Filed Pursuant to Rule 424(b)(2)
333-45069
333-45069-01
333-45069-02
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 6.75% SENIOR INSURED QUARTERLY NOTES DUE JUNE 30, 2038
(IQ NOTESSM*)
--------------
Interest on the Series A 6.75% Senior Insured Quarterly Notes due June 30,
2038 (the "Series A Senior Notes") at the rate of 6.75% 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 96.85%
of their principal amount ($53,267,500 aggregate proceeds to the Company,
before deducting expenses payable by the Company estimated at $470,000),
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 19, 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 14, 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.
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<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 Mandatorily 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 6.05% Senior Notes due May 1, 2003 (the "Series B Senior Notes").
USE OF PROCEEDS
The proceeds from the sale of the Series A Senior Notes, together with the
proceeds from the sale of the Series B Senior Notes, will be used by the
Company to repay its outstanding short-term indebtedness, which aggregated
approximately $59,000,000 as of May 14, 1998, and for other general corporate
purposes.
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.
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<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.
SPECIAL INSURANCE PROVISIONS OF THE SENIOR NOTE INDENTURE
Notwithstanding any other provision of the Senior Note Indenture, so long as
the Insurer is not in default under the Policy, the Insurer shall be entitled
to control and direct the enforcement of all rights and remedies with respect
to the Series A Senior Notes upon the occurrence and continuation of an Event
of Default.
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
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<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).
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<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
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<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 Series B Senior Notes), 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 6.75% Senior Insured Quarterly Notes due
June 30, 2038 of the Company.
</TABLE>
S-13
<PAGE>
APPENDIX A--FORM OF POLICY
<PAGE>
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>
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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>
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$55,000,000
LOGO
SERIES A 6.75% SENIOR
INSURED QUARTERLY NOTES
DUE JUNE 30, 2038
(IQ NOTES SM)
-----------
PROSPECTUS SUPPLEMENT
-----------
EDWARD D. JONES & CO., L.P.
May 14, 1998
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