File No. 70-5503
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
Post-Effective Amendment No. 17
to
FORM U-1
__________________________________
APPLICATION OR DECLARATION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
* * *
APPALACHIAN POWER COMPANY
40 Franklin Road, S.W., Roanoke, Virginia 24011
(Name of company filing this statement and
address of principal executive office)
* * *
AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of top registered holding company
parent of each applicant or declarant)
* * *
A. A. Pena, Senior Vice President
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
John F. Di Lorenzo, Jr., Secretary
AMERICAN ELECTRIC POWER SERVICE CORPORATION
1 Riverside Plaza, Columbus, Ohio 43215
(Names and addresses of agents for service)
Appalachian Power Company ("Appalachian"), a wholly-owned
utility subsidiary of American Electric Power Company, Inc.
("AEP"), a holding company registered under the Public Utility
Holding Company Act of 1935, hereby amends as follows its
Application or Declaration on Form U-1 in File No. 70-5503, as
heretofore amended:
1. By adding the following paragraph to the end of Item 1 of
said Form U-1:
"It is proposed that the Authority will issue and sell an
additional series of Bonds in the aggregate principal amount of up
to $19,500,000 (the 'Series H Bonds'), the proceeds of which will
be used to provide for the redemption at maturity of $19,500,000
principal amount of Bonds of the Authority which bear interest at
7-1/4% and mature on November 1, 1998, which were issued and sold
by the Authority on November 1, 1988 (the 'Series F Bonds'). It is
contemplated that the Series H Bonds will be issued pursuant to the
Indenture as supplemented by a Seventh Supplemental Indenture of
Trust between the Authority and the Trustee, the form of which is
filed as Exhibit B-9 hereto ('Supplemental Indenture'). Pursuant
to the Indenture and the Supplemental Indenture, the proceeds of
the sale of the Series H Bonds will be deposited by the Authority
with the Trustee and applied by the Trustee on or about November 1,
1998 to the payment of the $19,500,000 aggregate principal amount
of Series F Bonds outstanding.
It is contemplated that the Series H Bonds will be sold by the
Authority pursuant to arrangements with a group of underwriters.
While Appalachian will not be a party to the underwriting
arrangements for the Series H Bonds, the Agreement provides that
the Series H Bonds shall have such terms as shall be specified by
Appalachian. Appalachian understands that the Series H Bonds can
be issued under circumstances such that the interest on such Series
H Bonds will be excludable from gross income under the provisions
of Section 103 of the Internal Revenue Code of 1986, as amended
(except for interest on any Series H Bond during a period in which
it is held by a person who is a substantial user of the Project or
a related person).
Appalachian is advised that the Series H Bonds will bear
interest semi-annually. It is expected that the Series H Bonds
will mature at a date or dates not more than 30 years from the date
of their issuance. If it is deemed advisable, the final form of
Supplemental Indenture may provide for a sinking fund pursuant to
which a portion of all the Series H Bonds issued could be retired
annually. In addition, the Series H Bonds may not, if it is deemed
advisable, be redeemable optionally in whole or in part for a
period of time. If it is deemed advisable, the Series H Bonds may
be provided some form of credit enhancement, such as a letter of
credit, surety bond or bond insurance, and pay a fee in connection
therewith. The Series H Bonds will be on a parity with and secured
in the same manner as the other Series issued pursuant to the
Indenture.
It is not possible to predict precisely the interest rate
which may be obtained in connection with the issuance of the Series
H Bonds. However, Appalachian has been advised that, depending on
maturity and other factors, the annual interest rate on
obligations, interest on which is so excludable from gross income,
historically has been, and can be expected at the time of issuance
of the Series H Bonds to be, 1-1/2% to 2-1/2% or more lower than
the rates of obligations of like terms and comparable quality,
interest on which is fully subject to Federal income tax.
Moreover, Appalachian will not agree, without further Order of this
Commission, to the issuance of any Series H Bond by the Authority
(i) if the stated maturity of any such Bond shall be more than
thirty (30) years; (ii) if the fixed rate of interest to be borne
by any such Bond shall exceed 8% per annum or the initial rate of
interest borne by any fluctuating rate Bond shall exceed 8%; (iii)
if the discount from the initial public offering price of any such
Bond shall exceed 5% of the principal amount thereof; or (iv) if
the initial public offering price shall be less than 95% of the
principal amount thereof.
Appalachian hereby requests that an Order releasing
jurisdiction with respect to the purchase price of the Project as
it is affected by the sale of the Series H Bonds be issued as soon
as practicable and that such jurisdiction be reserved with respect
to the purchase price of the Project as it is affected by the sale
of further series of Revenue Bonds.
Compliance with Rule 54
Rule 54 provides that in determining whether to approve
certain transactions other than those involving an exempt wholesale
generator ('EWG') or a foreign utility company ('FUCO'), as defined
in the Act, the Commission will not consider the effect of the
capitalization or earnings of any subsidiary which is an EWG or
FUCO if Rule 53(a), (b) and (c) are satisfied. The requirements of
Rule 53(a), (b) and (c) are satisfied.
Rule 53(a)(1). As of March 31, 1998, AEP, through its
subsidiary, AEP Resources, Inc., had aggregate investment in FUCOs
of $435,146,000. This investment represents approximately 26.5% of
$1,641,608,000, the average of the consolidated retained earnings
of AEP reported on Form 10-K for the year ended March 31, 1998.
Rule 53(a)(2). Each FUCO in which AEP invests will maintain
books and records and make available the books and records required
by Rule 53(a)(2).
Rule 53(a)(3). No more than 2% of the employees of the opera-
ting company subsidiaries of AEP will, at any one time, directly or
indirectly, render services to any FUCO.
Rule 53(a)(4). AEP has submitted and will submit a copy of
Item 9 and Exhibits G and H of AEP's Form U5S to each of the public
service commissions having jurisdiction over the retail rates of
AEP's operating company subsidiaries.
Rule 53(b). (i) Neither AEP nor any subsidiary of AEP is the
subject of any pending bankruptcy or similar proceeding; (ii) AEP's
average consolidated retained earnings for the four most recent
quarterly periods ($1,613,592,000) represented an increase of
approximately $73,152,000 (or 4.7%) in the average consolidated
retained earnings from the previous four quarterly periods
($1,540,440,000); and (iii) for the fiscal year ended December 31,
1997, AEP did not report operating losses attributable to AEP's
direct or indirect investments in EWGs and FUCOs.
Rule 53(c). Rule 53(c) is inapplicable because the require-
ments of Rule 53(a) and (b) have been satisfied."
2. By adding the following paragraph to the end of Item 2 of
said U-1:
"Estimates of the fees, commissions and expenses to
be paid or incurred directly or indirectly by Appalachian
in connection with the preparation for and the issuance
of Series H Bonds will be filed by a further post-
effective amendment to this Application or Declaration."
3. By adding the following paragraph to the end of Item 4 of
said Form U-1:
"The proposed issuance of the Series H Bonds was the subject
of an application to, and has been authorized by, the State
Corporation Commission of Virginia."
4. By adding the following paragraph at the end of Item 5 of
said Form U-1:
"It is requested, pursuant to Rule 23(c) of the Rules and
Regulations of the Commission, that the Commission's order granting
and permitting to become effective this Application or Declaration
be issued on or before August 1, 1998. Appalachian waives any
recommended decision by a hearing officer or by any other
responsible officer of the Commission and waives the 30-day waiting
period between the issuance of the Commission's order and the date
it is to become effective, since it is desired that the
Commission's order, when issued, become effective forthwith.
Applicants consent to the Division of Investment Management
assisting in the preparation of the Commission's decision and/or
order in this matter, unless the Division opposes the matter
covered by this Application or Declaration."
5. By supplying the following exhibits:
"Exhibit B-9 Form of Seventh Supplemental Indenture
between the Authority and the Trustee.
Exhibit D-11 Copy of Application to State Corporation
Commission of Virginia.
Exhibit D-12 Copy of Order of State Corporation
Commission of Virginia.
Exhibit H-1-1 Form of Notice.
(b) Financial Statements:
It is believed that financial statements of Appalachian
and AEP and its subsidiaries consolidated are not necessary or
relevant to the disposition of this proceeding."
7. By adding the following paragraph at the end of Item 7 of
said Form U-1:
"It is believed that the granting and permitting to become
effective of this Application or Declaration will not constitute a
major Federal action significantly affecting the quality of the
human environment. No other Federal agency has prepared or is
preparing an environmental impact statement with respect to the
proposed transaction."
SIGNATURE
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, the undersigned company has duly
caused this Post-Effective Amendment No. 17 to be signed on its
behalf by the undersigned thereunto duly authorized.
APPALACHIAN POWER COMPANY
By:_s/ G. P. Maloney___________
G. P. Maloney, Vice President
Date: May 21, 1998
Exhibit B-9
SEVENTH SUPPLEMENTAL INDENTURE OF TRUST
Between
INDUSTRIAL DEVELOPMENT AUTHORITY OF RUSSELL COUNTY
And
FIRST UNION NATIONAL BANK
(successor to The First National Exchange Bank of Virginia)
Trustee
Dated as of __________ __, 1998
THIS SEVENTH SUPPLEMENTAL INDENTURE OF TRUST (the "Seventh
Supplemental Indenture"), made as of the ______ day of __________,
1998, by and between the INDUSTRIAL DEVELOPMENT AUTHORITY OF
RUSSELL COUNTY, a political subdivision of the Commonwealth of
Virginia (the "Authority"), and FIRST UNION NATIONAL BANK
(successor to The First National Exchange Bank of Virginia), a
national banking association, as Trustee (the "Trustee");
W I T N E S S E T H :
WHEREAS, the Authority has issued $24,000,000 aggregate
principal amount of its Pollution Control Revenue Bonds
(Appalachian Power Company Project), Series A (the "Series A
Bonds"), pursuant to the Industrial Development and Revenue Bond
Act, Chapter 33, Title 15.1, Code of Virginia of 1950, as amended
(the "Act"), under the Indenture of Trust dated as of December 1,
1974 (the "Indenture"), between the Authority and The First
National Exchange Bank of Virginia, as Trustee (the "Original
Trustee"), for the purpose of acquiring, constructing, installing,
equipping and financing, in part, certain air pollution control
facilities (the "Project") at the plants (the "Plants") of
Appalachian Power Company, a Virginia public service corporation
(the "Company"), in Russell and Giles Counties, Virginia, which
facilities were sold to the Company pursuant to an Agreement of
Sale dated as of December 1, 1974 (the "Agreement") between the
Authority and the Company; and
WHEREAS, the Authority has issued $17,000,000 aggregate
principal amount of its Pollution Control Revenue Bonds
(Appalachian Power Company Project), Series B (the "Series B
Bonds"), as Additional Bonds pursuant to Section 2.10 of the
Indenture and a First Supplemental Indenture of Trust dated as of
December 1, 1975 between the Authority and the Original Trustee
(the "First Supplemental Indenture") to provide additional funds to
finance a portion of the estimated Cost of Construction of the
Project, as defined in the Agreement, not theretofore paid by the
application of the Series A Bonds' proceeds; and
WHEREAS, the Authority has issued $11,000,000 aggregate
principal amount of its Pollution Control Revenue Bonds
(Appalachian Power Company Project), Series C (the "Series C
Bonds"), as Refunding Bonds pursuant to Section 2.11 of the
Indenture and a Second Supplemental Indenture of Trust dated as of
November 1, 1979 between the Authority and the Original Trustee
(the "Second Supplemental Indenture") to refund $10,500,000
aggregate principal amount of Series A Bonds which matured on
December 1, 1979; and
WHEREAS, the Authority has issued $6,240,000 aggregate
principal amount of its Pollution Control Revenue Bonds
(Appalachian Power Company Project), Series D (the "Series D
Bonds"), as Refunding Bonds pursuant to Section 2.11 of the
Indenture and a Third Supplemental Indenture of Trust dated as of
November 1, 1980 between the Authority and the Original Trustee
(the "Third Supplemental Indenture") to refund $6,000,000 aggregate
principal amount of Series B Bonds which matured on December 1,
1980; and
WHEREAS, the Authority has issued $6,500,000 aggregate
principal amount of its Pollution Control Revenue Bonds
(Appalachian Power Company Project), Series E (the "Series E
Bonds"), as Refunding Bonds pursuant to Section 2.11 of the
Indenture and a Fourth Supplemental Indenture of Trust dated as of
February 1, 1981 between the Authority and the Original Trustee
(the "Fourth Supplemental Indenture") to refund $6,240,000
aggregate principal amount of Series D Bonds which matured on April
1, 1981; and
WHEREAS, the Original Trustee transferred its trust business
and assets substantially as a whole to Dominion Trust Company,
which merged into First Union National Bank of Virginia, which
merged into the Trustee, and pursuant to the provisions of Section
9.05 of the Indenture, the Trustee thereupon became successor
trustee hereunder and became vested with all of the title to the
trust estate and all the trusts, powers, discretions, immunities,
privileges and all other matters as was the Original Trustee; and
WHEREAS, the Authority has issued $19,500,000 aggregate
principal amount of its Pollution Control Revenue Bonds
(Appalachian Power Company Project), Series F (the "Series F
Bonds"), as Refunding Bonds pursuant to Section 2.11 of the
Indenture and a Fifth Supplemental Indenture of Trust dated as of
November 1, 1988 between the Authority and the Trustee (the "Fifth
Supplemental Indenture") to refund $13,500,000 aggregate principal
amount of Series A Bonds and $6,000,000 aggregate principal amount
of Series B Bonds at their redemption on December 1, 1988; and
WHEREAS, the Authority has issued $17,500,000 aggregate
principal amount of its Pollution Control Revenue Bonds
(Appalachian Power Company Project), Series G (the "Series G
Bonds"), as Refunding Bonds pursuant to Section 2.11 of the
Indenture and a Sixth Supplemental Indenture of Trust dated as of
October 15, 1990 between the Authority and the Trustee (the "Sixth
Supplemental Indenture") to refund $11,000,000 aggregate principal
amount of Series C Bonds at their redemption on December 15, 1990
and $6,500,000 aggregate principal amount of Series E Bonds at
their redemption on February 1, 1991; and
WHEREAS, the Authority has determined to issue $19,500,000
aggregate principal amount of its Pollution Control Revenue Bonds
(Appalachian Power Company Project), Series H (the "Series H
Bonds"), as Refunding Bonds pursuant to Section 2.11 of the
Indenture to refund $19,500,000 aggregate principal amount of
Series F Bonds at their redemption on __________ __, ____; and
WHEREAS, the issuance of the Series H Bonds has been approved
by the Board of Supervisors of Russell County, Virginia and the
Board of Supervisors of Giles County, Virginia, after public
hearings, as required by Section 147(f) of the Internal Revenue
Code of 1986, as amended; and
WHEREAS, the Authority has determined that the Bonds issuable
hereunder, and the certificate of authentication by the Trustee to
be endorsed on all such Bonds shall be, respectively, substantially
in the following forms with such variations, omissions and
insertions as are required or permitted by the Indenture or this
Seventh Supplemental Indenture:
(FORM OF FRONT OF BOND)
NO. R $
UNITED STATES OF AMERICA
COMMONWEALTH OF VIRGINIA
INDUSTRIAL DEVELOPMENT AUTHORITY
OF RUSSELL COUNTY
Pollution Control Revenue Bond
(Appalachian Power Company Project)
SERIES H
MATURITY DATE CUSIP
November 1,
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
The Industrial Development Authority of Russell County, a
political subdivision of the Commonwealth of Virginia (the
Authority), for value received, hereby promises to pay, solely from
the source and as hereinafter provided, to the registered owner
stated above, or registered assigns or legal representatives, upon
presentation and surrender hereof at the principal office of First
Union National Bank (successor to The First National Exchange Bank
of Virginia), as Trustee, or its successor in trust (the Trustee),
in Roanoke, Virginia, or, at the option of the registered owner
hereof, at the principal office of such paying agent as may be
designated pursuant to the Indenture hereinafter referred to, the
principal sum stated above on the maturity date stated above,
subject to prior redemption as hereinafter provided, and to pay
from such source to the registered owner hereof interest hereon by
check or draft mailed to the registered owner at his address as it
appears on the registration books kept by the Trustee, as Bond
Registrar, such interest payable semiannually on May 1 and November
1 from the May 1 or November 1, as the case may be, next preceding
the date on which this Bond is authenticated, unless this Bond is
authenticated on a May 1 or November 1, in which case it will bear
interest from such May 1 or November 1, as the case may be, until
payment of said principal sum at the rate of ______ per centum
(______) per annum. Both principal and interest are payable in
lawful money of the United States of America.
This Bond and the issue of which it is a part and the interest
thereon are limited obligations of the Authority payable solely
from the revenues and receipts derived from the Agreement of Sale
hereinafter referred to (except to the extent paid from Bond
proceeds and income from temporary investments), which revenues and
receipts (except for payments of Authority expenses under Section
4.3 of the Agreement of Sale and payments for indemnification under
Sections 4.5 and 6.1 of the Agreement of Sale) have been pledged
and assigned to the Trustee to secure payment thereof. The Bonds
and the interest thereon shall not be deemed to constitute a debt
or a pledge of the faith and credit of the Commonwealth of Virginia
nor any political subdivision thereof, including the Authority and
Russell County. Neither the Commonwealth of Virginia nor any
political subdivision thereof, including the Authority and Russell
County, shall be obligated to pay the principal of the Bonds, the
interest thereon or other costs incident thereto except from the
revenues and receipts pledged therefor, and neither the faith and
credit nor the taxing power of the Commonwealth of Virginia or any
political subdivision thereof is pledged to the payment of the
principal of the Bonds or the interest thereon or other costs
incident thereto.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS
BOND SET FORTH ON THE REVERSE SIDE HEREOF WHICH, FOR ALL PURPOSES
HEREOF, SMALL HAVE THE SAME FORCE AND EFFECT AS IF PRINTED IN FULL
ON THE FRONT HEREOF.
This Bond shall not become obligatory for any purpose or be
entitled to any security or benefit under the Indenture or be valid
until the Trustee shall have executed the Certificate of
Authentication appearing hereon.
IN WITNESS WHEREOF, the Industrial Development Authority of
Russell County has caused this Bond to be signed by the facsimile
signature of its Chairman, a facsimile of its seal to be printed
hereon and attested by the facsimile signature of its Secretary,
and this Bond to be dated as of __________ __, 1998.
INDUSTRIAL DEVELOPMENT AUTHORITY
OF RUSSELL COUNTY
By____________________________
Chairman
(Seal)
Attest:
_________________________
Secretary
(FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION)
This Bond is one of the Bonds of the Series described in the
within-mentioned Indenture.
FIRST UNION NATIONAL BANK,
as Trustee
By____________________________
Authorized Officer
Date:
(FORM OF REVERSE OF BOND)
UNITED STATES OF AMERICA COMMONWEALTH OF VIRGINIA
INDUSTRIAL DEVELOPMENT AUTHORITY
OF RUSSELL COUNTY
Pollution Control Revenue Bond
(Appalachian Power Company Project)
SERIES H
This Bond is one of an issue of $19,500,000 aggregate
principal amount of Industrial Development Authority of Russell
County Pollution Control Revenue Bonds (Appalachian Power Company
Project), Series H (the Bonds), of like date and tenor, except as
to number and principal amount, authorized and issued pursuant to
the Industrial Development and Revenue Bond Act (Chapter 26, Title
15.2, Code of Virginia of 1950, as amended) for the purpose of
refunding certain Pollution Control Revenue Bonds (Appalachian
Power Company Project), Series F, which were previously issued by
the Authority for the purpose of refunding other bonds previously
issued by the Authority for the purpose of acquiring, constructing,
installing, equipping and financing, in part, certain air pollution
control facilities (the Project) at the plants of Appalachian Power
Company, a Virginia public service corporation (the Company), in
Russell and Giles Counties, Virginia (such plants being
collectively referred to herein as the Plants) and selling the same
to the Company pursuant to an Agreement of Sale dated as of
December 1, 1974 (the Agreement of Sale), between the Authority and
the Company. The Bonds are issued under and, together with other
series of bonds, are equally and ratably secured by an Indenture of
Trust dated as of December 1, 1974, as supplemented and amended,
and as supplemented by a Seventh Supplemental Indenture of Trust
dated as of __________ __, 1998 (the Indenture of Trust as
supplemented and amended being referred to herein as the
Indenture), between the Authority and the Trustee which assigns to
the Trustee, as security for the Bonds, the Authority's rights
under the Agreement of Sale (except for its rights to payment of
Authority expenses and indemnification of the Authority).
Reference is hereby made to the Indenture, the Agreement of Sale
and to all amendments and supplements thereto for a description of
the provisions, among others, with respect to the nature and extent
of the security, the rights, duties and obligations of the
Authority and the Trustee and the rights of the owners of the Bonds
and the terms upon which the Bonds are issued and secured.
Additional bonds and refunding bonds ranking equally with the Bonds
and other bonds issued under the Indenture may be issued on the
terms provided in the Indenture.
The Bonds may not be called for redemption by the Authority
prior to __________ __, ____, except that in the event of the
exercise by the Company of its option to prepay the entire purchase
price of the Project under circumstances involving (i) the
imposition of unreasonable burdens or excessive liabilities on the
Company or the Authority with respect to the Project or either of
the Plants, or the operation of the Project or either of the
Plants, including taxes not imposed on December 1, 1974 and
economic, technological or other changes making the continued
operation of the Plants uneconomical in the opinion of the
Company's Board of Directors, (ii) damage to or destruction of the
Project or a portion thereof or all or a portion of either or both
of the Plants, (iii) condemnation of all or substantially all of
the Project or all or a portion of either or both of the Plants, or
(iv) the operation of either of the Plants being enjoined, all as
provided in Section 5.1(b) through (e) of the Agreement of Sale,
the Bonds are subject to redemption in whole, but not in part, at
any time upon payment of 100% of the principal amount thereof plus
interest accrued to the redemption date.
The Bonds are also subject to optional redemption by the
County prior to maturity on or after __________ __, at any time in
whole or in part (less than all of the Bonds to be redeemed to be
selected by lot by the Trustee) upon payment of the following
redemption prices (expressed as a percentage of the principal
amount of Bonds to be redeemed) plus accrued interest to the
redemption date:
Redemption
Redemption Dates (Dates Inclusive) Price
If less than all of the Bonds are called for redemption, each
$5,000 principal amount of a Bond having a principal amount of more
than $5,000 shall be counted as one bond for the purpose of
selecting by lot.
If any of the Bonds or portions thereof are called for
redemption, the Trustee shall cause a notice thereof identifying
the Bonds or portions thereof to be redeemed to be sent by
registered or certified mail to the registered owner of each such
Bond or portion thereof to be redeemed at his address as it appears
on the registration books not less than 30 nor more than 60 days
prior to the redemption date. All Bonds and portions thereof so
called for redemption shall cease to bear interest on the
redemption date, shall no longer be secured by the Indenture and
shall not be deemed to be outstanding under the provisions of the
Indenture, provided funds for their redemption are on deposit at
the place of payment at that time. If a portion of this Bond shall
be called for redemption, a new bond in principal amount equal to
the unredeemed portion hereof will be issued to the registered
owner upon the surrender hereof.
The owner of this Bond shall have no right to enforce the
provisions of the Indenture or to institute action to enforce the
covenants therein or to take any action with respect to any Event
of Default under the Indenture or to institute, appear in or defend
any suit or other proceeding with respect thereto, except as
provided in the Indenture. In certain events, on conditions, in
the manner and with the effect set forth in the Indenture, the
principal of all the Bonds issued under the Indenture and then
outstanding may become or may be declared due and payable before
their stated maturities, together with interest accrued thereon.
Modifications or alterations of the Indenture, or of any
supplements thereto, may be made only to the extent and in the
circumstances permitted by the Indenture.
The Bonds are issuable as registered bonds without coupons in
the denominations of $5,000 or any integral multiple thereof.
The transfer of this Bond may be registered by the registered
owner hereof in person or by his duly authorized attorney or legal
representative at the principal office of the Trustee, but only in
the manner and subject to the limitations and conditions provided
in the Indenture and upon surrender and cancellation of this Bond.
Upon any such registration of transfer the Authority shall execute
and the Trustee shall authenticate and deliver in exchange for this
Bond a new Bond or Bonds, registered in the name of the transferee,
of authorized denominations. The Bond Registrar shall, prior to
due presentment for registration of transfer, treat the registered
owner as the person exclusively entitled to payment of principal
and interest and the exercise of all other rights and powers of the
owner.
All acts, conditions and things required to happen, exist or
be performed precedent to and in the issuance of this Bond have
happened, exist and have been performed.
(FORM OF ASSIGNMENT)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto___________________________________________________
(Please insert Social Security or other taxpayer identification
number of assignee)______________________________________________
(Please print or typewrite Name and Address of Assignee)
_________________________________________________________________
the within Bond, and all rights thereunder, and hereby does
irrevocably constitute and appoint_______________________________
Attorney to transfer the within Bond on the books kept for the
registration thereof, with full power of substitution in the
premises.
Dated:
___________________________________
NOTICE: The signature to this
assignment must correspond with the
name as it appears on the face of
the within Bond in every particular,
without alteration or enlargement or
any change whatever.
Signature Guaranteed: _______________________________; and
WHEREAS, all things necessary have been done and performed to
make the Series H Bonds, when issued and authenticated by the
Trustee, valid, binding and legal limited obligations of the
Authority and to constitute this Seventh Supplemental Indenture a
valid and binding agreement securing the payment of the principal
of, premium, if any, and interest on all bonds issued and to be
issued hereunder and under the Indenture (the Indenture, as
supplemented by the First Supplemental Indenture, the Second
Supplemental Indenture, the Third Supplemental Indenture, the
Fourth Supplemental Indenture, the Fifth Supplemental Indenture,
the Sixth Supplemental Indenture and this Seventh Supplemental
Indenture being referred to herein as the Indenture) and the
execution and delivery of this Seventh Supplemental Indenture and
the execution and issuance of the Series H Bonds have in all
respects been authorized;
NOW, THEREFORE, the Authority hereby agrees and covenants with
the Trustee and with the respective holders and owners, from time
to time of the Series B, Series C, Series E, Series F and Series G
Bonds or coupons thereon, or any part thereof, as follows:
ARTICLE I
Purpose of Series H Bonds
Section 1.01. Purpose of Series H Bonds. The Series H Bonds
of the Authority are authorized for the purpose of refunding
$19,500,000 aggregate principal amount of Series F Bonds at their
redemption on __________ __, ____.
ARTICLE II
The Series H Bonds
Section 2.01. Issuance of Series H Bonds. There are hereby
authorized to be issued Pollution Control Revenue Bonds of the
Authority in the aggregate principal amount of nineteen million
five hundred thousand dollars ($19,500,000) as Refunding Bonds
pursuant to Section 2.11 of the Indenture. Said Bonds shall be
designated "Industrial Development Authority of Russell County
Pollution Control Revenue Bonds (Appalachian Power Company
Project), Series H", shall be dated as of the ______ day of
__________, 1998, shall bear interest payable semiannually on the
first day of May and November in each year at the rate of per
centum (______%) per annum and shall mature, subject to the right
of prior redemption as hereinafter set forth, on __________ __,
____.
Both principal of and interest on the Series H Bonds shall be
payable in lawful money of the United States of America, but only
from the revenues and receipts pledged to the payment thereof as
provided herein and in the Indenture.
Section 2.02. Form of Series H Bonds. The Series H Bonds
shall be issued substantially in the form of the Series H Bond
hereinabove set forth, with such appropriate variations, omissions
and insertions as are permitted or required by the Indenture or
this Seventh Supplemental Indenture.
Section 2.03. Execution, Authentication and Delivery of
Series H Bonds. The Series H Bonds shall be executed,
authenticated and delivered, and the proceeds therefrom deposited,
as provided in Section 2.11 of the Indenture, as amended by Section
5.01 of the Second Supplemental Indenture, and Section 3.2(c) of
the Agreement.
ARTICLE III
Redemption of Series H Bonds Before Maturity
Section 3.01. Redemption. The Series H Bonds may not be
called for redemption by the Authority prior to __________ __,
____, except that the Series H Bonds are subject to redemption in
the event that the Company shall exercise its option to prepay, and
shall prepay, the purchase price of the Project under circumstances
involving (i) the imposition of unreasonable burdens or excessive
liabilities on the Company or the Authority with respect to the
Project or either of the Plants, or the operation of the Project or
either of the Plants, including taxes not imposed on December 1,
1974 and economic, technological or other changes making the
continued operation of the Plants uneconomical in the opinion of
the Company's Board of Directors, (ii) damage to or destruction of
the Project or a portion thereof or all or a portion of either or
both of the Plants, (iii) condemnation of all or substantially all
of the Project or all or a portion of either or both of the Plants,
or (iv) the operation of either of the Plants being enjoined, all
as provided in Section 8.1(b) through (e) of the Agreement. In
such event the Series H Bonds shall be redeemed by the Authority at
any time at the principal amount thereof plus interest accrued to
the redemption date but without premium.
The Series H Bonds are also subject to optional redemption by
the County prior to maturity on or after __________ __, ____ at any
time in whole or in part (less than all of the Series H Bonds to be
redeemed to be selected by lot by the Trustee) upon payment of the
following redemption prices (expressed as a percentage of principal
amount of Series H Bonds to be redeemed) plus accrued interest to
the redemption date:
Redemption
Redemption Dates (Dates Inclusive) Price
If less than all of the Series H Bonds shall be called for
redemption, each $5,000 principal amount of a Series H Bond having
a principal amount of more than $5,000 shall be counted as one Bond
for the purpose of selecting by lot. If a portion of a Series H
Bond having a principal amount of more than $5,000 shall be called
for redemption, a new series H Bond in principal amount equal to
the unredeemed portion thereof shall be issued to the registered
owner upon the surrender thereof.
Section 3.02. Other Provisions Pertaining to Redemption.
Reference is hereby made to Article III of the Indenture for the
provisions describing the methods and effects of redemption.
ARTICLE IV
Covenants and Security
Section 4.01. Authority; Compliance with Conditions. The
Authority covenants that it is duly authorized under the laws of
the Commonwealth of Virginia, including particularly and without
limitation the Act, to issue the Series H Bonds authorized hereby
and to execute and deliver this Seventh Supplemental Indenture, to
assign and pledge the Agreement and the revenues and receipts
payable under the Agreement, to grant a security interest therein
and to pledge the revenues and receipts hereby pledged and in the
manner and to the extent contemplated herein and in the Indenture;
that all of the requirements and conditions for the issuance of the
Series H Bonds and the execution and delivery of this Seventh
Supplemental Indenture have been satisfied and complied with; that
all other action on its part necessary for the issuance of the
Series H Bonds and the execution and delivery of this Seventh
Supplemental Indenture has been duly and effectively taken; and
that the Series H Bonds in the hands of the owners thereof are and
will be valid and enforceable obligations of the Authority
according to the terms thereof and hereof.
Section 4.02. Security for Series H Bonds; Confirmation of
Indenture. The Series H Bonds shall be equally and ratably secured
under the Indenture with all outstanding Bonds, and any other
series of Bonds which may be issued pursuant to Section 2.10 or
2.11 of the Indenture, without preference, priority or distinction
of any Bonds, as defined therein, over any other Bonds. As
supplemented and amended, the Indenture is in all respects ratified
and confirmed, and the Indenture, including each supplemental
indenture, shall be read, taken and construed as one and the same
instrument. All covenants, agreements and provisions of, and all
security provided under, the Indenture shall apply with full force
and effect to the Series H Bonds and to the owners thereof.
Section 4.03. Tax Option. The Authority, in the resolution
authorizing the issuance of the Series H Bonds and the execution
and delivery of this Seventh Supplemental Indenture, has exercised
the option provided by Section 1,103-8(g)(4) of the proposed Income
Tax Regulations contained in the Notice of Proposed Rule Making
published on August 20, 1975 to have the provisions of Section
1.103-8 of the Income Tax Regulations prescribed by T.D. 7199, as
corrected August 11, 1972, and not the provisions of such proposed
Income Tax Regulations, applied to the Series H Bonds. The
Authority covenants and agrees to take such further action as may
from time to time be required in order to implement the exercise of
such option, including, but not limited to, the execution of any
letter or Internal Revenue Service form necessary or desirable to
signify the exercise or re-exercise of such option.
ARTICLE V
Miscellaneous
Section 5.01. Authority of Officers and Agents. The officers
and agents of the Authority shall do all acts and things required
of them by this Seventh Supplemental Indenture, the Indenture and
the Series H Bonds for the complete and punctual performance of all
covenants and agreements contained herein and therein.
Section 5.02. Successors and Assigns. This Seventh
Supplemental Indenture shall be binding upon, inure to the benefit
of and be enforceable by the parties and their respective
successors and assigns.
Section 5.03. Applicable Law. This Seventh Supplemental
Indenture shall be governed by the applicable laws of the
Commonwealth of Virginia.
Section 5.04. Counterparts. This Seventh Supplemental
Indenture may be executed in several counterparts, each of which
shall be an original, and all of which together shall constitute
but one and the same instrument.
IN WITNESS WHEREOF, the Authority and the Trustee have caused
this Seventh Supplemental Indenture to be executed in their
respective corporate names, all as of the date first above written.
INDUSTRIAL DEVELOPMENT AUTHORITY
OF RUSSELL COUNTY
By____________________________
Chairman
FIRST UNION NATIONAL BANK,
as Trustee
By____________________________
Vice President
Exhibit D-11
Before the
STATE CORPORATION COMMISSION
APPLICATION :
of : Case No.
APPALACHIAN POWER COMPANY :
APPLICATION UNDER TITLE 56,
CHAPTER 3, OF THE CODE OF VIRGINIA
APPALACHIAN POWER COMPANY, a corporation duly organized under
the laws of the Commonwealth of Virginia (hereinafter referred to
as "Appalachian"), respectfully shows:
1. Appalachian is a public service corporation organized in
Virginia as a public utility, subject to regulation, inter alia, as
to rates, service and security issues by this Commission and doing
business under the laws of the Commonwealth of Virginia and duly
qualified to transact a public utility business in the State of
West Virginia.
2. On November 14, 1974, Appalachian filed an Application in
Case No. A-364 with this Commission requesting that this Commission
issue an Order authorizing the transfer by Appalachian of certain
pollution control facilities at its Glen Lyn and Clinch River
plants (the "Project") to the Industrial Development Authority of
Russell County, Virginia (the "Authority"), and the acquisition by
Appalachian of the Project from the Authority, all pursuant to an
installment sale agreement between Appalachian and the Authority
(the "Agreement"). On November 25, 1974 and December 26, 1974,
this Commission issued Orders authorizing Appalachian to proceed
with the transactions described in the Order of December 26, 1974.
On December 30, 1974, the Authority issued $24,000,000 of pollution
control revenue bonds, Series A (the "Series A Bonds"), and
deposited the amount realized from such sale in the Construction
Fund (as defined in the Indenture of Trust, dated as of December 1,
1974 (the "Russell County Indenture") between the Authority and The
First National Exchange Bank of Virginia (later succeeded by
Dominion Trust Company), as Trustee (the "Trustee"), in order to
provide monies to reimburse Appalachian for a portion of the
amounts it had expended to pay the Cost of Construction (as defined
in the Agreement) of the Project. The Series A Bonds included
$10,500,000 principal amount of Series A Bonds which, by their
terms, matured on December 1, 1979 (the "Maturing Series A Bonds").
The Series A Bonds also included (i) $1,000,000 principal amount of
8-3/4% Series A Bonds which, by their terms, matured on December 1,
1989, (ii) $1,000,000 principal amount of 9-1/8% Series A Bonds
which, by their terms, matured on December 1, 1994 and (iii)
$11,500,000 principal amount of 9-3/8% Series A Bonds which, by
their terms, mature on December 1, 2000 (such Series A Bonds being
hereafter collectively referred to as the "Refundable Series A
Bonds"). On December 30, 1974, the transfer of the Existing
Facilities by Appalachian from the Authority was effected.
On November 28, 1975, in connection with the issue and
sale by the Authority of additional pollution control revenue
bonds, Series B, in the aggregate principal amount of $17,000,000
(the "Series B Bonds") to provide additional funds for the payment
of the Cost of Construction of the Project, Appalachian filed an
Amendment to the Application with this Commission requesting that
a supplemental Order be entered by this Commission granting all
requisite authorization under the laws of Virginia for the
transaction proposed in the Amendment. On December 12, 1975, this
Commission issued an Order of Amendment authorizing Appalachian to
proceed and take all necessary action to effect the transactions as
set forth in the Amendment. On December 30, 1975, the Authority
issued the Series B Bonds and deposited the amount realized from
such sale in the Construction Fund in order to provide additional
monies to pay the Cost of Construction of the Project. The Series
B Bonds included $6,000,000 principal amount of Series B Bonds
which, by their terms, matured on December 1, 1980 (the "Maturing
Series B Bonds"). The Series B Bonds also included $6,000,000
principal amount of 10% Series B Bonds which, by their terms,
mature on December 1, 2000 (the "Refundable Series B Bonds").
On October 16, 1979, in connection with the issue and
sale by the Authority of pollution control revenue bonds in the
aggregate principal amount of $11,000,000 (the "Series C Bonds") to
provide principal and interest payments required for the refunding
of the Maturing Series A Bonds, Appalachian filed an Application
with this Commission in Case No. A-772 requesting that an Order be
entered by this Commission granting all requisite authorization
under the laws of Virginia for the transaction proposed in the
Application. On November 1, 1979, this Commission issued an Order
in Case No. A-772 authorizing Appalachian to take all necessary
action to effect the transactions specified in said Order. On
November 15, 1979, the Authority issued the Series C Bonds and
deposited the net proceeds in the Bond Fund (as defined in the
Russell County Indenture), which proceeds were applied to the
payment of the principal of, and interest on, the $10,500,000
aggregate principal amount of Maturing Series A Bonds.
On November 25, 1980, the Authority issued and sold
pollution control revenue bonds in the aggregate principal amount
of $6,240,000 (the "Series D Bonds") and deposited the net proceeds
in the Bond Fund, which proceeds were applied to the payment of the
principal of, and interest on, the $6,000,000 aggregate principal
amount of Maturing Series B Bonds. The obligations of Appalachian
under the Agreement with respect to the issuance and sale of the
Series D Bonds did not require authorization of this Commission
under the provisions of Section 56-65.1 of the Code of Virginia, as
amended.
On October 24, 1980, in connection with the issue and
sale by the Authority of pollution control revenue bonds in the
aggregate principal amount of $6,500,000 (the "Series E Bonds") to
provide principal and interest payments required for the refunding
of the Series D Bonds, Appalachian filed an Application with this
Commission in Case No. PUA800076 requesting that an Order be
entered by this Commission granting all requisite authorization
under the laws of Virginia for the transaction proposed in the
Application. On November 20, 1980, this Commission issued an Order
in Case No. PUA800076 authorizing Appalachian to take all necessary
action to effect the transactions specified in said Order. On
February 25, 1981, the Authority issued the Series E Bonds and
deposited the net proceeds in the Bond Fund, which proceeds were
applied to the payment of the principal of, and interest on, the
$6,240,000 aggregate principal amount of Series D Bonds.
On July 15, 1988, in connection with the issue and sale
by the Authority of pollution control revenue bonds in the
aggregate principal amount of $19,500,000 (the "Series F Bonds") to
provide principal and interest payments required for the refunding
of the Series A and B Bonds, Appalachian filed an Application with
this Commission in Case No. PUA880041 requesting that an Order be
entered by this Commission granting all requisite authorization
under the laws of Virginia for the transaction proposed in the
Application. On September 8, 1988, this Commission issued an Order
in Case No. PUA880041 authorizing Appalachian to take all necessary
action to effect the transactions specified in said Order. On
November 10, 1988, the Authority issued the Series F Bonds and
deposited the net proceeds in the Bond Fund, which proceeds were
applied to the payment of the principal of, and interest on, the
$19,500,000 aggregate principal amount of Series A and B Bonds.
On August 10, 1990, in connection with the issue and sale
by the Authority of pollution control revenue bonds in the
aggregate principal amount of $17,500,000 (the "Series G Bonds") to
provide principal and interest payments required for the refunding
of the Series C and E Bonds, Appalachian filed an Application with
this Commission in Case No. PUA900001 requesting that an Order be
entered by this Commission granting all requisite authorization
under the laws of Virginia for the transaction proposed in the
Application. On September 18, 1990, this Commission issued an
Order in Case No. PUA900001 authorizing Appalachian to take all
necessary action to effect the transactions specified in said
Order. On November 8, 1990, the Authority issued the Series G
Bonds and deposited the net proceeds in the Bond Fund, which
proceeds were applied to the payment of the principal of, and
interest on, the $17,500,000 aggregate principal amount of Series
C and E Bonds.
Pursuant to the Agreement, Appalachian will request the
Authority to issue and sell additional pollution control revenue
bonds in an aggregate principal amount of up to $19,500,000 (the
"Series H Bonds") in order to provide funds for the payment of up
to $19,500,000 aggregate principal amount of the Series F Bonds on
or prior to their stated maturity. It is contemplated that the
Series H Bonds will be issued pursuant to the Russell County
Indenture as supplemented and amended and to be supplemented by a
Seventh Supplemental Indenture in substantially the form filed
herewith as Exhibit A, which will provide that the proceeds of the
sale of the Series H Bonds will be deposited by the Authority with
the Trustee in the Bond Fund and applied to payment of up to
$19,500,000 aggregate principal amount of the Series F Bonds.
* * *
It is contemplated that the Series H Bonds will be sold
pursuant to arrangements with a group of underwriters. While
Appalachian will not be a party to the underwriting arrangements
for the Series H Bonds, the Agreement provides that the Series H
Bonds shall have such terms as shall be specified by Appalachian.
If it is deemed advisable, the final form of the Supplemental
Indenture may provide for a sinking fund pursuant to which a
portion of all the Series H Bonds issued could be retired annually.
In addition, the Series H Bonds may not, if it is deemed advisable,
be redeemable optionally in whole or in part for a period of time.
Finally, if it is deemed advisable, the Series H Bonds may be
provided some form of credit enhancement, such as a letter of
credit, bond insurance, or surety bond.
Appalachian understands that the Series H Bonds can be
issued under circumstances that the interest on such Series H Bonds
will be excludable from gross income under the provisions of
Section 103 of the Internal Revenue Code of 1986, as amended
(except for interest on any such Bond during a period in which it
is held by a person who is a substantial user of the Project or a
related person), and that while it is not possible to predict
precisely the interest rate which may be obtained in connection
with the issuance of bonds having such characteristics, the annual
interest rate on tax exempt obligations historically has been, and
can be expected under current circumstances to be, 1-1/2% to 2-1/2%
or more lower than the rates of obligations of like tenor and
comparable quality, interest on which is fully subject to Federal
income tax.
The Agreement provides that each installment of the
purchase price for the Project payable by Appalachian will be in
such an amount (together with other moneys held by the Trustee
under the Indenture for that purpose) as will enable payment, when
due, of (i) the interest on all Series H Bonds and any additional
bonds and refunding bonds issued under the Indenture, (ii) the
stated maturities of the principal of all Series H Bonds and any
additional bonds and refunding bonds issued under the Indenture and
(iii) amounts, including any accrued interest, payable in
connection with any mandatory redemption of all Series H Bonds and
any additional bonds or refunding bonds issued under the Indenture.
The Agreement also obligates Appalachian to pay the fees and
charges of the Trustee, as well as certain administrative expenses
of the Authority. Appalachian will not agree, without further
Order of this Commission, to the issuance of any Series H Bond if
(i) the stated maturity of any such Bond shall be more than thirty
(30) years; (ii) if the fixed rate of interest to be borne by any
such Series H Bonds shall exceed 8% or the initial rate of interest
to be borne by any fluctuating rate Series H Bond shall exceed 8%;
(iii) if the discount from the initial public offering price of any
such Bond shall exceed 5% of the principal amount thereof; or (iv)
if the initial public offering price of any such Bond shall be less
than 95% of the principal amount thereof.
Since Appalachian believes that every effort should be
made to minimize, to the extent possible, carrying costs of
facilities employed by Appalachian in the rendition of utility
services and the Authority will apply the funds derived from the
issuance of the Series H Bonds to the payment of $19,500,000
aggregate principal amount of Series F Bonds on or prior to their
stated maturity, Appalachian believes that the public interest will
be served by the issuance of the Series H Bonds.
Appalachian believes that the consummation of the
transaction herein proposed will be in the best interests of
Appalachian's consumers and investors and consistent with sound and
prudent financial policy. Appalachian also believes that although
its contractual obligations under the Agreement are not subject to
the provisions of Chapter 3 of Title 56 of the Code of Virginia, as
amended, if this Commission issues the Order requested hereby,
Appalachian will have received all necessary authorization from
this Commission which may be necessary or appropriate under the
laws of the Commonwealth of Virginia in respect of the transaction
described herein.
Because the proceeds from the sale of the Series H Bonds
will be deposited in the Bond Fund and will be applied to the
payment of $19,500,000 aggregate principal amount of the Series F
Bonds on or prior to their stated maturity, none of the proceeds of
the sale of the Series H Bonds will be received by Appalachian.
* * *
3. Appalachian proposes to issue and sell, from time to time
through December 31, 1998, up to $250,000,000 aggregate principal
amount of First Mortgage Bonds, in one or more new series (the "New
Bonds").
Each such series will mature in not less than 9 months
and not more than 42 years. The interest rate of the New Bonds may
be fixed or variable, and shall be sold (i) by competitive bidding;
(ii) by direct placement with a commercial bank or other
institutional investor; or (iii) through negotiation with
underwriters or agents. Any fixed rate of interest will not exceed
by more than 3.0% the yield to maturity on United States Treasury
Bonds of comparable maturity at the time of pricing of the New
Bonds. The initial interest rate on any variable rate New Bond
will not exceed 10% per annum.
It is difficult to determine, under present market
conditions, whether it would be more advantageous to Appalachian to
sell its New Bonds with a 42-year or some shorter maturity. It is
in the public interest, however, that Appalachian be afforded the
necessary flexibility to adjust its financing program to
developments in the markets for medium and long-term debt
securities when and as they occur in order to obtain the best
possible price, interest rate and terms for its New Bonds. It is
proposed, therefore, that Appalachian will decide at a subsequent
date whether there will be more than one series, and on the
maturity of each series, of the New Bonds. Appalachian will agree
to specific redemption provisions, if any, at the time of the
pricing of the New Bonds.
The New Bonds will be issued under and secured, together
with the presently outstanding First Mortgage Bonds, by the
Mortgage and Deed of Trust dated as of December 1, 1940, made by
Appalachian to Bankers Trust Company and R. Gregory Page, as
Trustees, as heretofore supplemented and amended (on file in Cases
No. 7118, 9022, 9947, 10555, 11183, 11908, 13367, 13857, 15683, S-
270, S-352, A-28, A-42, A-118, A-147, A-209, A-254, A-297, A-394,
A-397, A-444, A-483, A-513, A-614, A-739, A-753, PUA800002,
PUA800065, PUA820008, PUA830066, PUA860088, PUA870041, PUA890040,
PUF910025, PUF910047, PUF920035, PUF930038, PUF930035, PUF940002,
PUF950018 and PUF960032), and as to be further supplemented and
amended by one or more Indentures Supplemental to the Mortgage and
Deed of Trust. There is attached hereto as Exhibit B the form of
Supplemental Indenture proposed to be utilized by Appalachian for
one or more series of the New Bonds (except for provisions such as
interest rate, maturity, redemption terms and certain
administrative matters). Such form of Supplemental Indenture
contains a more complete description of the terms of the New Bonds.
* * *
4. As an alternative to the issuance of the New Bonds,
Appalachian proposes to issue from time to time through December
31, 1998, up to $250,000,000 aggregate principal amount of its
unsecured promissory notes (the "Notes"). The Notes may be issued
in the form of senior or other promissory notes. The Notes will be
issued under an indenture (the "Indenture"), as supplemented from
time to time by one or more company orders, or other similar
documentation. Copies of the forms of Indenture and company order
are attached hereto as Exhibits C and D, respectively.
The Notes will mature in not less than 9 months and not
more than 42 years and will be sold (i) by competitive bidding;
(ii) through negotiation with underwriters or agents; or (iii) by
direct placement with a commercial bank or other institutional
investor. Appalachian will agree to specific redemption
provisions, if any, including redemption premiums, at the time of
the pricing of the Notes.
The interest rate on the Notes may be fixed or variable.
Any fixed rate of interest of the Notes will not be greater than
300 basis points above the yield at the time of issuance of the
Notes to maturity of United States Treasury obligations that mature
on or about the date of maturity of the Notes. The initial
interest rate of any variable rate Note will not exceed 10% per
annum.
The Indenture (or any agreement documenting the issuance
of any Notes) may contain restrictive covenants which would
prohibit Appalachian from, among other things, (i) creating,
incurring, assuming or permitting to exist any liens on its
property, with certain stated exceptions; (ii) creating or
incurring any other indebtedness for borrowed money, other than as
may be specified therein; (iii) failing to maintain a specified
level of capitalization; (iv) entering into certain mergers,
consolidations and dispositions of assets; and (v) permitting
certain events to occur in connection with pension plans.
* * *
5. In no event will the amount of Notes and/or New Bonds
issued in the transactions described herein exceed a total of
$250,000,000. In connection with the issuance of the New Bonds
and/or Notes, Appalachian may enter into one or more interest rate
hedging arrangements (including, but not limited to, an interest
rate swap, cap, collar, treasury lock, or similar agreement
(collectively, the "Hedging Facility")), with a bank or other
financial institution (the "Counterparty"). The Hedging Facility
will set forth the specific terms upon which Appalachian will agree
to pay the Counterparty payments and/or fees and the other terms
and conditions of any rights or obligations thereunder.
Appalachian proposes that the fees paid in connection with this
arrangement will be on a straight-line basis over the life of the
Hedging Facility. The terms of each Hedging Facility would be
negotiated by Appalachian with the respective Counterparty, but in
no event would the rate of interest payable on the securities as
hedged exceed the applicable parameters set forth herein.
6. Any proceeds realized from the sale of the New Bonds
and/or Notes, together with any other funds which may become
available to Appalachian, will be used to redeem directly or
indirectly long-term debt, to refund directly or indirectly
preferred stock, to repay short-term debt at or prior to maturity,
to reimburse Appalachian's treasury for expenditures incurred in
connection with its construction program and for other corporate
purposes. Appalachian's First Mortgage Bonds, 8.75% Series due
2022 ($29,919,000 principal amount outstanding) may be redeemed at
a regular redemption price of 106.57% of the principal amount
thereof; the First Mortgage Bonds, 8.70% Series due 2022
($35,000,000 principal amount outstanding) may be redeemed at a
regular redemption price of 106.53% of the principal amount
thereof; the First Mortgage Bonds, 8.43% Series due 2022
($50,000,000 principal amount outstanding) may be redeemed at a
regular redemption price of 106.33% of the principal amount
thereof; the First Mortgage Bonds, 7.95% Series due 2002
($60,000,000 principal amount outstanding) may be redeemed at a
regular redemption price of 102.28% of the principal amount
thereof. The redemptions will occur if Appalachian considers that
the payment of the premiums of 6.57%, 6.53%, 6.33% and 2.28%,
respectively, is prudent in light of the substantial amounts of
interest expense that could be saved by early redemption of one or
all of these series, and proposes to treat said premiums, if such
early redemptions are carried out, as an expense of the New Bonds
and/or Notes, to be amortized over the life of the New Bonds and/or
Notes. If such life is twenty years, the amortization of such
premium would be approximately $439,210 per year. Appalachian
intends to utilize deferred tax accounting for the premium expense,
in order properly to match the amortization of the expense and the
related tax effect. In addition, Appalachian estimates that
approximately $203 million (exclusive of allowance for funds used
during construction) will be expended in 1998 in connection with
its construction program.
Appalachian may purchase the series of first mortgage
bonds referred to herein or any series of preferred stock through
tender offer, negotiated, open market or other form of purchase or
otherwise by means other than redemption, if they can be refunded
at a lower effective cost.
The tender offers will occur if Appalachian considers
that the payment of the necessary premium is prudent in light of
the substantial amounts of interest expense that could be saved by
early redemption of any of these series, and proposes to treat said
premium as an expense of the New Bonds or Notes to be amortized
over the life of the New Bonds or Notes. Appalachian intends to
utilize deferred tax accounting for the premium expense, in order
properly to match the amortization of the expense and the related
tax effect.
7. Balance Sheets and Statements of Income and Retained
Earnings for the twelve months ended June 30, 1997 are attached
hereto as Exhibit E.
8. The issuance of the New Bonds and/or Notes will be
effected in compliance with all applicable indenture, charter and
other standards relating to debt and equity securities and
capitalization ratios of Appalachian.
<PAGE>
Appalachian, therefore, asks that an Order be entered by
this Commission granting all requisite authorization under the laws
of Virginia for the transactions herein proposed.
Dated: November 4, 1997
APPALACHIAN POWER COMPANY
By /s/ G. P. Maloney
Vice President
and By/s/ John M. Adams, Jr.
Assistant Secretary
Attorneys for Applicant - Appalachian Power Company:
Thomas G. Berkemeyer, Esq.
American Electric Power Service Corporation
1 Riverside Plaza
Columbus, Ohio 43215
H. Allen Glover, Jr., Esq.
George J. A. Clemo, Esq.
Woods, Rogers & Hazlegrove
First Union Tower, Suite 1400
10 South Jefferson Street
Roanoke, Virginia 24011
STATE OF OHIO )
) ss:
COUNTY OF FRANKLIN )
Before me, Mary M. Soltesz, a Notary Public in and for the
State and County aforesaid, this 4th day of November, 1997,
personally appeared G. P. Maloney and John M. Adams, Jr., to me
known to be the persons whose names are signed to the foregoing
Application, and after being first duly sworn made oath and said
that they are Vice President and Assistant Secretary, respectively,
of Appalachian Power Company, that they have read the Application
and know the contents thereof, that the allegations therein are
true and correct to the best of their knowledge, information and
belief, and that they are duly authorized to make, verify and file
the Application for Appalachian Power Company.
Subscribed and sworn to before me this 4th day of November,
1997.
/s/ Mary M. Soltesz
Notary Public
My Commission expires 7-12-99
Exhibit D-12
COMMONWEALTH OF VIRGINIA
STATE CORPORATION COMMISSION
AT RICHMOND, November 26, 1997
APPLICATION OF
APPALACHIAN POWER COMPANY CASE NO. PUF970035
For authority to issue long-term debt
ORDER GRANTING AUTHORITY
On November 6, 1997, Appalachian Power Company ("APCo",
"Applicant") filed an application under Chapter 3 of Title 56 of
the Code of Virginia for authority to issue up to $269,500,000 in
long-term debt. Applicant has paid the requisite fee of $250.
The long-term indebtedness APCo proposes to incur will be in
the form of up to $19,500,000 in pollution control bonds and up to
$250,000,000 in first mortgage bonds and/or unsecured promissory
notes. The pollution control bonds are to be issued on or prior to
November 1, 1998, and the first mortgage bonds/unsecured promissory
notes are to be issued from time to time through December 31, 1998.
Although the Company has requested the flexibility to set specific
terms and conditions, such as the maturity and interest rate, at
the time of issuance based upon market conditions at that time, it
has outlined broad parameters under which the issuance of debt will
take place.
The proceeds from the pollution control bonds will be used to
retire a like amount of currently outstanding pollution control
bonds, Series F, on or prior to their current maturity date. The
proceeds from the issuance of the $250,000,000 in debt will be used
to redeem, directly or indirectly, long-term debt, to refund,
directly or indirectly, preferred stock, to repay short-term debt,
to fund the Company's construction program or for other corporate
purposes. In conjunction with the issuance of the debt, the
Company states that it may enter into one or more interest rate
hedging arrangements (including, but not limited to, an interest
rate swap, cap, collar, treasury lock, or similar agreement) with
a bank or other financial institution.
THE COMMISSION, upon consideration of the application and
having been advised by Staff, is of the opinion and finds that
approval of the application will not be detrimental to the public
interest. We will approve the application subject to the terms and
conditions detailed herein. The hedging arrangements proposed by
Applicant are approved only as part of the issuance of debt
securities in this proceeding. Such approval shall not, however,
be deemed a general grant of authority to enter into interest rate
swaps, caps, collars, treasury locks or similar agreements with
banks or other financial institutions. We note that we recently
held, in Case No. PUF 970019, that interest rate swap agreements
come within the purview of Chapter 3 of Title 56 of the Code of
Virginia and, as such, require prior approval from the Commission.
Accordingly,
IT IS ORDERED THAT:
1) Applicant is authorized to incur long-term indebtedness
in the form of pollution control revenue bonds of up to
$19,500,000, under the terms and conditions and for the purposes
outlined in its application, through November 1, 1998.
2) Applicant is authorized to issue and sell up to
$250,000,000 in debt, under the terms and conditions and for the
purposes as outlined in the application, through December 31, 1998.
3) Applicant is authorized to enter into the hedging
agreements proposed in its application only in conjunction with the
issuance of the debt securities approved herein and only for a term
not to exceed 60 days.
4) The authority to issue debt for purposes of retiring
other obligations prior to maturity is conditioned upon there being
a demonstrated cost savings to the Company and its ratepayers.
5) Applicant shall submit a preliminary Report of Action
within seven days after the issuance of any debt pursuant to this
Order to include the issuance date, the amount of the issue, the
interest rate, the maturity date, and the securities retired, if
any.
6) Within 60 days after the end of each calendar quarter in
which any debt is issued pursuant to this Order, Applicant shall
file a more detailed Report of Action with respect to the debt to
include the type of debt issued, the date and amount of each
series, the interest rate, the maturity date, net proceeds to
Applicant, an itemized list of expenses to date associated with
each issue, the securities retired, if any, with an analysis
demonstrating the cost savings associated with the refunding and a
balance sheet reflecting the action taken.
7) Applicant's Final Report of Action shall be due on or
before February 26, 1999, to include a summary of all information
filed in the Reports of Action pursuant to Ordering paragraph 5, in
addition to the information, if required, related to the issuance
of debt in the quarter ended December 31, 1998.
8) That the authority granted herein shall have no
implications for ratemaking purposes.
9) That this matter shall remain under the continued review,
audit and appropriate action of this Commission.
AN ATTESTED COPY hereof shall be sent to Applicant, care of
Thomas G. Berkemeyer, Senior Attorney, American Electric Power, 1
Riverside Plaza, Columbus, OH 43215-2373; and to the Division of
Economics and Finance of the Commission.
/s/ William J. Bridge
Clerk of the State Corporation Commission
Exhibit H-1-1
UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Release No. /June , 1998
________________________________________
:
In the Matter of :
:
:
APPALACHIAN POWER COMPANY :
40 Franklin Road, S.W. :
Roanoke, Virginia 24011 :
:
(70-5503) :
________________________________________:
NOTICE OF PROPOSED ISSUANCE OF REFUNDING BONDS BY COUNTY AUTHORITY
IN CONNECTION WITH POLLUTION CONTROL FINANCING
NOTICE IS HEREBY GIVEN that Appalachian Power Company
("Appalachian"), an electric utility subsidiary of American
Electric Power Company, Inc., a registered holding company, has
filed with this Commission a post-effective amendment to its
Application or Declaration previously filed and amended pursuant to
the Public Utility Holding Company Act of 1935 (the "Act"),
designating Sections 9(a), 10 and 12(d) of the Act and Rule
44(b)(3) promulgated thereunder as applicable to the proposed
transaction. All interested persons are referred to the
Application or Declaration, as amended by said post-effective
amendments, which is summarized below, for a complete statement of
the proposed transaction.
By Order dated December 10, 1974 (HCAR No. 18703), Appalachian was
authorized to enter into an agreement of sale (the "Agreement")
with the Industrial Development Authority of Russell County,
Virginia (the "Authority") concerning the financing of pollution
control facilities (the "Facilities") at Appalachian's Glen Lyn and
Clinch River plants. Under the Agreement the Authority is to issue
and sell its pollution control revenue bonds (the "Revenue Bonds"),
in one or more series, the proceeds from which sales are to be
deposited by the Authority with the trustee (the "Trustee") under
the indenture (the "Indenture") entered into between the Authority
and the Trustee pursuant to which Indenture the Revenue Bonds are
issued and secured. The proceeds will then be applied to the
payment of the costs of construction of the Facilities, originally
estimated at $45,000,000, or, in the case of proceeds from the sale
of refunding bonds, to the payment of principal, premium (if any)
and/or interest on Revenue Bonds to be refunded. Appalachian
conveyed an undivided interest in a portion of the Facilities to
the Authority, which portion the Authority sold to Appalachian
under an installment sales arrangement requiring Appalachian to pay
as the purchase price semi-annual installments in such an amount
(together with other monies held by the Trustee under the Indenture
for that purpose) as to enable the Authority to pay, when due, the
interest and principal on the Revenue Bonds. Jurisdiction was re-
served in the Order of December 10, 1974, with respect to the
payment of the purchase price of the Facilities by installment
payments insofar as such payments were affected by the interest
rate or rates of the Revenue Bonds to be issued and sold by the
Authority.
By Orders dated December 27, 1974, December 17, 1975, November 14,
1979, November 21, 1980, February 20, 1981, October 31, 1988 and
October 16, 1990 (HCAR Nos. 18736, 19303, 21295, 21802, 21924,
24737 and 25169), such jurisdiction was released concerning the
sales of Revenue Bonds in the principal amounts of $24,000,000,
$17,000,000, $11,000,000, $6,240,000, $6,500,000, $19,500,000 and
$17,500,000, respectively, as such sales affected the purchase
price to Appalachian.
By post-effective amendment it is stated that the Authority now
proposes to issue and sell a series of refunding bonds (the
"Refunding Bonds") in the aggregate principal amount of
$19,500,000, the net proceeds from the sale of which will be used
to provide for the principal payment required for the refunding
prior to their stated maturity of $19,500,000 principal amount of
Revenue Bonds previously issued by the Authority. The Refunding
Bonds will be issued under and secured by the Indenture and a
seventh supplemental indenture, will bear interest semi-annually
and will mature at a date or dates not more than thirty years from
the date of issuance.
It is contemplated that the Refunding Bonds will be sold by the
Authority pursuant to arrangements with a group of underwriters.
The fees and expenses to be incurred in connection with the
proposed transaction will be supplied by further amendment. It is
stated that the State Corporation Commission of Virginia has
jurisdiction over the proposed transaction and that no other state
commission and no federal commission, other than this Commission,
has jurisdiction thereover.
The Application or Declaration and any amendments thereto are
available for public inspection through the Commission's Office of
Public Reference. Interested persons wishing to comment or request
a hearing should submit their views in writing by June , 1998 to
the Secretary, Securities and Exchange Commission, Washington, D.C.
20549, and serve a copy on the applicant or declarant at the
address specified above. Proof of service (by affidavit or, in
case of any attorney at law, by certificate) should be filed with
the request. Any request for a hearing shall identify specifically
the issues of fact or law that are disputed. A person who so
requests will be notified of any hearing, if ordered, and will
receive a copy of any notice or Order issued in this matter. After
said date, the Application or Declaration, as filed or as it may be
amended, may be permitted to become effective.
For the Commission, by the Office of Public Utility Regulation,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
