<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED SEPTEMBER 22, 1993)
$85,000,000
ARKANSAS POWER & LIGHT COMPANY
FIRST MORTGAGE BONDS, 8 3/4% SERIES DUE MARCH 1, 2026
------------------------------
Interest on the Company's First Mortgage Bonds, 8 3/4% Series due March 1,
2026 (the "New Bonds") is payable on March 1 and September 1 of each year,
commencing September 1, 1996. The New Bonds will not be redeemable prior to
March 1, 2001. Thereafter, the New Bonds will be redeemable at the option of the
Company, in whole or in part, at any time, upon not less than 30 days' notice,
at the general redemption prices as described herein and, under certain
circumstances, at the special redemption price of 100% of the principal amount
thereof plus accrued interest to the date fixed for redemption. See "Description
of the New Bonds -- Redemption and Purchase of New Bonds" herein.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(3)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Per New Bond..................... 100.00% 0.875% 99.125%
- ------------------------------------------------------------------------------------------------
Total............................ $85,000,000 $743,750 $84,256,250
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from March 27, 1996.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deduction of expenses payable by the Company, estimated at $140,000.
------------------------------
The New Bonds are offered subject to prior sale, when, as and if delivered
to and accepted by the Underwriters and subject to certain other conditions. The
Underwriters reserve the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that the New Bonds will be
ready for delivery through the book-entry facilities of The Depository Trust
Company, New York, New York, on or about March 27, 1996, against payment
therefor in immediately available funds.
------------------------------
BEAR, STEARNS & CO. INC.
GOLDMAN, SACHS & CO.
SALOMON BROTHERS INC
------------------------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS MARCH 20, 1996.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Reference is made to "Incorporation of Certain Documents by Reference" in
the accompanying Prospectus. At the date of this Prospectus Supplement, the
Incorporated Documents (as defined in the accompanying Prospectus) include the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
SELECTED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
The selected financial information of the Company set forth below should be
read in conjunction with the financial statements and other financial
information contained in the Incorporated Documents.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Operating Revenues............. $1,648,233 $1,590,742 $1,591,568 $1,521,129 $1,528,270
Operating Income............... 217,931 216,633 236,222 179,773 219,418
Interest Expense (net)......... 112,914 107,138 117,172 120,728 132,300
Net Income..................... 172,080(1) 142,263 205,297(2) 130,529 143,451
Ratio of Earnings to Fixed
Charges(3).................. 2.56 2.32 3.11(2) 2.28 2.25
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
1995(4)
------------------------
AMOUNT PERCENT
---------- -------
<S> <C> <C>
Balance Sheet Data:
Capitalization:
Common Stock and Paid-in Capital................................ $ 591,314 22.8
Retained Earnings............................................... 492,386 19.0
---------- -----
Total Common Shareholder's Equity.......................... 1,083,700 41.8
Preferred Stock (without sinking fund).......................... 176,350 6.8
Preferred Stock (with sinking fund)............................. 49,027 1.9
First Mortgage Bonds(5)......................................... 882,515 34.1
Other Long-Term Debt(5)......................................... 398,688 15.4
---------- -----
Total Capitalization............................. $2,590,280 100.0
========== =====
</TABLE>
- ---------------
(1) Net income for the year ended December 31, 1995 includes $34 million related
to a change in the method of accounting for nuclear refueling outage costs.
(2) Net income for the year ended December 31, 1993 includes $81 million ($50
million after tax) related to a change in accounting principle to provide
for the accrual of estimated unbilled revenues.
(3) "Earnings", as defined by Securities and Exchange Commission ("SEC")
Regulation S-K, represent the aggregate of (a) income before the cumulative
effect of accounting changes, (b) taxes based on income, (c) investment tax
credit adjustments -- net and (d) fixed charges. "Fixed Charges" include
interest (whether expensed or capitalized), related amortization and
interest applicable to rentals charged to operating expenses.
(4) The proceeds from the sale of the New Bonds are expected to be used
primarily to refund outstanding First Mortgage Bonds and as a result the
Company's capitalization will not be materially affected. See "Use of
Proceeds".
(5) Excludes current maturities of First Mortgage Bonds and Other Long-Term Debt
of $26.2 million and $2.5 million, respectively.
S-2
<PAGE>
USE OF PROCEEDS
The net proceeds to be received from the issuance and sale of the New Bonds
are expected to be used to satisfy a portion of the Company's annual maintenance
and replacement fund requirement under the Mortgage and for general corporate
purposes. The Company expects to use the cash deposited to satisfy the annual
maintenance and replacement fund requirement to redeem all of the Company's
First Mortgage Bonds, 10 3/8% Series due October 1, 2020 and a portion of the
Company's First Mortgage Bonds, 10% Series due February 1, 2020 (in each case at
a price of 100% of the principal amount thereof, plus accrued interest to the
date of redemption).
DESCRIPTION OF THE NEW BONDS
The following description of the particular terms of the New Bonds offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the New Bonds set forth in
the accompanying Prospectus under the heading "Description of the New Bonds", to
which description reference is hereby made. As used in this Prospectus
Supplement, the terms "Bonds", "Corporate Trustee", "Trustees" and "Mortgage"
shall have the same meanings as the same terms used under the heading
"Description of the New Bonds" in the accompanying Prospectus.
INTEREST, MATURITY AND PAYMENT. The New Bonds will mature on March 1, 2026.
The New Bonds will bear interest from March 27, 1996 at the rate shown in their
title, payable on March 1 and September 1 of each year, commencing September 1,
1996. Interest is payable to holders of record on the interest payment date.
Principal and interest are payable at the office or agency of the Company in New
York City. For so long as the New Bonds are registered in the name of The
Depository Trust Company, New York, New York ("DTC"), or its nominee, the
principal and interest due on the New Bonds will be payable by the Company or
its agent to DTC for payment to its Participants (as defined herein) for
subsequent disbursement to the beneficial owners. The Company has covenanted to
pay interest on any overdue principal and (to the extent that payment of such
interest is enforceable under applicable law) on any overdue installment of
interest on the Bonds of all series at the rate of 6% per annum.
REDEMPTION AND PURCHASE OF NEW BONDS. The New Bonds will not be redeemable
for any purpose prior to March 1, 2001. Thereafter, the New Bonds will be
redeemable at the option of the Company, in whole or in part, at any time, upon
not less than 30 days' notice (a) at the special redemption price set forth
below with cash deposited under the maintenance and replacement fund or with
certain deposited cash or proceeds of released property, and (b) at the general
redemption prices set forth below for all other redemptions:
<TABLE>
<CAPTION>
GENERAL SPECIAL
REDEMPTION REDEMPTION
YEAR PRICE(%) PRICE(%)
------------- ---------- ----------
<S> <C> <C>
<CAPTION>
GENERAL SPECIAL
REDEMPTION REDEMPTION
YEAR PRICE(%) PRICE(%)
------------- ---------- ----------
<S> <C> <C>
</TABLE>
If redeemed during the 12-month period ending the last day of February,
<TABLE>
<S> <C> <C>
2002......... 106.563 100.000
2003......... 106.125 100.000
2004......... 105.688 100.000
2005......... 105.250 100.000
2006......... 104.813 100.000
2007......... 104.375 100.000
2008......... 103.938 100.000
2009......... 103.500 100.000
2010......... 103.063 100.000
2011......... 102.625 100.000
2012......... 102.188 100.000
2013......... 101.750 100.000
2014......... 101.313 100.000
2015......... 100.875 100.000
2016......... 100.438 100.000
2017......... 100.000 100.000
2018......... 100.000 100.000
2019......... 100.000 100.000
2020......... 100.000 100.000
2021......... 100.000 100.000
2022......... 100.000 100.000
2023......... 100.000 100.000
2024......... 100.000 100.000
2025......... 100.000 100.000
2026......... 100.000 100.000
</TABLE>
in each case together with accrued interest to the date fixed for redemption.
S-3
<PAGE>
If, at the time notice of redemption is given, the redemption monies are
not held by the Corporate Trustee, the redemption may be made subject to receipt
of such monies before the date fixed for redemption, and such notice shall be of
no effect unless such monies are so received.
Cash deposited under any provision of the Mortgage (with certain
exceptions) may be applied to the redemption or purchase (including purchase
from the Company) of Bonds of any series.
DIVIDEND COVENANT. The Company will covenant in substance that, so long as
any New Bonds remain outstanding, it will not pay any cash dividends on common
stock after February 29, 1996 (other than certain dividends declared by the
Company on or before February 29, 1996) except from credits to retained earnings
after February 29, 1996 plus $350,000,000 and plus such additional amounts as
shall be approved by the SEC.
SINKING OR IMPROVEMENT FUND. The New Bonds will not have the sinking or
improvement fund requirements described under the heading "Description of the
New Bonds -- Sinking or Improvement Fund" in the accompanying Prospectus.
MAINTENANCE AND REPLACEMENT FUND. The New Bonds as such will not be
entitled to the benefits of a maintenance and replacement fund. However, so long
as certain series of Bonds created prior to March 1, 1996 are outstanding, the
Company will be required to comply with the maintenance and replacement fund
requirements described under the heading "Description of the New
Bonds -- Maintenance and Replacement Fund" in the accompanying Prospectus.
RESERVATION OF RIGHTS TO AMEND THE MORTGAGE.
ISSUANCE OF ADDITIONAL BONDS. The Company has reserved the right
without any consent or other action by the holders of the New Bonds or any
subsequently created series to amend the Mortgage (1) to provide that Bonds
may be issued upon the basis of 80% of the cost or fair value (whichever is
less) of unfunded property additions after adjustments to offset
retirements (in addition to the other bases of issuance) and (2) to modify
the net earnings test (a) to provide that the period over which net
earnings is computed shall be 12 consecutive months out of the immediately
preceding 18 months (instead of the immediately preceding 15 months), (b)
to specifically permit the inclusion in net earnings of revenues collected
subject to possible refund and allowances for funds used during
construction and (c) to provide for no deduction for non-recurring charges.
RELEASE AND SUBSTITUTION OF PROPERTY. The Company has reserved the
right without any consent or other action by the holders of the New Bonds
or any subsequently created series to amend the Mortgage (1) to permit the
release of mortgaged property from the lien of the Mortgage in an amount
equal to the aggregate principal amount of retired bonds that the Company
elects to use as the basis for such release times the reciprocal of the
bonding ratio in effect at the time such retired bonds were originally
issued; (2) to permit the release of unfunded property so long as the
Company has at least $1 in unfunded property additions remaining; (3) to
remove the existing limitations on the amount of obligations secured by
purchase money mortgages upon any property being released that can be used
as the basis for such release; (4) to specifically provide that if the
Company transfers as an entirety all or substantially all property subject
to the Mortgage to a successor corporation, the Company would be released
of all obligations under the Mortgage; and (5) to change the definition of
"Funded Property" to mean only property specified by the Company with a
fair value, to be determined by an independent expert, of not less than
10/8 of the sum of the amount of outstanding Bonds and retired bond
credits.
MODIFICATION. The Company has reserved the right without any consent
or other action by the holders of the New Bonds or any subsequently created
series to amend the Mortgage (1) to reduce the percentage vote required to
modify certain bondholders' rights from 70% or 66 2/3%, as the case may be,
to a majority of Bonds outstanding; (2) to provide that, if less than all
series of Bonds outstanding are to be affected by a proposed change in the
Mortgage, that only the consent of a majority of the Bonds of each affected
series is required to make such change; and (3) to permit the Company to
amend the Mortgage without the consent of the holders of Bonds to make
changes which do not adversely affect the interests of such bondholders in
any material respect.
S-4
<PAGE>
BOOK-ENTRY NEW BONDS. DTC will act as securities depository for the New
Bonds. The New Bonds will be issued only as fully-registered securities
registered in the name of Cede & Co. (DTC's partnership nominee). One or more
fully-registered global certificates will be issued for the New Bonds
representing the aggregate principal amount of the New Bonds and will be
deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. DTC holds securities that its participants (the "Direct
Participants") deposit with DTC. DTC also facilitates the settlement among
Direct Participants of securities transactions, such as transfers and pledges,
in deposited securities through electronic computerized book-entry changes in
Direct Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. DTC is owned by a number of its Direct Participants and by
The New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly (the "Indirect Participants", and
together with the Direct Participants, the "Participants"). The rules applicable
to DTC and its Participants are on file with the SEC.
Purchases of New Bonds within the DTC system must be made by or through
Direct Participants which will receive a credit for the New Bonds on DTC's
records. The ownership interest of each actual purchaser of each New Bond (a
"Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' respective records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of
ownership interest in the New Bonds are to be accomplished by entries made on
the books of Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their ownership interest in
New Bonds except in the event that use of the book-entry system for the New
Bonds is discontinued.
To facilitate subsequent transfers, all New Bonds deposited by Direct
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of the New Bonds with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the New Bonds; DTC's records
reflect only the identity of the Direct Participants to whose accounts such New
Bonds are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
securities of an issue are being redeemed, DTC's practice is to determine by lot
the amount of the interest of each Direct Participant in such series to be
redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the New
Bonds. Under its usual procedures, DTC mails an omnibus proxy (an "Omnibus
Proxy") to the Participants as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the New Bonds are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
S-5
<PAGE>
Principal, premium, if any, and interest payments on the New Bonds will be
made to DTC. DTC's practice is to credit Direct Participants' accounts on the
relevant payment date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive payment
on such payment date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is the case with
securities for the accounts of customers in bearer form or registered in
"street-name", and will be the responsibility of such Participant and not of
DTC, the Underwriters, or the Company, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal,
premium, if any, and interest to DTC is the responsibility of the Company or the
Corporate Trustee. Disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursement of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with
respect to the New Bonds at any time by giving reasonable notice to the Company.
Under such circumstances and in the event that a successor securities depository
is not obtained, certificates for the New Bonds are required to be printed and
delivered. In addition, the Company may decide to discontinue use of the system
of book-entry transfers through DTC (or a successor securities depository). In
that event, certificates for the New Bonds will be printed and delivered.
The Company will not have any responsibility or obligation to Participants
or the persons for whom they act as nominees with respect to the accuracy of the
records of DTC, its nominee or any Direct or Indirect Participant with respect
to any ownership interest in the New Bonds, or with respect to payments to or
providing of notice for the Direct Participants, the Indirect Participants or
the Beneficial Owners.
So long as Cede & Co. is the registered owner of the New Bonds, as nominee
of DTC, references herein to holders of the New Bonds shall mean Cede & Co. or
DTC and shall not mean the Beneficial Owners of the New Bonds.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from DTC. Neither the Company, the Trustees nor the
Underwriters takes responsibility for the accuracy or completeness thereof.
UNDERWRITING
Under the terms and conditions set forth in the Underwriting Agreement
dated the date hereof, the Company has agreed to sell to each of the
Underwriters named below, and each of the Underwriters has severally agreed to
purchase, the respective principal amount of the New Bonds set forth opposite
its name below:
<TABLE>
<CAPTION>
UNDERWRITING PRINCIPAL AMOUNT
--------------------------------------------------------------------- ----------------
<S> <C>
Bear, Stearns & Co. Inc.............................................. $42,000,000
Goldman, Sachs & Co.................................................. $30,000,000
Salomon Brothers Inc ................................................ $13,000,000
-----------
Total...................................................... $85,000,000
===========
</TABLE>
The Underwriting Agreement provides that the several obligations of the
Underwriters to pay for and accept delivery of the New Bonds are subject to
approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters' obligations are such that they are committed to
take and pay for all of the New Bonds offered hereby if any are taken, provided,
that under certain circumstances involving a default of an Underwriter, less
than all of the New Bonds may be purchased. Default by one Underwriter would not
relieve the non-defaulting Underwriters from their several obligations, and in
the event of such a default, the non-defaulting Underwriters may be required by
the Company to purchase the principal amount of the New Bonds that they have
severally agreed to purchase and, in addition, to purchase the principal amount
of the New Bonds that the defaulting Underwriter, or Underwriters, shall have
failed to purchase,
S-6
<PAGE>
severally and not jointly, up to a principal amount equal to one-ninth of the
principal amount of the New Bonds that such non-defaulting Underwriters have
otherwise agreed to purchase.
The Underwriters have advised the Company that they propose to offer all or
part of the New Bonds directly to purchasers at the initial public offering
price set forth on the cover page of this Prospectus Supplement, and to certain
securities dealers at such price less a concession not in excess of 0.50% of the
principal amount of the New Bonds. The Underwriters may allow, and such dealers
may reallow to certain brokers and dealers, a concession not in excess of 0.25%
of the principal amount of the New Bonds. After the New Bonds are released for
sale to the public, the offering price and other selling terms may from time to
time be varied.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
There is presently no trading market for the New Bonds and there is no
assurance that a market will develop. Although they are under no obligation to
do so, the Underwriters presently intend to act as market makers for the New
Bonds in the secondary trading market, but may discontinue such market-making at
any time without notice.
EXPERTS AND LEGALITY
The Company's balance sheets as of December 31, 1995 and 1994 and the
statements of income, retained earnings, and cash flows and the related
financial statement schedule for each of the two years ended December 31, 1995,
incorporated by reference in this Prospectus, have been incorporated by
reference herein in reliance on the reports of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
The statements of income, retained earnings and cash flows and the related
financial statement schedule for the year ended December 31, 1993, incorporated
in this Prospectus by reference to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports dated February 11, 1994, which
expressed an unqualified opinion and included an explanatory paragraph relating
to the Company's change in method of accounting for revenues, also incorporated
by reference herein and have been so included in reliance upon the reports of
such firm given upon their authority as experts in accounting and auditing.
For further information, see "Experts and Legality" in the accompanying
Prospectus.
S-7
<PAGE>
PROSPECTUS
ARKANSAS POWER & LIGHT COMPANY
FIRST MORTGAGE BONDS
PREFERRED STOCK, CUMULATIVE, $0.01 PAR VALUE
PREFERRED STOCK, CUMULATIVE, $25 PAR VALUE
PREFERRED STOCK, CUMULATIVE, $100 PAR VALUE
Arkansas Power & Light Company ("the Company") may offer from time to time
its First Mortgage Bonds (the "New Bonds") and/or its Preferred Stock,
Cumulative, $0.01 Par Value ("Class A Preferred Stock"), Preferred Stock,
Cumulative, $25 Par Value and/or Preferred Stock, Cumulative, $100 Par Value
(collectively, the "New Preferred Stock"), aggregating $600,000,000 in principal
amount, par value and/or price payable in the event of involuntary liquidation
("liquidation value"), as the case may be. The New Bonds and New Preferred Stock
will each be offered in one or more series at prices and on terms to be
determined at the time of sale. This Prospectus will be supplemented by a
prospectus supplement (the "Prospectus Supplement") which will set forth, as
applicable, (1) the aggregate principal amount, rate and time of payment of
interest, maturity, purchase price, initial public offering price, if any, any
redemption provisions and other specific terms of the series of the New Bonds in
respect of which this Prospectus is being delivered or (2) the number of shares
of the New Preferred Stock, the par value per share, the liquidation value per
share (in the case of Class A Preferred Stock), purchase price, initial public
offering price, if any, dividend rate (or method of calculation thereof), any
redemption or sinking fund terms and other specific terms of the series of the
New Preferred Stock in respect of which this Prospectus is being delivered. The
sale of one series of any security will not be contingent upon the sale of any
other series of any security.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------------
The Company may sell the New Bonds and/or the New Preferred Stock through
underwriters, dealers or agents, or directly to one or more purchasers. The
Prospectus Supplement will set forth the names of underwriters, dealers or
agents, if any, any applicable commissions or discounts and the net proceeds to
the Company from any such sale. See "Plan of Distribution" for possible
indemnification arrangements for underwriters, dealers, agents and purchasers.
------------------------
The date of this Prospectus is September 22, 1993.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY OR ANY OTHER SECURITIES OF THE COMPANY AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 ("Exchange Act") and in accordance therewith files reports
and other information with the Securities and Exchange Commission ("SEC"). Such
reports include information, as of particular dates, concerning the Company's
directors and officers, their remuneration, the principal holders of the
Company's securities and any material interest of such persons in transactions
with the Company. Such reports and other information can be inspected and copied
at the public reference facilities maintained by the SEC at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549; 500 West Madison Street, 14th Floor,
Chicago, IL 60661, and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies of this material can also be obtained at prescribed rates from the
Public Reference Section of the SEC at its principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Company's series of $2.40 Preferred Stock is
listed on the New York Stock Exchange. Reports and other information concerning
the Company can be inspected at the office of such Exchange at 20 Broad Street,
New York, New York. Shareholders of the Company are furnished copies of
financial statements as of the end of the most recent fiscal year audited and
reported upon (with an opinion expressed) by independent auditors.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the SEC pursuant to the Exchange Act are
incorporated in this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1992.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1993 and June 30, 1993.
In addition, all documents subsequently filed by the Company pursuant to
Section 13, 14 or 15(d) of the Exchange Act prior to the termination of this
offering shall be deemed to be incorporated by reference in this Prospectus and
to be a part hereof from the date of filing of such documents (such documents,
and the documents enumerated above, being herein referred to as "Incorporated
Documents").
Any statement contained herein or in an Incorporated Document shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
Incorporated Document or in an accompanying Prospectus Supplement modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN
DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR
ALL OF THE INCORPORATED DOCUMENTS, OTHER THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS
SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE THEREIN. REQUESTS
SHOULD BE DIRECTED TO SHIRLEY HUNTER, ASSISTANT SECRETARY, ARKANSAS POWER &
LIGHT COMPANY, P.O. BOX 551, LITTLE ROCK, ARKANSAS 72203, TELEPHONE NUMBER:
501-377-4000. THE INFORMATION RELATING TO THE COMPANY CONTAINED IN THIS
PROSPECTUS AND ANY ACCOMPANYING PROSPECTUS SUPPLEMENT DOES NOT PURPORT TO BE
COMPREHENSIVE AND SHOULD BE READ TOGETHER WITH THE INFORMATION CONTAINED IN THE
INCORPORATED DOCUMENTS.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR WITH RESPECT TO ANY SERIES OF
THE NEW BONDS OR THE NEW PREFERRED STOCK, THE PROSPECTUS SUPPLEMENT RELATING
THERETO, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS AND A PROSPECTUS SUPPLEMENT NOR ANY
SALE MADE THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE OF THAT
PROSPECTUS SUPPLEMENT.
------------------------
THE COMPANY
The Company was incorporated under the laws of the State of Arkansas in
1926. The Company's principal executive offices are located at 425 West Capitol
Avenue, Little Rock, Arkansas 72201. Its telephone number, including area code,
is 501-377-4000.
The Company is an electric public utility company with substantially all of
its operations in the State of Arkansas. The Company also has operations in the
States of Missouri and Tennessee. Entergy Corporation is a registered public
utility holding company under the Public Utility Holding Company Act of 1935
("Holding Company Act") and it owns all of the outstanding common stock of the
Company. The Company, Louisiana Power & Light Company ("LP&L"), Mississippi
Power & Light Company ("MP&L") and New Orleans Public Service Inc. ("NOPSI") are
the principal operating electric utility subsidiaries of Entergy Corporation.
Entergy Corporation also owns all of the common stock of System Energy
Resources, Inc., a generating company, Entergy Services, Inc., a service
company, Entergy Enterprises, Inc., a non-utility company, Entergy Operations,
Inc., a nuclear management services company, and Entergy Power, Inc., a
subsidiary formed to market capacity and energy from certain Entergy System
generating units in wholesale markets. Entergy Corporation also has several
subsidiaries formed to participate in utility projects located outside the
Entergy System's retail service territory, both domestically and in foreign
countries.
The Company, LP&L, MP&L and NOPSI own all the capital stock of System
Fuels, Inc., a special purpose company which implements and/or maintains certain
programs for the procurement, delivery and storage of fuel supplies for Entergy
Corporation subsidiaries.
USE OF PROCEEDS
The net proceeds to be received from the issuance and sale of the New Bonds
and/or the New Preferred Stock will be used for (1) repayment of short-term debt
(bearing interest at fluctuating rates generally below the prime rate) incurred
to provide interim financing for general corporate purposes; and (2) other
general corporate purposes, including, without limitation, the possible
acquisition, in whole or in part, of certain of the Company's outstanding
securities. Any specific securities acquired with the proceeds of sale of a
series of New Bonds or New Preferred Stock will be set forth in the Prospectus
Supplement relating to that series. Reference is made to the Incorporated
Documents with respect to the Company's most significant contingencies, its
general capital requirements and its general financing plans and capabilities,
including its short-term borrowing capacity, and earnings coverage requirements
under the Company's Amended and Restated Articles of Incorporation, as amended
("Articles of Incorporation") and the Company's Mortgage (as herein defined)
which limit (except for most refunding purposes) the amount of additional
Preferred Stock and First Mortgage Bonds, respectively, the Company may issue.
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DESCRIPTION OF THE NEW BONDS
GENERAL. The New Bonds are to be issued under the Company's Mortgage and
Deed of Trust, dated as of October 1, 1944, to Guaranty Trust Company of New
York (now Morgan Guaranty Trust Company of New York ("Corporate Trustee")),
Henry A. Theis (John W. Flaherty, successor), and, as to property in Missouri,
Marvin A. Mueller (The Boatmen's National Bank of St. Louis, successor), as
Trustees, as supplemented by various supplemental indentures and as to be
further supplemented by one or more supplemental indentures relating to the New
Bonds (collectively referred to as the "Mortgage"). All First Mortgage Bonds
issued or to be issued under the Mortgage are referred to herein as "Bonds". The
statements herein concerning the Bonds, the New Bonds and the Mortgage are
merely an outline and do not purport to be complete. They are subject to the
detailed provisions of the Mortgage. The Mortgage and a form of supplemental
indenture are filed as exhibits to the Registration Statement.
TERMS OF SPECIFIC SERIES OF THE NEW BONDS. A Prospectus Supplement will
describe the following terms of a series of the New Bonds to be issued: (1) the
designation of such series of the New Bonds; (2) the aggregate principal amount
of such series; (3) the date on which such series will mature; (4) the rate at
which such series will bear interest and the date from which such interest
accrues; (5) the dates on which interest will be payable; (6) the prices,
including the "general redemption prices" and the "special redemption prices"
referred to below, and the other terms and conditions upon which the particular
series may be redeemed by the Company prior to maturity; (7) whether the
dividend covenant described below will be applicable to any such series; (8) if
an insurance policy will be provided for the payment of the principal of and/or
interest on the New Bonds of such series, the terms thereof, (9) whether the
sinking or improvement fund described below will be applicable to such series
and (10) any other terms of the New Bonds not inconsistent with the provisions
of the Mortgage.
FORM AND EXCHANGE. Unless otherwise indicated in a Prospectus Supplement,
the New Bonds will be delivered in fully registered form in denominations of
$1,000 or any multiple thereof. No service charge will be made for any transfer
or exchange of the New Bonds.
SINKING OR IMPROVEMENT FUND. Each series of the New Bonds may have sinking
or improvement fund requirements stated as 1% per year of the greatest amount of
such series of New Bonds outstanding prior to the beginning of the year, less
deductions for certain retired New Bonds of such series. This annual requirement
would commence no later than twenty-three months from the date of such series of
the New Bonds. The Company may, in effect, reduce such stated requirement by
taking credit for the principal amount of certain Bonds that the Company had the
right to have authenticated and delivered since 1952 but which right the Company
waived during such period to satisfy sinking fund requirements in respect of
certain of the Company's series of Bonds which are retired at the time the
credit is taken. The resulting requirement with respect to the New Bonds may be
satisfied in cash or principal amount of the New Bonds or with property
additions at 60% of the cost or fair value thereof, whichever is less. These
requirements may be anticipated at any time. If the date fixed for any resulting
redemption shall be in the calendar year in which such sinking fund payment is
due, redemption shall be at the special redemption price, but if the date fixed
for any resulting redemption shall be prior to the calendar year in which such
sinking fund payment is due, redemption shall be at the general redemption price
and subject to any limitation on such redemptions set forth under "Redemption
and Purchase of New Bonds" in the applicable Prospectus Supplement. The
Prospectus Supplement relating to a particular series of New Bonds will state
whether sinking or improvement fund requirements will apply to such series.
Similar but not identical provisions are in effect with respect to the Bonds of
other series now outstanding.
MAINTENANCE AND REPLACEMENT FUND. Effective with the Thirty-ninth
Supplemental Indenture dated as of December 1, 1985, the Company amended the
previous formula for calculating the maintenance and replacement fund
requirements to provide that in addition to actual expenditures for maintenance
and repairs, the Company will expend or deposit each year, for replacements and
improvements in respect of its depreciable utility property, an amount equal to
$5,800,000 plus 2% of net additions to such depreciable utility property made
after September 30, 1959, and prior to the beginning of the year for which the
calculation is made. All such requirements may be met by depositing cash, by
certifying gross property additions or by net
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cash expenditures for automotive equipment. Such cash may be withdrawn on
similar expenditures or on waiver of the right to issue Bonds or be applied to
the retirement of Bonds.
SPECIAL PROVISIONS FOR RETIREMENT OF BONDS. If, during any 12 month period,
mortgaged property is disposed of by order of or to any governmental authority,
resulting in the receipt of $10,000,000 or more as proceeds therefor, the
Company must apply (subject to certain conditions) such proceeds, less certain
deductions, to the retirement of Bonds (Mortgage, Sec. 64). The New Bonds are
redeemable for this purpose at the special redemption prices set forth under
"Redemption and Purchase of New Bonds" in the applicable Prospectus Supplement.
The Mortgage now provides in substance that no modification of the obligations
of the Company under Section 64 is effective against any Bondholder without his
consent. However, the Company (as described below under "Modification of the
Mortgage") has reserved the right without any consent or other action by holders
of any series of Bonds created after July 31, 1970 (including any series of the
New Bonds) to amend the Mortgage so as to provide that thereafter its
obligations under Section 64 may be modified with the consent of the holders of
66 2/3% of the Bonds, and, if less than all series of Bonds are affected, the
consent also of the holders of 66 2/3% of the Bonds of each series affected.
SECURITY. The New Bonds, together with all other Bonds now or hereafter
issued under the Mortgage, will be secured by the Mortgage, which constitutes,
in the opinion of general counsel for the Company, a first mortgage lien on all
of the present properties of the Company (except as stated below), subject to
(a) leases of minor portions of the Company's property to others for uses which,
in the opinion of such counsel, do not interfere with the Company's business,
(b) leases of certain property of the Company not used in its electric utility
business, and (c) excepted encumbrances. There are excepted from the lien all
cash and securities; certain equipment, materials or supplies; automobiles,
other vehicles and aircraft; timber, minerals, mineral rights and royalties;
receivables, contracts, leases and operating agreements; and certain unimproved
lands sold or to be sold.
The Mortgage contains provisions for subjecting after-acquired property
(subject to pre-existing liens) to the lien thereof, subject to limitations in
the case of consolidation, merger or sale of substantially all of the Company's
assets.
The Mortgage provides that the Trustees shall have a lien upon the
mortgaged property, prior to the New Bonds, for the payment of their reasonable
compensation and for expenses and for indemnity against certain liabilities.
The Mortgage contains restrictions on the acquisition of property subject
to liens and on the issuance of Bonds under divisional or prior lien mortgages.
ISSUANCE OF ADDITIONAL BONDS. The maximum principal amount of Bonds which
may be issued under the Mortgage is unlimited. Bonds of any series may be issued
from time to time on the basis of (1) 60% of property additions after
adjustments to offset retirements; (2) retirement of Bonds or qualified lien
bonds; and (3) deposit of cash. Deposited cash may be withdrawn upon the bases
stated in (1) and (2). Property additions generally include electric, gas, steam
and/or hot water property acquired after June 30, 1944, but may not include
securities, or rolling stock, or (except to the extent of offsetting retirements
of property of such character) other transportation property or property used
principally for the production or gathering of natural gas. The Company has
reserved the right, without any consent or other action by holders of any series
of Bonds created after June 30, 1978 (including any series of the New Bonds) to
make available as property additions any form of space satellites (including
solar power satellites), space stations and other analogous facilities.
With certain exceptions in the case of (2) above, the issuance of Bonds is
subject to adjusted net earnings, before interest and income taxes, for 12 out
of the preceding 15 months being at least twice the annual interest requirements
on all Bonds at the time outstanding, including the additional issue, and all
indebtedness of prior rank. Such adjusted net earnings are computed after
provisions for appropriations out of income for property retirements in an
amount at least equal to the maintenance and replacement fund requirements for
such period.
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The Company expects to issue the New Bonds on the basis of unfunded net
property additions and/or on the basis of the retirement of Bonds. Net property
additions available for the issuance of the New Bonds at June 30, 1993 were
approximately $472 million.
The Mortgage contains certain restrictions on the issuance of Bonds against
property subject to liens and on the increase of the amount of liens upon
property used as the basis for the issuance of Bonds.
Other than the security afforded by the lien of the Mortgage and
restrictions on the issuance of additional Bonds described above (including
particularly those described in the first paragraph above), there are no
provisions of the Mortgage which afford holders of the New Bonds protection in
the event of a highly leveraged transaction involving the Company. However, such
a transaction would require regulatory approval and management of the Company
believes that such approval would be unlikely in a highly leveraged context.
RELEASE AND SUBSTITUTION OF PROPERTY. Property may be released upon the
bases of (1) deposit of cash or, to a limited extent, purchase money mortgages,
(2) property additions, after adjustments in certain cases to offset retirements
and after making adjustments for qualified lien bonds outstanding against
property additions, and (3) waiver of the right to issue Bonds without applying
any earnings test. Cash may be withdrawn upon the bases stated in (2) and (3)
above.
The Mortgage contains special provisions with respect to qualified lien
bonds pledged, and disposition of moneys received on pledged prior lien bonds.
DIVIDEND COVENANT. The Company may covenant in substance that, so long as
any New Bonds of a particular series remain outstanding, it will not pay any
cash dividends on common stock after a selected date close to the date of the
original issuance of such series of New Bonds (other than certain dividends that
may be declared by the Company prior to such selected date) except from credits
to retained earnings after such selected date plus an amount up to $350 million
and plus such additional amounts as shall be approved by the SEC. The Prospectus
Supplement relating to a particular series of New Bonds will state whether this
covenant will apply to such series.
MODIFICATION OF THE MORTGAGE. The rights of the Bondholders may be modified
with the consent of the holders of 70% of the Bonds and, if less than all series
of Bonds are affected, the consent also of the holders of 70% of the Bonds of
each series affected. The Company has reserved the right (without any consent or
other action by holders of any series of Bonds created after July 31, 1970,
including the New Bonds) to substitute for the foregoing provision a provision
to the effect that the rights of the Bondholders may be modified with the
consent of holders of 66 2/3% of the Bonds and, if less than all series of Bonds
are affected, the consent also of holders of 66 2/3% of the Bonds of each series
affected. In general, no modification of the terms of payment of principal or
interest, no modification of the obligations of the Company under Section 64 of
the Mortgage (until the substitution referred to above under "Special Provisions
for Retirement of Bonds" is made), and no modification affecting the lien or
reducing the percentage required for modification is effective against any
Bondholder without his consent. See also "Issuance of Additional Bonds", and
"Special Provisions for Retirement of Bonds".
DEFAULTS AND NOTICE THEREOF. An event of default is defined as being:
default in payment of principal; default for 60 days in payment of interest or
of installments of funds for the retirement of Bonds; certain events in
bankruptcy, insolvency or reorganization; default in payment of interest on or
principal of any outstanding qualified lien bonds continued beyond grace
periods; and default, for 90 days after notice, in other covenants. The Trustees
may withhold notice of default (except in payment of principal, interest or
funds for retirement of Bonds) if they think it is in the interest of the
Bondholders.
The Corporate Trustee or holders of 25% of the Bonds may declare the
principal and interest due and payable on default, but the holders of a majority
of the Bonds may annul such declaration and destroy its effect if such default
has been cured. No holder of Bonds may enforce the lien of the Mortgage unless
such holder shall have given the Trustees written notice of a default and unless
holders of 25% of the Bonds have requested the Trustees in writing to act and
have offered the Trustees reasonable opportunity to act and indemnity
satisfactory to the Trustees against the cost, expenses and liabilities to be
incurred thereby, and the Trustees shall have declined or failed to act. Holders
of a majority of the Bonds may direct the time, method and place
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of conducting any proceedings for any remedy available to the Trustees, or
exercising any trust or power conferred upon the Trustees, but the Trustees are
not required to risk their funds or incur personal liability if there is
reasonable ground for believing that repayment is not reasonably assured.
The Company must file an annual certificate with the Corporate Trustee as
to compliance with the provisions of the Mortgage and as to the absence of
default with respect to any of the covenants contained in the Mortgage.
DESCRIPTION OF THE NEW PREFERRED STOCK
GENERAL. The Articles of Incorporation provide for three classes of
preferred stock ("Preferred Stock"), the $100 par value, cumulative, preferred
stock ("$100 Preferred Stock"), the $25 par value, cumulative, preferred stock
("$25 Preferred Stock") and the $0.01 par value, cumulative, preferred stock
("Class A Preferred Stock"). The $100 Preferred Stock, the $25 Preferred Stock
and the Class A Preferred Stock have the same rank and, except as to those
characteristics relating to par value, voting rights and in certain other
respects as to which there may be variations among series, the shares of each
series of Preferred Stock confer equal rights upon the holders. The respects in
which there may be variations as between series consist of (i) the number of
shares constituting each series and the distinctive designation thereof, (ii)
the dividend rates (or method of determination thereof), dividend payment dates
and the date from which dividends shall be cumulative, (iii) the terms and
conditions of conversion privileges, if any, (iv) the terms and conditions of,
and the amount or amounts payable upon, redemption, (v) the terms and amount of
sinking fund requirements (if any) for the purchase or redemption of shares of
each series except to the extent previously fixed in the Articles of
Incorporation and (vi) the amount payable in the event of voluntary liquidation
and, in the case of the Class A Preferred Stock, involuntary liquidation,
dissolution or winding up of the Company. When a new series of Preferred Stock
is issued, those characteristics thereof as to which there may be variations
between series are stated and expressed in the articles of amendment to the
Articles of Incorporation providing for the issuance of such series. The
statements herein concerning the Preferred Stock and the New Preferred Stock are
merely an outline and do not purport to be complete. Such statements do not
relate or give effect to the provisions of statutory or common law and are
subject in all respects to the detailed provisions of the Articles of
Incorporation and the proposed forms of articles of amendment to be adopted for
each series of New Preferred Stock. The Articles of Incorporation and forms of
articles of amendment are filed as exhibits to the Registration Statement.
TERMS OF SPECIFIC SERIES OF THE NEW PREFERRED STOCK. A Prospectus
Supplement will describe the following terms of a series of New Preferred Stock
to be issued: (1) the designation of such series of New Preferred Stock; (2) the
par value of each share; (3) in the case of a series of Class A Preferred Stock,
the amount per share payable in the event of the involuntary liquidation,
dissolution or winding up of the Company ("liquidation value"); (4) the number
of shares of New Preferred Stock in such series; (5) the purchase price and
initial public offering price, if any, of the shares of such series; (6) the
dividend rate (or method of calculation thereof); (7) the dividend payment dates
and the date from which dividends will be cumulative; (8) the terms and
conditions pursuant to which, and the prices at which, the Company may redeem
shares of such series; (9) the terms and amount of any sinking fund requirements
applicable to such series and (10) any other terms of the New Preferred Stock
not inconsistent with the provisions of the Articles of Incorporation.
DIVIDEND RIGHTS. Each series of the New Preferred Stock shall be entitled,
pari passu with all shares of any class or series of Preferred Stock then
outstanding and in preference to the common stock, to cumulative dividends at
the rate provided for each particular series, payable quarterly on such dates as
are stated in the articles of amendment providing for the issuance of such
series. Dividends with respect to each series of the New Preferred Stock will be
cumulative from the date of issuance when and as declared by the Board of
Directors.
VOTING RIGHTS. Except as expressly provided by law or the Articles of
Incorporation, the holders of Preferred Stock have no power to vote and are not
entitled to notice of any meeting of stockholders of the Company.
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If and when dividends payable on Preferred Stock of the Company shall have
not been paid in an amount equal to or greater than the aggregate dividends
accumulated on the outstanding Preferred Stock in any period of twelve months,
and thereafter until all dividends in default on any such Preferred Stock shall
have been paid or declared and set apart for payment, the holders of all
Preferred Stock, voting together as a voting group, in such manner that the
holders of the $100 Preferred Stock shall have one vote per share, the holders
of the $25 Preferred Stock shall have one-quarter vote per share and the holders
of the Class A Preferred Stock shall be entitled to the number of votes per
share produced by dividing the liquidation value of such share by 100, shall be
entitled to elect the smallest number of directors necessary to constitute a
majority of the full Board of Directors, and the holders of the common stock,
voting together as a voting group, shall be entitled to elect the remaining
directors of the Company.
RESTRICTIONS ON ISSUANCE OF PRIOR RANKING STOCK AND ON ALTERING RIGHTS OF
PREFERRED STOCK. So long as any shares of Preferred Stock are outstanding, the
Company shall not, without the consent of the holders of at least two-thirds of
the total number of votes entitled to be cast by the Preferred Stock (calculated
as described above under "Voting Rights");
(1) Create, authorize or issue any new stock which would rank prior to
the Preferred Stock as to dividends or distributions or in liquidation,
dissolution or winding up, or create, authorize or issue any security
convertible into shares of any such stock except for the purpose of
providing funds for the redemption of all of the Preferred Stock then
outstanding, provided that any such new stock or security shall be issued
within twelve months after the vote by the holders of the Preferred Stock
authorizing its issuance; or
(2) Amend, alter or repeal any of the rights, preferences or powers of
the holders of the Preferred Stock so as to affect adversely any such
rights, preferences or powers; if such amendment would affect adversely the
rights, preferences or powers of less than all series of the Preferred
Stock, only the consent of the holders of at least two-thirds of the votes
entitled to be cast by outstanding shares of all series so affected is
required; and the increase or decrease in the authorized amount of the
Preferred Stock or the creation, or increase or decrease in the amount, of
any class of stock ranking on a parity with the Preferred Stock shall not
be deemed to affect adversely the rights, preferences or powers of the
holders of the Preferred Stock.
RESTRICTIONS ON MERGER, SALE OF ASSETS, ISSUANCE OF UNSECURED DEBT AND SALE
OF ADDITIONAL PREFERRED STOCK. So long as any shares of Preferred Stock are
outstanding, the Company shall not, without the consent of the holders of at
least a majority of the total number of votes entitled to be cast by the
Preferred Stock (calculated as described above under "Voting Rights");
(1) Merge or consolidate with or into any other corporation or sell or
otherwise dispose of all or substantially all of its assets, unless such
merger, consolidation, sale or other disposition, or the issuance or
assumption of securities in the effectuation thereof shall have been
ordered or approved under the Holding Company Act; or
(2) Issue or assume any unsecured notes, debentures or other
securities representing unsecured debt (other than for the purpose of
refunding or renewing outstanding unsecured securities issued or assumed by
the Company resulting in equal or longer maturities or redeeming or
otherwise retiring all outstanding shares of Preferred Stock) if
immediately after such issue or assumption (a) the total outstanding
principal amount of all unsecured notes, debentures or other securities
representing unsecured debt of the Company will thereby exceed 20% of the
aggregate of all existing secured debt of the Company and the capital
stock, premiums thereon, and surplus of the Company, as stated on its
books, or (b) the total outstanding principal amount of all unsecured
notes, debentures or other securities representing unsecured debt of the
Company of maturities of less than 10 years will thereby exceed 10% of such
aggregate. For the purpose of this paragraph, the payment due upon the
maturity of unsecured debt having an original single maturity in excess of
10 years or the payment due upon the final maturity of any unsecured serial
debt which had original maturities in excess of 10 years shall not be
regarded as
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unsecured debt of a maturity of less than 10 years until such payment shall
be required to be made within 3 years; or
(3) Issue, sell or otherwise dispose of any additional shares of
Preferred Stock, or of any other class of stock ranking on a parity with
the Preferred Stock as to dividends or in liquidation, dissolution or
winding up (other than for the purpose of refinancing an equal par value
amount of the $100 or $25 Preferred Stock or an equal liquidation value
amount of the Class A Preferred Stock or of stock ranking prior to or on a
parity with the Preferred Stock as to dividends or distributions or in
liquidation, dissolution, or winding up) unless the gross income, as
defined, of the Company for a period of 12 consecutive calendar months
within the 15 calendar months preceding the issuance, sale or disposition
of such stock, available for the payment of interest, shall have been at
least 1 1/2 times the sum of the annual interest charges on all debt
securities of the Company and the annual dividend requirements on all
outstanding Preferred Stock, and all other stock, if any, ranking prior to,
or on a parity with, the Preferred Stock, including the shares proposed to
be issued, and unless the aggregate of the capital of the Company
applicable to the common stock and the surplus of the Company shall be not
less than the aggregate amount payment on the involuntary dissolution,
liquidation or winding up of the Company in respect of all shares of
Preferred Stock and all shares of stock, if any, ranking prior thereto or
on a parity therewith, as to dividends or distributions, which will be
outstanding after the issuance of the shares proposed to be issued.
LIQUIDATION RIGHTS. In the event of any voluntary liquidation, dissolution
or winding up of the Company, the New Preferred Stock, pari passu with all
Preferred Stock then outstanding, shall have a preference over the common stock
until an amount equal to the then current redemption price shall have been paid.
In the event of any involuntary liquidation, dissolution or winding up of the
Company, the New Preferred Stock, pari passu with all Preferred Stock then
outstanding, shall also have a preference over the common stock until the full
par value thereof, in the case of the $100 Preferred Stock and the $25 Preferred
Stock, and the full liquidation value thereof, in the case of the Class A
Preferred Stock, plus accumulated and unpaid dividends thereon shall have been
paid.
PREEMPTIVE OR OTHER SUBSCRIPTION RIGHTS. No holder of any stock of the
Company shall be entitled to the right to purchase or subscribe for any part of
any stock of the Company or of any securities convertible into stock of the
Company.
LIABILITY TO FURTHER CALLS OR ASSESSMENT. All shares of the New Preferred
Stock, when issued in accordance with the terms of the Prospectus, and the
applicable Prospectus Supplement, will be validly issued and fully paid and
non-assessable.
CERTAIN LIMITATIONS ON COMMON STOCK DIVIDENDS. The Articles of
Incorporation in effect restrict the payment of dividends on common stock to 75%
of net income available for common stock dividends if the percentage of common
stock equity to total capitalization, as defined, is between 20% and 25%, and to
50% of such net income if such percentage is less than 20%. Other limitations on
the payment of common stock dividends exist in the Articles of Incorporation,
including a prohibition of the payment of common stock dividends in the event
the Company should be in arrears in its dividend obligations upon the Preferred
Stock, or in its sinking fund obligations for any series of Preferred Stock.
Certain limitations on the payment of common stock dividends exist in the
Mortgage.
CERTAIN TERMS APPLICABLE TO REDEMPTION. In general, at any time when
dividends payable on any Preferred Stock are in default, the Company may not (1)
make any payment, or set aside funds for payment, into any sinking fund for the
purchase or redemption of any shares of the Preferred Stock, or (2) redeem,
purchase or otherwise acquire less than all of the shares of the Preferred
Stock, in either case unless approval is obtained under the Holding Company Act.
Any shares of the Preferred Stock which are redeemed, purchased or acquired
shall revert to the status of authorized and unissued shares and may be reissued
as part of a new series of Preferred Stock of the same class.
TRANSFER AGENT AND REGISTRAR. Unless otherwise indicated in a Prospectus
Supplement, the transfer agent and registrar for the New Preferred Stock is
Mellon Securities Trust Company, New York, New York.
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RATIOS OF EARNINGS TO FIXED CHARGES AND RATIOS OF EARNINGS
TO FIXED CHARGES AND PREFERRED DIVIDENDS
The Company has calculated ratios of earnings to fixed charges and ratios
of earnings to fixed charges and preferred dividends pursuant to Item 503 of SEC
Regulation S-K as follows:
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
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DECEMBER 31, JUNE
---------------------------------------- 30,
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratios of Earnings to Fixed Charges(a)... 2.24 2.31 2.16 2.25 2.28 2.85(c)
Ratios of Earnings to Fixed Charges and
Preferred Dividends (a)(b)............. 1.83 1.88 1.81 1.87 1.86 2.31(c)
</TABLE>
- ------------
(a) "Earnings", as defined by SEC Regulation S-K, represent the aggregate of
(1) net income, (2) taxes based on income, (3) investment tax credit
adjustments--net and (4) fixed charges. "Fixed Charges" include interest
(whether expensed or capitalized), related amortization and interest
applicable to rentals charged to operating expenses.
(b) "Preferred Dividends," as defined in SEC Regulation S-K, are computed by
dividing the preferred dividend requirement by one hundred percent (100%)
minus the effective income tax rate.
(c) Earnings for the twelve months ended June 30, 1993 include the cumulative
effect as of January 1, 1993 of a change in accounting principle to provide
for the accrual of estimated unbilled revenues.
EXPERTS AND LEGALITY
The financial statements and the related financial statement schedules
incorporated in this prospectus by reference from the Company's Annual Report on
Form 10-K have been audited by Deloitte & Touche, independent auditors, as
stated in their reports, which are incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm given upon their
authority as experts in auditing and accounting.
With respect to the unaudited interim financial information which is
incorporated herein by reference, Deloitte & Touche have applied limited
procedures in accordance with professional standards for a review of such
information. However, as stated in their reports included in the Company's
Quarterly Reports on Form 10-Q and incorporated by reference herein, they did
not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the limited nature of the review
procedures applied. Deloitte & Touche are not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for their reports on the
unaudited interim financial information because those reports are not "reports"
or "parts" of the Registration Statement prepared or certified by an accountant
within the meaning of Sections 7 and 11 of that Act.
All statements made in the Incorporated Documents, as to matters of law and
legal conclusions, based on the belief or opinion of the Company or otherwise,
pertaining to (i) titles to properties, franchises and other operating rights of
the Company, (ii) the regulations to which the Company is subject, and (iii) any
legal proceedings to which the Company is a party, and all statements made as to
matters of law and legal conclusions under "Description of the New Bonds" and
"Description of the New Preferred Stock" herein are made on the authority of
Friday, Eldredge & Clark, general counsel of the Company, and such statements
are included in such documents and herein in reliance upon their authority as
experts.
The legality of the New Bonds and the New Preferred Stock will be passed
upon for the Company by Friday, Eldredge & Clark, general counsel of the
Company, 2000 First Commercial Building, 400 West Capitol Avenue, Little Rock,
Arkansas, and Reid & Priest, 40 West 57th Street, New York, New York, and for
the underwriter(s), dealer(s), agent(s) or purchaser(s) by Winthrop, Stimson,
Putnam & Roberts, One Battery Park Plaza, New York, New York. However, all legal
matters pertaining to the organization of the
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<PAGE>
Company, titles to property, franchises and the lien of the Mortgage and all
matters of Arkansas, Missouri and Tennessee law will be passed upon only by
Friday, Eldredge & Clark.
PLAN OF DISTRIBUTION
The Company may sell the New Bonds and the New Preferred Stock in one or
more sales in any of three ways: (i) through one or more underwriters or
dealers; (ii) directly to a limited number of purchasers or to a single
purchaser; or (iii) through one or more agents. The Prospectus Supplement
relating to a series of the New Bonds ("Offered Bonds") or to a series of the
New Preferred Stock ("Offered Stock") will set forth the terms of the offering,
as applicable, of the Offered Bonds or the Offered Stock, including the name or
names of any underwriters, dealers or agents, the purchase price of such Offered
Bonds or Offered Stock and the proceeds to the Company from such sale, any
underwriting discounts and other items constituting underwriters' compensation,
any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
If underwriters are used in the sale, the New Bonds or the New Preferred
Stock will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of the sale. The underwriter or underwriters with respect to a
particular underwritten offering of Offered Bonds or Offered Stock will be named
in the Prospectus Supplement relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters will be set forth on
the cover page of such Prospectus Supplement. Unless otherwise set forth in the
Prospectus Supplement, the obligations of the underwriters to purchase the
Offered Bonds or Offered Stock will be subject to certain conditions precedent,
and the underwriters will be obligated to purchase all such Offered Bonds or
Offered Stock if any are purchased; provided that the agreement between the
Company and the underwriter or underwriters providing for the sale of the
Offered Bonds or Offered Stock may provide that under certain circumstances
involving a default of underwriters less than all of the Offered Bonds or
Offered Stock may be purchased.
Offered Bonds or Offered Stock may be sold directly by the Company or
through agents designated by the Company from time to time. The Prospectus
Supplement will set forth the name of any agent involved in the offer or sale of
the Offered Bonds or Offered Stock in respect of which the Prospectus Supplement
is delivered as well as any commissions payable by the Company to such agent.
Unless otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a best efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Offered Bonds or Offered Stock from the Company at the
public offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in the
future. Such contracts will be subject to those conditions set forth in the
Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
Each Prospectus Supplement relating to a particular offering of Offered
Bonds or Offered Stock will contain a statement (i) as to whether or not the
Company is able to predict the existence of a secondary market for such
securities and, if such existence is predicted, as to the extent of such
secondary market, and (ii) if such securities are to be purchased by an
underwriter or underwriters, as to whether or not such underwriter or
underwriters intend to make a market in such securities.
Subject to certain conditions, the Company may agree to indemnify any
underwriters, dealers, agents or purchasers, and any insurer providing an
insurance policy for the payment of principal of and/or interest on New Bonds,
and their controlling persons against certain civil liabilities, including
liabilities under the Securities Act of 1933.
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