614/223-1630
Securities and Exchange Commission
450 Fifth Street, N.W.
ATTN: Filing Desk, Stop 1-4
Washington, D.C. 20549-1004
March 14, 1997
Re: Ohio Power Company
Registration Statement on Form S-3
File No. 333-22143
Gentlemen:
Pursuant to Rule 424(b)(2) and on behalf of Ohio Power Company
(the "Company"), submitted herewith is the Prospectus, dated
February 27, 1997, as supplemented by the Preliminary Prospectus
Supplement, dated March 10, 1997, and the Final Prospectus
Supplement, dated March 13, 1997, to be used in connection with
the anticipated public offering by the Company of its Junior
Subordinated Deferrable Interest Debentures, 7.92% Series due
March 1, 2027 in the principal amount of $50,000,000.
Very truly yours,
/s/ David C. House
David C. House
DCH/mms
PROSPECTUS SUPPLEMENT
(To Prospectus dated February 27, 1997)
$50,000,000
OHIO POWER COMPANY
7.92% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
SERIES B, DUE 2027
The Junior Subordinated Deferrable Interest Debentures,
Series B, Due 2027, will mature on March 31, 2027 (the "Series B
Junior Subordinated Debentures"). Interest on the Series B
Junior Subordinated Debentures is payable quarterly, in arrears,
on each March 31, June 30, September 30 and December 31,
commencing March 31, 1997. The Series B Junior Subordinated
Debentures will be redeemable at 100% of the principal amount
redeemed plus accrued interest to the redemption date at the
option of the Company in whole or in part on or after March 18,
2002. The Series B Junior Subordinated Debentures will be
represented by a global debenture registered in the name of a
nominee of The Depository Trust Company, as Depository, and will
be available for purchase in denominations of $25 and any
integral multiple thereof. See "Description of Series B Junior
Subordinated Debentures" herein and "Description of New Junior
Subordinated Debentures" in the accompanying Prospectus.
Payment of the principal of, premium, if any, and interest
on the Series B Junior Subordinated Debentures is subordinated
and subject in right of payment to the prior payment in full of
all Senior Indebtedness of the Company. As of September 30,
1996, outstanding Senior Indebtedness of the Company aggregated
approximately $1,067,300,000.
The Series B Junior Subordinated Debentures have been
approved for listing on the New York Stock Exchange, subject to
notice of issuance. Trading of the Series B Junior Subordinated
Debentures on the New York Stock Exchange is expected to commence
within a 30 day period after the initial delivery of the Series B
Junior Subordinated Debentures. See "Underwriting" herein.
SEE "INVESTMENT CONSIDERATIONS" FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE SERIES B JUNIOR SUBORDINATED
DEBENTURES, INCLUDING THE PERIODS AND CIRCUMSTANCES DURING AND
UNDER WHICH PAYMENT OF INTEREST ON THE SERIES B JUNIOR SUBORDI-
NATED DEBENTURES MAY BE DEFERRED AND THE RELATED FEDERAL INCOME
TAX CONSEQUENCES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Initial Public Underwriting Proceeds to
Offering Price(1) Discount(2)(4) Company(3)(4)
Per Series B Junior
Subordinated
Debenture ...... 100% 3.15% 96.85%
Total ........ $50,000,000 $1,575,000 $48,425,000
(1) Plus accrued interest, if any, from the date of original
issuance.
(2) The Company has agreed to indemnify the Underwriters against
certain liabilities, including certain liabilities under the
Securities Act of 1933, as amended. See "Underwriting"
herein.
(3) Before deducting expenses payable by the Company, estimated
at $174,652.
(4) The Underwriting Discount will be 2% of the principal amount
of the Series B Junior Subordinated Debentures sold to
certain institutions. Therefore, to the extent any such
sales are made to such institutions, the actual total
Underwriting Discount will be less than, and the actual
total Proceeds to Company will be greater than, the amounts
shown in the table above.
The Series B Junior Subordinated Debentures are offered
severally by the Underwriters, subject to prior sale, when, as
and if issued and accepted by them, subject to approval of
certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to
withdraw, cancel or modify such offer and to reject orders in
whole or in part. It is expected that delivery of the Series B
Junior Subordinated Debentures will be made in New York, New
York, on or about March 18, 1997.
Merrill Lynch & Co.
PaineWebber Incorporated
Prudential Securities Incorporated
Dean Witter Reynolds Inc.
Morgan Stanley & Co. Incorporated
The date of this Prospectus Supplement is March 13, 1997.
Certain persons participating in this offering may engage in
transactions that stabilize, maintain, or otherwise affect the
price of the Series B Junior Subordinated Debentures offered
hereby, including by entering stabilizing bids. For a descrip-
tion of these activities, see "Underwriting" herein.
INVESTMENT CONSIDERATIONS
Prospective purchasers of Series B Junior Subordinated
Debentures should carefully review the information contained
elsewhere in this Prospectus Supplement and in the accompanying
Prospectus and should particularly consider the following
matters:
Subordination of Series B Junior Subordinated Debentures
Payment of the principal of, premium, if any, and interest
on the Series B Junior Subordinated Debentures is subordinated
and subject in right of payment to the prior payment in full of
all Senior Indebtedness of the Company. As of September 30,
1996, outstanding Senior Indebtedness of the Company aggregated
approximately $1,067,300,000. There are no terms in the Series B
Junior Subordinated Debentures that limit the Company's ability
to incur additional indebtedness, including indebtedness that
ranks senior to the Series B Junior Subordinated Debentures. See
"Description of New Junior Subordinated Debentures--Subordina-
tion" in the accompanying Prospectus.
Option to Extend Interest Payment Period
The Company has the right under the Indenture to extend the
interest payment period from time to time on the Series B Junior
Subordinated Debentures to a period not exceeding 20 consecutive
quarters, and as a consequence, quarterly interest payments on
the Series B Junior Subordinated Debentures would be deferred
(but would continue to accrue with interest thereon compounded
quarterly to the extent permitted by law) during any such
extended interest payment period. In the event that the Company
exercises this right, the Company may not declare or pay
dividends on, or 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. Therefore, the Company
believes that the extension of an interest payment period on the
Series B Junior Subordinated Debentures is unlikely. Prior to
the termination of any such extension period, the Company 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 Series B Junior Subordinated
Debentures. Upon the termination of any extension period and the
payment of all accrued and unpaid interest then due, the Company
may select a new extension period, subject to the above
requirements. See "Description of Series B Junior Subordinated
Debentures--Option to Extend Interest Payment Period" herein.
Should an extended interest payment period occur, holders of
the Series B Junior Subordinated Debentures will continue to
accrue income (as original issue discount) for United States
federal income tax purposes even though interest is not being
paid on a current basis. As a result, a holder will include such
interest in gross income for United States federal income tax
purposes in advance of the receipt of cash, and will not receive
the cash from the Company related to such income if a holder
disposes of Series B Junior Subordinated Debentures prior to the
record date for payment of interest. See "Certain United States
Federal Income Tax Consequences--Original Issue Discount, Market
Discount and Acquisition Premium" herein.
Certain Trading Characteristics of the Series B Junior Subordi-
nated Debentures
The Series B Junior Subordinated Debentures are expected to
trade as equity securities on the New York Stock Exchange.
Consequently, purchasers will not pay and sellers will not
receive any accrued and unpaid interest on the Series B Junior
Subordinated Debentures that is not included in the trading
price. For certain tax consequences with respect to such sales,
see "Certain United States Federal Income Tax Consequences--Sale,
Exchange and Retirement of Series B Junior Subordinated
Debentures" herein.
DESCRIPTION OF SERIES B JUNIOR SUBORDINATED DEBENTURES
The following description of the particular terms of the
Series B Junior Subordinated Debentures offered hereby (referred
to in the Prospectus as "New Junior Subordinated Debentures")
supplements, and to the extent inconsistent therewith replaces,
the description of the general terms and provisions of New Junior
Subordinated Debentures set forth in the Prospectus, to which
description reference is hereby made.
General
The Series B Junior Subordinated Debentures will be issued
as a series of New Junior Subordinated Debentures under the
Indenture.
Principal Amount, Interest and Maturity
The Series B Junior Subordinated Debentures will be limited
in aggregate principal amount to $50,000,000.
The Series B Junior Subordinated Debentures will mature
March 31, 2027 and will bear interest at the rate per annum shown
in the title thereof from the date on which the Series B Junior
Subordinated Debentures are originally issued until the principal
amount thereof becomes due and payable. Interest will be payable
quarterly, in arrears, on each March 31, June 30, September 30
and December 31, commencing March 31, 1997. Interest (other than
interest payable on redemption or maturity) will be payable to
the persons in whose names the Series B Junior Subordinated
Debentures are registered at the close of business on the
relevant regular record dates, which will be one Business Day (as
hereinafter defined) prior to the relevant payment dates, except
that if the Series B Junior Subordinated Debentures are no longer
represented by a global debenture, the regular record date for
such interest installment shall be the close of business on March
15, June 15, September 15 or December 15 (regardless of whether
it is a Business Day) next preceding an interest payment date.
Interest payable on redemption or maturity will be payable to the
person to whom the principal is paid. Interest 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 Series B
Junior 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 such date. A "Business Day" shall mean any day other
than a day on which banking institutions in the Borough of
Manhattan, the City and State of New York are authorized or
obligated by law to close.
Redemption
The Series B Junior Subordinated Debentures will be
redeemable at the option of the Company, in whole or in part, at
any time on or after March 18, 2002, upon not less than 30 nor
more than 60 days' notice, at 100% of the principal amount
redeemed together with accrued and unpaid interest to the
redemption date.
Option to Extend Interest Payment Period
The Company shall have the right at any time during the term
of the Series B Junior Subordinated Debentures from time to time
to extend the interest payment period of the Series B Junior
Subordinated Debentures for up to 20 consecutive quarters (the
"Extension Period"), at the end of which Extension Period the
Company shall pay all interest accrued and unpaid thereon
(together with interest thereon compounded quarterly at the rate
specified for the Series B Junior Subordinated Debentures to the
extent permitted by applicable law); provided that during any
such Extension Period, the Company shall not declare or pay any
dividend on, or 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. Prior to the termination
of any such Extension Period, the Company 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 Series B Junior Subordinated Debentures. Upon
the termination of any Extension Period and the payment of all
accrued and unpaid interest then due, the Company 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. The Company shall give the holders of
the Series B Junior Subordinated Debentures notice of its
selection of such Extension Period at least ten Business Days
prior to the earlier of (i) the next interest payment date or
(ii) the date the Company is required to give notice to holders
of the Series B Junior Subordinated Debentures (or, if applica-
ble, to the New York Stock Exchange or other applicable self-
regulatory organization) of the record or payment date of such
interest payment, but in any event not less than two Business
Days prior to such record date.
Covenant of the Company
The Company will not declare or pay any dividend on, or
purchase, acquire or make a distribution or liquidation payment
with respect to, any of its capital stock or make any guarantee
payments with respect thereto, if at such time (i) an Event of
Default under the Indenture has occurred and is continuing or
(ii) the Company has given notice of its selection of an
Extension Period and such period, or any extension thereof, is
continuing.
Form
The Series B Junior Subordinated Debentures initially will
be issued in registered form and will be represented by a global
debenture (the "Global Debenture"). See "Description of New
Junior Subordinated Debentures--Book-Entry Debentures" and
"Description of New Junior Subordinated Debentures--Form,
Exchange, Registration and Transfer" in the accompanying
Prospectus.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the material United States
federal income tax consequences of the ownership of Series B
Junior Subordinated Debentures as of the date hereof and
represents the opinion of Simpson Thacher & Bartlett, counsel to
the Company, insofar as it relates to matters of law or legal
conclusions, and is based on certain representations of the
Company. Except where noted, it deals only with Series B Junior
Subordinated Debentures held by initial purchasers who have
purchased Series B Junior Subordinated Debentures at the initial
offering price thereof and who hold such Series B Junior
Subordinated Debentures as capital assets and does not deal with
special situations, such as those of dealers in securities or
currencies, financial institutions, life insurance companies,
persons holding Series B Junior Subordinated Debentures as a part
of a hedging or conversion transaction or a straddle, United
States Holders (as defined below) whose "functional currency" is
not the U.S. dollar, or Non-United States Holders (as defined
below) who own (actually or constructively) ten percent or more
of the combined voting power of all classes of voting stock of
the Company, who are present in the United States or who have any
other special status with respect to the United States.
Furthermore, the discussion below is based upon the provisions of
the Internal Revenue Code of 1986, as amended (the "Code") and
regulations, rulings and judicial decisions thereunder as of the
date hereof, and such authorities may be repealed, revoked or
modified so as to result in federal income tax consequences
different from those discussed below. Persons considering the
purchase, ownership or disposition of Series B Junior Subordinat-
ed Debentures should consult their own tax advisors concerning
the federal income tax consequences in light of their particular
situations as well as any consequences arising under the laws of
any other taxing jurisdiction.
United States Holders
As used herein, a "United States Holder" of a Series B
Junior Subordinated Debenture means a holder that is a citizen or
resident of the United States, a corporation, partnership or
other entity created or organized in or under the laws of the
United States or any political subdivision thereof, an estate the
income of which is subject to United States federal income
taxation regardless of its source or any trust if a court within
the United States is able to exercise primary supervision over
the administration of the trust and one or more United States
fiduciaries have the authority to control all substantial
decisions of the trust. A "Non-United States Holder" is a holder
that is not a United States Holder.
Payments of Interest
Except as set forth below, stated interest on a Series B
Junior Subordinated Debenture will generally be taxable to a
United States Holder as ordinary income at the time it is paid or
accrued in accordance with the United States Holder's method of
accounting for tax purposes.
Original Issue Discount, Market Discount and Acquisition Premium
The Company believes that, under the applicable Treasury
regulations, the Series B Junior Subordinated Debentures will not
be treated as issued with "original issue discount" ("OID")
within the meaning of section 1273(a) of the Code. If, however,
the Company exercises its rights to defer payments of interest on
the Series B Junior Subordinated Debentures, the Series B Junior
Subordinated Debentures will become OID instruments at such time
and all United States Holders of the Series B Junior Subordinated
Debentures will be required to accrue their pro rata share of OID
on an economic-accrual daily basis during the Extension Period
even though the Company will not pay such interest until the end
of the Extension Period, and even though some United States
Holders may use the cash method of tax accounting. Moreover,
thereafter the Series B Junior Subordinated Debentures will be
taxed as OID instruments for as long as they remain outstanding.
Thus, even after the end of an Extension Period, all United
States Holders would be required to continue to include the
stated interest on the Series B Junior Subordinated Debentures in
income on a daily basis, regardless of their method of tax
accounting and in advance of receipt of the cash attributable to
such interest income. Under the OID economic accrual rules, a
United States Holder would accrue an amount of interest income
each year that approximates the stated interest payments called
for under the terms of the Series B Junior Subordinated
Debentures, and actual cash payments of interest payments on the
Series B Junior Subordinated Debentures would not be reported
separately as taxable income.
The Treasury regulations described above have not yet been
addressed in any rulings or other interpretations by the IRS, and
it is possible that the IRS could take a contrary position. If
the IRS were to assert successfully that the stated interest on
the Series B Junior Subordinated Debentures was OID regardless of
whether the Company exercises its option to defer payments of
interest on such debentures, all United States Holders of Series
B Junior Subordinated Debentures would be required to include
such stated interest in income on an economic-accrual daily basis
as described above.
United States Holders other than initial United States
Holders may be deemed to have acquired the Series B Junior
Subordinated Debentures with market discount or acquisition
premium. Such holders should consult their own tax advisors
concerning the effect of the market discount and premium rules on
their holding of the Series B Junior Subordinated Debentures.
Sale, Exchange and Retirement of Series B Junior Subordinated
Debentures
Upon the sale, exchange or retirement of a Series B Junior
Subordinated Debenture, a United States Holder will recognize
gain or loss equal to the difference between the amount realized
upon the sale, exchange or retirement and the adjusted tax basis
of the Series B Junior Subordinated Debenture. If a United
States Holder disposes of a Series B Junior Subordinated
Debenture prior to the occurrence of an Extension Period, any
portion of the amount received that is attributable to accrued
interest will be treated as interest income and will not be
treated as part of the amount realized for purposes of determin-
ing gain or loss on the disposition of the Series B Junior
Subordinated Debenture. A United States Holder's tax basis in a
Series B Junior Subordinated Debenture will, in general, be the
United States Holder's cost therefor, increased by any OID
previously included in income by the United States Holder and
reduced by any cash payments in respect of such accrued OID (if
any). Such gain or loss will be capital gain or loss and will be
long-term capital gain or loss if at the time of sale, exchange
or retirement the Series B Junior Subordinated Debenture has been
held for more than one year. Under current law, net capital
gains are, under certain circumstances, taxed at lower rates than
items of ordinary income. The deductibility of capital losses is
subject to limitations.
Non-United States Holders
Under present United States federal income and estate tax
law, and subject to the discussion below concerning backup
withholding:
(a) no withholding of United States federal income tax
will be required with respect to the payment by the Company
or any Paying Agent of principal or interest (which for
purposes of this discussion includes OID) on a Series B
Junior Subordinated Debenture owned by a Non-United States
Holder, provided (i) the beneficial owner is not a con-
trolled foreign corporation that is related to the Company
through stock ownership, (ii) the beneficial owner is not a
bank whose receipt of interest on a Series B Junior
Subordinated Debenture is described in section 881(c)(3)(A)
of the Code and (iii) either (y) the beneficial owner
certifies to the Company or its agent, under the penalties
of perjury, that it is not a U. S. person, citizen or
resident and provides its name and address or (z) a
financial institution holding the Series B Junior Subordi-
nated Debentures on behalf of the beneficial owner certi-
fies, under penalties of perjury, that such statement has
been received by it and furnishes the Company or its agent
with a copy thereof;
(b) no withholding of United States federal income tax
will be required with respect to any gain realized by a Non-
United States Holder upon the sale, exchange or retirement
of a Series B Junior Subordinated Debenture; and
(c) a Series B Junior Subordinated Debenture benefi-
cially owned by an individual who at the time of death is a
Non-United States Holder will not be subject to United
States federal estate tax as a result of such individual's
death, provided that the interest payments with respect to
such debenture would not have been, if received at the time
of such individual's death, effectively connected with the
conduct of a trade or business by such individual in the
United States.
Backup Withholding and Information Reporting
In general, information reporting requirements will apply to
certain payments of principal, interest and OID paid on Series B
Junior Subordinated Debentures and to the proceeds of sale of a
Series B Junior Subordinated Debenture made to United States
Holders other than certain exempt recipients (such as corpora-
tions). A 31 percent backup withholding tax will apply to such
payments if the United States Holder fails to provide a taxpayer
identification number or certification of foreign or other exempt
status or fails to report in full dividend and interest income.
No information reporting or backup withholding will be
required with respect to payments made by the Company or any
paying agent to Non-United States Holders if a statement
described in (a)(iii) under "Non-United States Holders" has been
received and the payor does not have actual knowledge that the
beneficial owner is a United States person.
Payments of the proceeds from the sale by a Non-United
States Holder of a Series B Junior Subordinated Debenture made to
or through a foreign office of a broker will not be subject to
information reporting or backup withholding, except that if the
broker is, for federal income tax purposes, a United States
person, a controlled foreign corporation or a foreign person that
derives 50 percent or more of its gross income for certain
periods from the conduct of a trade or business in the United
States, such payments will not be subject to backup withholding
but may be subject to information reporting. Payments of
proceeds from the sale of a Series B Junior Subordinated
Debenture to or through the United States office of a broker is
subject to information reporting and backup withholding unless
the Non-United States Holder or the beneficial owner certifies as
to its non-United States status or otherwise establishes an
exemption.
Any amounts withheld under the backup withholding rules will
be allowed as a refund or a credit against such holder's U. S.
federal income tax liability provided the required information is
furnished to the IRS.
RECENT DEVELOPMENTS
American Electric Power Company, Inc. ("AEP") and the
Company filed with the SEC and mailed to the registered holders
of the Company's cumulative preferred stock their Offer to
Purchase and Proxy Statement. Pursuant to such offer, AEP
purchased, and has subsequently sold to the Company, $119,007,200
par value of the Company's cumulative preferred stock. At a
special meeting of the shareholders of the Company on February
28, 1997, the shareholders approved an amendment to the Amended
Articles of Incorporation to remove the limitation contained
therein upon the Company's ability to issue securities represent-
ing unsecured indebtedness.
UNDERWRITING
Subject to the terms and conditions set forth in the
Underwriting Agreement, the Company has agreed to sell to each of
the Underwriters named below ("Underwriters"), and each of the
Underwriters has severally agreed to purchase the number of
Series B Junior Subordinated Debentures set forth opposite its
name below:
Principal
Amount of
Series B Junior
Subordinated
Underwriter Debentures
Merrill Lynch, Pierce, Fenner & Smith
Incorporated . . . . . . . . . . . . . $12,500,000
PaineWebber Incorporated . . . . . . . . . . . . . 12,500,000
Prudential Securities Incorporated . . . . . . . . 12,500,000
Dean Witter Reynolds Inc. . . . . . . . . . . . . . 6,250,000
Morgan Stanley & Co. Incorporated . . . . . . . . . 6,250,000
Total . . . . . . . . . . . . . . . . . $50,000,000
The Underwriters are committed to take and pay for all of
the Series B Junior Subordinated Debentures, if any are taken.
The Underwriting Agreement provides that under certain circum-
stances involving a default of Underwriters, less than all of the
Series B Junior Subordinated Debentures may be purchased.
The Company has been advised by the Underwriters that the
Underwriters propose initially to offer the Series B Junior
Subordinated Debentures to the public at the public offering
price set forth on the cover page of this Prospectus, and to
certain dealers at such price less a concession not in excess of
2% of the principal amount of the Series B Junior Subordinated
Debentures. The Underwriters may allow, and such dealers may
reallow, a discount not in excess of 1.2% of the principal amount
of the Series B Junior Subordinated Debentures to certain other
dealers. After the initial public offering, the public offering
price, concession and reallowance may be changed.
The Series B Junior Subordinated Debentures are a new issue
of securities with no established trading market. The Series B
Junior Subordinated Debentures have been approved for listing on
the New York Stock Exchange, subject to notice of issuance.
Trading of the Series B Junior Subordinated Debentures on the New
York Stock Exchange is expected to commence within a thirty-day
period after initial delivery of the Series B Junior Subordinated
Debentures. The Company has been advised by the Underwriters
that they intend to make a market in the Series B Junior
Subordinated Debentures, but are not obligated to do so and may
discontinue market making at any time without notice. No
assurance can be given as to the liquidity of the trading market
for the Series B Junior Subordinated Debentures.
In connection with this offering and in compliance with
applicable law and industry practice, the Underwriters may
overallot or effect transactions which stabilize, maintain or
otherwise affect the market price of the Series B Junior
Subordinated Debentures at levels above those which might
otherwise prevail in the open market, including by entering
stabilizing bids. A stabilizing bid means the placing of any
bid, or the effecting of any purchase, for the purpose of
pegging, fixing or maintaining the price of a security.
In general, purchases of a security for the purpose of
stabilization could cause the price of the security to be higher
than it might be in the absence of such purchases.
Neither the Company nor any of the Underwriters makes any
representation or prediction as to the direction or magnitude of
any effect that the transactions described above may have on the
price of the Series B Junior Subordinated Debentures. In
addition, neither the Company nor any of the Underwriters makes
any representation that the Underwriters will engage in such
transactions or that such transactions once commenced, will not
be discontinued without notice.
The Underwriters, and certain affiliates thereof, engage in
transactions with and perform services for the Company and its
affiliates in the ordinary course of business.
The Company has agreed to indemnify the Underwriters against
certain liabilities, including certain liabilities under the
Securities Act of 1933.
PROSPECTUS
OHIO POWER COMPANY
$50,000,000
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
Ohio Power Company (the "Company") intends to offer, from
time to time, up to $50,000,000 aggregate principal amount of its
Junior Subordinated Deferrable Interest Debentures (the "New
Junior Subordinated Debentures"). The New Junior Subordinated
Debentures will be offered in one or more series in amounts, at
prices and on terms to be determined at the time or times of
sale. The title, aggregate principal amount, denomination,
interest rate (or manner of calculation thereof), time of payment
of interest, maturity, initial public offering price, if any,
redemption provisions, if any, any listing on a securities
exchange and other specific terms of each series of New Junior
Subordinated Debentures in respect of which this Prospectus is
being delivered will be set forth in an accompanying supplement
to this prospectus ("Prospectus Supplement").
Payment of the principal of, premium, if any, and interest
on the New Junior Subordinated Debentures is subordinated and
subject in right of payment to the prior payment in full of all
Senior Indebtedness (as defined herein) of the Company. As of
September 30, 1996, outstanding Senior Indebtedness of the
Company aggregated approximately $1,067,300,000.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Company may sell the New Junior Subordinated Debentures
through underwriters, dealers or agents, or directly to one or
more institutional purchasers. A Prospectus Supplement will set
forth the names of underwriters or agents, if any, any applicable
commissions or discounts and the net proceeds to the Company from
any such sale.
The date of this Prospectus is February 27, 1997.
No dealer, salesperson or other person has been authorized
to give any information or to make any representation not
contained in this Prospectus in connection with the offer made by
this Prospectus or any Prospectus Supplement relating hereto,
and, if given or made, such information or representation must
not be relied upon as having been authorized by the Company or
any underwriter, agent or dealer. Neither this Prospectus nor
this Prospectus as supplemented by any Prospectus Supplement
constitutes an offer to sell, or a solicitation of an offer to
buy, by any underwriter, agent or dealer in any jurisdiction in
which it is unlawful for such underwriter, agent or dealer to
make such an offer or solicitation. Neither the delivery of this
Prospectus or this Prospectus as supplemented by any Prospectus
Supplement nor any sale made thereunder shall, under any
circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof or
thereof.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934 (the "1934 Act") and in
accordance therewith files reports and other information with the
Securities and Exchange Commission (the "SEC"). Such reports and
other information may be inspected and copied at the public
reference facilities maintained by the SEC at 450 Fifth Street,
N.W., Washington, D.C., 20549; Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois, 60661; and 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the
SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. The SEC maintains a Web site at http://www.sec.gov
containing reports, proxy and information statements and other
information regarding registrants that file electronically with
the SEC, including the Company. Certain of the Company's
securities are listed on the New York Stock Exchange, where
reports and other information concerning the Company may also be
inspected.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the SEC
are incorporated in this Prospectus by reference:
-- The Company's Annual Report on Form 10-K for the year
ended December 31, 1995;
-- The Company's Quarterly Reports on Form 10-Q for the
periods ended March 31, 1996, June 30, 1996 and
September 30, 1996;
-- The Company's Current Report on Form 8-K dated December
23, 1996.
All documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date
of this Prospectus and prior to the termination of the offering
made by this Prospectus shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
Any statement contained in a document 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 is deemed to be incorporated by
reference herein or in a Prospectus Supplement modifies or
supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to
whom a copy of this Prospectus has been delivered, on the written
or oral request of any such person, a copy of any or all of the
documents described above which have been incorporated by
reference in this Prospectus, other than exhibits to such
documents. Written requests for copies of such documents should
be addressed to Mr. G. C. Dean, American Electric Power Service
Corporation, 1 Riverside Plaza, Columbus, Ohio 43215 (telephone
number: 614-223-1000). The information relating to the Company
contained in this Prospectus or any Prospectus Supplement
relating hereto does not purport to be comprehensive and should
be read together with the information contained in the documents
incorporated by reference.
TABLE OF CONTENTS
Page
Available Information . . . . . . . . . . . . . . . . . . . . . 2
Documents Incorporated by Reference . . . . . . . . . . . . . . 2
Table of Contents . . . . . . . . . . . . . . . . . . . . . . . 3
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 4
Ratio of Earnings to Fixed Charges . . . . . . . . . . . . . . 4
Description of New Junior Subordinated Debentures . . . . . . . 5
Recent Developments . . . . . . . . . . . . . . . . . . . . . 15
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . 15
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Plan of Distribution . . . . . . . . . . . . . . . . . . . . 16
THE COMPANY
The Company is engaged in the generation, purchase,
transmission and distribution of electric power to approximately
673,000 customers in Ohio, and in supplying electric power at
wholesale to other electric utility companies and municipalities
in Ohio. Its principal executive offices are located at 301
Cleveland Avenue, S.W., Canton, Ohio 44702 (telephone number:
330-456-8173). The Company is a subsidiary of American Electric
Power Company, Inc. ("AEP") and is a part of the American
Electric Power integrated utility system (the "AEP System"). The
executive offices of AEP are located at 1 Riverside Plaza,
Columbus, Ohio 43215 (telephone number: 614-223-1000).
USE OF PROCEEDS
The Company proposes to use the net proceeds from the sale
of the New Junior Subordinated Debentures to purchase indirectly
its cumulative preferred stock, to fund its construction program
or to repay short-term indebtedness incurred in connection with
such purchase or its construction program. Subject to certain
conditions, AEP has offered to purchase all of the Company's
outstanding cumulative preferred stock, consisting of 1,484,316
shares issued in seven series: a 4-1/2% series, of which 202,403
shares are outstanding; a 4.08% series, of which 42,575 shares
are outstanding; a 4.20% series, of which 51,975 shares are
outstanding; a 4.40% series, of which 88,363 shares are
outstanding; a 5.90% series, of which 404,000 shares are
outstanding; a 6.02% series, of which 395,000 shares are
outstanding; and a 6.35% series, of which 300,000 shares are
outstanding. See "Recent Developments" herein. Following the
consummation of AEP's tender offer, the Company proposes to
purchase from AEP all such shares of cumulative preferred stock
acquired by AEP.
The Company has estimated that its consolidated construction
costs (inclusive of allowance for funds used during construction)
during 1997 will be approximately $144,000,000. At February 13,
1997, the Company had approximately $1,500,000 of short-term
unsecured indebtedness outstanding.
RATIO OF EARNINGS TO FIXED CHARGES
Below is set forth the ratio of earnings to fixed charges
for each of the twelve month periods ended December 31, 1991
through 1995 and September 30, 1996:
12-Month
Period Ended Ratio
December 31, 1991 2.86
December 31, 1992 2.71
December 31, 1993 3.14
December 31, 1994 3.28
December 31, 1995 2.95
September 30, 1996 3.30
DESCRIPTION OF NEW JUNIOR SUBORDINATED DEBENTURES
The New Junior Subordinated Debentures will be issued under
an Indenture, dated as of October 1, 1995, between the Company
and The First National Bank of Chicago, as Trustee (the
"Trustee"), as heretofore supplemented and amended and as to be
further supplemented (the "Indenture"). Section and Article
references used herein are references to provisions of the
Indenture unless otherwise noted.
All Junior Subordinated Deferrable Interest Debentures
(including the New Junior Subordinated Debentures) issued and to
be issued under the Indenture are herein sometimes referred to as
"Junior Subordinated Debentures". Copies of the Indenture,
including the form of Supplemental Indenture pursuant to which
each series of the New Junior Subordinated Debentures will be
issued (the "new Supplemental Indenture") are filed as exhibits
to the Registration Statement.
The following statements include brief summaries of certain
provisions of the Indenture under which Junior Subordinated
Debentures have been issued. Such summaries do not purport to be
complete and reference is made to the Indenture for complete
statements of such provisions. Such summaries are qualified in
their entirety by such reference and do not relate or give effect
to provisions of statutory or common law.
General
The New Junior Subordinated Debentures will be unsecured,
subordinated obligations of the Company. The Indenture does not
limit the aggregate principal amount of Junior Subordinated
Debentures that may be issued thereunder and provides that the
Junior Subordinated Debentures may be issued thereunder from time
to time in one or more series.
A description of the following terms of each series of New
Junior Subordinated Debentures in respect of which this
Prospectus is being delivered will be contained in a Prospectus
Supplement:
(1) the title of such series of the Junior Subordinated
Debentures;
(2) any limit upon the aggregate principal amount of
the Junior Subordinated Debentures of that series which may
be authenticated and delivered;
(3) the date or dates on which the principal of the
Junior Subordinated Debentures of the series is payable;
(4) the rate or rates (which may be fixed or variable)
at which the Junior Subordinated Debentures of the series
shall bear interest or the manner of calculation of such
rate or rates, if any;
(5) the date or dates from which such interest shall
accrue, the Interest Payment Dates on which such interest
will be payable or the manner of determination of such
Interest Payment Dates and the record date for the determi-
nation of holders to whom interest is payable on any such
Interest Payment Dates;
(6) the right to extend the interest payment periods
and the duration of such extension;
(7) the period or periods within which, the price or
prices at which and the terms and conditions upon which,
Junior Subordinated Debentures of the series may be
redeemed, in whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem or
purchase Junior Subordinated Debentures of the series
pursuant to any sinking fund or analogous provisions
(including payments made in cash in anticipation of future
sinking fund obligations) or at the option of a holder
thereof and the period or periods within which, the price or
prices at which, and the terms and conditions upon which,
Junior Subordinated Debentures of the series shall be
redeemed or purchased, in whole or in part, pursuant to such
obligation;
(9) the denominations in which the Junior Subordinated
Debentures of the series shall be issuable;
(10) any other terms with respect to such series (which
terms shall not be inconsistent with the terms of the
Indenture); and
(11) whether the Junior Subordinated Debentures are
issuable as a Global Debenture and, in such case, the
identity of the Depository for such series. (Section 2.01).
The New Junior Subordinated Debentures may be sold at a
substantial discount below their principal amount. Certain
special United States federal income tax considerations
applicable to the New Junior Subordinated Debentures sold at an
original issue discount may be described in the applicable
Prospectus Supplement.
Except as may otherwise be described in a Prospectus
Supplement, the covenants contained in the Indenture would not
afford holders of New Junior Subordinated Debentures protection
in the event of a highly leveraged transaction involving the
Company.
Subordination
The Indenture provides that payment of the principal of,
premium, if any, and interest on Junior Subordinated Debentures
is subordinated and subject in right of payment to the prior
payment in full of all Senior Indebtedness (as defined below) of
the Company as provided in the Indenture. No payment of
principal of (including redemption and sinking fund payments),
premium, if any, or interest on, Junior Subordinated Debentures
may be made if payment of principal, premium, interest or any
other payment on any Senior Indebtedness is not made when due,
any applicable grace period with respect to such default has
ended and such default has not been cured or waived or ceased to
exist, or if the maturity of any Senior Indebtedness has been
accelerated because of a default. Upon any distribution of
assets of the Company 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, premium, if any, and interest due
or to become due on, all Senior Indebtedness must be paid in full
before any payment is made on Junior Subordinated Debentures.
Subject to the payment in full of all Senior Indebtedness, the
rights of the holders of Junior Subordinated Debentures will be
subrogated to the rights of the holders of Senior Indebtedness to
receive payments or distributions applicable to Senior Indebted-
ness until all amounts owing on Junior Subordinated Debentures
are paid in full. (Sections 14.01 to 14.04).
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 the Company evidenced by notes,
debentures, bonds or other securities sold by the Company
for money or other obligations for money borrowed;
(b) all indebtedness of others of the kinds described
in the preceding clause (a) assumed by or guaranteed in any
manner by the Company or in effect guaranteed by the
Company;
(c) all installment purchase agreements entered into by
the Company in connection with revenue bonds issued by an
agency or political subdivision of a state of the United
States of America; and
(d) all renewals, extensions or refundings of indebted-
ness of the kinds described in either of the preceding
clauses (a), (b) and (c);
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
Junior Subordinated Debentures. Such Senior Indebtedness shall
continue to be Senior Indebtedness and entitled to the benefits
of the subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness.
(Sections 1.01 and 14.08).
The Indenture does not limit the aggregate amount of Senior
Indebtedness that may be issued. As of September 30, 1996,
Senior Indebtedness of the Company aggregated approximately
$1,067,300,000.
Form, Exchange, Registration and Transfer
Unless otherwise specified in a Prospectus Supplement, the
New Junior Subordinated Debentures initially will be issued in
registered form and will be represented by a global debenture
(the "Global Debenture"). See "Book-Entry Debentures" herein.
If not represented by one or more global debentures, New Junior
Subordinated Debentures may be presented for registration of
transfer (with the form of transfer endorsed thereon duly
executed) or exchange, at the office of the Debenture Registrar,
without service charge and upon payment of any taxes and other
governmental charges as described in the Indenture. Such
transfer or exchange will be effected upon the Company or the
Debenture Registrar being satisfied with the documents of title
and identity of the person making the request. The Company has
appointed the Trustee as Debenture Registrar with respect to New
Junior Subordinated Debentures. (Section 2.05).
The Company shall not be required to (i) issue, register the
transfer of or exchange any New Junior Subordinated Debenture
during a period beginning at the opening of business 15 days
before the day of the mailing of a notice of redemption of less
than all the outstanding New Junior Subordinated Debentures and
ending at the close of business on the day of such mailing or
(ii) register the transfer of or exchange any New Junior
Subordinated Debentures or portions thereof called for redemp-
tion. (Section 2.05).
Payment and Paying Agents
Unless otherwise indicated in a Prospectus Supplement,
payment of principal of and premium (if any) on any New Junior
Subordinated Debenture will be made only against surrender to the
Paying Agent of such New Junior Subordinated Debenture.
Principal of and any premium and interest on New Junior
Subordinated Debentures will be payable at the office of such
Paying Agent or Paying Agents as the Company may designate from
time to time, except that at the option of the Company payment of
any interest may be made by check mailed to the address of the
person entitled thereto as such address shall appear in the
Debenture Register with respect to such New Junior Subordinated
Debentures.
Unless otherwise indicated in a Prospectus Supplement, the
Trustee will act as Paying Agent with respect to New Junior
Subordinated Debentures. The Company may at any time designate
additional Paying Agents or rescind the designation of any Paying
Agents or approve a change in the office through which any Paying
Agent acts. (Sections 4.02 and 4.03).
All moneys paid by the Company to a Paying Agent for the
payment of the principal of or premium or interest, if any, on
any New Junior Subordinated Debenture that remain unclaimed at
the end of two years after such principal, premium, if any, or
interest shall have become due and payable, subject to applicable
law, will be repaid to the Company and the holder of such New
Junior Subordinated Debenture will thereafter look only to the
Company for payment thereof. (Section 11.04).
Book-Entry Debentures
Unless otherwise specified in a Prospectus Supplement and
except under the circumstances described below, the New Junior
Subordinated Debentures will be issued in whole or in part in the
form of a Global Debenture that will be deposited with, or on
behalf of, The Depository Trust Company, New York, New York
("DTC"), or such other depository as may be subsequently
designated (the "Depository"), and registered in the name of a
nominee of the Depository.
Book-Entry Debentures represented by a Global Debenture will
not be exchangeable for Certificated Debentures and, except under
the circumstances described below, will not otherwise be issuable
as Certificated Debentures.
So long as the Depository, or its nominee, is the registered
owner of a Global Debenture, such Depository or such nominee, as
the case may be, will be considered the sole owner of the
individual Book-Entry Debentures represented by such Global
Debenture for all purposes under the Indenture. Payments of
principal of and premium, if any, and any interest on individual
Book-Entry Debentures represented by a Global Debenture will be
made to the Depository or its nominee, as the case may be, as the
Owner of such Global Debenture. Except as set forth below,
owners of beneficial interests in a Global Debenture will not be
entitled to have any of the individual Book-Entry Debentures
represented by such Global Debenture registered in their names,
will not receive or be entitled to receive physical delivery of
any such Book-Entry Debentures and will not be considered the
Owners thereof under the Indenture, including, without limita-
tion, for purposes of consenting to any amendment thereof or
supplement thereto.
If the Depository is at any time unwilling or unable to
continue as depository and a successor depository is not
appointed, the Company will issue individual Certificated
Debentures in exchange for the Global Debenture representing the
corresponding Book-Entry Debentures. In addition, the Company
may at any time and in its sole discretion determine not to have
any New Junior Subordinated Debentures represented by the Global
Debenture and, in such event, will issue individual Certificated
Debentures in exchange for the Global Debenture representing the
corresponding Book-Entry Debentures. In any such instance, an
owner of a Book-Entry Debenture represented by a Global Debenture
will be entitled to physical delivery of individual Certificated
Debentures equal in principal amount to such Book-Entry Debenture
and to have such Certificated Debentures registered in his or her
name.
DTC has confirmed to the Company and the Underwriters the
following information:
1. DTC will act as securities depository for the Global
Debenture. The New Junior Subordinated Debentures will be
issued as fully-registered securities registered in the name
of Cede & Co. (DTC's partnership nominee). One fully-
registered Global Debenture will be issued for the series of
New Junior Subordinated Debentures, in the aggregate
principal amount of such series, and will be deposited with
DTC.
2. 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 1934 Act. DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited
securities 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. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc., and the National Association
of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and
dealers, banks, and trust companies that clear through or
maintain a custodial relationship with a Direct Participant,
either directly or indirectly ("Indirect Participants").
The Rules applicable to DTC and its Participants are on file
with the SEC.
3. Purchases of New Junior Subordinated Debentures
under the DTC system must be made by or through Direct
Participants, which will receive a credit for the New Junior
Subordinated Debentures on DTC's records. The ownership
interest of each actual purchaser of each New Junior
Subordinated Debenture ("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 purchase, but Beneficial Owners are expected to
receive written confirmations providing details of the
transaction, as well as periodic statements of their
holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the New Junior Subordi-
nated Debentures 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 New Junior
Subordinated Debentures, except in the event that use of the
book-entry system for the New Junior Subordinated Debentures
is discontinued.
4. To facilitate subsequent transfers, all New Junior
Subordinated Debentures deposited by Participants with DTC
are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of New Junior Subordinated Deben-
tures with DTC and their registration in the name of Cede &
Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the New Junior
Subordinated Debentures; DTC's records reflect only the
identity of the Direct Participants to whose accounts such
New Junior Subordinated Debentures are credited, which may
or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on
behalf of their customers.
5. 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.
6. Redemption notices shall be sent to Cede & Co. If
less than all of the New Junior Subordinated Debentures are
being redeemed, DTC's practice is to determine by lot the
amount of the interest of each Direct Participant in such
issue to be redeemed.
7. Neither DTC nor Cede & Co. will consent or vote with
respect to the New Junior Subordinated Debentures. Under
its usual procedures, DTC mails an Omnibus Proxy to the
Company as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts the
New Junior Subordinated Debentures are credited on the
record date (identified in a listing attached to the Omnibus
Proxy).
8. Principal and interest payments on the New Junior
Subordinated Debentures will be made to DTC. DTC's practice
is to credit Direct Participants' accounts on the date on
which interest is payable in accordance with their respec-
tive holdings shown on DTC's records unless DTC has reason
to believe that it will not receive payment on such date.
Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices,
as is the case with securities held for the accounts of
customers in bearer form or registered in "street name", and
will be the responsibility of such Participant and not of
DTC, the Underwriters or the Company, subject to any
statutory or regulatory requirements as may be in effect
from time to time. Payment of principal and interest to DTC
is the responsibility of the Company or the Trustee,
disbursement of such payments to Direct Participants shall
be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibili-
ty of Direct and Indirect Participants.
9. DTC may discontinue providing its services as
securities depository with respect to the New Junior
Subordinated Debentures at any time by giving reasonable
notice to the Company and the Trustee. Under such circum-
stances, in the event that a successor securities depository
is not obtained, Certificated Debentures are required to be
printed and delivered.
10. The Company may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor
securities depository). In that event, Certificated
Debentures 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 Company
believes to be reliable, but the Company takes no responsibility
for the accuracy thereof.
None of the Company, the Trustee or any agent for payment on
or registration of transfer or exchange of any Global Debenture
will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial
interests in such Global Debenture or for maintaining, supervis-
ing or reviewing any records relating to such beneficial
interests.
Modification of the Indenture
The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the holders of not less than a
majority in principal amount of Junior Subordinated Debentures of
each series that are affected by the modification, to modify the
Indenture or any supplemental indenture affecting that series or
the rights of the holders of that series of Junior Subordinated
Debentures; provided, that no such modification may, without the
consent of the holder of each outstanding Junior Subordinated
Debenture affected thereby, (i) extend the fixed maturity of any
Junior Subordinated Debentures of any series, or reduce the
principal amount thereof, or reduce the rate or extend the time
of payment of interest thereon, or reduce any premium payable
upon the redemption thereof or (ii) reduce the percentage of
Junior Subordinated Debentures, the holders of which are required
to consent to any such supplemental indenture. (Section 9.02).
In addition, the Company and the Trustee may execute,
without the consent of any holder of Junior Subordinated
Debentures, any supplemental indenture for certain other usual
purposes including the creation of any new series of Junior
Subordinated Debentures. (Sections 2.01, 9.01 and 10.01).
Events of Default
The Indenture provides that any one or more of the following
described events, which has occurred and is continuing,
constitutes an "Event of Default" with respect to each series of
Junior Subordinated Debentures:
(a) failure for 10 days to pay interest on Junior
Subordinated Debentures of that series when due; provided
that a valid extension of the interest payment period by the
Company shall not constitute a default in the payment of
interest for this purpose; or
(b) failure to pay principal or premium, if any, on
Junior Subordinated Debentures of that series when due
whether at maturity, upon redemption, by declaration or
otherwise, or to make payment required by any sinking or
analogous fund with respect to that series; or
(c) failure by the Company to observe or perform any
other covenant (other than those specifically relating to
another series) contained in the Indenture for 90 days after
written notice to the Company from the Trustee or the
holders of at least 25% in principal amount of the outstand-
ing Junior Subordinated Debentures of that series; or
(d) certain events involving bankruptcy, insolvency or
reorganization of the Company. (Section 6.01).
The Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of any particular series of Junior
Subordinated Debentures may declare the principal due and payable
immediately upon an Event of Default with respect to such series,
but the holders of a majority in aggregate outstanding principal
amount of such series may annul such declaration and waive the
default with respect to such series if the default has been cured
and a sum sufficient to pay all matured installments of interest
and principal otherwise than by acceleration and any premium has
been deposited with the Trustee. (Sections 6.01 and 6.06).
The holders of a majority in aggregate outstanding principal
amount of any series of Junior Subordinated Debentures have the
right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee for that
series. (Section 6.06). Subject to the provisions of the
Indenture relating to the duties of the Trustee in case an Event
of Default shall occur and be continuing, the Trustee will be
under no obligation to exercise any of its rights or powers under
the Indenture at the request or direction of any of the holders
of the Junior Subordinated Debentures, unless such holders shall
have offered to the Trustee indemnity satisfactory to it.
(Section 7.02).
The holders of a majority in aggregate outstanding principal
amount of any series of Junior Subordinated Debentures affected
thereby may, on behalf of the holders of all Junior Subordinated
Debentures of such series, waive any past default, except a
default in the payment of principal, premium, if any, or interest
when due otherwise than by acceleration (unless such default has
been cured and a sum sufficient to pay all matured installments
of interest and principal otherwise than by acceleration and any
premium has been deposited with the Trustee) or a call for
redemption of Junior Subordinated Debentures of such series.
(Section 6.06). The Company is required to file annually with
the Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants under the
Indenture. (Section 5.03(d)).
Consolidation, Merger and Sale
The Indenture does not contain any covenant that restricts
the Company's ability to merge or consolidate with or into any
other corporation, sell or convey all or substantially all of its
assets to any person, firm or corporation or otherwise engage in
restructuring transactions, provided that the successor
corporation assumes due and punctual payment of principal or
premium, if any, and interest on the Junior Subordinated
Debentures. (Section 10.01).
Defeasance and Discharge
Under the terms of the Indenture, the Company will be
discharged from any and all obligations in respect of the New
Junior Subordinated Debentures (except in each case for certain
obligations to register the transfer or exchange of New Junior
Subordinated Debentures, replace stolen, lost or mutilated New
Junior Subordinated Debentures, maintain paying agencies and hold
moneys for payment in trust) if the Company deposits with the
Trustee, in trust, moneys or Governmental Obligations (as defined
in the Indenture), or a combination thereof, in an amount
sufficient to pay all the principal of, and interest on, New
Junior Subordinated Debentures of such series on the dates such
payments are due in accordance with the terms of the New Junior
Subordinated Debentures. Such defeasance or discharge may occur
only if, among other things, the Company has delivered to the
Trustee an Opinion of Counsel to the effect that the holders of
the New Junior Subordinated Debentures will not recognize gain,
loss or income for federal income tax purposes as a result of the
satisfaction and discharge of the Indenture with respect to such
series and such holders will be subject to federal income
taxation on the same amounts and in the same manner and at the
same times as if such satisfaction and discharge had not
occurred. (Section 11.01).
Governing Law
The Indenture and New Junior Subordinated Debentures will be
governed by, and construed in accordance with, the laws of the
State of New York. (Section 13.05).
Concerning the Trustee
AEP System companies, including the Company, utilize or may
utilize some of the banking services offered by The First
National Bank of Chicago in the normal course of their business-
es. Among such services are the making of short-term loans,
generally at rates related to the prime commercial interest rate.
RECENT DEVELOPMENTS
On January 30, 1997, American Electric Power Company, Inc.
("AEP") and the Company filed with the SEC and mailed to the
registered holders of the Company's cumulative preferred stock
their Offer to Purchase and Proxy Statement. AEP has offered to
purchase all the outstanding shares of the Company's cumulative
preferred stock (the "AEP Offer"). Concurrently with the AEP
Offer, the Board of Directors of the Company is soliciting
proxies for use at a special meeting of shareholders of the
Company on February 28, 1997. The special meeting is being held
to consider an amendment to the Company's Amended Articles of
Incorporation to remove the limitation contained therein upon the
Company's ability to issue securities representing unsecured
indebtedness.
LEGAL OPINIONS
Opinions with respect to the legality of New Junior
Subordinated Debentures will be rendered by Simpson Thacher &
Bartlett (a partnership which includes professional corpora-
tions), 425 Lexington Avenue, New York, New York, and 1 Riverside
Plaza, Columbus, Ohio, counsel for the Company, and by Dewey
Ballantine, 1301 Avenue of the Americas, New York, New York,
counsel for the Underwriters. Additional legal opinions in
connection with the offering of the New Junior Subordinated
Debentures may be given by John M. Adams, Jr. or David C. House,
counsel for the Company. Mr. Adams is Assistant General Counsel,
and Mr. House is an Attorney, in the Legal Department of American
Electric Power Service Corporation, a wholly owned subsidiary of
AEP. From time to time, Dewey Ballantine acts as counsel to
affiliates of the Company in connection with certain matters.
EXPERTS
The financial statements and related financial statement
schedule incorporated in this prospectus by reference from the
Company's Annual Report on Form 10-K have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their
reports, which are incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
PLAN OF DISTRIBUTION
The Company may sell the New Junior Subordinated Debentures
in any of three ways: (i) through underwriters or dealers; (ii)
directly to a limited number of purchasers or to a single
purchaser; or (iii) through agents. The Prospectus Supplement
relating to a series of the New Junior Subordinated Debentures
will set forth the terms of the offering of the New Junior
Subordinated Debentures, including the name or names of any
underwriters, dealers or agents, the purchase price of such New
Junior Subordinated Debentures and the proceeds to the Company
from such sale, any underwriting discounts or agency fees and
other items constituting underwriters' or agents' compensation,
any initial public offering price and any discounts or conces-
sions allowed or reallowed or paid to dealers. Any initial
public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time
after the initial public offering.
If underwriters are used in the sale, the New Junior
Subordinated Debentures will be acquired by the underwriters for
their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time
of the sale. The underwriters with respect to a particular
underwritten offering of New Junior Subordinated Debentures will
be named in the Prospectus Supplement relating to such offering
and, if an underwriting syndicate is used, the managing
underwriters will be set forth on the cover page of such
Prospectus Supplement. Unless otherwise set forth in the
Prospectus Supplement, the obligations of the underwriters to
purchase the New Junior Subordinated Debentures will be subject
to certain conditions precedent, and the underwriters will be
obligated to purchase all such New Junior Subordinated Debentures
if any are purchased.
New Junior Subordinated Debentures may be sold directly by
the Company or through agents designated by the Company from time
to time. The Prospectus Supplement will set forth the name of
any agent involved in the offer or sale of the New Junior
Subordinated Debentures in respect of which the Prospectus
Supplement is delivered as well as any commissions payable by the
Company to such agent. Unless otherwise indicated in the
Prospectus Supplement, any such agent will be acting on a
reasonable best efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company
will authorize agents, underwriters or dealers to solicit offers
by certain specified institutions to purchase New Junior
Subordinated Debentures from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a
specified date in the future. Such contracts will be subject to
those conditions set forth in the Prospectus Supplement, and the
Prospectus Supplement will set forth the commission payable for
solicitation of such contracts.
Subject to certain conditions, the Company may agree to
indemnify any underwriters, dealers, agents or purchasers and
their controlling persons against certain civil liabilities,
including certain liabilities under the Securities Act of 1933.
