<PAGE>
As filed with the Securities and Exchange Commission on June 4, 1996
Registration No. 333-4032
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
<S> <C> <C>
SIERRA PACIFIC POWER CAPITAL I Delaware To Be Applied For
SIERRA PACIFIC POWER COMPANY Nevada 88-0044418
(Exact name of Each Registrant as specified (State or other Jurisdiction of (I.R.S. Employer
in its Charter) Incorporation or Organization) Identification Number)
</TABLE>
P.O. Box 10100 (6100 Neil Road)
Reno, Nevada 89520
(702) 689-4011
(Address, including zip code, and telephone number,
including area code, of each registrant's principal executive offices)
__________________
WILLIAM E. PETERSON, ESQ.
Senior Vice President, Corporate Secretary and General Counsel
Sierra Pacific Power Company
P.O. Box 10100 (6100 Neil Road)
Reno, Nevada 89520
(702) 689-4011
(Name, address, including zip code, and telephone number,
including area code, of agent for service for each registrant)
__________________
Please send copies of all communications to:
WILLIAM C. ROGERS, ESQ. DAVID C. CHAPIN, ESQ.
Choate, Hall & Stewart Ropes & Gray
Exchange Place One International Place
53 State Street Boston, Massachusetts 02110
Boston, Massachusetts 02109 (617) 951-7000
(617) 248-5000
__________________
Approximate Date of Commencement of Proposed Sale to Public: As soon as
practicable after the effective date of the Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [ ]
<PAGE>
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, as amended, other than securities offered only in connection
with dividend or interest reinvestment plans, please check the following
box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
OFFERING PRICE AGGREGATE
TITLE OF EACH CLASS OF AMOUNT TO BE PER UNIT OFFERING PRICE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED (1) (1)(2)(3) (1)(2)(3) REGISTRATION FEE (2)
- --------------------------- -------------- -------------- -------------- --------------------
<S> <C> <C> <C> <C>
Preferred Securities of 1,940,000 100% $48,500,000 $16,725
Sierra Pacific Power
Capital I
Junior Subordinated $48,500,000
Debentures
of Sierra Pacific Power
Company.................
Guarantee of Preferred
Securities of Sierra Pacific
Power Capital I, by Sierra
Pacific Power Company
and certain back-up
undertakings (4)..........
Total 100% $48,500,000 $16,725
---- ----------- -------
---- ----------- -------
</TABLE>
(1) In United States dollars or the equivalent thereof in any other currency
unit or units or composite currency or currencies. Such amount
represents the aggregate offering price of the Preferred Securities of
Sierra Pacific Power Capital I and the Junior Subordinated Dbentures of
Sierra Pacific Power Company to be issued. Junior Subordinated
Debentures may be issued and sold to Sierra Pacific Power Capital I, in
which event such Junior Subordinated Debentures may later be distributed
to the holders of Preferred Securities upon a dissolution of Sierra
Pacific Power Capital I and the distribution of the assets thereof.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended. The
aggregate public offering price of the Preferred Securities of Sierra
Pacific Power Capital I and the Junior Subordinated Debentures of Sierra
Pacific Power Company registered hereby will not exceed $48,500,000 and
no separate consideration will be received for the Junior Subordinated
Debentures of Sierra Pacific Power Company.
(3) Exclusive of accrued interest and distributions, if any.
(4) No separate consideration will be received for the Guarantee. The
Guarantee includes the rights of holders of the Preferred Securities
under the Guarantee and certain back-up undertakings, comprised of
obligations of Sierra Pacific Power Company under the Indenture and any
supplemental indenture thereto and pursuant to the Declaration of Trust,
to provide certain indemnities in respect of, and be responsible for
certain costs, expenses, debt and liabilities of the Trust, each as
described in the Registration Statement. All obligations under the
Indenture and the Declaration of Trust, including the indemnity
obligations, are included in the back-up undertakings.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION DATED JUNE 4, 1996
PROSPECTUS
1,940,000 PREFERRED SECURITIES
SIERRA PACIFIC POWER CAPITAL I
% TRUST ORIGINATED PREFERRED SECURITIES-SM- ("TOPRS-SM-")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
SIERRA PACIFIC POWER COMPANY
------------------
The % Trust Originated Preferred Securities (the "Preferred Securities")
offered hereby represent preferred undivided beneficial ownership interests in
the assets of Sierra Pacific Power Capital I, a statutory business trust formed
under the laws of the State of Delaware ("Sierra Pacific Capital" or the
"Trust"). Sierra Pacific Power Company, a Nevada corporation ("Sierra Pacific"
or the "Company"), will directly or indirectly own all the common securities
issued by the Trust (the "Common Securities" and, together with the Preferred
Securities, the "Trust Securities") representing undivided beneficial interests
in the assets of Sierra Pacific Capital. The Trust exists for the sole purpose
of issuing the Preferred Securities and Common Securities and using the proceeds
thereof to purchase from Sierra Pacific its % Junior Subordinated Debentures
due 2036 (the "Junior Subordinated Debentures") having the terms described
herein. The Junior Subordinated Debentures when issued will be unsecured
obligations of Sierra Pacific, will be issued pursuant to an Indenture which
will be qualified under and subject to the Trust Indenture Act of 1939, as
amended, and will be Subordinate and junior in right of payment to
(CONTINUED ON NEXT PAGE)
SEE "RISK FACTORS" BEGINNING ON PAGE 10 OF THIS PROSPECTUS FOR CERTAIN
INFORMATION RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES, INCLUDING THE
PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE
PREFERRED SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL
INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
Application has been made to list the Preferred Securities on the New York
Stock Exchange, Inc. (the "NYSE"). If so approved, trading of the Preferred
Securities on the NYSE is expected to commence within a 30-day period after the
initial delivery of the Preferred Securities. See "Plan of Distribution."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
INITIAL PUBLIC
OFFERING UNDERWRITING PROCEEDS TO
PRICE(1) COMMISSION (2) TRUST (3)(4)
<S> <C> <C> <C>
Per Preferred Security.................... $25.00 (3) $25.00
Total..................................... $48,500,000 (3) $48,500,000
</TABLE>
(1) Plus accrued distributions, if any, from the date of issuance.
(2) Sierra Pacific Capital and Sierra Pacific have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Plan of Distribution."
(3) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in the Junior Subordinated Debentures, Sierra
Pacific has agreed to pay to the Underwriters as compensation (the
"Underwriters' Compensation") for their arranging the investment therein of
such proceeds $ per Preferred Security (or $ in the aggregate);
provided, that such compensation for sales of 10,000 or more Preferred
Securities to a single purchaser will be $ per Preferred Security.
Therefore, to the extent of such sales, the actual amount of Underwriters'
Compensation will be less than the aggregate amount specified in the
preceding sentence. See "Plan of Distribution."
(4) Expenses of the offering which are payable by Sierra Pacific are estimated
to be $290,000.
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Preferred Securities will be made only in book-entry form
through the facilities of The Depository Trust Company, on or about ,
1996.
------------------------
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
LEGG MASON WOOD WALKER
INCORPORATED
------------------------
THE DATE OF THIS PROSPECTUS IS JUNE , 1996.
- -SM-"Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE>
(continued from previous page)
certain other indebtedness of Sierra Pacific as described herein. Upon an event
of a default under the Declaration (as defined herein), the holders of Preferred
Securities will have a preference over the holders of the Common Securities with
respect to payments in respect of distributions and payments upon redemption,
liquidation and otherwise.
Holders of the Preferred Securities will be entitled to receive cumulative
cash distributions at an annual rate of % of the liquidation preference of $25
per Preferred Security, accruing from the date of original issuance and payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year, commencing September 30, 1996 ("distributions"). See "Description of the
Preferred Securities -- Distributions". The payment of distributions and
payments on liquidation of the Trust or the redemption of Preferred Securities,
described below (but only to the extent funds of the Trust are available
therefor), are guaranteed by Sierra Pacific to the extent described herein (the
"Guarantee"). The Guarantee, when taken together with Sierra Pacific's
obligations under the Indenture pursuant to which the Junior Subordinated
Debentures are issued and its obligations under the Declaration (as defined
herein), including its liabilities to pay costs, expenses, debts and liabilities
of Sierra Pacific Capital (other than with respect to the Trust Securities),
provides a full and unconditional guarantee of amounts due on the Preferred
Securities. See "Risk Factors -- Rights Under the Guarantee" herein. The
obligations of Sierra Pacific under the Guarantee are subordinate and junior in
right of payment to all other liabilities of Sierra Pacific and PARI PASSU with
the most senior preferred stock issued, from time to time, if any, by Sierra
Pacific. The obligations of Sierra Pacific under the Junior Subordinated
Debentures are subordinate and junior in right of payment to all present and
future Senior Indebtedness (as defined herein) of Sierra Pacific, which
aggregated approximately $463 million at December 31, 1995, and rank PARI PASSU
with Sierra Pacific's other general unsecured creditors. The Junior Subordinated
Debentures purchased by the Trust may be subsequently distributed pro rata to
holders of the Preferred Securities and Common Securities in connection with the
dissolution of the Trust, upon the occurrence of certain events.
The distribution rate and the distribution payment date and other payment
dates for the Preferred Securities will correspond to the interest rate and
interest payment date and other payment dates on the Junior Subordinated
Debentures, which will be the sole assets of the Trust. As a result, if
principal or interest is not paid on the Junior Subordinated Debentures, no
amounts will be paid on the Preferred Securities. If Sierra Pacific does not
make principal or interest payments on the Junior Subordinated Debentures, the
Trust will not have sufficient funds to make distributions on the Preferred
Securities, in which event, the Guarantee will not apply to such distributions
until the Trust has sufficient funds available therefor.
So long as Sierra Pacific shall not be in default in the payment of interest
on the Junior Subordinated Debentures, Sierra Pacific has the right to defer
payments of interest on the Junior Subordinated Debentures by extending the
interest payment period on the Junior Subordinated Debentures at any time for up
to 20 consecutive quarters (each, an "Extension Period"). If interest payments
are so deferred, distributions will also be deferred. During such Extension
Period, distributions will continue to accrue with interest thereon (to the
extent permitted by applicable law) at an annual rate of % per annum
compounded quarterly, and during any Extension Period, holders of Preferred
Securities will be required to include deferred interest income in their gross
income for United States federal income tax purposes in advance of receipt of
the cash distributions with respect to such deferred interest payments. There
could be multiple Extension Periods of varying lengths throughout the term of
the Junior Subordinated Debentures. See "Description of the Junior Subordinated
Debentures -- Option to Extend Interest Payment Period," "Risk Factors -- Option
to Extend Interest Payment Period" and "United States Federal Income Taxation --
Original Issue Discount."
The Junior Subordinated Debentures are redeemable by Sierra Pacific, in
whole or in part, from time to time, on or after June , 2001, or at any time
in certain circumstances upon the occurrence of a Tax Event (as defined herein).
If Sierra Pacific redeems Junior Subordinated Debentures, the Trust must redeem
Trust Securities on a PRO RATA basis having an aggregate liquidation amount
equal to the aggregate principal amount of the Junior Subordinated Debentures so
redeemed at $25 per Preferred Security plus accrued and
2
<PAGE>
unpaid distributions thereon (the "Redemption Price") to the date fixed for
redemption. See "Description of the Preferred Securities -- Mandatory
Redemption." The Preferred Securities will be redeemed upon maturity of the
Junior Subordinated Debentures. The Junior Subordinated Debentures mature on
, 2036. In addition, upon the occurrence of a Tax Event arising from a
change in law or a change in legal interpretation regarding tax matters, unless
the Junior Subordinated Debentures are redeemed in the limited circumstances
described herein, the Trust shall be dissolved, with the result that the Junior
Subordinated Debentures will be distributed to the holders of the Preferred
Securities, on a PRO RATA basis, in lieu of any cash distribution. See
"Description of the Preferred Securities -- Tax Event Redemption or
Distribution." In certain circumstances, Sierra Pacific will have the right to
redeem the Junior Subordinated Debentures, which would result in the redemption
by the Trust of Trust Securities in the same amount on a PRO RATA basis. If the
Junior Subordinated Debentures are distributed to the holders of the Preferred
Securities, Sierra Pacific will use its best efforts to have the Junior
Subordinated Debentures listed on the NYSE or on such other exchange as the
Preferred Securities are then listed. See "Description of the Preferred
Securities -- Tax Event Redemption or Distribution" and "Description of the
Junior Subordinated Debentures."
In the event of the involuntary or voluntary dissolution, winding up or
termination of the Trust, the holders of the Preferred Securities will be
entitled to receive for each Preferred Security a liquidation amount of $25 plus
accrued and unpaid distributions thereon (including interest thereon to the
extent permitted by applicable law) to the date of payment, unless, in
connection with such dissolution, the Junior Subordinated Debentures are
distributed to the holders of the Preferred Securities. See "Description of the
Preferred Securities -- Liquidation Distribution Upon Dissolution."
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING TRANSACTIONS, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
3
<PAGE>
AVAILABLE INFORMATION
This Prospectus constitutes a part of a combined Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed by Sierra Pacific and Sierra Pacific Capital with the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act"), with respect to the Trust Securities, the
Junior Subordinated Debentures and the Guarantee (the "Offered Securities").
This Prospectus does not contain all of the information set forth in such
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the SEC. Reference is made to such Registration
Statement and to the exhibits relating thereto for further information with
respect to Sierra Pacific, the Sierra Pacific Trust and the Offered Securities.
Any statements contained herein concerning the provisions of any document filed
as an exhibit to the Registration Statement or otherwise filed with the SEC or
incorporated by reference herein are not necessarily complete, and, in each
instance, reference is made to the copy of such document so filed for a more
complete description of the matter involved. Each such statement is qualified in
its entirety by such reference.
Sierra Pacific is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the SEC.
Information regarding Sierra Pacific's directors, the remuneration paid to
Sierra Pacific's officers and directors, and interests of management and others
in certain transactions with Sierra Pacific is disclosed in reports filed by
Sierra Pacific with the SEC. Sierra Pacific's parent, Sierra Pacific Resources,
is also subject to the informational requirements of the Exchange Act and, in
accordance therewith, files reports, proxy statements and other information with
the SEC. Such reports, proxy statements and other information filed with the SEC
can be inspected and copied at prescribed rates at the SEC's Public Reference
Room, Judiciary Plaza, 450 Fifth Street, Northwest, Washington, D.C. 20549, as
well as the following Regional Offices of the SEC: 7 World Trade Center, New
York, New York 10048; and Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661.
No separate financial statements of Sierra Pacific Capital have been
included herein. Sierra Pacific does not consider that such financial statements
would be material to holders of the Preferred Securities because (i) all of the
voting securities of Sierra Pacific Capital will be owned, directly or
indirectly, by Sierra Pacific, a reporting company under the Exchange Act, (ii)
Sierra Pacific Capital has no independent operations but exists for the sole
purpose of issuing securities representing undivided beneficial interests in the
assets of Sierra Pacific Capital and investing the proceeds thereof in Junior
Subordinated Debentures issued by Sierra Pacific, and (iii) Sierra Pacific's
obligations described herein under the Declaration of Trust, the Guarantee
issued with respect to Preferred Securities, the Junior Subordinated Debentures
and the Indenture (as defined herein), taken together, constitute a full and
unconditional guarantee of payments due on the Trust Securities. See
"Description of the Junior Subordinated Debentures" and "Description of the
Guarantee."
Sierra Pacific Capital is not currently subject to the information reporting
requirements of the Exchange Act. Sierra Pacific Capital will become subject to
such requirements upon the effectiveness of the Registration Statement, although
it intends to seek and expects to receive exemptions therefrom.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Sierra Pacific (File No. 1-8609) with the
SEC pursuant to the Exchange Act is incorporated by reference herein and made a
part hereof:
1. Annual Report on Form 10-K for the year ended December 31, 1995,
including the Form 10-K/A amendment thereto; and
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1996.
All documents filed by Sierra Pacific pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering of the Offered Securities pursuant hereto shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents.
4
<PAGE>
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or therein (or in any other subsequently filed document that also is or is
deemed to be incorporated by reference herein or therein) modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Sierra Pacific undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, upon the written or oral request of
any such person, a copy of any or all of the foregoing documents incorporated
herein by reference, other than exhibits to such documents, unless such exhibits
are specifically incorporated by reference into such documents. Such requests
should be directed to Treasurer, Sierra Pacific Power Company, P.O. Box 10100,
Reno, Nevada 89520, Telephone (702) 689-4011.
5
<PAGE>
SIERRA PACIFIC POWER COMPANY
SELECTED HISTORICAL FINANCIAL INFORMATION
The following summary information is qualified in its entirety by the
information appearing elsewhere in this Prospectus and by the information and
financial statements in the documents incorporated by reference in this
Prospectus.
<TABLE>
<S> <C>
Business..................................... Primarily an electric utility which also
provides gas and water service in a portion
of its service area
Service Area................................. Western, central and northeastern Nevada, and
eastern California including the Lake Tahoe
Area
12 Months Ended December 31, 1995:
Customers................................ Electric 270,000; Gas 92,000; Water 61,000
Revenue Distribution..................... Electric 82%; Gas 11%; Water 7%
Electric Power Sources................... Purchased Power 46%; Coal 23%; Oil and Gas
30%; Hydro 1%
</TABLE>
FINANCIAL INFORMATION
(THOUSANDS, EXCEPT RATIOS)
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED DECEMBER 31,
ENDED ----------------------------------------------------------
MARCH 31, 1996 1995 1994 1993 1992 1991
-------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Income Summary:
Operating Revenues................ $ 162,154 $ 597,784 $ 603,193 $ 521,568 $ 476,769 $ 462,153
Operating Income.................. 28,665 101,811 95,983 90,562 84,823 86,330
Interest Charges (Excluding
AFUDC)........................... 9,672 37,107 41,027 40,914 40,392 43,362
Net Income........................ 20,114 65,983 60,863 57,457 49,843 50,224
Preferred Stock Dividend
Requirements..................... $ 1,785 $ 7,374 $ 7,934 $ 8,261 $ 5,640 $ 4,361
Ratio of Earnings to Fixed Charges
(1):
Actual.......................... 3.71(2) 3.54 3.09 2.94 2.81 2.62
Pro Forma....................... 3.50(2)
Ratio of Earnings to Fixed Charges
and Preferred Dividends (1):
Actual.......................... 2.88(2) 2.76 2.43 2.29 2.34 2.30
Pro Forma....................... 2.90(2)
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1996
--------------------------------------------------------
ACTUAL AS ADJUSTED (3)
--------------------------- ---------------------------
OUTSTANDING PERCENTAGE OUTSTANDING PERCENTAGE
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Capitalization Summary:
Long-term debt (4)............................................... $ 562,877 45.9% $ 572,877 45.3%
Company-obligated mandatorily redeemable preferred securities of
subsidiary Sierra Pacific Power Capital I (5)................... -- 0.0 48,500 3.8
Preferred Stock.................................................. 73,115 6.0 73,115 5.8
Preferred Stock Subject to Mandatory Redemption (6).............. 20,400 1.6 0.0
Common Shareholders' Equity...................................... 570,712 46.5 570,712 45.1
------------ ----- ------------ -----
Total.......................................................... $ 1,227,104 100.0% $ 1,265,204 100.0%
------------ ----- ------------ -----
------------ ----- ------------ -----
Short-Term Debt.................................................. $ 50,000 $ 11,900
</TABLE>
- ------------------------------
(1) "Earnings" represent the aggregate of net income, including AFUDC, taxes on
income and fixed charges. "Fixed charges" represent interest on short-term
and long-term debt, the interest portion on capital leases, the
amortization of bond premiums, discounts and expenses, and the amortization
of the net gain or loss on reacquired debt.
6
<PAGE>
(2) The calculations of Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Fixed Charges and Preferred Dividends are for the twelve months
ended March 31, 1996. The pro forma ratios give effect to the interest
payable on the Junior Subordinated Debentures at an assumed annual rate of
8.5% and the application of the proceeds as described in "Use of Proceeds".
(3) Also reflects the issuance on April 1, 1996 of $10,000,000 principal amount
of Medium-Term Notes, Series C at an annual interest rate of 6.81%, the net
proceeds of which were used to reduce short-term debt of Sierra Pacific.
Assumes that the net proceeds to Sierra Pacific from the sale of the
Preferred Securities offered hereby will be used to replace funds used to
redeem $20,400,000 in principal amount of Series G 8.24% Preferred Stock of
Sierra Pacific and to reduce short-term debt of Sierra Pacific.
(4) Includes current maturities of long-term debt.
(5) As described in this Prospectus, all of the assets of the Trust will be
% Junior Subordinated Debentures due 2036 of Sierra Pacific with a
principal amount of approximately $50,000,000, and upon redemption of such
debt, the Preferred Securities will be mandatorily redeemable.
(6) Includes current maturity of redeemable preferred stock.
7
<PAGE>
SIERRA PACIFIC POWER COMPANY
Sierra Pacific is a public utility company which is engaged primarily in the
generation, purchase, transmission, distribution and sale of electric energy to
approximately 270,000 customers in a service territory of approximately 50,000
square miles located in western, central and northeastern Nevada, including the
cities of Reno, Sparks, Carson City and Elko, and eastern California, including
the Lake Tahoe area. Sierra Pacific met its electric energy requirements for the
twelve months ended December 31, 1995 by utilizing coal generation (23%),
gas/oil generation (30%), purchased power (46%) and hydro power (1%). Sierra
Pacific has no ownership interest in, nor does it operate, any nuclear
generating units and has no future plans to do so. Sierra Pacific also provides
gas and water service to approximately 92,000 gas and 61,000 water customers in
the cities of Reno and Sparks and environs.
Sierra Pacific is a subsidiary of Sierra Pacific Resources ("Resources"),
which owns all of Sierra Pacific's outstanding common stock. In June, 1994,
Sierra Pacific, Resources and The Washington Water Power Company ("WWP") entered
into an Agreement and Plan of Reorganization and Merger, as subsequently amended
(the "Merger Agreement"), which provides for the merger of Sierra Pacific,
Resources and WWP into Altus Corporation ("Altus"). WWP is a combined electric
and gas utility, with headquarters in Spokane, Washington. The Merger Agreement
provides that after the effective date of the merger, Altus's corporate
headquarters will be located in Spokane. The executive offices of the Company
will be distributed among lines of business located in Reno and Spokane. Altus
will maintain a significant corporate presence in Reno. Pursuant to the Merger
Agreement, holders of Resources's Common Stock would receive 1.44 shares and
holders of WWP Common Stock would receive one share of Altus Common Stock,
respectively. Upon consummation of the Merger, the Junior Subordinated
Debentures and the Guarantee will be assumed by, and the Common Securities will
be held directly or indirectly by, Altus. Pro forma financial information
showing the effect of the Merger as of certain dates has been included in Sierra
Pacific's periodic reports filed pursuant to the Exchange Act.
The proposed merger has received all of the necessary approvals from the
common and preferred shareholders of Resources, Sierra Pacific and WWP. The
Merger Agreement is also subject to certain customary closing conditions and to
the receipt of all necessary governmental approvals, including approval of the
Federal Energy Regulatory Commission ("FERC") and six state utility commissions.
The state commissions in California, Idaho, Nevada, Oregon and Washington have
issued orders approving the merger, and the Montana utility commission has
issued an order stating that it would not exercise jurisdiction over the
proposed merger. Stipulations were reached among all parties in the states and
final orders approving the merger were issued. The stipulations contain a number
of provisions specific to individual states; however, all provide that existing
jurisdictional customers be held harmless from the merger and all state
commissions can reopen the proceedings after the FERC order if warranted.
The merger parties must still obtain approval for the merger from the FERC.
On November 29, 1995, the FERC issued an "Order Accepting for Filing and
Suspending Proposed Tariffs, Consolidating Dockets and Establishing Hearing
Procedures" for the merger. Among other things, the Order consolidated the
transmission tariffs and the merger application for purposes of the hearings.
Additionally, an updated, revised filing as required by the Order was made on
February 1, 1996, and hearings are scheduled to commence in June 1996. Based
upon this schedule, the parties believe that an order could be issued by the
FERC in 1996 or early 1997. However, under federal law, the FERC is not required
to issue a decision within any particular time period.
In the event that the merger is not completed, Sierra Pacific would continue
to operate as a stand-alone utility owned by Resources. However, Sierra Pacific
would need to reach alternative arrangements with each of its Commissions
(Nevada and California), either through negotiations or new rate proceedings,
with respect to rates to customers and rates of return as a stand-alone entity.
No assurance can be given as to the results of such negotiations or proceedings
or as to their impact on Sierra Pacific's revenues and net income going forward.
The Merger Agreement provides for the payment of a $25 million termination fee
plus expenses to be made in certain circumstances where one party accepts
another business combination proposal and, as a result, the Merger Agreement is
terminated. Also, the Merger Agreement provides that the agreement may be
terminated at any time prior to the closing date if the effective time has not
occurred before June 27, 1996, by providing written notice of termination to the
other party.
The principal executive offices of Sierra Pacific are located at 6100 Neil
Road, P.O. Box 10100, Reno, Nevada 89520, telephone (702) 689-4011.
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SIERRA PACIFIC POWER CAPITAL I
Sierra Pacific Capital is a statutory business trust formed under Delaware
law pursuant to (i) a declaration of trust, dated as of April 23, 1996, executed
by Sierra Pacific, as sponsor of the Trust (the "Sponsor"), and the trustees of
Sierra Pacific Capital (the "Sierra Pacific Trustees") and (ii) the filing of a
certificate of trust with the Secretary of State of the State of Delaware on
April 23, 1996. Such declaration will be amended and restated in its entirety
(as so amended and restated, the "Declaration") substantially in the form filed
as an exhibit to the Registration Statement. The Declaration will be qualified
as an indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). Upon issuance of the Preferred Securities, the purchasers
thereof will own all of the Preferred Securities. See "Description of the
Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust
Company." Sierra Pacific will directly or indirectly acquire Common Securities
in an aggregate liquidation amount equal to 3% of the total capital of Sierra
Pacific Capital. Sierra Pacific Capital exists for the exclusive purposes of (i)
issuing the Trust Securities representing undivided beneficial interests in the
assets of the Trust, (ii) investing the gross proceeds of the Trust Securities
in the Junior Subordinated Debentures and (iii) engaging in only those other
activities necessary or incidental thereto.
Pursuant to the Declaration, the number of Sierra Pacific Trustees will
initially be four. Two of the Sierra Pacific Trustees (the "Regular Trustees")
will be persons who are employees or officers of or who are affiliated with
Sierra Pacific. The third trustee will be a financial institution that is
unaffiliated with Sierra Pacific, which trustee will serve as institutional
trustee under the Declaration and as indenture trustee for the purposes of
compliance with the provisions of the Trust Indenture Act (the "Institutional
Trustee"). Initially, IBJ Schroder Bank & Trust Company, a New York banking
corporation, will be the Institutional Trustee until removed or replaced by the
holder of the Common Securities. For the purpose of compliance with the
provisions of the Trust Indenture Act, IBJ Schroder Bank & Trust Company will
act as trustee (the "Guarantee Trustee") under the Guarantee and as Debt Trustee
(as defined herein) under the Indenture. The fourth trustee will be an entity
that maintains its principal place of business in the state of Delaware (the
"Delaware Trustee"). Initially, Delaware Trust Capital Management, Inc. will act
as Delaware Trustee. See "Description of the Guarantee" and "Description of the
Preferred Securities -- Voting Rights."
The Institutional Trustee will hold title to the Junior Subordinated
Debentures for the benefit of the holders of the Trust Securities, and the
Institutional Trustee will have the power to exercise all rights, powers and
privileges under the Indenture (as defined herein) as the holder of the Junior
Subordinated Debentures. In addition, the Institutional Trustee will maintain
exclusive control of a segregated non-interest bearing bank account (the
"Property Account") to hold all payments made in respect of the Junior
Subordinated Debentures for the benefit of the holders of the Trust Securities.
The Institutional Trustee will make payments of distributions and payments on
liquidation, redemption and otherwise to the holders of the Trust Securities out
of funds from the Property Account. The Guarantee Trustee will hold the
Guarantee for the benefit of the holders of the Preferred Securities. Sierra
Pacific, as the direct or indirect holder of all the Common Securities, will
have the right to appoint, remove or replace any Sierra Pacific Trustee and to
increase or decrease the number of Sierra Pacific Trustees. Sierra Pacific will
pay all fees and expenses related to Sierra Pacific Capital and the offering of
the Trust Securities. See "Description of the Junior Subordinated Debentures --
Miscellaneous."
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act (the "Trust Act") and the Trust
Indenture Act. See "Description of the Preferred Securities."
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RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere in this Prospectus and should particularly
consider the following matters.
ABSENCE OF PRIOR PUBLIC MARKET
Prior to this offering, there has been no public market for the Preferred
Securities. Although application has been made to list the Preferred Securities
on the NYSE, there can be no assurance that an active public market will develop
for the Preferred Securities or that, if such market develops, the market price
will equal or exceed the public offering price set forth on the cover page of
this Prospectus. The public offering price for the Preferred Securities has been
determined through negotiations between Sierra Pacific and the Underwriters.
Prices for the Preferred Securities will be determined in the marketplace and
may be influenced by many factors, including the liquidity of the market for the
Preferred Securities, investor perceptions of Sierra Pacific and general
industry and economic conditions.
RANKING OF SUBORDINATE OBLIGATIONS UNDER THE GUARANTEE, AND JUNIOR SUBORDINATED
DEBENTURES
Sierra Pacific's obligations under the Guarantee are subordinate and junior
in right of payment to all liabilities of Sierra Pacific and PARI PASSU with the
most senior preferred stock issued, from time to time, if any, by Sierra
Pacific. The obligations of Sierra Pacific under the Junior Subordinated
Debentures are subordinate and junior in right of payment to all present and
future Senior Indebtedness of Sierra Pacific and PARI PASSU with obligations to
or rights of Sierra Pacific's other general unsecured creditors. No payment of
principal of (including redemption payments, if any), premium, if any, or
interest on the Junior Subordinated Debentures may be made if (i) any Senior
Indebtedness of Sierra Pacific is not paid when due and any applicable grace
period with respect to such default has ended with such default not having been
cured or waived or ceasing to exist, or (ii) the maturity of any Senior
Indebtedness has been accelerated because of a default. As of December 31, 1995,
Senior Indebtedness aggregated approximately $463 million, substantially all of
which consists of first mortgage bonds or debt secured by first mortgage bonds
issued under Sierra Pacific's Indenture of Mortgage dated December 1, 1940, and
which are secured by a first lien on substantially all of Sierra Pacific's real
and personal property. There are no terms in the Preferred Securities, the
Junior Subordinated Debentures or the Guarantee that limit Sierra Pacific's
ability to incur additional indebtedness, including indebtedness that ranks
senior to the Junior Subordinated Debentures and the Guarantee. See "Description
of the Guarantee -- Status of the Guarantee" and "Description of the Junior
Subordinated Debentures" herein.
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust Indenture
Act. IBJ Schroder Bank & Trust Company will act as indenture trustee under the
Guarantee for the purposes of compliance with the provisions of the Trust
Indenture Act (the "Guarantee Trustee"). The Guarantee Trustee will hold the
Guarantee for the benefit of the holders of the Preferred Securities.
The Guarantee guarantees to the holders of the Preferred Securities the
payment of (i) any accrued and unpaid distributions that are required to be paid
on the Preferred Securities, to the extent the Trust has funds available
therefor, (ii) the Redemption Price, including all accrued and unpaid
distributions with respect to Preferred Securities called for redemption by the
Trust, to the extent the Trust has funds available therefor, and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Trust
(other than in connection with the distribution of Junior Subordinated
Debentures to the holders of Preferred Securities or a redemption of all the
Preferred Securities), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on the Preferred Securities to the date
of the payment to the extent the Trust has funds available therefor or (b) the
amount of assets of the Trust remaining available for distribution to holders of
the Preferred Securities in liquidation of the Trust. The holders of a majority
in liquidation amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee or to direct the exercise of any trust or power conferred
upon the Guarantee Trustee under the Guarantee. Notwithstanding the foregoing,
any holder of Preferred Securities may institute a legal proceeding directly
against Sierra Pacific to enforce such holder's right to receive payment under
the Guarantee without first instituting a legal proceeding against the Trust,
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the Guarantee Trustee or any other person or entity. If Sierra Pacific were to
default on its obligation to pay amounts payable on the Junior Subordinated
Debentures or otherwise, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Preferred Securities or
otherwise, and, in such event, holders of the Preferred Securities would not be
able to rely upon the Guarantee for payment of such amounts. Instead, holders of
the Preferred Securities would rely on the enforcement (1) by the Institutional
Trustee of its rights as registered holder of the Junior Subordinated Debentures
against Sierra Pacific pursuant to the terms of the Junior Subordinated
Debentures or (2) by such holder of its right against Sierra Pacific to enforce
payments on the Junior Subordinated Debentures. See "Description of the
Guarantee" and "Description of the Junior Subordinated Debentures." The
Declaration provides that each holder of Preferred Securities, by acceptance
thereof, agrees to the provisions of the Guarantee, including the subordination
provisions thereof, and the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Institutional Trustee of its rights as a holder of the Junior
Subordinated Debentures against Sierra Pacific. In addition, the holders of a
majority in liquidation amount of the Preferred Securities will have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Institutional Trustee or to direct the exercise of any
trust or power conferred upon the Institutional Trustee under the Declaration,
including the right to direct the Institutional Trustee to exercise the remedies
available to it as a holder of the Junior Subordinated Debentures. If the
Institutional Trustee fails to enforce its rights under the Junior Subordinated
Debentures, a holder of Preferred Securities may institute a legal proceeding
directly against Sierra Pacific to enforce the Institutional Trustee's rights
under the Junior Subordinated Debentures without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of Sierra
Pacific to pay interest or principal on the Junior Subordinated Debentures on
the date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), then a holder of Preferred Securities may
directly institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Junior Subordinated Debentures having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder ( a "Direct Action") on or after the respective due
date specified in the Junior Subordinated Debentures. In connection with such
Direct Action, Sierra Pacific will be subrogated to the rights of such holder of
Preferred Securities under the Declaration to the extent of any payment made by
Sierra Pacific to such holder of Preferred Securities in such Direct Action. The
holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Junior Subordinated Debentures. See
"Description of the Preferred Securities -- Enforcement of Certain Rights by
Holders of Preferred Securities" and "-- Declaration Events of Default."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Sierra Pacific has the right under the Indenture (as such term is defined in
"Description of Junior Subordinated Debentures" herein) to defer payments of
interest on the Junior Subordinated Debentures by extending the interest payment
period at any time, and from time to time, on the Junior Subordinated
Debentures. As a consequence of such an extension, quarterly distributions on
the Preferred Securities would be deferred (but despite such deferral would
continue to accrue with interest thereon compounded quarterly to the extent
permitted by applicable law) by the Trust during any such extended interest
payment period. Such right to extend the interest payment period for the Junior
Subordinated Debentures is limited to a period not exceeding 20 consecutive
quarters. In the event that Sierra Pacific exercises this right to defer
interest payments, then (a) Sierra Pacific shall not declare or pay dividends
on, or make a distribution with respect to, or redeem, purchase or acquire, or
make a liquidation payment with respect to, any of its capital stock (other than
(i) purchases or acquisitions of shares of Sierra Pacific Common Stock in
connection with the satisfaction by Sierra Pacific of its obligations under any
employee benefit plans, (ii) as a result of a reclassification of Sierra Pacific
capital stock or the exchange or conversion of one class or series of Sierra
Pacific's capital stock for another class or series of Sierra Pacific capital
stock or (iii) the purchase of fractional interests in shares of Sierra
Pacific's capital stock pursuant to the conversion or exchange
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provisions of such Sierra Pacific capital stock or the security being converted
or exchanged), (b) Sierra Pacific shall not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by Sierra Pacific that rank PARI PASSU with or junior to the
Junior Subordinated Debentures and (c) Sierra Pacific shall not make any
guarantee payments with respect to the foregoing (other than pursuant to the
Guarantee). Prior to the termination of any such extension period, Sierra
Pacific may further extend the interest payment period; PROVIDED, that such
Extension Period, together with all such previous and further extensions
thereof, may not exceed 20 consecutive quarters or extend beyond the maturity of
the Junior Subordinated Debentures. Upon the termination of any Extension Period
and the payment of all amounts then due, Sierra Pacific may commence a new
Extension Period, subject to the above requirements. See "Description of the
Preferred Securities -- Distributions" and "Description of the Junior
Subordinated Debentures -- Option to Extend Interest Payment Period."
Should Sierra Pacific exercise its right to defer payments of interest by
extending the interest payment period, each holder of Preferred Securities will
continue to accrue income (as original issue discount ("OID")) in respect of the
deferred interest allocable to its Preferred Securities for United States
federal income tax purposes, which will be allocated but not distributed, to
holders of record of Preferred Securities. As a result, each such holder of
Preferred Securities will recognize income for United States federal income tax
purposes in advance of the receipt of cash and will not receive the cash from
Sierra Pacific Capital related to such income if such holder disposes of its
Preferred Securities prior to the record date for the date on which
distributions of such amounts are made. Sierra Pacific has no current intention
of exercising its right to defer payments of interest by extending the interest
payment period on the Junior Subordinated Debentures. However, should Sierra
Pacific determine to exercise such right in the future, the market price of the
Preferred Securities is likely to be affected. A holder that disposes of its
Preferred Securities during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its
Preferred Securities. In addition, as a result of the existence of Sierra
Pacific's right to defer interest payments, the market price of the Preferred
Securities (which represent an undivided beneficial interest in the Junior
Subordinated Debentures) may be more volatile than other securities on which OID
accrues that do not have such rights. See "United States Federal Income Taxation
- -- Original Issue Discount."
PROPOSED TAX LEGISLATION
On March 19, 1996, President Clinton proposed certain tax law changes that
would, among other things, generally deny corporate issuers a deduction for
interest in respect of certain debt obligations issued on or after December 7,
1995 (the "Proposed Legislation") if such debt obligations have a maximum term
in excess of twenty years and are not shown as indebtedness on the issuer's
applicable consolidated balance sheet. On March 29, 1996, the Senate Finance
Committee Chairman and the House Ways and Means Committee Chairman issued a
joint statement (the "Joint Statement") indicating their intent that certain
legislative proposals initiated by the Clinton administration, including the
Proposed Legislation, that may be adopted by either of the tax-writing
committees of Congress would have an effective date that is no earlier than the
date of "appropriate Congressional action." Based upon the Joint Statement, it
is expected that if the Proposed Legislation were to be enacted, such
legislation would not apply to the Junior Subordinated Debentures. There can be
no assurances, however, that the effective date guidance contained in the Joint
Statement will be incorporated into the Proposed Legislation, if enacted, or
that other legislation enacted after the date hereof will not otherwise
adversely affect the ability of Sierra Pacific to deduct the interest payable on
the Junior Subordinated Debentures. Accordingly, there can be no assurance that
a Tax Event will not occur. See "Description of the Preferred Securities -- Tax
Event Redemption or Distribution."
TAX EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Tax Event, the Trust shall be dissolved, except in
the limited circumstance described below, with the result that the Junior
Subordinated Debentures would be distributed to the holders of the Trust
Securities in connection with the liquidation of the Trust. In certain
circumstances, Sierra Pacific shall have the right to redeem the Junior
Subordinated Debentures, in whole or in part, in lieu of a distribution of the
Junior Subordinated Debentures by the Trust; in which event the Trust will
redeem
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the Trust Securities on a PRO RATA basis to the same extent as the Junior
Subordinated Debentures are redeemed by Sierra Pacific. See "Description of the
Preferred Securities -- Tax Event Redemption or Distribution."
Under current United States federal income tax law, a distribution of Junior
Subordinated Debentures upon the dissolution of the Trust would not be a taxable
event to holders of the Preferred Securities. Upon occurrence of a Tax Event,
however, a dissolution of the Trust in which holders of the Preferred Securities
receive cash would be a taxable event to such holders. See "United States
Federal Income Taxation -- Receipt of Junior Subordinated Debentures or Cash
Upon Liquidation of Sierra Pacific Power Capital I."
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a dissolution or liquidation of the Trust
were to occur. Accordingly, the Preferred Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Junior Subordinated Debentures that a holder of Preferred Securities may
receive on dissolution and liquidation of the Trust, may trade at a discount to
the price that the investor paid to purchase the Preferred Securities offered
hereby. Because holders of Preferred Securities may receive Junior Subordinated
Debentures upon the occurrence of a Tax Event, prospective purchasers of
Preferred Securities are also making an investment decision with regard to the
Junior Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein. See "Description
of the Preferred Securities -- Tax Event Redemption or Distribution" and
"Description of the Junior Subordinated Debentures -- General."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and will not
be entitled to vote to appoint, remove or replace, or to increase or decrease
the number of, Sierra Pacific Trustees, which voting rights are vested
exclusively in the holder of the Common Securities. See "Description of
Preferred Securities -- Voting Rights."
TRADING PRICE
The Preferred Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A holder who disposes of his Preferred Securities
between record dates for payments of distributions thereon will be required to
include accrued but unpaid interest on the Junior Subordinated Debentures
through the date of disposition in income as ordinary income (i.e., OID), and to
add such amount to his adjusted tax basis in his PRO RATA share of the
underlying Junior Subordinated Debentures deemed disposed of. To the extent the
selling price is less than the holder's adjusted tax basis (which will include,
in the form of OID, all accrued but unpaid interest), a holder will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
See "United States Federal Income Taxation -- Original Issue Discount" and
"Sales of Preferred Securities."
ACCOUNTING TREATMENT
The financial statements of the Trust will be reflected in Sierra Pacific's
consolidated financial statements with the Preferred Securities shown as
Company-obligated mandatorily-redeemable preferred securities of the subsidiary
Trust holding solely $48,500,000 principal amount of % subordinated debentures
due 2036 of Sierra Pacific.
USE OF PROCEEDS
The Trust will use all proceeds received from the sale of Preferred
Securities to purchase Junior Subordinated Debentures from Sierra Pacific.
Sierra Pacific intends to use the net proceeds from the sale of the Junior
Subordinated Debentures to replace funds used to redeem $20,400,000 in principal
amount of 8.24% Sierra Pacific Power Company Series G Preferred Stock and to
reduce short-term debt. As of March 31, 1996, the total outstanding short-term
debt of Sierra Pacific was $50,000,000 with an average interest rate of 5.73%
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DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Institutional Trustee, IBJ Schroder Bank & Trust Company,
will act as indenture trustee for the Preferred Securities under the Declaration
for purposes of compliance with the provisions of the Trust Indenture Act. The
terms of the Preferred Securities will include those stated in the Declaration
and those made part of the Declaration by the Trust Indenture Act and will
mirror the terms of the Junior Subordinated Debentures held by the Trust as
described herein. See "Description of the Junior Subordinated Debentures." All
Preferred Securities offered hereby will be fully and unconditionally guaranteed
by Sierra Pacific. See "Description of Guarantee." The following summary of the
material terms and provisions of the Preferred Securities does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the
Declaration, a copy of which is filed as an exhibit to the Registration
Statement of which this Prospectus is a part, the Trust Act and the Trust
Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of the
Trust the Trust Securities, which represent undivided beneficial interests in
the assets of the Trust. In connection with the issuance of Preferred
Securities, the Trust will issue one series of Trust Common Securities having
such terms including distributions, redemption, voting and liquidation rights or
such restrictions as shall be set forth therein. The terms of the Common
Securities will be substantially identical to the terms of the Preferred
Securities and the Common Securities will rank PARI PASSU, and payments will be
made thereon PRO RATA, with the Preferred Securities except that, upon an event
of default under the Declaration, the rights of the holders of the Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. Except in certain limited circumstances, the Common
Securities will also carry the right to vote to appoint, remove or replace any
of the Sierra Pacific Trustees of Sierra Pacific Capital. All of the Common
Securities of Sierra Pacific Capital will be directly or indirectly owned by
Sierra Pacific.
The Declaration does not permit the issuance by the Trust of any securities
other than the Trust Securities or the incurrence of any indebtedness by the
Trust. Pursuant to the Declaration, the Institutional Trustee will own the
Junior Subordinated Debentures purchased by the Trust for the benefit of the
holders of the Trust Securities. The payment of distributions out of money held
by the Trust, and payments upon redemption of the Preferred Securities or
liquidation of the Trust, are fully and unconditionally guaranteed by Sierra
Pacific. See "Description of the Guarantee." The Guarantee will be held by IBJ
Schroder Bank & Trust Company, the Guarantee Trustee, for the benefit of the
holders of the Preferred Securities. The Guarantee does not cover payment of
distributions when Sierra Pacific Capital does not have sufficient available
funds to pay such distributions. In such event, the remedy of a holder of
Preferred Securities is to vote to direct the Institutional Trustee to enforce
the Institutional Trustee's rights under the Junior Subordinated Debentures
except in the limited circumstances in which the holder may take Direct Action.
See "Description of the Preferred Securities -- Enforcement of Certain Rights by
Holders of Preferred Securities," "-- Voting Rights" and "-- Declaration Events
of Default."
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of % of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one quarter will bear interest thereon at
the rate per annum of % thereof compounded quarterly (to the extent permitted
by applicable law). The term "distribution" as used herein includes any such
interest payable unless otherwise stated. The amount of distributions payable
for any period will be computed on the basis of a 360-day year of twelve 30-day
months.
Distributions on the Preferred Securities will be cumulative, will accrue
from June , 1996, and will be payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year, commencing September 30, 1996,
when, as and if available for payment, distributions will be made by the
Institutional Trustee, except as otherwise described below. Interest payable in
the first payment period will be computed on the basis of days.
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Sierra Pacific has the right under the Indenture to defer payments of
interest on the Junior Subordinated Debentures by extending the interest payment
period from time to time on the Junior Subordinated Debentures, which, if
exercised, would defer quarterly distributions on the Preferred Securities
(though such distributions would continue to accrue with interest since interest
would continue to accrue on the Junior Subordinated Debentures) during any such
extended interest payment period. Such right to extend the interest payment
period for the Junior Subordinated Debentures is limited to a period not
exceeding 20 consecutive quarters provided that such deferral period may not
extend beyond the maturity of the Junior Subordinated Debentures. In the event
that Sierra Pacific exercises this right, then (a) Sierra Pacific shall not
declare or pay dividends on, make distributions with respect to, or redeem,
purchase or acquire, or make a liquidation payment with respect to, any of its
capital stock (other than (i) purchases or acquisitions of shares of Sierra
Pacific Common Stock in connection with the satisfaction by Sierra Pacific of
its obligations under any employee benefit plans, (ii) as a result of a
reclassification of Sierra Pacific capital stock or the exchange or conversion
of one class or series of Sierra Pacific's capital stock for another class or
series of Sierra Pacific capital stock or (iii) the purchase of fractional
interests in shares of Sierra Pacific's capital stock pursuant to the conversion
or exchange provisions of such Sierra Pacific capital stock or the security
being converted or exchanged) or make any guarantee payments with respect to the
foregoing, (b) Sierra Pacific shall not make any payment of interest, principal
or premium, if any, on or repay, repurchase or redeem any debt securities issued
by Sierra Pacific that rank PARI PASSU with or junior to such Junior
Subordinated Debentures and (c) Sierra Pacific shall not make any guarantee
payments with respect to the foregoing (other than pursuant to the Guarantee).
Prior to the termination of any such Extension Period, Sierra Pacific may
further extend the interest payment period; PROVIDED, that such Extension
Period, together with all such previous and further extensions thereof, may not
exceed 20 consecutive quarters or extend beyond the maturity of the Junior
Subordinated Debentures. Upon the termination of any Extension Period and the
payment of all amounts then due, Sierra Pacific may select a new Extension
Period, subject to the above requirements. See "Description of the Junior
Subordinated Debentures -- Interest" and "-- Option to Extend Interest Payment
Period." If distributions are deferred, the deferred distributions and accrued
interest thereon shall be paid to holders of record of the Preferred Securities
as they appear on the books and records of Sierra Pacific Capital on the record
date next following the termination of such deferral period.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received from Sierra Pacific on the Junior Subordinated Debentures. See
"Description of the Junior Subordinated Debentures." The payment of
distributions out of moneys held by the Trust is fully and unconditionally
guaranteed by Sierra Pacific. See "Description of the Guarantee."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Preferred Securities remain in book-entry
only form, will be one Business Day (as defined below) prior to the relevant
payment dates. Such distributions will be paid through the Institutional Trustee
who will hold amounts received in respect of the Junior Subordinated Debentures
in the Property Account for the benefit of the holders of the Trust Securities.
Subject to any applicable laws and regulations and the provisions of the
Declaration, each such payment will be made as described under "Book-Entry Only
Issuance -- The Depository Trust Company" below. In the event that the Preferred
Securities do not continue to remain in book-entry only form, the Regular
Trustees shall have the right to select relevant record dates, which shall be
more than one Business Day prior to the relevant payment dates. In the event
that any date on which distributions are to be made on the Preferred Securities
is not a Business Day, then payment of the distributions payable on such date
will be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such record date. A "Business Day" shall mean any day other
than Saturday, Sunday or any other day on which banking institutions in New York
City (in the State of New York) are permitted or required by any applicable law
to close.
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MANDATORY REDEMPTION
The Junior Subordinated Debentures will mature on , 2036, and may
be redeemed, in whole or in part, at any time on or after , 2001, or
at any time in certain circumstances upon the occurrence of a Tax Event. Upon
the repayment of the Junior Subordinated Debentures, whether at maturity or upon
redemption, the proceeds from such repayment or payment shall simultaneously be
applied to redeem Trust Securities having an aggregate liquidation amount equal
to the aggregate principal amount of the Junior Subordinated Debentures so
repaid or redeemed at the Redemption Price; PROVIDED, that holders of Trust
Securities shall be given not less than 30 nor more than 60 days' notice of such
redemption. See "Description of the Junior Subordinated Debentures -- Optional
Redemption." In the event that fewer than all of the outstanding Preferred
Securities are to be redeemed, the Preferred Securities will be redeemed PRO
RATA as described under "Book-Entry Only Issuance -- The Depository Trust
Company" below.
TAX EVENT REDEMPTION OR DISTRIBUTION
"Tax Event" means that the Regular Trustee shall have received an opinion of
a nationally recognized independent tax counsel experienced in such matters (a
"Dissolution Tax Opinion") to the effect that on or after the date of this
Prospectus, as a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, or (b) any amendment to, or change in, an interpretation or application
of any such laws or regulations by any legislative body, court, governmental
agency or regulatory authority which amendment or change is enacted,
promulgated, issued or announced or which interpretation or pronouncement is
issued or announced or which action is taken, in each case on or after the date
of this Prospectus, there is more than an insubstantial risk that (i) Sierra
Pacific Capital is, or will be within 90 days of the date thereof, subject to
United States federal income tax with respect to interest accrued or received on
the Junior Subordinated Debentures, (ii) the Trust is, or will be within 90 days
thereof, subject to more than a DE MINIMIS amount of other taxes, duties or
other governmental charges or (iii) interest payable by Sierra Pacific to the
Trust on the Junior Subordinated Debentures is not, or within 90 days of the
date thereof will not be, deductible, in whole or in part by Sierra Pacific for
United States federal income tax purposes.
If, at any time, a Tax Event (as defined above) shall occur and be
continuing, the Trust shall, except in the limited circumstances described
below, be dissolved with the result that the Junior Subordinated Debentures with
an aggregate principal amount equal to the aggregate stated liquidation amount
of, with an interest rate identical to the distribution rate of, and accrued and
unpaid interest equal to accrued and unpaid distributions on, the Trust
Securities, would be distributed to the holders of the Trust Securities in
liquidation of such holders' interests in the Trust on a pro rata basis within
90 days following the occurrence of such Tax Event; PROVIDED, that such
dissolution and distribution shall be conditioned on (i) the Regular Trustee's
receipt of an opinion of nationally recognized independent tax counsel
experienced in such matters (a "No Recognition Opinion"), which opinion may rely
on published revenue rulings of the Internal Revenue Service, to the effect that
the holders of the Trust Securities will not recognize any gain or loss for
United States federal income tax purposes as a result of such dissolution and
distribution of Junior Subordinated Debentures and (ii) Sierra Pacific being
unable to avoid such Tax Event within such 90 day period by taking some
ministerial action or pursuing some other reasonable measure that will have no
adverse effect on the Trust, Sierra Pacific or the holders of the Trust
Securities. Furthermore, if after receipt of a Dissolution Tax Opinion by the
Regular Trustee (i) Sierra Pacific has received an opinion (a "Redemption Tax
Opinion") of nationally recognized independent tax counsel experienced in such
matters that, as a result of a Tax Event, there is more than an insubstantial
risk that Sierra Pacific would be precluded from deducting the interest on the
Junior Subordinated Debentures for United States federal income tax purposes,
even after the Junior Subordinated Debentures were distributed to the holders of
Trust Securities in liquidation of such holders' interests in Sierra Pacific
Capital as described above, or (ii) the Regular Trustee shall have been informed
by such tax counsel that it cannot deliver a No Recognition Opinion to the
Trust, Sierra Pacific shall have the right, upon not less than 30 nor more than
60 days' notice, to redeem the Junior Subordinated Debentures, in whole or in
part, for cash within 90 days following the occurrence of such Tax Event, and,
following such redemption, Trust Securities with an aggregate liquidation amount
equal to the
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aggregate principal amount of the Junior Subordinated Debentures so redeemed
shall be redeemed by the Trust at the Redemption Price on a PRO RATA basis;
PROVIDED, HOWEVER, that if at the time there is available to Sierra Pacific or
the Trust the opportunity to eliminate, within such 90 day period, the Tax Event
by taking some ministerial action, such as filing a form or making an election
or pursuing some other similar reasonable measure that has no adverse effect on
the Trust, Sierra Pacific or the holders of the Trust Securities, Sierra Pacific
or the Trust will pursue such measure in lieu of redemption.
If the Junior Subordinated Debentures are distributed to the holders of the
Preferred Securities, Sierra Pacific will use its best efforts to cause the
Junior Subordinated Debentures to be listed on the NYSE or on such other
exchange as the Preferred Securities are then listed.
After the date for any distribution of Junior Subordinated Debentures upon
dissolution of the Trust, (i) the Preferred Securities will no longer be deemed
to be outstanding, (ii) the Depositary (as defined herein) or its nominee, as
the record holder of the Preferred Securities, will receive a registered global
certificate or certificates representing the Junior Subordinated Debentures to
be delivered upon such distribution, and (iii) any certificates representing
Preferred Securities not held by the Depositary or its nominee will be deemed to
represent Junior Subordinated Debentures having an aggregate principal amount
equal to the aggregate stated liquidation amount of, with an interest rate
identical to the distribution rate of, and accrued and unpaid interest equal to
accrued and unpaid distributions on such Preferred Securities until such
certificates are presented to Sierra Pacific or its agent for transfer or
reissuance.
There can be no assurance as to the market prices for either the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for the Preferred Securities if a dissolution and liquidation of the
Trust were to occur. Accordingly, the Preferred Securities that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary market,
or the Junior Subordinated Debentures that an investor may receive if a
dissolution and liquidation of the Trust were to occur, may trade at a discount
to the price that the investor paid to purchase the Preferred Securities offered
hereby.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Declaration Event of Default (as defined below) occurs and is
continuing, then the holders of Preferred Securities of the Trust would rely on
the enforcement by the Institutional Trustee of its rights as a holder of the
Junior Subordinated Debentures against Sierra Pacific. In addition, the holders
of a majority in liquidation amount of the Preferred Securities of the Trust
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Institutional Trustee or to direct
the exercise of any trust or power conferred upon the Institutional Trustee
under the Declaration, including the right to direct the Institutional Trustee
to exercise the remedies available to it as a holder of the Junior Subordinated
Debentures. If the Institutional Trustee fails to enforce its rights under the
Junior Subordinated Debentures, a holder of Preferred Securities of the Trust
may institute a legal proceeding directly against Sierra Pacific to enforce the
Institutional Trustee's rights under the Junior Subordinated Debentures without
first instituting any legal proceeding against the Institutional Trustee or any
other person or entity. Notwithstanding the foregoing, if an Event of Default
under the Declaration has occurred and is continuing and such event is
attributable to the failure of Sierra Pacific to pay interest or principal on
the Junior Subordinated Debentures on the date such interest or principal is
otherwise payable (or in the case of redemption, on the redemption date), then a
holder of Preferred Securities of the Trust may directly institute a proceeding
for enforcement of payment to such holder of the principal of or interest on the
Junior Subordinated Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such holder (a "Direct
Action") on or after the respective due date specified in the Junior
Subordinated Debentures. In connection with such Direct Action, Sierra Pacific
will be subrogated to the rights of such holder of Preferred Securities under
the Declaration to the extent of any payment made by Sierra Pacific to such
holder of Preferred Securities in such Direct Action.
PROPOSED TAX LEGISLATION
On March 19, 1996, President Clinton proposed the Proposed Legislation
which, among other things, would generally deny corporate issuers a deduction
for interest in respect of certain debt obligations issued on or after December
7, 1995 if such debt obligations have a maximum term in excess of twenty years
and are
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not shown as indebtedness on the issuer's applicable consolidated balance sheet.
On March 29, 1996, the Senate Finance Committee Chairman and the House Ways and
Means Committee Chairman issued the Joint Statement indicating their intent that
certain legislative proposals initiated by the Clinton administration, including
the Proposed Legislation, that may be adopted by either of the tax-writing
committees of Congress would have an effective date that is no earlier than the
date of "appropriate Congressional action." Based upon the Joint Statement, it
is expected that if the Proposed Legislation were to be enacted, such
legislation would not apply to the Junior Subordinated Debentures. There can be
no assurances, however, that the effective date guidance contained in the Joint
Statement will be incorporated into the Proposed Legislation, if enacted, or
that other legislation enacted after the date hereof will not otherwise
adversely affect the ability of Sierra Pacific to deduct the interest payable on
the Junior Subordinated Debentures. Accordingly, there can be no assurance that
a Tax Event will not occur. See "-- Tax Event Redemption or Distribution."
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
If the Trust gives a notice of redemption in respect of Preferred Securities
(which notice will be irrevocable), then, by 12:00 noon, New York City time, on
the redemption date, provided that Sierra Pacific has paid to the Institutional
Trustee a sufficient amount of cash in connection with the related redemption or
maturity of the Junior Subordinated Debentures, the Trust will irrevocably
deposit with the Depositary funds sufficient to pay the applicable Redemption
Price and will give the Depositary irrevocable instructions and authority to pay
the Redemption Price to the holders of the Preferred Securities. See "Book-Entry
Only Issuance -- The Depository Trust Company." If notice of redemption shall
have been given and funds deposited as required, then, immediately prior to the
close of business on the date of such deposit, distributions will cease to
accrue and all rights of holders of such Preferred Securities so called for
redemption will cease, except the right of the holders of such Preferred
Securities to receive the Redemption Price but without interest on such
Redemption Price. In the event that any date fixed for redemption of Preferred
Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day that is a Business Day
(without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day. In the event that payment of the
Redemption Price in respect of Preferred Securities is improperly withheld or
refused and not paid either by Sierra Pacific Capital, or by Sierra Pacific
pursuant to the Guarantee, distributions on such Preferred Securities will
continue to accrue at the then applicable rate from the original redemption date
to the date of payment, in which case the actual payment date will be considered
the date fixed for redemption for purposes of calculating the Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities are
to be redeemed, the Preferred Securities will be redeemed PRO RATA as described
below under "Book-Entry Only Issuance -- The Depository Trust Company."
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), Sierra Pacific or its subsidiaries may
at any time, and from time to time, purchase outstanding Preferred Securities by
tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust (each a "Liquidation"), the then holders
of the Preferred Securities will be entitled to receive out of the assets of the
Trust, after satisfaction of liabilities to creditors, distributions in an
amount equal to the aggregate of the stated liquidation amount of $25 per
Preferred Security plus accrued and unpaid distributions thereon to the date of
payment (the "Liquidation Distribution"), unless, in connection with such
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Liquidation, Junior Subordinated Debentures in an aggregate stated principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and accrued and unpaid interest
equal to accrued and unpaid distributions on, the Preferred Securities have been
distributed on a PRO RATA basis to the holders of the Preferred Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid only
in part because Sierra Pacific Capital has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Preferred Securities shall be paid on a PRO RATA
basis. The holders of the Common Securities will be entitled to receive
distributions upon any such dissolution PRO RATA with the holders of the
Preferred Securities, except that if a Declaration Event of Default has occurred
and is continuing, the Preferred Securities shall have a preference over the
Common Securities with regard to such distributions.
Pursuant to the Declaration, the Trust shall terminate (i) on April 23,
2051, the expiration of the term of the Trust, (ii) upon the bankruptcy of
Sierra Pacific, (iii) upon the filing of a certificate of dissolution or its
equivalent with respect to Sierra Pacific, the filing of a certificate of
cancellation with respect to the Trust after obtaining the consent of the
holders of at least a majority in liquidation amount of Trust Securities
affected thereby voting together as a single class to file such certificate of
cancellation, or the revocation of the charter of Sierra Pacific and the
expiration of 90 days after the date of revocation without a reinstatement
thereof, (iv) upon the distribution of Junior Subordinated Debentures upon the
occurrence of a Tax Event, (v) upon the entry of a decree of a judicial
dissolution of the holder of the Common Securities, Sierra Pacific or the Trust,
or (vi) upon the redemption of all the Trust Securities.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"); PROVIDED, that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated. Until such Declaration Events of Default
with respect to the Preferred Securities have been so cured, waived, or
otherwise eliminated, the Institutional Trustee will be deemed to be acting
solely on behalf of the holders of the Preferred Securities and only the holders
of the Preferred Securities will have the right to direct the Institutional
Trustee with respect to certain matters under the Declaration, and therefore the
Indenture. If the Institutional Trustee fails to enforce its rights under the
Junior Subordinated Debentures after a holder of Preferred Securities has made a
written request, such holder of record of Preferred Securities may institute a
legal proceeding against Sierra Pacific to enforce the Institutional Trustee's
rights under the Junior Subordinated Debentures without first instituting any
legal proceeding against the Institutional Trustee or any other person or
entity. Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of
Sierra Pacific to pay interest or principal on the Junior Subordinated
Debentures on the date such interest or principal is otherwise payable (or in
the case of redemption, the redemption date), Sierra Pacific acknowledges that
then a holder of Preferred Securities may institute a Direct Action for payment
on or after the respective due date specified in the Junior Subordinated
Debentures. In connection with such Direct Action, Sierra Pacific will be
subrogated to the rights of such holder of Preferred Securities under the
Declaration to the extent of any payment made by Sierra Pacific to such holder
of Preferred Securities in such Direct Action. The holders of Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of the Junior Subordinated Debentures.
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee as the sole holder of the Junior Subordinated Debentures will have the
right under the Indenture to declare the principal of and interest on the Junior
Subordinated Debentures to be immediately due and payable. Sierra Pacific and
Sierra Pacific Capital are each required to file annually with the Institutional
Trustee an officer's certificate as to its compliance with all conditions and
covenants under the Declaration.
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VOTING RIGHTS
Except as described herein, under the Trust Act, the Trust Indenture Act and
under "Description of the Guarantee -- Modification of the Guarantee;
Assignment" herein and as otherwise required by law and the Declaration, the
holders of the Preferred Securities will have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee,
or direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration including the right to direct the Institutional
Trustee, as holder of the Junior Subordinated Debentures, to (i) exercise the
remedies available to it under the Indenture as a holder of the Junior
Subordinated Debentures, (ii) waive any past Indenture Event of Default that is
waivable under Section 6.6 of the Indenture or (iii) exercise any right to
rescind or annul a declaration that the principal of all the Junior Subordinated
Debentures shall be due and payable; PROVIDED, HOWEVER, that, where a consent or
action under the Indenture would require the consent or act of holders of more
than a majority in principal amount of the Junior Subordinated Debentures (a
"Super-Majority") affected thereby, only the holders of at least such
Super-Majority in aggregate liquidation amount of the Preferred Securities may
direct the Institutional Trustee to give such consent or take such action. If
the Institutional Trustee fails to enforce its rights under the Junior
Subordinated Debentures, after a record holder has made a written request, such
holder of record of Preferred Securities may institute a legal proceeding
directly against Sierra Pacific to enforce the Institutional Trustee's rights
under the Junior Subordinated Debentures without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of Sierra
Pacific to pay interest or principal on the Junior Subordinated Debentures on
the date such interest or principal is otherwise payable (or in the case of
redemption on the redemption date), then a holder of Preferred Securities may
directly institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Junior Subordinated Debentures having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder on or after the respective due date specified in the
Junior Subordinated Debentures. The Institutional Trustee shall notify all
holders of the Preferred Securities of any notice of default received from the
Debt Trustee with respect to the Junior Subordinated Debentures. Such notice
shall state that such Indenture Event of Default also constitutes a Declaration
Event of Default. Except with respect to directing the time, method and place of
conducting a proceeding for a remedy, the Institutional Trustee shall not take
any of the actions described in clauses (i), (ii) or (iii) above unless the
Institutional Trustee has obtained an opinion of tax counsel to the effect that,
as a result of such action, Sierra Pacific Capital will not fail to be
classified as a grantor trust for United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Junior Subordinated Debentures, is required under the Indenture with respect to
any amendment, modification or termination of the Indenture, the Institutional
Trustee shall request the direction of the holders of the Trust Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a majority
in liquidation amount of the Trust Securities voting together as a single class;
PROVIDED, HOWEVER, that where a consent under the Indenture would require the
consent of a Super-Majority, the Institutional Trustee may only give such
consent at the direction of the holders of at least the proportion in
liquidation amount of the Trust Securities which the relevant Super-Majority
represents of the aggregate principal amount of the Junior Subordinated
Debentures outstanding. The Institutional Trustee shall be under no obligation
to take any such action in accordance with the directions of the holders of the
Trust Securities unless the Institutional Trustee has obtained an opinion of tax
counsel to the affect that for the purposes of United States federal income tax
Sierra Pacific Capital will not be classified as other than a grantor trust.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
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Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for such
purpose, at a meeting of all of the holders of Trust Securities or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Preferred Securities will be required for Sierra Pacific
Capital to redeem and cancel Preferred Securities or distribute Junior
Subordinated Debentures in accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by Sierra Pacific or any entity directly
or indirectly controlling or controlled by, or under direct or indirect common
control with, Sierra Pacific, shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if such Preferred
Securities were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See " -- Book-Entry Only Issuance -- The
Depository Trust Company" below.
Holders of the Preferred Securities will have no rights to appoint or remove
the Sierra Pacific Trustees, who may be appointed, removed or replaced solely by
Sierra Pacific as the indirect or direct holder of all of the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee), provided
that, if any proposed amendment provides for, or the Regular Trustees otherwise
propose to effect, (i) any action that would adversely affect the powers,
preferences or special rights of the Trust Securities, whether by way of
amendment to the Declaration or otherwise or (ii) the dissolution, winding-up or
termination of Sierra Pacific Capital other than pursuant to the terms of the
Declaration, then the holders of the Trust Securities voting together as a
single class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of at
least a majority in liquidation amount of the Trust Securities affected thereby;
PROVIDED, that, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred Securities or the Common Securities,
then only the affected class will be entitled to vote on such amendment or
proposal and such amendment or proposal shall not be effective except with the
approval of a majority in liquidation amount of such class of Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause Sierra Pacific
Capital to be classified for purposes of United States federal income taxation
as other than a grantor trust, (ii) reduce or otherwise adversely affect the
powers of the Institutional Trustee or (iii) cause Sierra Pacific Capital to be
deemed an "investment company" which is required to be registered under the
Investment Company Act of 1940, as amended (the "1940 Act").
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
Sierra Pacific Capital may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below. Sierra Pacific Capital may, with the consent of the Regular
Trustees and without the consent of the holders of the Trust Securities, the
Institutional Trustee or the Delaware Trustee consolidate, amalgamate, merge
with or into, or be replaced by a trust organized as such under the laws of any
State of the United States; PROVIDED, that (i) if the Trust is not the survivor
such successor entity either (x) expressly assumes all of the obligations of
Sierra Pacific Capital under the Trust Securities or (y) substitutes for the
Preferred Securities other securities having substantially the same terms as the
Trust Securities (the
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"Successor Securities"), so long as the Successor Securities rank the same as
the Trust Securities rank with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) Sierra Pacific expressly
acknowledges a trustee of such successor entity possessing the same powers and
duties as the Institutional Trustee as the holder of the Junior Subordinated
Debentures, (iii) the Preferred Securities or any Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or with another organization on
which the Preferred Securities are then listed or quoted, (iv) such merger,
consolidation, amalgamation or replacement does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by Moody's
Investors Service, Inc. or Standard & Poor's Corporation, (v) such merger,
consolidation, amalgamation or replacement does not adversely affect the rights,
preferences and privileges of the holders of the Trust Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in the new entity), (vi) such successor entity
has a purpose identical to that of Sierra Pacific Capital, (vii) prior to such
merger, consolidation, amalgamation or replacement, Sierra Pacific has received
an opinion of a nationally recognized independent counsel to Sierra Pacific
Capital experienced in such matters to the effect that (A) such merger,
consolidation, amalgamation or replacement does not adversely affect the rights,
preferences and privileges of the holders of the Trust Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in the new entity), and (B) following such
merger, consolidation, amalgamation or replacement, neither Sierra Pacific
Capital nor such successor entity will be required to register as an investment
company under the 1940 Act and (viii) Sierra Pacific guarantees the obligations
of such successor entity under the Successor Securities at least to the extent
provided by the Guarantee and the Common Securities Guarantee. Notwithstanding
the foregoing, Sierra Pacific Capital shall not, except with the consent of
holders of 100% in liquidation amount of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it, if
such consolidation, amalgamation, merger or replacement would cause Sierra
Pacific Capital or the Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary (the
"Depositary") for the Preferred Securities. The Preferred Securities will be
issued only as fully-registered securities registered in the name of Cede & Co.
(DTC's nominee). One or more fully-registered global Preferred Securities
certificates, representing the total aggregate number of Preferred Securities,
will be issued and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Participants in DTC
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of its
Participants and by the NYSE, the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others, such as securities brokers and dealers, banks and
trust companies that clear transactions through or maintain a direct or indirect
custodial relationship with a Participant either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Securities and Exchange Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Participants, which will receive a credit for the Preferred Securities
on DTC's records. The ownership interest of each actual purchaser of each
Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchases, but Beneficial Owners are expected to receive
written confirmations providing details of the transactions, as well
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as periodic statements of their holdings, from the Participants through which
the Beneficial Owners purchased Preferred Securities. Transfers of ownership
interests in the Preferred Securities are to be accomplished by entries made on
the books of Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their ownership interests in
the Preferred Securities, except in the event that use of the book-entry system
for the Preferred Securities is discontinued.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in the global Preferred Securities
as represented by a global certificate.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities. DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Preferred Securities represented thereby for all
purposes under the Declaration and the Preferred Securities. No beneficial owner
of an interest in a Global Certificate will be able to transfer that interest
except in accordance with DTC's applicable procedures, in addition to those
provided for under the Declaration.
DTC has advised Sierra Pacific that it will take any action permitted to be
taken by a holder of Preferred Securities (including the presentation of
Preferred Securities for exchange as described below) only at the direction of
one or more Participants to whose account the DTC interests in the Global
Certificates are credited and only in respect of such portion of the aggregate
liquidation amount of Preferred Securities as to which such Participant or
Participants has or have given such direction. However, if there is an Event of
Default under the Preferred Securities, DTC will exchange the Global
Certificates for Certificated Securities, which it will distribute to its
Participants and which will be legended as set forth under the heading "Notices
to Investors."
Conveyance of notices and other communications by DTC to Participants, by
Direct Participants to Indirect Participants and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices in respect of the Preferred Securities held in book-entry
form shall be sent to Cede & Co. If less than all of the Preferred Securities
are being redeemed, DTC will determine the amount of the interest of each
Participant to be redeemed in accordance with its procedures. Although voting
with respect to the Preferred Securities is limited, in those cases where a vote
is required, neither DTC nor Cede & Co. will itself consent or vote with respect
to Preferred Securities. Under its usual procedures, DTC would mail an Omnibus
Proxy to Sierra Pacific Capital as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Participants to whose accounts the Preferred Securities are credited on the
record date (identified in a listing attached to the Omnibus Proxy). Sierra
Pacific and Sierra Pacific Capital believe that the arrangements among DTC,
Direct and Indirect Participants, and Beneficial Owners will enable the
Beneficial Owners to exercise rights equivalent in substance to the rights that
can be directly exercised by a holder of a beneficial interest in Sierra Pacific
Capital.
Distributions on the Preferred Securities held in book-entry form will be
made to DTC in immediately available funds. DTC's practice is to credit
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe that
it will not receive payments on such payment date. Payments by Participants and
Indirect Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participants and not of DTC, Sierra Pacific Capital or Sierra Pacific, subject
to any statutory or regulatory requirements to the contrary as may be in effect
from time to time. Although DTC has agreed to the foregoing procedures in order
to facilitate transfer of interests in the Global Certificates among
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Participants of DTC, DTC is under no obligation to perform or continue to
perform such procedures, and such procedures may be discontinued at any time.
Neither Sierra Pacific, the Trust nor the Sierra Pacific Trustees will have any
responsibility for the performance by DTC or its Participants or Indirect
Participants under the rules and procedures governing DTC. Payment of
distributions to DTC is the responsibility of Sierra Pacific Capital,
disbursement of such payments to Participants is the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners is the responsibility of
Participants and Indirect Participants.
Except as provided herein, a Beneficial Owner of an interest in a Global
Certificate will not be entitled to receive physical delivery of Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
Sierra Pacific Capital. Under such circumstances, in the event that a successor
securities depositary is not obtained, Preferred Securities certificates are
required to be printed and delivered. Additionally, the Trust (with the consent
of Sierra Pacific) may decide to discontinue use of the system of book-entry
transfers through DTC (or any successor depositary) with respect to the
Preferred Securities. In that event, certificates for the Preferred Securities
will be printed and delivered. In each of the above circumstances, Sierra
Pacific will appoint a paying agent with respect to the Preferred Securities.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with respect
to the Trust Securities and after the curing of any defaults that may have
occurred, undertakes to perform only such duties as are specifically set forth
in the Declaration and, after default, shall exercise the same degree of care as
a prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provisions, the Institutional Trustee is under no obligation to
exercise any of the powers vested in it by the Declaration at the request of any
holder of Preferred Securities, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be incurred
thereby. The holders of Preferred Securities will not be required to offer such
indemnity in the event such holders, by exercising their voting rights, direct
the Institutional Trustee to take any action it is empowered to take under the
Declaration following a Declaration Event of Default. The Institutional Trustee
also serves as trustee under the Guarantee and the Indenture.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities represented by the Global
Certificates shall be made to DTC, which shall credit the relevant accounts at
DTC on the applicable distribution dates or, in the case of Certificated
Securities, such payments shall be made by check mailed to the address of the
holder entitled thereto as such address shall appear on the Register. The Paying
Agent shall initially be the Institutional Trustee who may designate an
additional or substitute paying agent at any time. Registration of transfers of
Preferred Securities will be effected without charge by or on behalf of Sierra
Pacific Capital, but upon payment (with the giving of such indemnity as Sierra
Pacific Capital or Sierra Pacific may require) in respect of any tax or other
government charges imposed in relation to it. Sierra Pacific Capital will not be
required to register or cause to be registered the transfer of Preferred
Securities after such Preferred Securities have been called for redemption.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate Sierra Pacific
Capital in such a way so that Sierra Pacific Capital will not be required to
register as an "investment company" under the 1940 Act or characterized as other
than a grantor trust for United States federal income tax purposes. Sierra
Pacific is authorized and directed to conduct its affairs so that the Junior
Subordinated Debentures will be treated as
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indebtedness of Sierra Pacific for United States federal income tax purposes. In
this connection, Sierra Pacific and the Regular Trustees are authorized to take
any action, not inconsistent with applicable law, the certificate of trust of
Sierra Pacific Capital or the articles of incorporation of Sierra Pacific, that
each of Sierra Pacific and the Regular Trustees determine in their discretion to
be necessary or desirable to achieve such end, as long as such action does not
adversely affect the interests of the holders of the Preferred Securities or
vary the terms thereof.
Holders of the Preferred Securities have no preemptive rights.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee which
will be executed and delivered by Sierra Pacific for the benefit of the holders
of Preferred Securities. The Guarantee will be qualified as an indenture under
the Trust Indenture Act. IBJ Schroder Bank & Trust Company will act as indenture
trustee under the Guarantee (the "Guarantee Trustee") for purposes of the Trust
Indenture Act. The terms of the Guarantee will be those set forth in such
Guarantee and those made part of such Guarantee by the Trust Indenture Act. The
following summary of the material terms is subject in all respects to the
provisions of, and is qualified in its entirety by reference to, the form of
Guarantee, which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part, and the Trust Indenture Act. The Guarantee will be
held by the Guarantee Trustee for the benefit of the holders of the Preferred
Securities of the Trust.
GENERAL
Pursuant to the Guarantee, Sierra Pacific will irrevocably agree, to the
extent set forth therein, to pay in full, to the holders of the Preferred
Securities issued by the Trust, the Guarantee Payments (as defined herein)
(except to the extent paid by the Trust), as and when due, regardless of any
defense, right of set-off or counterclaim which the Trust may have or assert.
The following payments with respect to Preferred Securities issued by the Trust
to the extent not paid by such Trust (the "Guarantee Payments") will be subject
to the Guarantee thereon (without duplication): (i) any accrued and unpaid
distributions which are required to be paid on such Preferred Securities, to the
extent the Trust shall have funds available therefor; (ii) the redemption price
(the "Redemption Price"), and all accrued and unpaid distributions, to the
extent the Trust has funds available therefor with respect to any Preferred
Securities called for redemption by the Trust and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Trust (other than in
connection with the distribution of Junior Subordinated Debentures to the
holders of Preferred Securities or the redemption of all of the Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on such Preferred Securities to the date of
payment, to the extent the Trust has funds available therefor and (b) the amount
of assets of the Trust remaining available for distribution to holders of the
Preferred Securities in liquidation of the Trust. The redemption price and the
liquidation amount will be fixed at the time the Preferred Securities are
issued. Sierra Pacific's obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts by Sierra Pacific to the holders of
Preferred Securities or by causing the Trust to pay such amounts to such
holders. The Guarantee will not apply to any payment of distributions on the
Preferred Securities except to the extent the Trust shall have funds available
therefor. If Sierra Pacific does not make interest payments on the Junior
Subordinated Debentures purchased by the Trust, the Trust will not pay
distributions on the Preferred Securities issued by the Trust and will not have
funds available therefor. See "Description of Junior Subordinated Debentures --
Certain Covenants of the Company." The Guarantee, when taken together with
Sierra Pacific's obligations under the Junior Subordinated Debentures, the
Indenture and the Declaration, including its obligations to pay costs, expenses,
debts and liabilities of the Trust (other than with respect to the Trust
Securities), will provide a full and unconditional guarantee on a subordinated
basis by Sierra Pacific of payments due on the Preferred Securities.
Sierra Pacific has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the Trust with respect to the Trust Common
Securities (the "Common Securities Guarantee") to the same
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extent as the Guarantee, except that upon an event of default under the
Declaration, holders of Preferred Securities shall have priority over holders of
Common Securities with respect to distributions and payments on liquidation,
redemption or otherwise.
CERTAIN COVENANTS OF SIERRA PACIFIC
In the Guarantee, Sierra Pacific will covenant that, so long as any
Preferred Securities issued by the Trust remain outstanding, if there shall have
occurred any event that would constitute an event of default under such
Guarantee or the Declaration of the Trust, then (a) Sierra Pacific shall not
declare or pay any dividend on, make any distributions with respect to, or
redeem, purchase or make a liquidation payment with respect to, any of its
capital stock (other than (i) purchases or acquisitions of shares of Common
Stock in connection with the satisfaction by Sierra Pacific of its obligations
under any employee benefit plans, (ii) as a result of a reclassification of
Sierra Pacific's capital stock or the exchange or (iii) the purchase of
fractional interests in shares of Sierra Pacific's capital stock pursuant to the
conversion or exchange provisions of such capital stock of Sierra Pacific or the
security being converted or exchanged), (b) Sierra Pacific shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees) issued by Sierra Pacific which
rank PARI PASSU with or junior to such Junior Subordinated Debentures and (c)
Sierra Pacific shall not make any guarantee payments with respect to the
foregoing (other than pursuant to the Guarantee).
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required), the
Guarantee may be amended only with the prior approval of the holders of not less
than a majority in liquidation amount of the outstanding Preferred Securities
issued by the Trust. All guarantees and agreements contained in the Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
Sierra Pacific and shall inure to the benefit of the holders of the Preferred
Securities of the Trust then outstanding.
TERMINATION
The Guarantee will terminate as to the Preferred Securities issued by the
Trust (a) upon full payment of the Redemption Price of all Preferred Securities
of the Trust, (b) upon distribution of the Junior Subordinated Debentures held
by the Trust to the holders of the Preferred Securities of the Trust or (c) upon
full payment of the amounts payable in accordance with the Declaration of the
Trust upon liquidation of the Trust. The Guarantee will continue to be effective
or will be reinstated, as the case may be, if at any time any holder of
Preferred Securities issued by the Trust must restore payment of any sums paid
under such Preferred Securities or the Guarantee. The subordination provisions
of the Junior Subordinated Debentures provide that in the event payment is made
on the Junior Subordinated Debentures or the Guarantee in contravention of such
provisions, such payments shall be paid over to the holders of Senior
Indebtedness.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of
Sierra Pacific to perform any of its payment or other obligations thereunder.
The holders of a majority in liquidation amount of the Preferred Securities
relating to the Guarantee have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercises of any trust or power
conferred upon the Guarantee Trustee under such Preferred Securities. If the
Guarantee Trustee fails to enforce such Guarantee, any holder of Preferred
Securities relating to such Guarantee may institute a legal proceeding directly
against Sierra Pacific to enforce the Guarantee Trustee's rights under such
Guarantee, without first
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instituting a legal proceeding against the Trust, the Guarantee Trustee or any
other person or entity. Notwithstanding the foregoing, if Sierra Pacific has
failed to make a Guarantee Payment, a holder of Preferred Securities may
directly institute a proceeding against Sierra Pacific for enforcement of the
Guarantee for such payment. Sierra Pacific waives any right or remedy to require
that any action be brought first against the Trust or any other person or entity
before proceeding directly against Sierra Pacific.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of Sierra Pacific and
will rank (i) subordinate and junior in right of payment to all other
liabilities of Sierra Pacific, (ii) PARI PASSU with the most senior preferred or
preference stock now or hereafter issued by Sierra Pacific and with any
guarantee now or hereafter entered into by Sierra Pacific in respect of any
preferred or preference stock of any affiliate of Sierra Pacific; and (iii)
senior to Sierra Pacific's common stock. The terms of the Preferred Securities
provide that each holder of Preferred Securities issued by the Trust by
acceptance thereof agrees to the subordination provisions and other terms of the
Guarantee.
The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under the guarantee without instituting a
legal proceeding against any other person or entity).
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee, undertakes to perform only such duties as are specifically set
forth in the Guarantee and, after default, shall exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by the Guarantee at the
request of any holder of Preferred Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred
thereby.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of the Junior
Subordinated Debentures in which Sierra Pacific Capital will invest the proceeds
from the issuance and sale of the Trust Securities. The following summary of the
material terms does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the Indenture, dated as of June 1,
1996 (the "Indenture"), between Sierra Pacific and IBJ Schroder Bank & Trust
Company, as Trustee (the "Debt Trustee"). Whenever particular provisions or
defined terms in the Indenture are referred to herein, such provisions or
defined terms are incorporated by reference herein.
Under certain circumstances involving the dissolution of Sierra Pacific
Capital following the occurrence of a Tax Event, Junior Subordinated Debentures
may be distributed to the holders of the Trust Securities in liquidation of
Sierra Pacific Capital. See "Description of the Preferred Securities -- Tax
Event Redemption or Distribution."
If the Junior Subordinated Debentures are distributed to the holders of the
Preferred Securities, Sierra Pacific will use its best efforts to have the
Junior Subordinated Debentures listed on the NYSE or on such other national
securities exchange or similar organization on which the Preferred Securities
are then listed or quoted.
GENERAL
The Junior Subordinated Debentures will be issued as unsecured debt
securities under the Indenture. The Indenture does not limit the aggregate
principal amount of debt securities which may be issued thereunder and provides
that the debt securities may be issued thereunder from time to time in one or
more series. However, the Junior Subordinated Debentures, as a separate series
of debt securities, will be limited in aggregate principal amount of
$50,000,000, such amount being the sum of the aggregate stated liquidation of
the Preferred Securities and the Common Securities.
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The Junior Subordinated Debentures are not subject to a sinking fund
provision. The entire principal amount of the Junior Subordinated Debentures
will mature and become due and payable, together with any accrued and unpaid
interest thereon including Additional Interest (as defined herein), if any, on
, 2036.
If Junior Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of such holders' interests in Sierra Pacific Capital,
such Junior Subordinated Debentures will initially be issued as one or more
Global Securities (as defined under "Book-Entry and Settlement" herein). Under
certain limited circumstances, Junior Subordinated Debentures may be issued in
certificated form in exchange for a Global Security. In the event that Junior
Subordinated Debentures are issued in certificated form, such Junior
Subordinated Debentures will be in denominations of $25 and integral multiples
thereof and may be transferred or exchanged at the offices described below.
Payments on Junior Subordinated Debentures issued as a Global Security will
be made to DTC, a successor depositary or, in the event that no depositary is
used, to a Paying Agent for the Junior Subordinated Debentures. In the event
Junior Subordinated Debentures are issued in certificated form, principal and
interest will be payable, the transfer of the Junior Subordinated Debentures
will be registrable and Junior Subordinated Debentures will be exchangeable for
Junior Subordinated Debentures of other denominations of a like aggregate
principal amount at the corporate trust office of the Debt Trustee in New York,
New York; PROVIDED, that at the option of Sierra Pacific payment of interest may
be made by check mailed to the address of the holder entitled thereto or by wire
transfer to an account appropriately designated by the holder entitled thereto.
Notwithstanding the foregoing, so long as the holder of any Junior Subordinated
Debentures is the Institutional Trustee, the payment of principal and interest
on the Junior Subordinated Debentures held by the Institutional Trustee will be
made at such place and to such account as may be designated by the Institutional
Trustee.
There are no covenants or provisions in the Indenture which afford holders
of the Junior Subordinated Debentures protection in the event of a highly
leveraged transaction or other similar transaction involving Sierra Pacific that
may adversely affect such holders.
INTEREST
Each Junior Subordinated Debenture shall bear interest at the rate of %
per annum from the original date of issuance, payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year (each an "Interest
Payment Date"), commencing September 30, 1996, to the person in whose name such
Junior Subordinated Debenture is registered, subject to certain exceptions, at
the close of business on the Business Day next preceding such Interest Payment
Date. In the event the Junior Subordinated Debentures shall not continue to
remain in book-entry only form, Sierra Pacific shall have the right to select
record dates, which shall be more than one Business Day prior to the Interest
Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period for which interest is computed
will be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, then
such payment shall be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date.
PROPOSED TAX LEGISLATION
On March 19, 1996, President Clinton proposed the Proposed Legislation
which, among other things, would generally deny corporate issuers a deduction
for interest in respect of certain debt obligations issued on or after December
7, 1995 if such debt obligations have a maximum term in excess of twenty years
and are not shown as indebtedness on the issuer's applicable consolidated
balance sheet. On March 29, 1996, the Senate Finance Committee Chairman and the
House Ways and Means Committee Chairman issued the
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Joint Statement indicating their intent that certain legislative proposals
initiated by the Clinton administration including the Proposed Legislation, that
may be adopted by either of the tax-writing committees of Congress would have an
effective date that is no earlier than the date of "appropriate Congressional
action." Based upon the Joint Statement, it is expected that if the Proposed
Legislation were to be enacted, such legislation would not apply to the Junior
Subordinated Debentures. There can be no assurances, however, that the effective
date guidance contained in the Joint Statement will be incorporated into the
Proposed Legislation, if enacted, or that other legislation enacted after the
date hereof will not otherwise adversely affect the ability of Sierra Pacific to
deduct the interest payable on the Junior Subordinated Debentures. Accordingly,
there can be no assurance that a Tax Event will not occur. See "Description of
the Preferred Securities -- Tax Event Redemption or Distribution."
SUBORDINATION
The Indenture provides that the Junior Subordinated Debentures are
subordinated and junior in right of payment to all Senior Indebtedness of Sierra
Pacific. No payment of principal (including redemption), premium, if any, or
interest on the Junior Subordinated Debentures may be made (i) if any Senior
Indebtedness of Sierra Pacific is not paid when due and any applicable grace
period with respect to such default has ended and such default has not been
cured or waived or ceased to exist, or (ii) the maturity of any Senior
Indebtedness of Sierra Pacific has been accelerated because of a default. Upon
any distribution of assets of Sierra Pacific to creditors upon any dissolution,
winding-up, liquidation or reorganization, whether voluntary or involuntary, or
in bankruptcy, insolvency, receivership or other proceedings, all principal and
premium, if any, and interest due or to become due on all Senior Indebtedness of
Sierra Pacific must be paid in full before the holders of Junior Subordinated
Debentures are entitled to receive or retain any payment. Upon satisfaction of
all claims of all Senior Indebtedness then outstanding, the rights of the
holders of the Junior Subordinated Debentures will be subrogated to the rights
of the holders of Senior Indebtedness of Sierra Pacific to receive payments or
distributions applicable to Senior Indebtedness until all amounts owing on the
Junior Subordinated Debentures are paid in full.
The term "Senior Indebtedness" means, with respect to Sierra Pacific, (i)
the principal, premium, if any, and interest in respect of (A) indebtedness of
Sierra Pacific, for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by Sierra Pacific,
including, without limitation, all obligations under the Indenture of Mortgage
dated as of December 1, 1940, between Sierra Pacific and The New England Trust
Company (State Street Bank and Trust Company, as successor trustee) and Leo W.
Huegle (Gerald R. Wheeler, as successor trustee), and Collateral Trust Indenture
dated June 1, 1992, between Sierra Pacific and Bankers Trust Company, (ii) all
capital lease obligations of Sierra Pacific, (iii) all obligations of Sierra
Pacific issued or assumed as the deferred purchase price of property, all
conditional sale obligations of Sierra Pacific and all obligations of Sierra
Pacific under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business), (iv) all obligations of
Sierra Pacific for the reimbursement on any letter of credit, banker's
acceptance, security purchase facility or similar credit transaction, (v) all
obligations of the type referred to in clauses (i) through (iv) above of other
persons for the payment of which Sierra Pacific is responsible or liable as
obligor, guarantor or otherwise and (vi) all obligations of the type referred to
in clauses (i) through (v) above of other persons secured by any lien on any
property or asset of Sierra Pacific (whether or not such obligation is assumed
by Sierra Pacific), except for (1) any such indebtedness that is by its terms
subordinated to or PARI PASSU with the Junior Subordinated Debentures and (2)
any indebtedness between or among Sierra Pacific or its affiliates, including
all other debt securities and guarantees in respect of those debt securities,
issued to any other trust, or a trustee of such trust, partnership or other
entity affiliated with Sierra Pacific that is a financing vehicle of Sierra
Pacific (a "Financing Entity") in connection with the issuance by such financial
entity of Preferred Securities or other securities that rank PARI PASSU with, or
junior to, the Preferred Securities. Such Senior Indebtedness shall continue to
be Senior Indebtedness and be entitled to the benefits of the subordination
provisions irrespective of any amendment, modification or waiver of any term of
such Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by Sierra Pacific. As of December 31, 1995, Senior
Indebtedness of Sierra Pacific aggregated approximately $463
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million, substantially all of which consists of first mortgage bonds or debt
secured by first mortgage bonds issued under Sierra Pacific's Indenture of
Mortgage and which are secured by a first lien on substantially all of Sierra
Pacific's real and personal property.
OPTIONAL REDEMPTION
Sierra Pacific shall have the right to redeem the Junior Subordinated
Debentures, in whole or in part, from time to time, on or after June , 2001,
or at any time in certain circumstances upon the occurrence of a Tax Event as
described under "Description of the Preferred Securities -- Tax Event Redemption
or Distribution," upon not less than 30 nor more than 60 days' notice, at a
redemption price equal to 100% of the principal amount to be redeemed plus any
accrued and unpaid interest, including Additional Interest (as herein defined),
if any, to the redemption date. If a partial redemption of the Preferred
Securities resulting from a partial redemption of the Junior Subordinated
Debentures would result in the delisting of the Preferred Securities, Sierra
Pacific may only redeem the Junior Subordinated Debentures in whole.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Sierra Pacific shall have the right at any time, during the term of the
Junior Subordinated Debentures, to defer interest payments from time to time by
extending the interest payment period for successive periods not exceeding 20
consecutive quarters, at the end of which Extension Period, Sierra Pacific shall
pay all interest then accrued and unpaid (including any Additional Interest, as
herein defined) together with interest thereon compounded quarterly at the rate
specified for the Junior Subordinated Debentures to the extent permitted by
applicable law ("Compound Interest"); PROVIDED, that during any such Extension
Period, (a) Sierra Pacific shall not declare or pay dividends on, make any
distribution with respect to, or redeem, purchase, acquire or make a liquidation
payment with respect to any of its capital stock (other than (i) purchases or
acquisitions of shares of Sierra Pacific Common Stock in connection with the
satisfaction by Sierra Pacific of its obligations under any employee benefit
plans, (ii) as a result of a reclassification of Sierra Pacific capital stock or
the exchange or conversion of one class or series of Sierra Pacific's capital
stock for another class or series of Sierra Pacific capital stock or (iii) the
purchase of fractional interests in shares of Sierra Pacific's capital stock
pursuant to the conversion or exchange provisions of such Sierra Pacific capital
stock or the security being converted or exchanged), (b) Sierra Pacific shall
not make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by Sierra Pacific that rank PARI
PASSU with or junior to the Junior Subordinated Debentures and (c) Sierra
Pacific shall not make any guarantee payments with respect to the foregoing
(other than pursuant to the Guarantee). Prior to the termination of any such
Extension Period, Sierra Pacific may further defer payments of interest by
extending the interest payment period; PROVIDED, HOWEVER, that, such Extension
Period, including all such previous and further extensions, may not exceed 20
consecutive quarters or extend beyond the maturity of the Junior Subordinated
Debentures. Upon the termination of any Extension Period and the payment of all
amounts then due, Sierra Pacific may commence a new Extension Period, subject to
the terms set forth in this section. No interest during an Extension Period,
except at the end thereof, shall be due and payable. Sierra Pacific has no
present intention of exercising its right to defer payments of interest by
extending the interest payment period on the Junior Subordinated Debentures. If
the Institutional Trustee shall be the sole holder of the Junior Subordinated
Debentures, Sierra Pacific shall give the Regular Trustees and the Institutional
Trustee notice of its selection of such Extension Period one Business Day prior
to the earlier of (i) the date distributions on the Preferred Securities are
payable or (ii) the date the Regular Trustees are required to give notice to the
NYSE (or other applicable self-regulatory organization) or to holders of the
Preferred Securities of the record date or the date such distribution is
payable. The Regular Trustees shall give notice of Sierra Pacific's selection of
such Extension Period to the holders of the Preferred Securities. If the
Institutional Trustee shall not be the sole holder of the Junior Subordinated
Debentures, Sierra Pacific shall give the holders of the Junior Subordinated
Debentures notice of its selection of such Extension Period ten Business Days
prior to the earlier of (i) the Interest Payment Date or (ii) the date upon
which Sierra Pacific is required to give notice to the NYSE (or other applicable
self-regulatory organization) or to holders of the Junior Subordinated
Debentures of the record or payment date of such related interest payment.
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ADDITIONAL INTEREST
If at any time Sierra Pacific Capital shall be required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing authority,
then, in any such case, Sierra Pacific will pay as additional interest
("Additional Interest") such additional amounts as shall be required so that the
net amounts received and retained by Sierra Pacific Capital after paying any
such taxes, duties, assessments or other governmental charges will be not less
than the amounts Sierra Pacific Capital would have received had no such taxes,
duties, assessments or other governmental charges been imposed.
CERTAIN COVENANTS
If (i) there shall have occurred any event that would constitute an
Indenture Event of Default or (ii) Sierra Pacific shall be in default with
respect to its payment of any obligations under the Guarantee, then (a) Sierra
Pacific shall not declare or pay dividends on, make distributions with respect
to, or redeem, purchase or acquire, or make a liquidation payment with respect
to, any of its capital stock (other than (i) purchases or acquisitions of shares
of Sierra Pacific common stock in connection with the satisfaction by Sierra
Pacific of its obligations under any employee benefit plans, (ii) as a result of
a reclassification of Sierra Pacific's capital stock or the exchange or
conversion of one class or series of Sierra Pacific capital stock for another
class or series of Sierra Pacific capital stock or (iii) the purchase of
fractional interests in shares of Sierra Pacific capital stock pursuant to the
conversion or exchange provisions of such Sierra Pacific capital stock or the
security being converted or exchanged) or make any guarantee payments with
respect to the foregoing, and, (b) Sierra Pacific shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities (including guarantees) issued by Sierra Pacific that rank PARI
PASSU with or junior to the Junior Subordinated Debentures.
Sierra Pacific will covenant (i) to directly or indirectly maintain 100%
ownership of the Common Securities of the Trust; PROVIDED, HOWEVER, that any
permitted successor of Sierra Pacific under the Indenture may succeed to Sierra
Pacific's ownership of such Common Securities and (ii) to use its reasonable
efforts to cause the Trust (x) to remain a statutory business trust, except in
connection with the distribution of Junior Subordinated Debentures to the
holders of Trust Securities in liquidation of the Trust, the redemption of all
of the Trust Securities of the Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the Declaration, and (y) to otherwise
continue to be classified as a grantor trust for United States federal income
tax purposes.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture provides that Sierra Pacific will not consolidate with or
merge into any other corporation or convey, transfer or lease its assets
substantially as an entirety unless (a) the successor is a corporation organized
in the United States and expressly assumes the due and punctual payment of the
principal of (and premium, if any) and interest on all Junior Subordinated
Debentures issued thereunder and the performance of every other covenant of the
Indenture on the part of Sierra Pacific and (b) immediately thereafter no
Indenture Event of Default and no event which, after notice or lapse of time, or
both, would become an Indenture Event of Default, shall have happened and be
continuing. Upon any such consolidation, merger, conveyance or transfer, the
successor corporation shall succeed to and be substituted for Sierra Pacific
under the Indenture and thereafter the predecessor corporation shall be relieved
of all obligations and covenants under the Indenture and the Junior Subordinated
Debentures.
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Junior Subordinated Debentures, will
have the right to declare the principal of and the interest on the Junior
Subordinated Debentures (including any Compound Interest and Additional
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the Junior Subordinated Debentures. See "-- Events of Default" below
for a
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description of the Indenture Events of Default. An Indenture Event of Default
also constitutes a Declaration Event of Default. The holders of Preferred
Securities in certain circumstances have the right to direct the Institutional
Trustee to exercise its rights as the holder of the Junior Subordinated
Debentures. See "Description of the Preferred Securities -- Declaration Events
of Default" and "Voting Rights."
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of Sierra Pacific to
pay interest or principal on the Junior Subordinated Debentures on the date such
interest or principal is otherwise payable, Sierra Pacific acknowledges that
then a holder of Preferred Securities may institute a Direct Action for payment
on or after the respective due date specified in the Junior Subordinated
Debentures. Notwithstanding any payment made to such holder of Preferred
Securities in connection with a Direct Action, Sierra Pacific shall remain
obligated to pay the principal of or interest on the Junior Subordinated
Debentures held by Sierra Pacific Capital or the Institutional Trustee of Sierra
Pacific Capital, and Sierra Pacific will be subrogated to the rights of such
holder of Preferred Securities with respect to payments on the Preferred
Securities to the extent of any payments made by Sierra Pacific to such holder
in any such Direct Action. The holders of Preferred Securities will not be able
to exercise directly any other remedy available to the holders of the Junior
Subordinated Debentures.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of Sierra
Pacific Capital as a result of the occurrence of a Tax Event, the Junior
Subordinated Debentures will be issued in the form of one or more global
certificates (each a "Global Security") registered in the name of the Depositary
or its nominee. Except under the limited circumstances described below, Junior
Subordinated Debentures represented by the Global Security will not be
exchangeable for, and will not otherwise be issuable as, Junior Subordinated
Debentures in definitive form. The Global Securities described above may not be
transferred except by the depositary to a nominee of the depositary or by a
nominee of the depositary to the depositary or another nominee of the depositary
or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debentures in definitive form and will not be considered the
holders (as defined in the Indenture) thereof for any purpose under the
Indenture, and no Global Security representing Junior Subordinated Debentures
shall be exchangeable, except for another Global Security of like denomination
and tenor to be registered in the name of the Depositary or its nominee or to a
successor Depositary or its nominee. Accordingly, each Beneficial Owner must
rely on the procedures of the Depositary or if such person is not a Participant,
on the procedures of the Participant through which such person owns its interest
to exercise any rights of a holder under the Indenture.
THE DEPOSITARY
If Junior Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of such holders' interests in Sierra Pacific Capital,
DTC will act as securities depositary for the Junior Subordinated Debentures.
For a description of DTC and the specific terms of the depositary arrangements,
see "Description of the Preferred Securities -- Book-Entry Only Issuance -- The
Depositary Trust Company." As of the date of this Prospectus, the description
therein of DTC's book-entry system and DTC's practices as they relate to
purchases, transfers, notices and payments with respect to the Preferred
Securities apply in all material respects to any debt obligations represented by
one or more Global Securities held by DTC. Sierra Pacific may appoint a
successor to DTC or any successor depositary in the event DTC or such successor
depositary is unable or unwilling to continue as a depository for the Global
Securities.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of
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the Junior Subordinated Debentures represented by such Global Security for all
purposes under the Indenture. Except as set forth below, owners of beneficial
interests in a Global Security will not be entitled to have the Junior
Subordinated Debentures represented by such Global Security registered in their
names, will not receive or be entitled to receive physical delivery of such
Junior Subordinated Debentures in definitive form and will not be considered the
owners or holders thereof under the Indenture. Accordingly, each person owning a
beneficial interest in a Global Security must rely on the procedures of the
Depositary for such Global Security and, if such person is not a participant, on
the procedures of the participant through which such person owns its interest,
to exercise any rights of a holder under the Indenture. Sierra Pacific
understands that under existing industry practices, if Sierra Pacific requests
any action of holders or if an owner of a beneficial interest in a Global
Security desires to give or take any action which a holder is entitled to give
or take under the Indenture, the Depositary for such Global Security would
authorize the participants holding the relevant beneficial interests to give or
take such action, and such participants would authorize beneficial owners owning
through such participants to give or take such action or would otherwise act
upon the instructions of beneficial owners holding through them.
Principal, premium, if any, and interest payments on the Junior Subordinated
Debentures represented by a Global Security registered in the name of a
Depositary or its nominee will be made to such Depositary or its nominee, as the
case may be, as the registered owner of such Global Security. None of Sierra
Pacific, the Debt Trustee or any other agent of Sierra Pacific or agent of the
Debt Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in such Global Security or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
Sierra Pacific expects that the Depositary for any Junior Subordinated
Debentures represented by a Global Security, upon receipt of any payment of
principal, premium or interest in respect of such Global Security, will
immediately credit participants' accounts with payments in amounts proportionate
to their respective beneficial interests in such Global Security as shown on the
records of such Depositary. Sierra Pacific also expects that payments by
participants to owners of beneficial interests in such Global Security held
through such participants will be governed by standing customer instructions and
customary practices, and will be the responsibility of such participants.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
If the Depositary for any Junior Subordinated Debentures represented by a
Global Security is at any time unwilling or unable to continue as Depositary or
ceases to be a clearing agency registered under the Exchange Act, and a
successor Depositary registered as a clearing agency under the Exchange Act is
not appointed by Sierra Pacific within 90 days, Sierra Pacific will issue such
Junior Subordinated Debentures in definitive form in exchange for such Global
Security. In addition, Sierra Pacific may at any time and in its sole discretion
determine not to have any of the Junior Subordinated Debentures of a series
represented by one or more Global Securities and, in such event, will issue
Junior Subordinated Debentures of such series in definitive form in exchange for
all of the Global Security or Securities representing such Junior Subordinated
Debentures. Any Junior Subordinated Debentures issued in definitive form in
exchange for a Global Security will be registered in such name or names as the
Depositary shall instruct the relevant Trustee. It is expected that such
instructions will be based upon directions received by the Depositary from
participants with respect to ownership of beneficial interests in such Global
Security.
EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events, which has occurred and is continuing, constitutes an "Event of Default"
with respect to the Junior Subordinated Debentures: (i) failure for 30 days to
pay interest on the Junior Subordinated Debentures, including any Additional
Interest in respect thereof, when due; PROVIDED, HOWEVER, that a valid extension
of the interest payment period by Sierra Pacific shall not constitute a default
in the payment of interest for this purpose; or (ii) failure to pay principal of
or premium, if any, on the Junior Subordinated Debentures when due whether at
maturity, upon redemption, by declaration or otherwise; PROVIDED, HOWEVER, that
a valid extension of the maturity of such Junior Subordinated Debentures shall
not constitute a default for this purpose; or (iii) failure to observe or
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perform any other covenant contained in the Indenture for 90 days after notice;
or (iv) in the event Junior Subordinated Debentures are issued to the Trust or a
trustee of such Trust in connection with the issuance of Trust Securities by
such Trust, the voluntary or involuntary dissolution, winding up or termination
of the Trust, except in connection with the distribution of Junior Subordinated
Debentures to the holders of Preferred Securities in liquidation of the Trust
upon the redemption of all outstanding Preferred Securities and in connection
with certain mergers, consolidations or amalgamations permitted by the
Declaration; or (v) certain events in bankruptcy, insolvency or reorganization
of Sierra Pacific.
The Debt Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the Junior Subordinated Debentures may declare
the principal of and interest on the Junior Subordinated Debentures due and
payable immediately on the occurrence of an Event of Default; PROVIDED, HOWEVER,
that, after such acceleration, but before a judgment or decree based on
acceleration, the holders of a majority in aggregate principal amount of
outstanding Junior Subordinated Debentures may, under certain circumstances,
rescind and annul such acceleration if all Events of Default, other than the
nonpayment of accelerated principal, have been cured or waived as provided in
the Indenture. For information as to waiver of defaults, see "-- Modification
and Amendments of the Indenture."
Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of
Sierra Pacific to pay interest or principal on the Junior Subordinated
Debentures on the date such interest or principal is otherwise payable, Sierra
Pacific acknowledges that, in such event, a holder of Preferred Securities may
institute a Direct Action for payment on or after the respective due date
specified in the Junior Subordinated Debentures. Sierra Pacific may not amend
the Indenture to remove the foregoing right to bring a Direct Action without the
prior written consent of all the holders of Preferred Securities of the Trust.
Notwithstanding any payment made to such holder of Preferred Securities by
Sierra Pacific in connection with a Direct Action, Sierra Pacific shall remain
obligated to pay the principal of or interest on the Junior Subordinated
Debentures held by the Trust or the Institutional Trustee of the Trust and
Sierra Pacific shall be subrogated to the rights of the holder of such Preferred
Securities with respect to payments on the Preferred Securities to the extent of
any payments made by Sierra Pacific to such holder in any Direct Action. The
holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Junior Subordinated Debentures.
The Holders of not less than a majority in principal amount of the
outstanding Junior Subordinated Debentures may waive any past defaults except
(a) a default in payment of the principal of (or premium, if any) or interest,
if any, on any Junior Subordinated Debentures and (b) a default in respect of a
covenant or provision of the Indenture which cannot be amended or modified
without the consent of the holder of each Junior Subordinated Debenture;
PROVIDED, HOWEVER, that if the Junior Subordinated Debentures are held by the
Trust or a trustee of such Trust, such waiver or modification to such waiver
shall not be effective until the holders of a majority in liquidation preference
of Trust Securities of the Trust shall have consented to such waiver or
modification to such waiver; PROVIDED FURTHER, that if the consent of the holder
of each outstanding Junior Subordinated Debenture is required, such waiver shall
not be effective until each holder of the Trust Securities of the Trust shall
have consented to such waiver.
Notwithstanding anything in the Indenture to the contrary, the right of any
holder of a Junior Subordinated Debenture to receive payment of the principal of
and interest on such Junior Subordinated Debt Security, on and after the
respective due dates expressed in such Junior Subordinated Debenture (as the
same may be extended in accordance with the terms of such Junior Subordinated
Debenture), or to institute suit for the enforcement of any such payment shall
not be impaired or affected without the consent of such holder, including the
holders of the Preferred Securities issued by Sierra Pacific Capital.
A default under any other indebtedness of Sierra Pacific or the Trust would
not constitute an Event of Default under the Junior Subordinated Debentures.
Subject to the provisions of the Indenture relating to the duties of the
Debt Trustee in case an Event of Default shall occur and be continuing, the Debt
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any holders of Junior
Subordinated Debentures, unless such holders shall have offered to the Debt
Trustee satisfactory indemnity. Subject to
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such provisions for the indemnification of the Debt Trustee, the holders of a
majority in aggregate principal amount of the Junior Subordinated Debentures
then outstanding will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Debt Trustee, or
exercising any trust or power conferred on the Debt Trustee with respect to such
series. The right of a holder of Preferred Securities to institute a proceeding
with respect to the Indenture is subject to certain conditions precedent
including notice and indemnity to the Debt Trustee, but the holder of a Junior
Subordinated Debenture has an absolute right to receipt of principal, premium,
if any, and interest at the maturity of, or, in the case of redemption, on the
Redemption Date or to institute suit for the enforcement thereof.
No holder of any Junior Subordinated Debenture will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless such holder shall have previously given to the Debt Trustee
written notice of a continuing Event of Default and, if the Trust is not the
sole holder of Junior Subordinated Debentures, unless the holders of at least
25% in aggregate principal amount of the Junior Subordinated Debentures then
outstanding shall also have made written request, and offered reasonable
indemnity, to the Debt Trustee to institute such proceeding as Debt Trustee, and
the Debt Trustee shall not have received from the holders of a majority in
aggregate principal amount of the outstanding Junior Subordinated Debentures a
direction inconsistent with such request and shall have failed to institute such
proceeding within 60 days. However, such limitations do not apply to a suit
instituted by a holder of a Junior Subordinated Debenture for enforcement of
payment of the principal of or interest on such Junior Subordinated Debenture on
or after the respective due dates expressed in such Junior Subordinated
Debenture.
Sierra Pacific is required to file annually with the Debt Trustee and the
Institutional Trustee a certificate as to whether Sierra Pacific is in
compliance with all the conditions and covenants under the Indenture.
MODIFICATIONS AND AMENDMENTS OF THE INDENTURE
Modifications and amendments to the Indenture may be made by Sierra Pacific
and the Debt Trustee with the consent of the holders of a majority in principal
amount of the Junior Subordinated Debentures at the time outstanding, PROVIDED,
that no such modification or amendment may, without the consent of the holder of
each Junior Subordinated Debenture affected thereby to: (i) modify the terms of
payment of principal, premium, if any, or interest or (ii) reduce the percentage
of holders of Junior Subordinated Debentures necessary to modify or amend the
Indenture or waive compliance by Sierra Pacific with any covenant or past
default, PROVIDED, FURTHER, that if the Junior Subordinated Debentures are held
by the Trust or a trustee of such Trust, such supplemental indenture shall not
be effective until the holders of a majority in liquidation preference of Trust
Securities of the Trust shall have consented to such supplemental indenture;
PROVIDED FURTHER, that if the consent of the holder of each outstanding Junior
Subordinated Debenture is required, such supplemental indenture shall not be
effective until each holder of the Trust Securities of the Trust shall have
consented to such supplemental indenture.
SETOFF
Notwithstanding anything contained to the contrary in the Indenture, Sierra
Pacific shall have the right to set off any payment with respect to the Junior
Subordinated Debentures it is otherwise required to make thereunder with and to
the extent Sierra Pacific has theretofore made, or is concurrently on the date
of such payment making, a payment under the Guarantee.
GOVERNING LAW
The Indenture and the Junior Subordinated Debentures will be governed by,
and construed in accordance with, the internal laws of the State of New York.
MISCELLANEOUS
The Indenture will provide that Sierra Pacific will pay all fees and
expenses related to (i) the offering of the Trust Securities and the Junior
Subordinated Debentures, (ii) the organization, maintenance and dissolution of
Sierra Pacific Capital, (iii) the retention of the Regular Trustees and (iv) the
enforcement by the Institutional Trustee of the rights of the holders of the
Preferred Securities. The payment of such fees and expenses will be fully and
unconditionally guaranteed by Sierra Pacific. Sierra Pacific will have the right
at all times to assign any of its rights or obligations under the Indenture to a
direct or indirect wholly owned
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subsidiary of Sierra Pacific; provided that, in the event of any such
assignment, Sierra Pacific will remain liable for all such obligations. Subject
to the foregoing, the Indenture will be binding upon and inure to the benefit of
the parties thereto and their respective successors and assigns. The Indenture
provides that it may not otherwise be assigned by the parties thereto. The Debt
Trustee, prior to default, undertakes to perform only such duties as are
specifically set forth in the Indenture and, after default, shall exercise the
same degree of care as a prudent individual would exercise in the conduct of his
or her own affairs. Subject to such provision, the Debt Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
satisfactory indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The Debt Trustee is not required to
expend or risk its own funds or otherwise incur personal financial liability in
the performance of its duties if the Debt Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
EFFECT OF OBLIGATIONS UNDER THE
JUNIOR SUBORDINATED DEBENTURES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of Sierra Pacific Capital
is to issue the Trust Securities evidencing undivided beneficial interests in
the assets of Sierra Pacific Capital, and to invest the proceeds from such
issuance and sale in the Junior Subordinated Debentures.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of Junior Subordinated Debentures
will be equal to the sum of the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and the interest and other payment dates on
the Junior Subordinated Debentures will match the distribution rate and
distribution and other payment dates for the Preferred Securities; (iii)
pursuant to the Indenture Sierra Pacific shall pay all, and the Trust shall not
be obligated to pay, directly or indirectly, any costs, expenses, debt and
obligations of the Trust (other than with respect to the Trust Securities); and
(iv) the Declaration further provides that the Regular Trustees shall not take
or cause or permit Sierra Pacific Capital to, among other things, engage in any
activity that is not consistent with the purposes of Sierra Pacific Capital.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor are
available) are fully and unconditionally guaranteed by Sierra Pacific. See
"Description of the Guarantee." If Sierra Pacific does not make interest
payments on the Junior Subordinated Debentures purchased by the Trust, the Trust
will not pay distributions on the Preferred Securities and will not have
sufficient funds available therefor. The Guarantee is a guarantee on a
subordinated basis with respect to the Preferred Securities issued by the Trust
from the time of its issuance and does not apply to any payment of distributions
unless and until the Trust has sufficient funds for the payment of such
distributions.
The Guarantee covers the payment of distributions and other payments on the
Preferred Securities only if and to the extent that Sierra Pacific has made a
payment of interest or principal on the Junior Subordinated Debentures held by
the Trust as its sole asset. The Guarantee, when taken together with Sierra
Pacific's obligations under the Junior Subordinated Debentures, the Indenture
and the Declaration, including its obligations to pay costs, expenses, debts and
liabilities of the Trust (other than with respect to the Trust Securities),
provides a full and unconditional guarantee of amounts due on the Preferred
Securities.
If Sierra Pacific fails to make interest or other payments on the Junior
Subordinated Debentures when due (taking account of any Extension Period), the
Declaration provides a mechanism whereby the holders of the Preferred
Securities, using the procedures described in "Description of the Preferred
Securities -- Book-Entry Only Issuance -- The Depository Trust Company" and " --
Voting Rights," may direct the Institutional Trustee to enforce its rights under
the Junior Subordinated Debentures. If the Institutional Trustee fails to
enforce its rights under the Junior Subordinated Debentures, a holder of
Preferred Securities may institute a legal proceeding against Sierra Pacific to
enforce the Institutional Trustee's rights under the
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Junior Subordinated Debentures without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity. Notwithstanding
the foregoing, if a Declaration Event of Default has occurred and is continuing
and such event is attributable to the failure of Sierra Pacific to pay interest
or principal on the Junior Subordinated Debentures on the date such interest or
principal is otherwise payable (or in the case of redemption on the redemption
date), then a holder of Preferred Securities may institute a Direct Action for
payment on or after the respective due date specified in the Junior Subordinated
Debentures. In connection with such Direct Action, Sierra Pacific will be
subrogated to the rights of such holder of Preferred Securities under the
Declaration to the extent of any payment made by Sierra Pacific to such holder
of Preferred Securities in such Direct Action. Sierra Pacific, under the
Guarantee, acknowledges that the Guarantee Trustee shall enforce the Guarantee
on behalf of the holders of the Preferred Securities. If Sierra Pacific fails to
make payments under the Guarantee, the Guarantee provides a mechanism whereby
the holders of the Preferred Securities may direct the Guarantee Trustee to
enforce its rights thereunder. Any holder of Preferred Securities may institute
a legal proceeding directly against Sierra Pacific to enforce such Preferred
Guarantee Trustee's right to receive payment under the Guarantee without first
instituting a legal proceeding against Sierra Pacific Capital, the Guarantee
Trustee, or any other person or entity.
Sierra Pacific and the Trust believe that the above mechanisms and
obligations, taken together, provide a full and unconditional guarantee by
Sierra Pacific of payments due on the Preferred Securities. See "Description of
Guarantee -- General."
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UNITED STATES FEDERAL INCOME TAXATION
GENERAL
In the opinion of Choate, Hall & Stewart (a partnership including
professional corporations), counsel to Sierra Pacific and the Trust ("Tax
Counsel"), the following is a summary of certain of the material United States
federal income tax consequences of the purchase, ownership and disposition of
Preferred Securities. Unless otherwise stated, this summary deals only with
Preferred Securities held as capital assets by holders who purchase the
Preferred Securities upon original issuance ("Initial Holders"). It does not
deal with special classes of holders such as banks, thrifts, real estate
investment trusts, regulated investment companies, insurance companies, dealers
in securities or currencies, tax-exempt investors, or persons that will hold the
Preferred Securities as a position in a "straddle," as part of a "synthetic
security" or "hedge," as part of a "conversion transaction" or other integrated
investment, or as other than a capital asset. This summary also does not address
the tax consequences to persons that have a functional currency other than the
U.S. Dollar or the tax consequences to shareholders, partners or beneficiaries
of a holder of Preferred Securities. Further, it does not include any
description of any alternative minimum tax consequences or the tax laws of any
state or local government or of any foreign government that may be applicable to
the Preferred Securities. This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations thereunder and
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change, possibly on a retroactive basis.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES
Based on the advice of Tax Counsel, Sierra Pacific intends to take the
position that the Junior Subordinated Debentures will be classified for United
States federal income tax purposes as indebtedness of Sierra Pacific under
current law, and, by acceptance of a Preferred Security, each holder covenants
to treat the Junior Subordinated Debentures as indebtedness and the Preferred
Securities as evidence of an indirect beneficial ownership interest in the
Junior Subordinated Debentures. No assurance can be given, however, that such
position of Sierra Pacific will not be challenged by the Internal Revenue
Service or, if challenged, that such a challenge will not be successful. The
remainder of this discussion assumes that the Junior Subordinated Debentures
will be classified for United States income tax purposes as indebtedness of
Sierra Pacific.
CLASSIFICATION OF SIERRA PACIFIC POWER CAPITAL I
In connection with the issuance of the Preferred Securities, Tax Counsel
will render its opinion generally to the effect that, under then current law and
assuming full compliance with the terms of the Declaration and the Indenture
(and certain other documents), and based on certain facts and assumptions
contained in such opinion, Sierra Pacific Capital will be classified for United
States federal income tax purposes as a grantor trust and not as an association
taxable as a corporation. Accordingly, for United States federal income tax
purposes, each holder of Preferred Securities generally will be considered the
owner of an undivided interest in the Junior Subordinated Debentures, and
pursuant to the agreement to treat the Junior Subordinated Debentures as
indebtedness, each holder will be required to include in its gross income any
OID accrued with respect to its allocable share of those Junior Subordinated
Debentures.
ORIGINAL ISSUE DISCOUNT
Because Sierra Pacific has the option, under the terms of the Junior
Subordinated Debentures, to defer payments of interest by extending interest
payment periods for up to 20 quarters, all of the stated interest payments on
the Junior Subordinated Debentures will be treated as "original issue discount."
Holders of debt instruments issued with OID must include that discount in income
on an economic accrual basis before the receipt of cash attributable to the
interest, regardless of their method of tax accounting. Generally, all of a
holder's taxable interest income with respect to the Junior Subordinated
Debentures will be accounted for as OID, and actual distributions of stated
interest will not be separately reported as taxable income. The amount of OID
that accrues in any month will approximately equal the amount of the interest
that accrues on the Junior Subordinated Debentures in that month at the stated
interest rate. In the event that the
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interest payment period is extended, holders will continue to accrue OID
approximately equal to the amount of the interest payment due at the end of the
extended interest payment period on an economic accrual basis over the length of
the extended interest period.
Because income on the Preferred Securities will constitute OID, corporate
holders of Preferred Securities will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the Preferred
Securities.
MARKET DISCOUNT AND BOND PREMIUM
Holders of Preferred Securities other than Initial Holders may be considered
to have acquired their undivided interests in the Junior Subordinated Debentures
with market discount or acquisition premium as such phrases are defined for
United States federal income tax purposes. Such holders are advised to consult
their tax advisors as to the income tax consequences of the acquisition,
ownership and disposition of the Preferred Securities.
RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF SIERRA
PACIFIC POWER CAPITAL I
Under certain circumstances, as described under the caption "Description of
the Preferred Securities -- Tax Event Redemption or Distribution," Junior
Subordinated Debentures may be distributed to holders in exchange for the
Preferred Securities and in liquidation of Sierra Pacific Capital. Under current
law, such a distribution, for United States federal income tax purposes, would
be treated as a non-taxable event to each holder, and each holder would receive
an aggregate tax basis in the Junior Subordinated Debentures equal to such
holder's aggregate tax basis in its Preferred Securities. A holder's holding
period in the Junior Subordinated Debentures so received in liquidation of
Sierra Pacific Capital would include the period during which the Preferred
Securities were held by such holder. If, however, the related special event is a
Tax Event which results in the Trust being treated as an association taxable as
a corporation, the distribution would likely constitute a taxable event to
holders of the Preferred Securities.
Under certain circumstances described herein (see "Description of the
Preferred Securities"), the Junior Subordinated Debentures may be redeemed for
cash and the proceeds of such redemption distributed to holders in redemption of
their Preferred Securities. Under current law, such a redemption would, for
United States federal income tax purposes, constitute a taxable disposition of
the redeemed Preferred Securities, and a holder could recognize gain or loss as
if it sold such redeemed Preferred Securities for cash. See "United States
Federal Income Taxation -- Sales of Preferred Securities."
SALES OF PREFERRED SECURITIES
A holder that sells Preferred Securities will recognize gain or loss equal
to the difference between its adjusted tax basis in the Preferred Securities and
the amount realized on the sale of such Preferred Securities. A holder's
adjusted tax basis in the Preferred Securities generally will be its initial
purchase price increased by OID previously includible in such holder's gross
income to the date of disposition and decreased by payments received on the
Preferred Securities. Such gain or loss generally will be a capital gain or loss
and generally will be a long-term capital gain or loss if the Preferred
Securities have been held for more than one year.
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Debentures. A holder who disposes of his Preferred
Securities between record dates for payments of distributions thereon will be
required to include accrued but unpaid interest on the Junior Subordinated
Debentures through the date of disposition in income as ordinary income, and to
add such amount to his adjusted tax basis in his pro rata share of the
underlying Junior Subordinated Debentures deemed disposed of. To the extent the
selling price is less than the holder's adjusted tax basis (which will include,
in the form of OID, all accrued but unpaid interest) a holder will recognize a
capital loss. Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal income tax purposes.
39
<PAGE>
PROPOSED TAX LEGISLATION
On March 19, 1996, President Clinton proposed the Proposed Legislation
which, among other things, would generally deny corporate issuers a deduction
for interest in respect of certain debt obligations issued on or after December
7, 1995 if such debt obligations have a maximum term in excess of twenty years
and are not shown as indebtedness on the issuer's applicable consolidated
balance sheet. On March 29, 1996, the Senate Finance Committee Chairman and the
House Ways and Means Committee Chairman issued the Joint Statement indicating
their intent that certain legislative proposals initiated by the Clinton
administration including the Proposed Legislation, that may be adopted by either
of the tax-writing committees of Congress would have an effective date that is
no earlier than the date of "appropriate Congressional action." Based upon the
Joint Statement, it is expected that if the Proposed Legislation were to be
enacted, such legislation would not apply to the Junior Subordinated Debentures.
There can be no assurances, however, that the effective date guidance contained
in the Joint Statement will be incorporated into the Proposed Legislation, if
enacted, or that other legislation enacted after the date hereof will not
otherwise adversely affect the ability of Sierra Pacific to deduct the interest
payable on the Junior Subordinated Debentures. Accordingly, there can be no
assurance that a Tax Event will not occur. See "Description of the Preferred
Securities -- Tax Event Redemption or Distribution."
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the United
States, a foreign corporation, a non-resident alien individual, a foreign
partnership, or a non-resident fiduciary of a foreign estate or trust.
Under present United States federal income tax law: (i) payments by Sierra
Pacific Capital or any of its paying agents to any holder of a Preferred
Security who or which is a United States Alien Holder will not be subject to
United States federal withholding tax; provided that, (a) the beneficial owner
of the Preferred Security does not actually or constructively own 10% or more of
the total combined voting power of all classes of stock of Sierra Pacific
entitled to vote, (b) the beneficial owner of the Preferred Security is not a
controlled foreign corporation that is related to Sierra Pacific through stock
ownership, and (c) either (A) the beneficial owner of the Preferred Security
certifies to Sierra Pacific Capital or its agent, under penalties of perjury,
that it is not a United States holder and provides its name and address or (B) a
securities clearing organization, bank or other financial institution that holds
customers' securities in the ordinary course of its trade or business (a
"Financial Institution"), and holds the Preferred Security in such capacity,
that certifies to Sierra Pacific Capital or its agent, under penalties of
perjury, that such statement has been received from the beneficial owner by it
or by a Financial Institution between it and the beneficial owner and furnishes
Sierra Pacific Capital or its agent with a copy thereof; and (ii) a United
States Alien Holder of a Preferred Security will not be subject to United States
federal withholding tax on any gain realized upon the sale or other disposition
of a Preferred Security.
INFORMATION REPORTING TO HOLDERS
Generally, income on the Preferred Securities will be reported to holders on
Forms 1099-OID, which forms should be mailed to holders of Preferred Securities
by January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, the Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the holder complies
with certain identification requirements. Any withheld amounts will be allowed
as a credit against the holder's United States federal income tax, provided the
required information is provided to the Service.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL
OR OTHER TAX LAWS.
40
<PAGE>
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Trust has agreed to sell to each of the
underwriters named below (the "Underwriters"), and each of the Underwriters, for
whom Merrill Lynch & Co. and Merrill, Lynch, Pierce, Fenner & Smith Incorporated
are acting as representative (the "Representative"), has severally agreed to
purchase the number of Preferred Securities set forth opposite its name below.
In the Underwriting Agreement, the several Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all of the Preferred
Securities offered hereby if any of the Preferred Securities are purchased,
provided that, under certain circumstances relating to a default of one or more
Underwriters, less than all of such Preferred Securities may be purchased.
<TABLE>
<CAPTION>
NUMBER OF
PREFERRED
UNDERWRITER SECURITIES
- -------------------------------------------------------------------------- ------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated........................
Dean Witter Reynolds Inc..................................................
A.G. Edwards & Sons, Inc..................................................
Legg Mason Wood Walker Incorporated.......................................
----------
Total................................................................. 1,940,000
----------
----------
</TABLE>
The Underwriters propose to offer the Preferred Securities in part directly
to the public at the initial public offering price, as set forth on the cover
page of this Prospectus, and in part to certain securities dealers at such price
less a concession of $.[ ] per Preferred Security. The Underwriters may allow,
and such dealers may reallow, a concession not in excess of $.[ ] per
Preferred Security to certain brokers and dealers. After the Preferred
Securities are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the Representative.
In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures of Sierra
Pacific, the Underwriting Agreement provides that Sierra Pacific will agree to
pay as compensation ("Underwriters' Compensation") to the Underwriters for the
Underwriters' arranging the investment therein of such proceeds, an amount in
New York Clearing House (next day) funds of $[ ] per Preferred Security (or
$[ ] in the aggregate) for the accounts of the several Underwriters,
provided that such compensation for sales of 10,000 or more Preferred Securities
to any single purchaser will be $[ ] per Preferred Security. Therefore, to
the extent of such sales, the actual amount of Underwriters' Compensation will
be less than the aggregate amount specified in the preceding sentence.
During a period of 30 days from the date of the pricing of the Preferred
Securities, neither the Trust nor Sierra Pacific will, without the prior written
consent of the Representative, directly or indirectly, sell, offer to sell,
contract to sell, grant any option for the sale of, or otherwise dispose of, any
Preferred Securities, any security convertible into or exchangeable into or
exercisable for Preferred Securities or the Junior Subordinated Debentures or
any debt securities substantially similar to the Junior Subordinated Debentures
or any equity securities substantially similar to the Preferred Securities
(except for the Junior Subordinated Debentures and the Preferred Securities).
An application has been filed with the New York Stock Exchange for the
listing of the Preferred Securities, subject to official notice of issuance. If
approved for listing, trading of the Preferred Securities on
41
<PAGE>
the New York Stock Exchange is expected to commence within a 30 day period after
the date of this Prospectus. The Representative has advised the Trust that the
Underwriters intend to make a market in the Preferred Securities prior to the
commencement of trading on the New York Stock Exchange. The Underwriters will
have no obligation to make a market in the Preferred Securities, however, and
may cease market making activities, if commenced, at any time.
Prior to this offering, there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the Preferred
Securities on the New York Stock Exchange, the Underwriters will undertake to
sell to a minimum of 400 beneficial holders.
Sierra Pacific and the Trust have agreed to indemnify the Underwriters
against, or to contribute to payments that the Underwriters may be required to
make in respect of, certain liabilities, including liabilities under the
Securities Act.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, Sierra Pacific in the ordinary course of
business.
LEGAL MATTERS
The validity of the Preferred Securities, Junior Subordinated Debentures,
the Guarantee and certain matters relating thereto and certain United States
federal income taxation matters will be passed upon for Sierra Pacific and
Sierra Pacific Capital by Choate, Hall & Stewart (a partnership including
professional corporations), Boston, Massachusetts, counsel to Sierra Pacific.
Matters of local law are being passed upon by Woodburn and Wedge, special Nevada
counsel for Sierra Pacific, by Graham & James LLP, special California counsel
for Sierra Pacific, and with respect to certain matters of Delaware law by
Skadden, Arps, Slate, Meagher & Flom, special counsel to the Underwriters.
Choate, Hall & Stewart has relied upon the opinions of such other counsel as to
such matters. Certain legal matters will be passed upon for the Underwriters by
Ropes & Gray, Boston, Massachusetts.
INDEPENDENT ACCOUNTANTS
The balance sheets and statements of capitalization of Sierra Pacific as of
December 31, 1995 and 1994, and the statements of income, common shareholders'
equity and cash flows for each of the three years in the period ended December
31, 1995, incorporated by reference in this Prospectus, have been incorporated
by reference in reliance on the report of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in auditing and
accounting.
Any financial statements and schedules hereafter incorporated by reference
in the registration statement of which the Prospectus is a part that have been
audited and are the subject of a report by independent accountants will be so
incorporated by reference in reliance upon such reports and upon the authority
of such firm as experts in accounting and auditing to the extent covered by
consents filed with the Commission.
ADDITIONAL INFORMATION
With respect to the unaudited interim financial information of the Company
for the period ended March 31, 1996, incorporated by reference in this
prospectus, the independent accountants have reported that they have applied
limited procedures in accordance with professional standards for a review of
such information. However, their reports included in the Company's quarterly
report on Form 10-Q for the quarterly period ended March 31, 1996 and
incorporated by reference herein, state that they did not audit and they do not
express an opinion on that interim financial information. Accordingly, the
degree of reliance on their report on such information should be restricted in
light of the limited nature of the review procedures applied. The accountants
are not subject to the liability provisions of Section 11 of the Act for their
reports on the unaudited interim financial information because those reports are
not "reports" or "parts" of the registration statement prepared or certified by
the accountants within the meaning of Sections 7 and 11 of the Act.
42
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY SIERRA PACIFIC POWER
COMPANY, SIERRA PACIFIC POWER CAPITAL I, OR THE UNDERWRITERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF SIERRA PACIFIC POWER COMPANY OR SIERRA PACIFIC POWER CAPITAL I SINCE THE DATE
HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE
IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information.......................... 4
Incorporation of Certain Documents by
Reference..................................... 4
Sierra Pacific Power Company Selected
Historical Financial Information.............. 6
Sierra Pacific Power Company................... 8
Sierra Pacific Power Capital I................. 9
Risk Factors................................... 10
Accounting Treatment........................... 13
Use of Proceeds................................ 13
Description of the Preferred Securities........ 14
Description of the Guarantee................... 25
Description of the Junior Subordinated
Debentures.................................... 27
Effect of Obligations Under the Junior
Subordinated Debentures and the Guarantee..... 36
United States Federal Income Taxation.......... 38
Plan of Distribution........................... 41
Legal Matters.................................. 42
Independent Accountants........................ 42
Additional Information......................... 42
</TABLE>
1,940,000
PREFERRED SECURITIES
SIERRA PACIFIC POWER
CAPITAL I
% TRUST ORIGINATED
PREFERRED SECURITIES ("TOPRS")
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
SIERRA PACIFIC
POWER COMPANY
---------------------
PROSPECTUS SUPPLEMENT
---------------------
MERRILL LYNCH & CO.
DEAN WITTER REYNOLDS INC.
A.G. EDWARDS & SONS, INC.
LEGG MASON WOOD WALKER
INCORPORATED
JUNE , 1996
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Securities and Exchange Commission Registration Fee.................. $16,725
New York Stock Exchange Listing Fee.................................. 14,750*
Nevada Commission Fee................................................ 200
California Commission Fee............................................ 5,203
Rating Agency Fees................................................... 22,665*
Blue Sky Fees and Expenses........................................... 7,000*
Trustee's Expenses................................................... 12,000*
Printing Fees and Expenses........................................... 40,000*
Accounting Fees and Expenses......................................... 14,000*
Legal Fees and Expenses.............................................. 149,500*
Miscellaneous Expenses............................................... 7,957*
Total Expenses....................................................... $290,000*
_______________________________
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Nevada Revised statutes provide that under certain circumstances, a
corporation may indemnify any person for amounts incurred in connection with
a pending or threatened action, suit or proceeding in which he is, or is
threatened to be made, a party by reason of his being a director, officer,
employee or agent of the Corporation.
The Articles of Incorporation of Sierra Pacific provide in substance that
Sierra Pacific will indemnify each of its directors and officers and former
directors and officers against expenses necessarily incurred in connection
with the defense of any action, suit or proceeding in which he or she is made
a party by reason of being or having been a director or officer of Sierra
Pacific, except in relation to matters as to which he or she shall be
adjudged liable for negligence or misconduct.
Sierra Pacific has purchased insurance coverage under a policy insuring
directors and officers of Sierra Pacific against certain liabilities which
they may incur in their capacity as such.
The Declaration of the Sierra Pacific Trust provides that no Sierra
Pacific Trustee, affiliate of the Sierra Pacific Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives or
agents of any Sierra Pacific Trustee, or any employee or agent of the Sierra
Pacific Trust or its affiliates (each an "Indemnified Person") shall be
liable, responsible or accountable in damages or otherwise to the Sierra
Pacific Trust or any employee or agent of the Trust or its affiliates for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Sierra
Pacific Trust and in a manner such Indemnified Person reasonably believed to
be within the scope of the authority conferred on such Indemnified Person by
the Declaration or by law, except that an Indemnified Person shall be liable
for any such loss,
II-1
<PAGE>
damage or claim incurred by reason of such Indemnified Person's negligence or
willful misconduct withrespect to such acts or omissions. The Declaration of
the Sierra Pacific Trust also provides that to the fullest extent permitted
by applicable law, Sierra Pacific shall indemnify and hold harmless each
Indemnified Person from and against any loss, damage or claim incurred by
such Indemnified Person by reason of any act or omission performed or omitted
by such Indemnified Person in good faith on behalf of the Sierra Pacific
Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person by such
Declaration, except that no Indemnified Person shall be entitled to be
indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of the negligence of such Indemnified Person or
willful misconduct with respect to such acts or omissions. The Declaration
of the Sierra Pacific Trust further provides that, to the fullest extent
permitted by applicable law, expenses (including legal fees) incurred by an
Indemnified Person in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by Sierra Pacific prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
or an undertaking by or on behalf of the Indemnified Person to repay such
amount if it shall be determined that the Indemnified Person is not entitled
to be indemnified for the underlying cause of action as authorized by the
Declaration.
The directors and officers of Sierra Pacific and the Regular Trustees are
covered by insurance policies indemnifying against certain liabilities,
including certain liabilities arising under the Securities Act of 1933, as
amended, which might be incurred by them in such capacities and against which
they cannot be indemnified by Sierra Pacific or the Sierra Pacific Trust.
Any agents, dealers or underwriters who execute any of the agreements
filed as Exhibit I to this registration statement will agree to indemnify
Sierra Pacific's directors and their officers and the Sierra Pacific Trustees
who signed the registration statement against certain liabilities that may
arise under the Securities Act of 1993, as amended, with respect to
information furnished to Sierra Pacific or the Sierra Pacific Trust by or on
behalf of any such indemnifying party.
See "Item 17. Undertakings." for a description of the Securities and
Exchange Commission's position regarding such indemnification provisions.
ITEM 16. EXHIBITS.
See Index to Exhibits immediately preceding the Exhibits included as part
of this Registration Statement.
ITEM 17. UNDERTAKING.
The Registrants hereby undertake that, for purposes of determining any
liability under the Securities Act, each filing of Sierra Pacific's Annual
Report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (and where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d)
of the Exchange Act) that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions referred to in Item 15
II-2
<PAGE>
(other than the insurance policies referred to therein), or otherwise, the
Registrants have been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrants of expenses incurred or paid by a director, officer or
controlling person of the Registrants in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrants will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the Plan of
Distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that the undertakings set forth in paragraphs (i) and (ii)
above do not apply if the information required to be included in a post
effective amendment by those paragraphs is contained in periodic reports
filed by Sierra Pacific pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
The Registrants hereby undertake that:
II-3
<PAGE>
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Reno, State of Nevada, on May 31, 1996.
SIERRA PACIFIC POWER COMPANY
By: /s/ Walter M. Higgins
----------------------------
(Walter M. Higgins)
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Walter M. Higgins Chairman, President and May 31, 1996
- ------------------------- Chief Executive Officer
Walter M. Higgins (Principal Executive Officer)
and Director
Malyn K. Malquist* Senior Vice President, Chief May 31, 1996
- ------------------------- Financial Officer (Principal
Malyn K. Malquist Financial Officer) (Principal
Accounting Officer)
Edward P. Bliss* Director May 31, 1996
- -------------------------
Edward P. Bliss
Krestine M. Corbin* Director May 31, 1996
- -------------------------
Krestine M. Corbin
Theodore J. Day* Director May 31, 1996
- -------------------------
Theodore J. Day
Harold P. Dayton, Jr.* Director May 31, 1996
- -------------------------
Harold P. Dayton, Jr.
James R. Donnelley* Director May 31, 1996
- -------------------------
James R. Donnelley
Richard N. Fulstone* Director May 31, 1996
- -------------------------
Richard N. Fulstone
II-5
<PAGE>
James L. Murphy* Director May 31, 1996
- -------------------------
James L. Murphy
Ronald K. Remington* Director May 31, 1996
- -------------------------
Ronald K. Remington
Dennis E. Wheeler* Director May 31, 1996
- -------------------------
Dennis E. Wheeler
Robert B. Whittington* Director May 31, 1996
- -------------------------
Robert B. Whittington
* By /s/ Malyn K. Malquist
------------------------
Malyn K. Malquist
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Sierra
Pacific Power Capital I certifies that it has reasonable grounds to believe
that it meets all the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Reno, State of Nevada, on the 31st
day of May, 1996.
SIERRA PACIFIC POWER CAPITAL I
By: /s/ Malyn K. Malquist
----------------------------
Malyn K. Malquist, Trustee
By: /s/ William E. Peterson
----------------------------
William E. Peterson, Trustee
II-6
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
*1 - Form of Underwriting Agreement for offering of Preferred
Securities.
*4-A - Certificate of Trust of Sierra Pacific Power Capital I.
*4-B-1 - Declaration of Trust of Sierra Pacific Power Capital I.
*4-B-2 - Form of Amended and Restated Declaration of Trust of Sierra
Pacific Power Capital I.
*4-C - Form of Indenture among Sierra Pacific Power Company and IBJ
Schroder Bank & Trust Company, as Trustee.
*4-D - Form of Supplemental Indenture to Indenture to be used in
connection with the issuance of Junior Subordinated
Debentures and Preferred Securities.
*4-E - Form of Preferred Security (included in 4-B-2 above).
*4-F - Form of Junior Subordinated Debenture (included in 4-D above).
*4-G - Form of Guarantee with respect to Preferred Securities.
*5-A - Opinion of Choate, Hall & Stewart.
*5-B - Opinion of Woodburn and Wedge.
*5-C - Opinion of Graham & James L.L.P.
*5-D - Opinion of Skadden, Arps, Slate, Meager & Flom.
*8-A - Opinion of Choate, Hall & Stewart
12 - Computations of Ratio of Earnings to Fixed Charges of Sierra
Pacific Power Company and Ratio of Earnings to Fixed Charges
and Preferred Dividends of Sierra Pacific Power Company.
15 - Letter concerning unaudited interim financial information
from Independent Accountants, Coopers & Lybrand L.L.P.
23-A - Consent of Independent Accountants, Coopers & Lybrand L.L.P.
*23-B - Consent of Choate, Hall & Stewart (included in Exhibit 5-A).
*23-C - Consent of Woodburn and Wedge (included in Exhibit 5-B).
*23-D - Consent of Graham & James L.L.P. (included in Exhibit 5-C).
*23-E - Consent of Skadden, Arps, Slate, Meager & Flom (included in
Exhibit 5-D).
*24 - Powers of Attorney.
II-7
<PAGE>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
*25-A - Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended of IBJ Schroder Bank & Trust
Company, as Trustee under the Indenture.
*25-B - Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended of IBJ Schroder Bank & Trust
Company, as Trustee under the Amended and Restated
Declaration of Trust of Sierra Pacific Power Capital I.
*25-C - Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of IBJ Schroder Bank & Trust
Company, as Trustee of the Preferred Securities Guarantees
of Sierra Pacific Power Company for the benefit of the
holders of Preferred securities of Sierra Pacific Power
Capital I.
____________________________
* Previously filed.
II-8
<PAGE>
SIERRA PACIFIC POWER COMPANY
RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN TH0USANDS)
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED MARCH 31,
EARNINGS 1991 1992 1993 1994 1995 1996
- -------- ---- ---- ---- ---- ---- ---------------
<S> <C> <C> <C> <C> <C> <C>
Income After Interest Charges $50,224 $49,843 $57,457 $60,863 $65,983 $68,836
Deferral Mechanism Adjustments (1,2) $0 $1,050 ($409) $2 ($552) ($534)
-------- -------- -------- -------- -------- --------
Adjusted Income $50,224 $50,893 $57,048 $60,865 $65,431 $68,302
Income Taxes, Operating 24,810 26,029 27,499 29,113 37,370 40,242
Income Taxes, Non-Operating (390) (787) 301 751 (231) (239)
Fixed Charges (1,2) 46,095 41,975 43,823 43,493 40,326 39,987
-------- -------- -------- -------- -------- --------
Earnings Available
for Fixed Charges $120,739 $118,110 $128,671 $134,222 $142,896 $148,292
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
FIXED CHARGES
- -------------
Interest on Long-Term Debt (1) $39,331 $37,184 $39,091 $35,193 $35,326 $35,025
Deferred Mechanism Adjustments $0 ($980) $459 $52 $554 $512
-------- -------- -------- -------- -------- --------
Adjusted Interest $39,331 $36,204 $39,550 $35,245 $35,880 $35,537
Amortization of Debt Discount
and Expenses, Less Premium 549 680 1,001 1,247 1,225 1,224
Other Interest Expense (2) 3,482 2,528 822 4,386 556 668
Deferred Mechanism Adjustments 0 (70) (50) (54) (2) 22
-------- -------- -------- -------- -------- --------
Adjusted Interest 3,482 2,458 772 4,534 554 690
Interest Compounded
of all Rental Charges 2,733 2,633 2,500 2,467 2,667 2,536
-------- -------- -------- -------- -------- --------
Total Fixed Charges $46,095 $41,975 $43,823 $43,493 $40,326 $39,987
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
RATIO OF EARNINGS
TO FIXED CHARGES 2.62 2.81 2.94 3.09 3.54 3.71
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
</TABLE>
(1) Adjusted for the deferral portion of the variable rate interest deferral
mechanism.
(2) Adjusted for the carrying charges on the variable rate interest deferral
mechanism.
<PAGE>
SIERRA PACIFIC POWER COMPANY
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
(DOLLARS IN TH0USANDS)
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED MARCH 31,
EARNINGS 1991 1992 1993 1994 1995 1996
- -------- ---- ---- ---- ---- ---- ---------------
<S> <C> <C> <C> <C> <C> <C>
Income After Interest Charges $50,224 $49,843 $57,457 $60,863 $65,983 $68,836
Deferral Mechanism Adjustments (1,2) $0 $1,050 ($409) $2 ($552) ($534)
-------- -------- -------- -------- -------- --------
Adjusted Income $50,224 $50,893 $57,048 $60,865 $65,431 $68,302
Income Taxes, Operating 24,810 26,029 27,499 29,113 37,370 40,242
Income Taxes, Non-Operating (390) (787) 301 751 (231) (239)
Fixed Charges (1,2) 46,095 41,975 43,823 43,493 40,326 39,987
-------- -------- -------- -------- -------- --------
Earnings Available
for Fixed Charges/Preferred Dividends $120,739 $118,110 $128,671 $134,222 $142,896 $148,292
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
FIXED CHARGES/PREFERRED DIVIDENDS
- ---------------------------------
Interest on Long-Term Debt (1) $39,331 $37,184 $39,091 $35,193 $35,326 $35,025
Deferred Mechanism Adjustments $0 ($980) $459 $52 $554 $512
-------- -------- -------- -------- -------- --------
Adjusted Interest $39,331 $36,204 $39,550 $35,245 $35,880 $35,537
Amortization of Debt Discount
and Expenses, Less Premium 549 680 1,001 1,247 1,225 1,224
Other Interest Expense (2) 3,482 2,528 822 4,588 556 668
Deferred Mechanism Adjustments 0 (70) (50) (54) (2) 22
-------- -------- -------- -------- -------- --------
Adjusted Interest 3,482 2,458 772 4,534 554 690
Interest Compounded
of all Rental Charges 2,733 2,633 2,500 2,467 2,667 2,536
Preferred Dividends (3) 6,481 8,496 12,258 11,827 11,325 11,437
-------- -------- -------- -------- -------- --------
Total Fixed Charges/ $52,576 $50,471 $56,081 $55,320 $51,851 $51,424
Preferred Dividends -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
RATIO OF EARNINGS
TO FIXED CHARGES/PREFERRED DIVIDENDS 2.30 2.34 2.29 2.43 2.76 2.86
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
</TABLE>
(1) Adjusted for the deferral portion of the variable rate interest deferral
mechanism.
(2) Adjusted for the carrying charges on the variable rate interest deferral
mechanism.
(3) Preferred Stock Dividend Requirements (100% Tax Rate).
<PAGE>
EXHIBIT 15
[Coopers & Lybrand Letterhead]
May 31, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: SIERRA PACIFIC POWER COMPANY
REGISTRATION STATEMENT ON FORM S-3
We are aware that our report dated April 26, 1996 on our review of the
interim financial information of Sierra Pacific Power Company for the period
ended March 31, 1996 and included in the Company's quarterly report on
Form 10-Q is incorporated by reference in the registration statement on
Form S-3 of Sierra Pacific Resources for the Company's 1,940,000 shares of
Trust Originated Preferred Securities. Pursuant to Rule 436(c) under the
Securities Act of 1933, this report should not be considered a part of the
registration statement prepared or certified by us within the meaning of
Sections 7 and 11 of that Act.
Very truly yours,
/s/ Coopers & Lybrand L.L.P.
<PAGE>
EXHIBIT 23-A
[Coopers & Lybrand Letterhead]
May 31, 1996
Choate, Hall & Stewart
53 State Street
Boston, Ma., 02109
Enclosed is our manually signed consent letter for our audit of the
consolidated financial statements of Sierra Pacific Power Company as of
December 31, 1995 and 1994, and for each of the three years in the period
ending December 31, 1995 and 1994. Also, enclosed is our awareness letter for
our review of the interim consolidated financial statements of Sierra Pacific
Power Company for the period ended March 31, 1996.
Our manually signed report serves to authorize the use of our name on our
consent and awareness letters in the electronic filing of the Company's
Form S-3 for the issuance of 1,940,000 shares of Trust Originated Preferred
Stock with the SEC.
Please provide us with an exact copy of the entire document as electronically
filed with the SEC.
Very truly yours,
/s/ Coopers & Lybrand L.L.P.
