AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 3, 1998.
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
NIAGARA MOHAWK POWER CORPORATION
(Exact name of registrant as specified in its charter)
NEW YORK 15-0265555
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
----------------------
300 ERIE BOULEVARD WEST
SYRACUSE, NEW YORK 13202
(315) 474-1511
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
----------------------
WILLIAM F. EDWARDS
NIAGARA MOHAWK POWER CORPORATION
SENIOR VICE PRESIDENT &
CHIEF FINANCIAL OFFICER
300 ERIE BOULEVARD WEST
SYRACUSE, NEW YORK 13202
(315) 474-1511
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
JANET T. GELDZAHLER, ESQ.
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 558-4000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: _________
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
AS DETERMINED BY MARKET CONDITIONS.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 of the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_] __________________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
registration statement number of the earlier effective registration statement
for the same offering. [_] __________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=============================================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT
TITLE OF EACH CLASS TO BE OFFERING PRICE AGGREGATE OF
OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $1.00 per 23,000,000 shares $12.013125 $276,718,750.00 $81,632.03
share
=============================================================================================================================
<FN>
(1) Estimated solely for the purpose of calculating the fee pursuant to Rule
457(c) under the Securities Act of 1933 based on the average of the high
and low prices of the Registrant's Common Stock reported on the New York
Stock Exchange on May 27, 1998.
</FN>
</TABLE>
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
SUBJECT TO COMPLETION DATED JUNE 3, 1998
23,000,000 SHARES
NIAGARA MOHAWK POWER CORPORATION
COMMON STOCK PAR VALUE $1.00 PER SHARE
---------------------------
All of the 23,000,000 shares of common stock, par value $1.00 per share
("Common Stock"), of Niagara Mohawk Power Corporation, a New York corporation
(the "Company"), being offered hereby are being sold by the shareholders of the
Company (the "Selling Shareholders"). The Company will not receive any proceeds
of the sale of shares by the Selling Shareholders. See "Selling Shareholders."
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN RISKS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS PRIOR TO ANY INVESTMENT IN
THE SHARES OFFERED HEREBY.
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.
---------------------------
No dealer, salesperson or other person has been authorized to give any
information or to make any representation other than those contained in or
incorporated by reference into this Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company, the Underwriters or any other person. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to sell or the
solicitation of an offer to buy any security other than the shares offered
hereby, an offer to sell or a solicitation of an offer to buy the Shares by
anyone in any jurisdiction in which such offer or solicitation is not authorized
or in which the person making such offer or solicitation is not qualified to do
so or to any person in any circumstances in which such offer or solicitation is
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof or that the
information contained in this Prospectus is correct as of any time subsequent to
the date hereof.
-----------
TABLE OF CONTENTS
Page
Prospectus Summary.................................................. 3
The Company......................................................... 3
Risk Factors........................................................ 6
Dividend Policy..................................................... 10
The MRA and the PowerChoice Agreement............................... 11
The Share Exchange.................................................. 15
Selling Shareholders................................................ 16
<PAGE>
Plan of Distribution................................................ 18
Validity of the Shares.............................................. 20
Experts............................................................. 20
Available Information............................................... 20
Incorporation of Certain Documents by Reference..................... 21
Glossary of Certain Electricity, Natural Gas and Accounting Terms... 22
June 3, 1998
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and the financial statements,
including the notes thereto, appearing elsewhere (or incorporated by reference)
in this Prospectus. Each prospective investor is encouraged to read this
Prospectus and the documents incorporated by reference herein and therein in
their entirety. See "Glossary of Certain Electricity, Natural Gas and Accounting
Terms" appearing as Appendix A for definitions of certain terms used in this
Prospectus.
THE COMPANY
Niagara Mohawk Power Corporation (the "Company") is engaged in the
generation, purchase, transmission, distribution and sale of electricity and the
purchase, distribution, sale and transportation of natural gas in New York
State. The Company provides electric service to its customers in areas of
central, northern and western New York having a total population of
approximately 3.5 million, including the cities of Buffalo, Syracuse, Albany,
Utica, Schenectady, Niagara Falls, Watertown and Troy. The Company sells,
distributes and transports natural gas in areas of central, northern and eastern
New York contained within the Company's electric service territory having a
total population of approximately 1.7 million. The Company owns or has a
significant ownership interest in seven principal fossil and nuclear electric
generating facilities and a total capacity of approximately 5,299 megawatts
("MW") of electricity.
In 1997, the Company entered into two related agreements that it believes
will significantly improve its financial outlook, namely the PowerChoice
Settlement Agreement dated October 10, 1997 (as modified by the PSC Order (as
defined), the "PowerChoice Agreement") and the Master Restructuring Agreement
dated July 9, 1997, as amended (the "MRA"). Pursuant to the PowerChoice
Agreement, the Company and the New York State Public Service Commission (the
"PSC"), which regulates utilities in the State of New York, have agreed to a
five-year rate plan and the Company has agreed to divest its fossil and hydro
generating facilities (the "Genco Divestiture"), representing 4,217 MW of
capacity and approximately $1.1 billion of net book value. The PSC issued a
written order approving the PowerChoice Agreement and the MRA on March 20, 1998
(the "PSC Order"). The Company currently intends to use the proceeds from any
Genco Divestiture to reduce indebtedness. Pursuant to the MRA, the Company and
14 independent power producers ("IPPs", and such 14 IPPs, the "IPP Parties")
have agreed to terminate, restate or amend 27 power purchase agreements ("PPAs")
between the Company and such IPPs in exchange for $3.6 billion in cash and
approximately 42.9 million shares of the Company's Common Stock. The Selling
Shareholders are IPP Parties. The closing of the MRA is presently scheduled for
June 30, 1998. The Company intends to fund its cash obligations under the MRA
through the sale of $3.45 billion principal amount of senior unsecured debt (the
"Debt Offering"). In addition, the Company presently plans to sell a portion of
the 42.9 million shares of Common Stock to the public (the "Equity Offering",
and together with the Debt Offering, the "MRA Financing"), and deliver the
proceeds thereof to the IPP Parties. The remainder of the shares to be received
by the IPP Parties are being offered hereby. See "The MRA and the PowerChoice
Agreement."
For the twelve months ended March 31, 1998, the Company derived
approximately 84.5% of its revenues from the sale and transmission of
electricity and 15.5% of its revenues from the sale, distribution and
transportation of natural gas. During such period, the Company had revenues,
EBITDA, interest charges and net income of approximately $3.9 billion, $859.7
million, $272.0 million, and $100.7 million, respectively. After giving pro
forma effect to the consummation of the MRA and the MRA Financing, and the
principal terms
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<PAGE>
of the PowerChoice Agreement excluding the Genco Divestiture, the Company would
have had revenues, EBITDA, interest charges and net loss of approximately $3.8
billion, $1.3 billion, $505.5 million, and $(27.9) million, respectively.
"EBITDA" represents earnings before interest charges, interest income, income
taxes, depreciation and amortization, non-cash regulatory deferrals and other
amortizations, and extraordinary items. EBITDA is presented to provide
additional information about the Company's ability to meet its future
requirements for debt service and capital expenditures. EBITDA should not be
considered an alternative to net income as an indicator of operating performance
or an alternative to cash flow as a measure of liquidity. See the Pro Forma
Condensed Statements of Income and the Consolidated Statements of Cash Flows
incorporated by reference in this Prospectus. See "The MRA and the PowerChoice
Agreement" and the "Pro Forma Condensed Financial Statements" set forth herein.
The Company's principal executive offices are located at 300 Erie Boulevard
West, Syracuse, New York 13202, and its telephone number is (315) 474-1511.
BACKGROUND OF THE MRA
The Company entered into the PPAs that are subject to the MRA because it
was required to do so under the Public Utility Regulatory Policies Act of 1978
("PURPA"), which was intended to provide incentives for businesses to create
alternative energy sources. Under PURPA, the Company was required to purchase
electricity generated by qualifying facilities of IPPs at prices that were not
expected to exceed the cost that otherwise would have been incurred by the
Company in generating its own electricity, or in purchasing it from other
sources (known as "avoided costs"). While PURPA was a federal initiative, each
state retained certain delegated authority over how PURPA would be implemented
within its borders. In its implementation of PURPA, the State of New York passed
the "Six-Cent Law," establishing 6(cent) per kilowatt hour ("Kwh") as the floor
on avoided costs for projects less than 80 MW in size. The Six-Cent Law remained
in place until it was amended in 1992 to deny the benefit of the statute to any
future PPAs. The avoided cost determinations under PURPA were periodically
increased by the PSC during this period. PURPA and the Six-Cent Law, in
combination with other factors, attracted large numbers of IPPs to New York
State, and, in particular, to the Company's service territory, due to the area's
existing energy infrastructure and availability of cogeneration hosts. The
pricing terms of substantially all of the PPAs that the Company entered into in
compliance with PURPA and the Six-Cent Law or other New York laws were based, at
the option of the IPP, either on administratively determined avoided costs or
minimum prices, both of which have consistently been materially higher than the
wholesale market prices for electricity.
Since PURPA and the Six-Cent Law were passed, the Company has been required
to purchase electricity from IPPs in quantities in excess of its own demand and
at prices in excess of those available to the Company by internal generation or
for purchase in the wholesale market. In fact, by 1991 the Company was facing a
potential obligation to purchase power from IPPs substantially in excess of its
peak demand of 6,093 MW. As a result, the Company's competitive position and
financial performance have deteriorated and the price of electricity paid per
Kwh by its customers has risen significantly above the national average.
Accordingly, in 1991 the Company initiated a parallel strategy of negotiating
individual PPA buyouts, cancellations and renegotiations, and of pursuing
regulatory and legislative support and litigation to mitigate the Company's
obligation under the PPAs. By mid-1996, this strategy had resulted in reducing
the Company's obligations to purchase power under its PPA portfolio to
approximately 2,700 MW. Notwithstanding this reduction in capacity, over the
same time period, the payments made to the IPPs in respect of their PPAs rose
from approximately $200 million in 1990 to approximately $1.1 billion in 1997 as
independent power facilities from which the Company was obligated to purchase
electricity commenced operations. The Company estimates that absent the MRA,
payments made to the IPPs pursuant to PPAs would continue to escalate by
approximately $50 million per year until 2002.
Recognizing the competitive trends in the electric utility industry and the
impracticability of remedying the situation through a series of customer rate
increases, in mid-1996, the Company began comprehensive negotiations to
terminate, amend or restate a substantial portion of above-market PPAs in an
effort to mitigate the escalating cost of these PPAs as well as to prepare the
Company for a more competitive
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<PAGE>
environment. These negotiations led to the MRA and the PowerChoice Agreement.
See "The MRA and the PowerChoice Agreement."
BUSINESS STRATEGY
In New York State, where the Company's principal assets are located, the
PSC has established guidelines and goals for the development of a competitive
electricity market through the Competitive Opportunities Proceeding. The PSC's
stated goals include (i) lowering customer rates; (ii) increasing customer
choice; (iii) maintaining reliability of service; (iv) continuing environmental
and public policy programs; (v) mitigating concerns about market power; and (vi)
continuing customer protections and the obligation to serve. In addition, the
PSC has stated that electric utilities may recover stranded costs from customers
through a non-bypassable "wires" charge, known as a Competitive Transition
Charge ("CTC"), to be collected by electric distribution companies. Stranded
costs are utility costs that cannot be fully recovered from customers in rates
established in a competitive market. However, the PSC also cautioned that a
careful balancing of customer and electric utility interests and expectations is
necessary, and that the level of stranded cost recovery will ultimately depend
on the particular circumstances of each electric utility. Six of the seven
investor-owned electric utilities in New York State have had major restructuring
proposals approved, including the Company's PowerChoice Agreement.
Management believes that the MRA and the PowerChoice Agreement provide the
Company with financial stability and create an improved platform from which to
build value. The primary objective of the MRA is to convert a large and growing
off-balance sheet payment obligation that threatens the financial viability of
the Company into a fixed and manageable capital obligation. Accordingly, the
Company believes that the lower contractual obligations resulting from the MRA
will significantly improve cash flow which can be dedicated to reduce
indebtedness incurred to fund the MRA. With the PowerChoice Agreement, the
Company has established lower prices for its industrial, commercial and
residential electric customers for a period of three years and reasonable
certainty of prices for the two years thereafter. The MRA also facilitates the
creation of a competitive electricity supply market in the Company's service
territory.
In the near term, the Company believes the greatest opportunity for
improving the cash flow and financial condition of the Company will come from
focusing on the regulated electric transmission, distribution, nuclear and gas
operations. The Company will continue to emphasize operational excellence and
seek to improve margins through cost reductions. In addition, the Company
intends to pursue low risk unregulated business opportunities. Pursuant to the
PowerChoice Agreement, the Company has a one-year window in which to form a
holding company that, if formed, would enhance the Company's ability to explore
unregulated business opportunities to foster longer-term strategic growth. The
Company is seeking approval from its shareholders to establish a holding company
structure through a share exchange (the "Share Exchange"), in which present
shareholders of the Company would exchange their shares of the Company's Common
Stock on a share-for-share basis for shares of such holding company (such
holding Company referred to herein as "Holdings"). The implementation of a
holding company structure, if approved by the Company's shareholders, would only
occur following various regulatory approvals and is not anticipated to occur
prior to the first quarter of 1999. See "The Share Exchange".
5
<PAGE>
RISK FACTORS
This Prospectus contains or incorporates by reference statements that
constitute forward looking information within the meaning of the Private
Securities Litigation Reform Act of 1995. All statements regarding the Company's
future financial condition, results of operations, cash flows, financing plans,
business strategy, projected costs and capital expenditures, operations under
the MRA and the PowerChoice Agreement and words such as "anticipate,"
"estimate," "expect," "project," "intend," and similar expressions are intended
to identify forward-looking statements. Such statements appear in this
Prospectus under the captions "Prospectus Summary," "Risk Factors," and "The MRA
and the PowerChoice Agreement." Such statements are subject to certain risks,
uncertainties and assumptions. All of these forward-looking statements are based
on estimates and assumptions made by the Company's management which, although
believed by the Company's management to be reasonable, are inherently uncertain.
Investors are cautioned that such forward-looking statements are not guarantees
of future performance or results and involve risks and uncertainties and that
actual results or developments may differ materially from the forward-looking
statements as a result of various factors, including the factors described
below.
EFFECT OF MRA AND POWERCHOICE ON THE COMPANY'S REPORTED EARNINGS
The Company's reported net income will be significantly depressed in the
future as compared to historical results because of the effects of the MRA and
the PowerChoice Agreement. Pursuant to the rate reductions under PowerChoice,
the Company's electric revenues will be reduced by approximately $111.8 million
to be phased in over three years. In addition, the compensation paid to the IPP
Parties in the form of cash and Common Stock will be capitalized and carried on
the Company's books as a regulatory asset in an amount of approximately $4.0
billion (the "MRA Regulatory Asset"). This asset will be amortized generally
over ten years and will substantially reduce the Company's reported earnings.
Finally, the estimated additional interest charges and amortization of debt
issuance costs associated with the Debt Offering will increase the Company's
future interest expense and correspondingly reduce earnings. The impact of
reduced revenues under the PowerChoice Agreement, the MRA Regulatory Asset and
the increased interest expense related to the Debt Offering will be partially
offset by the benefit to the Company of the decreased cost of electricity
purchased from the IPPs. On a pro forma basis, as a result of the above
adjustments, the Company's net income (loss) will be reduced by $127.6 million
and $128.6 million for the year ended December 31, 1997 and the twelve months
ended March 31, 1998, respectively, to $55.7 million and $(27.9) million,
respectively, for such periods. On a historical basis, the Company reported net
income of $183.3 million and $100.7 million, respectively, for such periods. The
foregoing may adversely affect the market for the Common Stock and the prices at
which it may trade.
SUBSTANTIAL LEVERAGE AND LIMITED FINANCIAL FLEXIBILITY
Following consummation of the MRA and the Debt Offering, the Company will
have substantial leverage and significant debt service obligations. As of March
31, 1998, on a pro forma basis after giving effect to the consummation of the
MRA and the Debt Offering, the Company would have had outstanding approximately
$6.8 billion of senior indebtedness, consisting primarily of $2.8 billion of
First Mortgage Bonds, which are secured by a lien on substantially all of the
Company's utility property, $529.0 million of borrowings under the Company's
senior bank facility, which are secured with First Mortgage Bonds, $20.0 million
of unsecured medium term notes and $3.272 billion of senior unsecured notes (the
"Notes"). The Company also will have available additional borrowings of $275.0
million under its senior bank facility and, under the financial covenants set
forth in the
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<PAGE>
indenture governing the Notes, will have the ability to incur additional
indebtedness, up to certain limitations. See "The MRA and the PowerChoice
Agreement."
The degree to which the Company is leveraged could have important
consequences to holders of the Common Stock, including: (i) the Company's
ability to obtain additional financing for working capital, capital
expenditures, acquisitions or other corporate purposes will be limited in the
future; (ii) a substantial portion of the Company's cash flow from operations
will be dedicated to the payment of principal and interest on its indebtedness,
thereby reducing the funds available to the Company for other purposes; and
(iii) the Company's substantial leverage may place the Company at a competitive
disadvantage, hinder its ability to adjust rapidly to changing market conditions
and make it more vulnerable in the event of a downturn in general economic
conditions or its business.
EFFECT OF DECREASED SALES TO CUSTOMERS
Under the PowerChoice Agreement, the Company has established rates intended
to create sufficient cash flow to at least cover its operating expenses, satisfy
its fixed obligations, and recover allowable stranded costs. The Company's rate
design is based on estimates of future electricity usage and the number of
customers connected to the Company's distribution system. The level of electric
revenues can be adversely affected by lower than projected sales to retail
customers and by customer bypass of the system. Economic conditions in the
Company's service area could result in lower sales due to the relocation of
customers. Because of the relatively high cost of the Company's electricity,
customers could seek to bypass the Company's distribution system through
self-generation or the replacement of the Company with a municipal or other
utility. While the PowerChoice Agreement requires the payment of an exit fee or
access charge in these circumstances (except with respect to customers who had
made substantial investment in on-site generation as of October 10, 1997), the
affected customers and competitors may challenge the Company's right to collect
these fees, or the appropriate level of these fees. There can be no assurance
that the Company would prevail in any such proceeding. If revenues are
significantly lower than those anticipated in its rate design, the Company's
profitability could be materially adversely affected.
REGULATORY MATTERS
Following implementation of the PowerChoice Agreement, the Company will
remain subject to extensive regulation by the PSC. While the most material
aspects of the Company's rate structure for the next five years are established
in the PowerChoice Agreement, under certain circumstances, the PSC could
initiate proceedings to reduce rates. Conversely, the PSC is likely to continue
to assess competitive consequences in considering future rate increases even in
the event that the Company experiences revenue shortfalls or increased expenses.
In addition, many aspects of the Company's operations, including its electric
transmission and distribution systems, the operation and maintenance of its
nuclear facilities, its gas distribution operations and the issuance of
securities, will continue to be subject to extensive regulation by both the
federal government and the PSC. Changes in these regulations or in their
application to the Company could adversely affect the Company's business and
financial condition. Further, uncertainty exists regarding the ultimate impact
on the Company as the electric industry is further deregulated and electricity
suppliers gain open access to the Company's retail customers.
PSC procedures governing the approval of the PowerChoice Agreement
provide various parties the right to appeal such approval by giving notice of
their intention to do so within 120 days of the date on which approval is
received. Such an appeal may be based on the failure of the record to show a
reasonable basis for the terms of the PowerChoice Agreement and may result in an
amendment of the record to correct such
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failure, in renegotiation of such terms or in renegotiation of the PowerChoice
Agreement as a whole. There can be no assurance that, if appealed, the approval
of the PowerChoice Agreement will be upheld or that such appeal will not result
in terms substantially less favorable to the Company than those described
herein. In addition, certain parties have petitioned the PSC for a rehearing of
its order approving the PowerChoice Agreement and filed an action seeking to
enjoin the implementation of the PowerChoice Agreement, the MRA and the
Company's contemplated Genco Divestiture on the grounds that the PSC failed to
comply with the provisions of the New York State Environmental Quality Review
Act. On April 20, 1998, the application for a temporary restraining order was
denied, and on May 22, 1998, the injunction was denied and the petition was
dismissed, which decision is appealable. Suspension of the PowerChoice Agreement
or renegotiation of its material terms could have a material adverse effect on
the Company's results of operations.
RESTRICTIONS ON THE ABILITY TO PAY DIVIDENDS
The Company's Board of Directors omitted the Common Stock dividend
beginning in 1996 in order to stabilize the Company's financial condition and to
provide additional cash to service its fixed obligations. The Company expects to
dedicate a substantial portion of its future cash flow to reduce the
indebtedness incurred in connection with the MRA, which will reduce the amount
of cash available to pay dividends on the Common Stock. In addition, the
PowerChoice Agreement, as well as the indenture governing the Notes and the
Company's senior bank facility, significantly limit the amount that the Company
is permitted to pay in dividends on its Common Stock and Preferred Stock. In
light of the foregoing, there can be no assurance that the Company will be in a
position to pay dividends on the Common Stock in the near future and, if such
dividends are paid, their amount may be limited based on the Board's evaluation
of the Company's financial condition, business conditions and other factors at
the time.
FEDERAL INCOME TAX IMPLICATIONS OF MRA TO THE COMPANY
The Company has requested rulings from the Internal Revenue Service to the
effect that the amount paid to the IPP Parties who are terminating their PPAs
upon closing of the MRA will be currently deductible and generate a substantial
net operating loss ("NOL"). No assurance can be given that favorable rulings
will be issued. If favorable rulings are not received, and the Company's claimed
current deductions are challenged on audit and not ultimately sustained, the
amount of tax refunds generated from the NOL carryback, and thus the amount of
cash available to provide operating capital and service the Company's
obligations following consummation of the MRA, would be reduced. While any
disallowed deductions would ultimately be allowable in future years, and would
likely create, or increase the amount of NOLs available to offset tax
liabilities in future years, cash flow would be adversely affected in the near
term.
The Company's ability to utilize the NOL generated as a result of the MRA
could be substantially limited under the rules of section 382 of the Internal
Revenue Code (the "Code") if certain changes in the Company's stock ownership
were to occur following the consummation of the MRA. In general, the limitation
is triggered by a more than 50% change in stock ownership during a 3-year
testing period by shareholders who own, directly or indirectly, 5% or more of
the Common Stock. For purposes of making the change in ownership computation,
the IPP Parties who are issued Common Stock pursuant to the MRA and the
purchasers in the Equity Offering will likely be considered separate 5%
shareholder groups, with the result that a stock ownership change of up to 23%
will be deemed to have occurred by reason of their collective acquisition of
such stock. Thus, if the IPP Parties, the purchasers in the Equity Offering and
any other 5% shareholders experience ownership increases totaling more than 27%
during any 3-year testing period that includes the consummation date of the MRA,
the 50% statutory threshold would be breached and
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the NOL limitation would apply. The rules for determining changes in stock
ownership for purposes of section 382 are extremely complicated and in many
respects uncertain. A stock ownership change could occur as a result of
circumstances that are not within the control of the Company. If a more than 50%
change in ownership were to occur, the Company's remaining usable NOL on a going
forward basis would likely be significantly lower than the NOL amount which
otherwise would be usable absent the limitation. Consequently, the Company's net
cash position could be significantly lower as a result of tax liabilities which
would otherwise be eliminated or reduced through unrestricted use of the NOL.
NUCLEAR FACILITY RISK
Risks of substantial liability arise from the ownership and operation of
nuclear facilities, including, among others, structural problems at a nuclear
facility, the storage, handling and disposal of radioactive materials,
limitations on the amounts and types of insurance coverages commercially
available and uncertainties with respect to the technological and financial
aspects of decommissioning nuclear facilities at the end of their useful lives.
The Company's Nine Mile Point Nuclear Unit No. 1 ("Unit 1") nuclear facility is
one of the oldest in operation, having commenced operations in 1969. In the
event of an extended outage of either Unit 1 or Unit 2 at Nine Mile Point, the
Company would be required to purchase power in the open market to replace the
power normally produced by these facilities. Such purchases would subject the
Company to the risk of increased energy prices and, depending on the length of
the outage and the level of market prices, could have a material adverse effect
on the Company's cash flow. Under the PowerChoice Agreement, the Company is not
entitled to pass along these increased costs to customers in the form of higher
electric rates. If either facility were to have problems with its physical
condition or require significant capital expenditure, the Company would evaluate
the economic justification of continuing to operate the facility. The prudence
of the Company's decision to close a facility is subject to review by the PSC to
determine whether the Company should be allowed to recover its incremental
costs, including replacement power costs, which would likely be an amount
significant to the Company.
ENVIRONMENTAL REGULATIONS
The Company and its operations are subject to a wide range of environmental
laws and regulations relating to, among other matters, air emissions, wastewater
discharges, landfill operations and hazardous waste management. Compliance with
these laws and regulations is an increasingly important factor in the Company's
business. The Company is currently conducting a program to investigate and
restore, as necessary to meet current environmental standards, certain
properties associated with its former gas manufacturing process and other
properties which the Company has learned may be contaminated with industrial
waste, as well as investigating identified industrial waste sites as to which it
may be determined that the Company contributed. The Company has also been
advised that various federal, state or local agencies believe certain properties
require investigation and has prioritized the sites based on available
information in order to enhance the management of investigation and remediation,
if necessary. The Company is currently aware of 124 such sites with which it has
been or may be associated, including 76 which are Company-owned. With respect to
non-owned sites, the Company may be required to contribute some share of the
remedial costs. The Company has denied any responsibility in certain of these
sites and is contesting liability accordingly. Although in practice, remedial
costs are often allocated among parties, one party can, as a matter of law, be
held liable for all of the remedial costs at a site regardless of fault. The
Company has accrued a liability in the amount of $220 million for remedial costs
and the high end of the range of remedial costs is currently estimated by the
Company to be approximately $650 million, including approximately $285 million
in the unlikely event the Company is required to assume 100% responsibility at
non-owned sites. The Company believes that it is probable that environmental
compliance and remediation costs will continue to be
9
<PAGE>
recovered in its rates and the Company has recorded a regulatory asset for
recovery of these costs. However, there can be no assurance that additional
expenses associated with remedial costs or compliance with proposed and future
environmental laws and regulations could not have a material adverse effect on
the future operations and financial condition of the Company.
ACCOUNTING PRINCIPLES
The Company continues to apply the accounting principles of SFAS No. 71 to
its electric transmission and distribution, nuclear and gas operations, based on
the terms of the PowerChoice Agreement. SFAS No. 71 permits a utility to defer
certain costs for future recovery which would otherwise be charged to expense
when authorized to do so by the relevant regulatory authorities. As of March 31,
1998, the Company had recorded $811.0 million of regulatory assets, net of
regulatory liabilities, associated with the electric business. The deferral of
the costs of the MRA by the PSC will cause the net regulatory assets to increase
by approximately $4.0 billion. In the event that the Company determined, either
as a result of lower than expected revenues or higher than expected costs, that
its net regulatory assets were not in fact recoverable, it could no longer apply
the principles of SFAS No. 71 and would be required to record a non-cash charge
against income in the amount of the remaining unamortized net regulatory assets.
DIVIDEND POLICY
The Company has not declared or paid any cash dividends on the Common Stock
since 1996. The Company currently intends to retain future earnings to repay
indebtedness and therefore, does not anticipate paying any cash dividends in the
immediate future. The Company is limited in its ability to pay cash dividends in
respect of its Common Stock pursuant to the PowerChoice Agreement, the indenture
governing the Notes and the Company's senior bank facility. Any future
determination to declare and pay dividends will be made by the Board of
Directors after evaluating the Company's earnings, cash flow, financial
position, capital requirements, contractual agreements, regulatory restrictions,
competitive position, and such other factors as the Board of Directors deems
relevant.
10
<PAGE>
THE MRA AND THE POWERCHOICE AGREEMENT
Overview
On March 20, 1998, the Company received written approval from the PSC for
the PowerChoice Agreement which establishes a five-year rate plan and
incorporates the terms of the MRA. The key terms of the PowerChoice Agreement
include: (i) a revenue reduction of $111.8 million (exclusive of reductions in
the New York State Gross Receipts Tax) for all customer classes to be phased in
over three years beginning upon the consummation of the MRA; (ii) a mechanism to
cap prices to electric customers in years four and five of the five-year term;
(iii) an allowance for the Company to recover stranded costs (including the
recoverable costs associated with the MRA); (iv) the permission to establish the
MRA Regulatory Asset, reflecting the recoverable costs of the MRA which will be
amortized generally over ten years; (v) an agreement by the Company to divest
its fossil and hydro electric generating facilities within a defined time period
and retain its nuclear generating facilities with a commitment to explore their
divestiture at a later date; and (vi) an agreement by the Company to provide its
retail electric customers with the option to choose their supplier of
electricity by no later than December 1999.
The MRA
The closing of the MRA Financing is expected to occur concurrently with and
is contingent upon the closing of the MRA. Pursuant to the MRA, the Company has
reached an agreement with 14 IPPs to terminate, restate or amend 27 PPAs in
exchange for approximately $3.6 billion of cash and approximately 42.9 million
shares of Common Stock (representing approximately 23% of the Company's
outstanding shares following such issuance). A portion of the 42.9 million
shares of Common Stock is being issued in the Equity Offering and the net
proceeds thereof will be paid to the IPP Parties. The remainder of the 42.9
million shares of Common Stock will be issued directly to the IPP Parties and
are being offered hereby. The proceeds of the Debt Offering, together with cash
on hand, will be used to fund the Company's cash obligation under the MRA. The
principal effects of the MRA are to significantly reduce the Company's existing
payment obligations under the PPAs, which consisted of approximately 2,700 MW of
capacity in aggregate for all existing PPAs at March 31, 1998.
The Company expects that the MRA will result in a significant improvement
in cash flow resulting from the reduction in the payment obligation (both in
nominal dollars and PPA duration) under the existing PPAs. The savings in annual
energy payments will yield significant free cash flow that can be dedicated to
the repayment of the Notes.
Under the terms of the MRA, the Company's significant long-term and
escalating IPP payment obligations will be restructured into a more manageable
debt obligation and a portfolio of restated and amended PPAs with price and
duration terms that the Company believes are more favorable than the existing
PPAs. Under the MRA, 18 PPAs representing approximately 1,100 MW of electric
generating capacity will be terminated completely, thus allowing this capacity
to be replaced through the competitive market at market-based prices. The
Company has no continuing obligation to purchase energy from the terminating
IPPs. Also under the MRA, eight PPAs representing approximately 541 MW of
capacity will be restated on economic terms and conditions which the Company
believes are more favorable to it than the terms of the existing PPAs subject to
the MRA. The restated PPAs will have shorter terms (ten years) and will be
structured as financial swap contracts where the Company receives or makes
payments to the IPP Parties based upon the differential between the contract
price and a market reference price for electricity. The contract prices are
fixed for the first two years changing to an indexed pricing formula thereafter.
Contract
11
<PAGE>
quantities are fixed for the full ten year term of the contracts. The indexed
pricing structure ensures that the price paid for energy and capacity will
fluctuate relative to the underlying market cost of gas and general indices of
inflation. Until such time as a competitive energy market structure becomes
operational in the State of New York, the amended and restated contracts provide
the IPP Parties with a put option for the physical delivery of energy.
Additionally, one PPA representing 42 MW of capacity will be amended to reflect
a shorter term (17 years) and a lower stream of fixed unit prices. The Company's
expected future commitment under the restated and amended contracts ranges from
approximately $210 million in the first year to $290 million in the tenth year.
Against the Company's forecast of market energy prices, the amended and
restated PPAs represent an expected above-market payment obligation. The Company
believes, however, that its portfolio of amended and restated PPAs could provide
it and its customers with a hedge against significant upward movement in market
prices for electricity. The portfolio of amended and restated PPAs and market
purchases contain terms that are more responsive than the existing PPAs to
competitive market price changes.
Upon consummation of the MRA, the IPP Parties are expected to own up to
approximately 42.9 million shares of the Common Stock, representing
approximately up to 23% of the Company's voting securities. Pursuant to the MRA,
any IPP Party that receives 2% or more of the outstanding Common Stock and any
designee of IPP Parties that receives more than 4.9% of the outstanding Common
Stock upon the consummation of the MRA will, together with certain but not all
affiliates (collectively, "2% Shareholders"), enter into certain shareholder
agreements (the "Shareholders Agreements"). Pursuant to each Shareholder
Agreement, the 2% Shareholders agree that for five years from the consummation
of the MRA they will not acquire more than an additional 5% of the outstanding
Common Stock (resulting in ownership in all cases of no more than 9.9%) or take
any actions to attempt to acquire control of the Company, other than certain
permitted actions in response to unsolicited actions by third parties. The 2%
Shareholders generally vote their shares on a "pass-through" basis, in the same
proportion as all shares held by other shareholders are voted, except that they
may vote in their discretion (i) for extraordinary transactions and (ii) for
directors when there is a pending proposal to acquire the Company. Purchasers of
the shares offered hereby who are not affiliates of any 2% Shareholders will not
be subject to the above described restrictions.
Each of the IPP Parties has agreed, until 45 days after the closing of the
Equity Offering, not to offer, sell or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock, or enter into any swap or
similar arrangement with respect thereto, without the prior written consent of
Donaldson, Lufkin & Jenrette Securities Corporation, subject to certain
conditions.
The PowerChoice Agreement
The PowerChoice Agreement, which was approved by the PSC on March 20, 1998,
establishes a five-year rate plan that will reduce average residential and
commercial rates by an aggregate of 3.2% over the first three years. The rate
plan will take effect within 30 days of approval by the PSC of the tariffs
implementing PowerChoice, but in no case earlier than the MRA closing. The
reduction in prices will include certain savings that will result from partial
reductions of the GRT. Industrial customers will see average reductions of 25%
relative to 1995 price levels; these decreases will include discounts currently
offered to some industrial customers through optional and flexible rate
programs. The cumulative rate reductions, exclusive of GRT savings, are
estimated to be $111.8 million, to be phased in over the first three years of
the agreement. During the term of the PowerChoice Agreement, the Company will be
permitted to defer certain costs associated primarily with environmental
remediation, nuclear decommissioning and related costs, and changes in laws,
regulations, rules and orders. The Company must also defer, during the term of
the PowerChoice Agreement, the difference between the assumed weighted average
interest rate of 8.5% used by the Company to prepare its PowerChoice proposal
and the actual weighted average interest rate for the Senior Notes portion of
the Debt Offering. In years four and five of its rate plan, the Company can
request an annual increase in prices subject to a cap of 1% of the all-in price,
excluding commodity costs (e.g., transmission, distribution, nuclear, and
forecasted CTC). In addition to the price cap, the PowerChoice Agreement
provides for the recovery of deferrals established in years one through four and
cost variations
12
<PAGE>
resulting from indexing provisions of the MRA financial contracts. The aggregate
of the price cap increase and recovery of deferrals is subject to an overall
limitation of inflation.
Under the terms of the PowerChoice Agreement, all of the Company's
customers will be able to choose their electricity supplier in a competitive
market by December 1999. The Company will continue to distribute electricity
through its transmission and distribution systems and would be obligated to be
the so-called provider of last resort for those customers who do not exercise
their right to choose a new electricity supplier.
The PowerChoice Agreement provides that the MRA and the contracts executed
pursuant thereto are found to be prudent. The PowerChoice Agreement further
provides that the Company shall have a reasonable opportunity to recover its
stranded costs, including those associated with the MRA and the contracts
executed thereto, through a CTC and, under certain circumstances, through exit
fees or in rates for back-up service.
The PSC has limited the amount of the MRA Regulatory Asset that can be
recovered from customers to approximately $4.0 billion. The MRA Regulatory Asset
represents the recoverable costs of the MRA, consisting of the cash compensation
paid to the IPP Parties, the issuance of approximately 42.9 million shares of
Common Stock, a portion of which is being offered hereby with the remainder
being issued directly to the IPP Parties, and other expenses related to the MRA.
The ultimate amount of the MRA Regulatory Asset may vary based on certain events
related to the closing of the MRA. Because the value of the shares of Common
Stock sold in the Equity Offering and that of the shares offered hereby can only
be determined at the date of the closing of the MRA and the Equity Offering,
respectively, the value of the limitation on the recoverability of the MRA
Regulatory Asset is expected to be recorded as a charge to expense in the second
quarter of 1998 upon the closing of the MRA and the Equity Offering. The
ultimate amount of the charge to expense will be determined as the difference
between $8 per share and the Company's closing Common Stock price on the date
the MRA closes with respect to the portion of the 42.9 million shares issued
directly to the IPP Parties, and the actual offering price with respect to the
shares of Common Stock sold in the Equity Offering. Using the Company's closing
Common Stock price on March 26, 1998 of $12 7/16 per share, multiplied by
approximately 42.9 million shares, the estimated charge to expense would be
approximately $190.0 million.
The PowerChoice Agreement calls for the Company to divest all its fossil
and hydro generating facilities and prohibits the Company from owning
non-nuclear generating assets within the State of New York except as described
below. The Genco Divestiture is intended to be accomplished through an auction,
the plan for which was approved by the PSC in an order dated May 6, 1998.
Winning bids are expected to be selected in the fall of 1998. The Company will
retain a portion of the auction sale proceeds, above specified levels, as an
incentive to obtain maximum value in the sale. This incentive would be recovered
from sale proceeds. The Company agreed that if it does not receive an acceptable
bid for an asset, the Company will form a subsidiary to hold any such asset and
then will legally separate this subsidiary from the Company through a spin-off
to shareholders or otherwise. If a bid of zero or below is received for an
asset, the Company may keep the asset as part of its regulated business. The
auction process will serve to quantify any stranded costs associated with the
Company's fossil and hydro generating facilities. The Company will have a
reasonable opportunity to recover these costs through the CTC and, under certain
circumstances, through exit fees or in rates for back-up service. The Company
intends to use any cash proceeds from such an auction to repay indebtedness.
The PowerChoice Agreement contemplates that the Company's nuclear plants
will remain part of the Company's regulated business. The Company has been
supportive of the creation of a statewide New
13
<PAGE>
York Nuclear Operating Company that it expects would improve the efficiency of
nuclear units throughout the state. The PowerChoice Agreement stipulates that
absent such a statewide solution, the Company will file a detailed plan for
analyzing other proposals regarding its nuclear facilities, including the
feasibility of an auction, transfer and/or divestiture of such facilities,
within 24 months of approval of the PowerChoice Agreement.
The PowerChoice Agreement also allows the Company to form a holding company
at its election. The Company is seeking approval from its shareholders for the
formation of a holding company. The implementation of a holding company
structure, if approved by the Company's shareholders, would only occur following
various regulatory approvals and is not anticipated to occur prior to the first
quarter of 1999.
14
<PAGE>
THE SHARE EXCHANGE
EXCHANGE AGREEMENT
In the Share Exchange: (i) each share of the Company Common Stock
outstanding immediately prior to the effective time of the Share Exchange will
be exchanged for one new share of Holdings common stock; (ii) Holdings will
become the owner of all outstanding Company Common Stock; and (iii) the shares
of Holdings common stock held by the Company immediately prior to the Share
Exchange will be canceled.
As a result, upon completion of the Share Exchange, Holdings will become a
holding company, the Company will become a subsidiary of Holdings, and all of
Holdings common stock outstanding immediately after the Share Exchange will be
owned by the former holders of the Company Common Stock outstanding immediately
prior to the share exchange. Following the Share Exchange, certain of the
Company's existing non-utility subsidiaries will be transferred to Holdings and
become subsidiaries of Holdings.
The Company's outstanding preferred stock will not be exchanged in the
Share Exchange but will continue as shares of the Company preferred stock. The
Share Exchange will not change the rights of the holders of such shares as
currently provided in the Company's Amended Certificate of Incorporation. Debt
of the Company will remain unchanged and will continue as outstanding
obligations of the Company after the Share Exchange.
CONDITIONS TO EFFECTIVENESS OF THE SHARE EXCHANGE
The Share Exchange is subject to the satisfaction of the following
conditions (in addition to adoption of the Exchange Agreement by the holders of
the Company Common Stock): (i) all necessary orders, authorizations, approvals
or waivers from the PSC and all other jurisdictive regulatory bodies, boards or
agencies have been received, remain in full force and effect, and do not
include, in the sole judgment of the Board of Directors of the Company,
unacceptable conditions; and (ii) shares of Holdings common stock to be issued
in connection with the exchange have been listed, subject to official notice of
issuance, by the New York Stock Exchange.
Following satisfaction of these conditions, the Share Exchange will become
effective immediately following the close of business on the date of filing with
the New York Department of State of a certificate of exchange pursuant to
Section 913(d) of the New York Business Corporation Law. The Company cannot
predict when all conditions will be satisfied, but expects that the share
exchange will become effective in the first quarter of calendar 1999.
LISTING OF HOLDINGS COMMON STOCK
Holdings is applying to have its common stock listed on the New York Stock
Exchange. It is expected that such listing will become effective at the
effective time of the Share Exchange. The stock exchange ticker symbol of
Holdings common stock will be "NMK", and quotations will be carried in
newspapers as they have been for the Company Common Stock. Following the Share
Exchange, the Company Common Stock will no longer trade and will be delisted and
no longer registered pursuant to Section 12 of the Securities Exchange Act of
1934.
-15-
<PAGE>
SELLING SHAREHOLDERS
The table below sets forth the expected beneficial ownership of Common
Stock by each Selling Shareholder at June 30, 1998 and following the sale of the
shares of Common Stock offered by such Selling Shareholder.
<TABLE>
<CAPTION>
Shares of Common Stock Shares of Common Stock to be
Beneficially Owned Before Beneficially Owned After Sale
Sale Under this Prospectus Under this Prospectus (1) (2)
(1) (2)
Shares to
Name of Selling Shareholder Number Percentage be sold Number Percentage
--------------------------- ------ ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C>
IPP
American Ref-Fuel Company of
Niagara, L.P
7201 Hamilton Boulevard
Allentown, PA 18195
Onondaga Cogeneration Limited
Partnership
c/o GPU International, Inc.
One Upper Pond Road
Parsippany, NJ 07054
Project Orange Associates, L.P.
c/o GPU International, Inc.
One Upper Pond Road
Parsippany, NJ 07054
Fulton Cogeneration Associates
c/o ANR Venture Fulton Company
Nine Greenway Plaza, 16th Floor
Houston, TX 77046
Cogen Energy Technology L.P.
1902 River Road
Castleton-on-Hudson, NY 12033
Lyonsdale Energy Limited
Partnership
1 Riverchase Parkway South
Birmingham, AL 35244
<FN>
- --------------------
(1) Based on the number of shares of Common Stock to be outstanding on June 30,
1998. Beneficial ownership is determined in accordance with rules of the
Commission and includes shares over which the indicated beneficial owner
exercises voting and/or investment power.
(2) Each individual has the sole power to vote and dispose of the shares of
Common Stock.
</FN>
</TABLE>
-16-
<PAGE>
<TABLE>
<CAPTION>
Shares of Common Stock Shares of Common Stock to be
Beneficially Owned Before Beneficially Owned After Sale
Sale Under this Prospectus Under this Prospectus (1) (2)
(1) (2)
Shares to
Name of Selling Shareholder Number Percentage be sold Number Percentage
--------------------------- ------ ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C>
Indeck-Ilion Limited Partnership
Indeck Energy Services, Inc.
1130 Lake Cook Road
Buffalo Grove, IL 60089
Indeck-Yerkes Limited Partnership
Indeck Energy Services, Inc.
1130 Lake Cook Road
Buffalo Grove, IL 60089
Indeck-Olean Limited Partnership
Indeck Energy Services, Inc.
1130 Lake Cook Road
Buffalo Grove, IL 60089
Indeck-Oswego Limited Partnership
Indeck Energy Services, Inc.
1130 Lake Cook Road
Buffalo Grove, IL 60089
Black River Limited Partnership
c/o Jones Capital Corporation
J.A. Jones Drive
Charlotte, NC 28287
LG&E Westmoreland Rensselaer
c/o LG&E Power, Inc.
12500 Fair Lake Circle, #350
Fairfax, VA 22033-3804
Salt City Energy Venture, L.P.
56 Industrial Drive
Syracuse, NY 13204
AG-Energy, L.P.
c/o Sithe Energies, Inc.
450 Lexington Avenue, 37th Floor
New York, NY 10017
Seneca Power Partners, L.P.
c/o Sithe Energies, Inc.
450 Lexington Avenue, 37th Floor
New York, NY 10017
Sterling Power Partners, L.P.
c/o Sithe Energies, Inc.
450 Lexington Avenue, 37th Floor
New York, NY 10017
Power City Partners, L.P.
c/o Sithe Energies, Inc.
450 Lexington Avenue, 37th Floor
New York, NY 10017
P&N Partners, L.P.
c/o Sithe Energies, Inc.
450 Lexington Avenue, 37th Floor
New York, NY 10017
</TABLE>
-17-
<PAGE>
<TABLE>
<CAPTION>
Shares of Common Stock Shares of Common Stock to be
Beneficially Owned Before Beneficially Owned After Sale
Sale Under this Prospectus Under this Prospectus (1) (2)
(1) (2)
Shares to
Name of Selling Shareholder Number Percentage be sold Number Percentage
--------------------------- ------ ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C>
East Syracuse Generating Company,
L.P.
c/o US Generating Co.
7500 Old Georgetown Road
Bethesda, MD 20814-6161
Kamine/Besicorp Carthage L.P.
c/o Kamine Development Corp.
1545 Rt. 206, Suite 300
Bedminster, NJ 07921-2567
Kamine/Besicorp South Glens Falls
L.P.
c/o Kamine Development Corp.
1545 Rt. 206, Suite 300
Bedminster, NJ 07921-2567
Kamine/Besicorp Natural Dam L.P.
c/o Kamine Development Corp.
1545 Rt. 206, Suite 300
Bedminster, NJ 07921-2567
Kamine/Besicorp Syracuse L.P.
c/o Kamine Development Corp.
1545 Rt. 206, Suite 300
Bedminster, NJ 07921-2567
Kamine/Besicorp Beaver Falls L.P.
c/o Kamine Development Corp.
1545 Rt. 206, Suite 300
Bedminster, NJ 07921-2567
United Development Group -
Niagara, L.P.
1401 Main Street, Suite 1115
Columbia, SC 29211
</TABLE>
PLAN OF DISTRIBUTION
The shares of Common Stock covered by this Prospectus may be offered and
sold from time to time by the Selling Shareholders. The Selling Shareholders
will act independently of the Company in making decisions with respect to the
timing, manner and size of each sale. The Selling Shareholders may sell the
shares being offered hereby on the New York Stock Exchange, or otherwise, at
prices and under terms then prevailing or at prices related to the then current
market price or at negotiated prices. The shares may be sold by one or more of
the following means of distribution: (a) a block trade in which the
broker-dealer so engaged will attempt to sell such shares as agent, but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this Prospectus; (c) ordinary
brokerage transactions and transactions in which the broker solicits purchasers;
and (d) in privately negotiated transactions. To the extent required, this
Prospectus may be amended and supplemented from time to time to describe a
specific plan of distribution. In connection with distributions of such shares
or otherwise, the Selling Shareholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in short
sales of the Common Stock in the course of hedging the positions they assume
with the Selling Shareholders. The Selling Shareholders may also sell the Common
Stock short and redeliver the shares to close out such short positions. The
Selling
-18-
<PAGE>
Shareholders may also enter into option or other transactions with
broker-dealers or other financial institutions which require the delivery to
such broker-dealer or other financial institution of shares of Common Stock
offered hereby, which shares such broker-dealer or other financial institution
may resell pursuant to this Prospectus (as supplemented or amended to reflect
such transaction). The Selling Shareholders may also pledge such shares to a
broker-dealer or other financial institution, and, upon a default, such
broker-dealer or other financial institution may effect sales of the pledged
shares pursuant to this Prospectus (as supplemented or amended to reflect such
transaction). In addition, any shares of Common Stock covered by this Prospectus
that qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather
than pursuant to this Prospectus.
In effecting sales, brokers, dealers or agents engaged by the Selling
Shareholders may arrange for other brokers or dealers to participate. Brokers,
dealers or agents may receive commissions, discounts or concessions from the
Selling Shareholders in amounts to be negotiated prior to the sale. Such brokers
or dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales, and any such commissions, discounts or concessions may be deemed to be
underwriting discounts or commissions under the Securities Act. The Company will
pay all expenses incident to the offering and sale of the shares of Common Stock
covered by this Prospectus to the public other than any commissions and
discounts of underwriters, dealers or agents and any transfer taxes.
In order to comply with the securities laws of certain states, if
applicable, the shares of Common Stock covered by this Prospectus must be sold
in such jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states such shares may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption from
the registration or qualification requirement is available and is complied with.
The Company has advised the Selling Shareholders that the anti-manipulation
rules of Regulation M under the Exchange Act may apply to sales of shares of
Common Stock covered by this Prospectus in the market and to the activities of
the Selling Shareholders and their affiliates. In addition, the Company will
make copies of this Prospectus available to the Selling Shareholders and has
informed them of the need for delivery of copies of this Prospectus to
purchasers at or prior to the time of any sale of the shares of Common Stock
covered by this Prospectus. The Selling Shareholders may indemnify any
broker-dealer that participates in transactions involving the sale of the shares
of Common Stock covered by this Prospectus against certain liabilities,
including liabilities arising under the Securities Act.
At the time a particular offer of shares of Common Stock covered by this
Prospectus is made, if required, a Prospectus Supplement will be distributed
that will set forth the number of shares of Common Stock covered by this
Prospectus being offered and the terms of the offering, including the name of
any underwriter, dealer or agent, the purchase price paid by any underwriter,
any discount, commission and other item constituting compensation, any discount,
commission or concession allowed or reallowed or paid to any dealer, and the
proposed selling price to the public.
The sale of shares of Common Stock covered by this Prospectus by the
Selling Shareholders is subject to compliance by the Selling Shareholders with
certian contractual restrictions with the Company. There can be no assurance
that the Selling Shareholders will sell all or any of the shares of Common Stock
covered by this Prospectus.
-19-
<PAGE>
The Company has agreed to indemnify the Selling Shareholders and any person
controlling a Selling Shareholder against certain liabilities, including
liabiliteis under the Securities Act. The Selling Shareholders have agreed to
indemnify the Company and certain related persons against certain liabilities,
including liabilities under the Securities Act.
The Company has agreed with certain of the Selling Shareholders to keep the
Registration Statement of which this Prospectus constitutes a part effective for
up to two years following the effectiveness of the Registration Statement
containing this Prospectus.
VALIDITY OF THE SHARES
The validity of the shares offered hereby will be passed upon for the
Company by Sullivan & Cromwell, New York, New York, counsel to the Company.
EXPERTS
The financial statements incorporated in this Prospectus have been so
incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
and Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
periodic reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at 7 World Trade Center, New York, New York 10048
and Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois
60661. Copies of such materials may be obtained from the Public Reference
Section of the Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at the prescribed rates. The Commission maintains a
website (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The Common Stock of the Company is listed on the New York
Stock Exchange, 20 Broad Street, New York, New York 10005, where reports and
other information concerning the Company may be inspected.
Additional information regarding the Company and the securities offered
hereby is contained in the Registration Statement on Form S-3 and the exhibits
thereto (the "Registration Statement") filed with the Commission under the
Securities Act. This Prospectus does not contain all the information set forth
in the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information,
reference is made to the Registration Statement, which may be inspected without
charge at, and copies of which may be obtained at prescribed rates from the
Commission at, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
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<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are incorporated in this Prospectus by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1997.
2. Amendment to Annual Report on Form 10-K/A for the year ended December
31, 1997.
3. Second Amendment to Form 10-K/A for the year ended December 31, 1997.
4. Quarterly Report on Form 10-Q for the three months ended March 31,
1998.
5. Amendment to Quarterly Report on Form 10-Q/A for the three months
ended March 31, 1998.
6. Proxy Statement dated May 29, 1998 for the Company's 1998 Annual
Meeting.
All documents subsequently filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the Equity
Offering will be deemed to be incorporated by reference in this Prospectus and
will be part of this Prospectus from the date of filing of such documents. Any
statement contained in this Prospectus or in any document incorporated or deemed
to be incorporated by reference in this Prospectus will be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus or in any subsequently filed document that also is
or is deemed to be incorporated by reference in this Prospectus modifies or
supersedes such statement. any statement so modified or superseded will not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company undertakes to provide without charge to each person to whom a
copy of this Prospectus is delivered, upon the written or oral request of any
such person, a copy of any document described in this Prospectus (not including
exhibits to those documents unless such exhibits are incorporated by reference
into the information incorporated into this Prospectus). Requests for copies
should be directed to Niagara Mohawk Power Corporation, 300 Erie Boulevard West,
Syracuse, New York 13202. Attention: Leon T. Mazur, telephone number: (315)
474-1511.
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<PAGE>
APPENDIX A
GLOSSARY OF CERTAIN ELECTRICITY, NATURAL GAS
AND ACCOUNTING TERMS
TERM DEFINITION
Avoided Costs The costs an electric utility would otherwise incur to
generate power if it did not purchase electricity from
another source.
Cogeneration The simultaneous production of electric energy and useful
thermal energy for industrial, commercial, heating or
cooling purposes.
CTC Competitive Transition Charge.
Electric Distribution The delivery of electric energy to customers on a
distribution system. Electric energy is carried at high
voltages along transmission lines. For consumers needing
lower voltages, it is reduced in voltage at a substation
and delivered over primary distribution lines extending
throughout the area where the electricity is distributed.
For users needing lower voltage, the voltage is reduced
once again by a distribution transformer or a line
transformer. At this point it changes from primary to
secondary distribution voltage.
GRT Gross Receipts Tax.
GwH Gigawatt-hours: one gigawatt hour equals one billion watt
hours.
IPP Independent Power Producer: any person that owns or
operates, in whole or in part, one or more Independent
Power Facilities.
KW Kilowatt: one thousand watts.
Kwh Kilowatt-hour: a unit of electrical energy equal to one
kilowatt of power supplied or taken from an electric
circuit steadily for one hour.
MW Megawatt: one million watts.
Mwh Megawatt hour: one thousand kilowatt hours.
NYSERDA New York State Energy Research and Development Authority.
PPA Power Purchase Agreements: long-term contracts under
which a utility is obligated to purchase electricity from
an IPP at specified rates.
PSC New York State Public Service Commission.
PURPA Public Utility Regulatory Policies Act of 1978, as
amended. One of five bills signed into law on November 8,
1978, as the National Energy Act. It sets forth
procedures and requirements applicable to state utility
commissions, electric and natural gas utilities and
certain federal regulatory agencies. A major aspect of
this law is the mandatory purchase obligation from
qualifying facilities.
SFAS No. 71 Statement of Financial Accounting Standards No. 71
"Accounting for the Effects of Certain Types of
Regulation".
Six-Cent Law Section 66-c of the New York State Public Service Law,
governing minimum prices to be paid under certain PPAs.
Transmission The act or process of transporting electric energy in
bulk from a source or sources of supply to other
principal parts of the system or to other utility
systems. Also a functional classification relating to
that portion of utility plant used for the purpose of
transmitting electric energy in bulk to other principal
parts of the system or to other utility systems, or to
expenses relating to the operation and maintenance of
transmission plant.
Unit 1 Nine Mile Point Nuclear Station Unit No. 1, a 613 MW
nuclear generating facility 100% owned by Niagara Mohawk
and in operation since 1969.
Unit 2 Nine Mile Point Nuclear Station Unit No. 2, a 1144 MW
nuclear generating facility 41% owned by Niagara Mohawk
and in operation since 1988.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a statement of the estimated expenses, other than
underwriting discounts and commissions, to be incurred in connection with the
distribution of the securities registered under this registration statement.
Except as indicated, all costs and expenses will be paid by the Company.
Amount
to be paid
----------
SEC registration fee......................................... $ 81,633
Legal fees and expenses...................................... 20,000
Accounting fees and expenses................................. 15,000
Miscellaneous................................................ 20,000
----------
Total.................................................. $136,633
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 721 through 726 of the Business Corporation Law of the State of
New York (the "BCL") provide for indemnification of the Company's officers and
directors under certain conditions and subject to specific limitations. The BCL
permits New York corporations to supplement the statutory indemnification with
additional "non-statutory" indemnification for directors and officers meeting a
specified standard of conduct and to advance to officers and directors
litigation expenses under certain circumstances. As permitted by the BCL,
Article VI of the Company's By-Laws provides for indemnification of, and
advancement of litigation expenses incurred by, directors and officers of the
Company.
The Company has also obtained insurance providing for indemnification of
directors and officers against certain expenses and liabilities. In addition,
pursuant to a 1986 amendment to the BCL, the Company has entered into agreements
with certain of the officers and directors of the Company providing for
indemnification for the liability of officers and directors not covered by the
policy mentioned above. Such additional indemnification does not cover acts
committed in bad faith or acts which were the result of active and deliberate
dishonesty. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, the Company has been informed
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
Furthermore, Article XIIA of the Certificate of Incorporation of the
Company limits, with certain exceptions, the personal liability of a director of
the Company to the Company or its shareholders for damages for any breach of
duty in such capacity to the fullest extent permitted by the BCL.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Index to Exhibits
5 Opinion of Sullivan & Cromwell.*
23(a) Consent of PriceWaterhouse LLP.
23(b) Consent of Sullivan & Cromwell (included within Exhibit 5 hereto).
24 Power of attorney (included on page II-4).
- -----------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
(a) "The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 19(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-2
<PAGE>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any
financial statements required by Rule 3-19 of this chapter at the start of
any delayed offering or throughout a continuous offering. Financial
statements and information otherwise required by Section 10(a)(3) of the
Act need not be furnished, provided, that the registrant includes in the
prospectus, by means of a post-effective amendment, financial statements
required pursuant to this paragraph (a)(4) and other information necessary
to ensure that all other information in the prospectus is at least as
current as the date of those financial statements. Notwithstanding the
foregoing, with respect to registration statements on Form F-3, a
post-effective amendment need not be filed to include financial statements
and information required by Section 10(a)(3) of the Act or Rule 3-19 of
this chapter if such financial statements and information are contained in
periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Form F-3.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under "Item 15, Indemnification
of Directors and Officers" above, or otherwise, the Registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Syracuse, State of New York, on the 29th day of May,
1998.
NIAGARA MOHAWK POWER CORPORATION
By:
/s/ Steven W. Tasker
-----------------------------------------
Name: Steven W. Tasker
Title: Vice President-Controller and
Principal Accounting Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that such person whose signature
appears below constitutes and appoints William F. Edwards and Arthur W. Roos and
each of them severally, his true and lawful attorneys-in-fact with power of
substitution and resubstitution to sign in his name, place and stead, in any and
all capacities, to do any and all things and execute any and all instruments
that such attorney may deem necessary or advisable under the Securities Act of
1933 (the "Securities Act"), and any rules, regulations and requirements of the
U.S. Securities and Exchange Commission in connection with the registration
under the Securities Act of the Common Stock of the Registrant, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign his name in his respective capacity as a member of the
Board of Directors or officer of the Registrant, this Registration Statement
and/or such other form or forms as may be appropriate to be filed with the
Commission as any of them may deem appropriate in respect of the Common Stock of
the Registrant to any and all amendments thereto (including post-effective
amendments) to this Registration Statement, to any related Rule 462(b)
Registration Statement and to any documents filed as part of or in connection
with this Registration Statement and any and all amendments thereto, including
post-effective amendments.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on May 29, 1998:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ William F. Allyn
- --------------------------- Director May 29, 1998
William F. Allyn
/s/ Albert J. Budney, Jr.
- --------------------------- Director, President and Chief May 29, 1998
Albert J. Budney, Jr. Operating Officer
/s/ Lawrence Burkhardt, III
- --------------------------- Director May 29, 1998
Lawrence Burkhardt, III
/s/ Douglas M. Costle
- --------------------------- Director May 29, 1998
Douglas M. Costle
/s/ William E. Davis
- --------------------------- Chairman of the Board of Directors May 29, 1998
William E. Davis and Chief Executive Office
/s/ William J. Donlon
- --------------------------- Director May 29, 1998
William J. Donlon
II-4
<PAGE>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Anthony H. Gioia
- --------------------------- Director May 29, 1998
Anthony H. Gioia
/s/ Bonnie Guiton Hill
- --------------------------- Director May 29, 1998
Bonnie Guiton Hill
/s/ Henry A. Panasci, Jr.
- --------------------------- Director May 29, 1998
Henry A. Panasci, Jr.
/s/ Patti McGill Peterson
- --------------------------- Director May 29, 1998
Patti McGill Peterson
/s/ Donald B. Riefler
- --------------------------- Director May 29, 1998
Donald B. Riefler
/s/ Stephen B. Schwartz
- --------------------------- Director May 29, 1998
Stephen B. Schwartz
/s/ William F. Edwards
- --------------------------- Senior Vice President and Chief May 29, 1998
William F. Edwards Financial Officer
/s/ Steven W. Tasker
- --------------------------- Vice President-Controller and May 29, 1998
Steven W. Tasker Principal Accounting Officer
/s/ Edmund M. Davis, Esq.
- --------------------------- Director May 29, 1998
Edmund M. Davis, Esq.
II-5
EXHIBIT 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
March 26, 1998, except Note 2 (third paragraph) and Note 15, as to which the
date is May 29, 1998, appearing on page 40 of Niagara Mohawk Power Corporation's
Annual Report on Form 10-K/A for the year ended December 31, 1997. We also
consent to the incorporation by reference of our report on the Financial
Statement Schedule, which appears on page 109 in the Niagara Mohawk Power
Corporation's Annual Report on Form 10-K. We also consent to the reference to us
under the heading "Experts" in the Prospectus.
/s/ PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Syracuse, New York
June 3, 1998
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that such person whose signature
appears below constitutes and appoints William F. Edwards and Arthur W. Roos and
each of them severally, his true and lawful attorneys-in-fact with power of
substitution and resubstitution to sign in his name, place and stead, in any and
all capacities, to do any and all things and execute any and all instruments
that such attorney may deem necessary or advisable under the Securities Act of
1933 (the "Securities Act"), and any rules, regulations and requirements of the
U.S. Securities and Exchange Commission in connection with the registration
under the Securities Act of the Common Stock of the Registrant, including
specifically, but without limiting the generality of the foregoing, the power
and authority to sign his name in his respective capacity as a member of the
Board of Directors or officer of the Registrant, this Registration Statement
and/or such other form or forms as may be appropriate to be filed with the
Commission as any of them may deem appropriate in respect of the Common Stock of
the Registrant to any and all amendments thereto (including post-effective
amendments) to this Registration Statement, to any related Rule 462(b)
Registration Statement and to any documents filed as part of or in connection
with this Registration Statement and any and all amendments thereto, including
post-effective amendments.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on May 29, 1998:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ William F. Allyn
- --------------------------- Director May 29, 1998
William F. Allyn
/s/ Albert J. Budney, Jr.
- --------------------------- Director, President and Chief May 29, 1998
Albert J. Budney, Jr. Operating Officer
/s/ Lawrence Burkhardt, III
- --------------------------- Director May 29, 1998
Lawrence Burkhardt, III
/s/ Douglas M. Costle
- --------------------------- Director May 29, 1998
Douglas M. Costle
/s/ William E. Davis
- --------------------------- Chairman of the Board of Directors May 29, 1998
William E. Davis and Chief Executive Office
/s/ William J. Donlon
- --------------------------- Director May 29, 1998
William J. Donlon
<PAGE>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Anthony H. Gioia
- --------------------------- Director May 29, 1998
Anthony H. Gioia
/s/ Bonnie Guiton Hill
- --------------------------- Director May 29, 1998
Bonnie Guiton Hill
/s/ Henry A. Panasci, Jr.
- --------------------------- Director May 29, 1998
Henry A. Panasci, Jr.
/s/ Patti McGill Peterson
- --------------------------- Director May 29, 1998
Patti McGill Peterson
/s/ Donald B. Riefler
- --------------------------- Director May 29, 1998
Donald B. Riefler
/s/ Stephen B. Schwartz
- --------------------------- Director May 29, 1998
Stephen B. Schwartz
/s/ William F. Edwards
- --------------------------- Senior Vice President and Chief May 29, 1998
William F. Edwards Financial Officer
/s/ Steven W. Tasker
- --------------------------- Vice President-Controller and May 29, 1998
Steven W. Tasker Principal Accounting Officer
/s/ Edmund M. Davis, Esq.
- --------------------------- Director May 29, 1998
Edmund M. Davis, Esq.
-2-
