<PAGE>
PROSPECTUS SUPPLEMENT
(To Prospectus Dated March 18, 1996)
$40,000,000
NEW ORLEANS PUBLIC SERVICE INC.
GENERAL AND REFUNDING MORTGAGE BONDS,
8% SERIES DUE MARCH 1, 2006
The Company's General and Refunding Mortgage Bonds (the "New Bonds") will mature
on March 1, 2006. Interest on the New Bonds is payable semi-annually on March 1
and September 1 of each year, commencing September 1, 1996. The New Bonds will
not be redeemable prior to March 1, 2001, except in certain limited
circumstances involving 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. In all
such redemptions, accrued interest to the date fixed for redemption is also
payable. See "Description of the New Bonds -- Redemption and Purchase" 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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT COMPANY(2)
<S> <C> <C> <C>
Per New Bond....................................... 99.672% .650% 99.022%
Total.............................................. $39,868,800 $260,000 $39,608,800
</TABLE>
- --------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from March 26, 1996.
(2) Before deduction of expenses payable by the Company estimated at $177,000.
The New Bonds are offered subject to receipt and acceptance by the Underwriters,
to prior sale and to the Underwriters' right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the New Bonds will be made through the book-entry facilities of
The Depository Trust Company, on or about March 26, 1996, against payment
therefor in immediately available funds.
SALOMON BROTHERS INC BEAR, STEARNS & CO. INC.
The date of this Prospectus Supplement is March 20, 1996.
<PAGE>
RECENT DEVELOPMENT
On March 7, 1996, the City Council of New Orleans approved a settlement with
the Company in its rate review for the year ended September 30, 1995, which
settlement will result in a one-year credit reducing the Company's rates by
$6.185 million. This credit will be applied to customer bills over a
twelve-month period as a result of the Company's earnings during the one-year
period ended September 30, 1995, being in excess of its allowed rate of return.
USE OF PROCEEDS
The net proceeds from the issuance and sale of the New Bonds, together with
other funds of the Company, will be used (a) to pay at maturity $23.25 million
aggregate principal amount of the Company's First Mortgage Bonds, 5 5/8% Series
due April 1, 1996 and (b) to make a required sinking fund payment on May 1, 1996
of $15 million with respect to, and to redeem on May 1, 1996, prior to maturity,
the remaining $15 million, of the Company's General and Refunding Mortgage
Bonds, 10.95% Series due May 1, 1997.
DESCRIPTION OF THE NEW BONDS
The following description of the particular terms of the New Bonds offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the New Bonds set forth in
the accompanying Prospectus under the heading "Description of the New Bonds", to
which description reference is hereby made. As used herein the terms "G&R
Bonds", "Rate Recovery Mortgage Bonds", "DTC", "Participants", "Corporate
Trustee" and "G&R Mortgage" shall have the meanings provided therefor under the
heading "Description of the New Bonds" in the accompanying Prospectus.
INTEREST, MATURITY AND PAYMENT. The New Bonds will mature on March 1, 2006,
and will bear interest from March 26, 1996 at the rate shown in their title,
payable March 1 and September 1 of each year, commencing September 1, 1996.
Interest is payable to holders of record at the close of business on the last
day of the February or August next preceding the interest payment date.
Principal and interest are payable at the office or agency of the Company in New
York, New York. For so long as the New Bonds are registered in the name of DTC,
or its nominee, the principal and interest due on the New Bonds will be payable
by the Company or its agent to DTC for payment to its Participants for
subsequent disbursement to the beneficial owners. 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 on the New Bonds at the rate of 9% per annum.
REDEMPTION AND PURCHASE.
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 March 1, 2001. 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 (all of which are currently redeemable at 101.22% of the principal
amount thereof, and the latest scheduled maturity of which is May 1, 1997), at
the special redemption price of 100% of the principal amount thereof, 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 Bonds -- Certain Other Covenants and
Agreements"), (b) at the special redemption price of 100% of the principal
amount thereof, with certain deposited cash or proceeds of released property,
and (c) at the general redemption price of 100% of the principal amount thereof
for all other redemptions, in each case together with accrued interest to the
date fixed for redemption.
S-2
<PAGE>
If, at any time notice of redemption is given, the redemption monies are not
held by the Corporate 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 or similar fund.
REDEMPTION OF NEW BONDS AT THE OPTION OF HOLDERS. Notwithstanding the
prohibition on redemption of New Bonds prior to March 1, 2001, 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 Bonds -- Redemption and Purchase -- Redemption of
New Bonds at the Option of Holders", in the event of a consolidation or
merger of the Company with Louisiana Power & Light Company, the new company
formed thereby would have the right 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 with the same interest rates, interest
payment dates, maturity dates and redemption provisions. If the new company
makes such an offer, the holders of outstanding G&R Bonds, including the New
Bonds, must accept such first mortgage bonds in exchange for all or a
portion of their G&R Bonds and must tender to the Company for redemption any
G&R Bonds not so exchanged. 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 general redemption price specified
above under
"-- General."
(2) As described in the accompanying Prospectus under the heading
"Description of the New Bonds -- Redemption and Purchase -- Redemption of
New Bonds at the Option of Holders", 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 such bonds have been retired at
the Company's direction) 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 February 29, 1996, except from credits to
earned surplus after February 29, 1996 plus $150,000,000 plus such additional
amounts as shall be approved by the Securities and Exchange Commission.
S-3
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters named
below (the "Underwriters"), and each of the Underwriters, for whom Salomon
Brothers Inc is acting as representative, has severally agreed to purchase, the
principal amount of the New Bonds set forth opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITERS AMOUNT
- -------------------------------------------------------------------- --------------
<S> <C>
Salomon Brothers Inc................................................ $ 20,000,000
Bear, Stearns & Co. Inc............................................. 20,000,000
--------------
Total........................................................... $ 40,000,000
--------------
--------------
</TABLE>
Under the terms and subject to the conditions of the Underwriting Agreement,
the Underwriters are committed to take and pay for all of the New Bonds, if any
are taken, provided, that under certain circumstances involving a default of one
Underwriter, less than all of the New Bonds may be purchased. Default by one
Underwriter would not relieve the non-defaulting Underwriter from its several
obligation and, in the event of such a default, the non-defaulting Underwriter
may be required by the Company to purchase the principal amount of the New Bonds
it severally agreed to purchase and, in addition, to purchase the principal
amount of the New Bonds that the defaulting Underwriter shall have failed to
purchase up to a principal amount equal to one-ninth of the principal amount of
the New Bonds that such non-defaulting Underwriter has otherwise agreed to
purchase.
The Underwriters propose to offer the New Bonds in part directly to retail
purchasers at the public offering price set forth on the cover page of this
Prospectus Supplement and in part to certain securities dealers at such price
less a concession of .40% of the principal amount of the New Bonds. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of .25% of the principal amount of the New Bonds on sales to certain other
brokers and dealers. After the New Bonds are released for sale to the public,
the public offering price and other selling terms may be changed.
The Company has agreed to indemnify the several Underwriters against certain
civil liabilities, including certain liabilities under the Securities Act of
1933, as amended.
The Company has been advised by the Underwriters that one or more of the
Underwriters currently intend to make a market in the New Bonds, but that they
are not obligated to do so and may discontinue making a market in the New Bonds
at any time without notice. The Company currently has no intention to list the
New Bonds on any securities exchange, and there can be no assurance given as to
the liquidity of the trading market for the New Bonds.
S-4
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IN CONNECTION WITH THE
OFFER CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL 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 OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PROSPECTUS SUPPLEMENT
Recent Development............................ S-2
Use of Proceeds............................... S-2
Description of the New Bonds.................. S-2
Underwriting.................................. S-4
PROSPECTUS
Available Information......................... 2
Incorporation of Certain Documents by
Reference.................................... 2
The Company................................... 3
Use of Proceeds............................... 3
Description of the New Bonds.................. 4
Ratios of Earnings to Fixed Charges........... 11
Experts and Legality.......................... 11
Plan of Distribution.......................... 12
</TABLE>
$40,000,000
NEW ORLEANS
PUBLIC SERVICE INC.
GENERAL AND REFUNDING
MORTGAGE BONDS, 8%
SERIES DUE MARCH 1, 2006
SALOMON BROTHERS INC
BEAR, STEARNS & CO. INC.
PROSPECTUS SUPPLEMENT
DATED MARCH 20, 1996
<PAGE>
PROSPECTUS
$80,000,000
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 $80,000,000 aggregate principal amount of its General and Refunding
Mortgage Bonds (the "New 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, redemption provisions, if any,
and other specific terms of the series of New Bonds in respect of which this
Prospectus is being delivered. The sale of one series of New Bonds will not be
contingent upon the sale of any other series of New 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 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 indemnification arrangements for underwriters, dealers,
agents and purchasers.
The date of this Prospectus is March 18, 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NEW 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
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). 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 filed by the Company can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549-1004; and at the following Regional Offices of
the Commission: Chicago Regional Office, 500 W. Madison Street, Suite 1400,
Chicago, Illinois 60661; and New York Regional Office, 7 World Trade Center,
13th Floor, New York, New York 10048. Copies of such material can also be
obtained at prescribed rates from the Public Reference Section of the Commission
at its principal office at 450 Fifth Street, N.W., Washington, D.C. 20549-1004.
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 public accountants.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following document filed with the Commission pursuant to the Exchange
Act is incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1995.
In addition, all documents filed by the Company with the Commission pursuant
to Section 13, 14 or 15(d) of the Exchange Act after the date of this Prospectus
and 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 document enumerated above, being
herein referred to as "Incorporated Documents"; provided, however, that the
document enumerated above or subsequently filed by the Company pursuant to
Section 13, 14 or 15(d) of the Exchange Act prior to the filing of the Company's
next Annual Report on Form 10-K with the Commission shall not be Incorporated
Documents or be incorporated by reference in this Prospectus or be a part hereof
from and after any such filing of an Annual Report on Form 10-K).
Any statement contained in an Incorporated Document shall be deemed to be
modified or superseded for all 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 OR
ALL OF THE INCORPORATED DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS
SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE HEREIN. REQUESTS SHOULD
BE DIRECTED TO MR. CHRISTOPHER T. SCREEN, ASSISTANT SECRETARY, NEW ORLEANS
PUBLIC SERVICE INC., P. O. BOX 61000, NEW ORLEANS, LOUISIANA 70161, TELEPHONE
(504) 576-4212. THE INFORMATION RELATING TO THE COMPANY CONTAINED IN THIS
PROSPECTUS AND ANY ACCOMPANYING PROSPECTUS SUPPLEMENT DOES NOT PURPORT TO BE
COMPREHENSIVE AND SHOULD BE READ TOGETHER WITH THE INFORMATION CONTAINED IN THE
INCORPORATED DOCUMENTS.
2
<PAGE>
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 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 ANY 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 the State of Louisiana on
January 1, 1926. The Company's principal executive offices are located at 639
Loyola Avenue, New Orleans, Louisiana 70113; telephone (504) 576-5262.
The Company is an electric and gas public utility company having
substantially all of its operations located in Orleans Parish, 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
(the "Holding Company Act"), owns all of the outstanding common stock of the
Company. The Company, Arkansas Power & Light Company ("AP&L"), Gulf States
Utilities Company, Louisiana Power & Light Company ("LP&L") and Mississippi
Power & Light Company ("MP&L") are the principal operating utility subsidiaries
of Entergy. Entergy also owns, among other things, all of the common stock of
System Energy Resources, Inc. ("System Energy"), a generating company which owns
the Grand Gulf Nuclear Electric Generating Station ("Grand Gulf") and Entergy
Operations, Inc., a nuclear management services company.
The Company, AP&L, LP&L and MP&L own all of the capital stock of System
Fuels, Inc., a special purpose company which implements and/or maintains certain
programs for the procurement, delivery and storage of fuel supplies for Entergy
subsidiaries, including the Company.
The foregoing information relating to the Company does not purport to be
comprehensive and should be read together with the financial statements and
other information contained in the Incorporated Documents. Reference is made to
the Incorporated Documents with respect to the Company's most significant
contingencies, its general capital requirements, and its financing plans and
capabilities, including its short-term borrowing capacity, earnings coverage
requirements under its Restatement of Articles of Incorporation, as amended,
which limit the amount of additional preferred stock that the Company may issue,
and earnings coverage and other requirements under the Company's G&R Mortgage
(hereinafter defined), which limit the amount of additional mortgage bonds that
the Company may issue.
USE OF PROCEEDS
The net proceeds to be received from the issuance and sale of the New Bonds
will be used in order to repay and/or redeem outstanding securities at their
stated maturity or due dates and/or to effect redemption or acquisition of
certain outstanding securities prior to their maturity or due dates, and for
other general corporate purposes. The Company's securities that may be redeemed
or acquired include one or more series of the Company's outstanding (i) First
Mortgage Bonds (hereinafter defined), (ii) G&R Bonds (hereinafter defined),
and/or (iii) preferred stock. The specific securities, if any, to be redeemed or
acquired with the proceeds of a series of New Bonds will be set forth in the
Prospectus Supplement relating to that series.
3
<PAGE>
DESCRIPTION OF THE NEW BONDS
GENERAL. The New Bonds are to be issued under the Company's Mortgage and
Deed of Trust, dated as of May 1, 1987, as supplemented by five supplemental
indentures thereto and as to be further supplemented by one or more supplemental
indentures, including supplemental indentures relating to the New Bonds
(collectively referred to as the "G&R Mortgage"), to Bank of Montreal Trust
Company, as Corporate Trustee (the "Corporate Trustee"), and Mark F. McLaughlin,
as Co-Trustee (the "Co-Trustee" and, collectively with the Corporate Trustee,
"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 Bonds and the G&R
Mortgage are not intended to be comprehensive and are subject to the detailed
provisions of the G&R Mortgage, which are incorporated herein by reference.
(Copies of the G&R Mortgage are available upon request from the Corporate
Trustee or the Company.)
TERMS OF SPECIFIC SERIES OF THE NEW BONDS. A Prospectus Supplement will
include descriptions of the following terms of each series of New Bonds to be
issued: the designation of such series of the New Bonds; the aggregate principal
amount of such series; the date on which such series will mature; the rate at
which such series will bear interest and the date from which interest accrues;
the dates on which interest will be payable; and the prices and the other terms
and conditions, if any, upon which the particular series may be redeemed by the
Company prior to maturity.
SECURITY. The New 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 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 (a "Municipalization
Interest"), subject to certain excepted encumbrances. The G&R Mortgage also
constitutes, in the opinion of counsel for the Company, a second mortgage lien
on all other property of the Company (except properties released under the terms
of the G&R Mortgage and except as stated below), subject to (i) 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
(the "First Mortgage"), (ii) other excepted encumbrances, (iii) minor defects
and encumbrances customarily found in utility properties of like size and
character and that do not materially impair the use of the property affected
thereby in the conduct of the business of the Company, and (iv) 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.
Certain properties of the Company are excepted from the lien of the G&R Mortgage
and include 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 subjecting after-acquired property to
the lien thereof, subject to the lien of the First Mortgage and pre-existing
liens, and further subject to limitations in the case of consolidation, merger
or a 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 property. At December 31 1995,
approximately $35.25 million principal amount of bonds were outstanding under
the First Mortgage. Such bonds and all other bonds issued under the First
Mortgage are herein referred to as "First Mortgage Bonds." The G&R Mortgage
provides that no additional First Mortgage Bonds may be issued.
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.
4
<PAGE>
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 following bases: (i)
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 New Bonds issued on
this basis shall not exceed the lesser of $280,000,000 and 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"); (ii) 70% of property additions after adjustments to
offset retirements; (iii) retirements of G&R Bonds (other than Rate Recovery
Mortgage Bonds) or First Mortgage Bonds; or (iv) the deposit of cash with the
Corporate Trustee. Deposited cash may be withdrawn upon the bases stated in (ii)
or (iii) of the preceding sentence. 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, Rate Recovery Mortgage Bonds must mature not later than May
1, 1998. In connection with the issuance of G&R Bonds after January 1, 1993, the
Company has reserved the right, without the consent of the holders of any series
of G&R Bonds created after January 1, 1993, including the New Bonds or any
subsequent series of G&R Bonds (either with the consent of the holders of G&R
Bonds issued prior to January 1, 1993, or after all such bonds have been retired
at the Company's direction), to amend this limitation under the G&R Mortgage to
provide that all Rate Recovery Mortgage Bonds will mature not later than
September 30, 2001.
Under the G&R Mortgage, whenever the principal amount of outstanding Rate
Recovery Mortgage Bonds exceeds 66 2/3% 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 G&R Bonds after January 1, 1993, the Company has reserved the
right, without the consent of the holders of any series of G&R Bonds created
after January 1, 1993, including the New Bonds or any subsequent series of G&R
Bonds (either with the consent of the holders of G&R Bonds issued prior to
January 1, 1993, or after all such bonds have been retired at the Company's
direction), to eliminate this provision from the G&R Mortgage.
The New 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 G&R Bonds issued on the basis of
retired G&R Bonds or First Mortgage Bonds as described above, the issuance of
G&R Bonds is subject to adjusted net earnings for 12 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, the
additional G&R Bonds comprising such issuance, and all indebtedness, if any, of
prior rank. In connection with the issuance of G&R Bonds after January 1, 1993,
the Company has reserved the right, without the consent of the holders of any
series of G&R Bonds created after January 1, 1993, including the New Bonds or
any subsequent series of G&R Bonds (either with the consent of the holders of
G&R Bonds issued prior to January 1, 1993, or after all such bonds have been
retired at the Company's direction), to substitute for the foregoing a
requirement that adjusted net earnings for 12 of the preceding 18 months, before
income taxes, be at least twice such annual interest requirement. In general,
interest on variable interest rate bonds, if any, is calculated using the
average rate in effect during such 12-month period.
Pursuant to a resolution of the Council of the City of New Orleans,
Louisiana (the "Council") adopted on February 4, 1988, as effectively superseded
by a settlement agreement between the Company and the Council effective October
4, 1991 (the "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 Grand Gulf ("Grand Gulf 1"). The Rate Order
provided, among other things, for
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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 Bonds at December
31, 1995, were approximately $89.35 million. Deferred and uncollected Grand Gulf
l-related costs at December 31, 1995, were approximately $171.44 million and, at
that date, $30 million of Rate Recovery Mortgage Bonds were outstanding.
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, the G&R
Mortgage contains no provisions that afford the holders of the New Bonds
protection in the event of a highly leveraged transaction involving the Company.
Such a transaction, however, would require regulatory approval from the Council.
RELEASE AND SUBSTITUTION OF PROPERTY. Property (other than the
Municipalization Interest) may be released, without applying any earnings test,
upon the basis of: (i) the release of such property from the lien of the First
Mortgage; (ii) the deposit with the Corporate Trustee of cash or, to a limited
extent, purchase money mortgages; (iii) property additions under the G&R
Mortgage, after adjustments in certain cases to offset retirements and after
making adjustments for certain prior lien bonds, if any, outstanding against
property additions; and (iv) waiver of the right to issue G&R Bonds. Cash may be
withdrawn upon the bases stated in (iii) and (iv) of the preceding sentence.
Property is currently released from the lien of the G&R Mortgage on the
basis of its fair value. In connection with the issuance of G&R Bonds after
January 1, 1993, the Company has reserved the right, without the consent of the
holders of any series of G&R Bonds created after January 1, 1993, including the
New Bonds or any subsequent series of G&R Bonds (either with the consent of the
holders of G&R Bonds issued prior to January 1, 1993, or after all such bonds
have been retired at the Company's direction), to modify the release provisions
to provide that property owned by the Company on December 31, 1986 may be
released on the basis of its depreciated book value and all other property may
be released on the basis of its cost, as defined in the G&R Mortgage. Under the
new provisions, unfunded property may be released without meeting the tests
referred to 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 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 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 Commission.
GRAND GULF 1 DEFERRALS AND PROTECTION OF RATE ORDER. The Company has
covenanted that, so long as any Rate Recovery Mortgage Bonds are outstanding, it
will (i) not sell, assign or grant any lien on its deferred Grand Gulf 1-related
costs and the deferred carrying charges accrued thereon, (ii) take all
reasonable actions to maintain in full force and effect the Rate Order and to
defend the Rate Order against challenges, and (iii) 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 only series of Rate Recovery
Mortgage Bonds that remains outstanding is the 10.95% Series due May 1, 1997,
which is currently redeemable at 101.22% of the principal amount thereof.
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In connection with Rate Recovery Mortgage 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 payment 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 $15 million in the
12-month period beginning May 1, 1995, 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 (i) First Mortgage Bonds; (ii) G&R Bonds; (iii) 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); (iv) capitalized leases of equipment and office facilities, with
certain limitations; and (v) 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 l-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 guaranties in the
ordinary course of business in connection with the leasing of limited amounts of
personal property or financing of fuel purchases; guaranties of obligations of
System Fuels, Inc. in connection with its fuel supply business that are approved
by the Commission under the Holding Company Act; and 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 impair materially 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 (i) (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) in any calendar year dispose of any of its assets having an
aggregate fair value in excess of $10 million, or (ii) enter into any
sale-leaseback transactions involving cash consideration of $1 million or more,
unless the cash consideration for such transactions is used either (a) 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 (b) 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 Bonds will be included in
the Prospectus Supplement relating to that series.
MAINTENANCE AND REPLACEMENT FUND IN FIRST MORTGAGE. The New 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. Section
39(I) of the First Mortgage provides that, in addition to actual expenditures
for maintenance and repairs, the Company is required to expend or deposit 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
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<PAGE>
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 AND PURCHASE.
GENERAL. The terms and conditions, if any, upon which a particular series
of New Bonds may be redeemed by the Company prior to maturity will be set forth
in a Prospectus Supplement.
REDEMPTION OF NEW BONDS AT THE OPTION OF HOLDERS. Notwithstanding any
prohibition on redemption of New Bonds that may be set forth in a Prospectus
Supplement, the holders of the 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:
(a) Although no plans currently exist to merge or consolidate the
Company and LP&L, the G&R Mortgage provides that, in the event of such a
consolidation or merger, the new company formed thereby would have the right
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 with the
same interest rates, interest payment dates, maturity dates and redemption
provisions. If the new company makes such an offer, the holders of
outstanding G&R Bonds, including the New Bonds, must accept such first
mortgage bonds in exchange for all or a portion of their G&R Bonds and must
tender to the Company for redemption any G&R Bonds not so exchanged. The
redemption prices applicable for these purposes to the New Bonds will be
included in the Prospectus Supplement relating to each series of the New
Bonds.
(b) 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 the First Mortgage Bonds
required by the First Mortgage, to deposit the net proceeds of such
transaction with the Corporate Trustee. The holders of all G&R Bonds then
outstanding have the right to tender their G&R Bonds for redemption by the
Company 60 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 to 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 the G&R Bonds after
January 1, 1993, the Company has reserved the right, without the consent of
the holders of any series of G&R Bonds created after January 1, 1993,
including any holder of the New Bonds or subsequent series of G&R Bonds
(either with the consent of the holders of G&R Bonds issued prior to January
1, 1993 or after all such bonds have been retired at the Company's
direction), to eliminate this provision from the G&R Mortgage.
DEFAULTS AND NOTICE THEREOF. Defaults are defined in the G&R Mortgage as:
(1) default in the payment of principal; (2) default for 10 days in the 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 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 on other covenants). In connection with the
issuance of G&R Bonds after January 1, 1993, the Company has reserved the right,
without the consent of the holders of any series of G&R Bonds created after
January 1, 1993, including the holders of the New Bonds or any subsequent series
of G&R Bonds (either with the consent of the holders of G&R Bonds issued prior
to January 1, 1993, or after all such bonds have been retired at the Company's
direction), to modify this definition to provide that default for 30 days
(rather than 10 days) in the payment of interest and default in other covenants
for 90 days (rather than 30 days) after notice constitutes default under the G&R
Mortgage.
The Corporate Trustee or the holders of 25% in aggregate principal amount of
the G&R Bonds may declare the principal and interest thereon to be due and
payable on default, but a majority thereof may annul such declaration if such
default has been cured. No holders of G&R Bonds may enforce the lien of
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the G&R Mortgage without giving the Trustees written notice of a default and
unless (i) the holders of 25% in aggregate principal amount 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, expense and liabilities
to be incurred thereby and (ii) 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 upon the Trustees. The Trustees are not
required to risk their funds or incur personal liability if a reasonable ground
exists for believing that repayment is not reasonably assured.
The supplemental indentures relating to the Rate Recovery Mortgage 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 Bonds.
EVIDENCE TO BE FURNISHED TO THE TRUSTEE. Compliance with G&R Mortgage
provisions is evidenced by written statements of officers of the Company or
persons selected or paid by the Company. In certain cases, opinions of counsel
and certifications of an engineer, accountant, appraiser or other expert (who in
some cases must be independent) must be furnished. The Company must give the
Corporate 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, including the New Bonds, without such holders' consent.
BOOK-ENTRY SYSTEM G&R BONDS. Unless otherwise specified in the applicable
Prospectus Supplement, The Depository Trust Company, New York, New York ("DTC"),
will act as securities depository for the New Bonds. The New Bonds will be
issued only as fully registered securities registered in the name of Cede & Co.
(DTC's partnership nominee). One or more fully-registered global certificates
will be issued for the New Bonds, representing the aggregate principal amount of
such series of New Bonds, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants (the "Direct Participants") deposit with
DTC. DTC also facilitates the settlement among Direct Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Direct Participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. DTC is owned
by a number of its Direct Participants and by the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly (the "Indirect Participants," and together with the Direct
Participants, the "Participants"). The rules applicable to DTC and its
Participants are on file with the Commission.
Purchases of New Bonds within the DTC system must be made by or through
Direct Participants, which will receive a credit for the New Bonds on DTC's
records. The ownership interest of each actual
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purchaser of a New Bond (a "Beneficial Owner") will, in turn, be recorded on the
Direct and Indirect Participants' respective records. Beneficial Owners will not
receive written confirmation from DTC of their purchase, but Beneficial Owners
are expected to receive written confirmations providing details of the
transaction, as well as periodic statements of their holdings, from the Direct
or Indirect Participant through which the Beneficial Owner entered into the
transaction. Transfers of ownership interest in the New Bonds are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interest in New Bonds, except in the event that use of the
book-entry system for the New Bonds is discontinued.
To facilitate subsequent transfers, all New Bonds deposited by Direct
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of the New Bonds with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the New Bonds; DTC's records
reflect only the identity of the Direct Participants to whose accounts such New
Bonds are credited, which Direct Participants may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
that may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
securities of a particular series are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in such
series to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the New
Bonds. Under its usual procedures, DTC mails an omnibus proxy (an "Omnibus
Proxy") to the Participants as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the New Bonds are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and interest payments on the New Bonds will be
made to DTC. DTC's practice is to credit Direct Participants' accounts on the
relevant payment date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive payment
on such payment date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is the case with
securities for the accounts of customers in bearer form or registered in
"street-name," and will be the responsibility of such Participant and not of
DTC, the underwriters, dealers or agents, or the Company, subject to any
statutory or regulatory requirements that may be in effect from time to time.
Payment of principal, premium, if any, and interest to DTC is the responsibility
of the Company or the Corporate Trustee. Disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments to
the Beneficial Owners is the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to the New Bonds at any time by giving reasonable notice to the Company.
Under such circumstances and in the event that a successor securities depository
is not obtained, certificates for the New Bonds are required to be printed and
delivered. In addition, the Company at any time may discontinue use of the
system of book-entry transfers through DTC (or a successor securities
depository). In that event, certificates for the New Bonds will be printed and
delivered.
The Company will not have any responsibility or obligation to Participants
or the persons for whom they act as nominees with respect to the accuracy of the
records of DTC, its nominee or any Direct or Indirect Participant with respect
to any ownership interest in the New Bonds, or with respect to payments to or
the providing of notice to the Direct Participants, the Indirect Participants or
the Beneficial owners.
So long as Cede & Co. is the registered owner of the New Bonds, as nominee
of DTC, references herein to holders of the New Bonds shall mean Cede & Co. or
DTC and shall not mean the Beneficial Owners of the New Bonds.
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The information in this section concerning DTC and DTC's book-entry system
has been obtained from DTC. Neither the Company, the Trustees nor the
underwriters, dealers or agents takes responsibility for the accuracy or
completeness thereof.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company has calculated ratios of earnings to fixed charges pursuant to
Item 503 of Commission Regulation S-K as follows:
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
-----------------------------------------------------
DECEMBER 31,
-----------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(a)..................... 3.93 1.91 4.68(b) 2.66 5.66(c)
</TABLE>
- ------------------------
(a) "Earnings," as defined by Commission Regulation S-K, represent the aggregate
of (1) income before the cumulative effect of an accounting change, (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, 1993, include
approximately $18 million related to the change in accounting principle to
provide for the accrual of estimated unbilled revenues.
(c) Earnings for the twelve months ended December 31, 1991, include the effect
of a settlement between the Company and the Council, effective October 4,
1991, which permitted the Company to defer for future recovery, and record
as an asset, $90 million of previously incurred but uncollected Grand Gulf
l-related costs.
EXPERTS AND LEGALITY
The Company's balance sheets as of December 31, 1995 and 1994, and the
statements of income, retained earnings and cash flows, and the related
financial statement schedule, for the two years ended December 31, 1995,
incorporated by reference in this Prospectus, have been incorporated by
reference herein in reliance on the reports of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
The statements of income, retained earnings and cash flows, and the related
financial statement schedule, for the year ended December 31, 1993, incorporated
in this Prospectus by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports dated February 11, 1994, which
expressed an unqualified opinion and included an explanatory paragraph relating
to the Company's change in method of accounting for revenues, also incorporated
by reference herein, and have been so included in reliance upon the reports of
such firm given upon their authority as experts in accounting and auditing.
The legality of the New Bonds will be passed upon for the Company by Reid &
Priest LLP, New York, New York, and Laurence M. Hamric, Esq., General Attorney -
Corporate and Securities of Entergy Services, Inc., and for any underwriters,
dealers or agents by Winthrop, Stimson, Putnam & Roberts, 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
pertaining to Louisiana law will be passed upon only by Laurence M. Hamric, Esq.
The statements as to matters of law and legal conclusions made under
"Description of the New Bonds" have been reviewed by Laurence M. Hamric, Esq.,
and, except as to "Security," by Reid & Priest LLP, New York, New York, and are
set forth herein in reliance upon the opinions of said counsel, respectively,
and upon their authority as experts.
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PLAN OF DISTRIBUTION
The Company may sell the New Bonds: (a) through one or more underwriters or
dealers; (b) directly to one or more purchasers; (c) through one or more agents;
or (d) through a combination of any such methods of sale. The Prospectus
Supplement relating to a series of the New Bonds will set forth the terms of the
offering of the New Bonds, including the name or names of any underwriters,
dealers or agents, the purchase price of such New Bonds and the proceeds to the
Company from such sale, any underwriting discounts and other items constituting
underwriters' compensation, any initial public offering price and any discounts
or concessions allowed or reallowed or paid by any underwriters to dealers. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers by any underwriters may be changed from time to
time.
If underwriters are used in a sale of the New Bonds, such New 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 sale.
The underwriters with respect to a particular underwritten offering of New Bonds
will be named in the applicable Prospectus Supplement relating to such offering
and, if an underwriting syndicate is used, the managing underwriter or
underwriters will be set forth on the cover page of such Prospectus Supplement.
In connection with the sale of New Bonds, the underwriters may receive
compensation from the Company or from purchasers in the form of discounts,
concessions or commissions. The underwriters will be, and any dealers
participating in the distribution of the New Bonds may be, deemed to be
underwriters within the meaning of the Securities Act of 1933, as amended. The
underwriting agreement pursuant to which any New Bonds are to be sold will
provide that the obligations of the underwriters are subject to certain
conditions precedent and that the underwriters will be obligated to purchase all
of the New Bonds if any are purchased; provided that the agreement between the
Company and the underwriter providing for the sale of the New Bonds may provide
that, under certain circumstances involving a default of one or more
underwriters, less than all of the New Bonds may be purchased.
New Bonds may be sold directly by the Company or through agents designated
by the Company from time to time. The applicable Prospectus Supplement will set
forth the name of any agent involved in the offer or sale of the New Bonds in
respect of which such 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 applicable Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase New Bonds from the Company at the public offering price
set forth in such 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 applicable
Prospectus Supplement, and such Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
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, as amended.
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