File No. 70-6373
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
POST-EFFECTIVE AMENDMENT NO. 4
TO
FORM U-1
------------------------------
APPLICATION OR DECLARATION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
* * *
OHIO POWER COMPANY
301 Cleveland Avenue, S.W., Canton, Ohio 44702
(Name of company filing this statement and
address of principal executive office)
* * *
AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza, Columbus, Ohio 43215
(Name of top registered holding company
parent of each applicant or declarant)
* * *
A. A. Pena, Senior Vice President
American Electric Power Service Corporation
1 Riverside Plaza, Columbus, Ohio 43215
Susan Tomasky, General Counsel
American Electric Power Service Corporation
1 Riverside Plaza, Columbus, Ohio 43215
(Names and addresses of agents for service)
Ohio Power Company ("OPCo"), a wholly-owned utility subsidiary of American
Electric Power Company, Inc. ("AEP"), a holding company registered under the
Public Utility Holding Company Act of 1935 ("1935 Act"), hereby amends as
follows its Application or Declaration on Form U-1 in File No. 70-6373, as
heretofore amended:
1. By adding the following paragraphs to the end of Item 1 of said Form
U-l:
"On November 26, 1979, the Commission issued an Order (see HCAR No. 21308)
herein authorizing the transfer by OPCo of certain pollution control facilities
at its Cardinal and Muskingum River Generating Stations (the 'Project') to the
Ohio Air Quality Development Authority (the 'Authority'), and the acquisition by
OPCo of the Project from the Authority, all pursuant to an installment sale
agreement between OPCo and the Authority (the 'Agreement').
On November 28, 1979, the Authority issued $50,000,000 of State of Ohio
Air Quality Development Revenue Bonds (Ohio Power Company Project), Series A
(the 'Series A Bonds'), and deposited the amount realized from such sale in the
Construction Fund (as defined in the Indenture of Trust, dated as of November 1,
1979 (the 'Indenture')) in order to provide monies to reimburse OPCo for a
portion of the amounts it had expended to pay the Cost of Construction (as
defined in the Agreement) of the Project. The Series A Bonds included
$10,000,000 principal amount of 9.10% Bonds which, by their terms, were to
mature on November 1, 2004 and also included $40,000,000 principal amount of
9.20% Bonds which, by their terms, were to mature on November 1, 2009.
On June 8, 1989, in connection with the issue and sale by the Authority of
additional air quality development revenue refunding bonds, Series B, in the
aggregate amount of $50,000,000 (the 'Series B Bonds') to provide principal,
premium and interest payments required for the refunding of the Series A Bonds,
OPCo filed a Post-Effective Amendment No. 1 in this File requesting that an
Order be entered by this Commission granting all requisite authorization under
the 1935 Act for the transactions proposed therein. On August 11, 1989, this
Commission issued an Order (HCAR No. 24938) authorizing OPCo to take all
necessary action to effect the transactions specified in said Order. On August
23, 1989, the Authority issued $50,000,000 of Series B Bonds, the proceeds of
which were deposited in the Bond Fund created by the Indenture, together with
other funds supplied by OPCo, and applied to the payment of the principal of,
and premium and accrued interest on, the Series A Bonds at their redemption on
November 1, 1989.
Pursuant to the Agreement, OPCo may request the Authority to issue and
sell additional air quality development revenue bonds in an aggregate principal
amount of up to $50,000,000 (the 'Series C Bonds') in order to provide funds for
the payment of up to $50,000,000 aggregate principal amount of the Series B
Bonds prior to their stated maturity. It is contemplated that the Series C Bonds
will be issued pursuant to the Indenture as supplemented and amended and as to
be further supplemented and amended by a Second Supplemental Indenture in
substantially the form filed herewith as Exhibit B-4, which will provide that
the proceeds of the sale of the Series C Bonds will be deposited by the
Authority with the Trustee in the Bond Fund and applied to payment of up to
$50,000,000 aggregate principal amount of the Series B Bonds.
It is contemplated that the Series C Bonds will be sold by the Authority
pursuant to arrangements with Goldman, Sachs & Co. While OPCo will not be a
party to the underwriting arrangements for the Series C Bonds, the Agreement
provides that the Series C Bonds shall have such terms as shall be specified by
OPCo. If it is deemed advisable, the final form of the Second Supplemental
Indenture may provide for a sinking fund pursuant to which a portion of all
Series C Bonds could be retired annually. In addition, if it is deemed
advisable, the Series C Bonds may not be redeemable optionally in whole or in
part for a period of time. Finally, if it is deemed advisable, the Series C
Bonds may be provided some form of credit enhancement such as a letter of
credit, bond insurance or surety bond.
OPCo understands that the Series C Bonds can be issued under circumstances
that the interest on such Series C Bonds will be excludable from gross income
under the provisions of Section 103 of the Internal Revenue Code of 1986, as
amended (except for interest on any such Series C Bond during a period in which
it is held by a person who is a substantial user of the Project or a related
person), and that while it is not possible to predict precisely the interest
rate which may be obtained in connection with the issuance of bonds having such
characteristics, the annual interest rate on tax exempt obligations historically
has been, and can be expected under current circumstances to be, 1-1/2% to
2-1/2% or more lower than the rates of obligations of like tenor and comparable
quality, interest on which is fully subject to Federal income tax.
The Agreement provides that each installment of the purchase price for the
Project payable by OPCo will be in such an amount (together with other moneys
held by the Trustee under the Indenture for that purpose) as will enable payment
when due, of (i) the interest on all Series C Bonds and any additional bonds and
refunding bonds issued under the Indenture; (ii) the stated maturities of the
principal of all Series C Bonds and any additional bonds and refunding bonds
issued under the Indenture; and (iii) amounts, including any accrued interest,
payable in connection with any mandatory redemption of all Series C Bonds and
any additional bonds or refunding bonds issued under the Indenture. The
Agreement also obligates OPCo to pay the fees and charges of the Trustee, as
well as certain administrative expenses of the Authority.
OPCo will not agree, without further Order of this Commission, to the
issuance of any Series C Bond by the Authority (i) if the stated maturity of any
such Series C Bond shall be more than forty (40) years; (ii) if the fixed rate
of interest to be borne by any such Series C Bond shall exceed 8% per annum or
the initial rate of interest to be borne by any fluctuating rate Series C Bond
shall exceed 8%; (iii) if the discount from the initial public offering price of
any such Series C Bond shall exceed 5% of the principal amount thereof; or (iv)
if the initial public offering price of any such Series C Bond shall be less
than 95% of the principal amount thereof.
The Series B Bonds may be redeemed beginning August 1, 1999 at a
redemption price of 102.00%. OPCo may consider the payment of such premium
prudent in light of the amounts of interest expense that could be saved by early
redemption thereof, and proposes to treat said premium as an issuance expense of
the Series C Bonds to be amortized over the life of the Series C Bonds. OPCo
intends to utilize deferred tax accounting of the premium expense, in order to
properly match the amortization of the expense and related tax effect.
Since OPCo believes that every effort should be made to minimize, to the
extent possible, carrying costs of facilities employed by OPCo in the rendition
of utility services and the Authority will apply the funds derived from the
issuance of Series C Bonds to the payment of up to $50,000,000 aggregate
principal amount of Series B Bonds, OPCo believes that the public interest will
be served by the issuance of the Series C Bonds.
OPCo believes that the consummation of the transactions herein proposed
will be in the best interests of OPCo's consumers and investors and consistent
with sound and prudent financial policy. Moreover, because the proceeds from the
sale of the Series C Bonds will be deposited by the Authority in the Bond Fund
and will be applied to the payment of up to $50,000,000 aggregate principal
amount of Series B Bonds, none of the proceeds of the sale of the Series C Bonds
will be received by OPCo.
* * *
Rule 54 provides that in determining whether to approve certain
transactions other than those involving an exempt wholesale generator ('EWG') or
a foreign utility company ('FUCO'), as defined in the 1935 Act, the Commission
will not consider the effect of the capitalization or earnings of any subsidiary
which is an EWG or FUCO if Rule 53(a), (b) and (c) are satisfied. As set forth
below, all applicable conditions of Rule 53(a) are currently satisfied and none
of the conditions set forth in Rule 53(b) exist or will exist as a result of the
transactions proposed herein, thereby satisfying such provision and making Rule
53(c) inapplicable.
Rule 53(a)(1). As of September 30, 1998, AEP, through its subsidiary, AEP
Resources, Inc., had aggregate investment in FUCOs of $463,536,000. This
investment represents approximately 28.0% of $1,654,505,000, the average of the
consolidated retained earnings of AEP reported on Forms 10-Q and 10-K for the
four consecutive quarters ended September 30, 1998.
Rule 53(a)(2). Each FUCO in which AEP invests will maintain books and
records and make available the books and records required by Rule 53(a)(2).
Rule 53(a)(3). No more than 2% of the employees of the Operating
Companies1 of AEP will, at any one time, directly or indirectly, render services
to any FUCO.
Rule 53(a)(4). AEP has submitted and will submit a copy of Item 9 and
Exhibits G and H of AEP's Form U5S to each of the public service commissions
having jurisdiction over the retail rates of AEP's Operating Companies.
Rule 53(b). (i) Neither AEP nor any subsidiary of AEP is the subject of
any pending bankruptcy or similar proceeding; (ii) AEP's average consolidated
retained earnings for the four most recent quarterly periods ($1,654,585,000)
represented an increase of approximately $63,768,000 (or 4%) in the average
consolidated retained earnings from the previous four quarterly periods
($1,590,817,000); and (iii) for the fiscal year ended December 31, 1997, AEP did
not report operating losses attributable to AEP's direct or indirect investments
in EWGs and FUCOs.
AEP was authorized to invest up to 100% of its consolidated retained
earnings in EWGs and FUCOs (HCAR No. 26864, April 27, 1998) (the '100% Order')
in File No. 70-9021. In connection with its consideration of AEP's application
for the 100% Order, the Commission reviewed AEP's procedures for evaluating EWG
or FUCO investments. Based on projected financial ratios and on procedures and
conditions established to limit the risks to AEP involved with investments in
EWGs and FUCOs, the Commission determined that permitting AEP to invest up to
100% of its consolidated retained earnings in EWGs and FUCOs would not have a
substantial adverse impact upon the financial integrity of the AEP System, nor
would it have an adverse impact on any of the Operating Companies or their
customers, or on the ability of state commissions to protect the Operating
Companies or their customers. Since similar considerations are involved
hereunder with respect to Rule 54, OPCo should not be required to make
subsequent Rule 54 filings once AEP's aggregate investment in EWGs and FUCOs
exceeds 50% of its consolidated retained earnings."
2. By supplying the following list of estimated expenses with respect to
the transactions contemplated in Post-Effective Amendment No. 4:
Printing Official Statement, etc.....................$ 25,000
Independent Auditors' Fees........................... 15,000
Charges of Trustee (including counsel fees).......... 20,000
Legal Fees........................................... 110,000
Underwriter Fees..................................... 375,000
Rating Agency Fees................................... 40,000
Miscellaneous Expenses............................... 30,000
TOTAL......................................$615,000
3. By adding the following paragraph to the end of Item 4 of said Form
U-1:
"The proposed issuance of the Series C Bonds is the subject of an
application to, and will be authorized by, The Public Utilities Commission of
Ohio."
4. By adding the following paragraph at the end of Item 5 of said Form
U-1:
It is requested, pursuant to Rule 23(c) of the Rules and Regulations of
the Commission, that the Commission's order granting and permitting to become
effective this Application or Declaration be issued on or before April 1, 1999.
OPCo waives any recommended decision by a hearing officer or by any other
responsible officer of the Commission and waives the 30-day waiting period
between the issuance of the Commission's order and the date it is to become
effective, since it is desired that the Commission's order, when issued, become
effective forthwith. OPCo consents to the Division of Investment Management
assisting in the preparation of the Commission's decision and/or order in this
matter, unless the Division opposes the matter covered by this Application or
Declaration."
5. By supplying the following exhibits:
"Exhibit B-4 Form of Second Supplemental Indenture
between the County and the Trustee
Exhibit D-5 Copy of Application to The Public
Utilities Commission of Ohio
Exhibit D-6 Copy of Order of The Public Utilities
Commission of Ohio (to be filed by
amendment)
Exhibit H-1 Form of Notice
(b) Financial Statements:
It is believed that financial statements of OPCo and AEP and its
subsidiaries are not necessary or relevant to the disposition of this
proceeding."
7. By adding the following paragraph at the end of Item 7 of said Form
U-1:
"It is believed that the granting and permitting to become effective of
this Application or Declaration will not constitute a major Federal action
significantly affecting the quality of the human environment. No other Federal
agency has prepared or is preparing an environmental impact statement with
respect to the proposed transaction."
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this Post-Effective Amendment No.
4 to be signed on its behalf by the undersigned thereunto duly authorized.
OHIO POWER COMPANY
By_/s/ A. A. Pena________
Vice President
Dated: February 17, 1999
1 Appalachian Power Company ('APCo'), Columbus Southern Power Company ('CSPCo'),
Kentucky Power Company ('KPCo'), Kingsport Power Company ('KgpCo'), Indiana
Michigan Power Company ('I&M'), OPCo and Wheeling Power Company ('WPCo'),
electric utility subsidiaries of AEP (sometimes collectively referred to herein
as 'Operating Companies'). AEP is primarily engaged, through the Operating
Companies, in the generation, transmission and distribution of electric energy.
The Operating Companies operate an integrated public utility system that
provides service in Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia and
West Virginia.
Exhibit B-4
SECOND SUPPLEMENTAL INDENTURE OF TRUST
Between
OHIO AIR QUALITY DEVELOPMENT AUTHORITY
And
NATIONAL CITY BANK
(successor to BancOhio National Bank)
Trustee
Dated as of __________ __, ____
THIS SECOND SUPPLEMENTAL INDENTURE OF TRUST (the "Second Supplemental
Indenture") made and entered into as of __________ __, ____, by and between the
OHIO AIR QUALITY DEVELOPMENT AUTHORITY, a body both corporate and politic in the
State of Ohio, organized and existing under the laws of the State of Ohio (the
"Issuer"), and NATIONAL CITY BANK (successor to BancOhio National Bank), a
national banking association within the State of Ohio, organized, existing and
authorized to accept and execute trusts of the character herein set out under
and by virtue of the laws of the United States, with its principal office
located in Cleveland, Ohio, as trustee (the "Trustee").
R E C I T A L S
WHEREAS, the Issuer has issued $50,000,000 aggregate principal amount of
State of Ohio Air Quality Development Revenue Bonds (Ohio Power Company
Project), Series B (the "Series B Bonds"), pursuant to Section 13 of Article
VIII of the Ohio Constitution, as implemented by Chapter 3706, Ohio Revised
Code, both as amended (collectively, the "Act"), under the Indenture of Trust
dated as of November 1, 1979 (the "Indenture"), between the Issuer and the
Trustee for the purpose of acquiring, constructing and financing, in part,
certain facilities of Ohio Power Company (the "Company") designed for the
abatement of atmospheric pollution (the "Project") at the Company's Unit 1 (the
"Cardinal Plant") of the Cardinal Generating Station located in the County of
Jefferson, Ohio, and at the Company's Muskingum River Generating Station (the
"Muskingum River Plant") located in the Counties of Morgan and Washington, Ohio
(the Cardinal Plant and the Muskingum River Plant being referred to herein
collectively as the "Plants"), which facilities were sold to the Company
pursuant to an Agreement of Sale dated as of November 1, 1979 (the "Agreement")
between the Issuer and the Company; and
WHEREAS, the Issuer has determined to issue $50,000,000 aggregate
principal amount of State of Ohio Air Quality Development Revenue Refunding
Bonds (Ohio Power Company Project), Series C (the "Series C Bonds"), as
Refunding Bonds pursuant to Section 2.11 of the Indenture to refund $50,000,000
aggregate principal amount of Series B Bonds at their redemption on August 1,
1999; and
WHEREAS, the Issuer has determined that the Series C Bonds issuable
hereunder, and the certificate of authentication by the Trustee to be endorsed
on all such bonds shall be, respectively, substantially in the following forms
with such variations, omissions and insertions as are required or permitted by
the Indenture or this Second Supplemental Indenture:
(FORM OF FRONT OF BOND)
No. RB $____________
STATE OF OHIO
Air Quality Development Revenue Refunding Bond
(Ohio Power Company Project)
SERIES C
MATURITY DATE DATE OF BOND CUSIP
REGISTERED OWNER:
PRINCIPAL AMOUNT: DOLLARS
The STATE OF OHIO, a state of the United States of America, by the Ohio
Air Quality Development Authority, a body both corporate and politic (the
Issuer), for value received, hereby promises to pay, solely from the source and
as hereinafter provided, to the registered owner stated above, or registered
assigns or legal representatives, upon presentation and surrender hereof at the
principal office of National City Bank, Cleveland, Ohio, as Trustee, or its
successor in trust (the Trustee), or, at the option of the registered owner
hereof, at the principal office of such paying agent as may be designated
pursuant to the Indenture hereinafter referred to, the principal sum stated
above on the maturity date stated above, subject to prior redemption as
hereinafter provided, and to pay from such source to the registered owner hereof
interest hereon by check or draft mailed to the registered owner at his address
as it appears on the registration books kept by the Trustee, as Bond Registrar,
such interest payable semiannually on February 1 and August 1 from the February
1 or August 1 to which interest on the Bonds has accrued and been paid or duly
provided for, as the case may be, next preceding the date on which this Bond is
authenticated, unless this Bond is authenticated on a February 1 or August 1, in
which case it will bear interest from such February 1 or August 1, as the case
may be, or, if no interest on the Bonds has been paid or duly provided for, from
the date of this Bond stated above, until payment of said principal sum at the
rate of ______% per annum. Both principal and interest are payable in lawful
money of the United States of America.
This Bond and the issue of which it is a part and the interest thereon are
special obligations of the State of Ohio payable solely from the revenues and
receipts derived from the Agreement of Sale hereinafter referred to (except to
the extent paid out of money attributable to Bond proceeds), which revenues and
receipts (except for payments of Issuer expenses under Section 4.3 of the
Agreement of Sale and payments for indemnification under Sections 4.5 and 6.1 of
the Agreement of Sale) have been pledged and assigned to the Trustee to secure
payment thereof. The Bonds and the interest thereon do not constitute a debt, or
a pledge of the faith and credit, of the Issuer or the State of Ohio or any
political subdivision thereof, and the owners of the Bonds have no right to have
taxes levied by the General Assembly of the State of Ohio or taxing authority of
any political subdivision of the State of Ohio for the payment of the principal
thereof or interest or premium thereon, but the Bonds are payable solely from
the revenues and receipts pledged therefor.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS BOND SET FORTH
ON THE REVERSE SIDE HEREOF WHICH, FOR ALL PURPOSES HEREOF, SHALL HAVE THE SAME
FORCE AND EFFECT AS IF PRINTED IN FULL ON THE FRONT HEREOF.
This Bond shall not become obligatory for any purpose or be entitled to
any security or benefit under the Indenture or be valid until the Trustee shall
have executed the Certificate of Authentication appearing hereon.
IN WITNESS WHEREOF, the STATE OF OHIO, by the Ohio Air Quality Development
Authority, has caused this Bond to be signed by the manual or facsimile
signatures of said Authority's Chairman and Vice-Chairman, said Authority's
official seal to be affixed hereto or a facsimile thereof to be printed hereon
and attested by the manual or facsimile signature of said Authority's
Secretary-Treasurer.
STATE OF OHIO, by the
Ohio Air Quality Development
Authority
(Seal)
By_________________________
Chairman
Attest:
By_________________________
Vice-Chairman
By____________________
Secretary-Treasurer
(FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION)
This Bond is one of the Bonds of the Series described in the
within-mentioned Indenture.
NATIONAL CITY BANK, as Trustee
By__________________________
Authorized Officer
Date:_________________
(FORM OF REVERSE OF BOND)
STATE OF OHIO
Air Quality Development Revenue Refunding Bond
(Ohio Power Company Project)
Series C
This Bond is one of an issue of $50,000,000 STATE OF OHIO Air Quality
Development Revenue Refunding Bonds (Ohio Power Company Project), Series C (the
Bonds), of like date and tenor, except as to number and principal amount,
authorized and issued pursuant to Section 13 of Article VIII of the Ohio
Constitution, as implemented by Chapter 3706, Ohio Revised Code, both as
amended, for the purpose of refunding certain STATE OF OHIO Air Quality
Development Revenue Bonds (Ohio Power Company Project), Series B, which were
previously issued by the Issuer for the purpose of acquiring, constructing and
financing, in part, certain air pollution control facilities (the Project)
located at Unit 1 of Ohio Power Company, an Ohio corporation (the Company), at
the Cardinal Generating Station within the County of Jefferson, Ohio and at the
Company's Muskingum River Generating Station within the Counties of Morgan and
Washington, Ohio (Unit 1 of the Cardinal Generating Station and the Muskingum
River Generating Station being referred to herein collectively as the Plants),
and selling the same to the Company pursuant to an Agreement of Sale dated as of
November 1, 1979 (the Agreement of Sale), between the Issuer and the Company.
The Bonds are issued under and, together with other series of bonds, are equally
and ratably secured by an Indenture of Trust dated as of November 1, 1979, as
supplemented and amended by a First Supplemental Indenture dated as of August 1,
1989 and a Second Supplemental Indenture dated as of _________ __, ____ (the
Indenture of Trust as supplemented being referred to herein as the Indenture),
between the Issuer and the Trustee, which assigns to the Trustee, as security
for the Bonds, the Issuer's rights under the Agreement of Sale (except for
payment of Issuer expenses and for indemnification of the Issuer). Reference is
hereby made to the Indenture, the Agreement of Sale and to all amendments and
supplements thereto for a description of the provisions, among others, with
respect to the nature and extent of the security, the rights, duties and
obligations of the Issuer and the Trustee and the rights of the owners of the
Bonds and the terms upon which the Bonds are issued and secured. Additional
bonds and refunding bonds ranking equally with the Bonds may be issued on the
terms provided in the Indenture.
The Bonds may not be called for redemption by the Issuer prior to August
1, ____, except that, in the event of the exercise by the Company of its option
to prepay the entire purchase price of the Project under circumstances involving
(i) the imposition of unreasonable burdens or excessive liabilities on the
Issuer or the Company with respect to the Project or either of the Plants,
including taxes not imposed on November 1, 1979 and economic, technological or
other changes making the continued operation of either or both of the Plants
uneconomical in the opinion of the Company's Board of Directors, (ii) the
Agreement of Sale becoming void, unenforceable or impossible of performance in
accordance with the intent and purpose of the parties as expressed therein by
reason of any changes in the Constitution of the State of Ohio or the
Constitution of the United States of America or by reason of any legislative or
administrative action (whether state or Federal) or any final determination of
any court or administrative body (whether state or Federal) entered after the
contest thereof by the Issuer or the Company in good faith, (iii) damage to or
destruction of the Project or a portion thereof or all or a portion of either or
both of the Plants, (iv) condemnation of all or substantially all of the Project
or all or a portion of either or both of the Plants, or (v) the operation of
either of the Plants being enjoined, all as provided in Section 8.1(b) of the
Agreement of Sale, the Bonds are subject to redemption in whole, but not in
part, at any time upon the payment of 100% of the principal amount thereof plus
interest accrued to the redemption date.
The Bonds are also subject to optional redemption by the Issuer, at the
request of the Company, prior to maturity on or after August 1, ____, at any
time in whole or in part upon payment of the following redemption prices
(expressed as a percentage of principal amount of Bonds to be redeemed) plus
accrued interest to the redemption date:
Redemption
Redemption Dates (Dates Inclusive) Price
If less than all of the Bonds are called for redemption at any time, the
selection of such Bonds or portions thereof shall be made by lot by the Trustee
in such manner as the Trustee may determine and each $5,000 of a Bond having a
principal amount of more than $5,000 shall be counted as one bond for the
purpose of selecting by lot.
If any of the Bonds or portions thereof are called for redemption, the
Trustee shall cause a notice thereof identifying the Bonds to be redeemed to be
sent by registered or certified mail to the registered owner of each such Bond
to be redeemed at his address as it appears on the registration books not less
than 30 nor more than 60 days prior to the redemption date. Provided funds for
their redemption are on deposit at the place of payment at that time, all Bonds
or portions thereof so called for redemption shall cease to bear interest on the
redemption date, shall no longer be secured by the Indenture and shall not be
deemed to be outstanding under the provisions of the Indenture. If a portion of
this Bond shall be called for redemption, a new Bond in principal amount equal
to the unredeemed portion hereof will be issued to the registered owner upon the
surrender hereof.
The owner of this Bond shall have no right to enforce the provisions of
the Indenture or to institute action to enforce the covenants therein or to take
any action with respect to any Event of Default under the Indenture or to
institute, appear in or defend any suit or other proceeding with respect
thereto, except as provided in the Indenture. In certain events, on conditions,
in the manner and with the effect set forth in the Indenture, the principal of
all the Bonds issued under the Indenture and then outstanding may become or may
be declared due and payable before their stated maturities, together with
interest accrued thereon. Modifications or alterations of the Indenture, or of
any supplements thereto, may be made only to the extent and in the circumstances
permitted by the Indenture.
The Bonds are issuable solely as registered bonds without coupons in the
denominations of $5,000 or any integral multiple thereof.
The transfer of this Bond may be registered by the registered owner hereof
in person or by his duly authorized attorney or legal representative at the
principal office of the Bond Registrar, but only in the manner and subject to
the limitations and conditions provided in the Indenture and upon surrender and
cancellation of this Bond. Upon any such registration of transfer, the Issuer
shall execute and the Trustee shall authenticate and deliver in exchange for
this Bond a new Bond or Bonds, registered in the name of the transferee, of
authorized denominations. The Bond Registrar shall, prior to the due presentment
for registration of transfer, treat the registered owner as the person
exclusively entitled to payment of principal and interest and the exercise of
all other rights and powers of the owner.
All acts, conditions and things required to happen, exist or be performed
precedent to the issuance of this Bond have happened, exist and have been
performed.
(FORM OF ASSIGNMENT)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto ______________________________________________
(Please insert Social Security or other taxpayer identification
number of assignee) _____________________________________________
(Please print or typewrite Name and Address of Assignee)
- -----------------------------------------------------------------
the within Bond, and all rights thereunder, and hereby does irrevocably
constitute and appoint ______________________________ Attorney to transfer the
within Bond on the books kept for the registration thereof, with full power of
substitution in the premises.
Dated:
-----------------------------------
NOTICE: The signature to this assignment must
correspond with the name as it appears on the
face of the within Bond in every particular,
without alteration or enlargement or any change
whatever.
Signature Guaranteed: _______________________________; and
WHEREAS, all things necessary have been done and performed to make the
Series C Bonds, when issued and authenticated by the Trustee, valid, binding and
legal special obligations of the Issuer and to constitute this Second
Supplemental Indenture a valid and binding agreement securing the payment of the
principal of, premium, if any, and interest on all bonds issued and to be issued
hereunder and under the Indenture (the Indenture, as supplemented by this Second
Supplemental Indenture, being referred to herein as the Indenture) and the
execution and delivery of this Second Supplemental Indenture and the execution
and issuance of the Series C Bonds have in all respects been authorized.
NOW, THEREFORE, the Issuer hereby agrees and covenants with the Trustee
and with the respective holders and owners, from time to time of the Series B
Bonds or coupons thereon and Series C Bonds, or any part thereof, as follows:
ARTICLE I
Purpose of Series C Bonds
Section 1.01. Purpose of Series C Bonds. The Series C Bonds of the Issuer
are authorized for the purpose of refunding $50,000,000 aggregate principal
amount of Series B Bonds at their redemption on August 1, 1999.
ARTICLE II
The Series C Bonds
Section 2.01. Issuance of Series C Bonds. There are hereby authorized to
be issued State of Ohio Air Quality Development Revenue Refunding Bonds of the
Issuer in the aggregate principal amount of fifty million dollars ($50,000,000)
as Refunding Bonds pursuant to Section 2.11 of the Indenture. Said Bonds shall
be designated "State of Ohio Air Quality Development Revenue Refunding Bonds
(Ohio Power Company Project), Series C," shall be dated the first day of August,
1999, shall bear interest payable semiannually on the first day of February and
August in each year at the rate of ______% per annum and shall mature, subject
to the right of prior redemption as hereinafter set forth, on August 1, ____.
Both principal of and interest on the Series C Bonds shall be payable in
lawful money of the United States of America, but only from the revenues and
receipts pledged to the payment thereof as provided herein and in the Indenture.
Section 2.02. Form of Series C Bonds. The Series C Bonds shall be issued
substantially in the form of the Series C Bond hereinabove set forth, with such
appropriate variations, omissions and insertions as are permitted or required by
the Indenture or this Second Supplemental Indenture.
Section 2.03. Execution, Authentication and Delivery of Series C Bonds.
The Series C Bonds shall be executed, authenticated and delivered, and the
proceeds therefrom deposited, as provided in Section 2.11 of the Indenture and
Section 3.2(c) of the Agreement.
ARTICLE III
Redemption of Series C Bonds Before Maturity
Section 3.01. Redemption. The Series C Bonds may not be called for
redemption by the Issuer prior to August 1, ____, except that, in the event of
the exercise by the Company of its option to prepay the entire purchase price of
the Project under circumstances involving (i) the imposition of unreasonable
burdens or excessive liabilities on the Issuer or the Company with respect to
the Project or either of the Plants, including taxes not imposed on November 1,
1979 and economic, technological or other changes making the continued operation
of either or both of the Plants uneconomical in the opinion of the Company's
Board of Directors, (ii) the Agreement becoming void, unenforceable or
impossible of performance in accordance with the intent and purpose of the
parties as expressed therein by reason of any changes in the Constitution of the
State of Ohio or the Constitution of the United States of America or by reason
of any legislative or administrative action (whether state or Federal) or any
final determination of any court or administrative body (whether state or
Federal) entered after the contest thereof by the Issuer or the Company in good
faith, (iii) damage to or destruction of the Project or a portion thereof or all
or a portion of either or both of the Plants, (iv) condemnation of all or
substantially all of the Project or all or a portion of either or both of the
Plants, or (v) the operation of either of the Plants being enjoined, all as
provided in Section 8.1(b) of the Agreement, the Series C Bonds are subject to
redemption in whole, but not in part, at any time upon the payment of 100% of
the principal amount thereof plus interest accrued to the redemption date.
The Series C Bonds are also subject to optional redemption by the Issuer,
at the request of the Company, prior to maturity on or after August 1, ____, at
any time in whole or in part upon payment of the following redemption prices
(expressed as a percentage of principal amount of Series C Bonds to be redeemed)
plus accrued interest to the redemption date:
Redemption
Redemption Dates (Dates Inclusive) Price
If less than all of the Series C Bonds are called for redemption at any
time, the selection of such Series C Bonds or portions thereof shall be made by
lot by the Trustee in such manner as the Trustee may determine and each $5,000
of a Series C Bond having a principal amount of more than $5,000 shall be
counted as one Series C Bond for the purpose of selecting by lot. If a portion
of a Series C Bond having a principal amount of more than $5,000 shall be called
for redemption, a new Series C Bond in principal amount equal to the unredeemed
portion thereof shall be issued to the registered owner upon the surrender
thereof.
Section 3.02. Other Provisions Pertaining to Redemption.
Reference is hereby made to Article III of the Indenture for the
provisions describing the methods and effects of redemption.
ARTICLE IV
Covenants and Security
Section 4.01. Authority; Compliance with Conditions. The Issuer covenants
that it is duly authorized under the laws of the State of Ohio, including
particularly and without limitation the Act, to issue the Series C Bonds
authorized hereby and to execute and deliver this Second Supplemental Indenture,
to assign and pledge the Agreement and the revenues and receipts payable under
the Agreement, to grant a security interest therein and to pledge the revenues
and receipts hereby pledged and in the manner and to the extent contemplated
herein and in the Indenture; that all of the requirements and conditions for the
issuance of the Series C Bonds and the execution and delivery of this Second
Supplemental Indenture have been satisfied and complied with; that all other
action on its part necessary for the issuance of the Series C Bonds and the
execution and delivery of this Second Supplemental Indenture has been duly and
effectively taken; and that the Series C Bonds in the hands of the owners
thereof are and will be valid and enforceable special obligations of the Issuer
according to the terms thereof and hereof.
Section 4.02. Security for Series C Bonds; Confirmation of Indenture. The
Series C Bonds shall be equally and ratably secured under the Indenture with all
outstanding Bonds, and any other series of Bonds which may be issued pursuant to
Section 2.10 or 2.11 of the Indenture, without preference, priority or
distinction of any Bonds, as defined therein, over any other Bonds. As
supplemented, the Indenture is in all respects ratified and confirmed, and the
Indenture, including each supplemental indenture, shall be read, taken and
construed as one and the same instrument. All covenants, agreements and
provisions of, and all security provided under, the Indenture shall apply with
full force and effect to the Series C Bonds and to the owners thereof.
ARTICLE V
Miscellaneous
Section 5.01. Authority of Officers and Agents. The officers and agents of
the Issuer shall do all acts and things required of them by this Second
Supplemental Indenture, the Indenture and the Series C Bonds for the complete
and punctual performance of all covenants and agreements contained herein and
therein.
Section 5.02. Successors and Assigns. This Second Supplemental Indenture
shall be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
Section 5.03. Applicable Law. This Second Supplemental
Indenture shall be governed by and construed in accordance with
the applicable laws of the State of Ohio.
Section 5.04. Counterparts. This Second Supplemental
Indenture may be executed in several counterparts, each of which
shall be an original, and all of which together shall constitute
but one and the same instrument.
IN WITNESS WHEREOF, the OHIO AIR QUALITY DEVELOPMENT AUTHORITY has caused
this Second Supplemental Indenture to be executed by its Executive Director and
NATIONAL CITY BANK has caused this Second Supplemental Indenture to be executed
by its Authorized Officer and attested by its Authorized Officer, all as of the
date first above written.
OHIO AIR QUALITY DEVELOPMENT AUTHORITY
By____________________________
Executive Director
[CORPORATE SEAL]
NATIONAL CITY BANK
By____________________________
Authorized Officer
Attest:__________________________
Authorized Officer
Exhibit D-5
Before
THE PUBLIC UTILITIES COMMISSION OF OHIO
.....................................
:
In the Matter of :
the application of :
OHIO POWER COMPANY : Case No. 99-___-EL-AIS
for authority to issue and sell :
pollution control revenue :
refunding bonds :
.....................................
APPLICATION AND STATEMENT
TO THE HONORABLE
THE PUBLIC UTILITIES COMMISSION OF OHIO:
Your Applicant, Ohio Power Company, respectfully shows:
FIRST: Applicant is an Ohio corporation engaged in the
business of supplying to consumers within the State of Ohio electricity for
light, heat and power purposes and is a public utility as defined by the Ohio
Revised Code.
SECOND: Attached hereto as Exhibit A are financial statements, including a
balance sheet and statements of income and retained earnings of the Applicant as
of September 30, 1998.
THIRD: On October 19, 1979, Applicant filed an application and statement
in Case No. 79-927-EL-AIS with this Commission requesting that the Commission
issue an Order authorizing the transfer by Applicant of certain pollution
control facilities at its Cardinal and Muskingum River Generating Stations (the
"Project") to the Ohio Air Quality Development Authority (the "Authority"), and
the acquisition by Applicant of the Project from the Authority, all pursuant to
an installment sale agreement between Applicant and the Authority (the
"Agreement"). On October 31, 1979, the Commission issued an Order authorizing
Applicant to proceed with these transactions.
On November 28, 1979, the Authority issued $50,000,000 of State of
Ohio Air Quality Development Revenue Bonds (Ohio Power Company Project), Series
A (the "Series A Bonds"), and deposited the amount realized from such sale in
the Construction Fund (as defined in the Indenture of Trust, dated as of
November 1, 1979 (the "Indenture")) in order to provide monies to reimburse
Applicant for a portion of the amounts it had expended to pay the Cost of
Construction (as defined in the Agreement) of the Project. The Series A Bonds
included $10,000,000 principal amount of 9.10% Bonds which, by their terms, were
to mature on November 1, 2004 and also included $40,000,000 principal amount of
9.20% Bonds which, by their terms, were to mature on November 1, 2009.
On June 8, 1989, in connection with the issue and sale by the
Authority of additional air quality development revenue refunding bonds, Series
B, in the aggregate amount of $50,000,000 (the "Series B Bonds") to provide
principal, premium and interest payments required for the refunding of the
Series A Bonds, Applicant filed an application and statement with this
Commission in Case No. 89-933-EL-AIS requesting that an Order be entered by this
Commission granting all requisite authorization, if any, under the laws of the
State of Ohio for the transactions proposed in the application and statement. On
July 18, 1989, this Commission issued an Order in Case No. 89-933-EL-AIS
authorizing Applicant to take all necessary action to effect the transactions
specified in said Order. On August 23, 1989, the Authority issued $50,000,000 of
Series B Bonds, the proceeds of which were deposited in the Bond Fund created by
the Indenture, together with other funds supplied by Applicant, and applied to
the payment of the principal of, and premium and accrued interest on, the Series
A Bonds at their redemption on November 1, 1989.
FOURTH: Pursuant to the Agreement, Applicant may request the Authority to
issue and sell additional air quality development revenue refunding bonds in an
aggregate principal amount of up to $50,000,000 (the "Series C Bonds") in order
to provide funds for the payment of up to $50,000,000 aggregate principal amount
of the Series B Bonds prior to their stated maturity. It is contemplated that
the Series C Bonds will be issued pursuant to the Indenture as supplemented and
amended and as to be further supplemented and amended by a Second Supplemental
Indenture in substantially the form filed herewith as Exhibit B, which will
provide that the proceeds of the sale of the Series C Bonds will be deposited by
the Authority with the Trustee in the Bond Fund and applied to payment of up to
$50,000,000 aggregate principal amount of the Series B Bonds.
It is contemplated that the Series C Bonds will be sold by the
Authority pursuant to arrangements with one or more underwriters. While
Applicant will not be a party to the underwriting arrangements for the Series C
Bonds, the Agreement provides that the Series C Bonds shall have such terms as
shall be specified by Applicant. If it is deemed advisable, the final form of
the Second Supplemental Indenture may provide for a sinking fund pursuant to
which a portion of all the Series C Bonds could be retired annually. In
addition, if it is deemed advisable, the Series C Bonds may not be redeemable
optionally in whole or in part for a period of time. Finally, if it is deemed
advisable, the Series C Bonds may be provided some form of credit enhancement
such as a letter of credit, bond insurance or surety bond.
Applicant understands that the Series C Bonds can be issued under
circumstances that the interest on such Series C Bonds will be excludable from
gross income under the provisions of Section 103 of the Internal Revenue Code of
1986, as amended (except for interest on any such Series C Bond during a period
in which it is held by a person who is a substantial user of the Project or a
related person), and that while it is not possible to predict precisely the
interest rate which may be obtained in connection with the issuance of bonds
having such characteristics, the annual interest rate on tax exempt obligations
historically has been, and can be expected under current circumstances to be,
150 to 250 basis points or more lower than the rates of obligations of like
tenor and comparable quality, interest on which is fully subject to Federal
income tax.
The Agreement provides that each installment of the purchase price
for the Project payable by Applicant will be in such an amount (together with
other moneys held by the Trustee under the Indenture for that purpose) as will
enable payment, when due, of (i) the interest on all Series C Bonds and any
additional bonds and refunding bonds issued under the Indenture; (ii) the stated
maturities of the principal of all Series C Bonds and any additional bonds and
refunding bonds issued under the Indenture; and (iii) amounts, including any
accrued interest, payable in connection with any mandatory redemption of all
Series C Bonds and any additional bonds or refunding bonds issued under the
Indenture. The Agreement also obligates Applicant to pay the fees and charges of
the Trustee, as well as certain administrative expenses of the Authority.
Applicant will not agree, without further Order of this Commission, to the
issuance of any Series C Bond by the Authority (i) if the stated maturity of any
such Series C Bond shall be more than forty (40) years; (ii) if the fixed rate
of interest to be borne by any such Series C Bond shall exceed 8% per annum or
the initial rate of interest to be borne by any fluctuating rate Series C Bond
shall exceed 8%; (iii) if the discount from the initial public offering price of
any such Series C Bond shall exceed 5% of the principal amount thereof; or (iv)
if the initial public offering price of any such Series C Bond shall be less
than 95% of the principal amount thereof.
FIFTH: The Series B Bond may be redeemed beginning August 1, 1999 at a
redemption price of 102.00%. Applicant may consider the payment of such premium
prudent in light of the amounts of interest expense that could be saved by early
redemption thereof, and proposes to treat said premium as an issuance expense of
the Series C Bonds to be amortized over the life of the Series C Bonds.
Applicant intends to utilize deferred tax accounting of the premium expense, in
order to properly match the amortization of the expense and related tax effect.
Since Applicant believes that every effort should be made to
minimize, to the extent possible, carrying costs of facilities employed by
Applicant in the rendition of utility services and the Authority will apply the
funds derived from the issuance of Series C Bonds to the payment of up to
$50,000,000 aggregate principal amount of Series B Bonds, Applicant believes
that the public interest will be served by the issuance of the Series C Bonds.
SIXTH: Applicant believes that the consummation of the transactions herein
proposed will be in the best interests of Applicant's consumers and investors
and consistent with sound and prudent financial policy. Applicant also believes
that since the obligations of Applicant under the Agreement will be limited to
the payment of the purchase price of the Project over a period of years in the
future, a substantial question exists as to whether approval or authorization by
your Commission is required under the Ohio Revised Code to enable Applicant to
continue to perform its obligations under the Agreement. Since, however, your
Commission is invested with the power, under Section 4905.06 of the Ohio Revised
Code generally to supervise all public utilities within its jurisdiction,
Applicant proposes on this occasion that your Commission issue an Order to the
effect that, to the extent that your Commission has jurisdiction thereof, the
consummation and carrying out of the proposed transactions as described herein
be approved and authorized by the Commission pursuant to all applicable
provisions of the Ohio Revised Code. Applicant believes that, if your Commission
issues such Order on the terms herein proposed, Applicant will have received all
necessary authorization from your Commission which may be necessary or
appropriate under the laws of the State of Ohio applicable to your Commission
for Applicant to enter into, and consummate, the transactions described herein.
SEVENTH: Because the proceeds from the sale of the Series C Bonds will be
deposited by the Authority in the Bond Fund and will be applied to the payment
of up to $50,000,000 aggregate principal amount of Series B Bonds, none of the
proceeds of the sale of the Series C Bonds will be received by Applicant.
WHEREFORE: Applicant prays for authority from your Honorable Commission,
to the extent your Commission has jurisdiction thereover, to consummate and
carry out the transactions proposed herein with respect to the refinancing of
the terms of Applicant's installment agreement of sale with the Ohio Air Quality
Development Authority, all as described in this Application.
Applicant prays for all other and further relief necessary and
appropriate in the premises.
Respectfully submitted this 17th day of February, 1999.
OHIO POWER COMPANY
By _/s/ A. A. Pena____________
Treasurer
By _/s/ John F. Di Lorenzo, Jr.
Secretary
STATE OF OHIO )
) SS:
COUNTY OF FRANKLIN )
Before me, a Notary Public in and for Franklin County in the State of
Ohio, personally appeared A. A. Pena and John F. Di Lorenzo, Jr., Treasurer and
Secretary, respectively, of Ohio Power Company, the Applicant in the foregoing
application, and each being duly sworn says that the facts and allegations
herein contained are true to the best of his knowledge and belief.
_/s/ Mary M. Soltesz_____
Notary Public
My Commission expires 7-12-99
Dated: February 17, 1999
EXHIBIT A
Financial Statements of Applicant as of September 30, 1998
EXHIBIT B
Form of Second Supplemental Indenture relating to issuance
of State of Ohio Air Quality Development Authority Revenue
Refunding Bonds (Ohio Power Company Project), Series C
Exhibit H-1
UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Release No. /March , 1999
- ----------------------------------------
:
In the Matter of :
:
:
OHIO POWER COMPANY :
301 Cleveland Avenue, S.W. :
Canton, OH 44701 :
:
(70-6373) :
- ----------------------------------------
NOTICE OF PROPOSED ISSUANCE OF REFUNDING BONDS BY STATE AUTHORITY
IN CONNECTION WITH POLLUTION CONTROL FINANCING
NOTICE IS HEREBY GIVEN that Ohio Power Company ("OPCo"), an electric utility
subsidiary of American Electric Power Company, Inc., a registered holding
company, has filed with this Commission a post-effective amendment to its
Application or Declaration previously filed and amended pursuant to the Public
Utility Holding Company Act of 1935 (the "Act"), designating Sections 9(a), 10
and 12(d) of the Act and Rule 44(b)(3) promulgated thereunder as applicable to
the proposed transaction. All interested persons are referred to the Application
or Declaration, as amended by said post-effective amendments, which is
summarized below, for a complete statement of the proposed transaction.
By Order dated November 26, 1979 (HCAR No. 21308), OPCo was authorized to enter
into an agreement of sale (the "Agreement") with the Ohio Air Quality
Development Authority (the "Authority") concerning the financing of pollution
control facilities (the "Facilities") at OPCo's Cardinal and Muskingum River
Generating Stations. Under the Agreement, the Authority is to issue and sell its
pollution control revenue bonds (the "Revenue Bonds"), in one or more series,
the proceeds from which sales are to be deposited by the Authority with the
trustee (the "Trustee") under the indenture (the "Indenture") entered into
between the Authority and the Trustee pursuant to which Indenture the Revenue
Bonds are issued and secured. The proceeds will then be applied to the payment
of the costs of construction of the Facilities, or, in the case of proceeds from
the sale of refunding bonds, to the payment of principal, premium (if any)
and/or interest on Revenue Bonds to be refunded. OPCo conveyed an undivided
interest in a portion of the Facilities to the Authority, which portion the
Authority sold to OPCo under an installment sales arrangement requiring OPCo to
pay as the purchase price semi-annual installments in such an amount (together
with other monies held by the Trustee under the Indenture for that purpose) as
to enable the Authority to pay, when due, the interest and principal on the
Revenue Bonds. Jurisdiction was reserved in the Order of November 26, 1979, with
respect to the payment of the purchase price of the Facilities by installment
payments insofar as such payments were affected by the interest rate or rates of
the Revenue Bonds to be issued and sold by the Authority. By Orders dated
November 26, 1979 and August 11, 1989 (HCAR Nos. 21308 and 24938), such
jurisdiction was released concerning the sales of Revenue Bonds in the principal
amount of $50,000,000 each, as such sales affected the purchase price to OPCo.
By post-effective amendment it is stated that the Authority now proposes to
issue and sell a series of refunding bonds (the "Refunding Bonds") in the
aggregate principal amount of $50,000,000, the net proceeds from the sale of
which will be used to provide for the principal payment required for the
refunding prior to their stated maturity of $50,000,000 principal amount of
Revenue Bonds previously issued by the Authority. The Refunding Bonds will be
issued under and secured by the Indenture and a second supplemental indenture,
will bear interest semi-annually and will mature at a date or dates not more
than forty years from the date of issuance.
It is contemplated that the Refunding Bonds will be sold by the Authority
pursuant to arrangements with Goldman, Sachs & Co., as underwriter.
It is stated that The Public Utilities Commission of Ohio has jurisdiction over
the proposed transaction and that no other state commission and no federal
commission, other than this Commission, has jurisdiction thereover.
The Application or Declaration and any amendments thereto are available for
public inspection through the Commission's Office of Public Reference.
Interested persons wishing to comment or request a hearing should submit their
views in writing by March , 1999 to the Secretary, Securities and Exchange
Commission, Washington, D.C. 20549, and serve a copy on the applicant or
declarant at the address specified above. Proof of service (by affidavit or, in
case of any attorney at law, by certificate) should be filed with the request.
Any request for a hearing shall identify specifically the issues of fact or law
that are disputed. A person who so requests will be notified of any hearing, if
ordered, and will receive a copy of any notice or Order issued in this matter.
After said date, the Application or Declaration, as filed or as it may be
amended, may be permitted to become effective.
For the Commission, by the Office of Public Utility Regulation, pursuant to
delegated authority.
Jonathan G. Katz
Secretary
