<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 15, 1995
Registration No. 33-61713 and 33-61713-01
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
Amendment No. 1
to
Form S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
OHIO EDISON COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
OHIO
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
34-0437786
(I.R.S. EMPLOYER IDENTIFICATION NO.)
OHIO EDISON FINANCING TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
34-7035699
(I.R.S. EMPLOYER IDENTIFICATION NO.)
76 SOUTH MAIN STREET, AKRON, OHIO 44308
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANTS' TELEPHONE NUMBER INCLUDING AREA CODE: (216) 384-5100
------------------------
N. C. BRINK
SECRETARY
76 SOUTH MAIN STREET
AKRON, OHIO 44308
(216) 384-5500
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
The Commission is requested to mail signed copies of all orders, notices and
communications to:
J. H. BYINGTON, JR.
WINTHROP, STIMSON, PUTNAM & ROBERTS
ONE BATTERY PARK PLAZA
NEW YORK, N.Y. 10004-1490
VINCENT PAGANO, JR.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, N.Y. 10017-3909
------------------------
Approximate date of commencement of proposed sale to public:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
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 Act
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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<TABLE>
CALCULATION OF REGISTRATION FEE
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<CAPTION>
<S> <C> <C> <C> <C>
PROPOSED
MAXIMUM AGGREGATE PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT BEING OFFERING PRICE OFFERING PRICE AMOUNT OF
SECURITIES BEING REGISTERED REGISTERED PER UNIT(1) (1)(2) REGISTRATION FEE
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Ohio Edison Financing Trust ( )%
Cumulative Trust Preferred Capital 4,800,000 Preferred
Securities, Series A... Securities $25.00 $120,000,000 $41,380
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Ohio Edison Company Guarantee with respect
to Ohio Edison Financing Trust ( )%
Trust Preferred Capital Securities,
Series A(3)..............................
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Ohio Edison Company ( )% Junior Subordi-
nated Debentures, Series A, due
2025(4)..................................
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4,800,000 Preferred
Total...................................... Securities $25.00 $120,000,000 $41,380
=====================================================================================================================
</TABLE>
(1) Assumed solely for the purpose of calculating the registration fee.
(2) Exclusive of accrued distributions, if any.
(3) Includes the rights of holders of the Preferred Securities under the
Guarantee Agreement and certain back-up undertakings as described in the
Registration Statement. No separate consideration will be received for Ohio
Edison Company Guarantee.
(4) The Junior Subordinated Debentures will be purchased by Ohio Edison
Financing Trust with the proceeds of the sale of the Preferred Securities.
No separate consideration will be received for the Junior Subordinated
Debentures.
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH JURISDICTION.
PROSPECTUS (Subject to Completion, Issued September 15, 1995)
4,800,000 Preferred Securities
Ohio Edison Financing Trust
% CUMULATIVE TRUST PREFERRED CAPITAL SECURITIES, SERIES A
(Liquidation Amount $25 per Preferred Security)
guaranteed to the extent the Issuer has funds as set forth herein by
Ohio Edison Company
------------------------
The % Cumulative Trust Preferred Capital Securities, Series A (the
"Preferred Securities"), representing the undivided beneficial trust interests
offered hereby, are being issued by Ohio Edison Financing Trust, a statutory
business trust formed under the laws of the State of Delaware (the "Issuer" or
the "Trust"). Ohio Edison Company, an Ohio corporation ("Ohio Edison"), is the
owner of the undivided beneficial trust interests represented by common
securities (the "Common Securities"; and together with the Preferred
Securities, the "Issuer Securities") issued by the Issuer. The Issuer exists
for the sole purpose of issuing its trust interests (represented by the
Preferred Securities and the Common Securities) and investing the proceeds
thereof in % Junior Subordinated Debentures, Series A, Due 2025 (the
"Subordinated Debentures") issued by Ohio Edison. The trust interests
represented by the Preferred Securities will have a preference under certain
circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the trust interests represented by
the Common Securities issued by the Issuer. See "Description of the Preferred
Securities -- Subordination of Common Securities."
Holders of the Preferred Securities will be entitled to receive cumulative
cash distributions accruing from the date of original issuance and payable
quarterly in arrears on the last day of March, June, September and December of
each year, commencing December 31, 1995, at the rate of % per annum. Ohio
Edison has the right to defer payments of interest on the Subordinated
Debentures by extending the interest payment period thereon at any time for up
to 20 consecutive quarters (each an "Extension Period"). If interest payments
are so deferred, distributions on the Preferred Securities will also be
deferred. During an Extension Period, distributions will continue to accrue, and
holders of Preferred Securities will be required to accrue interest income for
United States Federal income tax purposes. See "Description of the Subordinated
Debentures -- Option to Extend Interest Payment Period" and "United States
Taxation -- Potential Extension of Interest Payment Period and Original Issue
Discount."
(continued on following page)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 9 HEREOF FOR CERTAIN INFORMATION RELEVANT
TO AN
INVESTMENT IN THE PREFERRED SECURITIES.
------------------------
The Preferred Securities have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance. Trading of the
Preferred Securities on the New York Stock Exchange is
expected to commence within a thirty-day period
after the date of this Prospectus. See
"Underwriting."
------------------------
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.
------------------------
PRICE $25 PER PREFERRED SECURITY AND ACCRUED DISTRIBUTIONS, IF ANY
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) THE ISSUER(3),(4)
------------------ ------------------ ------------------
<S> <C> <C> <C>
Per Preferred Security......................... $25.00 (3) $25.00
Total.......................................... $120,000,000 (3) $120,000,000
</TABLE>
---------------
(1) Plus accrued distributions, if any from , 1995.
(2) The Issuer and Ohio Edison have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933. See "Underwriting."
(3) Because the proceeds of the sale of the Preferred Securities will ultimately
be used to purchase Subordinated Debentures, Ohio Edison has agreed, in the
Underwriting Agreement, to pay to the Underwriters as compensation for their
services $ per Preferred Security (or $ in the aggregate);
provided that such compensation will be $ per Preferred Security sold
to certain institutions. See "Underwriting."
(4) Expenses of the offering, which are payable by Ohio Edison, are estimated to
be $417,000.
------------------------
The Preferred Securities are offered, subject to prior sale, when, as and if
accepted by the Underwriters and subject to approval of certain legal matters by
Simpson Thacher & Bartlett, counsel for the Underwriters. It is expected that
delivery of the Preferred Securities will be made on or about ,
1995 through the book-entry facilities of The Depository Trust Company against
payment therefor in New York funds.
------------------------
MORGAN STANLEY & CO.
Incorporated
, 1995
<PAGE> 3
The payment of distributions and payments on liquidation of the Issuer or
the redemption of Preferred Securities, as set forth below, are guaranteed to
the extent set forth herein by Ohio Edison (the "Guarantee"). See "Description
of the Guarantee". If Ohio Edison fails to make interest payments on the
Subordinated Debentures held by the Issuer, the Issuer will have insufficient
funds to pay distributions on the Preferred Securities. The Guarantee does not
cover payment of distributions when the Issuer does not have sufficient funds to
pay such distributions. In such event, the remedy of a holder of Preferred
Securities is to enforce the rights of the Issuer under the Subordinated
Debentures held by the Issuer. Ohio Edison's obligations under the Guarantee are
subordinate and junior in right of payment to all other liabilities of Ohio
Edison except any liabilities that may be made pari passu expressly by their
terms.
The Preferred Securities will be redeemed upon maturity of the Subordinated
Debentures. The Subordinated Debentures mature on , 2025, but the
maturity date may be extended once only, for up to an additional 19 years at the
option of Ohio Edison, provided certain conditions are met. See "Description of
the Subordinated Debentures -- Option to Extend Maturity Date." The Subordinated
Debentures are redeemable by Ohio Edison, in whole at any time or in part from
time to time, on or after , 2000, at a redemption price equal to
100% of the principal amount of the Subordinated Debentures being redeemed. If
Ohio Edison redeems Subordinated Debentures, the Issuer must redeem Issuer
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Subordinated Debentures so redeemed at $25 per Issuer
Security plus accrued and unpaid distributions thereon (the "Redemption Price")
to but excluding the date fixed for redemption. See "Description of the
Preferred Securities -- Mandatory Redemption."
In addition, upon the occurrence of a Special Event (as defined herein)
arising from a change in law or a change in legal interpretation, unless the
Subordinated Debentures are redeemed in the limited circumstances described
herein, the Issuer shall be dissolved, with the result that the Subordinated
Debentures will be distributed to the holders of the Preferred Securities, on a
pro rata basis, in lieu of any cash distribution. See "Description of the
Preferred Securities -- Special Event Redemption or Distribution." In certain
circumstances, Ohio Edison will have the right to redeem the Subordinated
Debentures, in whole but not in part, in lieu of a distribution of the
Subordinated Debentures by the Issuer, which would result in the redemption by
the Issuer of Issuer Securities in the same amount on a pro rata basis. If the
Subordinated Debentures are distributed to the holders of the Preferred
Securities, Ohio Edison will use its best efforts to have the Subordinated
Debentures listed on the New York Stock Exchange or on such other exchange as
the Preferred Securities are then listed. See "Description of the Preferred
Securities -- Special Event Redemption or Distribution" and "Description of the
Subordinated Debentures."
The Subordinated Debentures are subordinated and junior in right of payment
to all Senior Indebtedness (as defined herein) of Ohio Edison. As of June 30,
1995, Ohio Edison had approximately $3,546 million of principal amount of
indebtedness for borrowed money and capital lease obligations constituting
Senior Indebtedness. The terms of the Subordinated Debentures do not limit Ohio
Edison's ability to incur additional Senior Indebtedness. See "Description of
the Subordinated Debentures -- Subordination."
In the event of the liquidation of the Issuer, the holders of the Preferred
Securities will be entitled to receive for each Preferred Security a liquidation
amount of $25 plus accrued and unpaid distributions thereon to the date of
payment, subject to certain limitations. See "Description of the Preferred
Securities -- Liquidation Distribution Upon Dissolution."
The Preferred Securities will be represented by global certificates
registered in the name of The Depository Trust Company ("DTC") or its nominee.
Beneficial interests in the Preferred Securities will be shown on, and transfers
thereof will be effected only through, records maintained by participants in
DTC. Except as described herein, Preferred Securities in certificated form will
not be issued in exchange for the global certificates. See "Description of
Preferred Securities -- Book-Entry-Only Issuance -- The Depository Trust
Company."
2
<PAGE> 4
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, IN CONNECTION WITH THE OFFERING
MADE BY THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE ISSUER,
OHIO EDISON OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
A SOLICITATION BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR
SUCH PERSON TO MAKE SUCH AN OFFER OR SOLICITATION. THE DELIVERY OF THIS
PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE OF THE PROSPECTUS.
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 AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION.................................................................. 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................................ 4
SUMMARY INFORMATION.................................................................... 5
RISK FACTORS........................................................................... 9
OHIO EDISON COMPANY.................................................................... 12
RECENT DEVELOPMENT..................................................................... 12
FINANCING AND CONSTRUCTION PROGRAMS.................................................... 12
OHIO EDISON FINANCING TRUST............................................................ 13
USE OF PROCEEDS........................................................................ 14
DESCRIPTION OF THE PREFERRED SECURITIES................................................ 14
DESCRIPTION OF THE GUARANTEE........................................................... 25
DESCRIPTION OF THE SUBORDINATED DEBENTURES............................................. 27
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE SUBORDINATED DEBENTURES AND THE GUARANTEE........................................ 33
UNITED STATES TAXATION................................................................. 34
UNDERWRITING........................................................................... 36
EXPERTS................................................................................ 37
VALIDITY OF THE SECURITIES............................................................. 38
</TABLE>
3
<PAGE> 5
AVAILABLE INFORMATION
Ohio Edison is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by Ohio Edison may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and 7 World Trade Center, New York, New York 10048. Copies of
such materials can be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, such material may also be inspected and copied at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005, on which certain of Ohio Edison's securities are listed.
Ohio Edison and the Issuer have filed with the Commission a registration
statement on Form S-3 (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the Securities Act of 1933,
as amended (the "Act"). This Prospectus does not contain all of 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 hereby made to the Registration Statement.
No separate financial statements of the Issuer are included herein. Ohio
Edison considers that such financial statements would not be material to holders
of the Preferred Securities because (i) all of the Common Securities of the
Issuer are owned by Ohio Edison, a reporting company under the Exchange Act;
(ii) the Issuer has no independent operations, but exists for the sole purpose
of issuing securities representing undivided beneficial interests in the assets
of the Issuer and investing the proceeds thereof in the Subordinated Debentures
(and engaging in those activities necessary, convenient or incidental thereto);
and (iii) the obligations of the Issuer under the securities issued thereby, to
the extent funds are available therefor, are fully and unconditionally
guaranteed to the extent set forth herein by Ohio Edison.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Ohio Edison with the Commission pursuant
to the Exchange Act are incorporated herein by reference:
1. Ohio Edison's Annual Report on Form 10-K for the year ended December 31,
1994;
2. Ohio Edison's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1995 and June 30, 1995; and
3. Ohio Edison's Current Report on Form 8-K dated September 7, 1995.
All other documents filed by Ohio Edison pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the respective dates
of the filing of such documents. Any statement contained herein or in a document
all or a portion of which is incorporated or deemed to be incorporated by
reference herein 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 document which also is or is deemed to be incorporated by
reference herein 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.
Ohio Edison will provide without charge to each person, including a
beneficial owner, to whom a copy of this Prospectus has been delivered, upon the
written or oral request of any such person, a copy of any and all of the
documents which are incorporated herein by reference, other than exhibits to
such information (unless such exhibits are specifically incorporated by
reference into such documents). Requests for such copies should be directed to
Ohio Edison Company, Investor Services, 76 South Main Street, Akron, Ohio 44308,
telephone number 1-800-736-3402. The information relating to Ohio Edison
contained in this document does not purport to be comprehensive and should be
read together with the information contained in the incorporated documents.
Information relating to DTC and the book-entry only system is based upon
information furnished by DTC.
4
<PAGE> 6
SUMMARY INFORMATION
The following is qualified in its entirety by the information and financial
statements (including notes) appearing elsewhere herein and in documents
incorporated herein by reference.
GENERAL
The Preferred Securities represent undivided beneficial interests in the
assets of the Trust, which will consist of the Subordinated Debentures. The
Subordinated Debentures, in which the proceeds of the Preferred Securities will
be invested, mature on , 2025, unless such maturity date is extended by
Ohio Edison as described under "Description of the Subordinated
Debentures -- Option to Extend Maturity Date."
DISTRIBUTIONS
The distributions payable on each Preferred Security will be fixed at a
rate per annum of % of the stated liquidation amount of $25 per Preferred
Security, will be cumulative, will accrue from , 1995, the date of initial
issuance of the Preferred Securities, and will be payable quarterly in arrears,
on March 31, June 30, September 30 and December 31 of each year, commencing
December 31, 1995, except as otherwise described below. Distributions that are
in arrears for more than one quarter will accrue interest at the rate per annum
of % and the interest so accrued at the end of each quarter and remaining
unpaid will itself bear interest (to the extent permitted by applicable law)
thereafter until paid on the same basis. See "Description of Preferred
Securities -- Distributions".
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Ohio Edison has the right under the Indenture (as defined herein) to extend
the interest payment period from time to time on the Subordinated Debentures for
an Extension Period not exceeding 20 consecutive quarters, with the consequence
that quarterly distributions on the Preferred Securities would be deferred (but
would continue to accrue with interest thereon, including interest payable on
unpaid interest, as set forth above) by the Issuer during any such Extension
Period. Prior to the termination of any Extension Period, Ohio Edison may
further extend the Extension Period, provided that such Extension Period
together with all such previous and further extensions thereof may not exceed 20
consecutive quarters or extend beyond the maturity of the Subordinated
Debentures (including any extension thereof). Upon the termination of any
Extension Period and the payment of all amounts then due, Ohio Edison may select
a new Extension Period, subject to the above requirements. See "Description of
the Preferred Securities -- Distributions" and "Description of the Subordinated
Debentures -- Option to Extend Interest Payment Period".
Should an Extension Period occur, each Preferred Security holder would
continue to accrue interest income (as original issue discount) for United
States Federal income tax purposes. As a result, such a holder would be required
to include such interest in gross income for United States Federal income tax
purposes in advance of the receipt of cash, and would not receive the cash from
the Issuer related to such income if such holder disposed of its Preferred
Securities prior to the record date for payment of distributions. See "United
States Taxation -- Original Issue Discount."
The Issuer and Ohio Edison believe that an Extension Period on the
Subordinated Debentures is unlikely to occur.
MANDATORY REDEMPTION
Upon the repayment of the Subordinated Debentures, whether at maturity
or upon earlier redemption as provided in the Indenture, the proceeds from such
repayment shall be applied by the Property Trustee to redeem a Like Amount (as
defined below) of Issuer Securities, including Preferred Securities, upon not
less than 30 nor more than 60 days' notice, at the Redemption Price equal to
$25 per Issuer Security plus accrued and unpaid distributions thereon to but
excluding the date for redemption. See "Description of the Preferred Securities
-- Mandatory Redemption".
5
<PAGE> 7
OPTIONAL REDEMPTION
Ohio Edison has the right to redeem the Subordinated Debentures (a) on or
after , 2000, in whole at any time or in part from time to time,
subject to the conditions described under "Description of the Subordinated
Debentures -- Optional Redemption", or (b) at any time, in whole but not in
part, in certain circumstances upon the occurrence and continuation of a Tax
Event (as defined below), in each case at a redemption price equal to 100% of
the principal amount of Subordinated Debentures being redeemed, together with
any accrued but unpaid interest, including Additional Interest, if any, to but
not including the redemption date. See "Description of the Subordinated
Debentures -- Optional Redemption." If Ohio Edison redeems Subordinated
Debentures, the proceeds from such redemption shall be applied by the Property
Trustee to redeem a Like Amount (as defined below) of Issuer Securities,
including Preferred Securities, as discussed above.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
If, at any time, a Tax Event or an Investment Company Event (each a Special
Event, all as defined herein) shall occur and be continuing, the Issuer shall be
dissolved, except in the limited circumstances described below, with the result
that, after satisfaction of liabilities to creditors of the Issuer, a Like
Amount of Subordinated Debentures will be distributed to the holders of the
Issuer Securities in liquidation of such holders' interests in the Issuer on a
pro rata basis within 90 days following the occurrence of such Special Event;
provided, however, that in the case of the occurrence of a Tax Event, Ohio
Edison shall have the right, in certain circumstances, to redeem the
Subordinated Debentures, in whole but not in part, for cash at a redemption
price equal to 100% of the principal amount thereof within 90 days following the
occurrence of such Tax Event. If the Subordinated Debentures are distributed to
the holders of the Preferred Securities, Ohio Edison will use its best efforts
to cause the Subordinated Debentures to be listed on the New York Stock Exchange
or on such other exchange, if any, as the Preferred Securities are then listed.
THE GUARANTEE
The Guarantee guarantees to the holders of the Preferred Securities the
payment (but not the collection) of (i) any accrued and unpaid distributions
required to be paid on the Preferred Securities, to the extent the Property
Trustee (as defined herein) has available in the payment account established
therefor under the Trust Agreement (the "Payment Account") funds sufficient to
make such payment (which will occur only in the event that Ohio Edison has made
a required payment of interest or principal on the Subordinated Debentures),
(ii) the Redemption Price, including all accrued and unpaid distributions, with
respect to Preferred Securities called for redemption by the Issuer, to the
extent the Property Trustee has available in the Payment Account funds
sufficient to make such payment (which will occur only in the event that Ohio
Edison has made a required payment of interest or principal on the Subordinated
Debentures), and (iii) upon a voluntary or involuntary dissolution, winding-up
or termination of the Issuer (other than in connection with the distribution of
the Subordinated Debentures to the holders of the Preferred Securities or a
redemption of all of the Preferred Securities upon the maturity or redemption of
Subordinated Debentures), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid distributions on the Preferred Securities to
the date of payment, to the extent the Issuer has funds legally available
therefor, and (b) the amount of assets of the Issuer remaining available for
distribution to holders of the Preferred Securities in liquidation of the
Issuer. The Guarantee will rank subordinate and junior in right of payment to
all liabilities of Ohio Edison (except those made pari passu by their terms).
See "Description of the Guarantee".
The mechanisms and obligations relating to the Guarantee and the
Subordinated Debentures and the obligations of Ohio Edison under the Trust
Agreement to pay certain obligations, costs and expenses of the Issuer, taken
together, are equivalent to a full and unconditional subordinated guarantee by
Ohio Edison of payments due on the Preferred Securities. See "Risk
Factors -- Subordination of Guarantee and Subordinated Debentures", "Description
of the Guarantee", "Description of the Subordinated Debentures" and
"Relationship Among the Preferred Securities, the Subordinated Debentures and
the Guarantee".
6
<PAGE> 8
VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and, except
for the rights of holders of Preferred Securities to appoint a Special
Administrative Trustee upon the occurrence of certain events described herein,
will not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of, the Ohio Edison Trustees (as defined herein), which
voting rights are vested exclusively in the holder of the Common Securities. See
"Description of the Preferred Securities -- Voting Rights".
USE OF PROCEEDS
The proceeds from the sale of the Preferred Securities offered hereby will
be used by the Issuer to purchase the Subordinated Debentures issued by Ohio
Edison. Ohio Edison expects to use such proceeds to retire outstanding
securities and for general corporate purposes.
LISTING
The Preferred Securities have been approved for listing, subject to
official notice of issuance, as an equity security on the New York Stock
Exchange under the symbol "OEC PrT". Trading of the Preferred Securities on the
New York Stock Exchange is expected to commence within a 30-day period after the
date of this Prospectus.
7
<PAGE> 9
CERTAIN CONSOLIDATED FINANCIAL INFORMATION OF OHIO EDISON
(THOUSANDS, EXCEPT PER SHARE AMOUNTS, RATIOS AND PERCENTAGES)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,(1)
------------------------------------------------------------------
1990 1991 1992 1993(2) 1994
---------- ---------- ---------- ---------- ---------- TWELVE
MONTHS
ENDED
JUNE 30,
-----------
1995
-----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Income Summary:
Operating Revenues.......... $2,240,646 $2,358,946 $2,332,378 $2,369,940 $2,368,191 $2,363,087
Net Income.................. $ 281,676 $ 264,823 $ 276,986 $ 82,724 $ 303,531 $ 310,208
Earnings on Common Stock.... $ 254,048 $ 240,069 $ 253,060 $ 59,017 $ 281,852 $ 288,593
Earnings per share of Common
Stock..................... $1.67 $1.60 $1.70 $.39 $1.97 $2.01
Ratio of Earnings to Fixed
Charges(3)................ 1.97 1.95 2.01 1.12 2.24 2.27
Ratio of Earnings to Fixed
Charges plus Preferred and
Preference Stock Dividend
Requirements (pre-income
tax basis)(3)............. 1.79 1.79 1.85 0.99(4) 2.06 2.09
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1995
UNAUDITED
ACTUAL AS ADJUSTED(5)
------------------- -------------------
OUTSTANDING RATIO OUTSTANDING RATIO
----------- ----- ----------- -----
<S> <C> <C> <C> <C>
Capitalization Summary:
Common Stockholders' Equity.......................... $2,351,346 42.4% $2,351,346 42.4%
Preferred Stock--
Not Subject to Mandatory Redemption................ 328,240 6.0% 208,240 3.8%
Subject to Mandatory Redemption.................... 40,000 0.7% 40,000 0.7%
Company Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trust(6)................ -- 0.0% 120,000 2.2%
Long-Term Debt(7).................................... 2,822,225 50.9% 2,822,225 50.9%
---------- ----- ---------- -----
Total Capitalization................................... $5,541,811 100.0% $5,541,811 100.0%
========== ===== ========== =====
</TABLE>
---------------
(1) Derived from audited financial information.
(2) Includes net after tax charges of $218,377,000 ($1.43 per share) relating
primarily to the termination of Perry Unit 2, partially offset by the
cumulative effect of a change in accounting for unbilled revenues.
(3) "Earnings" for purposes of these calculations have been computed by adding
to "income before extraordinary items" all taxes based on income or profits,
total interest charges and the estimated interest element of rentals charged
to income. "Fixed charges" include total interest charges, the estimated
interest element of rentals and preferred stock dividend requirements,
determined on a "pre-income tax" basis (computed at the effective income tax
rates for the applicable periods). These ratios exclude fixed charges
applicable to the guarantee of the debt of a coal supplier aggregating
$16,922,000, $13,298,000, $9,762,000, $8,565,000, $7,424,000 and $6,874,000
for each of the five years in the period ended December 31, 1994 and the
twelve months ended June 30, 1995, respectively.
(4) Earnings were deficient in 1993 by $5,018,000 to cover fixed charges plus
preferred stock dividend requirements.
(5) Assumes that the net proceeds to Ohio Edison from the sale of the Preferred
Securities offered hereby will be used to redeem preferred stock of Ohio
Edison.
(6) As described in this Prospectus, all of the assets of the Issuer, the
subsidiary trust of Ohio Edison, will be approximately $124 million of %
Subordinated Debentures of Ohio Edison.
(7) Excludes $492,695,000 of long-term debt due to mature or subject to put
options within one year.
8
<PAGE> 10
RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere in this Prospectus and should particularly
consider the following matters:
SUBORDINATION OF GUARANTEE AND SUBORDINATED DEBENTURES
Ohio Edison's obligations under the Guarantee are subordinate and junior in
right of payment to all other liabilities of Ohio Edison, except any liabilities
that may be made pari passu expressly by their terms. Ohio Edison's obligations
under the Subordinated Debentures are subordinate and junior in right of payment
to Senior Indebtedness (as defined herein) of Ohio Edison. As of June 30, 1995,
Ohio Edison had approximately $3,546 million of principal amount of indebtedness
for borrowed money and capital lease obligations constituting Senior
Indebtedness on a consolidated basis. There are no terms of the Preferred
Securities, the Subordinated Debentures or the Guarantee that limit Ohio
Edison's ability to incur additional indebtedness, including indebtedness that
would rank senior to the Subordinated Debentures and the Guarantee. See
"Description of the Guarantee -- Status of the Guarantee" and "Description of
the Subordinated Debentures -- Subordination".
The ability of the Issuer to pay amounts due on the Preferred Securities is
solely dependent upon Ohio Edison making payments on the Subordinated Debentures
as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
Ohio Edison has the right under the Indenture to extend the interest
payment period from time to time on the Subordinated Debentures for an Extension
Period not exceeding 20 consecutive quarters. Upon the termination of any
Extension Period and the payment of all amounts then due, Ohio Edison may select
a new Extension Period, subject to the requirements described herein. During any
Extension Period, quarterly distributions on the Preferred Securities would be
deferred (but would continue to accrue with interest thereon) by the Issuer. In
the event that Ohio Edison exercises this right, Ohio Edison may not, during an
Extension Period, (a) declare or pay dividends on, or make a distribution with
respect to, or redeem, purchase, acquire, or make a liquidation payment with
respect to, any of its capital stock, or (b) make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by Ohio Edison that rank pari passu with or junior to the
Subordinated Debentures, or (c) make any guarantee payment with respect to the
foregoing (other than payments under the Guarantee); provided, however, that
restriction (a) above does not apply to any stock dividends paid by Ohio Edison
where the dividend stock is the same as that on which the dividend is paid.
Prior to the termination of any Extension Period, Ohio Edison may further extend
the interest payment period, provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarters and that such Extension Period may not extend beyond the maturity date
of the Subordinated Debentures (including any extension thereof). If Ohio Edison
should determine to exercise its extension right in the future, the market price
of the Preferred Securities is likely to be affected. The Issuer and Ohio Edison
believe that such an extension of an interest payment period on the Subordinated
Debentures is unlikely to occur. See "Description of the Preferred
Securities -- Distributions" and "Description of the Subordinated
Debentures -- Option to Extend Interest Payment Period." If an Extension Period
occurs and continues for six quarterly distribution periods or longer, the
holders of a majority in liquidation amount of the Preferred Securities will
have the right to appoint a Special Administrative Trustee as discussed below.
Should an Extension Period occur, each Preferred Security holder would
continue to accrue interest income for United States Federal income tax
purposes. As a result, such a holder would be required to include such interest
in gross income for United States Federal income tax purposes in advance of the
receipt of cash, and would not receive the cash from the Issuer related to such
income if such holder disposed of its Preferred Securities prior to the record
date for payment of distributions. See "United States Taxation -- Original Issue
Discount."
9
<PAGE> 11
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"). The Bank of New York will
act as indenture trustee under the Guarantee for the purposes of compliance with
the Trust Indenture Act (the "Guarantee Trustee"). The Guarantee Trustee will
hold the Guarantee for the benefit of the holders of the Preferred Securities.
The Guarantee guarantees to the holders of the Preferred Securities the
payment (but not the collection) of (i) any accrued and unpaid distributions
required to be paid on the Preferred Securities, to the extent the Property
Trustee has available in the Payment Account funds sufficient to make such
payments (which will occur only in the event that Ohio Edison has made a
required payment of interest or principal on the Subordinated Debentures), (ii)
the Redemption Price, including all accrued and unpaid distributions, with
respect to Preferred Securities called for redemption by the Issuer, to the
extent the Property Trustee has available in the Payment Account funds
sufficient to make such payments (which will occur only in the event that Ohio
Edison has made a required payment of interest or principal on the Subordinated
Debentures), and (iii) upon a voluntary or involuntary dissolution, winding-up
or termination of the Issuer (other than in connection with the distribution of
the Subordinated Debentures to the holders of the Preferred Securities or a
redemption of all of the Preferred Securities upon the maturity or redemption of
Subordinated Debentures), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid distributions on the Preferred Securities to
the date of payment, to the extent the Issuer has funds legally available
therefor and (b) the amount of assets of the Issuer remaining available for
distribution to holders of the Preferred Securities in liquidation of the
Issuer. The holders of a majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under the
Guarantee. If the Guarantee Trustee fails to enforce the Guarantee, any holder
of Preferred Securities may institute a legal proceeding directly against Ohio
Edison to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against the Issuer, the Guarantee Trustee
or any other person or entity. If Ohio Edison were to default on its obligations
under the Subordinated Debentures, the Issuer would lack available funds for the
payment of distributions or amounts payable on redemption of the Preferred
Securities or otherwise, and in such event holders of the Preferred Securities
would not be able to rely upon the Guarantee for payment of such amounts.
Instead, holders of the Preferred Securities would be required to rely on the
enforcement by the Property Trustee (as defined herein) of its rights, as
registered holder of the Subordinated Debentures, against Ohio Edison pursuant
to the terms of the Subordinated Debentures and may also vote to appoint a
Special Administrative Trustee who shall have the same rights, powers and
privileges as the Administrative Trustees (as defined herein) . See "Description
of the Guarantee -- Status of the Guarantee" and "Description of the
Subordinated Debentures -- Subordination" herein. The Trust Agreement provides
that each holder of Preferred Securities by acceptance thereof agrees to the
provisions of the Guarantee and the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If (i) the Issuer fails to pay distributions in full on the Preferred
Securities for six consecutive quarterly distribution periods or (ii) a Trust
Agreement Event of Default (as defined herein) occurs and is continuing, then
the holders of Preferred Securities would be entitled, by vote of a majority in
liquidation amount of the Preferred Securities, to appoint a Special
Administrative Trustee, who shall have the same rights, powers and privileges as
the other Administrative Trustees. In addition, the holders of a majority in
aggregate liquidation amount of the Preferred Securities will have the right to
(i) direct the time, method and place of conducting any proceeding for any
remedy available to the Property Trustee or to direct the exercise of any trust
or power conferred upon the Property Trustee under the Trust Agreement,
including the right to direct the Property Trustee to exercise the remedies
available to it as a holder of the Subordinated Debentures; (ii) waive any past
default; or (iii) exercise any right to rescind or annul a declaration that the
principal of all the Subordinated Debentures shall be due and payable; provided,
however, that where a consent under the Indenture (as defined herein) requires
the consent of all holders of the Subordinated Debentures affected thereby, the
Property Trustee may only give such consent at the direction of all holders of
the Preferred Securities. If the Property Trustee fails to enforce its rights
under the Subordinated Debentures, a holder of Preferred Securities may,
10
<PAGE> 12
after such holder's written request to the Property Trustee to enforce such
rights, institute a legal proceeding directly against Ohio Edison to enforce the
Property Trustee's rights under the Subordinated Debentures without first
instituting any legal proceeding against the Property Trustee or any other
person or entity. If Ohio Edison exercises its right to defer payments of
interest on the Subordinated Debentures (see "Option to Extend Interest Payment
Period" above), appointment of a Special Administrative Trustee would be the
only right of the holders of the Preferred Securities if the Issuer fails to pay
distributions in full on the Preferred Securities for six consecutive quarters
until expiration of the Extension Period (up to 20 consecutive quarters).
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Special Event (as defined herein), the Issuer
shall be dissolved, except in the limited circumstance described below, with the
result that the Subordinated Debentures would be distributed to the holders of
the Issuer Securities in connection with the liquidation of the Issuer. In
certain circumstances, Ohio Edison shall have the right to redeem the
Subordinated Debentures, in whole but not in part, in lieu of a distribution of
the Subordinated Debentures by the Issuer, in which event the Issuer will redeem
the Issuer Securities on a pro rata basis to the same extent as the Subordinated
Debentures are redeemed by Ohio Edison. See "Description of the Preferred
Securities -- Special Event Redemption or Distribution."
Under current United States Federal income tax law, a distribution of
Subordinated Debentures upon the dissolution of the Issuer would not be a
taxable event to holders of the Preferred Securities. Upon occurrence of a Tax
Event (as defined herein), however, a dissolution of the Issuer in which holders
of the Preferred Securities receive cash would be a taxable event to such
holders. See "United States Taxation -- Receipt of Subordinated Debentures or
Cash Upon Liquidation of the Issuer."
Because holders of Preferred Securities may receive Subordinated Debentures
upon the occurrence of a Special Event, prospective purchasers of Preferred
Securities are also making an investment decision with regard to the
Subordinated Debentures and should carefully review all the information
regarding the Subordinated Debentures contained herein. See "Description of the
Preferred Securities -- Special Event Redemption or Distribution" and
"Description of the Subordinated Debentures -- General."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and, except
for the rights of holders of Preferred Securities to appoint a Special
Administrative Trustee upon the occurrence of certain events described herein,
will not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of, the Ohio Edison Trustees (as defined herein), which
voting rights are vested exclusively in the holder of the Common Securities.
TRADING CHARACTERISTICS OF PREFERRED SECURITIES
The Preferred Securities have been approved for listing as an equity
security on the New York Stock Exchange, subject to official notice of
issuance. Accordingly, the Preferred Securities are expected to trade at a price
that takes into account the value, if any, of accrued and unpaid distributions;
thus, purchasers will not pay and sellers will not receive any accrued and
unpaid interest with respect to their undivided beneficial interests in
Subordinated Debentures owned through the Preferred Securities that is not
included in the trading price of the Preferred Securities. However, for United
States Federal income tax purposes, interest on the Subordinated Debentures will
be included in the gross income of holders of Preferred Securities as it
accrues, rather than when it is paid, and such accrual will increase a holder's
tax basis in his or her Preferred Securities. Consequently, a holder who sells
Preferred Securities between record dates for payments of distributions would
recognize a capital loss if the sales proceeds were less than the holder's tax
basis (as increased by such accrual of interest). Subject to certain limited
exceptions, capital losses may not be used to offset ordinary income for United
States Federal income tax purposes. See "United States Taxation -- Income from
Preferred Securities" and "-- Sale of Preferred Securities".
11
<PAGE> 13
OHIO EDISON COMPANY
Ohio Edison was organized under the laws of the State of Ohio in 1930 and
owns property and does business as an electric public utility in that state.
Ohio Edison also has ownership interests in certain generating facilities
located in the Commonwealth of Pennsylvania. Ohio Edison's principal executive
offices are located at 76 South Main Street, Akron, Ohio 44308, telephone number
1-800-736-3402.
Ohio Edison furnishes electric service to communities in a 7,500 square
mile area of central and northeastern Ohio. It also provides transmission
services to certain rural cooperatives in its service area and provides
transmission services and electric energy for resale to certain municipalities
in that service area. Ohio Edison also engages in the sale, purchase and
interchange of electric energy with other electric companies. The area it serves
has a population of approximately 2,530,000.
Ohio Edison owns all of the outstanding common stock of Pennsylvania Power
Company ("Penn Power"), a Pennsylvania corporation, which furnishes electric
service to communities in a 1,500 square mile area of western Pennsylvania. Penn
Power also provides transmission services and electric energy for resale to
certain municipalities in Pennsylvania. The area served by Penn Power has a
population of approximately 340,000.
Sources of generation for Ohio Edison and Penn Power (the "Companies")
during the twelve months ended June 30, 1995 were 74.2% coal and 25.8% nuclear.
RECENT DEVELOPMENT
On September 7, 1995, Ohio Edison filed an application with the Public
Utilities Commission of Ohio ("PUCO") for authority to implement its
Comprehensive Rate Reduction and Economic Development Plan ("Plan"). The Plan is
designed to enhance and accelerate economic development within Ohio Edison's
service area and to assure Ohio Edison's customers of long-term competitive
pricing for energy services. The Ohio Office of the Consumers' Counsel and
Industrial Energy Users-Ohio have entered a stipulation with Ohio Edison
supporting the Plan.
The Plan provides for freezing Ohio Edison's base electric rates until
January 1, 2006, at which time base electric rates would be reduced by
approximately $300 million, or 20 percent, on an annual basis. During the
ten-year rate freeze, which would remain in effect unless certain significant
events occur, transition rate credits will be implemented under certain
conditions for customers served under Ohio Edison's General Service-Large rates
(primarily industrial customers). Also, the monthly customer charge will be
reduced for customers served under Ohio Edison's General Service-Secondary and
Residential rates. Taken together, these transition rate credits are expected to
reduce operating revenues by approximately $600 million during the ten-year rate
freeze period.
A major component of the Plan is Ohio Edison's commitment to reduce fixed
costs during the ten-year period by implementing regulatory accounting
modifications, such as accelerating depreciation of generating assets and
increasing amortization of regulatory assets which are being recovered from
customers. Ohio Edison has established aggressive targets to reduce costs and
increase revenue opportunities through its performance initiatives program.
Achieving those targets enables Ohio Edison to implement these accounting
modifications and offer the transition rate credits during the Plan period, and
preserve the opportunity to maintain a reasonable return to shareholders. The
Plan includes a cap (based upon the most recent common equity return authorized
for Ohio Edison by the PUCO) on the amount Ohio Edison may earn applicable to
its common stockholders in any calendar year during the Plan period. If the cap
were to be exceeded, such excess would be credited to customers in a future
period.
FINANCING AND CONSTRUCTION PROGRAMS
The Companies' total construction costs, excluding nuclear fuel, amounted
to approximately $227,000,000 in 1994. Such costs included expenditures for the
betterment of existing facilities and for the construction of transmission
lines, distribution lines, substations and other additions. The Companies
currently forecast expenditures of approximately $800,000,000 for property
additions and improvements from 1995-
12
<PAGE> 14
1999, of which approximately $180,000,000 is applicable to 1995. Various
Federal, state and local authorities regulate the Companies with regard to air
and water quality and other environmental matters. The Companies have estimated
additional capital expenditures for environmental compliance of approximately
$70,000,000 for the period 1995 through 1999, which is included in the
construction forecast.
During the 1995-1999 period, maturities of, and sinking fund requirements
for, long-term debt and preferred stock will require expenditures of
approximately $1,301,000,000, of which approximately $227,000,000 is applicable
to 1995.
Nuclear fuel purchases are financed through OES Fuel, Incorporated ("OES
Fuel," a wholly owned subsidiary of Ohio Edison) commercial paper and loans,
both of which are supported by a $225,000,000 long-term bank credit agreement.
Investments for additional nuclear fuel during the 1995-1999 period are
estimated to be approximately $172,000,000, of which approximately $30,000,000
applies to 1995. During the same periods, the Companies' nuclear fuel
investments are expected to be reduced by approximately $225,000,000 and
$56,000,000, respectively, as the nuclear fuel is consumed. Also, the Companies
have operating lease commitments of approximately $575,000,000 for the 1995-1999
period, of which approximately $106,000,000 relates to 1995. The Companies
recover the cost of nuclear fuel consumed and operating leases through their
electric rates.
Short-term borrowings of $230,950,000 at June 30, 1995, included
$114,950,000 of OES Capital, Incorporated ("OES Capital," a wholly owned
subsidiary of Ohio Edison) debt, which is secured by customer accounts
receivable. OES Capital can borrow up to $120,000,000 under a receivables
financing agreement at rates based on certain bank commercial paper. The
Companies also had $2,000,000 of unused short-term bank lines of credit as of
June 30, 1995. In addition, $14,000,000 was available through bank facilities
that provide for borrowings on a short-term basis at the banks' discretion. OES
Fuel had approximately $76,000,000 of unused borrowing capability as of June 30,
1995 that was available for reloan to Ohio Edison.
OES Finance, Incorporated ("OES Finance," a wholly owned subsidiary of Ohio
Edison) was established during the third quarter of 1994 for the sole purpose of
maintaining deposits pledged as collateral to secure reimbursement obligations
relating to certain letters of credit supporting Ohio Edison's obligations to
lessors under the Beaver Valley Unit 2 sale and leaseback arrangements. The
deposits pledged to the financial institution providing those letters of credit
are the sole property of OES Finance. In the event of liquidation, OES Finance,
as a separate corporate entity, would have to satisfy its obligations to
creditors before any of its assets could be made available to Ohio Edison as
sole owner of OES Finance common stock.
Based on their present plans, the Companies could provide for their cash
requirements during the remainder of 1995 from the following sources: funds to
be received from operations; available cash and temporary cash investments
(approximately $60,000,000 as of June 30, 1995), of which $40,000,000 was held
in escrow for the redemption of pollution control obligations under a forward
refunding obligation; the issuance of long-term debt (for refunding purposes)
and funds available under short-term bank credit arrangements.
For the period 1995-1999, external financings may be used to provide a
portion of the Companies' cash requirements. The extent and type of future
financings will depend on the need for external funds as well as market
conditions, the maintenance of an appropriate capital structure and the ability
of the Companies to comply with coverage requirements in order to issue first
mortgage bonds and preferred stock. The Companies will continue to monitor
financial market conditions and, where appropriate, may take advantage of
economic opportunities to refund debt and preferred stock to the extent that
their financial resources permit.
OHIO EDISON FINANCING TRUST
The Issuer is a statutory business trust formed under Delaware law pursuant
to (i) a trust agreement executed by Ohio Edison, as sponsor for the Issuer, and
the trustees of such trust named therein and (ii) the filing of a certificate of
trust with the Delaware Secretary of State on August 8, 1995. Such trust
agreement will be amended and restated in its entirety (as so amended and
restated, the "Trust Agreement") substantially in the form filed as an exhibit
to the Registration Statement of which this Prospectus forms a part. The Trust
Agreement will be qualified as an indenture under the Trust Indenture Act. The
Issuer exists for the exclusive purposes of (i) issuing the Preferred Securities
and Common Securities representing
13
<PAGE> 15
undivided beneficial interests in the assets of such Issuer, (ii) investing the
gross proceeds of the sale of the Preferred Securities and Common Securities in
the Subordinated Debentures and (iii) engaging in only those other activities
necessary, convenient or incidental thereto. Pursuant to the Trust Agreement,
the number of Ohio Edison Trustees will initially be four. Two of the Ohio
Edison Trustees (the "Administrative Trustees") will be persons who are
employees or officers of or who are affiliated with Ohio Edison. The third
trustee will be a financial institution that maintains its principal place of
business in the State of Delaware and is unaffiliated with Ohio Edison (the
"Delaware Trustee"). The fourth trustee will be a financial institution which
will serve as property trustee under the Trust Agreement and as indenture
trustee for purposes of the Trust Indenture Act (the "Property Trustee"). The
Administrative Trustees, the Delaware Trustee and the Property Trustee are
sometimes referred to collectively herein as the "Ohio Edison Trustees".
Initially, The Bank of New York, a New York banking corporation, and The
Bank of New York (Delaware), a Delaware banking corporation, will be the
Property Trustee and the Delaware Trustee, respectively, until removed or
replaced by the holder of the Common Securities. The Bank of New York will also
act as Guarantee Trustee and as indenture trustee under the Indenture.
All of the Common Securities will be owned by Ohio Edison. The Common
Securities will rank pari passu, and payments will be made thereon pro rata,
with the Preferred Securities, except that upon the occurrence and continuance
of a Trust Agreement Event of Default, the rights of the holders of the Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. Ohio Edison will acquire Common Securities having an
aggregate liquidation amount equal to 3% of the total capital of the Issuer. The
Issuer has a term of approximately [55] years, but may terminate earlier as
provided in the Trust Agreement.
CONDUCT OF THE ISSUER'S AFFAIRS
The Issuer's business and affairs will be conducted by the Ohio Edison
Trustees. As described above, the Trust will not engage in any business or
activities other than those activities necessary, convenient or incidental to
issuance of the Issuer Securities and investment of the proceeds of such
issuance in the Subordinated Debentures. The holder of the Common Securities, or
the holders of a majority in liquidation preference of the Preferred Securities
if a Trust Agreement Event of Default has occurred and is continuing, will be
entitled to appoint, remove or replace the Property Trustee, the Delaware
Trustee and the Administrative Trustees. The duties and obligations of the
Property Trustee, the Delaware Trustee and the Administrative Trustees shall be
governed by the Trust Agreement, and the Property Trustee will be authorized to
exercise discretion only to the extent specifically stated therein. Ohio Edison
will pay all fees and expenses related to the Issuer and the issuance and sale
of the Issuer Securities.
The office of the Delaware Trustee in the State of Delaware is White Clay
Center, Route 273, Newark, Delaware 19711. The principal place of business of
the Issuer is c/o Ohio Edison Company, 76 South Main Street, Akron, Ohio 44308
(telephone number (216) 384-5100).
USE OF PROCEEDS
The proceeds from the sale of the Preferred Securities will be used by the
Issuer to purchase the Subordinated Debentures issued by Ohio Edison, as
described herein. Ohio Edison expects to use such proceeds to retire outstanding
securities and for general corporate purposes.
DESCRIPTION OF THE PREFERRED SECURITIES
The Trust Agreement among Ohio Edison as Depositor (the "Depositor"), The
Bank of New York, as Property Trustee, The Bank of New York (Delaware), as
Delaware Trustee and the two Administrative Trustees named therein, authorizes
and creates the Issuer. The Property Trustee, The Bank of New York, will act as
the indenture trustee for purposes of compliance with the provisions of the
Trust Indenture Act. The Issuer Securities will be issued by the Administrative
Trustees on behalf of the Issuer pursuant to the terms of the Trust Agreement.
The Preferred Securities represent undivided beneficial interests in the assets
of the Issuer and entitle the holders thereof to a preference in certain
circumstances with respect to distributions and
14
<PAGE> 16
amounts payable on redemption or liquidation over the Common Securities, as well
as other benefits as described in the Trust Agreement. The following summaries
of certain provisions of the Trust Agreement are subject to, and are qualified
in their entirety by reference to, all the provisions of the Trust Agreement,
including the definitions therein of certain terms, and the Trust Indenture Act.
Wherever particular sections or defined terms of the Trust Agreement are
referred to, such sections or defined terms are incorporated herein by
reference. The Trust Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part.
GENERAL
All of the Common Securities will be owned by Ohio Edison and will have a
stated liquidation amount of $25 per Common Security. The Common Securities rank
pari passu, and payments will be made thereon pro rata, with the Preferred
Securities except as described under "-- Subordination of Common Securities".
(Section 4.03). The Subordinated Debentures will be held of record by the
Property Trustee and held in trust for the benefit of the Trust and the holders
of the Issuer Securities. (Section 2.09). The Guarantee is a full and
unconditional guarantee with respect to the Preferred Securities but does not
guarantee payment of distributions or amounts payable on redemption or
liquidation of the Preferred Securities when the Property Trustee does not have
in the Payment Account sufficient available funds to pay such distributions. In
such event, the remedy of a holder of Preferred Securities is to vote, together
with the holders of a majority in liquidation amount of the Preferred
Securities, to appoint a Special Administrative Trustee and to direct the
Property Trustee to enforce the Property Trustee's rights under the Subordinated
Debentures.
DISTRIBUTIONS
The distributions payable on each Preferred Security will be fixed at a
rate per annum of % of the stated liquidation amount of $25 per Preferred
Security. Distributions that are in arrears for more than one quarter will
accrue interest at the rate per annum of % and the interest so accrued at
the end of each quarter and remaining unpaid will itself bear interest (to the
extent permitted by applicable law) thereafter until paid on the same basis. The
term "distributions" as used herein includes any such interest payable, unless
otherwise stated. The amount of distributions payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months. (Sections
4.01(a) and 4.01(b)).
Distributions on the Preferred Securities will be cumulative, will accrue
from , 1995, the date of initial issuance thereof, and will be
payable quarterly in arrears, on March 31, June 30, September 30 and December 31
of each year, commencing December 31, 1995, except as otherwise described below.
In the event that any date on which distributions are otherwise payable on the
Preferred Securities is not a Business Day, payment of the distribution payable
on such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect to any such delay) except that,
if such Business Day is in the next succeeding calendar year, payment of such
distribution shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date (each date on which
distributions are otherwise payable in accordance with the foregoing, a
"Distribution Date"). A "Business Day" means a day other than (x) a Saturday or
a Sunday, (y) a day on which banks in New York, New York are authorized or
obligated by law or executive order to remain closed or (z) a day on which the
principal corporate trust office of the Property Trustee or the Debenture
Trustee (as defined herein) is closed for business. (Section 4.01(a)).
Ohio Edison has the right, under the Indenture pursuant to which it will
issue the Subordinated Debentures (the "Indenture"), to extend the interest
payment period from time to time on the Subordinated Debentures for an Extension
Period not exceeding 20 consecutive quarters, with the consequence that
quarterly distributions on the Preferred Securities would be deferred (but would
continue to accrue with interest thereon, including interest payable on unpaid
interest, as set forth above) by the Issuer during any such Extension Period. In
the event that Ohio Edison exercises this right, Ohio Edison may not, during an
Extension Period, (a) declare or pay any dividends on, or make a distribution
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock, or (b) make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Company that rank pari passu with or junior to the
Subordinated Debentures, or (c) make any
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guarantee payments with respect to the foregoing (other than payments under the
Guarantee); provided, however, that restriction (a) above does not apply to any
stock dividends paid by Ohio Edison where the dividend stock is the same as that
on which the dividend is paid. Prior to the termination of any Extension Period,
Ohio Edison may further extend the interest payment period, provided that such
Extension Period together with all such previous and further extensions thereof
may not exceed 20 consecutive quarters or extend beyond the maturity of the
Subordinated Debentures. Upon the termination of any Extension Period and the
payment of all amounts then due, Ohio Edison may select a new Extension Period,
subject to the above requirements. See "Description of the Subordinated
Debentures -- Interest" and "-- Option to Extend Interest Payment Period".
Income of the Issuer available for distribution to the holders of the
Preferred Securities will be limited to payments under the Subordinated
Debentures in which the Issuer will invest the proceeds from the issuance and
sale of the Preferred Securities and the Common Securities. See "Description of
the Subordinated Debentures". If Ohio Edison does not make interest payments on
the Subordinated Debentures, the Property Trustee will not have funds available
to pay distributions on the Preferred Securities. The payment of distributions
(if and to the extent the Issuer has funds legally available for the payment of
such distributions and cash sufficient to make such payments) is guaranteed on a
limited and subordinated basis by Ohio Edison as set forth herein under
"Description of the Guarantee".
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of the Issuer on the relevant record
dates, which, as long as the Preferred Securities remain in book-entry-only
form, will be one Business Day prior to the relevant Distribution Date. Subject
to any applicable laws and regulations and the provisions of the Trust
Agreement, each such payment will be made as described under "Book-Entry-Only
Issuance -- The Depository Trust Company" below. In the event the Preferred
Securities do not remain in book-entry-only form, the relevant record date shall
be the date 15 days prior to the relevant Distribution Date. (Section 4.01(d)).
RIGHTS UNDER THE GUARANTEE AND THE SUBORDINATED DEBENTURES
The Guarantee will be a full and unconditional guarantee with respect to
the Preferred Securities from the time of issuance of such Preferred Securities
but will not apply to any payment of distributions or other amounts due to the
extent the Property Trustee does not have in the Payment Account sufficient
available funds to pay such distributions or other amounts due (which will occur
in the event that Ohio Edison has failed to make a payment of principal or
interest on the Subordinated Debentures). To the extent Ohio Edison were to
default on its obligation to pay amounts payable on the Subordinated Debentures,
the Property Trustee would lack in the Payment Account sufficient available
funds for the payment of distributions on or amounts payable on redemption of
the Trust Securities and, in such event, holders of the Preferred Securities
would not be able to rely on the Guarantee for payment of such amounts. Instead,
holders of the Preferred Securities would rely on the enforcement by the
Property Trustee (as defined herein) of its rights as registered holder of the
Subordinated Debentures against Ohio Edison pursuant to the terms of the
Indenture and may also vote to appoint a Special Administrative Trustee who
shall have the same rights, powers and privileges as the Administrative Trustees
(as defined herein). The above mechanisms and obligations relating to the
Guarantee and the Subordinated Debentures and the obligations of Ohio Edison
under the Trust Agreement to pay certain obligations, costs and expenses of the
Issuer, taken together, are equivalent to a full and unconditional guarantee by
Ohio Edison of payments due on the Preferred Securities. See "Description of the
Guarantee" and "Description of the Subordinated Debentures".
MANDATORY REDEMPTION
The Subordinated Debentures will mature on , 2025, unless the
maturity date is extended at the option of Ohio Edison (provided certain
conditions are met). Upon the repayment of the Subordinated Debentures, whether
at maturity or upon earlier redemption as provided in the Indenture, the
proceeds from such repayment shall be applied by the Trustee to redeem a Like
Amount (as defined below) of Issuer Securities, including Preferred Securities,
upon not less than 30 nor more than 60 days' notice, at the Redemption Price.
Such payment in redemption shall be due without limitation and in all events.
See "Description of the Subordinated Debentures -- Optional Redemption."
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Ohio Edison has the right to redeem the Subordinated Debentures (a) on or
after , 2000, in whole or in part, subject to the conditions
described under "Description of the Subordinated Debentures -- Optional
Redemption", or (b) at any time, in whole but not in part, in certain
circumstances upon the occurrence and continuation of a Tax Event (as defined
below). See "Description of the Subordinated Debentures -- Optional Redemption."
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
"Tax Event" means the receipt by the Administrative Trustees of an opinion
of counsel experienced in such matters to the effect that, as a result of (a)
any amendment to, or change (including any announced prospective change) in, the
laws or treaties (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, (b) any amendment
to or change in an interpretation or application of such laws or regulations by
any legislative body, court, governmental agency or regulatory authority
(including the enactment of any legislation and the publication of any judicial
decision or regulatory determination on or after the date of the issuance of the
Preferred Securities), (c) any interpretation or pronouncement of any such body,
court, agency or authority that provides for a position with respect to such
laws or regulations that differs from the theretofore generally accepted
position, or (d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated or effective, or
which interpretation or pronouncement is issued or announced, or which action is
taken, in each case on or after the date of the issuance of the Preferred
Securities, there is more than an insubstantial risk that (i) the Issuer is, or
will be, subject to United States Federal income tax with respect to income
accrued or received on the Subordinated Debentures, (ii) interest payable on the
Subordinated Debentures is not, or will not be, fully deductible by Ohio Edison
for United States Federal income tax purposes or (iii) the Issuer is, or will
be, subject to more than a de minimis amount of other taxes, duties or other
governmental charges (a "Dissolution Tax Opinion").
"Investment Company Event" means the receipt by the Administrative Trustees
of an opinion of counsel experienced in practice under the Investment Company
Act of 1940, as amended (the "1940 Act"), to the effect that as a result of the
occurrence of a change in law or regulation by any legislative body, court,
governmental agency or regulatory authority (a "Change in 1940 Act Law"), the
Issuer is or will be considered an "investment company" which is required to be
registered under the 1940 Act, which Change in 1940 Act Law becomes effective on
or after the date of the issuance of the Preferred Securities.
If, at any time, a Tax Event or an Investment Company Event (each, a
"Special Event") shall occur and be continuing, the Issuer shall, except in the
limited circumstances described below, be dissolved with the result that, after
satisfaction of liabilities to creditors of the Issuer, a Like Amount of
Subordinated Debentures will be distributed to the holders of the Issuer
Securities in liquidation of such holders' interests in the Issuer on a pro rata
basis within 90 days following the occurrence of such Special Event; provided,
however, that in the case of the occurrence of a Tax Event, such dissolution and
distribution shall be conditioned on the Administrative Trustees' receipt of an
opinion of counsel experienced in such matters (a "No Recognition Opinion"),
which opinion may rely on published revenue rulings of the Internal Revenue
Service, to the effect that the holders of the Issuer Securities will not
recognize any gain or loss for United States Federal income tax purposes as a
result of such dissolution and distribution of Subordinated Debentures; and
provided, further, that, if at the time there is available to the Issuer the
opportunity to eliminate, within such 90-day period, the Special Event by taking
some ministerial action, such as filing a form or making an election or pursuing
some other reasonable measure that will have no adverse effect on the Issuer,
Ohio Edison or the holders of the Issuer Securities, the Issuer will pursue such
measure in lieu of dissolution. Furthermore, if in the case of the occurrence of
a Tax Event, after receipt of a Dissolution Tax Opinion by the Administrative
Trustees (i) the Company has received an opinion of counsel experienced in such
matters (a "Redemption Tax Opinion") to the effect that, as a result of a Tax
Event, there is more than an insubstantial risk that Ohio Edison would be
precluded from deducting the interest on the Subordinated Debentures for United
States Federal income tax purposes even if the Subordinated Debentures were
distributed to the holders of Issuer Securities in liquidation of such holders'
interests in the Issuer as described above, or (ii) the Administrative Trustees
shall have been informed by such tax counsel that it cannot deliver a No
Recognition Opinion to the Issuer, Ohio Edison shall have the right, upon not
less than 30 nor more than
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60 days notice, to redeem the Subordinated Debentures, in whole but not in part,
for cash within 90 days following the occurrence of such Tax Event, and,
following such redemption, a Like Amount of Issuer Securities shall be redeemed
by the Issuer at the Redemption Price on a pro rata basis; provided, however,
that, if at the time there is available to Ohio Edison or the Issuer the
opportunity to eliminate, within such 90-day period, the Tax Event by taking
some ministerial action, such as filing a form or making an election or pursuing
some other similar reasonable measure which has no adverse effect on the Issuer,
Ohio Edison or the holders of the Issuer Securities, Ohio Edison or the Issuer
will pursue such measure in lieu of redemption. (Section 9.05)
If the Subordinated Debentures are distributed to the holders of the
Preferred Securities, Ohio Edison will use its best efforts to cause the
Subordinated Debentures to be listed on the New York Stock Exchange or on such
other exchange, if any, as the Preferred Securities are then listed. (Section
9.05)
After the date for any distribution of Subordinated Debentures upon
dissolution of the Issuer, (i) the Preferred Securities will no longer be deemed
to be outstanding, (ii) DTC or its nominee, as the record holder of the
Preferred Securities, will receive a registered global certificate or
certificate representing the Subordinated Debentures to be delivered upon such
distribution, and (iii) any certificates representing Preferred Securities not
held by DTC or its nominee will be deemed to represent a Like Amount of
Subordinated Debentures, with an interest rate identical to the distribution
rate of, and accrued and unpaid interest equal to accrued and unpaid
distributions on, such Preferred Securities, until such certificates are
presented to Ohio Edison or its agent for transfer or reissuance.
"Like Amount" means (i) with respect to a redemption of Issuer Securities,
Issuer Securities having a liquidation amount equal to the principal amount of
Subordinated Debentures to be contemporaneously redeemed in accordance with the
Indenture and the proceeds of which will be used to pay the Redemption Price of
such Issuer Securities and (ii) with respect to a distribution to holders of
Issuer Securities of Subordinated Debentures in connection with a liquidation of
the Issuer, Subordinated Debentures having a principal amount equal to the
liquidation amount of the Issuer Securities of the holder to whom such
Subordinated Debentures are distributed.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each redemption date shall be redeemed at
the Redemption Price with the proceeds from the contemporaneous redemption of
Subordinated Debentures. Redemptions of the Preferred Securities shall be made
and the Redemption Price shall be deemed payable on each Redemption Date only to
the extent that the Issuer has funds legally available for the payment of such
Redemption Price. (Section 4.02(c)). See also "-- Subordination of Common
Securities".
If the Issuer gives a notice of redemption in respect of Preferred
Securities, then, by 12:00 noon, New York time, on the Redemption Date, the
Property Trustee will irrevocably deposit with DTC funds sufficient to pay the
applicable Redemption Price and will give DTC irrevocable instructions and
authority to pay the Redemption Price to the holders of the Preferred
Securities. See "Book-Entry-Only Issuance -- The Depository Trust Company". If
the Preferred Securities are no longer in book-entry-only form, the Issuer will
irrevocably deposit with the paying agent for the Preferred Securities funds
sufficient to pay the applicable Redemption Price and will give such paying
agent irrevocable instructions and authority to pay the Redemption Price to the
holders thereof upon surrender of their certificates evidencing Preferred
Securities. Notwithstanding the foregoing, distributions payable on or prior to
the Redemption Date for any Preferred Securities called for redemption shall be
payable to the holders of such Preferred Securities on the relevant record dates
for the related Distribution Dates. If notice of redemption shall have been
given and funds deposited as required, then upon the Redemption Date, all rights
of holders of such Preferred Securities so called for redemption will cease,
except the right of the holders of such Preferred Securities to receive the
Redemption Price, but without interest on such Redemption Price, and such
Preferred Securities will cease to be outstanding. In the event that any date
fixed for redemption of Preferred Securities is not a Business Day, then payment
of the Redemption Price payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding
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Business Day. In the event that payment of the Redemption Price in respect of
Preferred Securities called for redemption is improperly withheld or refused and
not paid either by the Issuer or by Ohio Edison pursuant to the Guarantee
described herein under "Description of the Guarantee", distributions on such
Preferred Securities will continue to accrue at the then applicable rate, from
the original Redemption Date to the date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price. (Section 4.02(d))
Subject to applicable law (including, without limitation, United States
Federal securities law), Ohio Edison or its subsidiaries may at any time and
from time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement.
Payment of the Redemption Price on the Preferred Securities to holders of
Preferred Securities shall be made to the holders of record thereof as they
appear on the register for the Preferred Securities on the relevant record date,
which shall be one Business Day prior to the relevant Redemption Date; provided,
however, that in the event that the Preferred Securities do not remain in
book-entry-only form, the relevant record date shall be the date 15 days prior
to the Redemption Date. (Section 4.02(e)).
If less than all the Issuer Securities are to be redeemed on a Redemption
Date, then the aggregate liquidation amount of such securities to be redeemed
shall be allocated 3% to the Common Securities and 97% to the Preferred
Securities. The particular Preferred Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Property Trustee from
the outstanding Preferred Securities not previously called for redemption, by
such method as the Property Trustee shall deem fair and appropriate and which
may provide for the selection for redemption of portions (equal to $25 or
integral multiples thereof) of the liquidation amount of Preferred Securities of
a denomination larger than $25. The Property Trustee shall promptly notify the
security registrar in writing of the Preferred Securities selected for
redemption and, in the case of any Preferred Securities selected for partial
redemption, the liquidation preference thereof to be redeemed. For all purposes
of the Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Preferred Securities shall relate, in the case of
any Preferred Securities redeemed or to be redeemed only in part, to the portion
of the liquidation amount of Preferred Securities that has been or is to be
redeemed. (Section 4.02(f)).
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the Redemption Price of, the Issuer
Securities, as applicable, shall be made pro rata based on the liquidation
amount of the Issuer Securities; provided, however, that if on any Distribution
Date or Redemption Date a Trust Agreement Event of Default (as defined below,
see "-- Events of Default; Notice") shall have occurred and be continuing, no
payment of any Distribution on, or Redemption Price of, any Common Security, and
no other payment on account of the redemption, liquidation or other acquisition
of Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions on all outstanding Preferred Securities for
all Distribution periods terminating on or prior thereto, or in the case of
payment of the Redemption Price the full amount of such Redemption Price on all
outstanding Preferred Securities, shall have been made or provided for, and all
funds available to the Property Trustee shall first be applied to the payment in
full in cash of all Distributions on, or Redemption Price of, Preferred
Securities then due and payable. (Section 4.03(a)).
In the case of any Trust Agreement Event of Default (as defined herein)
resulting from an "Event of Default" under the Indenture, the holder of Common
Securities will be deemed to have waived any such Trust Agreement Event of
Default until the effect of all such Events of Default with respect to the
Preferred Securities has been cured, waived or otherwise eliminated. Until any
such Trust Agreement Events of Default have been so cured, waived or otherwise
eliminated, the Property Trustee shall act solely on behalf of the holders of
the Preferred Securities and not the holder of the Common Securities, and only
the holders of the Preferred Securities will have the right to direct the
Property Trustee to act on their behalf. (Section 4.03(b))
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to the Trust Agreement, the Issuer shall terminate and shall
be liquidated by the Ohio Edison Trustees on the first to occur of: (i) 2050,
the expiration of the term of the Trust; (ii) the
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bankruptcy, dissolution or liquidation of Ohio Edison; (iii) the distribution of
Subordinated Debentures upon the occurrence of a Special Event; and (iv) the
redemption of all of the Preferred Securities. (Sections 9.01 and 9.02).
If an early termination occurs as described in clauses (ii), (iii) or (iv)
above, the Issuer shall be liquidated by the Ohio Edison Trustees as
expeditiously as the Ohio Edison Trustees determine to be appropriate by causing
the Property Trustee to distribute to each holder of Preferred Securities and
Common Securities a Like Amount of Subordinated Debentures, unless such
distribution is determined by the Property Trustee not to be practical, in which
event such holders will be entitled to receive, out of the assets of the Issuer
available for distribution to holders after satisfaction of liabilities to
creditors, an amount equal to, in the case of holders of Preferred Securities,
the aggregate of the stated liquidation preference of $25 per Preferred Security
plus accrued and unpaid distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"). If such Liquidation Distribution
can be paid only in part because the Issuer has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Issuer on the Preferred Securities shall be paid on a pro rata
basis. The holder(s) of the Common Securities will be entitled to receive
distributions upon any such dissolution pro rata with the holders of the
Preferred Securities, except that if a Trust Agreement Event of Default has
occurred and is continuing, the Preferred Securities shall have a preference
over the Common Securities. (Sections 9.04(a) and 9.04(d)).
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an event of default under the
Trust Agreement with respect to the Preferred Securities issued thereunder (a
"Trust Agreement Event of Default") (whatever the reason for such event of
default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) the occurrence of an event of default under the Indenture (an
"Indenture Event of Default") (see "Description of Subordinated
Debentures -- Events of Default"); or
(ii) default by the Property Trustee in the payment of any
distribution when it becomes due and payable, and continuation of such
default for a period of 10 days; or
(iii) default by the Property Trustee in the payment of any Redemption
Price of any Preferred Security or Common Security when it becomes due and
payable; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Ohio Edison Trustees in the Trust
Agreement (other than a covenant or warranty a default in the performance
of which or the breach of which is dealt with in clause (ii) or (iii)
above), and continuation of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the
defaulting Trustee or Trustees by the holders of at least 10% in
liquidation amount of the outstanding Preferred Securities a written notice
specifying such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" under the Trust
Agreement.
Within five Business Days after the occurrence of any Trust Agreement Event
of Default, the Property Trustee shall transmit notice of any default actually
known to the Property Trustee to the holders of Preferred Securities, the
Administrative Trustees and the Depositor, unless such default shall have been
cured or waived. (Section 8.02).
Unless a Trust Agreement Event of Default shall have occurred and be
continuing, the Property Trustee may be removed at any time by act of the holder
of the Common Securities. If a Trust Agreement Event of Default has occurred and
is continuing, the Property Trustee may be removed at such time by act of the
holders of a majority in liquidation amount of the Preferred Securities,
delivered to the Property Trustee (in its individual capacity and on behalf of
the Issuer). No registration or removal of the Property Trustee and no
appointment of a successor trustee shall be effective until the acceptance of
appointment by the successor Property Trustee in accordance with the provisions
of the Trust Agreement. (Section 8.10).
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If a Trust Agreement Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities upon
dissolution of the Issuer as described above. See "-- Liquidation Distribution
Upon Dissolution".
MERGER OR CONSOLIDATION OF AN OHIO EDISON TRUSTEE
Any corporation into which either the Property Trustee, the Delaware
Trustee or any Administrative Trustee that is not a natural person may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any such Ohio Edison
Trustee shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of any such Ohio Edison Trustee, shall be the
successor to such Ohio Edison Trustee under the Trust Agreement, provided such
corporation is otherwise qualified and eligible. (Section 8.12).
VOTING RIGHTS
Except as provided below and under "Description of the
Guarantee -- Amendments and Assignment" and as otherwise required by law and the
Trust Agreement, the holders of the Preferred Securities will have no voting
rights. (Section 6.01(a)).
If (i) the Issuer fails to pay distributions in full on the Preferred
Securities for six (6) consecutive quarterly distribution periods or (ii) a
Trust Agreement Event of Default occurs and is continuing (each an "Appointment
Event"), then the holders of the Preferred Securities, acting as a single class,
will be entitled by a vote of a majority in liquidation amount of the Preferred
Securities to appoint a Special Administrative Trustee. For purposes of
determining whether the Issuer has failed to pay distributions in full for six
(6) consecutive quarterly distribution periods, distributions shall be deemed to
remain in arrears, notwithstanding any payments in respect thereof, until full
cumulative distributions have been or contemporaneously are paid with respect to
all quarterly distribution periods terminating on or prior to the date of
payment of such cumulative distributions. Any holders of Preferred Securities
(other than Ohio Edison or any of its affiliates) shall be entitled to nominate
any person to be appointed as Special Administrative Trustee. Not later than 30
days after such right to appoint a Special Administrative Trustee arises, the
Administrative Trustees shall convene a meeting of the holders of Preferred
Securities for the purpose of appointing a Special Administrative Trustee. If
the Administrative Trustees fail to convene such meeting within such 30-day
period, the holders of not less than 10% of the aggregate stated liquidation
amount of the Preferred Securities will be entitled to convene such meeting. The
provisions of the Trust Agreement relating to the convening and conduct of the
meetings of the holders will apply with respect to any such meeting. Any Special
Administrative Trustee so appointed shall cease to be a Special Administrative
Trustee if the Appointment Event pursuant to which the Special Administrative
Trustee was appointed and all other Appointment Events cease to be continuing.
Notwithstanding the appointment of any such Special Administrative Trustee, Ohio
Edison shall retain all rights under the Indenture, including the right to defer
payments of interest by extending the interest payment period as provided under
"Description of the Subordinated Debentures -- Option to Extend Interest Payment
Period." If such an extension occurs, there will be no Indenture Event of
Default and, consequently, no Trust Agreement Event of Default, for failure to
make any scheduled interest payment during the Extension Period on the date
originally scheduled. Holders of a majority in liquidation amount of the
Preferred Securities will have the right, however, in the circumstances
described above, to appoint a Special Administrative Trustee. (Section 6.01(d))
If any proposed amendment to the Trust Agreement provides for, or the Ohio
Edison Trustees otherwise propose to effect, (i) any action that would adversely
affect the powers, preferences or special rights of the holders of the Preferred
Securities, whether by way of amendment to the Trust Agreement or otherwise or
(ii) the dissolution, winding-up or termination of the Issuer, other than
pursuant to the Trust Agreement, then the holders of outstanding Preferred
Securities will be entitled to vote as a class on such amendment or proposal of
the Ohio Edison Trustees, and such amendment or proposal shall not be effective
except with the approval of the holders of 66 2/3% in liquidation preference of
such outstanding Preferred Securities. (Section 6.01(c)).
The holders of a majority in aggregate liquidation amount of the Preferred
Securities will have the right to (i) direct the time, method and place of
conducting any proceeding for any remedy available to the
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Property Trustee or to direct the exercise of any trust or power conferred upon
the Property Trustee under the Trust Agreement, including the right to direct
the Property Trustee to exercise the remedies available to it as a holder of the
Subordinated Debentures under the Indenture; (ii) waive any past Indenture Event
of Default that is waivable under the Indenture; or (iii) exercise any right to
rescind or annul a declaration that the principal of all the Subordinated
Debentures shall be due and payable; provided, however, that where a consent
under the Indenture (as defined herein) requires the consent of all holders of
the Subordinated Debentures affected thereby, the Property Trustee may only give
such consent at the direction of all holders of the Preferred Securities. If the
Property Trustee fails to enforce its rights under the Subordinated Debentures,
to the fullest extent permitted by law, a holder of Preferred Securities may,
after such holder's written request to the Property Trustee to enforce such
rights, institute a legal proceeding directly against Ohio Edison to enforce the
Property Trustee's rights under the Subordinated Debentures without first
instituting any legal proceeding against the Property Trustee or any other
person or entity. The Property Trustee shall notify all holders of the Preferred
Securities of any notice of default received from the Debenture Trustee with
respect to the Subordinated Debentures. Except with respect to directing the
time, method and place of conducting a proceeding for a remedy, the Property
Trustee shall not take any of the actions described in clauses (i), (ii) or
(iii), unless it shall receive an opinion of counsel experienced in such matters
to the effect that the Issuer will not be classified as an association taxable
as a corporation for United States Federal income tax purposes on account of
such action. (Section 6.01(b)).
Any required approval of holders of Preferred Securities may be given at a
separate meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Administrative Trustees will cause a notice of
any meeting at which holders of Preferred Securities are entitled to vote, or of
any matter upon which action by written consent of such holders is to be taken,
to be given to each holder of record of Preferred Securities in the manner set
forth in the Trust Agreement. (Section 6.02).
No vote or consent of the holders of Preferred Securities will be required
for the Issuer to redeem and cancel Preferred Securities in accordance with the
Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned by Ohio Edison, the Ohio Edison Trustees or any
affiliate of Ohio Edison or any Ohio Edison Trustee, shall (except in certain
limited circumstances set forth in the Trust Agreement) for purposes of such
vote or consent, be treated as if they were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company" below.
Except in the limited circumstances described above, in connection with the
appointment of a Special Administrative Trustee, and except if an Trust
Agreement Event of Default has occurred and is continuing, holders of the
Preferred Securities will have no rights to appoint or remove the Ohio Edison
Trustees, who may be appointed, removed or replaced solely by Ohio Edison as the
indirect or direct holder of all of the Common Securities.
CO-PROPERTY TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless a Trust Agreement Event of Default shall have occurred and be
continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any part
of the Trust Property (as defined in the Trust Agreement) may at the time be
located, the holder of the Common Securities and the Administrative Trustees
shall have power to appoint, and upon the written request of the Administrative
Trustees, Ohio Edison, as Depositor, shall for such purpose join with the
Administrative Trustees in the execution, delivery and performance of all
instruments and agreements necessary or proper to appoint, one or more persons
approved by the Property Trustee either to act as co-property trustee, jointly
with the Property Trustee, of all or any part of such Trust Property, or to act
as separate property trustee of any such property, in either case with such
powers as may be provided in the instrument of appointment, and to vest in such
person or persons in such capacity, any property, title, right or power deemed
necessary or desirable, subject to the provisions of the Trust Agreement. If
Ohio Edison, as Depositor, does not join in such appointment within 15 days
after the receipt by it of a request so to do, or in
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case an Indenture Event of Default has occurred and is continuing, the
Administrative Trustees alone shall have power to make such appointment.
(Section 8.09).
PAYMENT AND PAYING AGENT
Payments in respect of the Preferred Securities shall be made to DTC, which
shall credit the relevant accounts at DTC on the applicable Distribution Dates
or, if the Preferred Securities are not held by DTC, such payments shall be made
by check mailed to the address of the holder entitled thereto as such address
shall appear on the Register. The Paying Agent shall initially be The Bank of
New York. The Paying Agent shall be permitted to resign as Paying Agent upon 30
days' written notice to the Administrative Trustees, the Property Trustee and
the Depositor. In the event that The Bank of New York chooses to no longer be
the Paying Agent, the Administrative Trustees shall appoint a successor to act
as Paying Agent (which shall be a bank or trust company acceptable to the
Property Trustee and the Depositor). (Sections 4.04 and 5.09).
BOOK-ENTRY-ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
DTC will act as securities depository for the Preferred Securities. The
Preferred Securities will be issued only as fully-registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more fully-
registered global Preferred Security certificates will be issued, representing
in the aggregate the total number of Preferred Securities, and will be deposited
with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement of securities transactions among Participants
through electronic computerized book-entry changes in 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 ("Direct
Participants"). DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc. (the "New York Stock Exchange"), 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
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Securities and Exchange Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
each Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities 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 interests in Preferred Securities, except in the event that use
of the book-entry system for the Preferred Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities; DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants are 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.
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Redemption notices shall be sent to DTC. If less than all of the Preferred
Securities 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.
Although voting with respect to the Preferred Securities is limited to the
holders of record of the Preferred Securities, in those cases where a vote is
required, neither DTC nor Cede & Co. will itself consent or vote with respect to
Preferred Securities. Under its usual procedures, DTC would mail an Omnibus
Proxy to the Issuer 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 Preferred Securities are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Distribution payments on the Preferred Securities will be made by the
Issuer 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 payments
on such payment date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices and will be the
responsibility of such Participant and not of DTC, the Issuer or Ohio Edison,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of distributions to DTC is the responsibility of the
Issuer, 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 Preferred Securities at any time by giving 90 days' notice to the
Issuer. If DTC stops providing such services and a successor securities
depository is not obtained, Preferred Security certificates must be printed and
delivered. Additionally, the Administrative Trustees (with the consent of Ohio
Edison) could decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depository). In that event, definitive certificates
for the Preferred Securities will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Issuer believes to be reliable, but the
Issuer takes no responsibility for the accuracy thereof. The Issuer has no
responsibility for the performance by DTC or its Participants of their
respective obligations as described herein or under the rules and procedures
governing their respective operations.
REGISTRAR AND TRANSFER AGENT
The Bank of New York will act as registrar and transfer agent for the
Preferred Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Issuer, but upon payment in respect of any tax or
other governmental charges which may be imposed in relation to it.
The Issuer will not be required to register or cause to be registered any
transfer of Preferred Securities after they have been called for redemption or
during a period of 15 days immediately preceding the date on which notice
identifying the serial numbers for the Preferred Securities called for
redemption is mailed.
CONCERNING THE PROPERTY TRUSTEE
Ohio Edison and certain of its subsidiaries maintain deposit accounts and
conduct other banking transactions with the Property Trustee in the ordinary
course of their businesses. The Property Trustee also acts as trustee under
certain indentures relating to borrowings by or for the benefit of the lessors
to finance their acquisition of Ohio Edison's interest in the Perry Nuclear
Power Plant and Beaver Valley Power Station in connection with the sale and
leaseback of certain undivided interests in those plants. Under the
sale/leaseback documents, Ohio Edison is ultimately responsible for the payment
of this indebtedness.
MISCELLANEOUS
The Preferred Securities have been approved for listing on the New York
Stock Exchange, subject to official notice of issuance.
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The Administrative Trustees are authorized and directed to conduct the
affairs of the Issuer and to operate the Issuer so that the Issuer will not be
deemed to be an "investment company" required to be registered under the 1940
Act or taxed as a corporation for United States Federal income tax purposes and
so that the Subordinated Debentures will be treated as indebtedness of Ohio
Edison for United States Federal income tax purposes. In this connection, the
Depositor and the Administrative Trustees are authorized to take any action, not
inconsistent with applicable law, the certificate of trust or the Trust
Agreement, that the Depositor or the Administrative Trustees determine in their
discretion to be necessary or desirable for such purposes, as long as such
action does not adversely affect the interests of the holders of the Preferred
Securities.
Holders of the Preferred Securities have no preemptive rights.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee that
will be executed and delivered by Ohio Edison for the benefit of the holders
from time to time of Preferred Securities. The Guarantee will be qualified as an
indenture under the Trust Indenture Act. The Bank of New York will act as
Guarantee Trustee under the Guarantee for the purposes of compliance with the
Trust Indenture Act. The terms of the Guarantee will be those set forth in such
Guarantee and those made part of such Guarantee by the Trust Indenture Act. The
summary is subject in all respects to the provisions of, and is qualified in its
entirety by reference to, the Guarantee, which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and the Trust
Indenture Act. The Guarantee Trustee will hold the Guarantee for the benefit of
the holders of the Preferred Securities.
GENERAL
Ohio Edison will fully and unconditionally agree, to the extent described
herein, to pay the Guarantee Payments (as defined below) in full to the holders
of the Preferred Securities (except to the extent paid by or on behalf of the
Issuer), as and when due, regardless of any defense, right of set-off or
counterclaim that the Issuer may have or assert. The following payments with
respect to the Preferred Securities, to the extent not paid by or on behalf of
the Issuer (the "Guarantee Payments"), will be subject to the Guarantee (without
duplication): (i) any accrued and unpaid distributions required to be paid on
the Preferred Securities, to the extent the Property Trustee has in the Payment
Account sufficient available funds to pay such amounts (which will occur only in
the event that Ohio Edison has made a required payment of interest or principal
on the Subordinated Debentures), (ii) the Redemption Price, including all
accrued and unpaid distributions to the date of redemption, with respect to any
Preferred Securities called for redemption by the Issuer, to the extent the
Property Trustee has in the Payment Account sufficient available funds to pay
such amounts (which will occur only in the event that Ohio Edison has made a
required payment of interest or principal on the Subordinated Debentures) and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination of
the Issuer (other than in connection with the distribution of the Subordinated
Debentures to the holders of the Preferred Securities or a redemption of all of
the Preferred Securities upon the maturity or redemption of the Subordinated
Debentures), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Preferred Securities to the date of
payment, to the extent the Issuer has funds available therefor, and (b) the
amount of assets of the Issuer remaining available for distribution to holders
of Preferred Securities in liquidation of the Issuer. Ohio Edison's obligation
to make a Guarantee Payment may be satisfied by direct payment of the required
amounts by Ohio Edison to the holders of Preferred Securities or by causing the
Issuer to pay such amounts to such holders.
The Guarantee will be a full and unconditional guarantee with respect to
the Preferred Securities issued by the Issuer from the time of issuance of the
Preferred Securities, but will not apply to any payment of distributions due to
the extent that the Property Trustee shall lack in the Payment Account
sufficient available funds therefor, which would occur if Ohio Edison fails to
make required payments of interest or principal on the Subordinated Debentures.
If Ohio Edison does not make interest payments on the Subordinated Debentures
held by the Issuer, the Property Trustee will not have in the Payment Account
sufficient available funds for, and will not pay, distributions on the Preferred
Securities. The Guarantee will rank subordinate and
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junior in right of payment to all liabilities of Ohio Edison (except those made
pari passu by their terms). See "-- Status of the Guarantee".
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required), the
terms of the Guarantee may be changed only with the prior approval of the
holders of not less than 66 2/3% in liquidation amount of the outstanding
Preferred Securities. All guarantees and agreements contained in the Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
Ohio Edison and shall inure to the benefit of the holders of the Preferred
Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of Ohio
Edison to perform any of its payment obligations thereunder. The holders of a
majority in liquidation amount of the Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of the Guarantee or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under the
Guarantee.
If the Guarantee Trustee fails to enforce the Guarantee, any holder of
Preferred Securities may institute a legal proceeding directly against Ohio
Edison to enforce the Guarantee Trustee's rights under such Guarantee without
first instituting a legal proceeding against the Issuer, the Guarantee Trustee
or any other person or entity.
Ohio Edison will be required to provide annually to the Guarantee Trustee a
statement as to the performance by Ohio Edison of certain of its obligations
under the Guarantee and as to any default in such performance.
Ohio Edison will also be required to file annually with the Guarantee
Trustee an officer's certificate as to Ohio Edison's compliance with all
conditions under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default by Ohio Edison
in performance of the Guarantee, undertakes to perform only such duties as are
specifically set forth in the Guarantee and, after default with respect to the
Guarantee, must exercise the same degree of care as a prudent individual would
exercise in the conduct of his or her own affairs. Subject to this provision,
the Guarantee Trustee is under no obligation to exercise any of the powers
vested in it by the Guarantee at the request of any holder of Preferred
Securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of all Preferred Securities, the
distribution of Subordinated Debentures to holders of Preferred Securities in
exchange for all of the Preferred Securities or upon full payment of the amounts
payable upon liquidation of the Issuer. The Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of Preferred Securities must restore payment of any sums paid under the
Preferred Securities or the Guarantee.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of Ohio Edison and
will rank (i) subordinate and junior in right of payment to all liabilities of
Ohio Edison (except liabilities that may be made pari passu by their terms),
(ii) pari passu with the most senior preferred or preference stock now or
hereafter issued by Ohio Edison and with any guarantee now or hereafter entered
into by Ohio Edison in respect of any preferred or preference stock of any
affiliate of Ohio Edison and (iii) senior to Ohio Edison's common stock. The
Trust
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Agreement provides that each holder of Preferred Securities by acceptance
thereof agrees to the subordination provisions and other terms of the Guarantee.
The Guarantee will constitute a guarantee of payment and not of collection.
Accordingly, the guaranteed party may institute a legal proceeding directly
against the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
DESCRIPTION OF THE SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of the Subordinated
Debentures in which the Issuer will invest the proceeds of the issuance and sale
of the Issuer Securities. The following description is qualified in its entirety
by reference to the description in the Indenture (the "Indenture") dated as of
, 1995, between Ohio Edison and The Bank of New York, as trustee
with respect to the Subordinated Debentures (the "Debenture Trustee"), which is
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part. Whenever particular provisions or defined terms in the Indenture are
referred to herein, such provisions or defined terms are incorporated by
reference herein. Section references used herein are references to provisions of
the Indenture unless otherwise noted.
Under certain circumstances involving the dissolution of the Issuer
following the occurrence of a Special Event, Subordinated Debentures may be
distributed to the holders of the Issuer Securities in liquidation of the
Issuer. See "Description of the Preferred Securities -- Special Event Redemption
or Distribution."
If the Subordinated Debentures are distributed to the holders of the
Preferred Securities, Ohio Edison will use its best efforts to cause the
Subordinated Debentures to be listed on the New York Stock Exchange or on such
other exchange, if any, as the Preferred Securities are then listed.
GENERAL
The Subordinated Debentures will be limited in aggregate principal amount
to approximately $123,711,000, such amount being the sum of the aggregate stated
liquidation preference of the Preferred Securities and the consideration paid by
Ohio Edison for the Common Securities. The Subordinated Debentures are
unsecured, subordinated obligations of Ohio Edison which rank junior to all of
Ohio Edison's Senior Indebtedness (as defined below). The Subordinated
Debentures are not subject to a sinking fund provision.
The entire outstanding principal amount of the Subordinated Debentures will
become due and payable, together with any accrued and unpaid interest thereon,
including Additional Interest (as hereinafter defined), if any, on ,
2025, subject to the right of Ohio Edison to elect to extend the scheduled
maturity date of the Subordinated Debentures to a date not later than 2044,
which election is subject to Ohio Edison's satisfying certain conditions. See
"-- Option to Extend Maturity."
OPTIONAL REDEMPTION
On or after , 2000, Ohio Edison will have the right, at any
time and from time to time, to redeem the Subordinated Debentures, in whole or
in part, at a redemption price equal to 100% of the principal amount of the
Subordinated Debentures being redeemed, together with any accrued but unpaid
interest, including Additional Interest, if any, to the redemption date fixed
by the Company.
In certain circumstances upon the occurrence and continuation of a Tax
Event, Ohio Edison shall have the right to redeem the Subordinated Debentures,
in whole but not in part, within 90 days following the occurrence of such Tax
Event at a redemption price equal to 100% of the principal amount of
Subordinated Debentures being redeemed, together with any accrued but unpaid
interest, including Additional Interest, if any, to the redemption date. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution."
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For so long as the Issuer is the holder of all the outstanding Subordinated
Debentures, the proceeds of any such redemption will be used by the Issuer to
redeem Issuer Securities in accordance with their terms. Ohio Edison may not
redeem the Subordinated Debentures in part unless all accrued and unpaid
interest (including any Additional Interest) has been paid in full on all
outstanding Subordinated Debentures for all quarterly interest periods
terminating on or prior to the date of redemption.
Any optional redemption of the Subordinated Debentures shall be made upon
not less than 30 nor more than 60 days' notice to the holders thereof, as
provided in the Indenture.
INTEREST
The Subordinated Debentures shall bear interest at the rate of % per
annum. Such interest is payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year (each, an "Interest Payment Date"),
commencing December 31, 1995, to the person in whose name each Subordinated
Debenture is registered, subject to certain exceptions, at the close of business
on the Business Day next preceding such Interest Payment Date. Interest will
accrue quarterly (to the extent permitted by applicable law) at the rate of
% per annum on any interest installment in arrears for more than one
quarter and on any interest on such overdue interest. It is anticipated that the
Issuer will be the sole holder of the Subordinated Debentures unless the Trust
is liquidated.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Subordinated Debentures is not a Business Day, then
payment of the interest payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date the payment was originally payable.
OPTION TO EXTEND MATURITY DATE
The maturity date of the Subordinated Debentures is , 2025 (the
"Stated Maturity"). Ohio Edison, however, may, before the Stated Maturity,
extend such maturity date no more than one time for up to an additional 19 years
from the Stated Maturity; provided that (a) Ohio Edison is not in bankruptcy or
otherwise insolvent, (b) Ohio Edison is not in default on the Subordinated
Debentures, (c) Ohio Edison has made timely payments on the Subordinated
Debentures for the immediately preceding six quarters without deferrals, (d) the
Issuer is not in arrears on payments of distributions on the Preferred
Securities and (e) the Subordinated Debentures are rated BBB- or higher by any
one of Standard & Poor's Rating Group, Fitch Investor Services or Duff & Phelps
Credit Rating Company, Baa3 or higher by Moody's Investors Service, Inc. or the
equivalent for any other nationally recognized statistical rating organization.
Pursuant to the Trust Agreement, the Administrative Trustees are required to
give notice of Ohio Edison's election to extend the Stated Maturity to the
holders of the Preferred Securities.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Ohio Edison shall have the right at any time during the term of the
Subordinated Debentures to extend the interest payment period from time to time
for an Extension Period not exceeding 20 consecutive quarters, during which
interest will accrue but not be paid. Interest will accrue quarterly on accrued
but unpaid interest during any Extension Period. At the end of the Extension
Period, Ohio Edison must pay all interest then accrued and unpaid (including
interest accrued on unpaid interest as described above at the rate specified for
the Subordinated Debentures to the extent permitted by applicable law). During
any Extension Period, Ohio Edison may not (a) declare or pay any dividends on,
or make a distribution with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock, or (b) make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by the Company that rank pari passu with or
junior to the Subordinated Debentures, or (c) make any guarantee payments with
respect to the foregoing (other than payments under the Guarantee); provided,
however, that restriction (a) above does not apply to any stock dividends paid
by Ohio Edison where the
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dividend stock is the same as that on which the dividend is paid. Prior to the
termination of any Extension Period, Ohio Edison may further extend the interest
payment period, provided that such Extension Period together with all such
previous and further extensions thereof shall not exceed 20 consecutive quarters
at any one time or extend beyond the maturity date of the Subordinated
Debentures. Upon the termination of any Extension Period and the payment of all
amounts then due, Ohio Edison may select a new Extension Period, subject to the
above requirements. No interest shall be due and payable during an Extension
Period, except at the end thereof. So long as the Property Trustee shall be the
sole holder of the Subordinated Debentures, Ohio Edison must give the Property
Trustee, the Administrative Trustees and the Debenture Trustee notice of its
selection of such Extension Period at least one Business Day prior to the
earlier of (i) the date the distributions on the Preferred Securities are
payable or (ii) the date the Administrative Trustees are required to give notice
to the New York Stock Exchange or other applicable self-regulatory organization
or to holders of the Preferred Securities of the record date for the payment of
such distributions or the date such distributions are payable, but in any event
not less than one Business Day prior to such record date. The Administrative
Trustees will be required to give notice of Ohio Edison's selection of such
Extension Period to the holders of the Preferred Securities.
ADDITIONAL INTEREST
If the Issuer would be required to pay any taxes, duties, assessments or
governmental charges of whatever nature (other than withholding taxes) imposed
by the United States or any other taxing authority, then, in any case, Ohio
Edison will also pay as additional interest ("Additional Interest") such amounts
as shall be required so that the net amounts received and retained by the Issuer
after paying such taxes, duties, assessments or governmental charges will be not
less than the amounts the Issuer would have received had no such taxes, duties,
assessments or governmental charges been imposed.
SET-OFF
Notwithstanding anything to the contrary in the Indenture, Ohio Edison
shall have the right to set-off any payment it is otherwise required to make
thereunder to the extent Ohio Edison has theretofore made, or is concurrently on
the date of such payment making, a payment under the Guarantee.
SUBORDINATION
The Subordinated Debentures are subordinate and junior in right of payment
to all Senior Indebtedness (as defined below) of Ohio Edison as provided in the
Indenture. The Subordinated Debentures rank equal with obligations to trade
creditors of Ohio Edison. No payment of principal of (including redemption), or
interest on, the Subordinated Debentures may be made if Ohio Edison has
defaulted on any payment of Senior Indebtedness when due, any applicable grace
period with respect to such default has ended and such default has not been
cured or waived, or if the maturity of any Senior Indebtedness has been
accelerated because of a default. (Section 11.02). Upon any payment or
distribution of assets of Ohio Edison to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary or
in bankruptcy, insolvency, receivership or other proceedings, all principal of
and interest due or to become due on, all Senior Indebtedness must be paid in
full before the holders of the Subordinated Debentures are entitled to receive
or retain any payment thereon. (Section 11.03). Subject to the prior payment of
all Senior Indebtedness, the rights of the holders of the Subordinated
Debentures will be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions applicable to Senior
Indebtedness until all amounts owing on the Subordinated Debentures are paid in
full. (Section 11.04).
The term "Senior Indebtedness" shall mean the principal of, premium, if
any, interest on and any other payment due pursuant to any of the following,
whether outstanding at the date of execution of the Indenture or thereafter
incurred, created or assumed:
(a) all indebtedness of Ohio Edison on a consolidated basis (other
than any obligations to trade creditors) evidenced by notes, debentures,
bonds, other securities or other instruments issued by Ohio Edison for
money borrowed and capitalized lease obligations;
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(b) all indebtedness of others of the kinds described in the preceding
clause (a) assumed by or guaranteed in any manner by Ohio Edison or in
effect guaranteed by Ohio Edison; and
(c) all renewals, extensions or refundings of indebtedness of the
kinds described in either of the preceding clauses (a) or (b), unless, in
the case of any particular indebtedness, renewal, extension or refunding,
the instrument creating or evidencing the same or the assumption or
guarantee of the same expressly provides that such indebtedness, renewal,
extension or refunding is not superior in right of payment to or is pari
passu with the Subordinated Debentures. (Section 1.01).
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued. As of June 30, 1995, Ohio Edison had approximately $3,546
million of principal amount of indebtedness for borrowed money constituting
Senior Indebtedness on a consolidated basis.
CERTAIN COVENANTS OF OHIO EDISON
Pursuant to the Indenture, Ohio Edison will covenant that it will not
declare or pay any dividends or distributions (other than dividends or
distributions payable in common stock of Ohio Edison) on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock,
or make any guarantee payments with respect to the foregoing (other than
payments under the Guarantee) if at such time (i) there shall have occurred any
event of which Ohio Edison has actual knowledge that (a) with the giving of
notice or the lapse of time, or both, would constitute an Indenture Event of
Default and (b) in respect of which Ohio Edison shall not have taken reasonable
steps to cure, (ii) Ohio Edison shall be in default with respect to its payment
of any obligations under the Guarantee or (iii) Ohio Edison shall have given
notice of its selection of an Extension Period as provided in the Indenture and
such Extension Period, or any extension thereof, shall be continuing. (Section
10.05). Ohio Edison will also covenant (i) to maintain 100% ownership of the
Common Securities of the Issuer, provided, however, that any permitted successor
of Ohio Edison under the Indenture may succeed to Ohio Edison's ownership
thereof, (ii) not to voluntarily dissolve, wind-up or terminate the Trust,
except in connection with the distribution of the Subordinated Debentures to the
holders of the Issuer Securities in liquidation of the Issuer or in connection
with certain mergers, consolidations or amalgamations permitted by the Trust
Agreement and (iii) to use its reasonable efforts, consistent with the terms and
provisions of the Trust Agreement, to cause the Issuer to remain a business
trust and otherwise not to be classified as a corporation for United States
Federal income tax purposes. (Section 10.05).
EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events, that has occurred and is continuing constitutes an Indenture Event of
Default with respect to the Subordinated Debentures:
(a) failure for 10 days to pay interest on the Subordinated
Debentures, including any Additional Interest in respect thereof, when due
(subject to the deferral of any due date in the case of an Extension
Period); or
(b) failure to pay principal on the Subordinated Debentures when due
whether at maturity, upon redemption by declaration or otherwise; provided,
however, that an extension of the maturity of the Subordinated Debentures
in accordance with the terms of the Indenture and the Subordinated
Debentures shall not constitute an Indenture Event of Default; or
(c) failure to observe or perform in any material respect any other
covenant contained in the Indenture for 90 days after written notice to
Ohio Edison from the Debenture Trustee or the holders of at least 25% in
principal amount of the outstanding Subordinated Debentures; or
(d) certain events in bankruptcy, insolvency or reorganization of Ohio
Edison. (Section 5.01).
The holders of a majority in outstanding principal amount of the
Subordinated Debentures have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee.
(Section 5.12). The Debenture Trustee or the holders of not less than 25% in
aggregate outstanding principal amount of the Subordinated Debentures may
declare the principal of and interest on the
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<PAGE> 32
Subordinated Debentures due and payable immediately upon an Indenture Event of
Default, and should the Debenture Trustee or such holders of Subordinated
Debentures fail to make such declaration the holders of at least 25% in
aggregate liquidation preference of Preferred Securities then outstanding shall
have such right. The holders of a majority in aggregate outstanding principal
amount of the Subordinated Debentures may annul such declaration if all defaults
have been cured or waived and a sum sufficient to pay all matured installments
of interest and principal due otherwise than by acceleration, as well as all
sums paid or advanced by the Debenture Trustee and its compensation, expenses
and advances, has been deposited with the Debenture Trustee. (Section 5.02).
The holders of a majority in outstanding principal amount of the
Subordinated Debentures affected thereby may, on behalf of the holders of all
the Subordinated Debentures, waive any past default, except a default in the
payment of principal or interest (unless such default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Debenture Trustee) or
a default in respect of a covenant or provision which under the Indenture cannot
be modified or amended without the consent of the holder of each outstanding
Subordinated Debenture. (Section 5.13). Ohio Edison is required to file annually
with the Debenture Trustee a certificate as to whether or not Ohio Edison is in
compliance with all the material terms, provisions and conditions applicable to
it under the Indenture. (Section 10.04).
In case any Indenture Event of Default shall occur and be continuing, the
Property Trustee will have the right to declare the principal of and the
interest on the Subordinated Debentures (including any Additional Interest) and
any other amounts payable under the Indenture to be forthwith due and payable
and to enforce its other rights as a creditor with respect to the Subordinated
Debentures.
A voluntary or involuntary dissolution of the Issuer prior to redemption or
maturity of the Subordinated Debentures would not constitute an Indenture Event
of Default. If the Issuer is dissolved, an event Ohio Edison and the Issuer
consider to be remote, any of the following, among other things, could occur:
(i) a distribution of the Subordinated Debentures to the holders of the
Preferred Securities, (ii) a cash distribution to the holders of the Preferred
Securities out of the sale of assets of the Issuer, after satisfaction of
liabilities to creditors, (iii) a permitted redemption at par of the
Subordinated Debentures, and a consequent redemption of a Like Amount of the
Preferred Securities, at the option of Ohio Edison under the circumstances
described in "-- Optional Redemption" or (iv) the rollover of the Trust Property
into another entity with similar characteristics.
FORM, EXCHANGE, AND TRANSFER
The Subordinated Debentures will be issuable only in registered form,
without coupons and only in denominations of $25 and integral multiples thereof.
(Section 3.02.)
Subject to the terms of the Indenture, Subordinated Debentures may be
presented for registration of transfer (duly endorsed or accompanied by
satisfactory instruments of transfer) at the office of the Security Registrar or
at the office of any transfer agent designated by Ohio Edison for such purpose.
No service charge will be made for any registration of transfer or exchange of
Subordinated Debentures, but Ohio Edison may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith
except with respect to certain exchanges not involving any transfer. Such
transfer or exchange will be effected upon the Security Registrar or such
transfer agent, as the case may be, being satisfied with the documents of
transfer, title and identity of the person making the request. Ohio Edison has
appointed the Debenture Trustee as Security Registrar. (Section 3.05.)
Ohio Edison may at any time designate additional transfer agents or rescind
the designation of any transfer agent or approve a change in the office through
which any transfer agent acts. (Section 10.02.)
Ohio Edison will not be required to (i) issue, register the transfer of or
exchange Subordinated Debentures during a period of 15 days before the day
notice of redemption identifying the Subordinated Debentures called for
redemption is mailed or (ii) issue, register the transfer or exchange any
Subordinated Debentures selected for redemption in whole or in part, except the
unredeemed portion of any such Subordinated Debentures being redeemed in part.
(Section 3.05.)
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<PAGE> 33
PAYMENT AND PAYING AGENTS
Payment of interest on a Subordinated Debenture on any Interest Payment
Date will be made to the Person in whose name such Subordinated Debenture (or
one or more predecessor securities) is registered at the close of business on
the Regular Record Date for such interest. (Section 3.07.)
Principal of and any interest on the Subordinated Debentures will be
payable at the office of such Paying Agent or Paying Agents as Ohio Edison may
designate for such purpose from time to time, except that at the option of Ohio
Edison payment of any interest may be made by check mailed to the address of the
Person entitled thereto as such address appears in the Security Register or by
wire transfer. The Debenture Trustee is The Bank of New York and the corporate
trust office of the Debenture Trustee in The City of New York is designated as
Ohio Edison's sole Paying Agent for payments with respect to the Subordinated
Debentures. Ohio Edison may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent or approve a change in the office
through which any Paying Agent acts. (Section 10.02.)
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting Ohio Edison and the Debenture
Trustee, with the consent of the holders of not less than 66 2/3% of the
principal amount of the outstanding Subordinated Debentures, to modify the
Indenture in a manner affecting the rights of the holders of the Subordinated
Debentures; provided that no such modification may, without the consent of the
holder of each outstanding Subordinated Debenture, (i) change the fixed maturity
of the Subordinated Debentures, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or modify the
subordination provisions in the Indenture in a manner adverse to the holders of
the Subordinated Debentures, (ii) reduce the percentage of principal amount of
Subordinated Debentures, the holders of which are required to consent to any
such modification of the Indenture or (iii) modify certain provisions of the
Indenture relating to the waiver of past defaults or compliance by Ohio Edison
with the covenants therein. The Indenture also requires the consent of the
holders of the Preferred Securities in respect of certain amendments to or
termination of the Indenture and in respect of compliance by Ohio Edison with
certain covenants in the Indenture. (Section 9.02.)
CONSOLIDATION, MERGER AND SALE
Ohio Edison may not consolidate with or merge into, or convey, transfer or
lease its properties and assets substantially as an entirety to, any Person (a
"successor Person"), and may not permit any Person to merge into, or convey,
transfer or lease its properties and assets substantially as an entirety to,
Ohio Edison unless (i) the successor Person (if any) is a corporation,
partnership or trust organized and validly existing under the laws of any
domestic jurisdiction and assumes Ohio Edison's obligations on the Subordinated
Debentures and under the Indenture, (ii) immediately after giving effect to the
transaction, and treating any indebtedness which becomes an obligation of Ohio
Edison or any Subsidiary as a result of the transaction as having been incurred
by it at the time of the transaction, no Indenture Event of Default, and no
event which, after notice or lapse of time or both, would become an Indenture
Event of Default, shall have occurred and be continuing (iii) such consolidation
or merger or conveyance, transfer or lease of properties or assets of Ohio
Edison is permitted under, and does not give rise to any breach or violation of,
the Trust Agreement or the Guarantee and (iv) certain other conditions are met.
(Section 8.01).
SATISFACTION AND DISCHARGE
Under the terms of the Indenture, Ohio Edison will be discharged from any
and all obligations in respect of the Subordinated Debentures (except in each
case for certain obligations to register the transfer or exchange of
Subordinated Debentures, replace stolen, lost or mutilated Subordinated
Debentures and hold moneys for payment in trust) if Ohio Edison deposits with
the Debenture Trustee, in trust, moneys in an amount sufficient to pay all the
principal of, and interest on, the Subordinated Debentures on the dates such
payments are due in accordance with the terms of such Subordinated Debentures,
provided that the Subordinated Debentures have become due and payable, or will
become due and payable within one year whether at maturity or through redemption
thereof. (Section 4.01).
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<PAGE> 34
GOVERNING LAW
The Indenture and the Subordinated Debentures will be governed by, and
construed in accordance with, the laws of the State of New York. (Section 1.12).
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE SUBORDINATED DEBENTURES AND THE GUARANTEE
As long as payments of interest and other payments are made when due on the
Subordinated Debentures, such payments will be sufficient to cover distributions
and other payments due on the Preferred Securities, primarily because (i) the
aggregate principal amount of Subordinated Debentures will be equal to the sum
of the aggregate stated liquidation preference of the Preferred Securities and
the Common Securities; (ii) the interest rate and interest and other payment
dates on the Subordinated Debentures will match the distribution rate and
distribution and other payment dates for the Preferred Securities; (iii) the
Trust Agreement provides that Ohio Edison shall pay for all, and the Issuer
shall not be obligated to pay, directly or indirectly, for any, costs, expenses
and liabilities of the Issuer, including any income taxes, duties and other
governmental charges, and all costs and expenses with respect thereto, to which
the Issuer may become subject, except for United States withholding taxes and
the Issuer's obligations to holders of Preferred Securities under the Preferred
Securities; and (iv) the Trust Agreement further provides that the Ohio Edison
Trustees shall not cause or permit the Issuer to, among other things, engage in
any activity that is not consistent with the limited purposes of the Issuer.
Payments of distributions and other amounts due on the Preferred Securities
(to the extent the Issuer has funds available for the payment of such
distributions) are guaranteed by Ohio Edison as and to the extent set forth
under "Description of the Guarantee." If and to the extent that Ohio Edison does
not make payments on the Subordinated Debentures, the Property Trustee will not
have in the Payment Account sufficient available funds to pay distributions or
other amounts due on the Preferred Securities.
If the Guarantee Trustee fails to enforce the Guarantee, a holder of a
Preferred Security may institute a legal proceeding directly against Ohio Edison
to enforce its rights under the Guarantee without first instituting a legal
proceeding against the Issuer or any other person or entity.
The Preferred Securities evidence the rights of the holders thereof to the
benefits of the Trust, a trust that exists for the sole purpose of issuing its
Issuer Securities and investing the proceeds thereof in debt securities of Ohio
Edison, while the Subordinated Debentures represent indebtedness of Ohio Edison.
A principal difference between the rights of a holder of a Preferred Security
and a holder of a Subordinated Debenture is that a holder of a Subordinated
Debenture will accrue, and (subject to the permissible extension of the interest
period) is entitled to receive, interest on the principal amount of Subordinated
Debentures held, while a holder of Preferred Securities is only entitled to
receive distributions if and to the extent the Property Trustee has in the
Payment Account sufficient available funds for the payment of such
distributions.
Upon any voluntary or involuntary dissolution, winding-up or termination of
the Issuer, the holders of Preferred Securities will be entitled to receive, out
of assets legally available for distribution to holders, the Liquidation
Distribution in cash. See "Description of the Preferred
Securities -- Liquidation Distribution Upon Dissolution". Upon any voluntary or
involuntary liquidation or bankruptcy of Ohio Edison, the Issuer, as holder of
the Subordinated Debentures, would be a subordinated creditor of Ohio Edison,
subordinated in right of payment to all Senior Indebtedness, but entitled to
receive payment in full of principal and interest, before any stockholders of
Ohio Edison receive payments or distributions. Since Ohio Edison is Guarantor
under the Guarantee and has agreed to pay for all costs, expenses and
liabilities of the Issuer (other than United States withholding taxes and other
than the Issuer's obligations to holders of Preferred Securities under the
Preferred Securities), the positions of a holder of Preferred Securities and a
holder of Subordinated Debentures relative to other creditors and to
stockholders of Ohio Edison in the event of liquidation or bankruptcy of Ohio
Edison would be substantially the same.
A default or event of default under any Senior Indebtedness would not
constitute a default or Indenture Event of Default. In the event of payment
defaults under, or acceleration of, Senior Indebtedness, the
subordination provisions of the Subordinated Debentures provide that no payments
may be made in respect of
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the Subordinated Debentures until such Senior Indebtedness has been paid in full
or any payment default thereunder has been cured or waived. Failure to make
required payments on the Subordinated Debentures would constitute an Indenture
Event of Default.
UNITED STATES TAXATION
GENERAL
This section is a summary of the principal United States Federal income tax
considerations that may be relevant to prospective purchasers of Preferred
Securities and represents the opinion of Winthrop, Stimson, Putnam & Roberts,
counsel to Ohio Edison and the Issuer, insofar as it relates to matters of law
and legal conclusions with respect thereto. This section is based upon current
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
existing and proposed Treasury Regulations thereunder and current administrative
rulings and court decisions, all of which are subject to change (which change
may be retroactive). Subsequent changes may cause tax consequences to vary
substantially from the consequences described below.
The following discussion does not address all United States Federal income
tax matters affecting holders of Preferred Securities. Moreover, the discussion
addresses the United States Federal income tax considerations of holders of
Preferred Securities that are citizens or residents of the United States,
corporations, partnerships or other entities created or organized in or under
the laws of the United States or any political subdivision thereof or therein,
or estates or trusts the income of which is subject to United States Federal
income taxation regardless of its source ("U.S. Holders") and that hold the
Preferred Securities as a capital asset. Except as provided below, this
discussion does not address the tax consequences to holders of Preferred
Securities who are not U.S. Holders ("Non-U.S. Holders"), nor does it address
tax considerations applicable to holders of Preferred Securities that may be
subject to special tax rules, such as banks, insurance companies, tax-exempt
organizations or dealers in securities or currencies, or to holders of Preferred
Securities that will hold Preferred Securities as part of a position in a
"straddle" or as part of a "hedging" or "conversion" transaction for United
States Federal income tax purposes or that have a "functional currency" other
than the United States dollar. In addition, this discussion does not address the
tax consequences to Preferred Securities that do not purchase Preferred
Securities as part of their initial distribution. Accordingly, each prospective
holder of Preferred Securities, including each Non-U.S. Holder, should consult,
and should depend on, his, her or its own tax advisor in analyzing the United
States Federal, state, local and foreign tax consequences of the purchase,
ownership, sale or other disposition of Preferred Securities.
While Ohio Edison believes, based upon the advice of its counsel, that the
Subordinated Debentures should be treated as indebtedness for United States
Federal income tax purposes, holders of Preferred Securities should note that
the Internal Revenue Service (the "Service") may attempt to treat the
Subordinated Debentures as equity rather than indebtedness for United States
Federal income tax purposes. If the Service were successful in such attempt, the
Preferred Securities would be subject to redemption at the option of Ohio Edison
as described under "Description of the Preferred Securities -- Mandatory
Redemption."
INCOME FROM PREFERRED SECURITIES
In the opinion of Winthrop, Stimson, Putnam & Roberts, the Issuer will not
be classified as an association taxable as a corporation for United States
Federal income tax purposes. Each holder of Preferred Securities will be treated
as owning an undivided beneficial interest in the Subordinated Debentures.
Accordingly, each U.S. Holder will be required to include in its gross income as
interest its share of the original issue discount ("OID") accrued with respect
to the Subordinated Debentures whether or not distributions are actually made to
the holders of Preferred Securities. No portion of such income will be eligible
for the dividends-received deduction.
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ORIGINAL ISSUE DISCOUNT
Under the Indenture, Ohio Edison has the option to extend from time to time
the interest payment period on the Subordinated Debentures for a period not
exceeding 20 consecutive quarters but not beyond the maturity date of the
Subordinated Debentures (including any extension thereof). Ohio Edison's option
to extend the interest payment period will cause the Subordinated Debentures to
be treated as having been issued with OID for United States Federal income tax
purposes. Accordingly, a U.S. Holder will accrue OID (as interest income) in
accordance with a constant yield method over the term of the Subordinated
Debentures (including any Extension Period), regardless of the receipt of cash
with respect to the period to which such income is attributable.
As a result, U.S. Holders of record during an Extension Period will include
interest in gross income in advance of the receipt of cash, and any such holders
who dispose of Preferred Securities prior to the record date for the payment of
distributions following such Extension Period will include interest in gross
income but will not receive any cash related thereto.
RECEIPT OF SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE ISSUER
Under certain circumstances, as described under the caption "Description of
the Preferred Securities -- Special Event Redemption or Distribution,"
Subordinated Debentures may be distributed to holders of Preferred Securities in
exchange for the Preferred Securities and in liquidation of the Issuer. Under
current law, such a distribution, for United States Federal income tax purposes,
would be treated as a non-taxable event to each U.S. Holder, and each U.S.
Holder would receive an aggregate tax basis in the Subordinated Debentures equal
to such holder's aggregate tax basis in its Preferred Securities. A U.S Holder's
holding period for the Subordinated Debentures received in liquidation of the
Issuer would include the period during which such holder held the Preferred
Securities.
Under certain circumstances, as described under the caption "Description of
Preferred Securities -- Special Event Redemption or Distribution," Subordinated
Debentures may be redeemed for cash and the proceeds of such redemption
distributed to holders of Preferred Securities in redemption of the Preferred
Securities. Under current law, such a redemption would, for United States
Federal income tax purposes, constitute a taxable disposition of the redeemed
Preferred Securities, and a U.S. Holder would recognize gain or loss as if such
holder had sold such redeemed Preferred Securities for cash. See "Sale of
Preferred Securities."
SALE OF PREFERRED SECURITIES
Gain or loss will be recognized by a U.S. Holder on a sale of Preferred
Securities, including a redemption for cash, and will be equal to the difference
between the amount realized and such holder's adjusted tax basis in the
Preferred Securities sold. A U.S. Holder's adjusted tax basis in a Preferred
Security generally will equal the issue price of such Preferred Security
increased by the amount of OID previously includible in the gross income of such
holder and decreased by the amount of any payments received on such Preferred
Security. Any gain or loss recognized by a U.S. Holder on the sale of a
Preferred Security held for more than one year generally will be taxable as
long-term capital gain or loss. Subject to certain limited exceptions, capital
loses cannot be applied to offset ordinary income for United States Federal
income tax purposes.
NON-U.S. HOLDERS
Under present United States Federal income tax law: (i) payments by the
Issuer or any of its paying agents to any Non-U.S. Holder will not be subject to
United States Federal withholding tax, provided that (a) the beneficial owner of
the Preferred Security does not actually or constructively own 10% or more of
the total combined voting power of all classes of stock of Ohio Edison entitled
to vote, (b) the beneficial owner of the Preferred Security is not a controlled
foreign corporation that is related to Ohio Edison through stock ownership, and
(c) either (A) the beneficial owner of the Preferred Security certifies to the
Issuer or its agent, under penalties of perjury, that it is not a U.S. Holder
and provides its name and address or (B) a securities clearing organization,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "Financial Institution"), and holds
the Preferred Security in such capacity, certifies
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<PAGE> 37
to the Issuer or its agent, under penalties or perjury, that such statement has
been received from the beneficial owner by it or by another Financial
Institution between it and the beneficial owner and furnishes the Issuer or its
agent with a copy thereof; and (ii) a Non-U.S. Holder will generally not be
subject to United States Federal income or withholding tax on any gain realized
upon the sale or other disposition of a Preferred Security, except that a
Non-U.S. Holder will be subject to United States Federal income tax on any gain
if such Non-U.S. Holder (a) is engaged in a trade or business in the United
States and such gain is effectively connected to the conduct of such trade or
business or (b) is an individual present in the United States for 183 days or
more during the taxable year, and certain other conditions are met.
INFORMATION REPORTING AND BACKUP WITHHOLDING TAX
Subject to the qualifications discussed below, income on the Preferred
Securities (or on a Subordinated Debenture distributed to a holder of a
Preferred Security) will be reported to holders of Preferred Securities on Forms
1099, which forms should be mailed to such holders by January 31 following each
calendar year.
The Issuer will be obligated to report annually to Cede & Co., as holder of
record of the Preferred Securities, the OID related to the Subordinated
Debentures that accrued during the year. The Issuer currently intends to report
such information on Form 1099 prior to January 31 following each calendar year.
The Underwriters have indicated to the Issuer that, to the extent that they hold
Preferred Securities as nominees for beneficial holders, they currently expect
to report to such beneficial holders on Forms 1099 by January 31 following each
calendar year. Under current law, holders of Preferred Securities who hold as
nominees for beneficial holders will not have any obligation to report
information regarding the beneficial holders to the Issuer. The Issuer,
moreover, will not have any obligation to report to beneficial holders who are
not also record holders. Thus, beneficial holders of Preferred Securities who
hold their Preferred Securities through the Underwriters will receive Forms 1099
reflecting the income on their Preferred Securities from such nominee holders
rather than from the Issuer.
Payments made in respect of, and proceeds from the sale of, the Preferred
Securities, or Subordinated Debentures distributed to holders of Preferred
Securities, may be subject to a "backup" withholding tax of 31% unless the
holder complies with certain identification requirements. Any withheld amounts
will be allowed as a refund or a credit against the holder's United States
Federal income tax liability, provided the required information is provided to
the Service.
These information reporting and backup withholding tax rules are subject to
proposed Treasury Regulations and currently are under review by the United
States Treasury. Accordingly, the application of such rules to the Preferred
Securities could be changed.
UNDERWRITING
Under the terms and subject to the conditions contained in the Underwriting
Agreement dated the date hereof, each of the Underwriters named below for whom
Morgan Stanley & Co. Incorporated is acting as representative (the
"Representative") has severally agreed to purchase, and the Issuer has agreed to
sell to each of the Underwriters, severally, the respective number of Preferred
Securities set opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
NAME PREFERRED SECURITIES
------------------------------------------------------ --------------------
<S> <C>
Morgan Stanley & Co. Incorporated.....................
--------------------
Total................................................. 4,800,000
====================
</TABLE>
The Underwriting Agreement provides that the several obligations of the
Underwriters to pay for and accept delivery of the Preferred Securities are
subject to the approval of certain legal matters by their counsel
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<PAGE> 38
and to certain other conditions. In the Underwriting Agreement, the several
Underwriters have agreed, subject to the terms and conditions set forth therein,
to purchase all the Preferred Securities offered hereby if any of the Preferred
Securities are purchased. In the event of default by an Underwriter, the
Underwriting Agreement provides that, in certain circumstances, the purchase
commitments of the nondefaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.
The Underwriters initially propose to offer all or part of the Preferred
Securities directly to the public at the price to public set forth on the cover
page of this Prospectus, and all or part to certain dealers at a price that
represents a concession not in excess of $ per Preferred Security.
The Underwriters may allow, and such dealers may reallow, a concession not in
excess of $ per Preferred Security to certain other dealers. After
the initial offering of the Preferred Securities, the offering price and other
selling terms may from time to time be varied by the Representatives.
Because the proceeds of the sale of the Preferred Securities will
ultimately be used to purchase the Subordinated Debentures of Ohio Edison, the
Underwriting Agreement provides that Ohio Edison will pay to the Underwriters as
compensation for their services, $ per Preferred Security (or
$ in the aggregate); provided that such compensation will be
$ per Preferred Security sold to certain institutions.
Prior to this offering, there has been no public market for the Preferred
Securities. The Preferred Securities have been approved for listing on the New
York Stock Exchange subject to official notice of issuance. Listing is
contingent upon meeting the requirements of the New York Stock Exchange,
including those relating to distribution. In order to meet one such requirement,
the Underwriters have undertaken to sell lots of 100 or more Preferred
Securities to a minimum of 400 beneficial holders. Trading of the Preferred
Securities on the New York Stock Exchange is expected to commence within a
30-day period after the date of this Prospectus. The Underwriters have advised
the Issuer that they intend to make a market in the Preferred Securities prior
to the commencement of trading on the New York Stock Exchange. The Underwriters
will have no obligation to make a market in the Preferred Securities, however,
and may cease market making activities, if commenced, at any time.
The Issuer and Ohio Edison have agreed to indemnify the Underwriters
against, or contribute to payments that the Underwriters may be required to make
in respect of, certain liabilities, including liabilities under the Securities
Act of 1933, as amended.
In accordance with Section 34 of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., no sales of Preferred Securities may be
made to a discretionary account without the prior written approval of the
customer.
EXPERTS
The consolidated financial statements and related schedule incorporated by
reference or included in Ohio Edison Company's Annual Report on Form 10-K,
incorporated by reference in this prospectus, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports
dated February 3, 1995 with respect thereto, and are incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting and
auditing in giving said reports. Reference is made to said reports, which
include an explanatory paragraph with respect to the Company's change in its
method of accounting for unbilled revenues, income taxes and postretirement
benefits other than pensions as discussed in Notes 1 and 2 to the consolidated
financial statements.
With respect to the unaudited interim consolidated financial information
for the quarters ended March 31, 1995 and 1994, and June 30, 1995 and 1994,
Arthur Andersen LLP has applied limited procedures in accordance with
professional standards for reviews of that information. However, their separate
reports thereon state that they did not audit and they do not express an opinion
on that interim consolidated financial information. Accordingly, the degree of
reliance on their reports on that information should be restricted in light of
the limited nature of the review procedures applied. In addition, the
accountants are not subject to the liability provisions of Section 11 of the
Securities Act of 1933 for their reports on the unaudited interim
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<PAGE> 39
consolidated financial information because those reports are not "reports" or
"parts" of the registration statement prepared or certified by the accountants
within the meaning of Sections 7 and 11 of the Act.
VALIDITY OF THE SECURITIES
Certain matters of Delaware law relating to the validity of the Preferred
Securities, the validity of the Trust Agreement and the formation of the Issuer
are being passed upon by Richards, Layton & Finger, special Delaware counsel to
the Issuer. The validity of the Guarantee and the Subordinated Debentures will
be passed upon on behalf of the Issuer and Ohio Edison by Anthony J. Alexander,
Esq., Akron, Ohio, who is Senior Vice President and General Counsel of Ohio
Edison, and Winthrop, Stimson, Putnam & Roberts, and on behalf of the
Underwriters by Simpson Thacher & Bartlett (a partnership which includes
professional corporations), counsel to the Underwriters.
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PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Filing fees:
Securities and Exchange Commission............................................ $ 41,380
National Association of Securities Dealers, Inc............................... 12,000
Printing and composition of registration statement, prospectus, etc............. 60,000
Services of Trustee and its counsel............................................. 25,000
Services of Counsel -- Winthrop, Stimson, Putnam & Roberts
and Richards, Layton & Finger................................................. 110,000
Services of accountants -- Arthur Andersen LLP.................................. 40,000
Blue Sky fees and expenses...................................................... 25,000
New York Stock Exchange listing fees............................................ 44,300
Rating fees:
Moody's Investors Service, Inc................................................ 30,000
Standard & Poor's Corporation................................................. 24,300
Miscellaneous................................................................... 5,020
--------
Total................................................................. $417,000
========
</TABLE>
All of the above amounts, other than the filing fees, are estimates.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 1701.13(E) of Title 17 of Page's Ohio Revised Code Annotated gives
a corporation incorporated under the laws of Ohio power to indemnify any person
who is or has been a director, officer or employee of that corporation, or of
another corporation at the request of that corporation, against expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with any threatened, pending or completed action, suit or
proceeding, criminal or civil, to which he is or may be made a party because of
being or having been such director, officer or employee, provided that in
connection therewith, such person is determined to have acted in good faith in
what he reasonably believed to be in or not opposed to the best interest of the
corporation of which he is a director, officer or employee, without reasonable
cause, in the case of a criminal matter, to believe that his conduct was
unlawful. The determination as to the conditions precedent to the permitted
indemnification of such person is made by the directors of the indemnifying
corporation acting at a meeting at which, for the purpose, any director who is a
party to or threatened with any such action, suit or proceeding may not be
counted in determining the existence of a quorum and may not vote. If, because
of the foregoing limitations, the directors are unable to act in this regard,
such determination may be made by the majority vote of the corporation's voting
shareholders (or without a meeting upon two-thirds written consent of such
shareholders), by judicial proceeding or by written opinion of legal counsel not
retained by the corporation or any person to be indemnified during the five
years preceding the date of determination.
Section 36 of Ohio Edison Company's Code of Regulations provides as
follows:
"The Corporation shall indemnify any person who is or was a director,
officer, employee or agent of the Corporation or any person who is or has
served at the request of the Corporation as a director, officer, employee,
agent or trustee of another corporation, joint venture, trust or other
enterprise (as his heirs, executors and administrators) against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement,
actually and reasonably incurred by him by reason of the fact that he is or
was such director, officer, employee, agent or trustee in connection with
any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative to the full extent and
according to the procedures and requirements set forth in any applicable
law as the same may be in effect from time to time."
II-1
<PAGE> 41
The following resolution was adopted by the Board of Directors of Ohio
Edison Company on December 15, 1992 and made applicable to this registration
statement at meetings held on March 16, 1993, September 21, 1993 and October 19,
1993:
"RESOLVED, FURTHER: That, in addition to and not in derogation of any
other indemnity that may be available, with respect to the preparation and
filing of registration statement or registration statements with the
Securities and Exchange Commission in connection with the proposed issuance
and sale of the Long-term Indebtedness and/or the Equity Securities of the
Company authorized at this meeting, this Company indemnify and save
harmless each and every officer and employee of the Company executing and
preparing any such registration statement in its original or amended form
and every director of the Company who was a director thereof at the time of
the filing of any such registration statement in its original or amended
form, against any and all expenses reasonably incurred by them or any of
them in connection with any action, suit or proceeding arising out of the
preparation, filing or use of any such registration statement or the
related prospectus whether brought under the Securities Act of 1933 as
amended, or under any other applicable law where such action, suit or
proceeding is finally adjudicated in favor of such director, officer or
employee and the time to appeal has expired;"
Similar indemnity resolutions were adopted with respect to the Common Stock
and various issues of First Mortgage Bonds, Preferred Stock and Preference Stock
currently outstanding.
Section 1701.13(E) of Title 17 of Page's Ohio Revised Code Annotated
provides that the indemnification thereby permitted shall not be exclusive of
any other rights that directors, officers or employees may have, including
rights under insurance purchased by the corporation. Ohio Edison Company has
insurance covering, subject to certain deductible provisions, its liabilities
and expenses which might arise in connection with its lawful indemnification of
its directors and officers for certain of their liabilities and expenses and
also covering, subject to certain deductible provisions, its officers against
certain other liabilities.
In the Trust Agreement, Ohio Edison Company has agreed to indemnify the
Trustees for, and to hold the Trustees harmless against, any loss, liability or
expense incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the Trust Agreement,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder.
ITEM 16. LIST OF EXHIBITS.
The exhibits filed herewith are set forth on the Exhibit Index included as
part of this Registration Statement.
II-2
<PAGE> 42
ITEM 17. UNDERTAKINGS.
The undersigned Registrant, Ohio Edison Company, hereby undertakes that,
for purposes of determining any liability under the Securities Act of 1933 (the
"Act"), each filing of such registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement 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.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of each of the
Registrants pursuant to the provisions described under Item 15 above, or
otherwise, each of the Registrants has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
either of the Registrants of expenses incurred or paid by a director, officer or
controlling person of such Registrant in the successful defense of an action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, each of the Registrants
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 Act and will be governed by the final adjudication of such
issue.
Each of the undersigned registrants hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrants pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act shall be deemed to be part of this registration statement as of
the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus 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-3
<PAGE> 43
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, OHIO EDISON
COMPANY 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 AMENDMENT NO. 1
TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED
THEREUNTO DULY AUTHORIZED, IN THE CITY OF AKRON AND STATE OF OHIO ON THE 15TH
DAY OF SEPTEMBER, 1995.
OHIO EDISON COMPANY
By: W. R. HOLLAND
-----------------------------
W. R. Holland
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
NAME TITLE DATE
------------------------------------ ----------------------------------- -------------------
<C> <S> <C>
W. R. HOLLAND President and Chief Executive September 15, 1995
------------------------------------ Officer and Director (Principal
(W. R. Holland) Executive Officer)
H. P. BURG Senior Vice President and Director September 15, 1995
------------------------------------ (Principal Financial Officer and
(H. P. Burg) Principal Accounting Officer)
DONALD C. BLASIUS* Director September 15, 1995
------------------------------------
(Donald C. Blasius)
ROBERT H. CARLSON* Director September 15, 1995
------------------------------------
(Robert H. Carlson)
ROBERT M. CARTER* Director September 15, 1995
------------------------------------
(Robert M. Carter)
CAROL A. CARTWRIGHT* Director September 15, 1995
------------------------------------
(Carol A. Cartwright)
R. L. LOUGHHEAD* Director September 15, 1995
------------------------------------
(R. L. Loughhead)
GLENN H. MEADOWS* Director September 15, 1995
------------------------------------
(Glenn H. Meadows)
PAUL J. POWERS* Director September 15, 1995
------------------------------------
(Paul J. Powers)
CHARLES W. RAINGER* Director September 15, 1995
------------------------------------
(Charles W. Rainger)
GEORGE M. SMART* Director September 15, 1995
------------------------------------
(George M. Smart)
JESSE T. WILLIAMS, SR.* Director September 15, 1995
------------------------------------
(Jesse T. Williams, Sr.)
*By: H. P. BURG September 15, 1995
------------------------------------
(Attorney-in-fact)
</TABLE>
II-4
<PAGE> 44
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, OHIO EDISON
FINANCING TRUST 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
AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED, IN THE CITY OF AKRON AND STATE OF OHIO ON
THE 15TH DAY OF SEPTEMBER, 1995.
OHIO EDISON FINANCING TRUST
By: Ohio Edison, as Depositor
By: T. F. Struck II
----------------------
Name: T. F. Struck II
Title: Assistant Treasurer
II-5
<PAGE> 45
EXHIBIT INDEX
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement*
4.1 Certificate of Trust of Ohio Edison Financing Trust*
4.2 Form of Declaration of Trust of Ohio Edison Financing Trust*
4.3 Form of Amended and Restated Trust Agreement of Ohio Edison Financing Trust*
4.4 Form of Indenture among Ohio Edison Company, the Issuer and The Bank of New York,
as Debenture Trustee*
4.5 Form of Preferred Security (included in Exhibit 4.3)*
4.6 Form of Subordinated Debenture (included in Exhibit 4.4)*
4.7 Form of Guarantee by Ohio Edison Company and The Bank of New York, as Guarantee
Trustee*
5.1 Opinion of Richards, Layton & Finger, re: validity of Preferred Securities*
5.2 Opinion of Anthony J. Alexander, Esq., Senior Vice President and General Counsel
of Ohio Edison Company, re: validity of Guarantee and Subordinated Debentures*
8.1 Opinion of Winthrop, Stimson, Putnam & Roberts re: tax matters*
12.1 Computation of Consolidated Ratios of Earnings to Fixed Charges*
12.2 Computation of Consolidated Ratios of Earnings to Fixed Charges and Preferred and
Preference Stock Dividend Requirements*
15.1 Letter re: Unaudited Interim Financial Information of Arthur Andersen LLP,
independent public accountants*
23.1 Consent of Arthur Andersen LLP, independent public accountants
23.2 Consent of Richards, Layton & Finger (included in Exhibit 5.1 above)*
23.3 Consent of Anthony J. Alexander, Esq. (included in Exhibit 5.2 above)*
23.4 Consent of Winthrop, Stimson, Putnam & Roberts (included in Exhibit 8.1 above)*
24.1 Power of Attorney of Ohio Edison Company*
25.1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The
Bank of New York, as Debenture Trustee under the Indenture*
25.2 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The
Bank of New York, as Trustee under the Trust Agreement of the Issuer*
25.3 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The
Bank of New York, as Guarantee Trustee under the Guarantee*
</TABLE>
---------------
*Previously filed
II-6
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated February 3, 1995,
included or incorporated by reference in Ohio Edison Company's Annual Report on
Form 10-K for the year ended December 31, 1994, and to all references to our
Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Cleveland, Ohio
September 15, 1995
