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PROSPECTUS
AUGUST 25, 1999
CINERGY CORP.
OFFER TO EXCHANGE
$200,000,000 6.125% DEBENTURES DUE 2004
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
FOR
ALL OUTSTANDING 6.125% DEBENTURES DUE 2004
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THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
SEPTEMBER 23, 1999, UNLESS EXTENDED.
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Terms of the Exchange Offer:
- We will exchange all outstanding debentures that are validly tendered and
not withdrawn prior to the expiration of the Exchange Offer.
- You may withdraw tenders of outstanding debentures at any time prior to
the expiration of the Exchange Offer.
- The exchange of debentures will not be a taxable exchange for United
States federal income tax purposes.
- We will not receive any proceeds from the Exchange Offer.
- The terms of the debentures to be issued are substantially identical to
the outstanding debentures, except for certain transfer restrictions,
registration rights and related additional interest provisions relating to
the outstanding debentures.
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THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). You
may read and copy any document that we file at the Public Reference Room of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Information on the
operation of the Public Reference Room may be obtained by calling the Commission
at 1-800-SEC-0330. You may also read our filings at the regional offices of the
Commission located at Citicorp, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 7 World Trade Center, New York, New York 10048 or over the
Internet at the Commission's home page at http://www.sec.gov.
This prospectus constitutes part of a registration statement on Form S-4
filed with the Commission under the Securities Act of 1933 (the "Securities
Act"). It omits some of the information contained in the registration statement,
and reference is made to the registration statement for further information with
respect to Cinergy Corp. and the New Debentures being offered. Any statement
contained in this prospectus concerning the provisions of any document filed as
an exhibit to the registration statement or otherwise filed with the Commission
is not necessarily complete, and in each instance reference is made to the copy
of the document filed.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Our Annual Report on Form 10-K for the year ended December 31, 1998, our
Quarterly Reports on Form 10-Q for the three months ended March 31 and June 30,
1999 and our Current Reports on Form 8-K dated July 6, July 30 and August 10,
1999, filed pursuant to the Securities Exchange Act of 1934 (the "Exchange
Act"), are incorporated into this prospectus by reference.
We also incorporate by reference any filings made with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of this prospectus and prior to the termination of this exchange offer.
You may request a copy of these filings at no cost, by writing or telephoning
the office of Mr. William L. Sheafer, Vice President and Treasurer, Cinergy
Corp., 139 East Fourth Street, Cincinnati, Ohio 45202, telephone number (513)
287-2644.
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SUMMARY
THIS SUMMARY MAY NOT CONTAIN ALL THE INFORMATION THAT MAY BE IMPORTANT TO
YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS, INCLUDING THE FINANCIAL DATA AND
RELATED NOTES, BEFORE MAKING AN INVESTMENT DECISION. UNLESS THE CONTEXT
INDICATES OTHERWISE, THE WORDS "CINERGY", "THE COMPANY", "WE", "OUR", "OURS",
AND "US" REFER TO CINERGY CORP. AND ITS SUBSIDIARIES AND JOINT VENTURES
(INCLUDING UNCONSOLIDATED ENTITIES).
THE COMPANY
We are a registered holding company under the Public Utility Holding Company
Act of 1935 and the parent company of:
- The Cincinnati Gas & Electric Company ("CG&E");
- PSI Energy, Inc. ("PSI");
- Cinergy Services, Inc. ("Services");
- Cinergy Global Resources, Inc. ("Global Resources"); and
- Cinergy Investments, Inc. ("Investments").
CG&E is an operating utility primarily engaged in providing electric and gas
service in the southwestern portion of Ohio and, through its principal
subsidiary, The Union Light, Heat and Power Company, in neighboring areas in
Kentucky. PSI is an operating utility primarily engaged in providing electric
service in north central, central and southern Indiana. Services provides
management, financial, administrative, engineering, legal and other services to
Cinergy and its subsidiaries. We conduct our international businesses through
Global Resources and its subsidiaries, and our non-regulated business through
Investments and its subsidiaries.
Cinergy is a Delaware corporation that was created in October 1994 through
the merger of CG&E and PSI Resources, Inc. Our principal executive offices are
located at 139 East Fourth Street, Cincinnati, Ohio 45202; our telephone number
is (513) 287-2644.
THE EXCHANGE OFFER
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Securities Offered........................ We are offering up to $200,000,000 aggregate principal amount of
6.125% Debentures due 2004, which have been registered under the
Securities Act ("New Debentures").
The Exchange Offer........................ We are offering to issue the New Debentures in exchange for a like
principal amount of outstanding 6.125% Debentures due 2004, issued by
Cinergy on April 16, 1999 ("Old Debentures"). We are offering to
issue the New Debentures to satisfy our obligations contained in the
registration rights agreement entered into when the Old Debentures
were sold in transactions pursuant to Rule 144A under the Securities
Act and therefore not registered with the Commission. For procedures
for tendering, see "The Exchange Offer."
</TABLE>
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<TABLE>
<CAPTION>
Tenders, Expiration Date, Withdrawal...... The Exchange Offer will expire at 5:00 p.m. New York City time on
September 23, 1999, unless it is extended. If you decide to exchange
your Old Debentures for New Debentures, you must acknowledge that you
are not engaging in, and do not intend to engage in, a distribution
of the New Debentures. If you decide to tender your Old Debentures
pursuant to the Exchange Offer, you may withdraw them at any time
prior to September 23, 1999. If we decide for any reason not to
accept any Old Debentures for exchange, your Old Debentures will be
returned to you without expense promptly after the Exchange Offer
expires.
<S> <C>
Federal Income Tax Consequences........... Your exchange of Old Debentures for New Debentures pursuant to the
Exchange Offer will not result in any income, gain or loss to you for
federal income tax purposes. See "Certain United States Tax
Consequences of the Exchange Offer."
Use of Proceeds........................... We will not receive any proceeds from the issuance of the New
Debentures pursuant to the Exchange Offer.
Exchange Agent............................ Fifth Third Bank is the exchange agent for the Exchange Offer.
</TABLE>
CONSEQUENCES OF EXCHANGING DEBENTURES PURSUANT TO THE EXCHANGE OFFER
Based on interpretations by the Commission's staff in no-action letters
issued to third parties, we believe that New Debentures issued in exchange for
Old Debentures pursuant to the Exchange Offer may be offered for resale, resold
or otherwise transferred by you without registering the New Debentures under the
Securities Act or delivering a prospectus:
- so long as you are not one of our "affiliates", as defined in Rule 405 of
the Securities Act;
- so long as you acquire the New Debentures in the ordinary course of your
business; and
- unless you are a broker dealer, so long as you do not have any arrangement
with any person to participate in the distribution of the New Debentures.
Unless you are a broker-dealer, you must acknowledge that:
- you are not engaged in, and do not intend to engage in, a distribution of
the New Debentures; and
- you have no arrangement or understanding to participate in a distribution
of the New Debentures.
If you are an affiliate of Cinergy, or you are engaged in, intend to engage
in or have any arrangement or understanding with respect to, the distribution of
New Debentures acquired in the Exchange Offer, you should not rely on our
interpretations of the position of the Commission's staff and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction.
If you are a broker-dealer and receive New Debentures for your own account
pursuant to the Exchange Offer:
- you must acknowledge that you will deliver a prospectus in connection with
any resale of such New Debentures; and
- you may use this prospectus, as it may be amended or supplemented from
time to time, in connection with the resale of New Debentures received in
exchange for Old Debentures acquired by you as a result of market-making
or other trading activities.
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For a period of 90 days after the expiration of the Exchange Offer, we will
make this prospectus available to any broker-dealer for use in connection with
any such resale.
You may offer or sell the New Debentures in certain jurisdictions only if
they have been registered or qualified for sale there, or an exemption from
registration or qualification is available and is complied with. Subject to the
limitations specified in the registration rights agreement, we will register or
qualify the New Debentures for offer or sale under the securities laws of any
jurisdictions that you reasonably request in writing. Unless you request that
the sale of the New Debentures be registered or qualified in a jurisdiction, we
currently do not intend to register or qualify the sale of the New Debentures in
any jurisdiction. If you do not comply with the requirement described in this
paragraph, you could incur liability under the Securities Act, and we will not
indemnify you in such circumstances.
THE NEW DEBENTURES
The terms of the New Debentures and the Old Debentures are identical in all
material respects, except that the New Debentures have been registered under the
Securities Act and certain transfer restrictions, registration rights and
related additional interest provisions applicable to the Old Debentures do not
apply to the New Debentures.
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Issuer.................................... Cinergy will issue the New Debentures pursuant to the Indenture dated
as of April 15, 1999 between the Company and Fifth Third Bank, as
trustee.
New Debentures............................ $200,000,000 aggregate principal amount of 6.125% Debentures due
2004.
Ranking................................... Cinergy is a holding company. As a consequence, the New Debentures
offered hereby will be structurally subordinate to all secured and
unsecured debt of our operating subsidiaries.
Maturity Date............................. April 15, 2004.
Interest Payment Dates.................... April 15 and October 15, commencing October 15, 1999.
Sinking Fund.............................. None.
Record Date............................... The Business Day immediately preceding each Interest Payment Date.
Optional Redemption....................... We have the right to redeem the New Debentures, in whole or in part,
from time to time and at any time, upon not less than 30 days' notice
to the holders of the New Debentures, at a redemption price equal to
the greater of:
(A) 100% of the principal amount of the New Debentures to be
redeemed; and
(B) the sum of the present values of the remaining scheduled payments
of principal and interest on the New Debentures to be redeemed
(exclusive of interest accrued to the date of redemption)
discounted to the date of redemption on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at
the treasury rate plus 15 basis points, plus accrued and unpaid
interest on the principal amount being redeemed to the date of
redemption.
Trustee................................... Fifth Third Bank.
</TABLE>
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Events of Default......................... Each of the following will constitute an event of default under the
Indenture with respect to the New Debentures:
<S> <C>
- failure to pay principal of or any premium on any New Debenture
when due;
- failure to pay any interest on any New Debenture when due and
continuance of such default for a period of 30 days;
- failure to perform any other covenant in the Indenture, continued
for 90 days after written notice has been given by the Trustee or
the holders of at least 35% in principal amount of the New
Debentures, as provided in the Indenture; and
- certain events of bankruptcy, insolvency or reorganization.
See "Description of New Debentures--Events of Default."
Use of Proceeds........................... We will not receive any proceeds from the issuance of the New
Debentures.
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SELECTED CONSOLIDATED INCOME INFORMATION
The following tables show selected financial information of Cinergy. This
information is derived from our historical results. See "Where You Can Find More
Information". All amounts are in thousands except per share amounts and the
ratio of earnings to fixed charges.
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<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1998(1) 1997 1996
SIX MONTHS ------------ ------------ ------------
ENDED
JUNE 30, 1999
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(UNAUDITED)
<S> <C> <C> <C> <C>
Operating Revenues.................................... $ 2,677,678 $ 5,876,294 $ 4,387,101 $ 3,276,187
Operating Income...................................... $ 371,259 $ 566,429 765,668 763,538
Preferred Dividend Requirement........................ $ 2,729 $ 6,517 12,569 23,180
Net Income Before Extraordinary Item.................. $ 186,303 $ 260,968 362,638 334,797
Extraordinary Item--Equity Share of Windfall Profits
Tax (Less Applicable Income
Taxes of $0)........................................ -- -- (109,400 (2) --
Net Income............................................ $ 186,303 $ 260,968 $ 253,238 $ 334,797
Earnings Per Common Share
Net Income Before Extraordinary Item................ $1.17 $1.65 $2.30 $2.00
Net Income.......................................... $1.17 $1.65 $1.61 $2.00
Earnings Per Common Share--Assuming Dilution
Net Income Before Extraordinary Item................ $1.17 $1.65 $2.28 $1.99
Net Income.......................................... $1.17 $1.65 $1.59 $1.99
</TABLE>
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Notes:
(1) The period reflects charges against income relating to (a) a one-time charge
of $80 million (before taxes) reflecting the implementation of a 1989
settlement of a dispute with the Wabash Valley Power Association, Inc. that
resulted from the cancellation of the Marble Hill nuclear power station in
1984 and (b) the recording of $135 million (before taxes) of unrealized
losses related to energy marketing and trading operations. For additional
information, reference is made to our Annual Report on Form 10-K for the
year ended December 31, 1998, which is incorporated herein by reference.
(2) Represents a one-time charge for the windfall profits tax levied against our
United Kingdom subsidiary, Midlands Electricity plc. For additional
information, reference is made to our Annual Report on Form 10-K for the
year ended December 31, 1998, which is incorporated herein by reference.
(3) On August 10, 1999, the Company announced that it expected a $57 million,
after taxes, reduction in July earnings related to extreme weather
conditions late in the month. For additional information, reference is made
to the Company's Form 8-K dated August 10, 1999 and incorporated herein by
reference.
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CONSOLIDATED CAPITALIZATION
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OUTSTANDING OUTSTANDING
JUNE 30, 1999 DECEMBER 31, 1998
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% OF % OF
AMOUNT CAPITALIZATION AMOUNT CAPITALIZATION
------------ --------------- ------------ ---------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Long-term debt......................................... $ 2,782,798 51.0% $ 2,604,467 49.7%
Cumulative preferred stock
Not subject to mandatory redemption.................. 92,606 1.7 92,640 1.8
Common Stock equity.................................... 2,582,436 47.3 2,541,231 48.5
------------ ----- ------------ -----
Total Capitalization................................. $ 5,457,840 100.0% $ 5,238,338 100.0%
------------ ----- ------------ -----
------------ ----- ------------ -----
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RATIO OF EARNINGS TO FIXED CHARGES
Set forth below is the ratio of earnings to fixed charges for the six months
ended June 30, 1999 and for each year of the five year period ended December 31,
1998.
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED -----------------------------------------------------
JUNE 30, 1999 1998 1997 1996 1995 1994
- --------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
3.27 2.47 3.33 3.41 3.42 2.47
</TABLE>
For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of pretax income from continuing operations plus fixed charges.
Fixed charges consist of:
- interest expense;
- amortized premiums, discounts and capitalized expenses related to
indebtedness; and
- an estimate of the interest within rental expense.
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USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the New
Debentures offered under this prospectus. New Debentures will be exchanged for
Old Debentures as described in this prospectus on our receipt of Old Debentures
in like principal amount. The Old Debentures surrendered in exchange for the New
Debentures will be retired and canceled. Accordingly, the issuance of the New
Debentures will not result in any change in our indebtedness.
The net proceeds to us from the sale of the Old Debentures was approximately
$198 million (after deduction of underwriting discounts and commissions and
other expenses of the offering). Such net proceeds were used to repay a portion
of outstanding short-term indebtedness.
DESCRIPTION OF NEW DEBENTURES
GENERAL
The Old Debentures were, and the New Debentures will be, issued under an
indenture dated as of April 15, 1999 (the "Indenture) between Cinergy and Fifth
Third Bank, as trustee (the "Trustee"). Because this is a summary it does not
contain all the information that may be important to you. You should read the
entire Indenture, including the definitions therein of certain terms used below.
We have filed a copy of the Indenture as an exhibit to the registration
statement which includes this prospectus.
The terms of the New Debentures are identical in all material respects to
the terms of the Old Debentures, except for the removal of certain transfer
restrictions, registration rights and related additional interest provisions
applicable to the Old Debentures.
The New Debentures will be general unsecured obligations of Cinergy and will
rank PARI PASSU with all of our other unsecured and unsubordinated obligations.
The Indenture permits us to incur additional indebtedness in the future.
STRUCTURAL SUBORDINATION
Cinergy is a holding company. As a consequence, the New Debentures will be
structurally subordinate to all secured and unsecured debt of our operating
subsidiaries.
PRINCIPAL AMOUNT, INTEREST AND MATURITY
- - We will issue New Debentures with an aggregate principal amount of up to
$200,000,000.
- - The New Debentures will mature on April 15, 2004, and will bear interest at a
rate per annum of 6.125%, computed on the basis of a 360-day year of twelve
30-day months.
- - We will pay interest on the New Debentures semi-annually on April 15 and
October 15 in each year, beginning October 15, 1999, to registered holders of
record on the Business Day immediately preceding such Interest Payment Date. A
"Business Day" means any day other than a day on which banking institutions in
the City of New York or the City of Cincinnati are authorized or obligated to
close.
- - Principal of, premium, if any, and interest on the New Debentures will be
payable and the New Debentures will be transferable at the corporate trust
office of the Trustee in the City of Cincinnati, located at 38 Fountain Square
Plaza, Cincinnati, Ohio 45263, provided that payment of interest may be made
at our option by checks mailed to the registered holders of the New
Debentures.
- - We will issue the New Debentures in denominations of $100,000 and any integral
multiple of $1,000 above that amount.
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OPTIONAL REDEMPTION
The New Debentures will be redeemable, in whole or from time to time in
part, at our option on any date (each, a "Redemption Date") at a redemption
price equal to the greater of:
(A) 100% of the principal amount of the New Debentures to be redeemed; or
(B) the sum of the present values of the remaining scheduled payments of
principal and interest thereon (exclusive of interest accrued to the
Redemption Date) discounted to the Redemption Date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate plus 15 basis points,
plus, in either case, accrued and unpaid interest on the principal amount being
redeemed to such Redemption Date.
Notwithstanding the paragraph above, installments of interest on the New
Debentures that are due and payable on an Interest Payment Date falling on or
prior to the relevant Redemption Date will be payable to the Holders of such New
Debentures registered as such at the close of business on the relevant Regular
Record Date according to their terms and the provisions of the Indenture.
"Treasury Rate" means, with respect to any Redemption Date for the New
Debentures:
- the yield, under the heading that represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication
that is published weekly by the Board of Governors of the Federal Reserve
System and that establishes yields on actively traded United States
Treasury securities adjusted to constant maturity under the caption
"Treasury Constant Maturities" for the maturity corresponding to the
Comparable Treasury Issue (if no maturity is within three months before or
after the Final Maturity Date, yields for the two published maturities
most closely corresponding to the Comparable Treasury Issue shall be
determined and the Treasury Rate shall be interpolated or extrapolated
from such yields on a straight-line basis, rounding to the nearest month);
or
- if such release (or any successor release) is not published during the
week preceding the calculation date or does not contain such yields, the
rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, calculated using a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal
to the Comparable Treasury Price for such Redemption Date.
The Treasury Rate shall be calculated on the third Business Day preceding
the Redemption Date. As used in the immediately preceding sentence and in the
definition of "Reference Treasury Dealer Quotations" below, the term "Business
Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in The City of New York are authorized or
obligated by law or executive order to close.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Independent Investment Banker as having a maturity comparable to
the remaining term of the New Debentures to be redeemed that would be utilized,
at the time of election, and in accordance with customary financial practice, in
pricing new issues of corporate securities of comparable maturity to the
remaining term of the New Debentures.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Trustee after consultation
with us.
"Comparable Treasury Price" means, with respect to any Redemption Date for
the New Debentures:
- the average of four Reference Treasury Dealer Quotations for such
Redemption Date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations; or
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- if the Trustee obtains fewer than four Reference Treasury Dealer
Quotations, the average of all such quotations.
"Reference Treasury Dealer" means a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"). If such Primary Treasury
Dealer should cease to be a Treasury Dealer, the Trustee in consultation with us
shall substitute another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury 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 such Reference Treasury Dealer at 5:00 p.m. New York
City time, on the third Business Day preceding such Redemption Date.
"Final Maturity Date" means April 15, 2004.
We will mail notice of any redemption at least 30 days but not more than 60
days before the relevant Redemption Date to each holder of New Debentures to be
redeemed. If less than all the New Debentures are to be redeemed at our option,
the Trustee will select, in such manner as it deems fair and appropriate, the
New Debentures to be redeemed.
Unless we default in payment of the redemption price, on and after the
Redemption Date interest will cease to accrue on the New Debentures or portions
thereof called for redemption.
MANDATORY REDEMPTION
We are not required to make mandatory redemption of, or sinking fund
payments with respect to, the New Debentures.
CONSOLIDATION, MERGER, AND SALE OF ASSETS
The Indenture does not contain any covenant that restricts our ability to
merge or consolidate with or into any other corporation, sell or convey all or
substantially all of our assets or property to any person, firm or corporation
or otherwise engage in restructuring transactions, provided that the successor
entity assumes due and punctual payment of principal or premium, if any, and
interest on the New Debentures.
LIMITATION ON LIENS
Nothing contained in the Indenture in any way restricts or prevents us or
any of our subsidiaries or joint ventures from incurring any indebtedness:
PROVIDED, that we may not issue, assume or guarantee any Debt (as defined below)
secured by a Lien (as defined below) upon any of our property or assets (other
than cash) without effectively providing that the outstanding New Debentures
(together with any other indebtedness or obligation then existing or thereafter
created ranking equally with the New Debentures) are secured equally and ratably
with (or prior to) such Debt so long as such Debt is so secured. This
restriction on Liens will not, however, apply to the following:
- Liens in existence on the date of original issuance of the New Debentures;
- any Lien created or arising over any property which we acquire, construct
or create, but only if:
-- such Lien secures only principal amounts (not exceeding the cost of
such acquisition, construction or creation) of Debt incurred for the
purposes of such acquisition, construction or creation, together with
any costs, expenses, interest and fees incurred in relation thereto or a
guarantee given in respect thereof;
-- such Lien is created or arises on or before 90 days after the
completion of such acquisition, construction or creation; and
-- such Lien is confined solely to the property so acquired, constructed
or created;
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- any Lien to secure Debt incurred by us in connection with a specifically
identifiable project where the Lien relates and is confined to a property
or properties (including, without limitation, shares or other rights of
ownership in the entity(ies) which own such property or project) involved
in such project and acquired by us after the date of original issuance of
the New Debentures and the recourse of the creditors in respect of such
Debt is limited to any or all of such project and property (including
shares or other rights of ownership);
- any Lien securing amounts not more than 90 days overdue or otherwise being
contested in good faith;
- rights of financial institutions to offset credit balances in connection
with the operation of cash management programs established for our benefit
or in connection with the issuance of letters of credit for our benefit;
- any Lien securing Debt incurred by us in connection with the financing of
accounts receivable;
- any Lien incurred or deposits made in the ordinary course of business,
including, but not limited to:
-- any mechanics', materialmen's, carriers', workmen's, vendors' or other
like Liens; and
-- any Liens securing amounts in connection with workers' compensation,
unemployment insurance and other types of social security;
- any Lien upon specific items of our inventory or other goods and proceeds
securing our obligations in respect of bankers' acceptances issued or
created for the account of such person to facilitate the purchase,
shipment or storage of such inventory or other goods;
- any Lien incurred or deposits made securing the performance of tenders,
bids, leases, trade contracts (other than for borrowed money), statutory
obligations, surety bonds, appeal bonds, government contracts, performance
bonds, return-of-money bonds and other obligations of like nature incurred
in the ordinary course of business;
- any Lien constituted by a right of set off or right over a margin call
account or any form of cash or cash collateral or any similar arrangement
for obligations incurred in respect of the hedging or management of risks
under transactions involving any currency or interest rate swap, cap or
collar arrangements, forward exchange transaction, option, warrant,
forward rate agreement, futures contract or other derivative instrument of
any kind;
- any Lien arising out of title retention or like provisions in connection
with the purchase of goods and equipment in the ordinary course of
business;
- any Lien securing reimbursement obligations under letters of credit,
guarantees and other forms of credit enhancement given in connection with
the purchase of goods and equipment in the ordinary course of business;
- Liens on any property or assets:
-- acquired from a corporation which is merged with or into Cinergy and is
not created in anticipation of any such transaction (unless such Lien
was created to secure or provide for the payment of any part of the
purchase price of such corporation); or
-- existing at the time of acquisition of such property or assets by us
and which is not created in anticipation of such acquisition (unless
such Lien was created to secure or provide for the payment of any part
of the purchase price of such property or assets);
- Liens required by any contract or statute in order to permit us to perform
any contract or subcontract made with or at the request of a governmental
entity or any department, agency or
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instrumentality thereof, or to secure partial, progress, advance or any
other payments by us to such governmental unit pursuant to the provisions
of any contract or statute;
- any Lien securing:
-- industrial revenue, development or similar bonds issued by or for our
benefit, provided that such industrial revenue, development or similar
bonds are nonrecourse to Cinergy; or
-- taxes or assessments or other applicable governmental charges or
levies;
- any Lien which arises:
-- pursuant to any order of attachment, distraint or similar legal process
arising in connection with court proceedings and any Lien which secures
the reimbursement obligation for any bond obtained in connection with an
appeal taken in any court proceeding, so long as the execution or other
enforcement of such Lien arising pursuant to such legal process is
effectively stayed and the claims secured thereby are being contested in
good faith and, if appropriate, by appropriate legal proceedings, or any
Lien in favor of a plaintiff or defendant in any action before a court
or tribunal as security for costs or expenses; or
-- by operation of law or by order of a court or tribunal or any lien
which arises by an agreement of similar effect, including, without
limitation, judgement liens; or
- any extension, renewal or replacement (or successive extensions, renewals
or replacements), as a whole or in part, of any Liens referred to in the
above clauses, for amounts not exceeding the principal amount of the Debt
secured by the Lien so extended, renewed or replaced, provided that such
extension, renewal or replacement Lien is limited to all or a part of the
same property or assets that were covered by the Lien extended, renewed or
replaced (plus improvements on such property or assets).
"Consolidated Net Tangible Assets" is defined in the Indenture as the total
of all assets (including revaluations thereof as a result of commercial
appraisals, price level restatement or otherwise) appearing, on our most recent
consolidated balance sheet as of the date of determination, net of applicable
reserves and deductions but excluding goodwill, trade names, trademarks,
patents, unamortized debt discount and all other like intangible assets (which
term shall not be construed to include such revaluations), less the aggregate of
our consolidated current liabilities appearing on such balance sheet.
"Debt" is defined in the Indenture as all of our obligations evidenced by
bonds, debentures, notes or similar evidences of indebtedness in each case for
money borrowed.
"Lien" is defined in the Indenture as any mortgage, lien, pledge, security
interest or other encumbrance; provided, however, that the term "Lien" shall not
mean any easements, rights-of-way, restrictions and other similar encumbrances
and encumbrances consisting of zoning restrictions, leases, subleases, licenses,
sublicenses, restrictions on the use of property or defects in the title
thereto.
LIMITATION ON SALE AND LEASE-BACK TRANSACTIONS
The Indenture provides that, so long as any of the New Debentures remain
outstanding, we will not enter into any arrangement with any person providing
for the leasing by us of any assets which have been or are to be sold or
transferred by us to such person (a "Sale and Lease-Back Transaction") unless:
- such transaction involves a lease for a temporary period not to exceed
three years;
- such transaction is with an affiliate of ours;
- we would be entitled to incur Debt secured by a Lien on the assets or
property involved in such transaction at least equal in amount to the
Attributable Debt with respect to such Sale and Lease-Back Transaction,
without equally and ratably securing the New Debentures, as described
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under "--Limitation on Liens" above, other than as described with respect
to extensions, renewals and replacements of any Liens;
- such transaction is entered into within 90 days after our initial
acquisition of the assets or property subject to such transaction; or
- within the 12 months preceding the sale or transfer or the 12 months
following the sale or transfer, regardless of when such sale or transfer
may have been made, we apply in the case of a sale or transfer for cash,
an amount equal to the net proceeds thereof and, in the case of a sale or
transfer otherwise than for cash, an amount equal to the fair value of the
assets so leased at the time of entering into such arrangement (as
determined by our Board of Directors):
-- to the retirement of Debt, incurred or assumed by us which by its terms
matures at, or is extendible or renewable at the option of the obligor
to, a date more than 12 months after the date of incurring, assuming or
guaranteeing such Debt; or
-- to investment in any of our assets.
Notwithstanding the restrictions in the Indenture on Liens and Sale and
Lease-Back Transactions, we may, in addition to amounts permitted under such
restrictions, create Indebtedness (as defined in the Indenture) secured by
Liens, or enter into Sale and Lease-Back Transactions; provided that, after
giving effect thereto, the aggregate outstanding amount of all such Indebtedness
secured by Liens plus Attributable Debt resulting from such Sale and Lease-Back
Transactions does not exceed 10% of Consolidated Net Tangible Assets.
"Attributable Debt" is defined in the Indenture as, with respect to any
particular Sale and Lease-Back Transaction, at the time of determination, the
present value (discounted at the rate of interest implicit in such transaction
determined in accordance with generally accepted accounting principles) of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such Sale and Lease-Back Transaction (including any period
for which such lease has been extended or may, at the option of the lessor, be
extended).
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Indenture with respect to the New Debentures:
- failure to pay principal of or any premium on any New Debenture when due;
- failure to pay any interest on the New Debentures when due and continuance
of such default for a period of 30 days;
- failure to perform any other covenant in the Indenture, continued for 90
days after written notice has been given by the Trustee or the Holders of
at least 35% in principal amount of the Outstanding New Debentures as
provided in the Indenture; and
- certain events of bankruptcy, insolvency or reorganization involving
Cinergy.
If an Event of Default (other than a bankruptcy, insolvency or
reorganization Event of Default) with respect to the New Debentures at the time
Outstanding occurs and is continuing, either the Trustee or the Holders of at
least 35% in aggregate principal amount of the Outstanding New Debentures by
notice as provided in the Indenture may declare the principal amount of the New
Debentures to be due and payable immediately. If a bankruptcy, insolvency or
reorganization Event of Default with respect to the New Debentures at the time
Outstanding occurs, the principal amount of all the New Debentures will
automatically, and without any action by the Trustee or any Holder, become
immediately due and payable. After any such declaration of acceleration, but
before a judgment or decree based on acceleration, the Holders of a majority in
aggregate principal amount of the Outstanding New Debentures may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than the non-payment of accelerated principal, have been cured or waived
as provided in the Indenture. For information as to waiver of defaults, see
"Modification and Waiver."
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Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default occurs and is 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 such Holders
shall have offered to the Trustee reasonably satisfactory indemnity. Subject to
such provisions for the indemnification of the Trustee, the Holders of a
majority in principal amount of the Outstanding New Debentures 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 New Debentures.
No Holder of a New Debenture 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:
- such Holder has previously given to the Trustee written notice of a
continuing Event of Default with respect to the New Debentures;
- the Holders of at least 35% in aggregate principal amount of the
Outstanding New Debentures have made written request, and such Holder or
Holders have offered reasonably satisfactory indemnity, to the Trustee to
institute such proceeding as trustee; and
- the Trustee has failed to institute such proceedings, and has not received
from the Holders of a majority in aggregate principal amount of the
Outstanding New Debentures a direction inconsistent with such request,
within 60 days after such notice, request and offer.
However, such limitations do not apply to a suit instituted by a Holder of a
New Debenture for the enforcement of payment of the principal of or any premium
or interest on such New Debenture on or after the applicable due date specified
in such New Debenture.
We are required to furnish to the Trustee annually a statement by certain of
our officers as to whether or not we are, to our knowledge, in default in the
performance or observance of any of the terms, provisions and conditions of the
Indenture and, if so, specifying all such known defaults.
MODIFICATION AND WAIVER
The Indenture may be modified and amended at any time or from time to time
without the consent of any Holders by supplemental indentures (in form
satisfactory to the Trustee) entered into by us (when authorized by a Board
Resolution) and the Trustee, for any of the following purposes:
- to evidence the succession of another entity to us and the assumption by
any such successor of our covenants in the Indenture and in the New
Debentures;
- to add to our covenants for the benefit of the Holders or to surrender any
right or power in the Indenture conferred upon us;
- to add any additional Events of Default for the benefit of the Holders; or
- to cure any ambiguity, to correct or supplement any provision in the
Indenture which may be inconsistent with any other provision in the
Indenture, or to make any other provisions with respect to matters or
questions arising under the Indenture which are not inconsistent with the
provisions of the Indenture, provided that such action pursuant to this
clause must not adversely affect the interests of the Holders in any
material respect.
The Trustee is authorized to join with us in the execution of any such
supplemental indenture, and to make any further appropriate agreements and
stipulations which may be therein contained.
With the written consent of the Holders of not less than a majority in
principal amount of the Outstanding New Debentures, delivered to us and the
Trustee, we, when authorized by a Board Resolution, and the Trustee may enter
into an indenture or indentures supplemental to the Indenture for
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the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of modifying in any manner the rights
of the Holders under the Indenture; provided, however, that no such supplemental
indenture may, without the consent of the Holder of each Outstanding New
Debenture affected thereby:
- change the maturity date of the principal of, or any installment of
interest on, any New Debenture, or reduce the principal amount thereof or
the rate of interest thereon or any premium payable upon the redemption
thereof, or change the place of payment where, or the coin or currency in
which, any New Debenture or interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or
after the maturity date thereof (or, in the case of redemption, on or
after the date of redemption);
- reduce the percentage in principal amount of the Outstanding New
Debentures, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of the Indenture or
certain defaults hereunder and their consequences) provided for in the
Indenture; or
- modify certain other provisions specified in the Indenture.
It is not necessary for any written consent of Holders to approve the
particular form of any proposed supplemental indenture, but it is sufficient if
the written consent approves the substance thereof.
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that we may elect, at our option at any time, to have
the provisions of Section 1102, relating to defeasance and discharge of
indebtedness, or Section 1103, relating to defeasance of certain restrictive
covenants in the Indenture, applied to the New Debentures.
DEFEASANCE AND DISCHARGE. The Indenture provides that, if we exercise our
option to have Section 1102 applied to any New Debentures, we will be discharged
from all of our obligations with respect to such New Debentures upon the deposit
in trust for the benefit of the Holders of such New Debentures of money or U.S.
Government Obligations, or both, which, through the payment of principal and
interest in respect thereof in accordance with their terms, will provide money
in an amount sufficient to pay the principal of and any premium and interest on
such New Debentures on the respective Stated Maturities in accordance with the
terms of the Indenture and such New Debentures.
Notwithstanding the foregoing, under the Indenture, we will not be
discharged from certain obligations to:
- exchange or register the transfer of New Debentures;
- replace stolen, lost or mutilated New Debentures;
- maintain paying agencies; and
- hold moneys for payment in trust.
Such defeasance or discharge may occur only if, among other things, we have
delivered to the Trustee an Opinion of Counsel to the effect that we have
received from, or there has been published by, the United States Internal
Revenue Service a ruling, or there has been a change in tax law, in either case
to the effect that Holders of such New Debentures will not recognize gain or
loss for federal income tax purposes as a result of such deposit, defeasance,
and discharge and will be subject to federal income tax on the same amount, in
the same manner and at the same times as would have been the case if such
deposit, defeasance and discharge were not to occur.
DEFEASANCE OF CERTAIN COVENANTS. The Indenture provides that, if we
exercise our option to have Section 1103 applied to any New Debentures, we may
omit to comply with certain restrictive covenants and
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the occurrence of certain Events of Default, which are described above (with
respect to such restrictive covenants) under "Events of Default", will be deemed
not to be or result in an Event of Default, in each case with respect to such
New Debentures. In order to exercise such option, we will be required to:
- deposit, in trust for the benefit of the Holders of such New Debentures,
money or U.S. Government Obligations, or both, which, through the payment
of principal and interest in respect thereof in accordance with their
terms, will provide money in an amount sufficient to pay the principal of
and any premium and interest on such New Debentures on the respective
Stated Maturities in accordance with the terms of the Indenture and such
New Debentures; and
- among other things, deliver to the Trustee an Opinion of Counsel to the
effect that Holders of such New Debentures will not recognize gain or loss
for federal income tax purposes as a result of such deposit and defeasance
of certain obligations and will be subject to federal income tax on the
same amount, in the same manner and at the same times as would have been
the case if such deposit and defeasance were not to occur.
In the event we exercise this option with respect to any New Debentures and
such New Debentures are declared due and payable because of the occurrence of
any Event of Default, the amount of money and U.S. Government Obligations so
deposited in trust would be sufficient to pay amounts due on such New Debentures
at the time of their respective Stated Maturities but may not be sufficient to
pay amounts due on such New Debentures upon any acceleration resulting from such
Event of Default. In such case, we would remain liable for such payments.
TRANSFER AND EXCHANGE
At the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to Global Debentures, New Debentures will be exchangeable
for other Debentures, of any authorized denomination and of like tenor and
aggregate principal amount. A Holder may transfer or exchange Debentures in
accordance with the Indenture.
Subject to the terms of the Indenture and the limitations applicable to
Global Debentures, New Debentures may be presented for exchange as provided
above or for registration of transfer (duly endorsed or with the form of
transfer endorsed thereon duly executed) at the office of the security registrar
(the "Security Registrar" or "Registrar") or at the office of any transfer agent
designated by us for such purpose. No service charge will be made for any
registration of transfer or exchange of New Debentures, but we may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. Such transfer or exchange will be effected upon
the Security Registrar or such transfer agent, as the case may be, being
satisfied with the documents of title and identity of the person making the
request. We have appointed the Trustee as Security Registrar. We may at any time
designate additional transfer agents or rescind the designation of any transfer
agent or approve a change in the office through which any transfer agent acts,
except that we will be required to maintain a transfer agent in each Place of
Payment for the New Debentures.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and we may require a
Holder to pay any taxes and fees required by law or permitted by the Indenture.
We are not required to transfer or exchange any New Debenture selected for
redemption. Also, we are not required to transfer or exchange any New Debenture
for a period of 15 days before a selection of New Debentures to be redeemed.
BOOK-ENTRY, DELIVERY AND FORM
The certificates representing the New Debentures will be issued in fully
registered form, without coupons. Except as described below, the New Debentures
will be deposited with, or on behalf of, the
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Depository Trust Company, New York, New York ("DTC"), and registered in the name
of DTC's nominee, in the form of a global debenture (the "Global New
Debenture").
We expect that pursuant to procedures established by DTC:
- upon deposit of the Global New Debenture, DTC or its custodian will credit
on its internal system interests in the Global New Debentures to the
accounts of persons who have accounts with DTC ("Participants"); and
- ownership of the Global New Debenture will be shown on, and the transfer
of ownership thereof will be effected only through, records maintained by
DTC or its nominee (with respect to interests of Participants) and the
records of Participants (with respect to interests of persons other than
Participants). Ownership of beneficial interests in the Global New
Debenture will be limited to Participants or persons who hold interests
through Participants.
So long as DTC or its nominee is the registered owner or holder of the New
Debentures, DTC or such nominee will be considered the sole owner or holder of
the New Debentures represented by the Global New Debenture for all purposes
under the Indenture. No beneficial owner of an interest in the Global New
Debenture will be able to transfer such interest except in accordance with DTC's
procedures, in addition to those provided for under the Indenture with respect
to the New Debentures.
Payments of the principal of or premium and interest on the Global New
Debenture will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. None of Cinergy, the Trustee or any paying agent under
the Indenture will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global New Debenture or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest.
We expect that DTC or its nominee, upon receipt of any payment of the
principal of or premium and interest on the Global New Debenture, will credit
Participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global New
Debenture as shown on the records of DTC or its nominee. We also expect that
payments by Participants to owners of beneficial interests in the Global New
Debenture held through such Participants will be governed by standing
instructions and customary practice as is now the case with securities held for
the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such Participants.
Transfers between Participants in DTC will be effected in accordance with
DTC rules and will be settled in immediately available funds. If a holder
requires physical delivery of a certificated New Debenture for any reason,
including to sell New Debentures to persons in states which require physical
delivery of the New Debentures or to pledge such securities, such holder must
transfer its interest in the Global New Debenture in accordance with the normal
procedures of DTC and with the procedures set forth in the Indenture.
DTC has advised us that:
- it will take any action permitted to be taken by a holder of New
Debentures (including the presentation of New Debentures for exchange as
described below) only at the direction of one or more Participants to
whose account at DTC interests in the Global New Debenture are credited
and only in respect of such portion of the aggregate principal amount of
New Debentures as to which such Participant or Participants has or have
given such direction. However, if there is an Event of Default under the
Indenture, DTC will exchange the Global New Debenture for certificated New
Debentures, which it will distribute to its Participants;
- it 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 Uniform
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Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act; and
- it was created to hold securities for its Participants and facilitate the
clearance and settlement of securities transactions between Participants
through electronic book-entry changes in accounts of its Participants,
thereby eliminating the need for physical movement of certificates.
Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly
("Indirect Participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interest in the Global New Debentures among Participants, it is
under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither Cinergy nor the Trustee will have any
responsibility for the performance by DTC or its Participants or Indirect
Participants of their respective obligations under the rules and procedures
governing their operations.
TRANSFERS OF INTERESTS IN GLOBAL NEW DEBENTURES FOR CERTIFICATED NEW DEBENTURES
An entire Global New Debenture may be exchanged for definitive Debentures in
registered, certificated form without interest coupons ("Certificated New
Debentures") if:
- DTC:
-- notifies us that it is unwilling or unable to continue as depositary
for the Global New Debentures and we thereupon fail to appoint a
successor depositary within 90 days; or
-- has ceased to be a clearing agency registered under the Exchange Act;
- we notify the Trustee in writing that we elect to cause the issuance of
Certificated New Debentures; or
- there shall have occurred and be continuing a Default or an Event of
Default with respect to the New Debentures.
In any such case, we will notify the Trustee in writing that, upon surrender
by the Direct and Indirect Participants of their interest in such Global New
Debenture, Certificated New Debentures will be issued to each person that such
Direct and Indirect Participants and DTC identify as being the beneficial owner
of the related New Debentures.
Beneficial interests in Global New Debentures held by any Direct or Indirect
Participant may be exchanged for Certificated New Debentures (for itself or on
behalf of an Indirect Participant), but only upon at least 20 days' prior
written notice given to the Trustee by or on behalf of DTC in accordance with
customary DTC procedures. Certificated New Debentures delivered in exchange for
any beneficial interest in any Global New Debenture will be registered in the
names, and issued in any approved denominations, requested by DTC on behalf of
such Direct or Indirect Participants (in accordance with DTC's customary
procedures).
Neither Cinergy nor the Trustee will be liable for any delay by the holder
of the Global New Debentures or DTC in identifying the beneficial owners of New
Debentures, and Cinergy and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the holder of the Global New
Debenture or DTC for all purposes.
PAYMENT AND PAYING AGENT
Principal of and any premium and interest on the New Debentures will be
payable at the office of the Paying Agent or Paying Agents as we may designate
for such purpose from time to time, except that at our
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option payment of any interest may be made by check mailed to the address of the
Person entitled thereto as such address appears in the Security Register. The
corporate trust office of the Trustee in the City of Cincinnati will be
designated as our sole Paying Agent for payments with respect to the New
Debentures. We may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent or approve a change in the office through which
any Paying Agent acts, except that we will be required to maintain a Paying
Agent in each place of payment for the New Debentures.
All moneys paid by us to a Paying Agent for the payment of the principal of
or any premium or interest on any New Debenture which remains unclaimed at the
end of 18 months after such principal, premium or interest has become due and
payable will be repaid to us, and the Holder of such New Debenture thereafter
may look only to us for payment thereof.
TITLE
Cinergy, the Trustee, and any agent of Cinergy or the Trustee may treat the
Person in whose name a New Debenture is registered as the absolute owner thereof
(whether or not such New Debenture may be overdue) for the purpose of making
payment and for all other purposes.
GOVERNING LAW
The Indenture and the New Debentures will be governed by, and construed in
accordance with, the law of the State of New York.
THE EXCHANGE OFFER
Pursuant to a Registration Rights Agreement among Cinergy and the Initial
Purchasers (the "Registration Rights Agreement"), we agreed to use our
reasonable best efforts to cause to become effective a registration statement
(the "Exchange Offer Registration Statement") with respect to an issue of debt
securities identical in all material respects to the Old Debentures and, upon
becoming effective, to offer the holders of the Old Debentures the opportunity
to exchange their Old Debentures for New Debentures. The Registration Rights
Agreement also provides that in the event that due to a change in current
interpretations by the Commission, we are not permitted to effect such Exchange
Offer, we will instead file a registration statement covering resales by the
holders of Old Debentures (a "Shelf Registration Statement") and will use our
reasonable best efforts to cause such Shelf Registration Statement to become
effective and to keep such Shelf Registration Statement effective for two years
from the date on which we delivered the Old Debentures to the Initial Purchasers
(the "Closing Date").
Under the Registration Rights Agreement, we agreed to use our reasonable
best efforts to:
- file the Exchange Offer Registration Statement or a Shelf Registration
Statement with the Commission;
- have such Exchange Offer Registration Statement or Shelf Registration
Statement declared effective by the Commission within 180 days after the
Closing Date; and
- commence the Exchange Offer and issue the New Debentures in exchange for
all Old Debentures validly tendered in accordance with the terms of the
Exchange Offer prior to the close of the Exchange Offer, or, in the
alternative, cause such Shelf Registration Statement to remain effective
for two years from the Closing Date.
If we fail to comply with the above provisions, the Registration Rights
Agreement provides that additional interest ("Additional Interest") shall be
assessed as follows:
- if an Exchange Offer Registration Statement or Shelf Registration
Statement is not declared effective within 180 days following the Closing
Date, then commencing on the 181st day after the Closing Date, Additional
Interest shall be accrued on the Old Debentures over and above the accrued
interest at a rate of .25% per annum; or
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- Additional Interest shall be accrued on the Old Debentures over and above
the accrued interest at a rate of .25% per annum (immediately following
the relevant event) if either:
-- we have not exchanged New Debentures for all Old Debentures validly
tendered in accordance with the terms of the Exchange Offer on or
prior to 35 days after the date on which the Exchange Offer
Registration Statement was declared effective; or
-- if applicable, the Shelf Registration Statement has been declared
effective but such Shelf Registration Statement ceases to be
effective at any time prior to two years from the Closing Date.
However, the Additional Interest rate on the Old Debentures may not exceed
.25% per annum. Additional Interest on the Old Debentures will cease to accrue:
- upon the effectiveness of the Exchange Offer Registration Statement or
Shelf Registration Statement; or
- upon the exchange of New Debentures for all Old Debentures tendered or
upon the effectiveness of the Shelf Registration Statement which had
ceased to remain effective prior to two years from the Closing Date.
Any amounts of Additional Interest will be payable in cash, on the same
original payment dates of the Old Debentures. The amount of Additional Interest
will be determined by multiplying the applicable Additional Interest rate by the
principal amount of the Old Debentures, multiplied by a fraction, the numerator
of which is the number of days such Additional Interest rate was applicable
during such period (determined on the basis of a 360-day year comprised of
twelve 30-day months), and the denominator of which is 360.
Old Debentures not tendered in the Exchange Offer will bear interest at the
same rates as in effect at the time of issuance of the Old Debentures.
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD DEBENTURES
Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying letter of transmittal (the "Letter of Transmittal"), we
will:
- accept for exchange Old Debentures which are properly tendered on or prior
to the Expiration Date and not withdrawn as permitted below; and
- keep the Exchange Offer open for not less than 20 business days (or longer
if required by applicable law) after the date notice of the Exchange Offer
is mailed to the holders of the Old Debentures.
As used herein, the term "Expiration Date" means 5:00 p.m., New York City
time, on September 23, 1999; 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, $200,000,000 in aggregate principal
amount of the Old Debentures were outstanding. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Debentures 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 Debentures
at the addresses set forth in the security register with respect to Old
Debentures maintained by the Trustee.
We expressly reserve the right:
- 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
Debentures; and
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- to amend or terminate the Exchange Offer, and not to accept for exchange
any Old Debentures not theretofore 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 oral or written notice of any extension, amendment,
non-acceptance or termination to the Holders of the Old Debentures 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 9:00 a.m., New
York City time, on the next business day after the previously scheduled
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.
Holders of Old Debentures do not have appraisal or dissenters' rights in
connection with the Exchange Offer. Old Debentures which 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. We intend to conduct the Exchange Offer in accordance with the
applicable requirements of the Exchange Act and the rules and regulations of the
Commission thereunder.
PROCEDURES FOR TENDERING OLD DEBENTURES
The tender to us of Old Debentures by a Holder thereof as set forth below
and the acceptance thereof 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 Debentures for exchange 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 Fifth Third Bank (the "Exchange Agent") at the address set forth
below under "Exchange Agent" on or prior to the Expiration Date. In addition:
- certificates for such Old Debentures must be received by the Exchange
Agent along with the Letter of Transmittal;
- a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Old Debentures, if such 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
- the Holder must comply with the guaranteed delivery procedures described
below.
THE METHOD OF DELIVERY OF OLD DEBENTURES, LETTERS OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD DEBENTURES
SHOULD BE SENT TO CINERGY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless the Old Debentures surrendered for exchange
pursuant thereto are tendered:
- by a registered Holder of the Old Debentures who has not completed the box
entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the Letter of Transmittal; or
- for the account of an Eligible Institution (as defined below).
In the event that 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 a firm which is a member of a registered national securities exchange
or a member of the National Association of Securities Dealers, Inc. or by a
commercial bank or trust company having an office or correspondent in the United
States (collectively, "Eligible
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Institutions"). If Old Debentures are registered in the name of a person other
than the person signing the Letter of Transmittal, the Old Debentures
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 Debentures tendered for exchange will be
determined by Cinergy in its sole discretion, which determination will be final
and binding. We reserve the absolute right:
- to reject any and all tenders of any particular Old Debentures not
properly tendered or to not accept any particular Old Debentures which
acceptance might, in our judgment or the judgment of our counsel, be
unlawful; and
- to waive any defects or irregularities or conditions of the Exchange Offer
as to any particular Old Debentures either before or after the Expiration
Date (including the right to waive the ineligibility of any Holder who
seeks to tender Old Debentures in the Exchange Offer).
Unless waived, any defects or irregularities in connection with the tender
of Old Debentures for exchange must be cured within such reasonable period of
time as we determine. Neither Cinergy, 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 Debentures for exchange, nor will any of them incur
any liability for failure to give such notification.
If the Letter of Transmittal is signed by a person or persons other than the
registered Holder or Holders of Old Debentures, such Old Debentures 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 Debentures.
If the Letter of Transmittal or any Old Debentures or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers or corporations or others acting in a fiduciary or representative
capacity, such person should so indicate when signing and, unless waived by
Cinergy, proper evidence satisfactory to Cinergy of its authority to so act must
be submitted.
By executing, or otherwise becoming bound by a Letter of Transmittal, each
holder of the Old Debentures (other than certain specified holders) will
represent that:
- it is not our affiliate;
- any New Debentures to be received by it were acquired in the ordinary
course of business; and
- it has no arrangement with any person to participate in the distribution
(within the meaning of the Securities Act) of the New Debentures.
If the tendering Holder is a broker-dealer that will receive New Debentures for
its own account in exchange for Old Debentures 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 New Debentures. See "--Resale of the New Debentures."
ACCEPTANCE OF OLD DEBENTURES FOR EXCHANGE; DELIVERY OF NEW DEBENTURES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
we will accept, promptly after the Expiration Date, all Old Debentures properly
tendered and will issue the New Debentures promptly after acceptance of the Old
Debentures. See "Certain Conditions to the Exchange Offer" below. For purposes
of the Exchange Offer, we will be deemed to have accepted properly tendered Old
Debentures for exchange if and when we have given oral or written notice thereof
to the Exchange Agent.
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In all cases, issuance of New Debentures for Old Debentures 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 Debentures or
a timely Book-Entry Confirmation of such Old Debentures 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 Debentures are not accepted for
any reason set forth in the terms and conditions of the Exchange Offer or if
certificates representing Old Debentures are submitted for a greater principal
amount than the Holder desires to exchange, such unaccepted or non-exchanged Old
Debentures will be returned without expense to the tendering Holder thereof (or,
in the case of Old Debentures 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 Debentures 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
The Exchange Agent will make a request to establish an account with respect
to the Old Debentures at DTC for purposes of the Exchange Offer promptly after
the date of this prospectus. Any financial institution that is a participant in
DTC's systems may make book-entry delivery of Old Debentures by causing DTC to
transfer such Old Debentures 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 Debentures so tendered will only be made after
timely confirmation of such book-entry transfer of Old Debentures into the
Exchange Agent's account, and timely receipt by the Exchange Agent of an Agent's
Message (as such term is defined in the next sentence) 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 Debentures 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 Debentures 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 Debentures desires to tender such Old
Debentures and the Old Debentures are not immediately available, or time will
not permit such Holder's Old Debentures or other required documents to reach the
Exchange Agent before the Expiration Date, or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if:
- the tender is made through an Eligible Institution;
- prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) and Notice of Guaranteed Delivery,
substantially in the form provided by us (by telegram, telex, facsimile
transmission, mail or hand delivery), setting forth the name and address
of the Holder of Old Debentures and the amount of Old Debentures tendered,
stating that the tender is being made thereby and guaranteeing that within
five New York Stock Exchange ("NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates of all
physically
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tendered Old Debentures, 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
- the certificates for all physically tendered Old Debentures, 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 NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Debentures 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:
- the name of the person having tendered the Old Debentures to be withdrawn;
- the Old Debentures to be withdrawn (including the principal amount of such
Old Debentures); and
- (where certificates for Old Debentures have been transmitted) the name in
which such Old Debentures are registered, if different from that of the
withdrawing Holder.
If certificates for Old Debentures 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 Debentures 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 Debentures 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, and our determination will
be final and binding on all parties. Any Old Debentures so withdrawn will be
deemed not to have been validly tendered for exchange for purposes of the
Exchange Offer. Any Old Debentures which have been tendered for exchange but
which are not exchanged for any reason will be returned to the Holder thereof
without cost to such Holder (or, in the case of Old Debentures tendered by
book-entry transfer into the Exchange Agent's account at DTC pursuant to the
book-entry transfer procedures described above, such Old Debentures will be
credited to an account maintained with DTC for the Old Debentures) as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Debentures may be re-entered by following one of
the procedures described under "Procedures for Tendering Old Debentures" above
at any time on or prior to the Expiration Date.
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 New Debentures in exchange for, any
Old Debentures and may terminate or amend the Exchange Offer, if at any time
before the acceptance of such Old Debentures for exchange or the exchange of the
New Debentures for such Old Debentures, such acceptance or issuance would
violate applicable law or any interpretation of the Commission'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.
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In addition, we will not accept for exchange any Old Debentures tendered,
and no New Debentures will be issued in exchange for any such Old Debentures, 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
Fifth Third Bank 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:
Fifth Third Bank, Exchange Agent
By Mail or By Hand:
Fifth Third Center
38 Fountain Square
Cincinnati, Ohio 45263
Attention: Corporate Trust Department
By Facsimile:
(513) 744-6785
Confirm by Telephone:
(513) 579-5314
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, telephone or in person by our officers,
regular employees and affiliates. 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.
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 $75,000.
TRANSFER TAXES
Holders who tender their Old Debentures for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that Holders who
instruct us to register New Debentures in the name of, or request that Old
Debentures not tendered or not accepted in the Exchange Offer to be returned to,
a person other than the registered tendering Holder will be responsible for the
payment of any applicable transfer tax thereon.
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RESALE OF THE NEW DEBENTURES
Under existing interpretations of the Commission's staff contained in
several no-action letters to third parties, the New Debentures would be freely
transferable after the Exchange Offer without further registration under the
Securities Act. However, any purchaser of Old Debentures who is an "affiliate"
of Cinergy or who intends to participate in the Exchange Offer for the purpose
of distributing the New Debentures:
- will not be able to rely on the interpretation of the Commission's staff;
- will not be able to tender its Old Debentures in the Exchange Offer; and
- must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any sale or transfer of the
debentures unless such sale or transfer is made pursuant to an exemption
from such requirements.
By executing, or otherwise becoming bound by, the Letter of Transmittal each
holder of the Old Debentures (other than certain specified holders) will
represent that:
- it is not our "affiliate";
- any New Debentures to be received by it were acquired in the ordinary
course of its business; and
- it has no arrangement with any person to participate in the distribution
(within the meaning of the Securities Act) of the New Debentures.
In addition, in connection with any resales of New Debentures, any participating
broker-dealer who acquired debentures for its own account as a result of
market-making or other trading activities must deliver a prospectus meeting the
requirements of the Securities Act. The Commission has taken the position that
participating broker-dealers may fulfill their prospectus delivery requirements
with respect to the New Debentures (other than a resale of an unsold allotment
from the original sale of the Old Debentures) with the prospectus contained in
the Exchange Offer Registration Statement. Under the Registration Rights
Agreement, we are required to allow participating broker-dealers and other
persons, if any, subject to similar prospectus delivery requirements to use this
prospectus as it may be amended or supplemented from time to time, in connection
with the resale of such New Debentures.
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CERTAIN UNITED STATES TAX CONSEQUENCES OF THE EXCHANGE OFFER
The exchange of Old Debentures for New Debentures pursuant to the Exchange
Offer will not result in any United States federal income tax consequences to
Holders. When a Holder exchanges an Old Debenture for a New Debenture pursuant
to the Exchange Offer, the Holder will have the same adjusted basis and holding
period in the New Debenture as in the Old Debenture immediately before the
exchange.
PLAN OF DISTRIBUTION
Each participating broker-dealer pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
New Debentures. 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 New Debentures received in exchange for Old Debentures where such Old
Debentures 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 not exceeding 90 days after
the Expiration Date.
We will not receive any proceeds from any sales of the New Debentures by
participating broker-dealers. New Debentures received by participating
broker-dealers for their own account pursuant to the Exchange Offer may be sold
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 New Debentures
or a combination of such methods of resale, at market prices prevailing at the
time of resale, at prices related to such prevailing market prices or at
negotiated prices. Any such 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 such participating broker-dealer that
resells the New Debentures that were received by it for its own account pursuant
to the Exchange Offer. Any broker or dealer that participates in a distribution
of such New Debentures may be deemed to be an "underwriter" within the meaning
of the Securities Act and any profit on any such resale of New Debentures and
any omissions or concessions received by any such 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 debentures in respect of which this prospectus is being
delivered will be passed on for Cinergy by Taft, Stettinius & Hollister LLP.
EXPERTS
The consolidated financial statements and schedule incorporated by reference
in this prospectus, have been audited by Arthur Andersen LLP, independent public
accountants, to the extent and for the periods indicated in their reports, and
are incorporated herein by reference in reliance upon the authority of such firm
as experts in accounting and auditing. Reference is made to said report, which
includes an explanatory paragraph with respect to the change in method of
accounting for energy trading and risk management activities effective December
31, 1998, as discussed in Note 1 to the consolidated financial statements.
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN
ANY STATE WHERE THE OFFER IS NOT PERMITTED. THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Where You Can Find More Information....................................... 2
Incorporation of Certain Documents by Reference........................... 2
Prospectus Summary........................................................ 3
Use of Proceeds........................................................... 9
Description of New Debentures............................................. 9
The Exchange Offer........................................................ 20
Certain United States Tax Consequences of the Exchange Offer.............. 28
Plan of Distribution...................................................... 28
Legal Matters............................................................. 28
Experts................................................................... 28
</TABLE>
CINERGY CORP.
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PROSPECTUS
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AUGUST 25, 1999
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