by reference herein. Copies
of the financial statements of the Insurer incorporated herein by reference
and copies of the Insurer's annual statement for the year ended December 31,
1997 prepared in accordance with statutory accounting standards are available,
without charge, from the Insurer. The address of the Insurer's administrative
offices and its telephone number are One State Street Plaza, 17th Floor, New
York, New York 10004 and (212) 668-0340.
The Insurer makes no representation regarding the Series A Senior Notes or
the advisability of investing in the Series A Senior Notes and makes no
representation regarding, nor has it participated in the preparation of, this
Prospectus Supplement other than the information supplied by the Insurer and
presented under this heading "The Policy and the Insurer" and in the financial
statements incorporated herein by reference.
RATINGS
It is anticipated that Standard & Poor's Ratings Services, a Division of The
McGraw-Hill Companies ("S&P"), and Moody's Investors Service, Inc. ("Moody's")
will assign the Series A Senior Notes the ratings set forth on the cover page
hereof conditioned upon the issuance and delivery by the Insurer at the time
of delivery of the Series A Senior Notes of the Policy, insuring the timely
payment of the principal of and interest on the Series A Senior Notes. Such
ratings reflect only the views of such rating agencies, and an explanation of
the significance of such ratings may be obtained only from such rating
agencies at the following addresses: Moody's Investors Service, Inc., 99
Church Street, New York, New York 10007; Standard & Poor's, 25 Broadway, New
York, New York 10004. There is no assurance that such ratings will remain in
effect for any period of time or that they will not be revised downward or
withdrawn entirely by said rating agencies if, in their judgment,
circumstances warrant. Neither the Company nor the Underwriter has undertaken
any responsibility to oppose any proposed downward revision or withdrawal of a
rating on the Series A Senior Notes. Any such downward revision or withdrawal
of such ratings may have an adverse effect on the market price of the Series A
Senior Notes.
S-10
<PAGE>
At present, each of such rating agencies maintains four categories of
investment grade ratings. They are for S&P--AAA, AA, A and BBB and for
Moody's--Aaa, Aa, A and Baa. S&P defines "AAA" as the highest rating assigned
to a debt obligation. Moody's defines "Aaa" as representing the best quality
debt obligation carrying the smallest degree of investment risk.
EXPERTS
The financial statements and schedules of the Company included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997,
incorporated by reference herein, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated herein in reliance upon the authority of said
firm as experts in accounting and auditing in giving said reports.
Statements as to matters of law and legal conclusions in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997, relating to
titles to property of the Company under "Item 2--Properties--Titles to
Property," and relating to the Company under "Item 1--Business--Regulation,"
"Item 1--Business--Rate Matters" and "Item 1--Business--Competition," have
been reviewed by Eaton and Cottrell, P.A., general counsel for the Company,
and such statements are made upon the authority of such firm as experts.
The consolidated financial statements of the Insurer, Ambac Assurance
Corporation, as of December 31, 1997 and 1996 and for each of the years in the
three-year period ended December 31, 1997, are incorporated by reference
herein and in the registration statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
S-11
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to Edward D. Jones & Co., L.P. (the "Underwriter"),
and the Underwriter has agreed to purchase from the Company, the entire
principal amount of the Series A Senior Notes.
Under the terms and conditions of the Underwriting Agreement, the
Underwriter has committed, subject to the terms and conditions set forth
therein, to take and pay for all of the Series A Senior Notes offered hereby
if any of the Series A Senior Notes are purchased.
The Underwriter has advised the Company that it proposes to offer the Series
A Senior Notes from time to time for sale in one or more negotiated
transactions, or otherwise, at market prices prevailing at the time of sale,
at prices related to such prevailing market prices or at negotiated prices.
The Underwriter may effect such transactions by selling the Series A Senior
Notes to or through dealers, and such dealers may receive compensation in the
form of underwriting discounts, concessions or commissions from the
Underwriter and/or the purchasers of the Series A Senior Notes for whom they
may act as agent. The Underwriter and any dealers that participate with the
Underwriter in the distribution of the Series A Senior Notes may be deemed to
be underwriters, and any discounts or commissions received by them and any
profit on the resale of the Series A Senior Notes by them may be deemed to be
underwriting discounts or commissions, under the 1933 Act.
The Company has agreed, during the period of 15 days from the date of the
Underwriting Agreement, not to sell, offer to sell, grant any option for the
sale of, or otherwise dispose of any Series A Senior Notes, any security
convertible into or exchangeable into or exercisable for Series A Senior Notes
or any debt securities substantially similar to the Series A Senior Notes
(except for the Series A Senior Notes issued pursuant to the Underwriting
Agreement and the $35,000,000 aggregate principal amount of Series B Senior
Notes due May 1, 2003), without the prior written consent of the Underwriter.
Prior to this offering, there has been no public market for the Series A
Senior Notes. The Underwriter has advised the Company that it intends to make
a market in the Series A Senior Notes. The Underwriter will have no obligation
to make a market in the Series A Senior Notes, however, and may cease market
making activities, if commenced, at any time.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the 1933 Act.
In order to facilitate the offering of the Series A Senior Notes, the
Underwriter may engage in transactions that stabilize, maintain or otherwise
affect the price of the Series A Senior Notes. Specifically, the Underwriter
may over-allot in connection with the offering, creating a short position in
the Series A Senior Notes for its own account. In addition, to cover over-
allotments or to stabilize the price of the Series A Senior Notes, the
Underwriter may bid for, and purchase, Series A Senior Notes in the open
market. The Underwriter may reclaim selling concessions allowed to a dealer
for distributing Series A Senior Notes in the offering, if the Underwriter
repurchases previously distributed Series A Senior Notes in transactions to
cover short positions in stabilization transactions or otherwise. Any of these
activities may stabilize or maintain the market price of the Series A Senior
Notes above independent market levels. The Underwriter is not required to
engage in these activities, and may end any of these activities at any time.
The Underwriter engages in transactions with, and, from time to time, has
performed services for, the Company and its affiliates in the ordinary course
of business.
S-12
<PAGE>
GLOSSARY
<TABLE>
<S> <C>
1933 Act................ The Securities Act of 1933, as amended.
1934 Act................ The Securities Exchange Act of 1934, as amended.
Company................. Mississippi Power Company.
DTC..................... The Depository Trust Company, a "clearing corporation"
that initially will hold (through its agents) a global
certificate evidencing the Series A Senior Notes.
Insurer................. Ambac Assurance Corporation.
Interest Payment Dates.. March 31, June 30, September 30 and December 31 of each
year.
Policy.................. The financial guaranty insurance policy to be issued by
the Insurer covering the payment of the principal of
and interest on the Series A Senior Notes when due.
Record Date............. The close of business on the 15th calendar day prior to
an Interest Payment Date.
Redemption Price........ 100% of the principal amount of the Series A Senior
Notes being redeemed, plus accrued and unpaid interest
thereon to the date of payment.
Securities Rate......... The per annum interest rate on the Series A Senior
Notes, as set forth on the cover page of this
Prospectus Supplement.
Senior Note Indenture... The indenture pursuant to which the Company's Series A
Senior Notes will be issued.
Senior Note Indenture The trustee under the Senior Note Indenture; initially,
Trustee................ Bankers Trust Company.
Series A Senior Notes... The Series A % Senior Insured Quarterly Notes due
June 30, 2038 of the Company.
</TABLE>
S-13
<PAGE>
PROSPECTUS
$400,000,000
MISSISSIPPI POWER COMPANY
SENIOR NOTES
JUNIOR SUBORDINATED NOTES
---------------
MISSISSIPPI POWER CAPITAL TRUST II
MISSISSIPPI POWER CAPITAL TRUST III
TRUST PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED, AS SET FORTH HEREIN, BY
MISSISSIPPI POWER COMPANY
A SUBSIDIARY OF THE SOUTHERN COMPANY
---------------
Mississippi Power Company, a Mississippi corporation (the "Company"), may
offer, from time to time, (i) its senior notes (the "Senior Notes") in one or
more series or (ii) its junior subordinated notes (the "Junior Subordinated
Notes") in one or more series. The Senior Notes will be unsecured obligations
of the Company and will rank pari passu (equal in priority) with all other
unsecured and unsubordinated debt of the Company. The Junior Subordinated
Notes will be unsecured obligations of the Company and will be subordinate and
junior in right of payment to Senior Indebtedness (as defined herein) of the
Company.
Mississippi Power Capital Trust II and Mississippi Power Capital Trust III,
each a statutory business trust created under the laws of the State of
Delaware (individually, a "Trust" and collectively, the "Trusts"), may offer,
from time to time, trust preferred securities (collectively, the "Preferred
Securities") representing preferred undivided beneficial interests in the
assets of the respective Trusts. The Company will own all the common
securities (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") representing common undivided beneficial
interests in the assets of the respective Trusts. The payment of periodic cash
distributions on the Preferred Securities of each Trust and payments on
liquidation or redemption with respect to such Preferred Securities, in each
case to the extent such Trust has funds legally and immediately available
therefor, will be guaranteed by the Company as described herein (individually,
a "Guarantee" and collectively, the "Guarantees"). See "Description of
Guarantees." The Company's obligations under each Guarantee will be
subordinate and junior in right of payment to all of its other liabilities and
will rank pari passu with the most senior preferred stock of the Company.
Concurrently with the issuance by a Trust of its Preferred Securities, such
Trust will invest the proceeds thereof and of the Company's purchase of the
Common Securities of such Trust in a related series of Junior Subordinated
Notes of the Company with terms corresponding to the terms of such Trust's
Preferred Securities. Junior Subordinated Notes may subsequently be
distributed pro rata to holders of the Trust Securities of a Trust in
connection with the termination of such Trust upon the occurrence of certain
events as may be described in an accompanying Prospectus Supplement.
As described herein, the Company will, through each Guarantee, the
Subordinated Note Indenture, the Junior Subordinated Notes of the related
series, the related Trust Agreement and the related Agreement as to Expenses
and Liabilities, fully and unconditionally guarantee all of each Trust's
obligations with respect to its Preferred Securities.
Specific terms of the Senior Notes or the Junior Subordinated Notes of any
series or the Preferred Securities of any Trust in respect of which this
Prospectus is being delivered will be set forth in an accompanying Prospectus
Supplement with respect to such securities, which will describe, without
limitation and where applicable, the following: (a) in the case of Senior
Notes or Junior Subordinated Notes, the specific designation, aggregate
principal amount, denominations, maturity, interest payment dates, interest
rate (or the method of determining such rate), any redemption, exchange or
sinking fund provisions, and any other specific terms of the offering, and (b)
in the case of Preferred Securities, the specific designation, number of
Preferred Securities, liquidation amount per security, distribution rate (or
the method of determining such rate), dates on which distributions will be
payable, voting rights, any redemption, exchange or sinking fund provisions,
and any other rights, preferences, privileges, limitations and restrictions.
The Senior Notes, Junior Subordinated Notes and Preferred Securities may be
offered in amounts, at prices and on terms to be determined at the time of
offering; provided, however, that the aggregate initial public offering price
of all Senior Notes, Junior Subordinated Notes and Preferred Securities shall
not exceed $400,000,000.
The Prospectus Supplement relating to any series of Senior Notes, Junior
Subordinated Notes or Preferred Securities will contain information concerning
certain United States federal income tax considerations, if applicable to such
Senior Notes, Junior Subordinated Notes or Preferred Securities.
---------------
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 Senior Notes, Junior Subordinated Notes and Preferred Securities may be
sold directly, through agents, underwriters or dealers as designated from time
to time, or through a combination of such methods. See "Plan of Distribution."
If agents or any underwriters or dealers are involved in the sale of Senior
Notes, Junior Subordinated Notes or Preferred Securities in respect of which
this Prospectus is being delivered, the names of such agents, underwriters or
dealers and any applicable commissions or discounts will be set forth in or
may be calculated from the Prospectus Supplement with respect to such Senior
Notes, Junior Subordinated Notes or Preferred Securities.
---------------
February 9, 1998
<PAGE>
AVAILABLE INFORMATION
The Company and the Trusts have filed with the Securities and Exchange
Commission (the "Commission") a combined registration statement on Form S-3
(the "Registration Statement," which term encompasses any amendments thereof
and exhibits thereto) under the Securities Act of 1933, as amended (the "1933
Act"). As permitted by the rules and regulations of the Commission, this
Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto, to which
reference is hereby made.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports and other information with the Commission. Such reports and
other information can be inspected and copied at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the Commission's Regional Offices at 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, 13th Floor,
New York, New York 10048. Copies of such material can also be obtained at
prescribed rates by writing to the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a
Web site that contains reports, proxy and information statements and other
information regarding registrants including the Company that file
electronically at http://www.sec.gov. In addition, reports and other material
concerning the Company can be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005, on which Exchange certain
of the Company's securities are listed.
No separate financial statements of any Trust are included herein. The
Company considers that such statements would not be material to holders of the
Preferred Securities because each Trust has no independent operations and
exists for the sole purpose of investing the proceeds of the sale of its Trust
Securities in Junior Subordinated Notes.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission pursuant to the
1934 Act and are incorporated herein by reference and made a part of this
Prospectus:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(b) the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997; and
(c) the Company's Current Reports on Form 8-K dated February 12, 1997 and
February 20, 1997.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated herein by reference and made a part of this Prospectus from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A
COPY OF ANY OR ALL DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN THE
EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED
BY REFERENCE). SUCH REQUESTS SHOULD BE DIRECTED TO MICHAEL W. SOUTHERN, VICE
PRESIDENT, SECRETARY, TREASURER AND CHIEF FINANCIAL OFFICER, MISSISSIPPI POWER
COMPANY, 2992 WEST BEACH, GULFPORT, MISSISSIPPI 39501, TELEPHONE: (228) 864-
1211.
2
<PAGE>
SELECTED INFORMATION
The following material, which is presented herein solely to furnish limited
introductory information regarding the Company, has been selected from, or is
based upon, the detailed information and financial statements appearing in the
documents incorporated herein by reference or elsewhere in this Prospectus, is
qualified in its entirety by reference thereto and, therefore, should be read
together therewith.
MISSISSIPPI POWER COMPANY
<TABLE>
<CAPTION>
<C> <S>
Business......................... Generation, transmission, distribution and
sale of electric energy
Service Area..................... Approximately 1,200 square miles in the 23
counties of southeastern Mississippi,
containing an aggregate area of
approximately 11,500 square miles
Service Area Population
(1990 Census)................... Approximately 848,000
Customers at December 31, 1996... 185,835
Generating Capacity at December
31, 1996 (kilowatts)............ 2,085,552
Sources of Generation during 1996
(kilowatt-hours)................ Coal (85%), Gas and Oil (15%)
Sources of Generation Estimated
for 1997 (kilowatt-hours)....... Coal (83%), Gas and Oil (17%)
</TABLE>
SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
12 MONTHS
YEAR ENDED DECEMBER 31, ENDED
-------------------------------------------- DECEMBER 31,
1992 1993 1994 1995 1996 1997(1)
-------- -------- -------- -------- -------- ------------
(THOUSANDS, EXCEPT RATIOS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues...... $434,447 $474,883 $499,162 $516,553 $544,029 $543,588
Income Before Interest
Charges................ 63,772 67,726 76,067 82,765 80,523 81,769
Net Income After
Dividends on Preferred
Stock.................. 36,790 42,436 49,157 52,531 52,723 54,010
Ratio of Earnings to
Fixed Charges(2)....... 3.47 4.47 4.72 4.61 4.86 4.62
Ratio of Earnings to
Fixed Charges Plus
Preferred Dividend
Requirements (Pre-
Income Tax Basis)(3)... 2.82 3.23 3.55 3.54 3.68 3.85
</TABLE>
(Notes on following page)
3
<PAGE>
<TABLE>
<CAPTION>
CAPITALIZATION (UNAUDITED)
AS OF SEPTEMBER 30, 1997
--------------------------------
ACTUAL AS ADJUSTED(4)
--------------------------------
(THOUSANDS, EXCEPT PERCENTAGES)
<S> <C> <C> <C>
Common Stock Equity........................... $ 396,560 $ 396,560 34.3%
Cumulative Preferred Stock.................... 39,414 31,896 2.8
Company Obligated Mandatorily Redeemable
Preferred Securities of Subsidiary Trusts
Holding Company Junior Subordinated
Notes(5)..................................... 35,000 35,000 3.0
Senior Notes.................................. -- 400,000 34.6
Other Long-Term Debt.......................... 291,609 291,609 25.3
---------- ------------ -------
Total, excluding amounts due within one
year....................................... $ 762,583 $ 1,155,065 100.0%
========== ============ =======
</TABLE>
- --------
(1) See "Recent Results of Operations" herein.
(2) This ratio is computed as follows: (i) "Earnings" have been calculated by
adding to "Income Before Interest Charges" all income taxes deducted
therefrom and the debt portion of allowance for funds used during
construction, and (ii) "Fixed Charges" consist of "Net Interest Charges"
plus the debt portion of allowance for funds used during construction.
(3) In computing this ratio, "Preferred Dividend Requirements" represent the
before tax earnings necessary to pay such dividends, computed at the
effective tax rates for the applicable periods.
(4) Reflects (i) the retirement of the shares of certain issues of preferred
stock in an amount aggregating $7,518,400 in connection with a tender
offer for certain series of the Company's preferred stock by The Southern
Company and (ii) the issuance of $400,000,000 of new Senior Notes. Does
not reflect the potential redemption of outstanding securities with
proceeds from new security issuances. The pro forma amounts used in
connection with this capitalization table are assumed solely for the
purpose of this calculation and the amounts and types of securities that
will be ultimately issued will depend upon market conditions and other
factors prevailing at the time of issuance.
(5) As described in this Prospectus, substantially all of the assets of the
respective Trusts will be the Junior Subordinated Notes of the Company,
and upon redemption of such debt, the related Preferred Securities will be
mandatorily redeemable.
MISSISSIPPI POWER COMPANY
The Company was incorporated under the laws of the State of Mississippi on
July 12, 1972, was admitted to do business in Alabama on November 28, 1972,
and, effective December 21, 1972, by the merger into it of the predecessor
Mississippi Power Company, succeeded to the business and properties of the
latter company. The predecessor Mississippi Power Company was incorporated
under the laws of the State of Maine on November 24, 1924, and was admitted to
do business in Mississippi on December 23, 1924, and in Alabama on December 7,
1962. The principal executive offices of the Company are located at 2992 West
Beach, Gulfport, Mississippi 39501, and the telephone number is (228) 864-
1211.
The Company is a wholly owned subsidiary of The Southern Company, a holding
company registered under the Public Utility Holding Company Act of 1935. The
Company is engaged in the generation and purchase of electricity and the
distribution and sale of such energy within the 23 counties of southeastern
Mississippi, at retail in 123 communities, as well as in rural areas, and at
wholesale to one municipality, six rural electric distribution cooperative
associations and one generating and transmitting cooperative.
4
<PAGE>
THE TRUSTS
Each Trust is a statutory business trust created under Delaware law pursuant
to the filing of a certificate of trust with the Delaware Secretary of State
on January 24, 1997, with respect to Mississippi Power Capital Trust II, and
January 7, 1998, with respect to Mississippi Power Capital Trust III. Each
Trust's business is defined in a trust agreement, executed by the Company, as
Depositor, and the Delaware Trustee thereunder. This trust agreement of each
Trust will be amended and restated in its entirety substantially in the form
filed as an exhibit to the Registration Statement of which this Prospectus
forms a part (the "Trust Agreement"). Each Trust Agreement will be qualified
as an indenture under the Trust Indenture Act of 1939, as amended (the "1939
Act"). Each Trust exists for the exclusive purposes of (i) issuing its Trust
Securities representing undivided beneficial interests in the assets of such
Trust, (ii) investing the gross proceeds of its Trust Securities in a related
series of Junior Subordinated Notes, and (iii) engaging in only those other
activities necessary, appropriate, convenient or incidental thereto.
Each Trust's business and affairs will be conducted by its trustees, which
shall be appointed by the Company as the holder of the Common Securities: two
officers of the Company as Administrative Trustees; Bankers Trust Company as
Property Trustee; and Bankers Trust (Delaware) as Delaware Trustee. The
Property Trustee of each Trust will act as the indenture trustee with respect
to such Trust for purposes of compliance with the provisions of the 1939 Act.
The principal place of business of each Trust shall be c/o the Company, 2992
West Beach, Gulfport, Mississippi 39501, telephone (228) 864-1211, Attn:
Treasurer.
Reference is made to the Prospectus Supplement relating to the Preferred
Securities of a Trust for further information concerning such Trust.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trusts will be treated as subsidiaries
of the Company and, accordingly, the accounts of the Trusts will be included
in the consolidated financial statements of the Company. The Preferred
Securities will be presented as a separate line item in the consolidated
balance sheet of the Company, and appropriate disclosures concerning the
Preferred Securities, the Guarantees and the Junior Subordinated Notes will be
included in the notes to the consolidated financial statements. For financial
reporting purposes, the Company will record distributions payable on the
Preferred Securities as an expense.
USE OF PROCEEDS
Each Trust will invest the proceeds received from the sale of its Preferred
Securities in Junior Subordinated Notes. Except as may be otherwise described
in an applicable Prospectus Supplement, the net proceeds received by the
Company from such investment and any proceeds received from the sale of its
Senior Notes or other sales of its Junior Subordinated Notes will be used in
connection with its ongoing construction program, to pay scheduled maturities
and/or refundings of its securities, to repay short-term indebtedness to the
extent outstanding and for other general corporate purposes.
RECENT RESULTS OF OPERATIONS
For the year ended December 31, 1997, the unaudited amounts for "Operating
Revenues," "Income Before Interest Charges" and "Net Income After Dividends on
Preferred Stock" were $543,588,000, $81,769,000 and $54,010,000, respectively.
In the opinion of the management of the Company, the above unaudited amounts
for the year ended December 31, 1997 reflect all adjustments (which were only
normal recurring adjustments) necessary to present fairly the results of
operations for such period. The "Ratio of Earnings to Fixed Charges" and the
"Ratio of Earnings to Fixed Charges Plus Preferred Dividend Requirements (Pre-
Income Tax Basis)" for the year ended December 31, 1997 were 4.62 and 3.85,
respectively.
5
<PAGE>
DESCRIPTION OF THE SENIOR NOTES
Set forth below is a description of the general terms of the Senior Notes.
The following description does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, the Senior Note Indenture, dated as of May 1, 1998, between
the Company and Bankers Trust Company, as trustee (the "Senior Note Indenture
Trustee"), as to be supplemented by a supplemental indenture thereto
establishing the Senior Notes of each series (the Senior Note Indenture, as so
supplemented, is hereinafter referred to as the "Senior Note Indenture"), the
forms of which are filed as exhibits to the Registration Statement of which
this Prospectus forms a part. The terms of the Senior Notes will include those
stated in the Senior Note Indenture and those made a part of the Senior Note
Indenture by reference to the 1939 Act. Certain capitalized terms used herein
are defined in the Senior Note Indenture.
GENERAL
The Senior Notes will be issued as unsecured senior debt securities under
the Senior Note Indenture and will rank pari passu with all other unsecured
and unsubordinated debt of the Company. The Senior Notes will be effectively
subordinated to all secured debt of the Company, including its first mortgage
bonds, aggregating approximately $248,800,000 outstanding at September 30,
1997. The Senior Note Indenture does not limit the aggregate principal amount
of Senior Notes that may be issued thereunder and provides that Senior Notes
may be issued from time to time in one or more series pursuant to an indenture
supplemental to the Senior Note Indenture.
Reference is made to the Prospectus Supplement that will accompany this
Prospectus for the following terms of the series of Senior Notes being offered
thereby: (i) the title of such Senior Notes; (ii) any limit on the aggregate
principal amount of such Senior Notes; (iii) the date or dates on which the
principal of such Senior Notes is payable; (iv) the rate or rates at which
such Senior Notes shall bear interest, if any, or any method by which such
rate or rates will be determined, the date or dates from which such interest
will accrue, the interest payment dates on which such interest shall be
payable, and the regular record date for the interest payable on any interest
payment date; (v) the place or places where the principal of (and premium, if
any) and interest, if any, on such Senior Notes shall be payable; (vi) the
period or periods within which, the price or prices at which and the terms and
conditions on which such Senior Notes may be redeemed, in whole or in part, at
the option of the Company; (vii) the obligation, if any, of the Company to
redeem or purchase such Senior Notes; (viii) the denominations in which such
Senior Notes shall be issuable; (ix) if other than the principal amount
thereof, the portion of the principal amount of such Senior Notes which shall
be payable upon declaration of acceleration of the maturity thereof; (x) any
deletions from, modifications of or additions to the Events of Default or
covenants of the Company as provided in the Senior Note Indenture pertaining
to such Senior Notes; (xi) whether such Senior Notes shall be issued in whole
or in part in the form of a Global Security; and (xii) any other terms of such
Senior Notes.
The Senior Note Indenture does not contain provisions that afford holders of
Senior Notes protection in the event of a highly leveraged transaction
involving the Company.
EVENTS OF DEFAULT
The Senior Note Indenture provides that any one or more of the following
described events with respect to the Senior Notes of any series, which has
occurred and is continuing, constitutes an "Event of Default" with respect to
the Senior Notes of such series:
(a) failure for 10 days to pay interest on the Senior Notes of such
series, when due on an Interest Payment Date other than at maturity or upon
earlier redemption; or
(b) failure to pay principal or premium, if any, or interest on the
Senior Notes of such series when due at maturity or upon earlier
redemption; or
(c) failure for three Business Days to deposit any sinking fund payment
when due by the terms of a Senior Note of such series; or
6
<PAGE>
(d) failure to observe or perform any other covenant or warranty of the
Company in the Senior Note Indenture (other than a covenant or warranty
which has expressly been included therein solely for the benefit of one or
more series of Senior Notes other than such series) for 90 days after
written notice to the Company from the Senior Note Indenture Trustee or the
holders of at least 25% in principal amount of the outstanding Senior Notes
of such series; or
(e) certain events of bankruptcy, insolvency, or reorganization of the
Company.
The holders of not less than a majority in aggregate outstanding principal
amount of the Senior Notes of any series have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Senior Note Indenture Trustee with respect to the Senior Notes of such series.
If a Senior Note Indenture Event of Default occurs and is continuing with
respect to the Senior Notes of any series, then the Senior Note Indenture
Trustee or the holders of not less than 25% in aggregate outstanding principal
amount of the Senior Notes of such series may declare the principal amount
thereof due and payable immediately by notice in writing to the Company (and
to the Senior Note Indenture Trustee if given by the holders), and upon any
such declaration such principal amount shall become immediately due and
payable. At any time after such a declaration of acceleration with respect to
the Senior Notes of any series has been made and before a judgment or decree
for payment of the money due has been obtained as provided in Article Five of
the Senior Note Indenture, the holders of not less than a majority in
aggregate outstanding principal amount of the Senior Notes of such series may
rescind and annul such declaration and its consequences if the default has
been cured or waived and the Company has paid or deposited with the Senior
Note Indenture Trustee a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration and all sums paid or
advanced by the Senior Note Indenture Trustee, including reasonable
compensation and expenses of the Senior Note Indenture Trustee.
The holders of not less than a majority in aggregate outstanding principal
amount of the Senior Notes of any series may, on behalf of the holders of all
the Senior Notes of such series, waive any past default with respect to such
series, except (i) a default in the payment of principal or interest or (ii) a
default in respect of a covenant or provision which under Article Nine of the
Senior Note Indenture cannot be modified or amended thereunder without the
consent of the holder of each outstanding Senior Note of such series affected
thereby.
REGISTRATION AND TRANSFER
The Company shall not be required to (i) issue, register the transfer of or
exchange Senior Notes of any series during a period of 15 days immediately
preceding the date notice is given identifying the Senior Notes of such series
called for redemption, or (ii) register the transfer of or exchange any Senior
Notes so selected for redemption, in whole or in part, except the unredeemed
portion of any Senior Note being redeemed in part.
PAYMENT AND PAYING AGENT
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of any Senior Notes will be made only against surrender to the
Paying Agent of such Senior Notes. Principal of and interest on Senior Notes
will be payable subject to any applicable laws and regulations, at the office
of such Paying Agent or Paying Agents as the Company may designate from time
to time, except that, at the option of the Company, payment of any interest
may be made by wire transfer or by check mailed to the address of the person
entitled thereto as such address shall appear in the Security Register with
respect to the Senior Notes. Payment of interest on Senior Notes on any
interest payment date will be made to the person in whose name the Senior
Notes (or predecessor security) are registered at the close of business on the
Record Date for such interest payment (the fifteenth calendar day before such
interest payment date).
Unless otherwise indicated in an applicable Prospectus Supplement, the
Senior Indenture Trustee will act as Paying Agent with respect to the Senior
Notes. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agents or approve a change in the office
through which any Paying Agent acts.
7
<PAGE>
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or interest on the Senior Notes of any series which remain
unclaimed at the end of two years after such principal or interest shall have
become due and payable will be repaid to the Company, and the holder of such
Senior Notes will thereafter look only to the Company for payment thereof.
MODIFICATION
The Senior Note Indenture contains provisions permitting the Company and the
Senior Indenture Trustee, with the consent of the holders of not less than a
majority in principal amount of the outstanding Senior Notes of each series
affected thereby, to modify the Senior Note Indenture or the rights of the
holders of the Senior Note of such series; provided, that no such modification
may, without the consent of the holder of each outstanding Senior Note
affected thereby, (i) change the stated maturity of the principal of, or any
installment of principal of or interest on, any Senior Note, or reduce the
principal amount thereof or the rate of interest thereon or any premium
payable upon the redemption thereof, or change the method of calculating the
rate of interest thereon, or impair the right to institute suit for the
enforcement of any such payment on or after the stated maturity thereof (or,
in the case of redemption, on or after the redemption date), or (ii) reduce
the percentage of principal amount of the outstanding Senior Notes of any
series, the consent of whose holders is required for any such supplemental
indenture, or the consent of whose holders is required for any waiver (of
compliance with certain provisions of the Senior Note Indenture or certain
defaults thereunder and their consequences) provided for in the Senior Note
Indenture, or (iii) modify any of the provisions of the Senior Note Indenture
relating to supplemental indentures, waiver of past defaults, or waiver of
certain covenants, except to increase any such percentage or to provide that
certain other provisions of the Senior Note Indenture cannot be modified or
waived without the consent of the holder of each outstanding Senior Note
affected thereby.
In addition, the Company and the Senior Note Indenture Trustee may execute,
without the consent of any holders of Senior Notes, any supplemental indenture
for certain other usual purposes, including the creation of any new series of
senior notes.
CONSOLIDATION, MERGER AND SALE
The Company shall not consolidate with or merge into any other corporation
or convey, transfer or lease its properties and assets substantially as an
entirety to any person, unless (1) such other corporation or person is a
corporation organized and existing under the laws of the United States, any
state thereof or the District of Columbia and such other corporation or person
expressly assumes, by supplemental indenture executed and delivered to the
Senior Note Indenture Trustee, the payment of the principal of (and premium,
if any) and interest on all the Senior Notes and the performance of every
covenant of the Senior Note Indenture on the part of the Company to be
performed or observed; (2) immediately after giving effect to such
transactions, no Event of Default, and no event which, after notice or lapse
of time or both, would become an Event of Default, shall have happened and be
continuing; and (3) the Company has delivered to the Senior Note Indenture
Trustee an officers' certificate and an opinion of counsel, each stating that
such transaction complies with the provisions of the Senior Note Indenture
governing consolidation, merger, conveyance, transfer or lease and that all
conditions precedent thereto have been complied with.
INFORMATION CONCERNING THE SENIOR NOTE INDENTURE TRUSTEE
The Senior Note Indenture Trustee, prior to an Event of Default with respect
to Senior Notes of any series, undertakes to perform, with respect to Senior
Notes of such series, only such duties as are specifically set forth in the
Senior Note Indenture and, in case an Event of Default with respect to Senior
Notes of any series has occurred and is continuing, shall exercise, with
respect to Senior Notes of such series, the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provision, the Senior Note Indenture Trustee is under no obligation to
exercise any of the powers vested in it by the Senior Note Indenture at the
request of any holder of Senior Notes of any series, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which
might be incurred thereby. The Senior Note Indenture
8
<PAGE>
Trustee is not required to expend or risk its own funds or otherwise incur any
financial liability in the performance of its duties if the Senior Note
Indenture Trustee reasonably believes that repayment or adequate indemnity is
not reasonably assured to it.
Bankers Trust Company, the Senior Note Indenture Trustee, also serves as
Subordinated Note Indenture Trustee, as Property Trustee and as Guarantee
Trustee. The Company and certain of its affiliates maintain deposit accounts
and banking relationships with Bankers Trust Company. Bankers Trust Company
also serves as trustee under other indentures pursuant to which securities of
the Company and affiliates of the Company are outstanding.
GOVERNING LAW
The Senior Note Indenture and the Senior Notes will be governed by, and
construed in accordance with, the internal laws of the State of New York.
MISCELLANEOUS
The Company will have the right at all times to assign any of its rights or
obligations under the Senior Note Indenture to a direct or indirect wholly-
owned subsidiary of the Company; provided, that, in the event of any such
assignment, the Company will remain primarily liable for all such obligations.
Subject to the foregoing, the Senior Note Indenture will be binding upon and
inure to the benefit of the parties thereto and their respective successors
and assigns.
DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES
Set forth below is a description of the general terms of the Junior
Subordinated Notes. The following description does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the
Subordinated Note Indenture, dated as of February 1, 1997, between the Company
and Bankers Trust Company, as trustee (the "Subordinated Note Indenture
Trustee"), as to be supplemented by a supplemental indenture thereto
establishing the Junior Subordinated Notes of each series (the Subordinated
Note Indenture, as so supplemented, is hereinafter referred to as the
"Subordinated Note Indenture"), the forms of which are filed as exhibits to
the Registration Statement of which this Prospectus forms a part. The terms of
the Junior Subordinated Notes will include those stated in the Subordinated
Note Indenture and those made a part of the Subordinated Note Indenture by
reference to the 1939 Act. Certain capitalized terms used herein are defined
in the Subordinated Note Indenture.
GENERAL
The Junior Subordinated Notes will be issued as unsecured junior
subordinated debt securities under the Subordinated Note Indenture. The
Subordinated Note Indenture does not limit the aggregate principal amount of
Junior Subordinated Notes that may be issued thereunder and provides that
Junior Subordinated Notes may be issued from time to time in one or more
series pursuant to an indenture supplemental to the Subordinated Note
Indenture.
Reference is made to the Prospectus Supplement that will accompany this
Prospectus for the following terms of the series of Junior Subordinated Notes
being offered thereby: (i) the title of such Junior Subordinated Notes; (ii)
any limit on the aggregate principal amount of such Junior Subordinated Notes;
(iii) the date or dates on which the principal of such Junior Subordinated
Notes is payable; (iv) the rate or rates at which such Junior Subordinated
Notes shall bear interest, if any, or any method by which such rate or rates
will be determined, the date or dates from which such interest will accrue,
the interest payment dates on which such interest shall be payable, and the
regular record date for the interest payable on any interest payment date; (v)
the place or places where the principal of (and premium, if any) and interest,
if any, on such Junior Subordinated Notes shall be
9
<PAGE>
payable; (vi) the period or periods within which, the price or prices at which
and the terms and conditions on which such Junior Subordinated Notes may be
redeemed, in whole or in part, at the option of the Company; (vii) the
obligation, if any, of the Company to redeem or purchase such Junior
Subordinated Notes; (viii) the denominations in which such Junior Subordinated
Notes shall be issuable; (ix) if other than the principal amount thereof, the
portion of the principal amount of such Junior Subordinated Notes which shall
be payable upon declaration of acceleration of the maturity thereof; (x) any
deletions from, modifications of or additions to the Events of Default or
covenants of the Company as provided in the Subordinated Note Indenture
pertaining to such Junior Subordinated Notes; (xi) whether such Junior
Subordinated Notes shall be issued in whole or in part in the form of a Global
Security; (xii) the right, if any, of the Company to extend the interest
payment periods of such Junior Subordinated Notes; and (xiii) any other terms
of such Junior Subordinated Notes. The terms of each series of Junior
Subordinated Notes issued to a Trust will correspond to those of the related
Preferred Securities of such Trust as described in the Prospectus Supplement
relating to such Preferred Securities.
The Subordinated Note Indenture does not contain provisions that afford
holders of Junior Subordinated Notes protection in the event of a highly
leveraged transaction involving the Company.
SUBORDINATION
The Junior Subordinated Notes are subordinated and junior in right of
payment to all Senior Indebtedness (as defined below) of the Company. No
payment of principal of (including redemption payments, if any), or premium,
if any, or interest on (including Additional Interest (as defined herein)) the
Junior Subordinated Notes may be made if (a) any Senior Indebtedness is not
paid when due and any applicable grace period with respect to such default has
ended with such default not being cured or waived or otherwise ceasing to
exist, or (b) the maturity of any Senior Indebtedness has been accelerated
because of a default, or (c) notice has been given of the exercise of an
option to require repayment, mandatory payment or prepayment or otherwise.
Upon any payment or distribution of assets of the Company to creditors upon
any liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors, marshalling of assets or liabilities, or any bankruptcy,
insolvency or similar proceedings of the Company, the holders of Senior
Indebtedness shall be entitled to receive payment in full of all amounts due
or to become due on or in respect of all Senior Indebtedness before the
holders of the Junior Subordinated Notes are entitled to receive or retain any
payment or distribution. Subject to the prior payment of all Senior
Indebtedness, the rights of the holders of the Junior Subordinated Notes will
be subrogated to the rights of the holders of Senior Indebtedness to receive
payments and distributions applicable to such Senior Indebtedness until all
amounts owing on the Junior Subordinated Notes are paid in full.
The term "Senior Indebtedness" means, with respect to the Company, (i) any
payment due in respect of indebtedness of the Company, whether outstanding at
the date of execution of the Subordinated Note Indenture or thereafter
incurred, created or assumed, (a) in respect of money borrowed (including any
financial derivative, hedging or futures contract or similar instrument) and
(b) evidenced by securities, debentures, bonds, notes or other similar
instruments issued by the Company that, by their terms, are senior or senior
subordinated debt securities including, without limitation, all obligations
under its indentures with various trustees; (ii) all capital lease
obligations; (iii) all obligations issued or assumed as the deferred purchase
price of property, all conditional sale obligations and all obligations of the
Company under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business and long-term purchase
obligations); (iv) all obligations for the reimbursement of any letter of
credit, banker's acceptance, security purchase facility or similar credit
transaction; (v) all obligations of the type referred to in clauses (i)
through (iv) above of other persons the payment of which the Company is
responsible or liable as obligor, guarantor or otherwise; and (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
persons secured by any lien on any property or asset of the Company (whether
or not such obligation is assumed by the Company), except for (1) any such
indebtedness that is by its terms subordinated to or pari passu with the
Junior Subordinated Notes and (2) any unsecured indebtedness between or among
the Company or its affiliates. Such Senior Indebtedness shall continue to be
Senior Indebtedness and be entitled to the benefits of the subordination
provisions contained in the Subordinated Note Indenture irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
10
<PAGE>
The Subordinated Note Indenture does not limit the aggregate amount of
Senior Indebtedness that may be issued by the Company. As of September 30,
1997, Senior Indebtedness of the Company aggregated approximately
$328,800,000.
ADDITIONAL INTEREST
"Additional Interest" is defined in the Subordinated Note Indenture as (i)
such additional amounts as may be required so that the net amounts received
and retained by a holder of Junior Subordinated Notes (if the holder is a
Trust) after paying taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed by the United States or
any other taxing authority will not be less than the amounts the holder would
have received had no such taxes, duties, assessments, or other governmental
charges been imposed; and (ii) any interest due and not paid on an interest
payment date, together with interest thereon from such interest payment date
to the date of payment, compounded quarterly, on each interest payment date.
CERTAIN COVENANTS
The Company covenants in the Subordinated Note Indenture, for the benefit of
the holders of each series of Junior Subordinated Notes, that, (i) if at such
time the Company shall have given notice of its election to extend an interest
payment period for such series of Junior Subordinated Notes and such extension
shall be continuing, (ii) if at such time the Company shall be in default with
respect to its payment or other obligations under the Guarantee with respect
to the Trust Securities, if any, related to such series of Junior Subordinated
Notes, or (iii) if at such time an Event of Default thereunder with respect to
such series of Junior Subordinated Notes shall have occurred and be
continuing, (a) the Company shall not declare or pay any dividend or make any
distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock, and (b) the
Company shall not make any payment of interest, principal or premium, if any,
on or repay, repurchase or redeem any debt securities (including guarantees
other than the Guarantees) issued by the Company which rank pari passu with or
junior to the Junior Subordinated Notes. None of the foregoing, however, shall
restrict (i) any of the actions described in the preceding sentence resulting
from any reclassifications of the Company's capital stock or the exchange or
conversion of one class or series of the Company's capital stock for another
class or series of the Company's capital stock, or (ii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged.
The Subordinated Note Indenture further provides that, for so long as the
Trust Securities of any Trust remain outstanding, the Company covenants (i) to
directly or indirectly maintain 100% ownership of the Common Securities of
such Trust; provided, however, that any permitted successor of the Company
under the Subordinated Note Indenture may succeed to the Company's ownership
of such Common Securities, and (ii) to use its reasonable efforts to cause
such Trust (a) to remain a statutory business trust, except in connection with
the distribution of Junior Subordinated Notes to the holders of Trust
Securities in liquidation of such Trust, the redemption of all of the Trust
Securities of such Trust, or certain mergers, consolidations or amalgamations,
each as permitted by the related Trust Agreement, and (b) to otherwise
continue to be classified as a grantor trust for United States federal income
tax purposes.
EVENTS OF DEFAULT
The Subordinated Note Indenture provides that any one or more of the
following described events with respect to the Junior Subordinated Notes of
any series, which has occurred and is continuing, constitutes an "Event of
Default" with respect to the Junior Subordinated Notes of such series:
(a) failure for 10 days to pay interest on the Junior Subordinated Notes
of such series, including any Additional Interest (as defined in clause
(ii) of the definition thereof in the Subordinated Note Indenture) in
respect thereof, when due on an Interest Payment Date other than at
maturity or upon earlier redemption; provided, however, that a valid
extension of the interest payment period by the Company shall not
constitute a default in the payment of interest for this purpose; or
11
<PAGE>
(b) failure for 10 days to pay Additional Interest (as defined in clause
(i) of the definition thereof in the Subordinated Note Indenture); or
(c) failure to pay principal or premium, if any, or interest, including
Additional Interest (as defined in clause (ii) of the definition thereof in
the Subordinated Note Indenture), on the Junior Subordinated Notes of such
series when due at maturity or upon earlier redemption; or
(d) failure for three Business Days to deposit any sinking fund payment
when due by the terms of a Junior Subordinated Note of such series; or
(e) failure to observe or perform any other covenant or warranty of the
Company in the Subordinated Note Indenture (other than a covenant or
warranty which has expressly been included therein solely for the benefit
of one or more series of Junior Subordinated Notes other than such series)
for 90 days after written notice to the Company from the Subordinated Note
Indenture Trustee or the holders of at least 25% in principal amount of the
outstanding Junior Subordinated Notes of such series; or
(f) certain events of bankruptcy, insolvency, or reorganization of the
Company.
The holders of not less than a majority in aggregate outstanding principal
amount of the Junior Subordinated Notes of any series have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Subordinated Note Indenture Trustee with respect to the
Junior Subordinated Notes of such series. If a Subordinated Note Indenture
Event of Default occurs and is continuing with respect to the Junior
Subordinated Notes of any series, then the Subordinated Note Indenture Trustee
or the holders of not less than 25% in aggregate outstanding principal amount
of the Junior Subordinated Notes of such series may declare the principal
amount thereof due and payable immediately by notice in writing to the Company
(and to the Subordinated Note Indenture Trustee if given by the holders), and
upon any such declaration such principal amount shall become immediately due
and payable. At any time after such a declaration of acceleration with respect
to the Junior Subordinated Notes of any series had been made and before a
judgment or decree for payment of the money due has been obtained as provided
in Article Five of the Subordinated Note Indenture, the holders of not less
than a majority in aggregate outstanding principal amount of the Junior
Subordinated Notes of such series may rescind and annul such declaration and
its consequences if the default has been cured or waived and the Company has
paid or deposited with the Subordinated Note Indenture Trustee a sum
sufficient to pay all matured installments of interest (including any
Additional Interest) and principal due otherwise than by acceleration and all
sums paid or advanced by the Subordinated Note Indenture Trustee, including
reasonable compensation and expenses of the Subordinated Note Indenture
Trustee.
A holder of Preferred Securities may institute a legal proceeding directly
against the Company, without first instituting a legal proceeding against the
Property Trustee or any other person or entity, for enforcement of payment to
such holder of principal of or interest on the Junior Subordinated Notes of
the related series having a principal amount equal to the aggregate stated
liquidation amount of the Preferred Securities of such holder on or after the
due dates specified in the Junior Subordinated Notes of such series.
The holders of not less than a majority in aggregate outstanding principal
amount of the Junior Subordinated Notes of any series may, on behalf of the
holders of all the Junior Subordinated Notes of such series, waive any past
default with respect to such series, except (i) a default in the payment of
principal or interest or (ii) a default in respect of a covenant or provision
which under Article Nine of the Subordinated Note Indenture cannot be modified
or amended thereunder without the consent of the holder of each outstanding
Junior Subordinated Note of such series affected thereby.
REGISTRATION AND TRANSFER
The Company shall not be required to (i) issue, register the transfer of or
exchange Junior Subordinated Notes of any series during a period of 15 days
immediately preceding the date notice is given identifying the Junior
Subordinated Notes of such series called for redemption, or (ii) register the
transfer of or exchange any Junior Subordinated Notes so selected for
redemption, in whole or in part, except the unredeemed portion of any Junior
Subordinated Note being redeemed in part.
12
<PAGE>
PAYMENT AND PAYING AGENT
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of any Junior Subordinated Notes will be made only against
surrender to the Paying Agent of such Junior Subordinated Notes. Principal of
and interest on Junior Subordinated Notes will be payable, subject to any
applicable laws and regulations, at the office of such Paying Agent or Paying
Agents as the Company may designate from time to time, except that, at the
option of the Company, payment of any interest may be made by wire transfer or
by check mailed to the address of the person entitled thereto as such address
shall appear in the Security Register with respect to the Junior Subordinated
Notes. Payment of interest on Junior Subordinated Notes on any interest
payment date will be made to the person in whose name the Junior Subordinated
Notes (or predecessor security) are registered at the close of business on the
Record Date for such interest payment (the fifteenth calendar day before such
interest payment date).
Unless otherwise indicated in an applicable Prospectus Supplement, the
Subordinated Note Indenture Trustee will act as Paying Agent with respect to
the Junior Subordinated Notes. The Company may at any time designate
additional Paying Agents or rescind the designation of any Paying Agents or
approve a change in the office through which any Paying Agent acts.
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or interest on the Junior Subordinated Notes of any series which
remain unclaimed at the end of two years after such principal or interest
shall have become due and payable will be repaid to the Company, and the
holder of such Junior Subordinated Notes will thereafter look only to the
Company for payment thereof.
MODIFICATION
The Subordinated Note Indenture contains provisions permitting the Company
and the Subordinated Note Indenture Trustee, with the consent of the holders
of not less than a majority in principal amount of the outstanding Junior
Subordinated Notes of each series affected thereby, to modify the Subordinated
Note Indenture or the rights of the holders of the Junior Subordinated Note of
such series; provided, that no such modification may, without the consent of
the holder of each outstanding Junior Subordinated Note affected thereby, (i)
change the stated maturity of the principal of, or any installment of
principal of or interest on, any Junior Subordinated Note, or reduce the
principal amount thereof or the rate of interest (including Additional
Interest) thereon or any premium payable upon the redemption thereof, or
change the method of calculating the rate of interest thereon, or impair the
right to institute suit for the enforcement of any such payment on or after
the stated maturity thereof (or, in the case of redemption, on or after the
redemption date), or (ii) reduce the percentage of principal amount of the
outstanding Junior Subordinated Notes of any series, the consent of whose
holders is required for any such supplemental indenture, or the consent of
whose holders is required for any waiver (of compliance with certain
provisions of the Subordinated Note Indenture or certain defaults thereunder
and their consequences) provided for in the Subordinated Note Indenture, or
(iii) modify any of the provisions of the Subordinated Note Indenture relating
to supplemental indentures, waiver of past defaults, or waiver of certain
covenants, except to increase any such percentage or to provide that certain
other provisions of the Subordinated Note Indenture cannot be modified or
waived without the consent of the holder of each outstanding Junior
Subordinated Note affected thereby, or (iv) modify the provisions of the
Subordinated Note Indenture with respect to the subordination of the Junior
Subordinated Notes in a manner adverse to such holder.
In addition, the Company and the Subordinated Note Indenture Trustee may
execute, without the consent of any holders of Junior Subordinated Notes, any
supplemental indenture for certain other usual purposes, including the
creation of any new series of junior subordinated notes.
CONSOLIDATION, MERGER AND SALE
The Company shall not consolidate with or merge into any other corporation
or convey, transfer or lease its properties and assets substantially as an
entirety to any person, unless (1) such other corporation or person is a
corporation organized and existing under the laws of the United States, any
state thereof or the District of
13
<PAGE>
Columbia and such other corporation or person expressly assumes, by
supplemental indenture executed and delivered to the Subordinated Note
Indenture Trustee, the payment of the principal of (and premium, if any) and
interest (including Additional Interest) on all the Junior Subordinated Notes
and the performance of every covenant of the Subordinated Note Indenture on
the part of the Company to be performed or observed; (2) immediately after
giving effect to such transactions, no Event of Default, and no event which,
after notice or lapse of time or both, would become an Event of Default, shall
have happened and be continuing; and (3) the Company has delivered to the
Subordinated Note Indenture Trustee an officers' certificate and an opinion of
counsel, each stating that such transaction complies with the provisions of
the Subordinated Note Indenture governing consolidation, merger, conveyance,
transfer or lease and that all conditions precedent thereto have been complied
with.
INFORMATION CONCERNING THE SUBORDINATED NOTE INDENTURE TRUSTEE
The Subordinated Note Indenture Trustee, prior to an Event of Default with
respect to Junior Subordinated Notes of any series, undertakes to perform,
with respect to Junior Subordinated Notes of such series, only such duties as
are specifically set forth in the Subordinated Note Indenture and, in case an
Event of Default with respect to Junior Subordinated Notes of any series has
occurred and is continuing, shall exercise, with respect to Junior
Subordinated Notes of such series, the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provision, the Subordinated Note Indenture Trustee is under no obligation
to exercise any of the powers vested in it by the Subordinated Note Indenture
at the request of any holder of Junior Subordinated Notes of any series,
unless offered reasonable indemnity by such holder against the costs, expenses
and liabilities which might be incurred thereby. The Subordinated Note
Indenture Trustee is not required to expend or risk its own funds or otherwise
incur any financial liability in the performance of its duties if the
Subordinated Note Indenture Trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it.
Bankers Trust Company, the Subordinated Note Indenture Trustee, also serves
as Senior Note Indenture Trustee, as Property Trustee and as Guarantee
Trustee. The Company and certain of its affiliates maintain deposit accounts
and banking relationships with Bankers Trust Company. Bankers Trust Company
also serves as trustee under other indentures pursuant to which securities of
the Company and affiliates of the Company are outstanding.
GOVERNING LAW
The Subordinated Note Indenture and Junior Subordinated Notes will be
governed by, and construed in accordance with, the internal laws of the State
of New York.
MISCELLANEOUS
The Company will have the right at all times to assign any of its rights or
obligations under the Subordinated Note Indenture to a direct or indirect
wholly-owned subsidiary of the Company; provided, that, in the event of any
such assignment, the Company will remain primarily liable for all such
obligations. Subject to the foregoing, the Subordinated Note Indenture will be
binding upon and inure to the benefit of the parties thereto and their
respective successors and assigns.
DESCRIPTION OF THE PREFERRED SECURITIES
Each Trust may issue only one series of Preferred Securities having terms
described in the Prospectus Supplement relating thereto. The Trust Agreement
of each Trust will authorize the Administrative Trustees, on behalf of the
Trust, to issue the Preferred Securities of such Trust. The Preferred
Securities of each Trust will have such terms, including distributions,
redemption, voting, liquidation rights and such other preferred, deferral or
other special rights or such restrictions as shall be set forth in the Trust
Agreement of such Trust. Reference is made to the Prospectus Supplement
relating to the Preferred Securities of a Trust for specific terms, including
14
<PAGE>
(i) the distinctive designation of such Preferred Securities; (ii) the number
of Preferred Securities issued by such Trust; (iii) the annual distribution
rate (or method of determining such rate) for Preferred Securities of such
Trust and the date or dates on which such distributions shall be payable; (iv)
whether distributions on such Preferred Securities shall be cumulative and, in
the case of Preferred Securities having cumulative distribution rights, the
date or dates, or method of determining the date or dates, from which
distributions on such Preferred Securities shall be cumulative; (v) the amount
or amounts that shall be paid out of the assets of such Trust to the holders
of the Preferred Securities of such Trust upon voluntary or involuntary
dissolution, winding-up or termination of such Trust; (vi) the obligation, if
any, of such Trust to purchase or redeem such Preferred Securities and the
price or prices at which, the period or periods within which, and the terms
and conditions upon which such Preferred Securities shall be purchased or
redeemed, in whole or in part, pursuant to such obligation; (vii) the voting
rights, if any, of such Preferred Securities in addition to those required by
law, including the number of votes per Preferred Security and any requirement
for the approval by the holders of Preferred Securities as a condition to
specified action or amendments to the Trust Agreement of such Trust; (viii)
the rights, if any, to defer distributions on the Preferred Securities by
extending the interest payment period on the related Junior Subordinated
Notes; and (ix) any other relative rights, preferences, privileges,
limitations or restrictions of such Preferred Securities not inconsistent with
the Trust Agreement of such Trust or applicable law. All Preferred Securities
offered hereby will be guaranteed by the Company to the extent set forth under
"Description of the Guarantees." Any material United States federal income tax
considerations applicable to an offering of Preferred Securities will be
described in the Prospectus Supplement relating thereto.
DESCRIPTION OF THE GUARANTEES
Set forth below is a summary of information concerning the Guarantees that
will be executed and delivered by the Company for the benefit of the holders
of Preferred Securities of the respective Trusts from time to time. Each
Guarantee will be qualified as an indenture under the 1939 Act. Bankers Trust
Company will act as indenture trustee under each Guarantee (the "Guarantee
Trustee") for purposes of the 1939 Act. The terms of the respective Guarantees
will be those set forth therein and those made part thereof by the 1939 Act.
The following summary does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by reference
to, the Guarantees, the form of which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and the 1939
Act. Each Guarantee will be held by the Guarantee Trustee for the benefit of
holders of the Preferred Securities to which it relates.
GENERAL
Pursuant to each Guarantee, the Company will irrevocably and unconditionally
agree, to the extent set forth therein, to pay in full, to the holders of the
related Preferred Securities, the Guarantee Payments (as defined herein), to
the extent not paid by, or on behalf of, the related Trust, regardless of any
defense, right of set-off or counterclaim that the Company may have or assert
against any person. The following payments or distributions with respect to
the Preferred Securities of any Trust to the extent not paid or made by, or on
behalf of, such Trust will be subject to the Guarantee related thereto
(without duplication): (i) any accrued and unpaid distributions required to be
paid on the Preferred Securities of such Trust but if and only if and to the
extent that such Trust has funds legally and immediately available therefor,
(ii) the redemption price, including all accrued and unpaid distributions to
the date of redemption (the "Redemption Price"), with respect to any Preferred
Securities called for redemption by such Trust, but if and only to the extent
such Trust has funds legally and immediately available therefor, and (iii)
upon a dissolution, winding-up or termination of such Trust (other than in
connection with the distribution of Junior Subordinated Notes to the holders
of Trust Securities of such Trust or the redemption of all of the Preferred
Securities of such Trust), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid distributions on the Preferred Securities of
such Trust to the date of payment, to the extent such Trust has funds legally
and immediately available therefor, and (b) the amount of assets of such Trust
remaining available for distribution to holders of Preferred Securities of
such Trust in liquidation of such Trust (the "Guarantee Payments"). The
Company's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of the related
Preferred Securities or by causing the related Trust to pay such amounts to
such holders.
15
<PAGE>
Each Guarantee will be a guarantee of the Guarantee Payments with respect to
the related Preferred Securities from the time of issuance of such Preferred
Securities, but will not apply to the payment of distributions and other
payments on such Preferred Securities when the related Trust does not have
sufficient funds legally and immediately available to make such distributions
or other payments. IF THE COMPANY DOES NOT MAKE INTEREST PAYMENTS ON THE
JUNIOR SUBORDINATED NOTES HELD BY THE PROPERTY TRUSTEE UNDER ANY TRUST, SUCH
TRUST WILL NOT MAKE DISTRIBUTIONS ON ITS PREFERRED SECURITIES.
SUBORDINATION
The Company's obligations under each Guarantee to make the Guarantee
Payments will constitute an unsecured obligation of the Company and will rank
(i) subordinate and junior in right of payment to all other liabilities of the
Company, including the Junior Subordinated Notes, except those obligations or
liabilities made pari passu or subordinate by their terms, (ii) pari passu
with the most senior preferred or preference stock now or hereafter issued by
the Company and with any guarantee now or hereafter entered into by the
Company in respect of any preferred or preference securities of any affiliate
of the Company, and (iii) senior to all common stock of the Company. The terms
of the Preferred Securities will provide that each holder of Preferred
Securities by acceptance thereof agrees to the subordination provisions and
other terms of the Guarantee related thereto. The Company has outstanding
preferred stock that ranks pari passu to the Guarantees and common stock that
ranks junior to the Guarantees. See "Selected Information--Selected Financial
Information."
Each Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly
against the guarantor to enforce its rights under the guarantee without first
instituting a legal proceeding against any other person or entity).
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially and adversely
affect the rights of holders of the related Preferred Securities (in which
case no consent will be required), each Guarantee may be amended only with the
prior approval of the holders of not less than 66 2/3% in liquidation amount
of such outstanding Preferred Securities. The manner of obtaining any such
approval of holders of the Preferred Securities will be as set forth in an
accompanying Prospectus Supplement. All guarantees and agreements contained in
each Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the holders
of the related Preferred Securities then outstanding.
TERMINATION
Each Guarantee will terminate and be of no further force and effect as to
the related Preferred Securities upon full payment of the Redemption Price of
all such Preferred Securities, upon distribution of Junior Subordinated Notes
to the holders of such Preferred Securities, or upon full payment of the
amounts payable upon liquidation of the related Trust. Each Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of the related Preferred Securities must restore payment of
any sums paid with respect to such Preferred Securities or under such
Guarantee.
EVENTS OF DEFAULT
An event of default under each Guarantee will occur upon the failure by the
Company to perform any of its payment obligations thereunder. The holders of a
majority in liquidation amount of the Preferred Securities to which any
Guarantee relates have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of such Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under such Guarantee. Any holder of the
related Preferred Securities may institute a legal proceeding directly against
the Company to enforce its rights under such Guarantee without first
instituting a legal proceeding against the Guarantee Trustee or any other
person or entity. The holders of a majority in liquidation amount of Preferred
Securities of any series may, by vote, on behalf of the holders of all the
Preferred Securities of such series, waive any past event of default and its
consequences.
16
<PAGE>
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of any event of default with
respect to any Guarantee and after the curing or waiving of all events of
default with respect to such Guarantee, undertakes to perform only such duties
as are specifically set forth in such Guarantee and, in case an event of
default has occurred, shall exercise the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provisions, the Guarantee Trustee is under no obligation to exercise any
of the powers vested in it by any Guarantee at the request of any holder of
the related Preferred Securities, unless offered reasonable indemnity against
the costs, expenses and liabilities which might be incurred thereby.
Bankers Trust Company, the Guarantee Trustee, also serves as Property
Trustee, as Senior Note Indenture Trustee and as Subordinated Note Indenture
Trustee. The Company and certain of its affiliates maintain deposit accounts
and banking relationships with Bankers Trust Company. Bankers Trust Company
serves as trustee under other indentures pursuant to which securities of the
Company and affiliates of the Company are outstanding.
GOVERNING LAW
Each Guarantee will be governed by, and construed in accordance with, the
internal laws of the State of New York.
THE AGREEMENTS AS TO EXPENSES AND LIABILITIES
Pursuant to an Agreement as to Expenses and Liabilities to be entered into
by the Company under each Trust Agreement, the Company will irrevocably and
unconditionally guarantee to each person or entity to whom each Trust becomes
indebted or liable the full payment of any indebtedness, expenses or
liabilities of such Trust, other than obligations of such Trust to pay to the
holders of the related Preferred Securities or other similar interests in such
Trust the amounts due such holders pursuant to the terms of such Preferred
Securities or such other similar interests, as the case may be.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR SUBORDINATED NOTES AND
THE GUARANTEES
As long as payments of interest and other payments are made when due on each
series of Junior Subordinated Notes issued to a Trust, such payments will be
sufficient to cover distributions and payments due on the related Trust
Securities of such Trust primarily because (i) the aggregate principal amount
of each series of Junior Subordinated Notes will be equal to the sum of the
aggregate stated liquidation amount of the related Trust Securities; (ii) the
interest rate and interest and other payment dates on each series of Junior
Subordinated Notes will match the distribution rate and distribution and other
payment dates for the related Preferred Securities; (iii) the Company shall
pay for all costs and expenses of each Trust pursuant to the Agreements as to
Expenses and Liabilities; and (iv) each Trust Agreement provides that the
Securities Trustees thereunder shall not cause or permit the Trust to, among
other things, engage in any activity that is not consistent with the purposes
of the Trust.
Payments of distributions (to the extent funds therefor are legally and
immediately available) and other payments due on the Preferred Securities (to
the extent funds therefor are legally and immediately available) will be
guaranteed by the Company as and to the extent set forth under "Description of
the Guarantees." If the Company does not make interest payments on any series
of Junior Subordinated Notes, it is not expected that the related Trust will
have sufficient funds to pay distributions on its Preferred Securities. Each
Guarantee is a guarantee from the time of its issuance, but does not apply to
any payment of distributions unless and until the related Trust has sufficient
funds legally and immediately available for the payment of such distributions.
If the Company fails to make interest or other payments on any series of
Junior Subordinated Notes when due (taking into account any extension period
as described in the applicable Prospectus Supplement), the Trust
17
<PAGE>
Agreement provides a mechanism whereby the holders of the related Preferred
Securities may appoint a substitute Property Trustee. Such holders may also
direct the Property Trustee to enforce its rights under the Junior
Subordinated Notes of such series, including proceeding directly against the
Company to enforce such Junior Subordinated Notes. If the Property Trustee
fails to enforce its rights under any series of Junior Subordinated Notes, to
the fullest extent permitted by applicable law, any holder of related
Preferred Securities may institute a legal proceeding directly against the
Company to enforce the Property Trustee's rights under such series of Junior
Subordinated Notes without first instituting any legal proceeding against the
Property Trustee or any other person or entity. Notwithstanding the foregoing,
a holder of Preferred Securities may institute a legal proceeding directly
against the Company, without first instituting a legal proceeding against the
Property Trustee or any other person or entity, for enforcement of payment to
such holder of principal of or interest on Junior Subordinated Notes of the
related series having a principal amount equal to the aggregate stated
liquidation amount of the Preferred Securities of such holder on or after the
due dates specified in the Junior Subordinated Notes of such series.
If the Company fails to make payments under any Guarantee, such Guarantee
provides a mechanism whereby the holders of the Preferred Securities to which
such Guarantee relates may direct the Guarantee Trustee to enforce its rights
thereunder. In addition, any holder of Preferred Securities may institute a
legal proceeding directly against the Company to enforce the Guarantee
Trustee's rights under the related Guarantee without first instituting a legal
proceeding against the Guarantee Trustee or any other person or entity.
Each Guarantee, the Subordinated Note Indenture, the Junior Subordinated
Notes of the related series, the related Trust Agreement and the related
Agreement as to Expenses and Liabilities, as described above, constitute a
full and unconditional guarantee by the Company of the payments due on the
related series of Preferred Securities.
Upon any voluntary or involuntary dissolution, winding-up or termination of
any Trust, unless Junior Subordinated Notes of the related series are
distributed in connection therewith, the holders of Preferred Securities of
such Trust will be entitled to receive, out of assets legally available for
distribution to holders, a liquidation distribution in cash as described in
the applicable Prospectus Supplement. Upon any voluntary or involuntary
liquidation or bankruptcy of the Company, the Property Trustee, as holder of
the related series of Junior Subordinated Notes, would be a subordinated
creditor of the Company, subordinated in right of payment to all Senior
Indebtedness, but entitled to receive payment in full of principal and
interest, before any stockholders of the Company receive payments or
distributions. Because the Company is guarantor under each Guarantee and has
agreed to pay for all costs, expenses and liabilities of each Trust (other
than the Trust's obligations to holders of the Preferred Securities) pursuant
to the related Agreement as to Expenses and Liabilities, the positions of a
holder of Preferred Securities and a holder of Junior Subordinated Notes of
the related series relative to other creditors and to stockholders of the
Company in the event of liquidation or bankruptcy of the Company would be
substantially the same.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Subordinated Note
Indenture. However, in the event of payment defaults under, or acceleration
of, Senior Indebtedness, the subordination provisions of the Junior
Subordinated Notes provide that no payments may be made in respect of the
Junior Subordinated Notes until such Senior Indebtedness has been paid in full
or any payment default thereunder has been cured or waived. Failure to make
required payments on the Junior Subordinated Notes of any series would
constitute an Event of Default under the Subordinated Note Indenture with
respect to the Junior Subordinated Notes of such series except that failure to
make interest payments on the Junior Subordinated Notes of such series will
not be an Event of Default during an extension period as described in the
applicable Prospectus Supplement.
18
<PAGE>
PLAN OF DISTRIBUTION
The Company may sell the Senior Notes and the Junior Subordinated Notes and
the Trusts may sell the Preferred Securities in one or more of the following
ways from time to time: (i) to underwriters for resale to the public or to
institutional investors; (ii) directly to institutional investors; or (iii)
through agents to the public or to institutional investors. The Prospectus
Supplement with respect to each series of Senior Notes, Junior Subordinated
Notes or Preferred Securities will set forth the terms of the offering of such
Senior Notes, Junior Subordinated Notes or Preferred Securities, including the
name or names of any underwriters or agents, the purchase price of such Senior
Notes, Junior Subordinated Notes or Preferred Securities and the proceeds to
the Company or the applicable Trust from such sale, any underwriting discounts
or agency fees and other items constituting underwriters' or agents'
compensation, any initial public offering price, any discounts or concessions
allowed or reallowed or paid to dealers and any securities exchange on which
such Senior Notes, Junior Subordinated Notes or Preferred Securities may be
listed.
If underwriters participate in the sale, such Senior Notes, Junior
Subordinated Notes or Preferred Securities will be acquired by the
underwriters for their own account and may be resold from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale.
Unless otherwise set forth in the Prospectus Supplement, the obligations of
the underwriters to purchase any series of Senior Notes, Junior Subordinated
Notes or Preferred Securities will be subject to certain conditions precedent
and the underwriters will be obligated to purchase all of such series of
Senior Notes, Junior Subordinated Notes or Preferred Securities, if any are
purchased.
Underwriters and agents may be entitled under agreements entered into with
the Company and/or the applicable Trust to indemnification against certain
civil liabilities, including liabilities under the 1933 Act. Underwriters and
agents may engage in transactions with, or perform services for, the Company
in the ordinary course of business.
Each series of Senior Notes, Junior Subordinated Notes or Preferred
Securities will be a new issue of securities and will have no established
trading market. Any underwriters to whom Senior Notes, Junior Subordinated
Notes or Preferred Securities are sold for public offering and sale may make a
market in such Senior Notes, Junior Subordinated Notes or Preferred
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. The Senior Notes,
Junior Subordinated Notes or Preferred Securities may or may not be listed on
a national securities exchange.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of the Company and the Trusts by
Richards, Layton & Finger, P.A., Wilmington, Delaware, special Delaware
counsel to the Company and the Trusts. The validity of the Senior Notes, the
Junior Subordinated Notes, the Guarantees and certain matters relating thereto
will be passed upon on behalf of the Company by Eaton and Cottrell, P.A.,
Gulfport, Mississippi, and by Troutman Sanders LLP, Atlanta, Georgia. Certain
legal matters will be passed upon for the underwriters by Dewey Ballantine
LLP, New York, New York.
19
<PAGE>
EXPERTS
The financial statements and schedules of the Company included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996,
incorporated by reference in this Prospectus, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports
with respect thereto, and are incorporated herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
Statements as to matters of law and legal conclusions in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, relating to
titles to property of the Company under "Item 2--Properties--Titles to
Property," and relating to the Company under "Item 1--Business--Regulation,"
"Item 1--Business--Rate Matters" and "Item 1--Business--Competition," have
been reviewed by Eaton and Cottrell, P.A., general counsel for the Company,
and such statements are made upon the authority of such firm as experts.
20
<PAGE>
APPENDIX A--FORM OF POLICY
APPENDIX A
[SPECIMEN]
[AMBAC LETTERHEAD]
FINANCIAL GUARANTY INSURANCE POLICY
Obligor: Policy Number:
Obligations: Premium:
AMBAC ASSURANCE CORPORATION (AMBAC) A Wisconsin Stock Insurance Company in
consideration of the payment of the premium and subject to the terms of this
Policy, hereby agrees to pay to United States Trust Company of New York, as
trustee, or its successor (the "Insurance Trustee"), for the benefit of the
Obligees, that portion of the principal of and interest on the above-described
obligations (the "Obligations") which shall become Due for Payment but shall be
unpaid by reason of Nonpayment by the Obligor.
Ambac will make such payments to the Insurance Trustee within one (1) business
day following notification to Ambac of Nonpayment. Upon an Obligee's
presentation and surrender to the Insurance Trustee of such unpaid Obligations
or appurtenant coupons, uncanceled and in bearer form and free of any adverse
claim, the Insurance Trustee will disburse to the Obligee the face amount of
principal and interest which is then Due for Payment but is unpaid. Upon such
disbursement, Ambac shall become the owner of the surrendered Obligations and
coupons and shall be fully subrogated to all of the Obligee's rights to payment.
In cases where the Obligations are issuable only in a form whereby principal is
payable to registered Obligees or their assigns, the Insurance Trustee shall
disburse principal to an Obligee as aforesaid only upon presentation and
surrender to the Insurance Trustee of the unpaid Obligation, uncanceled and free
of any adverse claim, together with an instrument of assignment, in form
satisfactory to the Insurance Trustee duly executed by the Obligee or such
Obligee's duly authorized representative, so as to permit ownership of such
Obligation to be registered in the name of Ambac or its nominee. In cases where
the Obligations are issuable only in a form whereby interest is payable to
registered Obligees or their assigns the Insurance Trustee shall disburse
interest to an Obligee as aforesaid only upon presentation to the Insurance
Trustee of proof that the claimant is the person entitled to the payment of
interest on the Obligation and delivery to the Insurance Trustee of an
instrument of assignment, in form satisfactory to the Insurance Trustee, duly
executed by the claimant Obligee or such Obligee's duly authorized
representative, transferring to Ambac all rights under such Obligation to
receive the interest in respect of which the insurance disbursement was made.
Ambac shall be subrogated to all of the Obligees' rights to payment on
registered Obligations to the extent of the insurance disbursements so made.
In the event that a trustee or paying agent for the Obligations has notice that
any payment of principal of or interest on an Obligation which has become Due
for Payment and which is made to an Obligee by or on behalf of the Obligor has
been deemed a preferential transfer and theretofore recovered from the Obligee
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court of competent jurisdiction, such Obligee will be
entitled to payment from Ambac to the extent of such recovery if sufficient
funds are not otherwise available.
As used herein, the term "Obligee" means any person other than the Obligor who,
at the time of Nonpayment, is the owner of an Obligation or of a coupon
appertaining to an Obligation. As used herein, "Due for Payment", when referring
to the principal of Obligations, is when the stated maturity date or mandatory
redemption date for the application of a required sinking fund installment has
been reached and does not refer to any earlier date on which payment is due by
reason of call for redemption (other than by application of required sinking
fund installments), acceleration or other advancement of maturity; and, when
referring to interest on the Obligations, is when the stated date for payment of
interest has been reached. As used herein, "Nonpayment" means the failure of the
Obligor to have provided sufficient funds to the paying agent for payment in
full of all principal of and interest on the Obligations which are Due for
Payment.
This Policy is noncancelable. The premium on this Policy is not refundable for
any reason, including payment of the Obligations prior to maturity. This Policy
does not insure against loss of any prepayment or other acceleration payment
which at any time may become due in respect of any Obligation, other than at the
sole option of Ambac, nor against any risk other than Nonpayment.
In witness whereof, Ambac has caused this Policy to be affixed with a facsimile
of its corporate seal and to be signed by its duly authorized officers in
facsimile to become effective as its original seal and signatures and binding
upon Ambac by virtue of the countersignature of its duly authorized
representative.
/s/ P. LASSITER /s/ STEPHEN D. COOKE
[SEAL]
President Secretary
Effective Date:
UNITED STATES TRUST COMPANY OF NEW YORK acknowledges that it has agreed to
perform the duties of Insurance Trustee under this Policy.
Authorized Representative
/s/ H. WILLIAM WEBER
Authorized Officer
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY OR THE INSURER SINCE THE DATE HEREOF.
-----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
Summary of Offering...................................................... S-2
Capitalization........................................................... S-3
Use of Proceeds.......................................................... S-3
Recent Results of Operations............................................. S-3
Description of the Series A Senior Notes................................. S-4
The Policy and the Insurer............................................... S-8
Ratings.................................................................. S-10
Experts.................................................................. S-11
Underwriting............................................................. S-12
Glossary................................................................. S-13
Appendix A............................................................... A-1
PROSPECTUS
Available Information.................................................... 2
Incorporation of Certain Documents by Reference.......................... 2
Selected Information..................................................... 3
Mississippi Power Company................................................ 4
The Trusts............................................................... 5
Accounting Treatment..................................................... 5
Use of Proceeds.......................................................... 5
Recent Results of Operations............................................. 5
Description of the Senior Notes.......................................... 6
Description of the Junior Subordinated Notes............................. 9
Description of the Preferred Securities.................................. 14
Description of the Guarantees............................................ 15
Relationship Among the Preferred Securities, the Junior Subordinated
Notes and the Guarantees................................................ 17
Plan of Distribution..................................................... 19
Legal Matters............................................................ 19
Experts.................................................................. 20
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$55,000,000
LOGO
SERIES A % SENIOR
INSURED QUARTERLY NOTES
DUE JUNE 30, 2038
(IQ NOTES SM)
-----------
PROSPECTUS SUPPLEMENT
-----------
EDWARD D. JONES & CO., L.P.
May , 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
