PROSPECTUS
DPL INC.
OFFER TO EXCHANGE ITS 8 1/4% SENIOR NOTES DUE 2007
TERMS OF THE EXCHANGE OFFER
We are offering to exchange up to $425,000,000 of our new 8 1/4%
Senior Exchange Notes due 2007 for up to $425,000,000 of our existing 8 1/4%
Senior Notes due 2007. Throughout this prospectus we refer to the 8 1/4% Senior
Notes due 2007 as "old notes" and the 8 1/4% Senior Exchange Notes due 2007 as
"exchange notes."
We are offering to issue the exchange notes to satisfy our obligations
contained in the registration rights agreement entered into when the old notes
were sold in transactions exempt from registration under the Securities Act.
The terms of the exchange notes will be substantially identical to the
terms of the old notes, except that the exchange notes will be registered and
the transfer restrictions, registration rights and provisions for additional
interest relating to the old notes will not apply to the exchange notes. There
is no existing market for the exchange notes, and DPL does not intend to apply
for their listing on any securities exchange.
All old notes that are validly tendered and not validly withdrawn will
be exchanged.
The exchange of old notes for exchange notes will not be a taxable
exchange for U.S. federal income tax purposes.
To exchange your old notes for the exchange notes:
o You must complete and send the letter of transmittal that
accompanies this prospectus to Bank One Trust Company, National
Association, the exchange agent, by 5:00 p.m., New York time, on
July 31, 2000, unless the exchange offer is extended.
o If your old notes are held in book-entry form at The Depository
Trust Company, you must instruct DTC, through your signed letter
of transmittal, that you wish to exchange your old notes for
exchange notes. When the exchange offer closes, your DTC account
will be changed to reflect your exchange of old notes for
exchange notes.
o Tenders of old notes may be withdrawn at any time prior to the
expiration of the exchange offer.
You should read the section called "The Exchange Offer" for additional
information on how to exchange your old notes for exchange notes.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined that this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
The date of this prospectus is June 23, 2000
<PAGE>
TABLE OF CONTENTS
Page
----
WHERE YOU CAN FIND MORE INFORMATION...........................................3
FORWARD-LOOKING STATEMENTS....................................................4
SUMMARY INFORMATION...........................................................5
DPL...........................................................................5
DPL AND ITS SUBSIDIARIES......................................................5
THE EXCHANGE OFFER............................................................6
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION................................10
USE OF PROCEEDS..............................................................11
THE EXCHANGE OFFER...........................................................11
DESCRIPTION OF EXCHANGE NOTES ...............................................18
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS.....................29
PLAN OF DISTRIBUTION.........................................................32
LEGAL MATTERS................................................................33
INDEPENDENT ACCountants......................................................33
You should rely only on the information contained in this prospectus
or information contained in documents which you are referred to in this
prospectus. DPL has not authorized anyone to provide you with information
different from that contained in this prospectus. DPL is offering to sell the
exchange notes only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date on the
front cover, regardless of the time of delivery of this prospectus or any sale
of the exchange notes.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the information requirements of the Securities
Exchange Act of 1934, and in accordance we file annual, quarterly and special
reports, proxy statements and other information with the Securities and Exchange
Commission. You may read and copy any documents we file at the SEC's public
reference room, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference room. Our
SEC filings are also available to the public on the SEC's web site at
http://www.sec.gov and through the New York Stock Exchange, 20 Broad Street, New
York, New York 10005, on which our common stock is listed.
The SEC allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information as well as
the information included in this prospectus. We incorporate by reference the
documents listed below and any future filings made with the SEC under Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until all of
the exchange notes are sold.
o Annual Report on Form 10-K for the fiscal year ended December 31,
1999; and
o Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 2000
We have agreed with the initial purchasers of the old notes that, if
we are no longer subject to the informational requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, we will furnish to holders and
beneficial owners of the notes and to prospective purchasers designated by such
holders the information required to be delivered pursuant to Rule 144A(d)(4)
3
<PAGE>
under the Securities Act to permit compliance with Rule 144A in connection with
resales of the notes.
This Prospectus, which is part of the exchange offer registration
statement, does not contain all of the information found in the exchange offer
registration statement. You should refer to the registration statement,
including its exhibits and schedules, for further information. You may obtain
copies of documents containing this information from us, without charge, by
calling or writing to us at:
DPL INC.
Financial Activities
Box 8825
Dayton, Ohio 45401
(937) 259-7150
IN ORDER TO OBTAIN TIMELY DELIVERY, YOU MUST REQUEST DOCUMENTS FROM US
NO LATER THAN JULY 26, 2000, WHICH IS FIVE DAYS BEFORE THE EXPIRATION OF THE
EXCHANGE OFFER ON JULY 31, 2000.
FORWARD-LOOKING STATEMENTS
Reports and other information incorporated by reference in this
prospectus contain forward-looking statements regarding plans and expectations
for the future. Investors are cautioned that actual outcomes and results may
vary materially from those projected due to various factors beyond our control,
including abnormal weather, unusual maintenance or repair requirements, changes
in fuel costs, increased competition, regulatory changes and decisions, changes
in accounting rules and adverse economic conditions
4
<PAGE>
SUMMARY INFORMATION
The following summary contains basic information about this exchange
offer. It may not contain all the information that is important to you in making
your investment decision. Therefore, you should read the entire document
carefully before deciding to exchange the old notes.
The "Description of Exchange Notes" section of this prospectus
contains more detailed information regarding the terms and conditions of the
exchange notes. Unless the context indicates otherwise, the words "we," "our,"
"ours," "us" and "DPL" refer to DPL Inc. and its consolidated subsidiaries.
DPL
DPL Inc. was formed in 1985 as a holding company. DPL's principal
subsidiary is The Dayton Power and Light Company, a corporation formed under the
laws of the State of Ohio. Dayton Power and Light sells electricity and natural
gas to residential, commercial, industrial and governmental customers in a 6,000
square mile area of West Central Ohio. Electricity for Dayton Power and Light's
24 county service area is generated at eight power plants and is distributed to
495,000 retail customers. Natural gas service is provided to 308,000 customers
in 16 counties. At December 31, 1999, DPL had total assets of $4.34 billion and,
for the year then ended, DPL had operating revenues of $1.34 billion and net
income of $204 million.
DPL AND ITS SUBSIDIARIES
Other subsidiaries of DPL include:
o Miami Valley Resources, Inc., a natural gas supply
management company;
o Miami Valley Leasing, Inc., which leases communications
equipment and other miscellaneous equipment, owns real
estate and has, for financial investment purposes, acquired
limited partnership interests in wholesale electric
generation;
o Miami Valley Lighting, Inc., a street lighting business;
o Miami Valley CTC, Inc., which provides transportation
services;
o Miami Valley Insurance Company, an insurance company for DPL
and its subsidiaries;
o Miami Valley Development Company, which has acquired real
estate for Dayton Power and Light;
o DPL Energy, Inc., which has been granted authority to engage
in the business of brokering wholesale electric energy;
o MacGregor Park, Inc., an owner and developer of real estate;
and
o Plaza Building Inc., which owns and leases an office
building. MVE, Inc. is a subsidiary of Plaza Building Inc.
which provides financial support services to DPL and its
subsidiaries.
DPL is exempt from registration with the Securities and Exchange
Commission under the Public Utility Holding Company Act of 1935 because its
utility business operates solely in the State of Ohio.
DPL employed 2,102 persons as of December 31, 1999, of which 1,778
were full-time employees and 324 were part-time employees.
The principal executive offices of DPL are located at Courthouse Plaza
Southwest, Dayton, Ohio 45402. DPL's telephone number is (937) 224-6000.
5
<PAGE>
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
------------------------------------------
On March 1, 2000, we completed the private offering of the old notes.
We and the Initial Purchaser executed a registration rights agreement in the
private offering of the old notes in which we agreed to deliver to you this
prospectus and agreed to:
- file an exchange offer registration statement with the Commission
within 90 days after March 1, 2000, the date of issuance of the old notes;
- have the exchange offer registration statement declared effective by
the Commission within 180 days after March 1, 2000; and
- mail to each holders of the old notes a copy of the exchange offer
prospectus and consummate the exchange offer within 30 days after the date on
which the holders are mailed a copy of the exchange offer prospectus.
You are entitled to exchange in the exchange offer your old notes for
exchange notes which are identical in all material respects to the old notes
except that the exchange notes have been registered under the Securities Act.
THE EXCHANGE OFFER
EXCHANGE NOTES......................... $425,000,000 principal amount of 8 1/4%
Senior Exchange Notes due 2007.
THE EXCHANGE OFFER..................... We are offering to issue the exchange
notes in exchange for a like principal
amount of the outstanding 8 1/4% Senior
Notes due 2007, issued by us in a
private placement on March 1, 2000. We
are offering to issue the exchange notes
to satisfy our obligations contained in
the registration rights agreement
entered into when we sold the old notes
in transactions exempt from registration
under the Securities Act. The terms of
the exchange notes will be substantially
identical to the terms of the old notes,
except that the exchange notes will be
registered and the transfer
restrictions, registration rights and
provisions for additional interest
relating to the old notes will not apply
to the exchange notes.
6
<PAGE>
RESALES OF EXCHANGE NOTES.............. Based on Commission no-action letters,
we believe that after the exchange offer
you may offer and sell the exchange
notes without registration under the
Securities Act so long as:
- You acquired the exchange notes
in the ordinary course of business.
- When the exchange offer begins
you do not have an arrangement with
another person to participate in a
distribution of the exchange notes.
- You are not engaged in a
distribution of, nor do you intend
to distribute, the exchange notes.
When you tender the outstanding notes,
we will ask you to represent to us that:
- You are not an affiliate of DPL.
- You will acquire the exchange
notes in the ordinary course of
business.
- When the exchange offer begins
you are not engaged in, nor do you
have plans with another person to
be engaged in, a distribution of
the exchange notes.
If you are unable to make these
representations, you will be required to
comply with the registration and
prospectus delivery requirements under
the Securities Act in connection with a
resale transaction.
If you are a broker-dealer and receive
exchange notes for your own account, you
must acknowledge that you will deliver a
prospectus if you resell the exchange
notes. By acknowledging your intent and
delivering a prospectus you will not be
deemed to admit that you are an
"underwriter" under the Securities Act.
You may use this prospectus as it is
amended from time to time when you
resell exchange notes which were
acquired from market-making or trading
activities. For a year after the
expiration date we will make this
prospectus available to any
broker-dealer in connection with such a
resale. See "Plan of Distribution."
CONDITIONS TO THE EXCHANGE OFFER....... The exchange offer is subject to
conditions, some of which we may waive.
These conditions are more fully
described later in this prospectus under
"The Exchange Offer-Certain Conditions
to the Exchange Offer."
7
<PAGE>
PROCEDURES FOR TENDERING OLD NOTES..... If you wish to participate in the
exchange offer, you must complete, sign
and date the accompanying letter of
transmittal or a facsimile copy and mail
it or deliver it to the exchange agent
along with any necessary documentation.
Instructions and the address of the
exchange agent are on the letter of
transmittal and in this prospectus. See
"The Exchange Offer - Procedures for
Tendering Old Notes- Exchange Agent."
You may also effect a tender of
outstanding notes pursuant to the
procedures for book-entry transfer as
described in this prospectus. See
"Exchange Offer - Procedures for
Tendering Old Notes."
MATURITY DATE.......................... The exchange notes will mature on March
1, 2007
INTEREST PAYMENT DATES................. Interest on the exchange notes is
payable on March 1 and September 1 of
each year, commencing September 1, 2000.
INTEREST ACCRUAL....................... Interest on the exchange notes will
accrue from the last interest payment
date to which we paid interest on the
old notes.
ABSENCE OF PUBLIC MARKET FOR THE
EXCHANGE NOTES......................... We do not intend to apply for a listing
of the exchange notes on any securities
exchange. We do not know if an active
public market for the exchange notes
will develop or, if developed, will
continue. If an active public market
does not develop or is not maintained,
the market price and liquidity of the
exchange notes may be adversely
affected. We cannot make any assurances
regarding the liquidity of the market
for the exchange notes, the ability of
holders to sell their exchange notes or
the price at which holders may sell
their exchange notes.
OPTIONAL REDEMPTION.................... We may redeem the exchange notes prior
to their maturity at a redemption price
equal to the sum of (a) the principal of
the exchange notes being redeemed plus
accrued interest thereon to the
redemption date plus (b) a make-whole
amount. See "Description of Exchange
Notes--Redemption."
MAKE-WHOLE AMOUNT...................... The make-whole amount equals the excess,
if any, of
o the sum of the present values of the
remaining scheduled payments of the
principal amount and interest on the
exchange notes, exclusive of interest
paid to the date of redemption, from the
redemption date to the stated maturity
of the exchange notes, computed by
discounting these payments, in each
case, to the redemption date on a
semi-annual basis, assuming a 360-day
year consisting of twelve 30-day months,
at the then-current rate for treasury
securities of an equivalent maturity
plus .35% over
o 100% of the principal amount of the
exchange notes to be redeemed. See
"Description of Exchange
Notes--Redemption."
PRIORITY............................... The exchange notes will be unsecured
obligations and, so long as they are
unsecured, will rank equally with all of
our other senior unsecured indebtedness.
The indenture under which we will issue
the exchange notes does not limit the
amount of debt we or any of our
subsidiaries may incur. Because we are a
holding company that derives
substantially all of our income from our
operating subsidiaries, the exchange
8
<PAGE>
notes will be effectively subordinated
to debt and preferred stock at the
subsidiary level. See "Description of
Exchange Notes-- General."
USE OF PROCEEDS........................ There will be no proceeds payable to us
from the issuance of the exchange notes
pursuant to the exchange offer.
FORM AND DENOMINATION.................. We will issue the exchange notes in
fully registered form only in
denominations of $1,000 and in integral
multiples of $1,000. The exchange notes
will be represented by a registered
global certificate deposited with, or on
behalf of, the Depository Trust Company
or its nominee. See "Description of
Exchange Notes-- Book-Entry, Delivery
and Form."
LIMITATION ON LIENS.................... We may not grant a lien on the capital
shares of Dayton Power and Light to
secure our indebtedness without
similarly securing the exchange notes,
with certain exceptions. See
"Description of Exchange
Notes--Limitation on Liens."
TENDERS, EXPIRATION DATE,
WITHDRAWAL............................. The exchange offer will expire at 5:00
p.m. New York City time on July 31,
2000, unless it is extended. If you
decide to exchange your old notes for
exchange notes, you must acknowledge
that you are not engaging in, and do not
intend to engage in, a distribution of
the exchange notes. If you decide to
tender your old notes pursuant to the
exchange offer, you may withdraw them at
any time prior to July 31, 2000. If we
decide for any reason not to accept any
old notes for exchange, your old notes
will be returned to you at our expense
promptly after the expiration or
termination of the exchange offer.
FAILURE TO TENDER OLD NOTES............ If you do not tender your old notes or
we do not accept your tender because,
among other things, you invalidly
tendered your old notes, you will not be
entitled to any further registration
rights under the registration rights
agreement, except under limited
circumstances. However, your old notes
will remain outstanding and entitled to
the benefits of the indenture.
MATERIAL UNITED STATES TAX
CONSEQUENCES........................... Your exchange of old notes for exchange
notes pursuant to the exchange offer
should not result in any income, gain or
loss to you for United States federal
income tax purposes. See "Material
United States Federal Income Tax
Considerations."
EXCHANGE AGENT......................... Bank One Trust Company, National
Association is serving as exchange agent
in connection with the exchange offer.
The address, telephone number and
facsimile number of the exchange agent
are set forth under "The Exchange
Offer-- Exchange Agent."
TRUSTEE, REGISTRAR AND PAYING AGENT.... Bank One Trust Company, National
Association.
9
<PAGE>
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
The following table includes a summary of our consolidated financial
data for the period indicated. The summary consolidated financial data for the
three months ended March 31, 2000 and 1999 was derived from our unaudited
consolidated financial statements. The summary consolidated financial data for
the years ended December 31, 1999, 1998, 1997, 1996 and 1995 was derived from
our audited consolidated financial statements. This summary is qualified in its
entirety by the more detailed information and financial statements, including
the notes to these financial statements, included in the documents incorporated
by reference in this prospectus. See "Where You Can Find More Information."
<TABLE>
<CAPTION>
THREE YEARS ENDED
MONTHS ENDED DECEMBER 31,
MARCH 31, (MILLIONS OF DOLLARS,
EXCEPT FOR DIVIDENDS AND RATIOS)
2000 1999 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
Financial data:
--------------
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues............ $386.6 $ 383.5 $1,338.9 $1,352.2 $1,333.6 $1,318.2 $1,296.3
Operating Income.............. 114.5 126.3 402.9 382.0 355.6 357.1 353.7
Net Income.................... 50.1 72.5 204.2 189.1 181.4 172.9 164.7
Total Assets.................. $4,444.5 $3,872.0 $4,340.4 $3,855.9 $3,585.2 $3,418.7 $3,322.8
Ratio of Earnings to Fixed Charges:
Calculated in Accordance with
SEC Rules (times)............. 3.45 4.23 4.00 4.33 4.32 4.10 3.82
Cash Dividends Declared per
Common Share.............. $.235 $.235 $0.94 $0.94 $0.91 $0.87 $0.83
Earnings Per Common Share..... $.34 $.47 $1.35 $1.24 $1.20 $1.15 $1.09
</TABLE>
<TABLE>
<CAPTION>
AS OF MARCH 31, AS OF DECEMBER 31,
--------------- ------------------
2000 1999 1998 1997 1996 1995
---- ---- ---- ---- ---- ----
Capitalization:
--------------
<S> <C> <C> <C> <C> <C> <C>
Long-Term Debt (excluding current portion)... $1,756.0 $1,336.6 $1,065.9 $971.0 $1,014.3 1,081.5
Preferred Stock:
Not Subject to Mandatory Redemption.......... 22.9 22.9 22.9 22.9 22.9 22.9
Subject to Mandatory Redemption.............. 0.1 --- --- --- --- ---
Company Obligated Mandatorily Redeemable Trust
Preferred Securities of Subsidiary Holding Solely
Parent Debentures............................ 504.2 --- --- --- --- ---
Common Shareholders' Equity.................. 912.4 1,451.6 1,383.7 1,286.0 1,200.5 1,164.8
Total Capitalization*........................ 3,195.6 2,811.1 2,472.5 2,279.8 2,237.7 2,269.2
Total Capitalization and Liabilities......... $4,444.5 $4,340.4 $3,855.9 $3,585.2 $3,418.7 $3,322.8
* Includes Long-Term Debt & Trust Preferred
Securities.
</TABLE>
10
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the issuance of the exchange
notes in exchange for the old notes tendered pursuant to the exchange offer. In
consideration for the issuance of the exchange notes as contemplated by this
prospectus, we will receive in exchange an identical principal amount of
outstanding notes, which have terms substantially identical to the exchange
notes. We will retire and cancel all of the outstanding notes surrendered in
exchange for the exchange notes, and such outstanding notes may note be
reissued.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER; TERMS OF THE EXCHANGE OFFER
We issued and sold the old notes on March 1, 2000 to the initial
purchaser in a private transaction not subject to the registration requirements
of the Securities Act. The initial purchaser then offered and sold the old notes
only
o to "Qualified Institutional Buyers" (as defined in Rule 144A
under the Securities Act) in reliance on the exemption from the
registration requirements of the Securities Act provided by Rule
144A,
o to a limited number of institutional "Accredited Investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) that, prior to their purchase of old notes, executed and
delivered to the initial purchaser a letter containing certain
representations and agreements and
o outside the United States to non-U.S. persons in offshore
transactions (as defined in Regulation S under the Securities
Act) in compliance with Regulation S under the Securities Act.
In connection with the sale of the old notes, we entered into a
registration rights agreement with the initial purchaser which obligated us to:
o file a registration statement with the Commission for an offer to
exchange the old notes for the exchange notes;
o use our reasonable best efforts to cause the registration
statement to be declared effective within 180 days after the
issuance of the old notes;
o promptly after the registration statement has been declared
effective, offer exchange notes in exchange for surrender of the
old notes; and
o use our reasonable best efforts to keep the exchange offer open
for at least 30 days after the date notice of the exchange offer
has been mailed to the holders of the old notes.
The exchange notes have terms identical to the old notes, except that the
exchange notes do not have transfer restrictions or any terms relating to
registration rights and do not provide for the liquidated damages set forth in
the registration rights agreement payable by us in the event that we are unable
to fulfill certain of our obligations under the registration rights agreement. A
holder that tenders an old note pursuant to the exchange offer and does not
withdraw it will receive an exchange note in the same principal amount as the
tendered old note. Interest on each exchange note will accrue from the last
interest payment on the old note tendered. If no interest has been paid on the
old notes, interest will accrue from the date of issuance of the old notes.
PROCEDURES FOR TENDERING OLD NOTES
The tender to us of old notes by a holder as set forth below and the
acceptance of the old notes by us will constitute a binding agreement between
the tendering holder and us upon the terms and subject to the conditions set
forth in this prospectus and in the accompanying letter of transmittal. Except
as set forth below, a holder who wishes to tender old notes for exchange
11
<PAGE>
pursuant to the exchange offer must transmit a properly completed and duly
executed letter of transmittal, including all other documents required by such
letter of transmittal, to Bank One Trust Company, National Association, who is
acting as our exchange agent, at the address set forth below under "Exchange
Agent" on or prior to the expiration date. In addition:
o certificates for such old notes must be received by the exchange
agent along with the letter of transmittal; or
o a timely confirmation of a book-entry transfer of these old
notes, if this procedure is available, into the exchange agent's
account at DTC pursuant to the procedure for book-entry transfer
described below, must be received by the exchange agent prior to
the expiration date; or
o the holder must comply with the guaranteed delivery procedures
described below.
The method of delivery of old notes, letters of transmittal and all
other required documents is at the election and risk of the holders. If such
delivery is by mail, we recommend that you use registered mail, properly
insured, with return receipt requested. In all cases, sufficient time should be
allowed to assure timely delivery. No letters of transmittal or old notes should
be sent to DPL.
Signatures on a letter of transmittal or a notice of withdrawal, as
the case may be, must be guaranteed unless the old notes surrendered for
exchange pursuant thereto are tendered:
o by a registered holder of the old notes who has not completed the
box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the letter of transmittal; or
o for the account of an eligible institution.
If signatures on a letter of transmittal or a notice of withdrawal, as
the case may be, are required to be guaranteed, such guarantees must be by an
eligible institution, which is a firm that is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States. If old notes are registered in the name of a
person other than the person signing the letter of transmittal, the old notes
surrendered for exchange must be endorsed by, or be accompanied by a written
instrument or instruments of transfer or exchange, in satisfactory form as
determined by us in our sole discretion, duly executed by the registered holder
with the signature thereon guaranteed by an eligible institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of old notes tendered for exchange will be determined by
us in our sole discretion, and our determination will be final and binding on
all parties. We reserve the absolute right:
o to reject any and all tenders of any particular old notes not
properly tendered or to not accept any particular old notes which
acceptance might, in our judgment or the judgment of our counsel,
be unlawful; and
o to waive any defects or irregularities or conditions of the
exchange offer as to any particular old notes either before or
after the expiration date (including the right to waive the
ineligibility of any holder who seeks to tender old notes in the
exchange offer).
Unless waived, any defects or irregularities in connection with the
tender of old notes for exchange must be cured within such reasonable period of
time as we determine. Neither we, the exchange agent nor any other person will
be under any duty to give notification of any defect or irregularity with
respect to any tender of old notes for exchange, nor will we or any of them
incur any liability for failure to give such notification.
12
<PAGE>
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this
prospectus and in the accompanying letter of transmittal, we will:
o accept for exchange old notes, which are properly tendered on or
prior to the expiration date and not withdrawn as permitted
below; and
o use our reasonable best efforts to keep the exchange offer open
for not less than 30 days, or longer if required by applicable
law, after the date notice of the exchange offer is mailed to the
holders of the old notes.
The term "expiration date" means 5:00 p.m., New York City time, on
July 31, 2000; provided, however, that if we, in our sole discretion, have
extended the period of time for which the exchange offer is open, the term
"expiration date" means the latest time and date to which the exchange offer is
extended.
As of the date of this prospectus, $425,000,000 in aggregate principal
amount of the old notes were outstanding. The exchange offer is not conditioned
upon any minimum principal amount of old notes being tendered. This prospectus,
together with the letter of transmittal, is first being sent on or about the
date set forth on the cover page to all holders of old notes at the addresses
set forth in the security register maintained by the trustee.
We expressly reserve the right:
o at any time or from time to time, to extend the period of time
during which the exchange offer is open, and thereby delay
acceptance of any old notes; and
o to amend or terminate the exchange offer, and not to accept for
exchange any old notes not previously accepted for exchange, upon
the occurrence of any of the conditions of the exchange offer
specified below under "Certain Conditions to the Exchange Offer."
We will give written notice of any extension, amendment,
non-acceptance or termination to the holders of the old notes as promptly as
practicable, such notice in the case of any extension to be issued by means of a
press release or other public announcement no later than 5:00 p.m., New York
City time, on the previous expiration date. Without limiting the manner in which
we may choose to make any public announcement and subject to applicable law, we
shall have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to the Dow Jones News
Service.
Old notes that are not tendered for exchange or are tendered but not
accepted in connection with the exchange offer will remain outstanding and be
entitled to the benefits of the indenture, but will not be entitled to any
further registration rights under the registration rights agreement, except
under limited circumstances. We intend to conduct the exchange offer in
accordance with the applicable requirements of the Exchange Act and the relevant
rules and regulations of the SEC.
If the letter of transmittal is signed by a person or persons other
than the registered holder or holders of old notes, such old notes must be
endorsed or accompanied by appropriate powers of attorney, in either case signed
exactly as the name or names of the registered holder or holders that appear on
the old notes.
By executing, or otherwise becoming bound by, a letter of transmittal,
each holder of the old notes, other than certain specified holders, will
represent that:
o it is not our affiliate;
o any exchange notes to be received by it were acquired in the
ordinary course of its business; and
13
<PAGE>
o it has no arrangement with any person to participate in the
distribution, within the meaning of the Securities Act, of the
exchange notes.
If the tendering holder is a broker-dealer that will receive exchange
notes for its own account in exchange for the old notes that were acquired as a
result of market-making activities or other trading activities, it will be
required to acknowledge that it will deliver a prospectus in connection with any
resale of such exchange notes. See "--Resale of the Exchange Notes."
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon satisfaction or waiver of all of the conditions to the exchange
offer, we will accept, promptly after the expiration date, all old notes
properly tendered and will issue exchange notes promptly after acceptance of the
old notes. See "Certain Conditions to the Exchange Offer" below. For purposes of
the exchange offer, we will be deemed to have accepted properly tendered old
notes for exchange if and when we have given oral (confirmed in writing) or
written notice thereof to the exchange agent.
In all cases, issuance of exchange notes for the old notes that are
accepted for exchange pursuant to the exchange offer will be made only after
timely receipt by the exchange agent of certificates for such old notes or a
timely book-entry confirmation of such old notes into the exchange agent's
account at DTC pursuant to the book-entry transfer procedures described below, a
properly completed and duly executed letter of transmittal and all other
required documents. If any tendered old notes are not accepted for any reason
set forth in the terms and conditions of the exchange offer or if certificates
representing old notes are submitted for a greater principal amount than the
holder desires to exchange, such unaccepted or non-exchanged old notes will be
returned without expense to the tendering holder thereof (or, in the case of old
notes tendered by book-entry transfer into the exchange agent's account at DTC
pursuant to the book-entry transfer procedures described below, such
non-exchanged old notes will be credited to an account maintained with DTC) as
promptly as practicable after the expiration or termination of the exchange
offer.
BOOK-ENTRY TRANSFER
Promptly after the date of this prospectus, the exchange agent will
make a request to establish an account with respect to the old notes at DTC for
purposes of the exchange offer. Any financial institution that is a participant
in DTC's systems may make book-entry delivery of old notes by causing DTC to
transfer such old notes into the exchange agent's account in accordance with
DTC's Automated Tender Offer Program ("ATOP"), procedures for transfer. However,
the exchange for the old notes so tendered will only be made after timely
confirmation of such book-entry transfer of old notes into the exchange agent's
account, and timely receipt by the exchange agent of an agent's message and any
other documents required by the letter of transmittal. The term "agent's
message" means a message, transmitted by DTC and received by the exchange agent
and forming a part of a book-entry confirmation, which states that DTC has
received an express acknowledgment from a participant tendering old notes that
are the subject of such book-entry confirmation, that such participant has
received and agrees to be bound by the terms of the letter of transmittal, and
that we may enforce such agreement against such participant.
Although delivery of old notes may be effected through book-entry
transfer into the exchange agent's account at DTC, the letter of transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees and any other required documents, must in any case be
delivered to and received by the exchange agent at its address set forth under
"--Exchange Agent" on or prior to the expiration date, or the guaranteed
delivery procedure set forth below must be complied with.
Delivery of documents to DTC in accordance with its procedures does
not constitute delivery to the exchange agent.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the old notes desires to tender such old
notes and (1) the old notes are not immediately available, (2) time will not
permit such holder's old notes or other required documents to reach the exchange
14
<PAGE>
agent before the expiration date of the exchange offer, or (3) the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if:
o the tender is made through an eligible institution;
o prior to the expiration date of the exchange offer, the exchange
agent receives from such eligible institution a properly
completed and duly executed letter of transmittal (or a facsimile
letter of transmittal) and notice of guaranteed delivery,
substantially in the form provided by us (by telegram, telex,
facsimile transmission, mail or hand delivery),
o setting forth the name and address of the holder of old notes and
the amount of old notes tendered, stating that the tender is
being made thereby and guaranteeing that within five New York
Stock Exchange trading days after the date of execution of the
notice of guaranteed delivery, the certificates of all physically
tendered old notes, in proper form for transfer, or a book-entry
confirmation, as the case may be, and any other documents
required by the letter of transmittal will be deposited by the
eligible institution with the exchange agent; and
o the certificates for all physically tendered old notes, in proper
form for transfer, or a book-entry confirmation, as the case may
be, and all other documents required by the letter of
transmittal, are received by the exchange agent within five New
York Stock Exchange trading days after the date of execution of
the notice of guaranteed delivery.
WITHDRAWAL RIGHTS
Tenders of old notes may be withdrawn at any time prior to the
expiration date.
For a withdrawal to be effective, a written notice of withdrawal must
be received by the exchange agent at one of the addresses set forth below under
"Exchange Agent." Any such notice of withdrawal must specify:
o the name of the person having tendered the old notes to be
withdrawn;
o the old notes to be withdrawn (including the principal amount of
such old notes); and
o where certificates for old notes have been transmitted, the name
in which such old notes are registered, if different from that of
the withdrawing holder.
If certificates for old notes have been delivered or otherwise
identified to the exchange agent, then, prior to the release of such
certificates, the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an eligible institution unless such holder is an
eligible institution. If old notes have been tendered pursuant to the procedure
for book-entry transfer described above, any notice of withdrawal must specify
the name and number of the account at DTC to be credited with the withdrawn old
notes and otherwise comply with the procedures of such facility. All questions
as to the validity, form and eligibility (including time of receipt) of such
notices will be determined by us in our sole discretion, and our determination
will be final and binding on all parties.
Any old notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the exchange offer. Any old notes which
have been tendered for exchange but which are not exchanged for any reason will
be returned to its holder without cost to such holder (or, in the case of old
notes tendered by book-entry transfer into the exchange agent's account at DTC
pursuant to the book-entry transfer procedures described above, such old notes
will be credited to an account maintained with DTC for the old notes) as soon as
practicable after withdrawal, rejection of tender or termination of the exchange
offer. Properly withdrawn old notes may be re-entered by following one of the
procedures described under "Procedures for Tendering Old Notes" above at any
time on or prior to the expiration date.
15
<PAGE>
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the exchange offer, we are not
required to accept for exchange, or to issue exchange notes in exchange for old
notes, and we may terminate or amend the exchange offer, if at any time before
the acceptance of such old notes for exchange or the exchange of the exchange
notes for such old notes, such acceptance or issuance would violate applicable
law or any interpretation of the SEC's staff.
The condition in the paragraph immediately above is for our sole
benefit and may be asserted by us regardless of the circumstances giving rise to
such condition. Our failure at any time to exercise the foregoing rights is not
to be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
In addition, we will not accept for exchange any old notes tendered,
and no exchange notes will be issued in exchange for any such old notes, if at
such time any stop order is threatened or in effect with respect to the
registration statement of which this prospectus constitutes a part or the
qualification of the indenture under the Trust Indenture Act.
EXCHANGE AGENT
Bank One Trust Company, National Association has been appointed as the
exchange agent for the exchange offer. All executed letters of transmittal
should be directed to the exchange agent at one of the addresses set forth
below. Questions and requests for assistance, requests for additional copies of
this prospectus or of the letter of transmittal and requests for notices of
guaranteed delivery should be directed to the exchange agent, addressed as
follows:
Deliver To:
Bank One Trust Company, National Association, Exchange Agent
By Registered or Certified Mail:
1 North State Street
9th Floor
Chicago, IL 60602
Attention: Exchanges
By Facsimile:
(312) 407-8853
To Confirm by Telephone or for Information:
(800) 524-9472
Delivery to an address other than as set forth above or transmission
of instructions via facsimile other than as set forth above does not constitute
a valid delivery.
FEES AND EXPENSES
The principal solicitation is being made by mail; however, additional
solicitation may be made by telegraph, telecopy, telephone or in person by our
officers, regular employees, affiliates and agents. We will not pay any
additional compensation to any such officers and employees who engage in
soliciting tenders. We will not make any payment to brokers, dealers, or others
soliciting acceptances of the exchange offer. However, we will pay the exchange
agent reasonable and customary fees for its services and will reimburse it for
its reasonable out-of-pocket expenses in connection therewith.
16
<PAGE>
The estimated cash expenses to be incurred in connection with the
exchange offer will be paid by us and are estimated in the aggregate to be
$200,000.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the same carrying value as the
old notes. Accordingly, DPL will not recognize any gain or loss for accounting
purposes. DPL intends to amortize the expenses of the exchange offer and
issuance of the old notes over the term of the exchange notes.
RESALE OF THE EXCHANGE NOTES
Based on an interpretation by the SEC's staff contained in several
no-action letters issued to third parties, we believe that the exchange notes
issued pursuant to the exchange offer may be offered for resale, resold and
otherwise transferred after the exchange offer by any holder of exchange notes
(other than a holder which is our "affiliate" within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, if such holder:
o acquires the exchange notes in the ordinary course of his or her
business; and
o does not intend to participate, and has no arrangement with any
person to participate, in a distribution of the exchange notes.
Any holder of the old notes who tenders in the exchange offer with the
intention to participate, or for the purpose of participating, in a distribution
of the exchange notes may not rely on the position of the staff of the
Commission enunciated in the "Exxon Capital Holdings Corporation" or similar
no-action letters (the Exxon Capital Letters) but rather must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. In addition, any such resale transaction
should be covered by an effective registration statement containing the selling
security holders information required by Item 507 of Regulation S-K of the
Securities Act. Each broker-dealer that receives exchange notes for its own
account in exchange for the old notes, where such old notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, may be a statutory underwriter and must acknowledge that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such exchange notes.
By tendering in the exchange offer, each holder will represent to us
(which representation may be contained in the Letter of Transmittal) to the
effect that:
o it is not our affiliate;
o it is not engaged in, and does not intend to engage in, and has
no arrangement or understanding with any person to participate
in, a distribution of the exchange notes to be issued in the
exchange offer; and
o it is acquiring the exchange notes in its ordinary course of
business.
Each holder will acknowledge and agree that any broker-dealer and any
such holder using the exchange Offer to participate in a distribution of the
exchange notes acquired in the exchange offer:
o could not under Commission policy as in effect on the date of the
registration rights agreement rely on the position of the
Commission enunciated in the exxon capital letters;
o must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary
resale transaction and that such secondary resale transaction
must be covered by an effective registration statement containing
the selling security holder information required by Item 507 of
Regulation S-K if the resales are of exchange notes obtained by
such Holder in exchange for old notes acquired by such Holder
directly from us or our affiliate.
17
<PAGE>
DESCRIPTION OF EXCHANGE NOTES
GENERAL
The old notes were, and the exchange notes will be, issued pursuant to
an indenture dated as of March 1, 2000, between us and Bank One Trust Company,
National Association and an officer's certificate establishing the old notes and
the exchange notes.
The following description of the terms of the exchange notes does not
purport to be complete and is qualified in its entirety by reference to (a) the
indenture and (b) the officer's certificate. Whenever particular provisions or
defined terms in the indenture and officer's certificate are referred to under
this "Description of the Exchange Notes," such provisions or defined terms are
incorporated in this prospectus by reference.
The indenture provides for our issuance of debt securities (including
the exchange notes), notes or other unsecured evidences of indebtedness in an
unlimited amount from time to time. The exchange notes will be our unsecured
obligations which, so long as they are unsecured, will rank equally in right of
payment of principal and interest with all of our other existing and future
senior unsecured obligations. The indenture provides that we may not grant a
lien on the capital shares of Dayton Power and Light to secure our debt
obligations without similarly securing the exchange notes, with certain
exceptions. However, the indenture does not limit the aggregate amount of
indebtedness we or our subsidiaries may issue. We are a holding company that
derives substantially all of our income from our operating subsidiaries. The
exchange notes therefore are effectively subordinated to debt and preferred
shares at the subsidiary level. Our financial statements included in the
incorporated documents show the aggregate amount of subsidiary debt and
preferred shares and our other debt as of the date of those statements.
Purchases of notes or beneficial interests therein may be made in
minimum denominations of $1,000 and in integral multiples of $1,000.
PRINCIPAL AMOUNT, INTEREST AND MATURITY
We will issue the exchange notes as a series of debt securities under
the indenture. The officer's certificate with respect to the exchange notes
limits the aggregate principal amount of the exchange notes to $425,000,000. The
exchange notes will mature on March 1, 2007. The exchange notes will bear
interest from the later of the date of issuance of the old notes or the date of
the last interest payment on the old notes, at the rate of 8 1/4% per annum,
payable semi-annually in arrears on March 1 and September 1 in each year,
commencing September 1, 2000. Interest will be paid to the persons in whose
names exchange notes are registered at the close of business on February 15 or
August 15 next preceding each semi-annual interest payment date. The amount of
interest payable for any period is computed on the basis of a 360-day year of
twelve 30-day months and for any period shorter than a full month, on the basis
of the actual number of days elapsed in such period. In the event that any date
on which interest is payable on the exchange notes is not a business day, the
payment of the interest payable on such date will be made on the next succeeding
day which is a business day (and without any interest or other payment in
respect of any such delay), with the same force and effect as if made on the
date the payment was originally payable.
Principal and interest payments on the exchange notes, other than
certificated notes, will be made by DPL to Cede & Co. (as nominee of DTC) so
long as Cede & Co. is the registered owner. Disbursement of such payments to the
DTC participants is the responsibility of DTC, and disbursement of such payments
to the beneficial owners of the exchange notes is the responsibility of DTC
direct and indirect participants, all as described below under "Book-Entry,
Delivery and Form."
REDEMPTION
The exchange notes may be redeemed prior to their maturity at any time
at our option, in whole or from time to time in part, at a redemption price
equal to the sum of:
o the principal amount of the exchange notes (or portion thereof)
being redeemed plus accrued interest thereon to the redemption
date; and
18
<PAGE>
o the make-whole amount (as defined below), if any, with respect to
the exchange notes (or portion thereof) being redeemed.
As used in this prospectus:
"Make-whole amount" means the excess, if any, of
o the sum, as determined by a quotation agent (as described below),
of the present values of the principal amount of such notes,
together with scheduled payments of interest (exclusive of
interest to the date of redemption) from the redemption date to
the stated maturity of the notes, in each case discounted to the
redemption date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the adjusted treasury rate
(as described below) over
o 100% of the principal amount of the notes to be redeemed.
"Adjusted treasury rate" means, with respect to any redemption date,
the rate per annum equal to the semi-annual equivalent yield to maturity of the
comparable treasury issue (as described below), calculated using a price for the
comparable treasury issue (expressed as a percentage of its principal amount)
equal to the comparable treasury price (as defined herein) for such redemption
date, calculated on the third business day preceding the redemption date, plus
in each case .35% (35 basis points).
"Comparable treasury issue" means the United States Treasury security
selected by the quotation agent (as described below) as having a maturity
comparable to the remaining term from the redemption date to the stated maturity
of the notes that would be utilized, at the time of selection and in accordance
with customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of the senior notes.
"Quotation agent" means the reference treasury broker/dealer that we
select.
"Reference treasury broker/dealer" means a primary U.S. Government
securities broker/dealer selected by DPL.
"Comparable treasury price" means, with respect to any redemption
date,
o the average of the bid and asked prices for the comparable
treasury issue (expressed in each case as a percentage of its
principal amount) on the third business day preceding the
redemption date, as set forth in the daily statistical release
(or any successor release) published by the Federal Reserve Bank
of New York and designated "Composite 3:30 p.m. Quotations for
U.S. Government Securities" or
o if the release (or any successor release) is not published or
does not contain such prices on that business day, the average of
three (or such lesser number as is obtained by the trustee)
reference treasury broker/dealer quotations for such redemption
date.
"Reference treasury broker/dealer quotations" means, with respect to
each reference treasury broker/dealer and any redemption date, the average, as
determined by the trustee, of the bid and asked prices for the comparable
treasury issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the trustee by the reference treasury broker/dealer at 5:00
p.m., New York City time, on the third business day preceding the redemption
date.
Notice of any redemption will be mailed at least 30 days but no more
than 60 days before the redemption date to each holder of exchange notes to be
redeemed. If, at the time notice of redemption is given, the redemption moneys
are not held by the trustee, the redemption may be made subject to their receipt
on or before the date fixed for redemption and such notice shall be of no effect
unless such moneys are so received. Upon payment of the redemption price, on and
19
<PAGE>
after the redemption date interest will cease to accrue on the exchange notes or
portions thereof called for redemption. The exchange notes are not subject to
any sinking fund.
PAYMENT AND PAYING AGENTS
Interest on each exchange note on each interest payment date will be
paid to the person in whose name such exchange note is registered as of the
close of business on the regular record date relating to such interest payment
date. However, interest payable at maturity (whether at stated maturity, upon
redemption or otherwise) will be paid to the person to whom principal is paid.
If there has been a default in the payment of interest on any exchange note, the
defaulted interest may be payable to the person in whose name such note is
registered as of the close of business on a date selected by the trustee which
is not more than 15 days and not less than 10 days prior to the date we propose
for payment of such defaulted interest or in any other lawful manner not
inconsistent with the requirements of any securities exchange on which such
exchange note may be listed, if the trustee deems such manner of payment
practicable.
The principal of and premium, if any, and interest on, the exchange
notes at maturity will be payable upon presentation of the exchange notes at the
designated corporate trust operations office of Bank One Trust Company, National
Association in the City of New York, as our paying agent. We may change the
place of payment on the exchange notes, may appoint one or more additional
paying agents (including us) and may remove any paying agent, all at our
discretion.
REGISTRATION AND TRANSFER
The transfer of exchange notes may be registered, and the exchange
notes may be exchanged for other exchange notes, of authorized denominations and
of like tenor and aggregate principal amount, at the corporate trust office of
Bank One Trust Company, National Association in the city of Chicago, as security
registrar for the exchange notes. We may change the place for registration of
transfer and exchange of the exchange notes and may designate one or more
additional places for such registration and exchange, all at our discretion. No
service charge will be made for any transfer or exchange of the exchange notes,
but we may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of the exchange notes. We will not be required to execute
or to provide for the registration of transfer of, or the exchange of, any
exchange notes during a period of 15 days prior to giving any notice of
redemption or any exchange notes selected for redemption in whole or in part,
except the unredeemed portion of any notes being redeemed in part.
DEFEASANCE
The principal amount of any series of debt securities issued under the
indenture will be deemed to have been paid for purposes of the indenture and our
entire indebtedness in respect thereof will be deemed to have been satisfied and
discharged upon fulfillment of certain conditions if there shall have been
irrevocably deposited with the trustee or any paying agent, in trust:
o money in an amount which will be sufficient; or
o in the case of a deposit made prior to the maturity of the debt
securities, eligible obligations (as described below), the
principal of and the interest on which when due, without any
regard to reinvestment thereof, will provide moneys which,
together with the money, if any, deposited with or held by the
trustee, will be sufficient; or
o a combination of the foregoing which will be sufficient, to pay
when due the principal of and premium, if any, and interest, if
any, due and to become due on the debt securities of such series
that are outstanding. For this purpose, "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 and which do not
20
<PAGE>
contain provisions permitting the redemption or other prepayment
thereof at the option of the issuer thereof.
LIMITATION ON LIENS
The indenture provides that, except as otherwise specified with
respect to a particular series of debt securities, so long as any debt
securities of any series are outstanding, we will not pledge, mortgage,
hypothecate or grant a security interest in, or permit any mortgage, pledge,
security interest or other lien upon, any capital shares of Dayton Power and
Light that we now or hereafter own to secure any indebtedness (as described
below), without making effective provision so that the outstanding debt
securities shall (so long as the other indebtedness shall be so secured) be
equally and ratably secured with any and all other indebtedness and any other
indebtedness similarly entitled to be equally and ratably secured. This
restriction does not apply to, or prevent the creation or existence of,
o any mortgage, pledge, security interest, lien or encumbrance upon
any such capital shares created at the time of our acquisition of
those capital shares or within one year after that time to secure
all or a portion of the purchase price for those capital shares;
o any mortgage, pledge, security interest, lien or encumbrance by
us upon any of those capital shares existing at the time of our
acquisition of those shares (whether or not we assume the
obligations secured),or
o any extension, renewal or refunding of any mortgage, pledge,
security interest, lien or encumbrance described in either of the
previous two bullet points on capital shares of Dayton Power and
Light (or substantially the same capital shares) or any portion
thereof.
o any judgment, levy, execution, attachment or other similar lien
arising in connection with court proceedings, provided that
either
(a) the execution or enforcement of each such lien is
effectively stayed within 30 days after entry of the
corresponding judgment (or the corresponding judgment has
been discharged within such 30 day period) and the claims
secured thereby are being contested in good faith by
appropriate proceedings timely commenced and diligently
prosecuted;
(b) the payment of each lien is covered in full by insurance and
the insurance company has not denied or contested coverage
on it; or
(c) so long as each lien is adequately bonded, any appropriate
legal proceedings that may have been duly initiated for the
review of the corresponding judgment, decree or order shall
not have been fully terminated or the period within which
such proceedings may be initiated shall not have expired.
For purposes of the restriction described in the preceding bullet
points:
"Indebtedness" means
o all indebtedness, whether or not represented by bonds,
debentures, notes or other securities, created or assumed by us
for the repayment of money borrowed;
o all indebtedness for money borrowed secured by a lien upon
property we own and upon which indebtedness for money we borrowed
customarily pays interest, even though we have not assumed or
become liable for the payment of such indebtedness for money
borrowed; and
o all indebtedness of others for money borrowed which we guaranteed
as to payment of principal or in effect guaranteed through a
contingent agreement to purchase that indebtedness, but excluding
21
<PAGE>
from this definition any of our other contingent obligations in
respect of indebtedness for money borrowed or other obligations
incurred by others.
Notwithstanding the foregoing, except as otherwise specified in the
officer's certificate with respect to a particular series of debt securities, we
may, without securing the debt securities, pledge, mortgage, hypothecate or
grant a security interest in, or permit any mortgage, pledge, security interest
or other lien (in addition to liens expressly permitted as described in the
second preceding paragraph) upon, capital shares of Dayton Power and Light that
we now or hereafter own to secure any indebtedness (which would otherwise be
subject to the foregoing restriction) in an aggregate amount which, together
with all other such indebtedness, does not exceed 10% of consolidated
capitalization. For this purpose, "consolidated capitalization" means the sum
obtained by adding
o consolidated shareholders' equity;
o consolidated indebtedness for money borrowed (exclusive of any
consolidated indebtedness which is due and payable within one
year of the date such sum is determined); and, without
duplication,
o any preference or preferred shares that we or any of our
consolidated subsidiaries issue which is subject to mandatory
redemption or sinking fund provisions.
The term "consolidated shareholders' equity" (as used above) means the
total assets (as described below) of us and our consolidated subsidiaries less
all liabilities of us and our consolidated subsidiaries. As used in the
foregoing definition, "liabilities" means all obligations which would, in
accordance with generally accepted accounting principles in the United States,
be classified on a balance sheet as liabilities, including without limitation,
o indebtedness secured by property of our's or any of our
consolidated subsidiaries whether or not we or the consolidated
subsidiary is liable for the payment thereof unless, in the case
that we or the consolidated subsidiary is not so liable, such
property has not been included among our assets or the
consolidated subsidiary on such balance sheet,
o deferred liabilities and
o indebtedness of us or any of our consolidated subsidiaries that
is expressly subordinated in right and priority of payment to
other liabilities of us or the consolidated subsidiary.
As used in this definition, "liabilities" includes preference or
preferred stock of us or any consolidated subsidiary only to the extent of any
preference or preferred stock that is subject to mandatory redemption or sinking
fund provisions.
The term "consolidated subsidiary" (as used above) means at any date
any subsidiary whose financial statements would be consolidated with our
consolidated financial statements as of that date under generally accepted
accounting principles. The "assets" of any person means the whole or any part of
its business, property, assets, cash and receivables. The term "consolidated
indebtedness" means total indebtedness as shown on the consolidated balance
sheet of us and our consolidated subsidiaries.
As of December 31, 1999, our consolidated capitalization was
approximately $2.8 billion.
CONSOLIDATION, MERGER, AND SALE OF ASSETS
Under the terms of the indenture, we may not consolidate with or merge
into any other entity or convey, transfer or lease our properties and assets
substantially as an entirety to any other entity, unless
o the corporation formed by such consolidation or into which we are
merged or the entity which acquires by conveyance or transfer, or
which leases, our property and assets substantially as an
entirety will be an entity organized and validly existing under
the laws of any domestic jurisdiction and such entity expressly
assumes our obligations on all debt securities and under the
indenture;
22
<PAGE>
o immediately after giving effect to the transaction, no event of
default, and no event which, after notice or lapse of time or
both, would become an event of default, will have occurred and be
continuing; and
o We deliver to the trustee an officer's certificate and an opinion
of counsel as provided in the indenture.
EVENTS OF DEFAULT
Each of the following will constitute an event of default under the
indenture with respect to the debt securities of any series:
o failure to pay any interest on the debt securities of such series
within 30 days after the same becomes due and payable;
o failure to pay principal or premium, if any, on the debt
securities of such series when due and payable;
o failure to pay any sinking fund installment when and as due by
the terms of the debt securities of such series;
o failure to perform, or breach of, any of our other covenants or
warranties in the indenture (other than a covenant or warranty in
the indenture solely for the benefit of one or more series of
debt securities other than such series) for 60 days after written
notice to us by the trustee, or to us and the trustee by the
holders of at least 33% in principal amount of the debt
securities of such series outstanding under the indenture and;
o certain events in bankruptcy, insolvency or reorganization of
DPL.
Additional events of default for a series of debt securities may be
specified at the time such series is created. An event of default with respect
to the debt securities of a particular series may not necessarily constitute an
event of default with respect to debt securities of any other series issued
under the indenture.
REMEDIES
If an event of default due to our default in payment of principal of
or interest on any series of debt securities or due to our default in the
performance or breach of any other covenant or warranty applicable to the debt
securities of that series but not applicable to all series occurs and is
continuing, then either the trustee or the holders of at least 33% in principal
amount of the outstanding debt securities of that series may declare the
principal of all of the debt securities of such series and interest accrued
thereon to be due and payable immediately. If an event of default due to the
default in the performance of any other covenants or agreements in the indenture
applicable to all outstanding debt securities, either the trustee or the holders
of not less than 33% in principal amount of all outstanding debt securities,
considered as one class, and not the holders of the debt securities of any one
of such series, may make such declaration of acceleration. In certain events of
bankruptcy, insolvency, reorganization, assignment or receivership of us, the
principal and interest on all debt securities shall automatically become due and
payable.
At any time after the declaration of acceleration with respect to the
debt securities 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:
o we have paid or deposited with the trustee a sum sufficient to
pay:
(1) all overdue interest on all debt securities of the series;
23
<PAGE>
(2) the principal of and premium, if any, on any debt securities
of the series which have become due otherwise than by the declaration of
acceleration and interest thereon at the rate or rates prescribed therefor in
the debt securities;
(3) interest upon overdue interest at the rate or rates
prescribed therefor in the debt securities, to the extent that payment of the
interest is lawful;
(4) and all amounts due to the trustee under the indenture; and
o any other event or events of default with respect to debt
securities of that series, other than the nonpayment of the
principal of the debt securities of that series which has become
due solely by such declaration of acceleration, have been cured
or waived as provided in the indenture.
Subject to the provisions of the indenture relating to the duties of
the trustee, in case an event of default shall occur and be continuing, the
trustee will be under no obligation to exercise any of its rights or powers
under the indenture at the request or direction of any of the holders, unless
the holders will have offered to the trustee reasonable indemnity. If an event
of default has occurred and is continuing in respect of a series of debt
securities, subject to the provisions for the indemnification of the trustee,
the holders of a majority in principal amount of the outstanding debt securities
of the series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the trustee, or exercising
any trust or power conferred on the trustee, with respect to the debt securities
of the series; provided, however, that if an event of default occurs and is
continuing with respect to more than one series of debt securities, the holders
of a majority in aggregate principal amount of the outstanding debt securities
of all that series, considered as one class, will have the right to make the
direction, and not the holders of the debt securities of any one of such series;
and provided, further, that the direction will not be in conflict with any rule
of law or with the indenture.
No holder of debt securities of any series will have any right to
institute any proceeding with respect to the indenture, or for the appointment
of a receiver or a trustee, or for any other remedy thereunder, unless:
o the holder has previously given to the trustee written notice of
a continuing event of default with respect to the debt securities
of that series;
o the holders of a majority in aggregate principal amount of the
outstanding debt securities of all series in respect of which an
event of default shall have occurred and be continuing,
considered as one class, have made written request to the
trustee, and the holder or holders have offered reasonable
indemnity to the trustee to institute the proceeding in respect
of the event of default in its own name as trustee; and
o the trustee has failed to institute any proceeding, and has not
received from the holders of a majority in aggregate principal
amount of the outstanding debt securities of such series a
direction inconsistent with such request, within 60 days after
such notice, request and offer.
These limitations do not apply to a suit instituted by a holder of a
debt security for the enforcement of payment of the principal of or any premium
or interest on such debt security on or after the applicable due date specified
in such debt security.
We will be required to furnish to the trustee annually a statement by
an appropriate officer as to that officer's knowledge of our compliance with all
conditions and covenants under the indenture, the compliance to be determined
without regard to any period of grace or requirement of notice under the
indenture.
MODIFICATION AND WAIVER
Without the consent of any holder of debt securities, we and the
trustee may enter into one or more supplemental indentures for any of the
following purposes:
o to evidence the assumption by any of our permitted successors of
our covenants in the indenture and in the debt securities; or
24
<PAGE>
o to add to our covenants or other provisions for the benefit of
all holders or for the benefit of the holders of, or to remain in
effect only so long as there will be outstanding debt securities
of one or more specified series, or one or more specified
tranches thereof, or to surrender any right or power conferred
upon us by the indenture; or
o to add any additional events of default with respect to
outstanding debt securities; or
o to change or eliminate any provision of the indenture or to add
any new provision to the indenture, provided that if such change,
elimination or addition will adversely affect the interests of
the holders of debt securities of any series or tranche in any
material respect, such change, elimination or addition will
become effective with respect to such series or tranche only:
(1) when the consent of the holders of debt securities of such
series or tranche has been obtained in accordance with the
indenture, or
(2) when no debt securities of such series or tranche remain
outstanding under the indenture; or
o to provide collateral security for all but not part of the debt
securities; or
o to establish the form or terms of debt securities of any other
series or tranche as permitted by the indenture; or
o 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 the 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
o to evidence and provide for the acceptance of appointment of a
successor trustee with respect to the debt securities of one or
more series and to add to or change any of the provisions of the
indenture as will be necessary to provide for or to facilitate
the administration of the trusts under the indenture by more than
one trustee; or
o to provide for the procedures required to permit the utilization
of a noncertificated system of registration for the debt
securities of all or any series or tranche; or
o to change any place where the principal of and premium, if any,
and interest, if any, on all or any series or tranche of debt
securities will be payable, all or any series or tranche of debt
securities may be surrendered for registration of transfer or
exchange and notices and demands to or upon us in respect of debt
securities and the indenture may be served;
o to cure any ambiguity or inconsistency or to add or change any
other provisions with respect to matters and questions arising
under the indenture, provided such changes or additions will not
adversely affect the interests of the holders of debt securities
of any series or tranche in any material respect; or
o to maintain the qualification of the indenture under the Trust
Indenture Act.
The holders of a majority in aggregate principal amount of the debt
securities of all series then outstanding may waive our compliance with certain
restrictive provisions of the indenture. The holders of a majority in principal
amount of the outstanding debt securities of any series may waive any past
default under the indenture with respect to that series, except a default in the
payment of principal, premium, or interest and certain covenants and provisions
of the indenture that cannot be modified or be amended without the consent of
the holder of each outstanding debt security of the series affected.
25
<PAGE>
Except as provided above, the consent of the holders of a majority in
aggregate principal amount of the debt securities 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 indenture or modifying in any manner the rights of the holders of such
debt securities under the indenture pursuant to one or more supplemental
indentures; provided, however, that if less than all of the series of debt
securities 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 debt securities of all series so directly
affected, considered as one class, will be required; and provided, further, that
if the debt securities of any series shall have been issued in more than one
tranche and if the proposed supplemental indenture will directly affect the
rights of the holders of debt securities of one or more, but less than all, of
those tranches, then the consent only of the holders of a majority in aggregate
principal amount of the outstanding debt securities of all tranches so directly
affected, considered as one class, will be required; and provided further, that
no such amendment or modification may:
o change the stated maturity of the principal of, or any
installment of principal of or interest on, any debt security, 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 change the coin or
currency (or other property) in which any debt security 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 debt security (or, in the case
of redemption, on or after the redemption date) without, in any
such case, the consent of the holder of such debt security;
o reduce the percentage in principal amount of the outstanding debt
securities of any series, or any tranche thereof, the consent of
the holders of which is required for any supplemental indenture,
or the consent of the holders of which is required for any waiver
of compliance with any provision of the 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 debt security of that series or
tranche, or
o modify certain of the provisions of the indenture relating to
supplemental indentures, waivers of certain covenants and waivers
of past defaults with respect to the debt securities of any
series or tranche, without the consent of the holder of each
outstanding debt security affected thereby. A supplemental
indenture which changes or eliminates any covenant or other
provision of the indenture which has expressly been included
solely for the benefit of one or more particular series of debt
securities or one or more tranches thereof, or modifies the
rights of the holders of debt securities of that series or
tranche with respect to such covenant or other provision, will be
deemed not to affect the rights under the indenture of the
holders of the debt securities of any other series or tranche.
The indenture provides that in determining whether the holders of the
requisite principal amount of the outstanding debt securities have given any
request, demand, authorization, direction, notice, consent or waiver under the
indenture, or whether a quorum is present at the meeting of the holders of debt
securities, debt securities owned by us or any other obligor upon the debt
securities or any affiliate of our's or of such other obligor (unless we, such
affiliate or such obligor own all debt securities outstanding under the
indenture, determined without regard to this provision) will be disregarded and
deemed not to be outstanding.
If we solicit from holders any request, demand, authorization,
direction, notice, consent, election, waiver or other act, we may, at our
option, fix in advance a record date for the determination of holders entitled
to give that request, demand, authorization, direction, notice, consent, waiver
or other act, but we will have no obligation to do so. If a record date is
fixed, the request, demand, authorization, direction, notice, consent, waiver or
other act may be given before or after the record date, but only the holders of
record at the close of business on that record date will be deemed to be holders
for the purposes of determining whether holders of the requisite proportion of
the outstanding debt securities have authorized or agreed or consented to the
request, demand, authorization, direction, notice, consent, waiver or other act,
and for that purpose the outstanding debt securities will be computed as of the
record date. Any request, demand, authorization, direction, notice, consent,
election, waiver or other act of a holder will bind every future holder of the
same debt security and the holder of every debt security issued upon the
26
<PAGE>
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 trustee or us in
reliance thereon, whether or not notation of such action is made upon such debt
security.
RESIGNATION OF TRUSTEE
The trustee may resign at any time by giving written notice thereof to
us or may be removed at any time by act of the holders of a majority in
principal amount of all series of debt securities then outstanding delivered to
the trustee and us. No resignation or removal of the 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 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 trustee appointed by act of the holders, if we have 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 indenture, the trustee will be deemed to have resigned and the
successor will be deemed to have been appointed as trustee in accordance with
the indenture.
NOTICES
Notices to holders of debt securities will be given by first class
mail to the address of each holder as it may appear in the security register.
TITLE
We, the trustee, and any of our agents or the trustee, may treat the
person in whose name debt securities are registered as the absolute owner
thereof (whether or not the debt securities may be overdue) for the purpose of
making payments and for all other purposes irrespective of notice to the
contrary.
GOVERNING LAW
The indenture and the debt securities will be governed by, and
construed in accordance with, the laws of the State of New York.
REGARDING THE TRUSTEE
The trustee under the indenture is Bank One Trust Company, National
Association. We and Dayton Power and Light also maintain various banking and
trust relationships with Bank One Trust Company, National Association.
BOOK-ENTRY, DELIVERY AND FORM
GENERAL
The exchange notes will be issued in the form of one or more fully
registered securities in global form. The global notes will be deposited with,
or on behalf of, The Depository Trust Company and registered in the name of The
Depositary Trust Company or its nominee.
Upon issuance of the global notes, The Depositary Trust Company or its
nominee will credit, on its book-entry registration and transfer system, the
respective principal amount of the individual beneficial interests represented
by such global notes to the accounts of persons who have accounts with the
depository. Ownership of beneficial interests in the global notes will be shown
on, and the transfer of that ownership will be effected only through, records
maintained by The Depositary Trust Company or its nominee (with respect to the
participants' interests) for the global notes, or by participants or persons
that hold interests through participants (with respect to beneficial interests
of persons other than participants). The laws of some jurisdictions may require
27
<PAGE>
that certain purchasers of securities take physical delivery of the securities
in definitive form. These limits and laws may impair the ability to transfer or
pledge beneficial interests in the global notes.
So long as The Depositary Trust Company, or its nominee, is the
registered holder of any global notes, The Depositary Trust Company or such
nominee, as the case may be, will be considered the sole legal owner of the
global notes for all purposes under the indenture and the exchange notes. Except
as set forth below, owners of beneficial interests in global notes will not be
entitled to have their global notes registered in their names, will not receive
or be entitled to receive physical delivery in exchange therefor and will not be
considered to be the owners or holders of their global notes for any purpose
under the securities or the indenture. We understand that under existing
industry practice, in the event an owner of a beneficial interest in a global
note desires, to take any action that The Depositary Trust Company, as the
holder of the global note, is entitled to take, The Depositary Trust Company
would authorize the participants to take that action, and that the participants
would authorize beneficial owners owning through those participants to take that
action or would otherwise act upon the instructions of beneficial owners owning
through them.
Any payment of principal or interest due on the exchange notes on any
interest payment date or at maturity will be made available by us to the trustee
by that date. As soon as practicable thereafter, the trustee will make those
payments to The Depositary Trust Company or its nominee, as its nominee, as the
case may be, as the registered owner of the global notes representing the
exchange notes in accordance with existing arrangements between the trustee and
The Depositary Trust Company.
We expect that The Depositary Trust Company or its nominee, upon
receipt of any payment of principal or interest in respect of the global notes,
will credit immediately the accounts of the related participants with payments
in amounts proportionate to their respective beneficial interests in the
principal amount of the global notes as shown on the records of The Depositary
Trust Company. We also expect that payments by participants to owners of
beneficial interests in the global notes held through the participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such participants.
Neither us, nor the trustee, nor any payment agent for the global
notes will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in any
of the global notes or for maintaining, supervising or reviewing any records
relating to the beneficial ownership interests or for other aspects of the
relationship between The Depositary Trust Company and its participants or the
relationship between the participants and the owners of beneficial interests in
the global notes owning through the participants.
Unless and until exchanged in whole or in part for securities in
definitive form in accordance with the terms of the securities, the global notes
may not be transferred except as a whole by the The Depositary Trust Company to
a nominee of The Depositary Trust Company or by a nominee of the The Depositary
Trust Company to The Depositary Trust Company or another nominee of The
Depositary Trust Company or by The Depositary Trust Company of any such nominee
to a successor of The Depositary Trust Company or a nominee of each successor.
Although The Depositary Trust Company has agreed to the foregoing
procedures in order to facilitate transfers of interests in the global notes
among participants of The Depositary Trust Company, it is under no obligation to
perform or continue to perform those procedures, and those procedures may be
discontinued at any time. Neither the trustee nor us will have any
responsibility for the performance by The Depositary Trust Company or its
participants or indirect participants of their respective obligations under the
rules and procedures governing their operations. Us and the trustee may
conclusively rely on, and shall be protected in relying on, instructions from
The Depositary Trust Company for all purposes.
28
<PAGE>
CERTIFICATED NOTES
Securities that are originally issued to institutional "accredited
investors" who are not qualified institutional buyers will be sold in
certificated form.
The global notes shall be exchangeable for corresponding certificated
securities registered in the name of persons other than The Depositary Trust
Company or its nominee only if:
o The Depositary Trust Company (a) notifies us that it is unwilling
or unable to continue as the depositary for any of the global
notes or (b) at any time ceases to be a clearing agency
registered under the exchange act,
o there shall have occurred and be continuing an event of default
(as defined in the indenture) with respect to the applicable
securities or
o We execute and deliver to the trustee an order that the global
notes shall be so exchangeable.
Any certificated securities will be issued only in fully registered form and
shall be issued without coupons in minimum denominations of $1,000 and in
integral multiples of $1,000. Any certificated securities so issued will be
registered in the names and in the denominations as The Depositary Trust Company
shall request.
THE CLEARING SYSTEM
The Depositary Trust Company has advised us as follows: The Depositary
Trust Company is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and "a
clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. The Depositary Trust Company was created to hold securities of
institutions that have accounts with The Depositary Trust Company
("participants") and to facilitate the clearance and settlement of securities
transactions among it participants in such securities through electronic
book-entry changes in accounts of participants, thereby eliminating the need for
physical movement of securities certificates. The Depositary Trust Company's
participants include securities brokers and dealers (which may include the
initial purchasers of the old notes), bank, trust companies, clearing
corporations and certain other organizations. Access to The Depositary Trust
Company'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, whether directly or indirectly.
LACK OF PUBLIC MARKET
The exchange notes are new issues of securities for which there is
currently no active trading market. If any exchange notes are traded after their
initial issuance, they may trade at a discount from their face value, depending
upon prevailing interest rates, the market for similar securities and other
factors, including general economic conditions and our financial condition,
performance and prospects.
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes the material United States federal
income tax consequences of the acquisition, ownership and disposition of
exchange notes as of the date hereof and represents the opinion of Thelen Reid &
Priest LLP, counsel to DPL, insofar as it relates to matters of law or legal
conclusions. Except where noted, this summary deals only with exchange notes
held as capital assets within the meaning of section 1221 of the Internal
Revenue Code of 1986, as amended (the "Code") and does not deal with special
situations, such as those of dealers in securities or currencies, financial
institutions, tax-exempt entities, life insurance companies, individual
retirement and tax-deferred accounts, persons holding exchange notes as a part
of a hedging or conversion transaction or a straddle, or persons whose
functional currency is not the United States dollar. In addition, this
discussion does not address the tax consequences to persons who acquired old
notes other than pursuant to their initial issuance and distribution, and who
acquire exchange notes other than pursuant to the exchange offer. Furthermore,
29
<PAGE>
the discussion below is based upon the provisions of the Code, existing and
proposed Treasury regulations promulgated thereunder, and applicable
administrative rulings and judicial decisions now in effect, all of which are
subject to change, possibly on a retroactive basis, so as to result in United
States federal income tax consequences different from those discussed below.
A "United States person" is defined as (i) an individual citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, (iii) an estate, the income of which is subject to United
States federal income taxation regardless of its source, or (iv) a trust if (a)
a court within the United States is able to exercise primary supervision over
the administration of the trust and (b) one or more United States persons have
the authority to control all substantial decisions of the trust. As used herein,
a "United States holder" means a beneficial owner of an exchange note that is a
United States person. As used herein, the term "non-United States holder" means
a beneficial owner of an exchange note that is not a United States holder.
PROSPECTIVE HOLDERS OF EXCHANGE NOTES ARE ADVISED TO CONSULT WITH
THEIR TAX ADVISORS AS TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF
THE ACQUISITION, OWNERSHIP AND DISPOSITION OF EXCHANGE NOTES IN LIGHT OF THEIR
PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR OTHER TAX
LAWS.
EXCHANGE OF OLD NOTES FOR EXCHANGE NOTES
An exchange of old notes for exchange notes pursuant to the exchange
offer should not constitute a taxable event for United States federal income tax
purposes because the exchange notes should not be considered materially
different in kind or extent from the old notes. Rather, beneficial interests in
the exchange notes should be treated as a continuation of beneficial interests
in old notes in the hands of a holder. As a result, holders who effect an
exchange pursuant to the exchange offer should not recognize any income, gain or
loss for United States federal income tax purposes with respect to the exchange.
In addition, a holder's tax basis in an exchange note will be the same as that
holder's basis in the old note exchanged therefor, and a holder's holding period
in an exchange note will include that holder's holding period in the old note
exchanged therefor.
UNITED STATES HOLDERS
PAYMENTS OF INTEREST
Interest on exchange notes will generally be taxable to a United
States holder as ordinary income at the time it is paid or accrued in accordance
with the United States holder's method of accounting for United States federal
income tax purposes.
SALE, EXCHANGE OR REDEMPTION OF EXCHANGE NOTES
Except as described above under "Exchange of Old Notes for Exchange
Notes," upon the sale, exchange or redemption of exchange notes, a United States
holder generally will recognize gain or loss equal to the difference between (i)
the amount realized upon the sale, exchange or redemption, and (ii) the United
States holder's adjusted tax basis in the exchange notes. A United States
holder's adjusted tax basis in the exchange notes will be the initial purchase
price it paid for the old notes exchanged therefor, net of accrued interest.
Such gain or loss will be capital gain or loss and will be long-term capital
gain or loss if, at the time of the sale, exchange or redemption, the United
States holder's holding period in the exchange notes (including the holding
period of the United States holder in the old notes) is greater than one year.
Under current law, the deductibility of capital losses is subject to
limitations. The net capital gains of individuals are generally taxed at lower
rates than ordinary income.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Payments of interest on, or the proceeds from the sale, retirement or
other disposition of exchange notes are subject to information reporting unless
the United States holder establishes an exemption.
30
<PAGE>
Payments of the interest on, or the proceeds from the sale,
retirement, or other disposition of exchange notes may be subject to a "backup
withholding" tax of 31% if the United States holder, among other things, (1)
fails to furnish his or her social security number or other taxpayer
identification number ("TIN") to the payor responsible for backup withholding
(for example, the United States holder's securities broker) on Internal Revenue
Service ("IRS") Form W-9 or a substantially similar form signed under penalties
of perjury, (2) furnishes the payor an incorrect TIN, (3) fails to provide the
payor with a certified statement, signed under penalties of perjury, that the
TIN provided to the payor is correct and that the United States holder is not
subject to backup withholding, or (4) fails to properly report interest and
dividends on his tax return. Information reporting and backup withholding does
not apply to certain payments made to exempt recipients, such as corporations.
Any amounts withheld under the backup withholding rules will be
allowed as a credit or refund against a United States holder's United States
federal income tax liability, if certain required information is provided to the
IRS.
NON-UNITED STATES HOLDERS
PAYMENTS OF INTEREST
Subject to the discussion below concerning backup withholding, no
withholding of United States federal income tax will be required with respect to
the payment by DPL or any paying agent of principal or interest on an exchange
note held by a non-United States holder, provided that the beneficial owner (1)
does not actually or constructively own 10% or more of the total combined voting
power of all classes of stock of DPL entitled to vote within the meaning of Code
section 871(h)(3) and the regulations thereunder; (2) is not a controlled
foreign corporation within the meaning of Code section 957, which is related,
directly or indirectly, to DPL through stock ownership; and (3) satisfies the
requirement, described generally below, set forth in Code section 871(h) and
Code section 881(c) and the regulations thereunder.
To satisfy the requirement referred to in clause (3) above, the
beneficial owner of an exchange note, or a financial institution holding an
exchange note on behalf of the beneficial owner, must provide, in accordance
with specified procedures, DPL or its paying agent with a statement to the
effect that the beneficial owner is not a United States person. These
requirements will be met if (1) the beneficial owner provides his name and
address, and certifies, under penalties of perjury, that he is not a United
States person, which certification may be made on an IRS Form W-8 (or successor
form); or (2) a financial institution holding the exchange note on behalf of the
beneficial owner certifies, under penalties of perjury, that such statement has
been received by it and furnishes a paying agent with a copy thereof.
In the event that any of the above requirements are not satisfied, DPL
will nonetheless not withhold United States federal income tax on interest paid
to a non-United States holder if it receives either IRS Form 4224 (for taxable
years prior to January 1, 2001) or IRS Form W-8 ECI from that non-United States
holder, establishing that such income is effectively connected with the conduct
of a trade or business in the United States, unless DPL has knowledge to the
contrary. Interest paid to a non-United States holder that is effectively
connected with the conduct by the holder of a trade or business in the United
States is generally taxed at the graduated rates that are applicable to United
States persons. In the case of a non-United States holder that is a corporation,
such effectively connected income may also be subject to the United States
federal branch profits tax, which is generally imposed on a foreign corporation
on the deemed repatriation from the United States of effectively connected
earnings and profits, at a 30% rate, unless the rate is reduced or eliminated by
an applicable income tax treaty and the non-United States holder is a qualified
resident of the treaty country.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES
A non-United States holder generally will not be subject to United
States federal income tax with respect to gain recognized on a sale, exchange or
redemption of an exchange note unless (1) the gain is effectively connected with
a trade or business of the non-United States holder in the United States; (2) in
the case of a non-United States holder who is an individual and holds the
exchange note as a capital asset, the holder is present in the United States for
183 or more days in the taxable year of the sale or other disposition and
certain other conditions are met; or (3) the non-United States holder is subject
31
<PAGE>
to tax pursuant to certain provisions of the Code applicable to United States
expatriates. However, any amount attributable to accrued but unpaid interest on
the exchange note will be treated in the same manner as payments of interest
made to the non-United States holder, as described above.
Gain derived by a non-United States holder from the sale or other
disposition of an exchange note that is effectively connected with the conduct
by the holder of a trade or business in the United States is generally taxed at
the graduated rates that are applicable to United States persons. In the case of
a non-United States holder that is a corporation, such effectively connected
income may also be subject to the United States branch profits tax. If any
individual non-United States holder falls under clause (2) of the preceding
paragraph, the holder will be subject to a flat 30% tax on the gain derived from
the sale or other disposition, which may be offset by certain United States
source capital losses recognized within the same taxable year as the sale or
other disposition.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Non-United States holders will not be subject to information reporting
or backup withholding on payments made by DPL or its paying agent if a statement
described in clause (3) of the first paragraph under "Non-United States Holders
- Payments of Interest" has been received and the payor has no actual knowledge
that the beneficial owner is a United States person.
In addition, backup withholding and information reporting will not
apply to payments of principal or interest on exchange notes paid or collected
by a foreign office of a custodian, nominee or other foreign agent on behalf of
a non-United States holder, or if a foreign office of a broker pays the proceeds
of the sale of exchange notes to a non-United States holder. If, however, the
nominee, custodian, agent or broker is, for United States federal income tax
purposes, a United States person, a controlled foreign corporation or a foreign
person that derives 50% or more of its gross income for certain periods from the
conduct of a United States trade or business, or (with respect to payments after
December 31, 2000) a foreign partnership with certain connections to the United
States, such payments will not be subject to backup withholding (unless the
payer has actual knowledge that the payee is a United States person) but will be
subject to information reporting unless (i) the custodian, nominee, agent or
broker has documentary evidence that the beneficial owner is not a United States
person and certain other conditions are met, or (ii) the beneficial owner
otherwise establishes an exemption.
Payments of principal or interest on exchange notes paid to a
non-United States holder by a United States office of a custodian, nominee or
agent, or payment of the proceeds of a sale of exchange notes by the United
States office of a broker, will be subject to backup withholding and information
reporting unless (i) the non-United States holder provides the statement
described above that the holder is not a United States person and the payor does
not have actual knowledge to the contrary, or (ii) the beneficial owner
otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be
allowed as a credit or a refund against a non-United States holder's United
States federal income tax liability, if certain required information is provided
to the IRS.
PLAN OF DISTRIBUTION
Each participating broker-dealer in connection with the exchange offer
must acknowledge that it will deliver a prospectus in connection with any resale
of exchange notes. This prospectus, as it may be amended or supplemented from
time to time, may be used by a participating broker-dealer in connection with
resales of exchange notes received in exchange for old notes where such old
notes were acquired as a result of market-making activities or other trading
activities. We have agreed that we will make this prospectus, as amended or
supplemented, available to any participating broker-dealer for use in connection
with any such resale and participating broker-dealers shall be authorized to
deliver this prospectus for a period ending upon the earlier of the expiration
of the 90th day after the exchange offer has been completed or such time as such
broker-dealers no longer own any registrable securities, which we define in the
registration rights agreement.
We will not receive any proceeds from any sales of the exchange notes
by participating broker-dealers. Exchange notes received by participating
broker-dealers for their own account pursuant to the exchange offer may be sold
32
<PAGE>
from time to time, in one or more transactions in the over-the-counter market,
in negotiated transactions, through the writing of options on the exchange notes
or a combination of such methods of resale, at market prices prevailing at the
time of resale, at prices related to the prevailing market prices or at
negotiated prices. Any resale may be made directly to purchasers or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from any participating broker-dealer that resells the
exchange notes that were received by it for its own account pursuant to the
exchange offer. Any broker or dealer that participates in a distribution of the
exchange notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any resale of exchange notes and any omissions
or concessions received by any persons may be deemed to be underwriting
compensation under the Securities Act. The letter of transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
participating broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
We will promptly send additional copies of this prospectus and any
amendment or supplement to this prospectus to any participating broker-dealer
that requests such documents in the letter of transmittal. See "The Exchange
Offer."
LEGAL MATTERS
The validity of the exchange notes will be passed upon for us by
Stephen F. Koziar, Group Vice President and General Counsel of DPL and by Thelen
Reid & Priest LLP, New York, New York.
INDEPENDENT ACCOUNTANTS
The consolidated financial statements and schedules incorporated in
this Prospectus by reference to the Annual Report on Form 10-K for the year
ended December 31, 1999 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.
33
