<PAGE>
PROSPECTUS SUPPLEMENT FILED PURSUANT TO RULE 424(B)(5)
(TO PROSPECTUS DATED NOVEMBER 18, 1997) FILE NUMBER 333-11153
$50,000,000
OTTER TAIL POWER COMPANY
SENIOR DEBENTURES, 6.375% SERIES DUE 2007
--------------
(INTEREST PAYABLE JUNE 1 AND DECEMBER 1)
-------------------
The Senior Debentures, 6.375% Series Due 2007 (the "Offered Debentures") of
Otter Tail Power Company (the "Company") will mature on December 1, 2007. The
Offered Debentures will be unsecured obligations of the Company and will rank on
a parity with all other unsecured and unsubordinated debt of the Company.
Interest on the Offered Debentures is payable semi-annually on June 1 and
December 1 of each year, commencing June 1, 1998. The Offered Debentures will
not be redeemable prior to maturity and will not have the benefit of any sinking
fund. The Offered Debentures will be represented by one or more global
securities (the "Global Securities") registered in the name of The Depository
Trust Company ("DTC") or its nominee. Beneficial interests in Global Securities
will be shown on, and transfers thereof will be effected only through, records
maintained by DTC and its participants. See "Certain Terms of the Offered
Debentures" in this Prospectus Supplement.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
Per Debenture............................. 98.581% 0.375% 98.206%
Total..................................... $49,290,500 $187,500 $49,103,000
</TABLE>
- -------
(1) Plus accrued interest, if any, from November 21, 1997.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
(3) Before deducting estimated expenses of $150,000 payable by the Company.
-------------------
The Offered Debentures are offered by the Underwriter when, as and if
delivered to and accepted by the Underwriter and subject to approval of certain
legal matters by Sidley & Austin, counsel for the Underwriter, and certain other
conditions. It is expected that delivery of the Offered Debentures will be made
on or about November 21, 1997, through the book-entry facilities of DTC, against
payment therefor in immediately available funds.
-------------------
[LOGO]
-------------------
NOVEMBER 18, 1997
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE OFFERED DEBENTURES,
INCLUDING OVERALLOTMENT, STABILIZING AND SYNDICATE COVERING TRANSACTIONS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
------------------------
SELECTED CONSOLIDATED FINANCIAL DATA
The financial data presented below should be read in conjunction with the
Company's consolidated financial statements and notes thereto which are
incorporated by reference in the accompanying Prospectus.
<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS)
YEAR ENDED DECEMBER NINE MONTHS ENDED
31, SEPTEMBER 30,
---------------------- -----------------------
1995 1996 1996 1997
-------- ----------- ----------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
Income Statement:
Operating Revenue
Electric.................. $203,925 $ 199,345 $ 147,079 $151,244
Health Services........... 50,896 61,697 43,598 48,277
Manufacturing............. 38,690 64,568(1) 51,133(1) 57,273
Other Business
Operations.............. 32,818 43,829 34,833 30,449
Operating Income
Electric.................. 47,916 45,279 33,545 33,436
Health Services........... 3,581 5,137 3,156 2,592
Manufacturing............. 3,270 6,503(1) 6,048(1) 6,420
Other Business
Operations.............. 3,531 2,387 1,515 843
Net Income.................. 28,945 31,004(1) 23,097(1) 23,868
Ratio of Earnings to Fixed
Charges (2)............... 3.96 3.66 3.72 3.50
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 (UNAUDITED)
----------------------------------------
PERCENT OF
AS CAPITALIZATION
ACTUAL(3) ADJUSTED(4) AS ADJUSTED(4)
---------- ----------- ---------------
<S> <C> <C> <C>
Capitalization:
Long-Term Debt.......................................................... $ 181,487 $ 202,617 45.2%
Cumulative Preferred Shares............................................. 38,831 38,831 8.7%
Common Share Equity..................................................... 206,479 206,479 46.1%
---------- ----------- -----
Total Capitalization.................................................. $ 426,797 $ 447,927 100.0%
---------- ----------- -----
---------- ----------- -----
</TABLE>
- ------------------------
(1) These items have been restated to reflect the acquisition of Chassis Liner
Corporation on June 30, 1997, which was accounted for under the pooling of
interests method. All of such items are unaudited, including items for the
year ended December 31, 1996.
(2) For purposes of computing the ratios of earnings to fixed charges: (1)
earnings consist of consolidated net income to which has been added total
income tax expense and fixed charges; and (ii) fixed charges consist of
interest on long-term debt and other interest charges and amortization of
debt expense, premium and discount.
(3) Actual Long-Term Debt includes $18,800,000 of current maturities on the
Company's First Mortgage Bonds, 8.75% Series due December 15, 1997.
S-2
<PAGE>
(4) Adjusted to give effect to the issuance of the Offered Debentures and the
repayment or redemption of $28,870,000 aggregate principal amount of the
Company's First Mortgage Bonds as described under "Use of Proceeds" in this
Prospectus Supplement.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Offered
Debentures will be used in part for the payment at maturity of $18,800,000
principal amount of the Company's First Mortgage Bonds, 8.75% Series due
December 15, 1997. The balance of such net proceeds will be used for the
redemption in 1997 of $9,240,000 principal amount of the Company's First
Mortgage Bonds, 7.625% Series due February 1, 2003 at a price of 101.36%, and
$830,000 principal amount of the Company's First Mortgage Bonds, 8.125%
Pollution Control (Coyote Project) Series B due August 1, 2009 at a price of
100%, in each case plus accrued interest to the date of redemption, and for
general corporate purposes.
CERTAIN TERMS OF THE OFFERED DEBENTURES
The following description of the particular terms of the Offered Debentures
supplements, and to the extent inconsistent therewith supersedes, the
description of the general terms and provisions of the Debentures set forth in
the accompanying Prospectus, to which description reference is hereby made. All
capitalized terms used and not defined in this Prospectus Supplement shall have
the same meanings ascribed to those terms in the accompanying Prospectus.
GENERAL. The Offered Debentures are unsecured obligations of the Company
and will rank on a parity with all other unsecured and unsubordinated debt of
the Company. The Offered Debentures are limited to $50,000,000 in aggregate
principal amount and will be issued under the Company's Indenture (For Unsecured
Debt Securities) dated as of November 1, 1997 (the "Debenture Indenture")
between the Company and First Trust National Association, as Trustee (the
"Debenture Indenture Trustee"). The Debenture Indenture does not limit the
aggregate amount of secured, unsecured or unsubordinated debt of the Company
that may be issued from time to time. The Offered Debentures are not afforded
any protection under the Company's First Mortgage Indenture. A default with
respect to, or an acceleration of, any other indebtedness of the Company will
not constitute an Event of Default with respect to the Offered Debentures. As of
October 31, 1997, the Company on an unconsolidated basis (parent company only)
had approximately $123,025,000 of outstanding secured debt, approximately
$15,610,000 of outstanding unsecured and unsubordinated debt and no outstanding
unsecured subordinated debt.
MATURITY, INTEREST AND PAYMENT. The Offered Debentures will mature on
December 1, 2007. The Offered Debentures will bear interest at the rate shown in
their title, payable semi-annually on June 1 and December 1 in each year,
commencing June 1, 1998, to holders registered at the close of business on the
May 15 and November 15, as the case may be, next preceding such interest payment
date. Interest on the Offered Debentures will accrue from November 21, 1997, or
from the most recent interest payment date.
NO REDEMPTION OR SINKING FUND. The Offered Debentures may not be redeemed
prior to maturity by the Company and no sinking fund will be established for the
benefit of the Offered Debentures.
DEFEASANCE. The provisions described in the accompanying Prospectus under
the caption "Description of Debentures--Defeasance" are applicable to the
Offered Debentures.
As set forth in such description, under the provisions of the Debenture
Indenture, at the Company's election, the Offered Debentures will be deemed to
have been paid for purposes of the Debenture Indenture and the entire
indebtedness of the Company in respect thereof will be deemed to have been
satisfied and discharged if there has been irrevocably deposited with the
Debenture Indenture Trustee or any Paying Agent (other than the Company) in
trust sufficient cash or certain government securities, or a combination
thereof, to fully satisfy all principal of and interest on the Offered
Debentures.
S-3
<PAGE>
Under existing case law and regulations, such a deposit, satisfaction and
discharge (a "defeasance") is treated as a sale or exchange of the obligations
in respect of the Offered Debentures for federal income tax purposes. A holder
would then recognize gain or loss in the amount by which the fair market value
of the Offered Debentures after the defeasance was greater or less than the
holder's basis in the Offered Debentures prior to the defeasance. Such gain or
loss generally would be capital gain or loss to a holder who held the Offered
Debentures as capital assets. In addition, there may be other associated tax
consequences. Prospective purchasers are urged to consult their own tax advisors
as to the specific consequences to them of a defeasance. See "Description of
Debentures--Defeasance" in the accompanying Prospectus.
GLOBAL SECURITIES. The Offered Debentures will be represented by a Global
Security or Securities that will be deposited with, or on behalf of, DTC and
registered in the name of DTC or a nominee thereof.
DTC has advised the Company and the Underwriter that DTC is (i) a
limited-purpose trust company organized under the New York Banking Law, (ii) a
"banking organization" within the meaning of the New York Banking Law, (iii) a
member of the Federal Reserve System, (iv) a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and (v) a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC was created to hold securities of its participating
organization ("participants") and to facilitate the clearance and settlement of
securities transactions, such as transfers and pledges, among its participants
in such securities through electronic computerized book-entry changes in
accounts of participants, thereby eliminating the need for physical movement of
securities certificates. Participants include securities brokers and dealers
(including the Underwriter), banks, trust companies, clearing corporations and
certain other organizations, some of whom (and/or their representatives) own
DTC. Access to DTC's book-entry system is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Persons who are not participants may beneficially own securities held by DTC
only through participants.
A Global Security shall be exchangeable for Offered Debentures registered in
the names of persons other than DTC or its nominee only if (i) DTC notifies the
Company that it is unwilling or unable to continue as a depository for such
Global Security and no successor depository shall have been appointed, or if at
any time DTC ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, at a time when DTC is required to be so registered to act
as such depository, (ii) the Company in its sole discretion determines that such
Global Security shall be so exchangeable or (iii) there shall have occurred and
be continuing an Event of Default with respect to such Offered Debentures. Any
Global Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for Offered Debentures registered in such names as DTC shall
direct. It is expected that such instructions will be based upon directions
received by DTC from its participants with respect to ownership of beneficial
interest in such Global Security.
Settlement for the Offered Debentures will be made in immediately available
funds. So long as the Offered Debentures are represented by one or more Global
Securities, all payments of principal and interest will be made by the Company
in immediately available funds.
So long as the Offered Debentures are represented by one or more Global
Securities registered in the name of DTC or its nominee, the Offered Debentures
will trade in DTC's Same-Day Funds Settlement System, and secondary market
trading activity in the Offered Debentures will therefore be required by DTC to
settle in immediately available funds. No assurance can be given as to the
effect, if any, of settlement in immediately available funds on the trading
activity in the Offered Debentures.
A further description of DTC's procedures with respect to the Offered
Debentures is set forth under "Description of Debentures--Global Securities" in
the accompanying Prospectus.
S-4
<PAGE>
UNDERWRITING
Subject to the terms and conditions contained in the Underwriting Agreement
between the Company and A.G. Edwards & Sons, Inc. (the "Underwriter"), the
Underwriter has agreed to purchase from the Company the entire principal amount
of the Offered Debentures. The nature of the obligation of the Underwriter is
such that if any Offered Debentures are purchased, all of them must be
purchased.
The Underwriter proposes to offer the Offered Debentures to the public at
the public offering price set forth on the cover page of this Prospectus
Supplement and to certain dealers at such price less a concession of not more
than .25% of the principal amount of the Offered Debentures. The Underwriter may
allow, and such dealers may reallow, concessions not in excess of .20% of the
principal amount of the Offered Debentures to certain other brokers and dealers.
After the initial public offering, the public offering price and other selling
terms may be changed by the Underwriter.
The Offered Debentures have no established trading market and the Company
does not intend to list the Offered Debentures on any securities exchange. The
Underwriter has advised the Company that it intends to make a market in the
Offered Debentures. However, the Underwriter is not obligated to do so and may
discontinue any market making at any time without notice. Accordingly, no
assurance can be given as to the liquidity of, or trading markets for, the
Offered Debentures.
In connection with the offering of the Offered Debentures, the Underwriter
may engage in overallotment, stabilizing transactions and syndicate covering
transactions in accordance with Regulation M under the Securities Exchange Act
of 1934. Overallotment involves sales in excess of the offering size, which
creates a short position for the Underwriter. Stabilizing transactions involve
bids to purchase the Offered Debentures in the open market for the purpose of
pegging, fixing or maintaining the price of the Offered Debentures. Syndicate
covering transactions involve purchases of the Offered Debentures in the open
market after the distribution has been completed in order to cover short
positions. Such stabilizing transactions and syndicate covering transactions may
cause the price of the Offered Debentures to be higher than it would otherwise
be in the absence of such transactions. Such activities, if commenced, may be
discontinued at any time.
The Company has agreed to indemnify the Underwriter against certain
liabilities which may be incurred in connection with this offering, including
liabilities under the Securities Act of 1933, or to contribute to payments which
the Underwriter may be required to make in respect thereto.
S-5
<PAGE>
PROSPECTUS
$50,000,000
OTTER TAIL POWER COMPANY
DEBT SECURITIES
------------------
Otter Tail Power Company (the "Company") may offer from time to time up to
$50,000,000 aggregate initial offering price of its debt securities, including
First Mortgage Bonds and unsecured notes, debentures or other evidences of
indebtedness (collectively referred to as "Debt Securities"), in one or more
series, at prices and on terms to be determined at the time of sale. The terms
of the Debt Securities in respect of which this Prospectus is being delivered,
including, where applicable, the series designation, the principal amount of the
series, the maturity, the provisions for redemption and sinking fund payments
and other provisions, together with the terms of offering of such Debt
Securities, will be set forth in the supplement accompanying this Prospectus
(the "Prospectus Supplement").
The Company may sell the Debt Securities to or through underwriters or
dealers, directly to other purchasers or through agents. See "Plan of
Distribution." The Prospectus Supplement will set forth the names of any
underwriters, dealers or agents, any applicable commissions, discounts or
allowances and the net proceeds to the Company from such sale.
------------------------
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 date of this Prospectus is November 18, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices at Seven World Trade Center, Suite 1300, New York, New York
10048 and 1400 Citicorp Center, 500 West Madison Street, Chicago, Illinois
60601. Copies of such material can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549, at prescribed rates. The Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy statements and other
information regarding registrants such as the Company that file electronically
with the Commission.
The Company has filed with the Commission a registration statement on Form
S-3 with respect to the Debt Securities (herein, together with all amendments
and exhibits, referred to as the "Registration Statement") under the Securities
Act of 1933, as amended. This Prospectus does not contain all the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement, which may
be inspected without charge at the Public Reference Section of the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of which may be obtained from the Commission at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission under the Exchange Act
(File No. 0-368) are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1996.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1997.
3. The Company's Current Report on Form 8-K dated January 27, 1997.
All other documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Debt Securities shall be deemed
to be incorporated by reference into this Prospectus and to be a part hereof
from the respective dates of filing of such documents.
Any statement contained herein or in a document all or part of which is
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus and the Prospectus
Supplement to the extent that a statement contained herein or therein or in any
documents subsequently filed with the Commission which also is or is deemed to
be incorporated by reference herein or therein 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 or
the Prospectus Supplement.
The Company will provide without charge to any person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference (not
including exhibits thereto unless such exhibits are specifically incorporated by
reference into the information that the Registration Statement incorporates).
Requests for such copies should be directed to Jay D. Myster, Secretary, Otter
Tail Power Company, 215 South Cascade Street, Box 496, Fergus Falls, Minnesota
56538-0496, telephone number: (218) 739-8200.
2
<PAGE>
THE COMPANY
The Company is an operating public utility engaged in the production,
transmission, distribution and sale of electric energy in western Minnesota,
eastern North Dakota and northeastern South Dakota. The territory served by the
Company's electric utility operations is predominantly agricultural, including a
part of the Red River Valley. By customer category, 54.3% of 1996 electric
revenues was derived from commercial and industrial customers, 33.5% from
residential customers and 12.2% from other sources, including municipalities,
farms and power pools.
The Company, through its subsidiaries, is also engaged in other businesses
located in the upper midwest region of the United States which are referred to
in this Prospectus as Health Services Operations, Manufacturing Operations and
Other Business Operations. Health Services Operations consist of certain
businesses acquired beginning in 1993, including a diagnostic medical imaging
company, a management company for a number of diagnostic medical imaging
companies, and a medical imaging company that sells and services diagnostic
medical imaging equipment and associated supplies and accessories. Manufacturing
Operations include businesses acquired beginning in 1990 in such areas as metal
parts stamping and fabrication, agricultural equipment and plastic pipe
extrusion. Other Business Operations include businesses involved in such areas
as electrical and telephone construction contracting, radio broadcasting, waste
incinerating and telephone/cable television utility. The Company derived
approximately 45% of its consolidated operating revenues from these other
businesses during 1996, approximately 38% during 1995 and approximately 31%
during 1994.
The Company was incorporated in 1907 under the laws of the State of
Minnesota. Its principal executive office is located at 215 South Cascade
Street, Box 496, Fergus Falls, Minnesota 56538-0496, telephone number: (218)
739-8200.
USE OF PROCEEDS
The net proceeds to be received by the Company from the issue and sale of
the Debt Securities offered hereby will be used to repay short-term and other
indebtedness, to redeem one or more outstanding series of First Mortgage Bonds
and/or Cumulative Preferred Shares and for general corporate purposes. See
"Construction Program and Financing."
CONSTRUCTION PROGRAM AND FINANCING
The Company is continually expanding, replacing and improving its electric
utility facilities. During 1996, the Company invested approximately $36,221,000
for additions to its electric utility properties. Capital expenditures of
approximately $16,000,000 were made in Health Services Operations, $4,600,000 in
Manufacturing Operations and $5,000,000 in Other Business Operations by Company
subsidiaries during 1996.
Total consolidated capital expenditures for the Company and its subsidiaries
during the five-year period 1997-2001 are estimated to be approximately
$169,000,000. Of this amount, $18,000,000 is for Health Services Operations,
$12,000,000 for Manufacturing Operations and $12,000,000 for Other Business
Operations. The Company estimates that during the five years 1997 through 2001
it will invest for electric utility construction approximately $127,000,000
(including allowance for funds used during construction). The Company
continuously reviews options for increasing its generating capacity, but at this
time has no firm plans for additional base load generating plant construction.
The majority of electric utility expenditures for the five-year period 1997
through 2001 will be for work related to the Company's transmission and
distribution system.
The Company estimates that funds currently on hand, combined with funds
internally generated in the next five years, will be sufficient to meet all
sinking fund payments for First Mortgage Bonds and to provide for its estimated
1997-2001 consolidated capital expenditures. Additional short-term or long-term
financing will be required in the period 1997-2001 in connection with the
maturity of First Mortgage Bonds
3
<PAGE>
and a Long-Term Lease Obligation ($21,000,000), in the event the Company decides
to refund or retire early any of its presently outstanding debt or Cumulative
Preferred Shares or for other corporate purposes.
The foregoing estimates of capital expenditures and funds internally
generated may be subject to substantial changes due to unforeseen factors, such
as changed economic conditions, competitive conditions, technological changes,
new environmental and other governmental regulations, changed tax laws and rate
regulation, and acquisitions by subsidiaries.
RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1992 1993 1994 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Ratios of Earnings to Fixed Charges........................................ 4.06 3.98 4.23 3.96 3.66
<CAPTION>
NINE MONTHS ENDED
SEPT. 30,
--------------------
1996 1997
--------- ---------
<S> <C> <C>
Ratios of Earnings to Fixed Charges........................................ 3.72 3.50
</TABLE>
For purposes of computing the ratio of earnings to fixed charges: (i)
earnings consist of consolidated net income to which has been added total income
tax expense and fixed charges; and (ii) fixed charges consist of interest on
long-term debt and other interest charges and amortization of debt expense,
premium and discount.
DESCRIPTION OF FIRST MORTGAGE BONDS
GENERAL
If the Debt Securities are issued as First Mortgage Bonds, those First
Mortgage Bonds will be issued in one or more series under the Company's
Indenture of Mortgage dated as of July 1, 1936 to First Trust National
Association (formerly named First Trust Company of Saint Paul and First Trust
Company, Inc.) (the "corporate Trustee") and Louis S. Headley (James A.
Ehrenberg having succeeded as individual Trustee), as Trustees (the "First
Mortgage Indenture Trustees"), as supplemented by forty-five supplemental
indentures (the "Prior Supplemental Indentures," the twenty-first of which, the
"Revised Indenture," revised and restated the provisions of said Indenture of
Mortgage as theretofore amended and supplemented), and as proposed to be further
supplemented by each new supplemental indenture (a "New Supplemental Indenture")
creating a new series of First Mortgage Bonds. Said Indenture of Mortgage, as so
supplemented and as so to be supplemented, is herein called the "First Mortgage
Indenture." As used herein, the term "New First Mortgage Bonds" refers to any
new series of First Mortgage Bonds in respect of which this Prospectus is being
delivered.
The summaries of the First Mortgage Indenture set forth below do not purport
to be complete and are subject to the detailed provisions of the First Mortgage
Indenture, a copy of which is filed with the Commission as an exhibit to the
Registration Statement and is incorporated in this section by reference.
Capitalized terms used in this section which are not otherwise defined in this
Prospectus shall have the meanings ascribed to them in the First Mortgage
Indenture. Whenever particular provisions or terms defined in the First Mortgage
Indenture are referred to in this section, such provisions or definitions are
incorporated by reference as part of the statements made in this section, and
such statements are qualified in their entirety by such reference. References to
article and section numbers herein, unless otherwise indicated, are references
to article and section numbers of the First Mortgage Indenture.
TERMS OF NEW FIRST MORTGAGE BONDS
Reference is made to the Prospectus Supplement for a description of the
following terms and other information with respect to the New First Mortgage
Bonds: (1) the designation and aggregate principal amount of the New First
Mortgage Bonds; (2) the date on which the New First Mortgage Bonds will mature;
(3) the rate per annum at which the New First Mortgage Bonds will bear interest
and the date from which such interest will accrue; (4) the dates on which such
interest will be payable; and (5) any
4
<PAGE>
redemption provisions, sinking fund provisions or other specific terms
applicable to the New First Mortgage Bonds. The holders of the outstanding First
Mortgage Bonds do not have the right to tender such First Mortgage Bonds to the
Company for repurchase upon the Company's becoming involved in a highly
leveraged transaction or change of control involving the Company, and the
Company does not currently intend to afford the holders of the New First
Mortgage Bonds such a right.
The New First Mortgage Bonds will be issued only in fully registered form,
without coupons, in the denominations of $1,000 and any integral multiple
thereof. The New First Mortgage Bonds will be exchangeable in the manner
provided in the First Mortgage Indenture. No charge will be made by the Company
for any exchange or transfer of New First Mortgage Bonds, other than for stamp
taxes or other governmental charges, if any, applicable thereto. Principal of
and any premium or interest on the New First Mortgage Bonds will be payable at
the office of the corporate Trustee in St. Paul, Minnesota, except that interest
may, at the option of the Company, be paid by checks or drafts payable to the
registered holders of the New First Mortgage Bonds of such series mailed to such
holders at their addresses appearing on the registry books of the corporate
Trustee. The Company is not required to make transfers or exchanges of New First
Mortgage Bonds for a period of 10 days next preceding any interest payment date
for the New First Mortgage Bonds or any date for the selection of New First
Mortgage Bonds to be redeemed.
SINKING FUND
The First Mortgage Indenture establishes a sinking fund into which the
Company will deposit with the corporate Trustee on December 1 in each of the
years that the New First Mortgage Bonds will be outstanding (commencing with the
December 1 in the calendar year following the calendar year in which the New
First Mortgage Bonds are issued except to the extent, if any, that the New First
Mortgage Bonds will be issued to refund First Mortgage Bonds of a prior series)
an amount equal to 1% of the greatest aggregate principal amount of the New
First Mortgage Bonds at any time theretofore outstanding (after deducting the
principal amount of any New First Mortgage Bonds refunded by the issuance of
First Mortgage Bonds of another series), to be used not later than the following
February 1 for the partial redemption of the New First Mortgage Bonds; provided,
however, that such sinking fund requirement may be satisfied in whole or in part
by surrendering to the corporate Trustee for cancellation the New First Mortgage
Bonds reacquired by the Company at the amount which would have been required to
effect on the following February 1 the redemption through the sinking fund of
the New First Mortgage Bonds so delivered. Similar sinking funds have been
established with respect to all series of First Mortgage Bonds now outstanding.
(Section 8 of the Thirty-first, Forty-second and Forty-fourth Supplemental
Indentures; Section 17 of the Thirty-ninth Supplemental Indenture; and Sections
8 and 17 of the Forty-third and Forty-fifth Supplemental Indentures.)
DEPRECIATION REQUIREMENT
The First Mortgage Indenture establishes a depreciation requirement
equivalent to 2.5% per annum of the average amount of depreciable fundable
property for the period for which the requirement is calculated. Provision is
made for the deposit each year with the corporate Trustee of cash equal to the
excess of (i) the depreciation requirement for the preceding year over (ii) the
aggregate of amounts expended for fundable property during the preceding year
limited, however, to the cost of fundable property retired during such preceding
year. In lieu of depositing cash, the Company may elect to utilize net fundable
property not theretofore utilized for any purpose of the First Mortgage
Indenture. The Company is entitled to satisfy its depreciation requirement for
any year by the application of any depreciation credit remaining from prior
years. Cash deposited on account of the depreciation requirement for any year
may be withdrawn against net fundable property or against a depreciation credit
arising within three years after the deposit. Cash not so withdrawn may be
applied by the Company to reimburse the Company for its cost in acquiring First
Mortgage Bonds (but not in an amount exceeding the principal of and premium, if
any, payable upon the voluntary redemption of such First Mortgage Bonds) or may
be applied, and under certain circumstances must be set aside by the corporate
Trustee to be applied, to the
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payment of the principal of First Mortgage Bonds either at maturity or upon
redemption (if and to the extent then subject to redemption). (Sections
2.01(34), 6.02, 6.05, 9.03, 11.01 and 11.02 of the First Mortgage Indenture.)
SECURITY AND PRIORITY
The First Mortgage Indenture constitutes, in the opinion of Dorsey & Whitney
LLP, counsel for the Company, a direct first mortgage lien upon substantially
all of the physical property, franchises and leases of the Company subject only
to permitted encumbrances. The First Mortgage Indenture contains provisions
subjecting to the lien thereof physical property, franchises and leases which
the Company may subsequently acquire, subject, however, to permitted
encumbrances and to liens existing or placed upon such property at the time of
acquisition thereof by the Company. The First Mortgage Indenture obligates the
Company not to create prior or parity liens or permit such liens to exist,
except for permitted encumbrances, liens existing at date of acquisition on
property acquired and purchase money mortgages created by the Company. (Granting
Clauses of the First Mortgage Indenture; Sections 2.01(29) and 8.05 of the
Revised Indenture.)
The New First Mortgage Bonds will rank equally and ratably (except as to any
sinking fund which may be established for the exclusive benefit of one or more
particular series of First Mortgage Bonds) with all First Mortgage Bonds
regardless of series at any time issued or outstanding under the First Mortgage
Indenture.
ISSUANCE OF THE NEW FIRST MORTGAGE BONDS AND OF ADDITIONAL FIRST MORTGAGE BONDS
Additional First Mortgage Bonds (including the New First Mortgage Bonds) may
be issued under the First Mortgage Indenture in principal amounts limited only
as follows:
(1) not to exceed 60% of the cost or fair value, whichever is less, of
net fundable property certified to the corporate Trustee as having been
constructed or otherwise acquired after December 31, 1957 and not otherwise
utilized for any purpose of the First Mortgage Indenture;
(2) not to exceed the amount of cash deposited with the corporate
Trustee for such purpose; or
(3) not to exceed the principal amount of First Mortgage Bonds
previously issued under the First Mortgage Indenture which have been retired
or are then being retired and which have not theretofore been utilized for
any purpose of the First Mortgage Indenture or are not otherwise
disqualified for such use;
provided, however, that, unless such additional First Mortgage Bonds are being
issued against other First Mortgage Bonds (retired or being retired), the
Company's net operating earnings (after deducting the depreciation requirement)
for a period of twelve consecutive calendar months within the fifteen calendar
months immediately preceding the calendar month in which the application for the
authentication and delivery of the First Mortgage Bonds is made shall have been
at least equal to two times the annual interest charges upon all First Mortgage
Bonds then to be outstanding and indebtedness of the Company, if any, secured by
a lien prior to or on a parity with the lien of the First Mortgage Indenture.
Such net operating earnings consist basically of the Company's operating income
before income taxes. As of December 31, 1996, net operating earnings were 3.66
times such interest charges, and after the sale of $50,000,000 principal amount
of Debentures (as hereinafter defined) (assuming a 7% interest rate), would be
3.03 times such interest charges. (Section 2.01(33) and Article VI of the
Revised Indenture.)
The New First Mortgage Bonds will be issued under item (1) or (3) above. As
of December 31, 1996, the Company had certified under the First Mortgage
Indenture net fundable property in excess of $47,000,000, which is available for
the issuance of First Mortgage Bonds under item (1) above (entitling the Company
to issue at least $28,000,000 principal amount of additional First Mortgage
Bonds on the basis of
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net fundable property). As of December 31, 1996, the Company also was entitled
to issue in excess of $102,000,000 principal amount of First Mortgage Bonds on
the basis of First Mortgage Bonds theretofore retired, as described under item
(3) above.
WITHDRAWAL OF CERTAIN CASH
Cash deposited with the corporate Trustee as the basis for the issuance of
additional First Mortgage Bonds may be withdrawn by the Company in the amount of
60% of the lesser of the cost or fair value of net fundable property not
theretofore utilized for any purpose under the First Mortgage Indenture. Other
cash held under the First Mortgage Indenture may be withdrawn by the Company in
the amount of 100% of the lesser of the cost or fair value of net fundable
property not theretofore utilized for any purpose under the First Mortgage
Indenture. (Sections 6.05 and 11.01 of the First Mortgage Indenture.)
DIVIDEND COVENANT
The Company will covenant in each New Supplemental Indenture that so long as
any of the New First Mortgage Bonds issued thereunder remain outstanding, the
Company will not declare or pay dividends on its Common Shares (other than
dividends payable in Common Shares) or make any other distribution in respect of
its Common Shares unless, after giving effect thereto, the sum of all such
dividends and distributions subsequent to December 31, 1976 will not exceed
$8,000,000 plus the Company's net income available for Common Shares accrued
after that date. Each New Supplemental Indenture will further provide that in
computing such net income there shall be deducted, as an additional depreciation
charge, for each year after 1976, the amount, if any, by which the First
Mortgage Indenture depreciation requirement exceeds the depreciation charges
against such net income actually made by the Company on account of its
depreciable fundable property. The same or a less restrictive covenant applies
to all of the currently outstanding series of First Mortgage Bonds. Under the
most restrictive of these covenants, $10,089,000 of retained earnings of the
Company at December 31, 1996 were not available for dividends or other
distributions on the Common Shares. (Section 9 of the Thirty-first, Forty-second
and Forty-fourth Supplemental Indentures; Section 18 of the Thirty-ninth
Supplemental Indenture; and Sections 9 and 18 of the Forty-third and Forty-fifth
Supplemental Indentures.)
MODIFICATION OF THE FIRST MORTGAGE INDENTURE
In general, modifications or alterations of the First Mortgage Indenture and
of the rights or obligations of the Company and of the Bondholders may, with the
approval of the Company, be made at Bondholders' meetings upon the affirmative
vote of 75% of the Bondholders entitled to vote thereat with respect to matters
involved. Provisions relating to such modifications or alterations are subject
to certain conditions designed to safeguard the position of the Bondholders and
the First Mortgage Indenture Trustees with respect to certain matters of basic
importance, including payment of principal of and any premium and interest on
the First Mortgage Bonds and creation of liens ranking prior to or on a parity
with the lien of the First Mortgage Indenture. (Article XII of the First
Mortgage Indenture.)
DEFAULT PROVISIONS
The First Mortgage Indenture provides that the following constitute "events
of default": (a) default in the payment of interest on any First Mortgage Bond
for 60 days; or (b) default in the payment of principal of any First Mortgage
Bond; or (c) default in the due performance or observance of any other covenant
or condition for 60 days after written notice thereof; or (d) institution of
bankruptcy, insolvency or similar proceedings. The First Mortgage Indenture
Trustees are required to give notice to the Bondholders of all defaults known to
the First Mortgage Indenture Trustees unless such defaults have been cured
before the giving of such notice or unless (except in the case of a default in
the payment of principal of or any premium or interest on any of the First
Mortgage Bonds, or in the payment of moneys into any sinking fund for the First
Mortgage Bonds) the First Mortgage Indenture Trustees, in good faith, determine
that
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withholding of such notice is in the interests of the Bondholders. In case of an
event of default, the First Mortgage Indenture Trustees may, and upon the
request of the holders of at least 25% of the aggregate principal amount of the
First Mortgage Bonds then outstanding shall, declare the principal of all First
Mortgage Bonds then outstanding to be due and payable and, subject to the rights
of the First Mortgage Indenture Trustees to receive adequate indemnification,
take all needful steps for the protection of the holders of such First Mortgage
Bonds upon the conditions and with the effect provided in the First Mortgage
Indenture. Compliance with certain provisions of the First Mortgage Indenture is
required to be evidenced by various certificates filed by the Company with the
corporate Trustee; however, no periodic evidence is required to be furnished as
to the absence of events of default. (Article VIII and Sections 13.01, 13.02,
13.04 and 15.02 of the First Mortgage Indenture.)
CONCERNING THE FIRST MORTGAGE INDENTURE TRUSTEES
First Trust National Association is corporate Trustee and James A.
Ehrenberg, an officer of the corporate Trustee, is individual Trustee under the
First Mortgage Indenture. The First Mortgage Indenture provides that the holders
of a majority in principal amount of the First Mortgage Bonds outstanding may
direct the First Mortgage Indenture Trustees to take action under the First
Mortgage Indenture, but under certain circumstances the First Mortgage Indenture
Trustees may decline to follow such direction or to exercise certain of their
powers. Moreover, the First Mortgage Indenture Trustees are under no obligation
to take such action unless furnished with indemnity satisfactory to the
corporate Trustee against all expenses and liability. (Section 13.20 of the
First Mortgage Indenture.)
The corporate Trustee acts as agent for participants in the Company's
Automatic Dividend Reinvestment and Share Purchase Plan. In the ordinary course
of business, affiliates of the corporate Trustee have engaged, and may in the
future engage, in commercial banking transactions with the Company and its
affiliates.
The corporate Trustee is also the Debenture Indenture Trustee under the
Debenture Indenture (each as defined below). As such, the corporate Trustee
would have a conflicting interest for purposes of the Trust Indenture Act if an
Event of Default were to occur under the First Mortgage Indenture or the
Debenture Indenture. In either such case, the corporate Trustee may be required
to eliminate such conflicting interest by resigning as the corporate Trustee or
the Debenture Indenture Trustee. There are other instances under the Trust
Indenture Act which would require the resignation of the corporate Trustee, such
as an affiliate of the corporate Trustee acting as underwriter with respect to
any of the Debt Securities.
DESCRIPTION OF DEBENTURES
GENERAL
The Debt Securities may be issued in one or more series under the Indenture
(For Unsecured Debt Securities) (the "Debenture Indenture") between the Company
and First Trust National Association, as Trustee (the "Debenture Indenture
Trustee"). The Debt Securities issued under the Debenture Indenture (the
"Debentures") will be unsecured obligations of the Company and shall not be
afforded any protection under the First Mortgage Indenture, pursuant to which
various series of First Mortgage Bonds have been, and may hereafter be, issued.
The First Mortgage Indenture does not limit the aggregate amount of First
Mortgage Bonds that may be issued except as described under "Description of
First Mortgage Bonds-- Issuance of the New First Mortgage Bonds and of
Additional First Mortgage Bonds." As of September 30, 1997, approximately
$123,000,000 of First Mortgage Bonds were outstanding.
The summaries of the Debenture Indenture set forth below do not purport to
be complete and are subject to the detailed provisions of the Debenture
Indenture, a copy of which is filed with the Commission as an exhibit to the
Registration Statement and is incorporated in this section by reference.
Capitalized terms used in this section which are not otherwise defined in this
Prospectus shall have the meanings
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ascribed to them in the Debenture Indenture. Whenever particular provisions or
terms defined in the Debenture Indenture are referred to in this section, such
provisions or definitions are incorporated by reference as part of the
statements made in this section, and such statements are qualified in their
entirety by such reference. References to article and section numbers herein,
unless otherwise indicated, are references to article and section numbers of the
Debenture Indenture.
TERMS OF DEBENTURES
Reference is made to the Prospectus Supplement for a description of the
following terms and other information with respect to the series of Debentures
in respect of which this Prospectus is being delivered: (1) the title of such
series of Debentures; (2) any limit on the aggregate principal amount of such
Debentures or the series of which they are a part; (3) the Person or Persons to
whom interest on the Debentures of such series shall be payable if other than
the Persons in whose names such Debentures are registered; (4) the date or dates
on which the principal of any of such Debentures will be payable; (5) the rate
or rates (which may be fixed or variable) and/or the method of determination of
such rate or rates at which any of such Debentures will bear interest, if any,
the date or dates from which any such interest will accrue, the Interest Payment
Dates on which any such interest will be payable and the Regular Record Date for
any such interest payable on any Interest Payment Date; (6) the place or places
where (i) the principal of or any premium or interest on any of such Debentures
will be payable, (ii) registration of transfer of such Debentures may be
effected, (iii) exchanges of such Debentures may be effected and (iv) notices
and demands to or upon the Company in respect of such Debentures may be served;
the Security Registrar for such Debentures and, if such is the case, that the
principal of such Debentures shall be payable without presentment or surrender
thereof; (7) the period or periods within which, or the date or dates on which,
the price or prices at which and the terms and conditions upon which any of such
Debentures may be redeemed, in whole or in part, at the option of the Company;
(8) the obligation or obligations, if any, of the Company to redeem or purchase
any of such Debentures pursuant to any sinking fund or other mandatory
redemption provisions or at the option of the Holder thereof, and the period or
periods within which, or the date or dates on which, the price or prices at
which and the terms and conditions upon which any of such Debentures shall be
redeemed or purchased, in whole or in part, pursuant to such obligation, and
applicable exceptions to the requirements of a notice of redemption in the case
of mandatory redemption or redemption at the option of the Holder; (9) the
denominations in which any of such Debentures will be issuable, if other than
denominations of $1,000 and any integral multiple thereof; (10) if other than
the currency of the United States, the currency or currencies, including
composite currencies, in which payment of the principal of and any premium and
interest on any of such Debentures will be payable; (11) if the principal of or
any premium or interest on any of such Debentures is to be payable, at the
election of the Company or the Holder thereof, in a coin or currency other than
in which such Debentures are stated to be payable, the period or periods within
which and the terms and conditions upon which, such election is to be made; (12)
if the principal of or any premium or interest on such Debentures is to be
payable, or is to be payable at the election of the Company or a Holder thereof,
in securities or other property, the type and amount of such securities or other
property, or the formulary or other method or other means by which such amount
shall be determined, and the period or periods within which, and the terms and
conditions upon which, any such election may be made; (13) if the amount payable
in respect of principal of or any premium or interest on any of such Debentures
may be determined with reference to an index or other fact or event
ascertainable outside the Debenture Indenture, the manner in which such amounts
will be determined; (14) if other than the principal amount thereof, the portion
of the principal amount of any of such Debentures which shall be payable upon
declaration of acceleration of the Maturity thereof; (15) any addition to the
Events of Default applicable to any of such Debentures and any addition to the
covenants of the Company for the benefit of the Holders of such Debentures; (16)
the terms, if any, pursuant to which such Debentures may be converted into or
exchanged for shares of capital stock or other securities of the Company or any
other Person; (17) the obligations or instruments, if any, which shall be
considered to be Eligible Obligations in respect of such Debentures denominated
in a currency other than Dollars or in a composite currency, and any additional
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or alternative provisions for the reinstatement of the Company's indebtedness in
respect of such Debentures after the satisfaction and discharge thereof; (18) if
such Debentures are to be issued in global form, (i) any limitations on the
rights of the Holder or Holders of such Debentures to transfer or exchange the
same or to obtain the registration of transfer thereof, (ii) any limitations on
the rights of the Holder or Holders thereof to obtain certificates therefor in
definitive form in lieu of temporary form and (iii) any and all other matters
incidental to such Debentures; (19) if such Debentures are to be issuable as
bearer securities; (20) any limitations on the rights of the Holders of such
Debentures to transfer or exchange such Debentures or to obtain the registration
of transfer thereof, and if a service charge will be made for the registration
of transfer or exchange of such Debentures, the amount or terms thereof; (21)
any exceptions to the provisions governing payments due on legal holidays or any
variations in the definition of Business Day with respect to such Debentures;
and (22) any other terms of such Debentures of such series, or any Tranche
thereof, not inconsistent with the provisions of the Debenture Indenture.
(Section 301)
Debentures may be sold at a substantial discount below their principal
amount. Certain special United States federal income tax considerations
applicable to Debentures sold at an original issue discount may be described in
the applicable Prospectus Supplement. In addition, certain special United States
federal income tax or other considerations applicable to any Debentures which
are denominated in a currency or currency unit other than Dollars may be
described in the applicable Prospectus Supplement.
Except as may otherwise be described in the Prospectus Supplement, the
covenants contained in the Debenture Indenture would not afford Holders of
Debentures protection in the event of a highly-leveraged transaction or change
of control involving the Company.
FORM, EXCHANGE AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement,
Debentures of each series will be issuable only in fully registered form without
coupons and in denominations of $1,000 and any integral multiple thereof.
(Sections 201 and 302)
At the option of the Holder, subject to the terms of the Debenture Indenture
and the limitations applicable to global securities, Debentures of any series
will be exchangeable for other Debentures of the same series, of any authorized
denomination and of like tenor and aggregate principal amount. (Section 305)
Subject to the terms of the Debenture Indenture and the limitations
applicable to global securities, Debentures may be presented for exchange as
provided above for registration of transfer (duly endorsed or accompanied by a
duly executed instrument of transfer) at the office of the Security Registrar or
at the office of any transfer agent designated by the Company for such purpose.
Unless otherwise indicated, no service charge will be made for any registration
of transfer or exchange of Debentures, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith. Every Debenture presented or surrendered for registration
of transfer or exchange shall (if so required by the Company, the Debenture
Indenture Trustee or the Security Registrar) be duly endorsed or accompanied by
an executed written instrument of transfer in form satisfactory to the Company,
the Debenture Indenture Trustee or the Security Registrar. (Section 305) Any
transfer agent (in addition to the Security Registrar) initially designated by
the Company for any Debenture will be named in the applicable Prospectus
Supplement. The Company may at any time designate additional transfer agents or
rescind the designation of any transfer agent or approve a change in the office
through which any transfer agent acts, except that the Company will be required
to maintain a transfer agent in each Place of Payment for the Debentures of each
series. The Company may perform all functions of any office or agency. (Section
602)
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The Company shall not be required to execute or register the transfer of or
the exchange of any Debenture, or any Tranche thereof, during a period of 15
days preceding the notice to be given identifying the Debentures called for
redemption, or any Debentures so selected for redemption, in whole or in part,
except the unredeemed portion of any such Debenture being redeemed in part.
(Section 305)
PAYMENT AND PAYING AGENT
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debenture on any Interest Payment Date will be made to the
person in whose name such Debenture (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest. (Section 307)
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium and interest on the Debentures of a particular
series will be payable at the office of such Paying Agent or Paying Agents as
the Company may designate for such purpose from time to time. Unless otherwise
indicated in the applicable Prospectus Supplement, the corporate trust office of
the Debenture Indenture Trustee in New York, New York will be designated as the
Company's sole Paying Agent for payment with respect to Debentures of each
series. Any other Paying Agents initially designated by the Company for the
Debentures of a particular series will be named in the applicable Prospectus
Supplement. The Company may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent or approve a change in the office
through which any Paying Agent acts, except that the Company will be required to
maintain a Paying Agent in each Place of Payment for the Debentures of a
particular series. (Section 602)
Any moneys deposited by the Company with the Trustee or any Paying Agent for
the payment of the principal of or any premium or interest on any Debenture
which remains unclaimed at the end of two years after such principal, premium or
interest has become due and payable will be paid to the Company, and the Holder
of such Debenture, as an unsecured general creditor and not as a Holder,
thereafter may look only to the Company for payment thereof. (Section 603)
REDEMPTION
Any terms for the optional or mandatory redemption of Debentures will be set
forth in the applicable Prospectus Supplement or a supplement thereto. Except as
shall otherwise be provided in the applicable Prospectus Supplement with respect
to Debentures that are redeemable at the option of the Holder, Debentures will
be redeemable only upon notice by mail not less than 30 days nor more than 60
days prior to the date fixed for redemption, and, if less than all the
Debentures of a series, or any Tranche thereof, are to be redeemed, the
particular Debentures to be redeemed will be selected by the Securities
Registrar by such method as shall be provided for any particular series, or in
the absence of any such provision, by such method of random selection as the
Security Registrar deems fair and appropriate. (Sections 403 and 404)
Any notice of redemption at the option of the Company may state that such
redemption will be conditional upon receipt by the Paying Agent or Agents, on or
prior to the date fixed for such redemption, of money sufficient to pay the
principal of and any premium and interest on such Debentures and that if such
money has not been so received, such notice will be of no force and effect and
the Company will not be required to redeem such Debentures. (Section 404)
CONSOLIDATION, MERGER, CONVEYANCE OR OTHER TRANSFER
Under the terms of the Debenture Indenture, the Company may not consolidate
with or merge into any other corporation or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, unless (i) the
corporation formed by such consolidation or into which the Company is merged or
the Person which acquires by conveyance or transfer, or which leases, the
properties and assets of the Company substantially as an entirety shall be a
Person organized and existing under the laws of any
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domestic jurisdiction and shall expressly assume the Company's obligations on
the Debentures and under the Debenture Indenture, (ii) immediately after giving
effect to the transaction, no Event of Default shall have occurred and be
continuing and (iii) the Company will have delivered to the Debenture Indenture
Trustee an Officer's Certificate and an Opinion of Counsel as provided in the
Debenture Indenture. (Section 1101)
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Debenture Indenture with respect to Debentures of any series: (a) failure to pay
any interest on any Debentures of such series within 60 days after the same
becomes due and payable; (b) failure to pay principal of or premium, if any, on
any Debenture of such series within three Business Days after the same becomes
due and payable; (c) failure to perform or breach of any other covenant or
warranty of the Company in the Debenture Indenture (other than a covenant or
warranty of the Company in the Debenture Indenture solely for the benefit of one
or more series of Debentures other than such series) for 60 days after written
notice to the Company by the Debenture Indenture Trustee, or to the Company and
the Debenture Indenture Trustee by the Holders of at least 33% in principal
amount of the Debentures of such series Outstanding under the Debenture
Indenture as provided in the Debenture Indenture; (d) certain events of
bankruptcy, insolvency or reorganization; and (e) any other Event of Default
specified in the applicable Prospectus Supplement with respect to Debentures of
a particular series. (Section 801)
An Event of Default with respect to a series of Debentures may not
necessarily constitute an Event of Default with respect to the Debentures of any
other series issued under the Debenture Indenture.
If an Event of Default with respect to any series of Debentures occurs and
is continuing, then either the Debenture Indenture Trustee or the Holders of not
less than 33% in principal amount of the Outstanding Debentures of such series
may declare the principal amount (or if the Debentures of such series are
Discount Securities, such portion of the principal amount thereof as may be
specified in the applicable Prospectus Supplement) of all of the Debentures of
such series to be due and payable immediately; provided, however, that if an
Event of Default occurs and is continuing with respect to more than one series
of Debentures, the Debenture Indenture Trustee or the Holders of not less than
33% in aggregate principal amount of the Outstanding Securities of all such
series, considered as one class, may make such declaration of acceleration and
not the Holders of the Debentures of any one of such series. (Section 802)
Subject to the provisions of the Debenture Indenture relating to the duties
of the Debenture Indenture Trustee in case an Event of Default shall occur and
be continuing, the Debenture Indenture Trustee will be under no obligation to
exercise any of its rights or powers under the Debenture Indenture at the
request or direction of any Holder, unless such Holder shall have offered to the
Debenture Indenture Trustee reasonable security or indemnity. (Section 903)
Subject to such provisions of the indemnification of the Debenture Indenture
Trustee, the Holders of a majority in principal amount of the Outstanding
Debentures of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Indenture Trustee, or exercising any trust or power conferred on the Debenture
Indenture Trustee, with respect to the Debentures of that series. (Section 812)
No Holder of a Debenture of any series will have any right to institute any
proceeding with respect to the Debenture Indenture, or for the appointment of a
receiver or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given written notice to the Debenture Indenture Trustee of
a continuing Event of Default with respect to the Debentures of such series,
(ii) the Holders of not less than a majority in aggregate principal amount of
the Outstanding Debentures of such series have made written request to the
Debenture Indenture Trustee, and such Holder or Holders have offered reasonable
indemnity to the Debenture Indenture Trustee, to institute such proceeding as
trustee and (iii) the
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Debenture Indenture Trustee has failed to institute such proceeding, and has not
received from the Holders of a majority in aggregate principal amount of the
Outstanding Debentures of that series a direction inconsistent with such
request, within 60 days after such notice, request and offer. (Section 807)
However, such limitations do not apply to a suit instituted by a Holder of a
Debenture for the enforcement of payment of the principal of or any premium or
interest on such Debenture on or after the applicable due date specified in such
Debenture. (Section 808)
The Company will be required to furnish to the Debenture Indenture Trustee
annually, not later than October 1 in each year, a statement by an appropriate
officer as to such officer's knowledge of the Company's compliance with all
conditions and covenants under the Debenture Indenture, such compliance to be
determined without regard to any period of grace or requirement of notice under
the Debenture Indenture. (Section 606)
RIGHT TO CURE
At any time after the declaration of acceleration with respect to the
Debentures of any series has been made and before a judgment or decree for
payment of the money due has been obtained, the Event or Events of Default
giving rise to such declaration of acceleration will, without further act, be
deemed to have been waived, and such declaration and its consequences will,
without further act, be deemed to have been rescinded and annulled, if
(a) the Company has paid or deposited with the Debenture Indenture
Trustee a sum sufficient to pay
(1) all overdue interest, if any, on all Debentures of such series;
(2) the principal of and premium, if any, on any Debentures of such
series which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates prescribed
therefor in such Debentures;
(3) interest upon overdue interest, if any, at the rate or rates
prescribed therefor in such Debentures, to the extent that payment of
such interest is lawful; and
(4) all amounts due to the Debenture Indenture Trustee under the
Debenture Indenture; and
(b) any other Event or Events of Default with respect to the Debentures
of such series, other than the non-payment of the principal of the
Debentures of such series which has become due solely by such declaration of
acceleration, have been cured or waived as provided in the Debenture
Indenture. (Section 802)
MODIFICATION AND WAIVER
Without the consent of any Holder of Debentures, the Company and the
Debenture Indenture Trustee may enter into one or more supplemental indentures
to the Debenture Indenture for any of the following purposes: (a) to evidence
the assumption by any permitted successor to the Company of the covenants of the
Company in the Debenture Indenture and the Debentures; or (b) to add one or more
covenants of the Company or other provisions for the benefit of the Holders of
all or any series of Outstanding Debentures or to surrender any right or power
conferred upon the Company by the Debenture Indenture; or (c) to add any
additional Events of Default with respect to all or any series of Outstanding
Debentures; or (d) to change or eliminate any provision of the Debenture
Indenture or to add any new provision to the Debenture Indenture, provided that
if such change, elimination or addition will adversely affect the interests of
the Holders of Debentures of any series in any material respect, such change,
elimination or addition will become effective with respect to such series only
when the consent of the Holders of such series so affected has been obtained or
when there is no Debenture of such series
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remaining Outstanding under the Debenture Indenture; or (e) to provide
collateral security for the Debentures; or (f) to establish the form or terms of
Debentures of any series as permitted by the Debenture Indenture; or (g) to
provide for the authentication and delivery of bearer securities and coupons
appertaining thereto representing interest, if any, thereon and for the
procedures for the registration, exchange and replacement thereof and for giving
of notice to, and the solicitation of the vote or consent of, the Holders
thereof, and for any and all other matters incidental thereto; or (h) to
evidence and provide for the acceptance of appointment of a separate or
successor Debenture Indenture Trustee under the Debenture Indenture with respect
to the Debentures of one or more series and to add or to change any of the
provisions of the Debenture Indenture as shall be necessary to provide for or to
facilitate the administration of the trusts under the Debenture Indenture by
more than one trustee; or (i) to provide for the procedures required to permit
the utilization of a noncertificated system of registration for any series of
Debentures; or (j) to change any place where (1) the principal of and any
premium and interest on any Debentures shall be payable, (2) any Debentures may
be surrendered for registration of transfer or exchange and (3) notices and
demands to or upon the Company in respect of Debentures and the Debenture
Indenture may be served; or (k) to cure any ambiguity, to correct or supplement
any defective or inconsistent provision or to make or change any other
provisions with respect to matters and questions arising under the Debenture
Indenture, provided such changes or additions shall not adversely affect the
interests of the Holders of Debentures of any series in any material respect.
(Section 1201)
The Holders of not less than a majority in aggregate principal amount of the
Outstanding Debentures of any series may waive compliance by the Company with
certain restrictive provisions of the Debenture Indenture. (Section 607) The
Holders of not less than a majority in principal amount of the Outstanding
Debentures of any series may waive any past default under the Debenture
Indenture with respect to such series, except a default in the payment of
principal, premium or interest and certain covenants and provisions of the
Debenture Indenture that cannot be modified or be amended without the consent of
the Holder of each Outstanding Debenture of such series affected. (Section 813)
Without limiting the generality of the foregoing, if the Trust Indenture Act
is amended after the date of the Debenture Indenture in such a way as to require
changes to the Debenture Indenture or the incorporation therein of additional
provisions or so as to permit changes to, or the elimination of, provisions
which, at the date of the Debenture Indenture or at any time thereafter, were
required by the Trust Indenture Act to be contained in the Debenture Indenture,
the Debenture Indenture will be deemed to have been amended so as to conform to
such amendment or to effect such changes or elimination, and the Company and the
Debenture Indenture Trustee may, without the consent of any Holders, enter into
one or more supplemental indentures to evidence or effect such amendment.
(Section 1201)
Except as provided above, the consent of the Holders of not less than a
majority in aggregate principal amount of the Debentures of all series then
Outstanding, considered as one class, is required for the purpose of adding any
provisions to, or changing in any manner, or eliminating any of the provisions
of, the Debenture Indenture pursuant to one or more supplemental indentures;
provided, however, that if less than all of the series of Debentures Outstanding
are directly affected by a proposed supplemental indenture, then the consent
only of the Holders of a majority in aggregate principal amount of Outstanding
Debentures of all series so directly affected, considered as one class, will be
required; and provided, further, that if the Debentures of any series have been
issued in more than one Tranche and if the proposed supplemental indenture
directly affects the rights of the Holders of one or more, but less than all,
such Tranches, then the consent only of the Holders of a majority in aggregate
principal amount of the Outstanding Debentures of all Tranches so directly
affected, considered as one class, will be required; and provided further, that
no such supplemental indenture may (a) change the Stated Maturity of the
principal of, or any installment of principal of or interest on, any Debenture,
or reduce the principal amount thereof or the rate of interest thereon (or the
amount of any installment of interest thereon) or change the method of
calculating such rate or reduce any premium payable upon the redemption thereof,
or reduce the amount of the principal of any Discount Security that would be due
and payable upon a declaration of
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acceleration of Maturity or change the coin or currency (or other property) in
which any Debenture or any premium or the interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment on or after
the Stated Maturity of any Debenture (or, in the case of redemption, on or after
the redemption date) without, in any such case, the consent of the Holder of
such Debenture, (b) reduce the percentage in principal amount of the Outstanding
Debentures of any series, or any Tranche thereof, the consent of the Holders of
which is required for any such supplemental indenture, or the consent of the
Holders of which is required for any waiver of compliance with any provision of
the Debenture Indenture or any default thereunder and its consequences, or
reduce the requirements for quorum or voting, without, in any such case, the
consent of the Holder of each Outstanding Debenture of such series or Tranche,
or (c) modify certain of the provisions of the Debenture Indenture relating to
supplemental indentures, waivers of certain covenants and waivers of past
defaults with respect to the Debentures of any series, or any Tranche thereof,
without the consent of the Holder of each Outstanding Debenture affected
thereby. A supplemental indenture which changes or eliminates any covenant or
other provision of the Debenture Indenture which has expressly been included
solely for the benefit of one or more particular series of Debentures or one or
more Tranches thereof, or modifies the rights of the Holders of Debentures of
such series or Tranches with respect to such covenant or other provision, will
be deemed not to affect the rights under the Debenture Indenture of the Holders
of the Debentures of any other series or Tranche. (Section 1202)
The Debenture Indenture provides that in determining whether the Holders of
the requisite principal amount of the Outstanding Debentures have given any
request, demand, authorization, direction, notice, consent or waiver under the
Debenture Indenture as of any date, or whether or not a quorum is present at a
meeting of Holders, (i) Debentures owned by the Company or any other obligor
upon the Debentures or any Affiliate of the Company or of such other obligor
(unless the Company, such Affiliate or such obligor owns all Securities
Outstanding under the Debenture Indenture, or all Outstanding Debentures of each
such series and each such Tranche, as the case may be, determined without regard
to this clause (i)) shall be disregarded and deemed not to be Outstanding; (ii)
the principal amount of a Discount Security that shall be deemed to be
Outstanding for such purposes shall be the amount of the principal thereof that
would be due and payable as of the date of such determination upon a declaration
of acceleration of the Maturity thereof as provided in the Debenture Indenture;
and (iii) the principal amount of a Debenture denominated in one or more foreign
currencies or a composite currency that will be deemed to be Outstanding will be
the Dollar equivalent, determined as of such date in the manner prescribed for
such Debenture, of the principal amount of such Debenture (or, in the case of a
Debenture described in clause (ii) above, of the amount described in such
clause). (Section 101)
If the Company shall solicit from Holders any request, demand,
authorization, direction, notice, consent, election, waiver or other Act, the
Company may, at its option, by Board Resolution, fix in advance a record date
for the determination of Holders entitled to give such request, demand,
authorization, direction, notice, consent, election, waiver or other Act, but
the Company shall have no obligation to do so. If such a record date is fixed,
such request, demand, authorization, direction, notice, consent, election,
waiver or other Act may be given before or after such record date, but only the
Holders of record at the close of business on the record date shall be deemed to
be Holders for the purposes of determining whether Holders of the requisite
proportion of the Outstanding Debentures have authorized or agreed or consented
to such request, demand, authorization, direction, notice, consent, direction,
waiver or other Act, and for that purpose the Outstanding Debentures shall be
computed as of the record date. Any request, demand, authorization, direction,
notice, consent, election, waiver or other Act of a Holder shall bind every
future Holder of the same Debenture and the Holder of every Debenture issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Debenture Indenture Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Debenture. (Section 104)
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DEFEASANCE
Unless otherwise indicated in the applicable Prospectus Supplement, any
Debenture, or any portion of the principal amount thereof, will be deemed to
have been paid for purposes of the Debenture Indenture, and, at the Company's
election, the entire indebtedness of the Company in respect thereof will be
deemed to have been satisfied and discharged, if there has been irrevocably
deposited with the Debenture Indenture Trustee or any Paying Agent (other than
the Company), in trust: (a) money in an amount which will be sufficient, or (b)
Eligible Obligations (as described below), which do not contain provisions
permitting the redemption or other prepaying thereof at the option of the issuer
thereof, the principal of and the interest on which when due, without any regard
to reinvestment thereof, will provide monies which, together with money, if any,
deposited with or held by the Debenture Indenture Trustee or such Paying Agent,
will be sufficient, or (c) a combination of (a) and (b) which will be
sufficient, to pay when due the principal of and any premium and interest due
and to become due on such Debentures or portions thereof. (Section 701) For this
purpose, unless otherwise indicated in the applicable Prospectus Supplement,
Eligible Obligations include direct obligations of, or obligations
unconditionally guaranteed by, the United States, entitled to the benefit of the
full faith and credit thereof, and certificates, depositary receipts or other
instruments which evidence a direct ownership interest in such obligations or in
any specific interest or principal payments due in respect thereof. (Section
101)
For federal income tax purposes, the deposit contemplated in the preceding
paragraph, together with the entire discharge and satisfaction of the Company's
obligations under the Debenture Indenture and the affected Debentures
thereunder, would be treated as an exchange of the affected Debentures for other
securities or for a direct interest in the cash and securities held in the
trust. In general, a Holder of such securities would recognize gain or loss to
the extent the fair market value thereof exceeds such Holder's adjusted basis in
such security. Such a Holder thereafter would be required to recognize for
federal income tax purposes a share of the income, gain or loss of the trust.
The amount so required to be recognized could be different from the amount that
would otherwise have been recognized in the absence of such deposit. Prospective
investors are urged to consult their own tax advisors as to the specific
consequences to them of any such deposit.
RESIGNATION OF DEBENTURE INDENTURE TRUSTEE
The Debenture Indenture Trustee may resign at any time by giving written
notice thereof to the Company or may be removed at any time by Act of the
Holders of a majority in principal amount of Debentures then Outstanding
delivered to the Debenture Indenture Trustee and the Company. No resignation or
removal of the Debenture Indenture Trustee and no appointment of a successor
trustee will become effective until the acceptance of appointment by a successor
trustee in accordance with the requirements of the Debenture Indenture. So long
as no Event of Default or event which, after notice or lapse of time, or both,
would become an Event of Default has occurred and is continuing and except with
respect to a Debenture Indenture Trustee appointed by Act of the Holders of a
majority in principal amount of the Outstanding Debentures, if the Company has
delivered to the Trustee a resolution of its Board of Directors appointing a
successor trustee and such successor has accepted such appointment in accordance
with the terms of the Debenture Indenture, the Debenture Indenture Trustee will
be deemed to have resigned and the successor will be deemed to have been
appointed as trustee in accordance with the Debenture Indenture. (Section 910)
NOTICES
Notices to Holders of Debentures will be given by mail to the addresses of
such Holders as they may appear in the Security Register. (Section 106)
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PERSONS DEEMED OWNERS
The Company, the Debenture Indenture Trustee and any agent of the Company or
the Debenture Indenture Trustee may treat the Person in whose name a Debenture
is registered as the absolute owner thereof (whether or not such Debenture may
be overdue) for the purpose of making payment and for all other purposes.
(Section 308)
GOVERNING LAW
The Debenture Indenture and the Debentures will be governed by, and
construed in accordance with, the laws of the State of New York, except to the
extent the law of any other jurisdiction shall be mandatorily applicable.
(Section 112)
LIMITATION ON SUITS
The Debenture Indenture limits a Holder's right to institute any proceeding
with respect to the Debenture Indenture, the appointment of a receiver or
trustee, or for any other remedy under the Debenture Indenture. (Section 807)
MAINTENANCE OF PROPERTIES
The Debenture Indenture provides that the Company shall cause (or, with
respect to property owned in common with others, make reasonable effort to
cause) all its properties used or useful in the conduct of its business to be
maintained and kept in good condition, repair and working order and shall cause
(or, with respect to property owned in common with others, make reasonable
effort to cause) to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as, in the judgment of the Company,
may be necessary so that the business carried on in connection therewith may be
properly conducted; provided, however, that nothing shall prevent the Company
from discontinuing, or causing the discontinuance of, the operation and
maintenance of any of its properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business. (Section 605)
CONCERNING THE DEBENTURE INDENTURE TRUSTEE
See "Description of First Mortgage Bonds--Concerning the First Mortgage
Indenture Trustees" for a description of certain relationships between the
Debenture Indenture Trustee and the Company.
GLOBAL SECURITIES
Some or all of the Debentures of any series may be represented, in whole or
in part, by one or more global securities (each, a "Global Security") which will
have an aggregate principal amount equal to that of the Debentures represented
thereby. Each Global Security will be registered in the name of a depositary
(the "Depositary") or a nominee thereof identified in the applicable Prospectus
Supplement, will be deposited with such Depositary or nominee or a custodian
therefor and will bear a legend regarding the restrictions on exchanges and
registration of transfer thereof referred to below and any such other matters as
may be provided for pursuant to the Debenture Indenture.
As long as the Depositary, or its nominee, is the registered holder of a
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and holder of such Global Security and the Debentures
represented thereby for all purposes under the Debenture Indenture. Except in
limited circumstances, owners of beneficial interests in a Global Security will
not be entitled to have such Global Security or any Debentures represented
thereby registered in their names, will not receive or be entitled to receive
physical delivery of certificated Debentures in exchange therefor and will not
be considered to be the owners or holders of such Global Security or any
Debentures represented thereby for any purpose under the Debentures or the
Debenture Indenture. All payments of principal of and any
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premium and interest on a Global Security will be made to the Depositary or its
nominee, as the case may be, as the Holder thereof. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. These laws may impair the
ability to transfer beneficial interests in a Global Security.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of Debentures represented by the Global Security to
the accounts of its participants. Ownership of beneficial interests in a Global
Security will be shown only on, and the transfer of those ownership interests
will be effected only through, records maintained by the Depositary (with
respect to participants' interests) or any such participant (with respect to
interests of persons held by such participants on their behalf). Payments,
transfers, exchanges and other matters relating to beneficial interests in a
Global Security may be subject to various policies and procedures adopted by the
Depositary from time to time. Neither the Company, the Debenture Indenture
Trustee nor any of their respective agents will have any responsibility or
liability for any aspect of the Depositary's or any participant's records
relating to, or for payments made on account of, beneficial interests in a
Global Security, or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities to or through underwriters or
dealers, directly to other purchasers or through agents. The Company may also
directly solicit offers to purchase the Debt Securities.
The Prospectus Supplement will set forth the terms of the offering,
including the name or names of any underwriters, dealers or agents, the purchase
price or prices of the Debt Securities offered thereby, the proceeds to the
Company from the sale of such Debt Securities, any initial public offering
price, any underwriting discount or commission and any discounts, concessions or
commissions allowed or reallowed or paid by any underwriter to other dealers.
Any initial public offering price and any discounts, concessions or commissions
allowed or reallowed or paid to dealers may be changed from time to time.
If so indicated in the Prospectus Supplement, the Company may authorize
underwriters, dealers or other persons acting as the Company's agents to solicit
offers by certain institutions to purchase the Debt Securities offered thereby
directly from the Company pursuant to contracts providing for payment and
delivery on a future date. Such contracts will be subject only to the conditions
set forth in the Prospectus Supplement, which will also set forth the commission
payable for solicitation of such contracts.
Underwriters, dealers and agents who participate in the distribution of the
Debt Securities may be entitled under agreements to be entered into with the
Company to indemnification by the Company against certain liabilities, including
liabilities under the Securities Act of 1933, as amended, or to contribution
with respect to payments which such underwriters, dealers or agents may be
required to make in respect thereof.
The Company does not intend to apply for the listing of the Debt Securities
on any national securities exchange. The Prospectus Supplement will indicate
whether any underwriter, dealer or agent intends to make a market in the Debt
Securities offered thereby. No assurance can be given as to the liquidity of any
trading market in the Debt Securities.
LEGAL OPINIONS
Legal matters with respect to the Debt Securities will be passed upon for
the Company by Dorsey & Whitney LLP, Minneapolis, Minnesota, and for any
underwriters, dealers, purchasers or agents by Sidley &
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Austin, Chicago, Illinois. The statements as to matters of law and legal
conclusions made under "Description of First Mortgage Bonds--Security and
Priority" are made on the authority of Dorsey & Whitney LLP.
EXPERTS
The consolidated financial statements 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 report which is
incorporated herein by reference, and have been so incorporated in reliance upon
such report given upon their authority as experts in accounting and auditing.
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH THEY RELATE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY THE SECURITIES OFFERED HEREBY IN ANY CIRCUMSTANCE IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Selected Consolidated Financial Data........... S-2
Use of Proceeds................................ S-3
Certain Terms of the Offered Debentures........ S-3
Underwriting................................... S-5
PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference.................................... 2
The Company.................................... 3
Use of Proceeds................................ 3
Construction Program and Financing............. 3
Ratios of Earnings to Fixed Charges............ 4
Description of First Mortgage Bonds............ 4
Description of Debentures...................... 8
Plan of Distribution........................... 18
Legal Opinions................................. 18
Experts........................................ 19
</TABLE>
$50,000,000
OTTER TAIL POWER COMPANY
SENIOR DEBENTURES
6.375% SERIES DUE 2007
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PROSPECTUS SUPPLEMENT
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