File No. 70-8405
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
AMENDMENT NO. 1 to
APPLICATION-DECLARATION
under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Arkansas Power & Light Company
425 West Capitol, 40th Floor
Little Rock, Arkansas 72201
(Name of company filing this statement and
address of principal executive offices)
Entergy Corporation
(Name of top registered holding company parent of each applicant
or declarant)
Glenn E. Harder
Vice President - Financial
Strategies and Treasurer
Arkansas Power & Light Company
639 Loyola Avenue
New Orleans, Louisiana 70113
(Name and address of agent for service)
The Commission is also requested to send copies of any
communications in connection with this matter to:
Laurence M. Hamric, Esq. Paul B. Benham, III, Esq.
Entergy Services, Inc. Friday, Eldredge & Clark
225 Baronne Street 2000 First Commercial Building
New Orleans, Louisiana 70112 400 West Capitol Avenue
Little Rock, Arkansas 72201
Bonnie Wilkinson, Esq. David P. Falck, Esq.
Reid & Priest Winthrop, Stimson, Putnam &
40 West 57th Street Roberts
New York, New York 10019 One Battery Park Plaza
New York, New York 10004
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Item 1. Description of Proposed Transactions.
Item 1 in this proceeding is hereby amended to read in
its entirety as follows:
"1. Arkansas Power & Light Company ("Company"), an
electric utility company operating principally in the state of
Arkansas, is a subsidiary of Entergy Corporation, which is a
registered holding company under the Public Utility Holding
Company Act of 1935 ("1935 Act"). The Company proposes to enter
into arrangements for the issuance and sale, by one or more
governmental authorities (each an "Issuer"), of one or more
series of tax-exempt bonds in an aggregate principal amount not
to exceed $200 million ("Tax-Exempt Bonds") at one time or from
time to time through December 31, 1996.
"2. The Company would enter into one or more
installment sale agreements or loan agreements and/or one or more
supplements or amendments thereto (collectively, the "Agreement")
contemplating the issuance and sale by the Issuer(s) of one or
more series of Tax-Exempt Bonds pursuant to one or more trust
indentures and/or one or more supplements thereto (collectively,
the "Indenture") between the Issuer and one or more trustees
(collectively the "Trustee"). The proceeds of the sale of Tax-
Exempt Bonds, net of any underwriters' discounts or other
expenses payable from proceeds, will be applied to acquire and
construct certain pollution control or sewage and solid waste
disposal facilities at the Company's generating plants
("Facilities") or to refinance outstanding tax-exempt bonds
issued for that purpose.
"3. If the Agreement is an installment sale agreement,
the Company would sell Facilities to the Issuer for cash and
simultaneously repurchase such Facilities from the Issuer for a
purchase price payable on an installment basis over a period of
years. If the Agreement is a loan agreement, the Issuer will
loan the proceeds of the sale of Tax-Exempt Bonds to the Company,
and the Company will agree to repay the loan on an installment
payment basis over a period of years. Such installment payments
or loan repayments will be in amounts sufficient (together with
any other moneys held by the Trustee under the Indenture and
available for the purpose) to pay the principal or purchase price
of, the premium, if any, and the interest on the related series
of Tax-Exempt Bonds as the same become due and payable, and will
be made directly to the Trustee pursuant to an assignment and
pledge thereof by the Issuer to the Trustee as set forth in the
Indenture. Under the Agreement, the Company will also be
obligated to pay (i) the fees and charges of the Trustee and any
registrar or paying agent under the Indenture and, if any, the
Remarketing Agent and the Tender Agent hereinafter referred to,
(ii) all expenses incurred by the Issuer in connection with its
rights and obligations under the Agreement, (iii) all expenses
necessarily incurred by the Issuer or the Trustee under the
Indenture in connection with the transfer or exchange of Tax-
Exempt Bonds, and (iv) all other payments which the Company
agrees to pay under the Agreement.
"4. The Indenture may provide that, upon the
occurrence of certain events relating to the operation of the
Facilities financed, the Tax-Exempt Bonds will be redeemable by
the Issuer, at the direction of the Company. Any series of Tax-
Exempt Bonds may be made subject to a mandatory cash sinking fund
under which stated portions of Tax-Exempt Bonds of such series
are to be retired at stated times. Tax-Exempt Bonds may be
subject to mandatory redemption in certain other cases. The
payments by the Company under the Agreement in such circumstances
shall be sufficient (together with any other moneys held by the
Trustee under the Indenture and available therefor) to pay the
principal of all Tax-Exempt Bonds to be redeemed or retired, and
the premium, if any, thereon together with interest accrued or to
accrue to the redemption date on such bonds.
"5. It is proposed that the Tax-Exempt Bonds mature
not less than five years from the first day of the month of
issuance nor later than 40 years from the date of issuance. Tax-
Exempt Bonds will be subject to optional redemption, at the
direction of the Company, in whole or in part at the redemption
prices (expressed as percentages of principal amount) plus
accrued interest to the redemption date, and at the times, set
forth in the Indenture.
"6. The Agreement and the Indenture may provide for a
fixed interest rate or for an adjustable interest rate for each
series of the Tax-Exempt Bonds as hereinafter described. If the
series of Tax-Exempt Bonds has an adjustable interest rate, the
interest rate during the first Rate Period (hereinafter referred
to) would be determined in discussions between the Company and
the purchasers thereof from the Issuer and be based on the
current tax-exempt market rate for comparable bonds having a
maturity comparable to the length of the initial Rate Period.
Thereafter, for each Rate Period, the interest rate on such Tax-
Exempt Bonds would be that rate which will be sufficient to
remarket such Tax-Exempt Bonds at their principal amount. No
series of Tax-Exempt Bonds will be issued at rates in excess of
those generally obtained at the time of pricing for sales of
substantially similar tax-exempt bonds (having the same maturity,
issued for the benefit of companies of comparable credit quality
and having similar terms, conditions and features). At April
18, 1994, such rate is estimated to be approximately 7% per annum
for tax-exempt bonds having a maturity of 30 years, no optional
redemption for the first ten years after initial issuance, and
issuance and pledge of collateral first mortgage bonds as
security. Paragraphs 7-10 below relate to Tax-Exempt Bonds
having an adjustable interest rate.
"7. The term "Rate Period," as used herein, means a
period during which the interest rate on such Tax-Exempt Bonds of
a particular series bearing an adjustable rate (or method of
determination of such interest rate) is fixed. The initial Rate
Period would commence on the date as of which interest begins to
accrue on such Tax-Exempt Bonds. The length of each Rate Period
would be not less than one day nor more than five years.
"8. The Agreement and the Indenture would provide that
holders of Tax-Exempt Bonds would have the right to tender or be
required to tender their Tax-Exempt Bonds and have them purchased
at a price equal to the principal amount thereof, plus any
accrued and unpaid interest thereon, on dates specified in, or
established in accordance with, the Indenture. A Tender Agent
may be appointed to facilitate the tender of any Tax-Exempt Bonds
by holders. Any holders of Tax-Exempt Bonds wishing to have such
Tax-Exempt Bonds purchased may be required to deliver such Tax-
Exempt Bonds during a specified period of time preceding such
purchase date to the Tender Agent, if one shall be appointed, or
to the Remarketing Agent appointed to offer such tendered Tax-
Exempt Bonds for sale.
"9. Under the Agreement the Company would be obligated
to pay amounts equal to the amounts to be paid by the Remarketing
Agent or the Tender Agent pursuant to the Indenture for the
purchase of Tax-Exempt Bonds so tendered, such amounts to be paid
by the Company on the dates such payments by the Remarketing
Agent or the Tender Agent are to be made; provided, however, that
the obligation of the Company to make any such payment under the
Agreement would be reduced by the amount of any other moneys
available therefor, including the proceeds of the sale of such
tendered Tax-Exempt Bonds by the Remarketing Agent.
"10. Upon the delivery of such Tax-Exempt Bonds by
holders to the Remarketing Agent or the Tender Agent for
purchase, the Remarketing Agent would use its best efforts to
sell such Tax-Exempt Bonds at a price equal to the stated
principal amount of such Tax-Exempt Bonds.
"11. In order to obtain a more favorable rating on one
or more series of the Tax-Exempt Bonds and, thereby, improve the
marketability thereof, the Company may arrange for one or more
irrevocable letter(s) of credit for an aggregate amount up to
$226 million from a bank (the "Bank") in favor of the Trustee.
In such event, payments with respect to principal, premium, if
any, interest and purchase obligations in connection with such
Tax-Exempt Bonds coming due during the term of such letter of
credit would be secured by, and payable from funds drawn under,
the letter of credit. In order to induce the Bank to issue such
letter of credit, the Company would enter into a Letter of Credit
and Reimbursement Agreement ("Reimbursement Agreement") with the
Bank pursuant to which the Company would agree to reimburse the
Bank for all amounts drawn under such letter of credit within a
specified period (not to exceed 84 months) after the date of the
draw and with interest thereon at a rate that would not exceed
rates generally obtained at the time of entering into the
Reimbursement Agreement by companies of comparable credit quality
on letters of credit having comparable terms, and, in any event,
not in excess of the Bank's prime commercial loan rate plus 2%.
The terms of the Reimbursement Agreements would correspond to the
terms of the Letter of Credit.
"12. It is anticipated that the Reimbursement Agreement
would require the payment by the Company to the Bank of annual
letter of credit fees not to exceed 1.25% of the face amount of
the letter of credit per annum and perhaps an up-front fee not to
exceed .25% of the face amount of the letter of credit. Any such
letter of credit may expire or be terminated prior to the
maturity date of related Tax-Exempt Bonds and, in connection with
such expiration or termination, such Tax-Exempt Bonds may be made
subject to mandatory redemption or purchase on or prior to the
date of expiration or termination of such letter of credit,
possibly subject to the right of owners of Tax-Exempt Bonds not
to have their Tax-Exempt Bonds redeemed or purchased. Provision
may be made for extension of the term of any such letter of
credit or for the replacement thereof, upon its expiration or
termination, by another letter of credit from the Bank or a
different bank. See Exhibit B-4 for further information on the
Reimbursement Agreement.
"13. In addition or as an alternative to the security
provided by a letter of credit, in order to obtain a more
favorable rating on Tax-Exempt Bonds and consequently improve the
marketability thereof, the Company may (a) determine to provide
an insurance policy for the payment of the principal of and/or
interest and/or premium on the Tax-Exempt Bonds (see Exhibit B-5
for further information), and/or (b) provide security for holders
of Tax-Exempt Bonds and/or the Bank equivalent to the security
afforded to holders of First Mortgage Bonds outstanding under the
Company's Mortgage by obtaining the authentication of and
pledging one or more new series of First Mortgage Bonds
("Collateral Bonds") under the Mortgage as it may be
supplemented. Collateral Bonds would be issued on the basis of
unfunded net property additions and/or previously-retired First
Mortgage Bonds and delivered to the Trustee under the Indenture
and/or the Bank to evidence and secure the Company's obligation
to pay the purchase price of the related Facilities or repay the
loan made by the Issuer under the Agreement and the Company's
obligation to reimburse the Bank under the Reimbursement
Agreement. These Collateral Bonds could be issued in several
ways. First, if the Tax-Exempt Bonds bear a fixed interest rate,
Collateral Bonds could be issued in a principal amount equal to
the principal amount of such Tax-Exempt Bonds and bear interest
at a rate equal to the rate of interest on such Tax-Exempt Bonds.
Secondly, they could be issued in a principal amount equivalent
to the principal amount of such Tax-Exempt Bonds plus an amount
equal to interest on those Bonds for a specified period. In such
a case, Collateral Bonds would bear no interest. Thirdly,
Collateral Bonds could be issued in a principal amount equivalent
to the principal amount of such Tax-Exempt Bonds or in such
amount plus an amount equal to interest on those Bonds for a
specified period, but carry a fixed interest rate that would be
lower than the fixed interest rate of the Tax-Exempt Bonds.
Fourthly, they could be issued in a principal amount equivalent
to the principal amount of Tax-Exempt Bonds at an adjustable rate
of interest, varying with such Tax-Exempt Bonds.
"14. No series of Collateral Bonds will be issued at
interest rates in excess of those of the related series of Tax-
Exempt Bonds (see paragraph 6 above for an example of such rates
at April 18, 1994). The maximum aggregate principal amount of
the Collateral Bonds would be $226 million. The terms of the
Collateral Bonds relating to maturity, interest payment dates, if
any, redemption provisions and acceleration will correspond to
the terms of the related Tax-Exempt Bonds. Upon issuance, the
terms of the Collateral Bonds will not vary during the life of
such series except for the interest rate in the event the
Collateral Bonds bear interest at an adjustable rate.
"15. For further information with respect to the terms
of the Agreement and Indenture, reference is made to Exhibits B-
1, B-2 and B-3.
"16. It is contemplated that the Tax-Exempt Bonds may
be sold by the Issuer pursuant to arrangements with an
underwriter or a group of underwriters or by private placement in
a negotiated sale or sales. The Company will not be party to the
underwriting or placement arrangements; however, the Agreement
will provide that the terms of the Tax-Exempt Bonds, and their
sale by the Issuer, shall be satisfactory to the Company. The
Company understands that interest payable on the Tax-Exempt Bonds
will not be included in the gross income of the holders thereof
for Federal income tax purposes under the provisions of Section
103 of the Internal Revenue Code of 1986, as amended to the date
of issuance of Tax-Exempt Bonds (except for interest on any Tax-
Exempt Bond during a period in which it is held by a person who
is a "substantial user" of the Facilities or a "related person"
within the meaning of Section 147(a) of such Code).
"17. The Company has been advised that the interest
rates on tax-exempt bonds have been and are expected at the
time(s) of issuance of Tax-Exempt Bonds to be lower than the
interest rates on bonds of similar tenor and maturities and
comparable quality, interest on which is fully subject to Federal
income tax.
"18. The Company shall not use the proceeds from the
Agreement to enter into refinancing transactions unless: (1) the
estimated present value savings derived from the net difference
between interest or dividend payments on a new issue of
comparable securities and those securities refunded is, on an
after tax basis, greater than the present value of all
repurchasing, redemption, tendering and issuing costs, assuming
an appropriate discount rate, determined on the basis of the then
estimated after-tax cost of capital of Entergy Corporation and
its subsidiaries, consolidated; or (2) the Company shall have
notified the Commission of the proposed refinancing transaction
(including the terms thereof) by post-effective amendment hereto
and obtained appropriate supplemental authorization.
"19. The proceeds to be received from the issuance and
sale of the Tax-Exempt Bonds will not be used to invest directly
or indirectly in an exempt wholesale generator ("EWG") or foreign
utility company, as defined in Section 32 or 33, respectively, of
the 1935 Act. If the proceeds of such sales are used to refund
outstanding securities, any savings derived from the refunding
transaction will not be used to acquire or otherwise invest in an
EWG or foreign utility company. Information with respect to
Entergy's EWG investments will be supplied by amendment."
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned company has duly caused this
amendment to be signed on its behalf by the undersigned thereunto
duly authorized.
ARKANSAS POWER & LIGHT COMPANY
By: /s/ Glenn E. Harder
Glenn E. Harder
Vice President-Financial
Strategies and Treasurer
Date April 25, 1994
