PROSPECTUS SUPPLEMENT
(To Prospectus Dated February 19, 1993)
$30,000,000
New Orleans Public Service Inc.
GENERAL AND REFUNDING MORTGAGE BONDS,
8.67% SERIES DUE APRIL 1, 2005
Interest payable April 1 and October 1
Interest on the Company's General and Refunding Mortgage Bonds, 8.67%
Series due April 1, 2005 (the "New Bonds") is payable April 1 and
October 1 of each year, commencing October 1, 1995. The New Bonds
will not be redeemable prior to [WW] April 1, 1998, except in certain
limited circumstances in volving redemption at the option of the holders
of New Bonds. Thereafter, the New Bonds will be redeemable at the option
of the Company, in whole or in part, at any time, upon not less than
30 days' notice, at a redemption price of 100% of the principal amount
as described herein.
See "Description of the New Bonds # Redemption and Purchase of New Bonds"
herein.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PRICE 100% AND ACCRUED INTEREST
Underwriting
Price To Discounts and Proceeds to
Public (1) Commission (2) Company(1)(3)
Per Bond 100.00% .65% 99.35%
Total $30,000,000 $195,000 $29,805,000
(1) Plus accrued interest from April 1, 1995.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deduction of expenses payable by the Company estimated
at $220,000.
The New Bonds are offered subject to prior sale, when, as and if
accepted by the Underwriter and subject to approval of certain
legal matters by Winthrop, Stimson, Putnam & Roberts, counsel for
the Underwriter. It is expected that delivery of the New Bonds will
be on or about April 27, 1995 through the book-entry facilities of
The Depository Trust Company, New York, New York.
MORGAN STANLEY & CO. Incorporated
April 20, 1995
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Reference is made to "Incorporation of Certain Documents by Reference"
in the accompanying Prospectus. At the date of this Prospectus
Supplement, the Incorporated Documents include the Company's Annual
Report on Form 10-K for the year ended December 31, 1994
("the Form 10-K").
RECENT DEVELOPMENT
As previously disclosed in the Form 10-K, a proceeding is pending at
the Federal Energy Regulatory Commission ("FERC") to consider whether
the Entergy System Agreement (an agreement among regulated subsidiaries
of Entergy Corporation ("Entergy") relating to the sharing of generating
capacity and other resources) permits certain out-of-service generating
units to be included in reserve equalization calculations under Service
Schedule MSS-1 to the System Agreement. On March 3, 1995, a FERC
administrative law judge ("ALJ") issued an opinion holding that the
practice whereby these subsidiaries of Entergy included the
out-of-service units in the reserve equalization calculations during
the period 1987 through 1993 was notpermitted by Service Schedule
MSS-1 and, therefore, constituted a violation of the System Agreement.
However, the ALJ found that the violation was in good faith and had
benefited the ratepayers of the Entergy system as a whole in certain
respects, and that these subsidiaries of Entergy did not deserve to be
censured or punished in connection therewith. Accordingly, the ALJ
determined that no retroactive refunds by any of these regulated
subsidiaries of Entergy should be ordered.
The ALJ's order is subject to review by the FERC. If the FERC concurs
with the finding that the System Agreement was violated, it would
have the discretion, notwithstanding the ALJ's recommendation, to
order that refunds be made. If that were to occur, the Company might
be required to refund some or all of the amount by which it was
underbilled pursuant to the System Agreement as a result of the
inclusion of the outof-service units in the reserve equalization
formula, which is estimated to be $13.1 million (plus accrued interest).
The Company cannot determine at this time whether it would be authorized
to recover through retail rates any amounts associated with refunds
that might be ordered by the FERC in this proceeding. For further
information with respect to this proceeding, reference is made to page
16 of the Form 10-K.
USE OF PROCEEDS
The net proceeds from the issuance and sale of the New Bonds will be
used to reimburse the Company for the payment at maturity of $9.2
million aggregate principal amount of its General and Refunding
Mortgage Bonds, 13.90% Series due February 1, 1995, to make a required
sinking fund payment of $15 million on May 1, 1995 on the Company's
General and Refunding Mortgage Bonds, 10.95% Series due May 1, 1997
and for other corporate purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company has calculated ratios of earnings to fixed charges pursuant
to Item 503 of Securities and Exchange Commission ("SEC") Regulation S-K
as follows:
Year Ended December 31,
1994 1993 1992 1991 1990
Ratios of Earnings to Fixed Charges(a) 1.91 4.68(b) 2.66 5.66(c) 2.73
(a) "Earnings", as defined by Item 503(d)(3) of SEC Regulation S-K,
represent the aggregate of (1) net income, (2) taxes based on income,
(3) investment tax credit adjustments # net and (4) fixed charges.
"Fixed Charges" as defined by Item 503(d)(4) of SEC Regulation S-K
include interest (whether expensed or capitalized), related
amortization and interest applicable to rentals charged to operating
expenses. This table supersedes the one set forth in the accompanying
Prospectus under "Ratios of Earnings to Fixed Charges."
(b) Earnings for the year ended December 31, 1993 include approximately
$18 million pre-tax cumulative effect of a change in accounting
principle to provide for the accrual of estimated unbilled revenues.
(c) Earnings for the year ended December 31, 1991 include the effect of
a settlement between the Company and the Council of the City of
New Orleans, Louisiana, effective October 4, 1991, that permitted the
Company to defer for future recovery, and record as an asset, $90
million of previously incurred but uncollected Grand Gulf 1-related
costs.
DESCRIPTION OF THE NEW BONDS
The following description of the particular terms of the New Bonds
offered hereby supplements the description of the general terms and
provisions of the New G&R Bonds set forth in the accompanying
Prospectus under the heading "Description of the New G&R Bonds", to
which description reference is hereby made. As used hereinafter, the
terms "G&R Bonds", "Rate Recovery Mortgage Bonds", "Trustee" and
"G&R Mortgage" shall have the meanings provided therefor under the
heading "Description of the New G&R Bonds" in the accompanying
Prospectus, except that Z. George Klodnicki resigned as Trustee
and was succeeded by Mark F. McLaughlin as of May 26, 1993.
Interest, Maturity and Payment. The New Bonds will mature on
April 1, 2005, and will bear interest at the rate shown in their
title, payable April 1 and October 1 of each year, commencing October
1, 1995. Interest is payable to holders of record at the close of
business on the last day of the March or September next preceding the
interest payment date. Principal and interest are payable at the
office or agency of the Company in New York City. (See "Book-Entry
G&R Bonds" below for information on principal and interest paymentsto
owners of beneficial interests in the New Bonds). The Company has
covenanted to pay interest on any overdue principal and (to the
extent that payment of such interest is enforceable under applicable
law) on any overdue installment of interest at the rate of
9.67% per annum.
Redemption and Purchase of New Bonds.
General. Except as provided below under "Redemption of New Bonds at
the Option of Holders", the New Bonds will not be redeemable for any
purpose prior to April 1, 1998. Thereafter, the New Bonds will be
redeemable, at the option of the Company, in whole at any time, or in
part from time to time, upon not less than 30 days' notice (a) so long
as any Rate Recovery Mortgage Bonds are outstanding (the latest
scheduled maturity of currently outstanding Rate Recovery Mortgage
Bonds being May 1, 1997), at the special redemption price of 100% of
the principal amount, with cash consideration from certain disposals
of assets or from sale-leaseback transactions (as described in the
accompanying Prospectus in the last paragraph under the heading
"Description of the New G&R Bonds # Certain Other Covenants and
Agreements"), (b) at the special redemption price of 100% of the
principal amount, with certain deposited cash or proceeds of released
property, and (c) at the general redemption price of 100% of the
principal amount for all other redemptions, in each case together with
accrued interest to the date fixed for redemption.
If, at the time notice of redemption is given, the redemption monies
are not held by the Trustee, the redemption may be made subject to
receipt of such monies before the date fixed for redemption, and such
notice shall be of no effect unless such monies are so received.
Cash deposited under any provision of the G&R Mortgage (with certain
exceptions) may be applied to the redemption or purchase (including
the purchase from the Company) of G&R Bonds of any series. The New
Bonds are not subject to redemption under any sinking or improvement
fund or any maintenance or replacement fund.
Redemption of New Bonds at the Option of Holders. Notwithstanding the
prohibition on redemption of New Bonds prior to April 1, 1998, the
holders of New Bonds will have the right, at any time prior to
maturity, to tender their New Bonds to the Company for redemption in
the limited circumstances and at the prices described below:
(1) As described in the accompanying Prospectus under the heading "Description
of the New G&R Bonds # Redemption or Exchange in the Event of Consolidation or
Merger with LP&L", in the event of a consolidation or merger of the Company with
Louisiana Power & Light Company, the new company formed thereby would have the
option to offer to exchange all outstanding G&R Bonds, including the New Bonds,
for a like principal amount of the new company's first mortgage bonds. If the
new company makes such an offer to exchange, the holders of outstanding G&R
Bonds, including the New Bonds, may, instead of receiving such first mortgage
bonds, require the Company to redeem such G&R Bonds. The redemption prices
applicable for these purposes to the New Bonds are determined as follows:
(a) if, at the time the new company gives notice to G&R Bondholders of
the offer to exchange, the first mortgage bonds of the new company
are rated higher than, or in the same generic rating category as,
the G&R Bonds by at least two nationally recognized statistical rating
agencies, at a redemption price equal to the principal amount of the
New Bonds to be redeemed, together with accrued interest to the date
fixed for redemption; and
(b) in all other cases, at the then applicable general redemption
prices specified under "General Redemption Price (%)" in the table
under the heading "General" above.
(2) As described in the accompanying Prospectus under the heading
"Description of the New G&R Bonds # Redemption at the Option of Holders in the
Event of Takeover", if all or substantially all of the Company's property or a
majority of its common stock is taken or acquired by a governmental authority,
the holders of all G&R Bonds then outstanding, including the New Bonds, have
the right to tender their G&R Bonds for redemption by the Company at a price
equal to the principal amount thereof plus accrued interest to the date fixed
for redemption. The Company has reserved the right (either with the consent of
the holders of G&R Bonds issued prior to January 1, 1993 or after all of such
bonds have been retired at its discretion) to eliminate this provision from the
G&R Mortgage without the consent of holders of the New Bonds or any subsequent
series of G&R Bonds.
Dividend Covenant. The Company will covenant in substance that, so
long as any New Bonds remain outstanding, it will not pay any cash dividends on
common stock or repurchase common stock after March 31, 1995 except from
credits to earned surplus after March 31, 1995 plus $150,000,000 plus such
additional amounts as shall be approved by the SEC.
Book-Entry G&R Bonds. The information under the heading "Description
of the New G&R Bonds # Form and Exchanges" in the accompanying Prospectus will
not be applicable to the New Bonds. Except under the circumstances described
below, the New Bonds will be issued in the form of one or more fully registered
bonds that will be deposited with, or on behalf of, The Depository Trust
Company, New York, New York ("DTC"), or such other depository as may be
subsequently designated, and registered in the name of Cede & Co., as nominee
for DTC.
So long as DTC, or its nominee, is the owner of the New Bonds, DTC or
such nominee, as the case may be, will be considered the sole registered holder
of the New Bonds for all purposes under the G&R Mortgage. Payments of principal
of and premium, if any, and interest on the New Bonds will be made to DTC
or its nominee, as the case may be, as the holder of the New Bonds. Except as
set forth below, owners of beneficial interests in the New Bonds will not be
entitled to have any individual New Bonds registered in their names, will not
receive or be entitled to receive physical delivery of any such New Bonds and
will not be considered the holders thereof under the G&R Mortgage.
If DTC is at any time unwilling or unable to continue as depository
and a successor depository is not appointed, the Company will issue individual
registered New Bonds in exchange for the New Bonds held by DTC. In addition,
the Company may at any time and in its sole discretion determine not to have
the New Bonds held by DTC and, in such event, will issue individual registered
New Bonds in exchange for the New Bonds held by DTC. In any such instance, an
owner of a beneficial interest in the New Bonds will be entitled to physical
delivery of individual New Bonds equal in principal amount to such beneficial
interest and to have such New Bonds registered in such owner's name. Individual
New Bonds so issued will be issued as registered New Bonds in denominations of
$1,000 or any multiple thereof.
Upon the issuance of the New Bonds, DTC will credit, on its book-entry
registration and transfer system, the respective principal amounts of beneficial
interests to the accounts of institutions that have accounts with DTC
("Participants"). The accounts to be credited will initially be designated
by the
Underwriter (as hereinafter defined) or the Company. Ownership of beneficial
interests in the New Bonds will be limited to Participants or persons who may
hold interests through Participants. Ownership of beneficial interests in the
New Bonds will be shown on, and the transfer of that ownership will be effected
only through, records maintained by DTC (with respect to the Participants'
interests) or by Participants or persons who hold through Participants (with
respect to persons other than Participants). The laws of some states require
that certain purchasers of securities take physical delivery of such
securities.
Such limits and such laws may impair the ability to transfer beneficial
interests in the New Bonds. Upon receipt of any payment of principal, premium
or interest in respect of the New Bonds, DTC's current practice is to credit
immediately Participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of such New
Bonds as shown on the records of DTC. Payments by Participants to owners of
beneficial interests in the New Bonds will be governed by standing
instructions and customary practices, as is now the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such Participants, subject to any
statutory or regulatory requirements that may be in effect from time to
time. Conveyance of notices and other communications by DTC to Participants and
by Participants to other beneficial owners will be governed by arrangements
among them, subject to any statutory and regulatory requirements as may be
in effect from time to time.
Each purchaser of New Bonds must rely on (1) the procedures of DTC,
and, if such purchaser is not a Participant, the procedures of the Participant
through which such purchaser holds its beneficial interest, to receive payments
and notices, and (2) the records of DTC and, if such purchaser is not a
Participant, the records of the Participant through which such purchaser holds
its beneficial interest, to evidence its beneficial ownership of New Bonds.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. DTC holds securities of its Participants
and facilitates the clearance and settlement of securities transactions among
its Participants in such securities through electronic book-entry changes in
accounts of the Participants, thereby eliminating the need for physical
movement of securities certificates. DTC's Participants include securities
brokers and dealers (including the Underwriter of the New Bonds), banks,
trust companies, clearing corporations, and certain other organizations, some
of whom (and/or their representatives) own DTC. Access to DTC's book-entry
system is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. The rules applicable to DTC and
its Participants are on file with the SEC.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources (including DTC) that the Company and the
Underwriter of the New Bonds believe to be reliable, but the Company and the
Underwriter of the New Bonds take no responsibility for the accuracy thereof.
Neither the Company, the Trustees, the Underwriter nor any agent for
payment on or registration of transfer or exchange of New Bonds will have any
responsibility or liability for any of the records relating to or payments
made on account of beneficial interests in any of the New Bonds or for
maintaining, supervising or reviewing any records relating to such beneficial
interests.
EXPERTS AND LEGALITY
Reference is made to "Experts and Legality" in the accompanying
Prospectus. The financial statements and the related financial statement
schedules incorporated in this Prospectus by reference from the Form 10-K
have been incorporated by reference herein in reliance on the reports of
Coopers & Lybrand, L.L.P.,independent accountants, given on the authority
of such firm as experts in auditing and accounting.
UNDERWRITING
Under the terms and subject to the conditions set forth in the
Underwriting Agreement dated the date hereof, Morgan Stanley & Co.
Incorporated (the "Underwriter") has agreed to purchase and the Company has
agreed to sell to the Underwriter the New Bonds.
The Underwriting Agreement provides that the obligation of the
Underwriter to pay for and accept delivery of the New Bonds is subject to
approval of certain legal matters by its counsel and to certain other
conditions. The Underwriter is committed to take and pay for all of the
New Bonds if any are taken.
The Underwriter initially proposes to offer the New Bonds directly
to the public at the public offering price set forth on the cover page hereof,
and to certain dealers at a price less a concession not in excess of .40% of
the principal amount of the New Bonds. The Underwriter may allow and such
dealers may reallow a concession not in excess of .25% of the principal
amount of the New Bonds to certain other dealers. After the initial
offering of the New Bonds, the offering price and other selling terms may
from time to time be varied by the Underwriter.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
The Company does not intend to apply for listing of the New Bonds
on a national securities exchange, but has been advised by the Underwriter
that it presently intends to make a market in the New Bonds, as permitted
by applicable laws and regulations. The Underwriter is not obligated to make
a market in the New Bonds, and any such market making may be discontinued
at any time at the sole discretion of the Underwriter. Accordingly, no
assurance can be given as to the liquidity of, or trading markets for, the
New Bonds.
PROSPECTUS
$145,000,000
New Orleans Public Service Inc.
General and Refunding Mortgage Bonds
New Orleans Public Service Inc. (the "Company") may offer from time to time
up to $145,000,000 aggregate principal amount of its General and Refunding
Mortgage Bonds (the "New G&R Bonds"), in one or more series at prices and on
terms to be determined at the time of sale. This Prospectus will be
supplemented by a prospectus supplement (the "Prospectus Supplement") which
will set forth the aggregate principal amount, rate and time of payment of
interest, maturity, purchase price, initial public offering price, if any,
redemption provisions and other specific terms of the series of New G&R
Bonds in respect of which this Prospectus is being delivered. The sale
of one series of New G&R Bonds will not be contingent upon the sale of
any other series of New G&R Bonds.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Company may sell the New G&R Bonds through underwriters, dealers or
agents, or directly to one or more purchasers. The Prospectus Supplement will
set forth the names of underwriters, dealers or agents, if any, any applicable
commissions or discounts and the net proceeds to the Company from any such
sale.
See "Plan of Distribution" for possible indemnification arrangements for
underwriters, dealers, agents and purchasers.
The date of this Prospectus is February 19, 1993
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
NEW G&R BONDS OFFERED HEREBY OR ANY OTHER SECURITIES OF THE COMPANY AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
New Orleans Public Service Inc. ("Company") is subject to the informational
requirements of the Securities Exchange Act of 1934 ("Exchange Act") and in
accordance therewith files reports and other information with the
Securities and Exchange Commission ("SEC"). Such reports include information,
as of particular dates, concerning the Company's directors and officers,
their remuneration, the principal holders of the Company's securities and
any material interests of such persons in transactions with the Company.
Such reports and other information can be inspected and copied at the public
reference facilities maintained by the SEC at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549; 500 West Madison Street, 14th floor,
Chicago, Illinois 60661; and 7 World Trade Center, 13th floor, New York,
New York 10048. Copies of this material can also be obtained at prescribed
rates from the Public Reference Section of the SEC at its principal office
at 450 Fifth Street, N.W., Washington, D.C. 20549. Shareholders of the
Company are furnished copies of financial statements as of the end of the
most recent fiscal year audited and reported upon (with an
opinion expressed) by independent certified public accountants.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the SEC pursuant to the Exchange Act
are incorporated in this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1991; and
2. The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1992, June 30, 1992 and September 30, 1992.
In addition, all documents subsequently filed with the SEC by the
Company pursuant to Section 13, 14 or 15(d) of the Exchange Act prior to
the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of
filing of such documents (such documents, and the documents enumerated
above, being hereinafter referred to as "Incorporated Documents").
Any statement contained herein or in an Incorporated Document
shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in
any other subsequently filed Incorporated Document or in an accompanying
Prospectus Supplement modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to
each person, including any beneficial owner, to whom a copy of this
Prospectus has been delivered, on the written or oral request of any such
person, a copy of any and all of the Incorporated Documents, other than
exhibits to such documents, unless such exhibits are specifically
incorporated by reference therein. Requests should be directed to
Mr. Gary L. Florreich, Assistant Secretary and Assistant Treasurer,
New Orleans Public Service Inc., 317 Baronne Street, New Orleans,
Louisiana 70112, telephone number; 504-595-3100. The information relating
to the Company contained in this Prospectus and any accompanying
Prospectus Supplement does not purport to be comprehensive and is
based upon information contained in the Incorporated Documents; accordingly,
such information contained herein should be read together with the
information contained in the Incorporated Documents.
No person has been authorized to give any information or to
make any representation not contained in this Prospectus or, with
respect to any series of New G&R Bonds, the Prospectus Supplement
relating thereto, and, if given or made, such information or
representation must not be relied upon as having been authorized by
the Company or any underwriter. This Prospectus and any Prospectus
Supplement do not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any jurisdiction
to any person to whom it is unlawful to make such offer in such jurisdiction.
Neither the delivery of this Prospectus and a Prospectus Supplement
nor any sale made thereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company
since the date of this Prospectus or that Prospectus Supplement.
THE COMPANY
The Company was incorporated under the laws of Louisiana on January 1,
1926. The Company's principal executive offices are located at 317 Baronne
Street, New Orleans, Louisiana 70112. Its telephone number, including area
code, is 504-595-3100.
The Company is an electric and gas public utility company with all of
its operations in the State of Louisiana. Entergy Corporation ("Entergy"),
which is a registered public utility holding company under the Public Utility
Holding Company Act of 1935, as amended ("Holding Company Act"), owns
all of the outstanding common stock of the Company. The Company, Arkansas
Power & Light Company ("AP&L"), Louisiana Power & Light Company ("LP&L")
and Mississippi Power & Light Company ("MP&L") are the principal operating
utility subsidiaries of Entergy. Entergy also owns all of the common stock of
System Energy Resources, Inc. ("System Energy"), a generating company, Entergy
Services, Inc., a service company, Entergy Enterprises, Inc., a non-utility
company, Entergy Operations, Inc., a nuclear management services company, and
Entergy Power, Inc., a subsidiary formed to market certain capacity and
energy in certain wholesale markets.
The Company, AP&L, LP&L and MP&L own all the capital stock of System
Fuels, Inc., a special purpose company formed to plan and implement
programs for the procurement, delivery and storage of fuel supplies for
Entergy subsidiaries.
USE OF PROCEEDS
The net proceeds to be received from the issuance and sale of the
New G&R Bonds will be used for (or to reimburse the Company's treasury for)
the payment at maturity, redemption or other acquisition, in whole or in
part, of certain of the Company's outstanding securities. The Company's
securities that may be redeemed or acquired include (1) one or more series
of the Company's outstanding first mortgage bonds, (2) one or more series
of the Company's outstanding general and refunding mortgage bonds, and
(3) one or more series of the Company's outstanding preferred stock.
The specific securities redeemed or acquired with the proceeds of a
series of New G&R Bonds will be set forth in the Prospectus Supplement
relating to that series. Reference is made to the Incorporated Documents
with respect to the Company's most significant contingencies, its general
capital requirements, and its general financing plans and capabilities,
including its short term borrowing capacity, earnings coverage requirements
under the Company's Restatement of Articles of Incorporation, as amended,
which limit the amount of additional preferred stock which the Company
may issue, and earnings coverage and other requirements under the Company's
general and refunding mortgage, which limit the amount of additional
mortgage bonds which the Company may issue.
DESCRIPTION OF THE NEW G&R BONDS
General. The New G&R Bonds are to be issued under the Company's
Mortgage and Deed of Trust, dated as of May 1, 1987, as supplemented by
two supplemental indentures thereto and as to be further supplemented by
one or more supplemental indentures, including supplemental indentures
relating to the New G&R Bonds (collectively referred to as the "G&R
Mortgage"), to Bank of Montreal Trust Company ("Trustee") and Z. George
Klodnicki, as Trustees (collectively, "Trustees"). All General and Refunding
Mortgage Bonds issued or to be issued under the G&R Mortgage are referred
to herein as "G&R Bonds."
The statements herein concerning the G&R Bonds, the New G&R Bonds
and the G&R Mortgage are merely an outline. They are subject to the
detailed provisions of the G&R Mortgage, which are incorporated herein by
reference.
Terms of Specific Series of the New G&R Bonds. A Prospectus
Supplement will include descriptions of the following terms of a series of
the New G&R Bonds to be issued: (1) the designation of such series of the
New G&R Bonds; (2) the aggregate principal amount of such series; (3) the
date on which such series will mature; (4) the rate at which such series
will bear interest and the date from which such interest accrues; (5)
the dates on which interest will be payable; and (6) the prices and the other
terms and conditions upon which the particular series may be redeemed by
the Company prior to maturity.
Form and Exchanges. Unless otherwise indicated in a Prospectus
Supplement, the New G&R Bonds will be delivered in definitive fully
registered form in denominations of $1,000 or any multiple thereof. No
service charge will be made for any transfer or exchange of the New G&R Bonds.
Security. The New G&R Bonds, together with all other G&R Bonds now
or hereafter issued under the G&R Mortgage, will be secured by the G&R
Mortgage, which constitutes, in the opinion of Monroe &
Lemann (A Professional Corporation), counsel for the Company, a first lien on
all rights of the Company to receive payment and compensation for certain rate
deferrals (and deferred carrying charges accrued thereon) (see "Issuance of
Additional G&R Bonds" below) in the event of acquisition of the Company's
properties and assets by a governmental authority ("Municipalization
Interest"),
subject to certain excepted encumbrances. The G&R Mortgage also constitutes,
in the opinion of Monroe & Lemann (A Professional Corporation), counsel for
the Company, a second mortgage lien on all other properties of the Company
(except properties released under the terms of the G&R Mortgage and except
as stated below), subject to (1) the first lien of the Company's Mortgage
and Deed of Trust dated as of July 1, 1944, to The Chase National Bank of
the City of New York (The Bank of New York, successor) and Carl E. Buckley
(W. T. Cunningham, successor), as Trustees, as supplemented ("First Mortgage"),
(2) other excepted encumbrances, (3) minor defects and encumbrances customarily
found in properties of like size and character which do not materially impair
the use of the property affected thereby in the conduct of the business of
the Company, and (4) other liens, defects and encumbrances, if any, existing
or placed thereon at the time of acquisition thereof by the Company and
except as limited by bankruptcy law. There are excepted from the lien of the
G&R Mortgage certain property, including all cash and securities; all
merchandise, equipment, apparatus, materials or supplies held for sale or other
disposition in the usual course of business or consumable during use;
automobiles, vehicles and aircraft; timber, minerals, mineral rights and
royalties; and receivables, contracts, leases and operating agreements.
The G&R Mortgage contains provisions for subjecting after-acquired
property (subject to the First Mortgage and pre-existing liens) to the lien
thereof, subject to limitations in the case of consolidation, merger or sale
of substantially all of the Company's assets.
The G&R Mortgage is junior and subordinate to the lien of the First
Mortgage on substantially all of the Company's properties. At December 31,
1992, approximately $90.25 million principal amount of bonds were outstanding
under the First Mortgage. Such bonds and all other bonds issued under the
First
Mortgage are hereinafter referred to as "First Mortgage Bonds." The G&R
Mortgage provides that no additional First Mortgage Bonds may be issued
under the First Mortgage.
The G&R Mortgage provides that the Trustees shall have a lien upon the
mortgaged property, prior to the G&R Bonds, for the payment of their
reasonable compensation, expenses and disbursements and for indemnity against
certain liabilities.
The G&R Mortgage contains restrictions on liens and on the issuance of
indebtedness, including bonds, applicable so long as any Rate Recovery Mortgage
Bonds, as defined below, are outstanding (see "Certain Other Covenants and
Agreements" below).
Issuance of Additional G&R Bonds. The maximum principal amount of
G&R Bonds that may be issued and outstanding under the G&R Mortgage is $10
billion. G&R Bonds of any series may be issued from time to time on the
basis of (1) the aggregate uncollected balance of certain rate deferrals,
described below, and the deferred carrying charges accrued thereon, recorded
as assets on the books of the Company (whether or not subject to the lien of
the G&R Mortgage), provided that the aggregate principal amount of outstanding
G&R Bonds issued on this basis shall not exceed the lesser of $280,000,000 or
50% of the uncollected balance of such rate deferrals, and such bonds must
mature not later than May 1, 1998 (G&R Bonds issued on this basis being
hereinafter called "Rate Recovery Mortgage Bonds"), (2) 70% of property
additions after adjustments to offset retirements, (3) retirement of G&R
Bonds (other than Rate Recovery Mortgage Bonds) or of First Mortgage Bonds,
and (4) deposit of cash with the Trustee. Deposited cash may be withdrawn
upon the bases stated in (2) or (3). Property additions generally include
electric, gas, steam or hot water property acquired after December 31, 1986,
but may not include, among other things, securities, automobiles, vehicles
or aircraft, or property used principally for the production or gathering
of natural gas.
As noted above, under the G&R Mortgage, Rate Recovery Mortgage Bonds
must mature not later than May 1, 1998. In connection with the issuance of
New G&R Bonds, the Company will reserve the right, without the consent of the
holders of any series of G&R Bonds created after January 1, 1993, including the
New G&R Bonds, to amend this limitation to provide that all Rate Recovery
Mortgage Bonds must mature not later than September 30, 2001.
Under the G&R Mortgage, whenever the principal amount of outstanding
Rate Recovery Mortgage Bonds exceeds 66#% of the uncollected balance of rate
deferrals and the deferred carrying charges accrued thereon, no additional
G&R Bonds may be issued, on any basis, under the G&R Mortgage. In connection
with the issuance of New G&R Bonds, the Company will reserve the right, without
the consent of the holders of any series of G&R Bonds created after January 1,
1993, including the New G&R Bonds, to amend the G&R Mortgage to eliminate this
restriction.
The Company contemplates that the New G&R Bonds will not be issued on
the basis of rate deferrals and accordingly will not be Rate Recovery Mortgage
Bonds.
With certain exceptions in the case of (3) above, the issuance of G&R
Bonds is subject to adjusted net earnings for 12 out of the preceding 15
months,
before income taxes, being at least twice the annual interest requirements on
all First Mortgage Bonds and all G&R Bonds at the time outstanding, including
the additional issue, and all indebtedness, if any, of prior rank. In
connection with the issuance of the New G&R Bonds, the Company will reserve
the right, without the consent of the holders of any series of G&R Bonds
created after January 1, 1993, including the New G&R Bonds, to substitute
for the foregoing a requirement that adjusted net earnings for 12 out of the
preceding 18 months, before income taxes, be at least twice such annual
interest requirements. In general, interest on variable interest bonds,
if any, is calculated using the average rate in effect during such 12
months period.
Pursuant to a resolution of the Council of the City of New Orleans,
Louisiana ("Council") adopted on February 4, 1988, as effectively superceded
by a settlement agreement between the Company and the Council effective
October 4, 1991 ("Rate Order"), the Company deferred for future recovery a
portion of its costs related to its allocated share of capacity and energy
from System Energy's interest in Unit No. 1 of the Grand Gulf Nuclear
Electric Generating Station ("Grand Gulf 1"). The Rate Order provides, among
other things, for the recovery by the Company of approximately $379 million
of deferred Grand Gulf 1-related costs and related carrying charges, in varying
annual amounts, over a 10-year period from October 1, 1991 through
September 30, 2001. Reference is made to the Incorporated Documents
for further information with respect to these matters.
Net property additions available for the issuance of New G&R Bonds at
September 30, 1992 were approximately $106.5 million. Deferred and uncollected
Grand Gulf 1-related costs at September 30, 1992 were approximately $248
million
and at that date $113.6 million of Rate Recovery Mortgage Bonds were
outstanding. On February 1, 1993, $29.4 million of outstanding Rate Recovery
Mortgage Bonds were retired at maturity.
The G&R Mortgage contains restrictions on the issuance of G&R Bonds
against property subject to liens (other than the lien of the First Mortgage).
Other than the security afforded by the lien of the G&R Mortgage and
restrictions on the issuance of additional G&R Bonds described above, there
are no provisions of the G&R Mortgage which afford the holders of the New G&R
Bonds protection in the event of a highly leveraged transaction involving the
Company. However, such a transaction would require regulatory approval, and
management of the Company believes that such approval would be unlikely in a
highly leveraged context.
Release and Substitution of Property. Property (other than the
Municipalization Interest) may be released, without applying any earnings test,
upon the basis of: (1) the release of such property from the lien of the
First Mortgage, (2) the deposit of cash or, to a limited extent, purchase
money mortgages, (3) property additions, after adjustments in certain cases
to offset retirements and after making adjustments for certain prior lien
bonds, if any, outstanding against property additions, and (4) waiver of
the right to issue G&R Bonds. Cash may be withdrawn upon the bases stated
in (3) and (4) above.
Property is currently released on the basis of its fair value. In
connection with the issuance of New G&R Bonds, the Company will reserve the
right, without the consent of the holders of any series of G&R Bonds created
after January 1, 1993, including the New G&R Bonds, to modify the release
provisions to provide that property owned by the Company on December 31, 1986
is released on the basis of its depreciated book value and all other property
is released on the basis of its cost, as defined in the G&R Mortgage. In
connection with the issuance of New G&R Bonds, the Company will also reserve
the right, without the consent of the holders of any series of G&R Bonds
created after January 1, 1993, including the New G&R Bonds, to add new
provisions for the release of unfunded property. Under the new provisions,
the Company will be able to release unfunded property without meeting the
tests in the preceding paragraph, if, after such release, the Company will
have at least one dollar ($1) in unfunded property that remains subject
to the lien of the G&R Mortgage.
Dividend Covenant. The Company will covenant in substance that, so
long as any New G&R Bonds of a particular series remain outstanding, it will
not pay any cash dividends on common stock or repurchase common stock after
a selected date close to the date of the original issuance of such series of
New G&R Bonds (other than certain dividends that may be declared by the
Company prior to such selected date) except from credits to retained earnings
after such selected date plus an amount not to exceed $150,000,000 and plus
such additional amounts as shall be approved by the SEC.
Grand Gulf 1 Deferrals and Protection of Rate Order. The Company has
covenanted that, so long as any Rate Recovery Mortgage Bonds are outstanding,
(1) it will not sell, assign or grant any lien on its deferred Grand Gulf
1-related costs and the deferred carrying charges accrued thereon, and (2)
it will take all reasonable actions to maintain in full force and effect the
Rate Order and to defend the Rate Order against challenges, and it will not
take any action to modify the Rate Order in any manner that is materially
adverse to the interests of the holders of the Rate Recovery Mortgage Bonds.
Certain Other Covenants and Agreements. The Company has entered
into certain other covenants and agreements as hereinafter set forth. The
Company will no longer be bound by these covenants and agreements when Rate
Recovery Mortgage Bonds are no longer outstanding (the latest scheduled
maturity of currently outstanding Rate Recovery Mortgage Bonds being May 1,
1997).
In connection with the G&R Bonds issued prior to January 1, 1993, the
Company has made certain covenants related to, among other things, limitations
on outstanding indebtedness, guaranties, principal payments, loans and
advances,
dispositions of assets (including accounts receivable), dividends on common
stock and purchases of preferred and common stock, liens, lines of business and
transactions with affiliates. The covenant limiting principal payments
provides that the Company will not make payments on account of principal of, or
purchase, outstanding G&R Bonds (other than Rate Recovery Mortgage Bonds)
or outstanding industrial development or pollution control revenue bonds prior
to May 1, 1997 in excess of stated amounts ranging from $2.5 million in the
12-month period beginning May 1, 1993 to $25 million in the 12-month period
beginning May 1, 1996. The covenant limiting indebtedness provides that the
Company will not incur or permit to be outstanding any indebtedness for
borrowed money except (1) First Mortgage Bonds; (2) G&R Bonds; (3) indebtedness
in respect of industrial development or pollution control revenue bonds
(subject to certain conditions, including the Company's meeting the net
earnings and property additions issuance tests under the G&R Mortgage as if
an equal principal amount of G&R Bonds bearing an equal rate of interest were
being issued); (4) capitalized leases of equipment and office facilities, with
certain limitations; and (5) unsecured indebtedness maturing in one year
or less in an amount not exceeding the greater of 10% of capitalization or 50%
of cumulative deferred and uncollected Grand Gulf 1-related costs and the
deferred carrying charges accrued thereon (less the principal amount of
outstanding Rate Recovery Mortgage Bonds). The covenant limiting guaranties
provides that the Company will not guarantee any financial obligations except
(1) guaranties in the ordinary course of business in connection with the
leasing of limited amounts of personal property or financing of fuel purchases;
(2) guaranties of obligations of System Fuels, Inc. in connection with its
fuel supply business that are approved by the SEC under the Holding Company
Act; and (3) financial undertakings of the Company in connection with its
obligations to System Energy. In connection with the issuance of Rate
Recovery Mortgage Bonds prior to January 1, 1993, the Company has also agreed
to redeem any Rate Recovery Mortgage Bonds tendered by the holders thereof if
(a) the Company's share of Grand Gulf 1 costs is increased in an amount that
an independent arbiter deems material and such amount is not reflected in the
Company's retail rates; (b) the Rate Order has been modified so as to impair
the Company's ability to perform its obligations in respect of outstanding
Rate Recovery Mortgage Bonds; or (c) a change in law or accounting
principles adversely affects the recording as assets or recovery of
deferred Grand Gulf 1 costs or the Company's financial condition or results
of operations so as to materially impair the Company's ability to perform its
obligations in respect of outstanding Rate Recovery Mortgage Bonds.
The Company has also covenanted that, so long as any Rate Recovery
Mortgage Bonds are outstanding, it will not (1) (except in the case of
condemnation or other acquisition by a governmental entity or merger or
consolidation with, or transfer of all or substantially all of its property
as an entirety to, another corporation) dispose of any of its assets in any
calendar year having an aggregate fair value in excess of $10 million, or (2)
enter into any sale-leaseback transactions involving cash consideration of
$1 million or more, unless the cash consideration for such transactions is used
either to redeem outstanding First Mortgage Bonds, and, to the extent not
required to be used for that purpose, to redeem outstanding G&R Bonds, or to
acquire or construct property subject to the lien of the G&R Mortgage. The
redemption prices applicable for these purposes to each series of New G&R
Bonds will be included in the Prospectus Supplement relating to that series.
Maintenance and Replacement Fund in First Mortgage. The New G&R
Bonds will not be subject to any maintenance or replacement provisions.
However, the Company has covenanted to comply with the provisions of Sections
38 and 39(I) of the First Mortgage, which provisions relate to maintenance
and replacement of property, but only so long as the First Mortgage remains
outstanding. Such Section 39(I) provides that in addition to actual
expenditures for maintenance and repairs, the Company is required to expend
or deposit for each year, for replacements and improvements in respect of
mortgaged property, an amount equal to $2,050,000 plus 3% of net additions to
mortgaged property made after December 31, 1943 and prior to the beginning
of the year for which the calculation is made. Such requirement may be met
by depositing cash under the First Mortgage or certifying gross property
additions thereunder or by taking credit for First
Mortgage Bonds and prior lien bonds retired. Any excess in such credits may
be applied against future requirements. Such cash may be used to redeem or
purchase First Mortgage Bonds or may be withdrawn against gross property
additions under the First Mortgage or waiver of the right to issue
First Mortgage Bonds.
Redemption at the Option of Holders in the Event of Takeover. If
all or substantially all of the Company's property or a majority of its
common stock is taken or acquired by a governmental authority, the Company
is obligated, after any redemption of First Mortgage Bonds required by the
First Mortgage, to deposit the net proceeds of such transaction with the
Trustee, and the holders of all G&R Bonds then outstanding have the right
to tender their G&R Bonds for redemption by the Company sixty days after
notice of such deposit of proceeds, at a price equal to the principal amount
thereof plus accrued interest to the date of redemption. The terms of the
franchise ordinances pursuant to which the Company provides electric and gas
service in the City of New Orleans state that the City has a continuing
option to purchase the Company's gas and electric properties.
In connection with the issuance of New G&R Bonds, the Company will
reserve the right, without the consent of the holders of any series of G&R
Bonds created after January 1, 1993, including the New G&R Bonds, to amend
the G&R Mortgage to eliminate this provision.
Redemption or Exchange in the Event of Consolidation or Merger with
LP&L. There are no plans to consolidate or merge the Company and LP&L.
However, the G&R Mortgage provides that, should such a consolidation or
merger of the Company and LP&L occur, the new company to be formed thereby
would have the option at any time thereafter to redeem outstanding G&R Bonds
at stated redemption prices or to offer to exchange all outstanding G&R
Bonds for a like principal amount of the new company's first mortgage bonds
having the same interest rates, maturity dates, interest payment dates and
redemption provisions. If the new company opts for such an offer to
exchange, the holders of outstanding G&R Bonds may, instead of receiving
such first mortgage bonds, require the Company to redeem their G&R Bonds at
stated prices. The redemption prices applicable for these purposes to each
series of New G&R Bonds will be included in the Prospectus Supplement relating
to that series.
Defaults and Notice Thereof. Defaults are defined in the G&R
Mortgage as: (1) default in payment of principal; (2) default for 10 days
in payment of interest; (3) certain events in bankruptcy, insolvency or
reorganization; (4) default in other covenants for 30 days after notice
(unless the Company has in good faith commenced efforts to perform the
covenant); (5) default under a supplemental indenture; and (6) the occurrence
of a "Default" under the First Mortgage (defined as being default in
payment of principal of First Mortgage Bonds, default for 60 days in payment
of interest on or installments of funds for retirement of First Mortgage
Bonds, certain defaults with respect to qualified lien bonds, certain
events in bankruptcy, insolvency or reorganization, and default for 90 days
after notice in other covenants). In connection with the issuance of the
ew G&R Bonds, the Company will reserve the right, without the consent of
the holders of any series of G&R Bonds created after January 1, 1993,
including the New G&R Bonds, to modify this definition to provide that
default for 30 days (rather than 10 days) in payment of interest and
default in other covenants for 90 days (rather than 30 days) after
notice constitute defaults under the G&R Mortgage.
The Trustee or the holders of 25% of the G&R Bonds may declare the
principal and interest due and payable on default but a majority may annul
such declaration if such default has been cured. No holders of G&R Bonds
may enforce the lien of the G&R Mortgage without giving the Trustees
written notice of a default and unless the holders of 25% of the G&R Bonds
have requested the Trustees to act and offered them reasonable opportunity
to act and indemnity satisfactory to them against the cost, expenses
and liabilities to be incurred thereby and the Trustees shall have failed
to act. The holders of a majority of the G&R Bonds may direct the time,
method and place of conducting any proceedings for any remedy available to
the Trustees or exercising any trust or power conferred on the Trustees.
The Trustees are not required to risk their funds or incur personal liability
if there is reasonable ground for believing that repayment is not reasonably
assured.
The supplemental indentures relating to G&R Bonds issued prior to
January 1, 1993 set forth additional events constituting "defaults" under
the G&R Mortgage, including a default in the payment by the Company
of more than $1,000,000 of other indebtedness when due. These additional
defaults apply only so long as any Rate Recovery Mortgage Bonds are
outstanding and may be waived by the holders of Rate Recovery Mortgage Bonds,
without the consent of the holders of any other G&R Bonds, including the New
G&R Bonds.
Evidence to be Furnished to the Trustee. Compliance with G&R Mortgage
provisions is evidenced by written statements of Company officers or persons
selected or paid by the Company. In certain cases, opinions of counsel and
certification of an engineer, accountant, appraiser or other expert (who in some
cases must be independent) must be furnished. The Company must give the
Trustee
an annual statement as to whether or not the Company has fulfilled its
obligations under the G&R Mortgage throughout the preceding calendar year.
Modification. The rights of holders of G&R Bonds may be modified with
the consent of the holders of a majority of the G&R Bonds, and, if less than
all series of G&R Bonds are adversely affected, the consent of the holders of
a majority of the G&R Bonds adversely affected (except with respect to
amendments or waivers of certain provisions relating to outstanding Rate
Recovery Mortgage Bonds, which generally require the consent of the holders
of two-thirds of each series of Rate Recovery Mortgage Bonds affected and not
of any other bonds). No modification of the terms of payment of principal,
premium, if any, or interest and no modification affecting the lien of the G&R
Mortgage or reducing the percentage required for modification is effective
against any holder of G&R Bonds without his consent.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company has calculated ratios of earnings to fixed charges pursuant
to Item 503 of SEC Regulation S-K as follows:
Twelve Months Ended
December 31, September 30
1987 1988 1989 1990 1991 1992
Ratios of Earnings to Fixed Charges(a) # -(b) 2.05 1.89 2.73 5.66(c) 6.07(c)
(a) "Earnings", as defined by SEC Regulation S-K, represent the
aggregate of (1) net income, (2) taxes based on income, (3) investment tax
credit adjustments # net and (4) fixed charges. "Fixed Charges" include
interest (whether expensed or capitalized), related amortization and interest
applicable to rentals charged to operating expenses.
(b) Earnings for the twelve months ended December 31, 1987, which
included the effects of a resolution, issued by the Council on February 4,
1988, that disallowed the recovery by the Company of $135 million of
previously-deferred Grand Gulf 1-related costs, were inadequate to cover fixed
charges due to the Company's recording of the $135 million write-off in 1987.
The amount of the coverage deficiency for fixed charges was $94.5 million.
(c) Earnings for the twelve months ended December 31, 1991 and
September 30, 1992 include the effect of a settlement between the Company
and the Council, effective October 4, 1991, that permitted the Company to
defer for future recovery, and record as an asset, $90 million of previously
incurred but uncollected Grand Gulf 1-related costs.
EXPERTS AND LEGALITY
The Company's financial statements and the related financial statement
schedules incorporated by reference in this Prospectus, except to the extent
described below, have been audited by Deloitte & Touche, independent auditors,
as stated in their reports included in the Annual Report of the Company on
Form 10-K incorporated by reference herein, and have been so incorporated by
reference in reliance upon such reports given upon their authority as
experts in auditing and accounting.
With respect to unaudited interim financial information included in
the Company's Quarterly Reports on Form 10-Q which are incorporated herein by
reference, Deloitte & Touche have applied limited prrocedures in accordance
with professional standards for review of such information. However, as stated
in their reports included in such Quarterly Reports on Form 10-Q incorporated
by reference herein, they did not audit and do not express an opinion on that
interim financial information. Accordingly, the degree of reliance on their
reports on such information should be restricted in light of the limited nature
of the review procedures applied.
Deloitte & Touche are not subject to the liability provisions of
Section 11 of the Securities Act of 1933 for their reports on the unaudited
interim financial information because those reports are not "reports" or
"parts" of the Registration Statement prepared or certified by an accountant
within the meaning of Sections 7 and 11 of that Act.
The statements as to matters of law and legal conclusions made under
"Description of the New G&R Bonds" have been reviewed by Monroe & Lemann
(A Professional Corporation), and by Reid & Priest, both counsel for the
Company, and are set forth herein in reliance upon the opinions of said
firms, respectively, and upon their authority as experts. The statements
made herein or in the Incorporated Documents as to matters of law and legal
conclusions, based on the belief or opinion of the Company or otherwise,
pertaining to titles to properties, franchises and other operating rights of
the Company, regulations to which the Company is subject and any legal
proceedings to which the Company is a party, are made on the authority
of Monroe & Lemann (A Professional Corporation), and such statements
are included in such documents and herein in reliance upon their authority
as experts.
The legality of the New G&R Bonds will be passed upon for the
Company by Monroe & Lemann (A Professional Corporation), 201 St. Charles
Avenue, New Orleans, Louisiana and Reid & Priest, 40 West 57th Street,
New York, New York, and for the underwriter(s), dealer(s), agent(s) or
purchaser(s) by Winthrop, Stimson, Putnam & Roberts, One Battery Park Plaza,
New York, New York. However, all legal matters pertaining to the organization
of the Company, titles to property, franchises and the lien of the G&R
Mortgage, and all matters of Louisiana law will be passed upon only by
Monroe & Lemann (A Professional Corporation).
The statements made in the Company's Annual Report on Form 10-K for
the year ended December 31, 1991 and Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1992, June 30, 1992 and September 30, 1992, which
are incorporated herein by reference, as to matters of law and legal
conclusions with respect to legal proceedings with respect to the Company have
been reviewed by Thomas O. Lind, Esq., Regional Counsel # Louisiana, of
Entergy Services, Inc. and such statements are included in such documents and
herein in reliance upon his authority as an expert. Prior to January 1, 1993
Mr. Lind was an officer and full-time employee of the Company.
PLAN OF DISTRIBUTION
The Company may sell the New G&R Bonds in one or more sales in any of
three ways: (1) through one or more underwriters or dealers; (2) directly
to a limited number of purchasers or to a single purchaser; or (3) through
one or more agents. The Prospectus Supplement relating to a series of the
New G&R Bonds ("Offered G&R Bonds") will set forth the terms of the offering
of the Offered G&R Bonds, including the name or names of any underwriters,
dealers or agents, the purchase price of such Offered G&R Bonds and the
proceeds to the Company from such sale, any items constituting underwriters'
compensation, any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers. Any initial public
offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
The underwriter or underwriters with respect to a particular
underwritten offering of the Offered G&R Bonds will be named in the
Prospectus Supplement relating to such offering.
If underwriters are involved in the sale, the Offered G&R Bonds will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
a fixed public offering price or at varying prices determined at the time of
each resale. Unless otherwise set forth in the Prospectus Supplement, the
obligations of the underwriters to purchase the Offered G&R Bonds will be
subject to certain conditions precedent, and the underwriters will be obligated
to purchase all such Offered G&R Bonds if any are purchased; provided that
the agreement between the Company and the underwriter or underwriters providing
for the sale of the Offered G&R Bonds may provide that under certain
circumstances involving a default of underwriters, less than all of the
Offered G&R Bonds may be purchased.
Offered G&R Bonds may be sold directly by the Company or through
agents designated by the Company from time to time. The Prospectus Supplement
will set forth the name of any agent involved in the offer or sale of the
Offered G&R Bonds in respect of which the Prospectus Supplement is delivered
as well as any commissions payable by the Company to such agent. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers by certain
specified institutions to purchase Offered G&R Bonds from the Company at the
public offering price set forth in the Prospectus Supplement pursuant to
delayed delivery contracts providing for payment and delivery on a
specified date in the future. Such contracts will be subject to those
conditions set forth in the Prospectus Supplement, and the Prospectus
Supplement will set forth the commission payable for solicitation of such
contracts.
Each Prospectus Supplement relating to a particular offering of
Offered G&R Bonds will contain a statement by the Company (1) as to whether
or not the Company is able to predict the existence of a secondary market
for such securities and, if such existence is predicted, as to the extent
of such secondary market, and (2) if such securities are to be purchased by
an underwriter or underwriters, as to whether or not such underwriter or
underwriters intend to make a market in such securities.
Subject to certain conditions, the Company may agree to indemnify any
underwriters, dealers, agents or purchasers and their controlling persons
against certain civil liabilities, including liabilities under the Securities
Act of 1933.
