<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 3, 1997
REGISTRATION NOS. 333-
333-
333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE SOUTHERN COMPANY 4911
SOUTHERN COMPANY CAPITAL FUNDING, INC. 6719
SOUTHERN COMPANY CAPITAL TRUST I 6733
(EXACT NAME OF REGISTRANT AS SPECIFIED (PRIMARY STANDARD INDUSTRIAL
IN ITS CHARTER) CLASSIFICATION CODE NUMBER)
DELAWARE 58-0690070
DELAWARE APPLIED FOR
DELAWARE APPLIED FOR
(I.R.S. EMPLOYER IDENTIFICATION
(STATE OR OTHER JURISDICTION OF NUMBER)
INCORPORATION OR ORGANIZATION)
270 PEACHTREE STREET, N.W.
ATLANTA, GEORGIA 30303
(770) 393-0650
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
EACH REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
TOMMY CHISHOLM, SECRETARY
THE SOUTHERN COMPANY
270 PEACHTREE STREET, N.W.
ATLANTA, GEORGIA 30303
(770) 393-0650
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE OF EACH REGISTRANT)
PLEASE SEND COPIES OF ALL CORRESPONDENCE TO:
W.L. WESTBROOK JOHN D. MCLANAHAN
FINANCIAL VICE PRESIDENT TROUTMAN SANDERS LLP
THE SOUTHERN COMPANY 600 PEACHTREE STREET, N.E., SUITE 5200
270 PEACHTREE STREET ATLANTA, GEORGIA 30308
ATLANTA, GEORGIA 30303 (404) 885-3000
(770) 393-0650
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE(2)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Exchange Capital Securities, Liquidation
Amount $1,000 per Capital Security, of
Southern Company Capital Trust I....... $325,000,000 100% $325,000,000 $98,485
- ----------------------------------------------------------------------------------------------------
Exchange Series A Junior Subordinated
Deferrable Interest Notes of Southern
Company Capital Funding, Inc.(2).......
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The Southern Company Exchange Capital
Securities Guarantees(3)(4)............
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The Southern Company Exchange Junior
Subordinated Notes Guarantee(3)(4).....
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Total(5)................................ $325,000,000 100% $325,000,000 $98,485
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</TABLE>
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(1) Estimated for the sole purpose of computing the registration fee. Pursuant
to Rule 457(n) under the Securities Act, no separate fee is payable with
respect to the Exchange Capital Securities Guarantee (the "Exchange Capital
Securities Guarantee").
(2) No separate consideration will be received for the Exchange Series A
Junior Subordinated Deferrable Interest Notes (the "Exchange Junior
Subordinated Notes") distributed upon any liquidation of Southern Company
Capital Trust I.
<PAGE>
(3) No separate consideration will be received for the Exchange Capital
Securities Guarantee or the Exchange Notes Guarantee.
(4) This Registration Statement (as the same may be amended from time to time
(the "Registration Statement")) is deemed to cover rights of holders of
Exchange Capital Securities of Southern Company Capital Trust I under the
Trust Agreement, the rights of holders of Exchange Junior Subordinated Notes
under the Indenture, the rights of the holders of such Exchange Capital
Securities under the Exchange Capital Securities Guarantee, the rights of
holders of the Exchange Junior Subordinated Notes under the Exchange Notes
Guarantee and certain backup undertakings as described herein.
(5) Such amount represents the liquidation amount of the Southern Company
Capital Trust I Exchange Capital Securities to be exchanged hereunder and
the principal amount of Exchange Junior Subordinated Notes that may be
distributed to holders of such Exchange Capital Securities upon any
liquidation of Southern Company Capital Trust I.
---------------
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 WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<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 ANY 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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JUNE 3, 1997
SOUTHERN COMPANY CAPITAL TRUST I
OFFER TO EXCHANGE ITS
8.19% EXCHANGE CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER EXCHANGE CAPITAL SECURITY)
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR ANY AND ALL OF ITS OUTSTANDING
8.19% ORIGINAL CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER ORIGINAL CAPITAL SECURITY)
------------
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
[LOGO OF SOUTHERN COMPANY APPEARS HERE]
------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON , 1997, UNLESS EXTENDED.
Southern Company Capital Trust I, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby offers, upon the terms and
subject to the conditions set forth in this Prospectus (as the same may be
amended or supplemented from time to time, the "Prospectus") and in the
accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"), to exchange up to $325,000,000 aggregate liquidation amount of its
8.19% Exchange Capital Securities (the "Exchange Capital Securities") which
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement (as defined herein) of
which this Prospectus constitutes a part, for a like liquidation amount of its
outstanding 8.19% Capital Securities (the "Original Capital Securities"), of
which $325,000,000 aggregate liquidation amount are issued and outstanding.
Pursuant to the Exchange Offer, (i) The Southern Company, a Delaware
corporation ("Southern"), is also offering to exchange its guarantee of
payments of cash distributions and payments on liquidation of the Trust or
redemption of the Original Capital Securities (the "Original Capital Securities
Guarantee") for a like guarantee in respect of the Exchange Capital Securities
(the "Exchange Capital Securities Guarantee") and (ii) Southern Company Capital
Funding, Inc., a Delaware corporation ("Capital") and an indirect, wholly-owned
subsidiary of Southern, is offering to exchange $335,052,000 aggregate
principal amount of its Series A 8.19% junior subordinated deferrable interest
notes due February 1, 2037 (the "Original Junior Subordinated Notes") for a
like aggregate principal amount of its Series A 8.19% exchange junior
subordinated deferrable interest notes due February 1, 2037 (the "Exchange
Junior Subordinated Notes"). Southern has irrevocably and unconditionally
guaranteed the due and punctual payment of the Original Junior Subordinated
Notes (the "Original Notes Guarantee") and will likewise guarantee payment of
the Exchange Junior Subordinated Notes (the "Exchange Notes Guarantee"). The
Exchange Capital Securities Guarantee, Exchange Junior Subordinated Notes and
Exchange Notes Guarantee also have been registered under the Securities Act.
The Original Capital Securities, the Original Capital Securities Guarantee, the
Original Junior Subordinated Notes and the Original Notes Guarantee are
collectively referred to herein as the "Original Securities" and the Exchange
Capital Securities, the Exchange Capital Securities Guarantee, the Exchange
Junior Subordinated Notes and the Exchange Notes Guarantee are collectively
referred to herein as the "Exchange Securities."
This Prospectus and the Letter of Transmittal are first being mailed to all
holders of Original Capital Securities on , 1997.
----------
SEE "RISK FACTORS" BEGINNING ON PAGE 18 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS IN DECIDING WHETHER TO TENDER ORIGINAL
CAPITAL SECURITIES IN THE EXCHANGE OFFER.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1997.
<PAGE>
(Continued from the previous page)
The terms of the Exchange Securities are identical in all material respects
to the respective terms of the Original Securities, except that (i) the
Exchange Securities have been registered under the Securities Act and
therefore will not be subject to certain restrictions on transfer applicable
to the Original Securities, (ii) the Exchange Capital Securities will not
contain the $100,000 minimum liquidation amount transfer restriction, (iii)
the Exchange Capital Securities will not provide for any increase in the
distribution rate thereon and (iv) the Exchange Junior Subordinated Notes will
not provide for any increase in the interest rate thereon. See "Description of
the Exchange Capital Securities," "Description of the Exchange Junior
Subordinated Notes" and "Description of the Original Securities." The Exchange
Capital Securities are being offered for exchange in order to satisfy certain
obligations of Southern, Capital and the Trust under the Registration Rights
Agreement dated as of February 1, 1997 (the "Registration Rights Agreement")
among Southern, Capital, the Trust and the Initial Purchasers (as defined
herein). In the event that the Exchange Offer is consummated, any Original
Capital Securities which remain outstanding after consummation of the Exchange
Offer and the Exchange Capital Securities issued in the Exchange Offer will
vote together as a single class for purposes of determining whether holders of
the requisite percentage in outstanding liquidation amount thereof have taken
certain actions or exercised certain rights under the Trust Agreement (as
defined herein).
The Exchange Capital Securities and the Original Capital Securities
(collectively, the "Capital Securities") represent preferred undivided
beneficial interests in the assets of the Trust. Capital is the owner of all
of the undivided beneficial interests represented by common securities of the
Trust (the "Common Securities," and together with the Capital Securities, the
"Trust Securities"). Bankers Trust Company is the Property Trustee (the
"Property Trustee") of the Trust. The Trust exists for the sole purpose of
issuing the Trust Securities, investing the proceeds thereof in the Junior
Subordinated Notes (as defined herein) and exchanging the Original Junior
Subordinated Notes for the Exchange Junior Subordinated Notes in the Exchange
Offer. The Junior Subordinated Notes will mature on February 1, 2037. Under
certain conditions, Capital has the right to advance the maturity date of the
Junior Subordinated Notes. See "Description of the Exchange Junior
Subordinated Notes--Conditional Right to Advance Maturity." The Capital
Securities will have a preference over the Common Securities under certain
circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise. See "Description of the Exchange Capital
Securities."
The Junior Subordinated Notes will be unsecured obligations of Capital and
will be subordinate and junior in right of payment to all Senior Indebtedness
of Capital, as described herein. See "Description of the Exchange Junior
Subordinated Notes--Subordination." The Notes Guarantee will be an unsecured
obligation of Southern and will be subordinate and junior in right of payment
to all Senior Indebtedness of Southern. See "Description of the Exchange Notes
Guarantee." Holders of the Capital Securities are entitled to receive
cumulative cash distributions at the rate of 8.19% per annum (the "Securities
Rate"), accruing from February 4, 1997 and payable, unless deferred, semi-
annually in arrears on February 1 and August 1 of each year (each, a
"Distribution Date").
The Securities Rate and the Distribution Dates for the Capital Securities
will correspond to the interest rate and interest and other payment dates on
the Junior Subordinated Notes, which will constitute substantially all the
assets of the Trust. As a result, if principal or interest is not paid on the
Junior Subordinated Notes, no amounts will be paid on the Capital Securities.
CAPITAL HAS THE RIGHT TO DEFER PAYMENTS OF INTEREST ON THE JUNIOR SUBORDINATED
NOTES BY EXTENDING THE INTEREST PAYMENT PERIOD ON THE JUNIOR SUBORDINATED
NOTES, AT ANY TIME AND FROM TIME TO TIME, FOR UP TO 10 CONSECUTIVE SEMI-ANNUAL
PERIODS (EACH, AN "EXTENSION PERIOD"). If interest payments are so deferred,
distributions on the Capital Securities also will be deferred and neither
Southern nor Capital will be permitted, subject to certain exceptions
described herein, to declare or pay any dividend or distribution on any of its
capital stock or make any guarantee payments with respect to the foregoing, or
make any payment on any debt securities issued by it which rank pari passu
with or junior to the Junior Subordinated Notes or the Notes Guarantee. During
any Extension Period, holders of Capital Securities will be required to
include income in the form of original issue discount ("OID") in their gross
income for United States federal income tax purposes in advance of the receipt
of the cash payments attributable to such deferred interest. See "Description
of the Exchange Junior Subordinated Notes--Option to Extend Interest Payment
Period," "Risk Factors--Option to Extend Interest Payment Period" and "Certain
Federal Income Tax Considerations--
2
<PAGE>
Original Issue Discount" and "--Market Discount." Deferred installments of
interest on the Junior Subordinated Notes will bear interest, compounded semi-
annually, at a rate per annum equal to the Securities Rate to the extent
permitted by applicable law. The payment of such deferred interest, together
with interest thereon, will be distributed to the holders of the Capital
Securities as received at the end of any Extension Period.
The Trust Securities are subject to mandatory redemption upon repayment of
the Junior Subordinated Notes at maturity or their earlier redemption. The
Junior Subordinated Notes are redeemable at the option of Capital (in whole or
in part), from time to time, on or after February 1, 2007, or at any time in
whole upon the occurrence of a Tax Event or Investment Company Act Event
(either, a "Special Event"). Upon the occurrence of a Special Event, Capital
will have the option to redeem the Junior Subordinated Notes (and the Trust
Securities will also be redeemed) or distribute the Junior Subordinated Notes
pro rata to the holders of the Trust Securities. See "Description of the
Exchange Capital Securities--Special Event Redemption or Distribution."
The payment of distributions on the Capital Securities is guaranteed by
Southern under the Capital Securities Guarantee Agreement, but only to the
extent that the Trust has funds legally and immediately available therefor
(the "Capital Securities Guarantee"). If Capital fails to make required
payments on the Junior Subordinated Notes, the Trust will not have sufficient
funds to pay such distributions, and the Capital Securities Guarantee does not
cover the payment of distributions when the Trust does not have sufficient
funds legally available therefor. In such event, the remedy of a holder of
Capital Securities is to enforce the Junior Subordinated Notes and the Notes
Guarantee. See "Description of the Exchange Junior Subordinated Notes" and
"Description of the Exchange Notes Guarantee." Southern's obligations under
the Capital Securities Guarantee are subordinate and junior in right of
payment to all of its other liabilities and will rank pari passu (equal in
priority) with the most senior preferred stock of Southern. See "Description
of the Exchange Capital Securities Guarantee." Southern and Capital have,
through the Capital Securities Guarantee, the Notes Guarantee, the
Subordinated Note Indenture, the Junior Subordinated Notes, the Trust
Agreement and the Agreement as to Expenses and Liabilities, fully and
unconditionally guaranteed, subject to certain subordination provisions, all
the Trust's obligations with respect to the Capital Securities.
In the event of the voluntary or involuntary dissolution, winding-up or
termination of the Trust, the holders of the Capital Securities will be
entitled to receive, for each Capital Security, a liquidation amount of $1,000
plus accrued and unpaid distributions thereon (including interest thereon) to
the date of payment, unless in connection with such dissolution, winding-up or
termination, the Junior Subordinated Notes are distributed to the holders of
the Capital Securities. See "Description of the Exchange Capital Securities--
Liquidation Distribution Upon Dissolution."
Except as described herein, the Capital Securities initially will be
represented by a global certificate or certificates registered in the name of
The Depository Trust Company ("DTC") or its nominee. Beneficial interests in
such Capital Securities will be shown on, and transfers thereof will be
effected only through, records maintained by Participants (as defined herein)
in DTC. Except as described herein, Capital Securities in certificated form
will not be issued in exchange for the global certificates. See "Description
of the Exchange Capital Securities--Form, Denomination, Book-Entry Procedures
and Transfer."
The Trust is making the Exchange Offer of the Exchange Capital Securities in
reliance on the position of the staff of the Division of Corporation Finance
of the Securities and Exchange Commission (the "Commission") as set forth in
certain interpretive letters addressed to third parties in other transactions.
However, neither Southern, Capital nor the Trust has sought its own
interpretive letter and there can be no assurance that the staff of the
Division of Corporation Finance of the Commission would make a similar
determination with respect to the Exchange Offer as it has in such
interpretive letters to third parties. Based on these interpretations by the
staff of the Division of Corporation Finance of the Commission, and subject to
the two immediately following sentences, Southern, Capital and the Trust
believe that Exchange Capital Securities issued pursuant to this Exchange
Offer in exchange for Original Capital Securities may be offered for resale,
resold and otherwise transferred by a holder thereof (other than a holder who
is a broker-dealer) without further compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such
3
<PAGE>
Exchange Capital Securities are acquired in the ordinary course of such
holder's business and that such holder is not participating, and has no
arrangement or understanding with any person to participate, in a distribution
(within the meaning of the Securities Act) of such Exchange Capital
Securities. However, any holder of Original Capital Securities who is an
"affiliate" of Southern, Capital or the Trust or who intends to participate in
the Exchange Offer for the purpose of distributing Exchange Capital
Securities, or any broker-dealer who purchased Original Capital Securities
from the Trust to resell pursuant to Rule 144A under the Securities Act ("Rule
144A") or any other available exemption under the Securities Act, (a) will not
be able to rely on the interpretations of the staff of the Division of
Corporation Finance of the Commission set forth in the above-mentioned
interpretive letters, (b) will not be permitted or entitled to tender such
Original Capital Securities in the Exchange Offer and (c) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or other transfer of such Original Capital Securities
unless such sale is made pursuant to an exemption from such requirements. In
addition, as described below, if any broker-dealer holds Original Capital
Securities acquired for its own account as a result of market-making or other
trading activities and exchanges such Original Capital Securities for Exchange
Capital Securities, then such broker-dealer must deliver a prospectus meeting
the requirements of the Securities Act in connection with any resales of such
Exchange Capital Securities.
Each holder of Original Capital Securities who wishes to exchange Original
Capital Securities for Exchange Capital Securities in the Exchange Offer will
be required to represent that (i) it is not an "affiliate" of Southern,
Capital or the Trust, (ii) any Exchange Capital Securities to be received by
it are being acquired in the ordinary course of its business, (iii) it has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of such Exchange Capital
Securities, and (iv) if such holder is not a broker-dealer, such holder is not
engaged in, and does not intend to engage in, a distribution (within the
meaning of the Securities Act) of such Exchange Capital Securities. In
addition, Southern, Capital and the Trust may require such holder, as a
condition to such holder's eligibility to participate in the Exchange Offer,
to furnish to Southern, Capital and the Trust (or an agent thereof) in writing
information as to the number of "beneficial owners" (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) on behalf of whom such holder holds the Original Capital
Securities to be exchanged in the Exchange Offer. Each broker-dealer that
receives Exchange Capital Securities for its own account pursuant to the
Exchange Offer must acknowledge that it acquired the Original Capital
Securities for its own account as the result of market-making activities or
other trading activities and must agree that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale
of such Exchange Capital Securities. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. Based on the position taken by the staff of the Division of
Corporation Finance of the Commission in the interpretive letters referred to
above, Southern, Capital and the Trust believe that broker-dealers who
acquired Original Capital Securities for their own accounts, as a result of
market-making activities or other trading activities ("Participating Broker-
Dealers"), may fulfill their prospectus delivery requirements with respect to
the Exchange Capital Securities received upon exchange of such Original
Capital Securities (other than Original Capital Securities which represent an
unsold allotment from the initial sale of the Original Capital Securities)
with a prospectus meeting the requirements of the Securities Act, which may be
the prospectus prepared for an exchange offer so long as it contains a
description of the plan of distribution with respect to the resale of such
Exchange Capital Securities. Accordingly, this Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer
during the period referred to below in connection with resales of Exchange
Capital Securities received in exchange for Original Capital Securities
acquired by such broker-dealer as a result of market-making activities or
other trading activities. Southern, Capital and the Trust and have agreed
that, for a period not exceeding 90 days after the Expiration Date (as defined
herein), they will make this Prospectus available to any broker-dealer for use
in connection with any such resale. See "Plan of Distribution." However, a
Participating Broker-Dealer who intends to use this Prospectus in connection
with the resale of Exchange Capital Securities received in exchange for
Original Capital Securities pursuant to the Exchange Offer must notify
Southern, Capital or the Trust, or cause Southern, Capital or the Trust to be
notified, on or prior to the Expiration Date, that it is a Participating
Broker-Dealer. Such notice may be given in the space provided for that
4
<PAGE>
purpose in the Letter of Transmittal or may be delivered to the Exchange Agent
at one of the addresses set forth herein under "The Exchange Offer--Exchange
Agent." Any Participating Broker-Dealer who is an "affiliate" of Southern,
Capital or the Trust may not rely on such interpretive letters and must comply
with the registration and prospectus delivery requirements of the Securities
Act in connection with any resale transaction. See "The Exchange Offer--
Resales of Exchange Capital Securities."
In that regard, each Participating Broker-Dealer who surrenders Original
Capital Securities pursuant to the Exchange Offer will be deemed to have
agreed, by execution of the Letter of Transmittal or delivery of an Agent's
Message (as defined herein), that upon receipt of notice from Southern,
Capital or the Trust of the occurrence of any event or the discovery of any
fact which makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or which causes this Prospectus to
omit to state a material fact necessary in order to make the statements
contained or incorporated by reference herein, in light of the circumstances
under which they were made, not misleading or of the occurrence of certain
other events specified in the Registration Rights Agreement, such
Participating Broker-Dealer will suspend the sale of Exchange Capital
Securities (or the Exchange Capital Securities Guarantee, the Exchange Notes
Guarantee or the Exchange Junior Subordinated Notes, as applicable) pursuant
to this Prospectus until Southern, Capital or the Trust has amended or
supplemented this Prospectus to correct such misstatement or omission and has
furnished copies of the amended or supplemented Prospectus to such
Participating Broker-Dealer, or Southern, Capital or the Trust has given
notice that the sale of the Exchange Capital Securities (or the Exchange
Capital Securities Guarantee, Exchange Notes Guarantee or the Exchange Junior
Subordinated Notes, as applicable) may be resumed, as the case may be. If
Southern, Capital or the Trust gives such notice to suspend the sale of the
Exchange Capital Securities (or the Exchange Capital Securities Guarantee,
Exchange Notes Guarantee or the Exchange Junior Subordinated Notes, as
applicable), it shall extend the 90-day period referred to above during which
Participating Broker-Dealers are entitled to use this Prospectus in connection
with the resale of Exchange Capital Securities by the number of days during
the period from and including the date of the giving of such notice to and
including the date when Participating Broker-Dealers shall have received
copies of the amended or supplemented Prospectus necessary to permit resales
of the Exchange Capital Securities or to and including the date on which
Southern, Capital or the Trust has given notice that the sale of Exchange
Capital Securities (or the Exchange Capital Securities Guarantee, Exchange
Notes Guarantee or the Exchange Junior Subordinated Notes, as applicable) may
be resumed, as the case may be.
Prior to the Exchange Offer, there has been only a limited secondary market
and no public market for the Original Capital Securities. The Exchange Capital
Securities will be a new issue of securities for which there currently is no
market. Although Lehman Brothers Inc., Goldman, Sachs & Co., Merrill, Lynch,
Pierce, Fenner & Smith Incorporated, Salomon Brothers Inc and J.P. Morgan
Securities Inc., the initial purchasers of the Original Capital Securities
(the "Initial Purchasers"), have informed Southern, Capital and the Trust that
they each currently intend to make a market in the Exchange Capital
Securities, they are not obligated to do so, and any such market making may be
discontinued at any time without notice. Accordingly, there can be no
assurance as to the development or liquidity of any market for the Exchange
Capital Securities. Southern, Capital and the Trust currently do not intend to
apply for listing of the Exchange Capital Securities on any securities
exchange or for quotation through the NASD Automated Quotation System.
Any Original Capital Securities not tendered and accepted in the Exchange
Offer will remain outstanding and will be entitled to all the same rights and
will be subject to the same limitations applicable thereto under the Trust
Agreement (except for those rights which terminate upon consummation of the
Exchange Offer). Following consummation of the Exchange Offer, the holders of
Original Capital Securities will continue to be subject to all of the existing
restrictions upon transfer thereof and neither Southern, Capital nor the Trust
will have any further obligation to such holders (other than under certain
limited circumstances) to provide for registration under the Securities Act of
the Original Capital Securities held by them. To the extent that Original
Capital Securities are tendered and accepted in the Exchange Offer, a holder's
ability to sell untendered Original Capital Securities could be adversely
affected. See "Risk Factors--Consequences of a Failure to Exchange Original
Capital Securities."
5
<PAGE>
THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION. HOLDERS OF ORIGINAL CAPITAL SECURITIES ARE URGED TO READ THIS
PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING
WHETHER TO TENDER THEIR ORIGINAL CAPITAL SECURITIES PURSUANT TO THE EXCHANGE
OFFER.
Original Capital Securities may be tendered for exchange on or prior to 5:00
p.m., New York City time, on , 1997 (such time on such date being
hereinafter called the "Expiration Date"), unless the Exchange Offer is
extended by Southern, Capital or the Trust (in which case the term "Expiration
Date" shall mean the latest date and time to which the Exchange Offer is
extended). Tenders of Original Capital Securities may be withdrawn at any time
on or prior to the Expiration Date. The Exchange Offer is not conditioned upon
any minimum liquidation amount of Original Capital Securities being tendered
for exchange. However, the Exchange Offer is subject to certain events and
conditions which may be waived by Southern, Capital or the Trust and to the
terms and provisions of the Registration Rights Agreement. Original Capital
Securities may be tendered in whole or in part having an aggregate liquidation
amount of not less than $100,000 (100 Original Capital Securities) or any
integral multiple of $1,000 liquidation amount (one Original Capital Security)
in excess thereof. Southern has agreed to pay all expenses of the Exchange
Offer. See "The Exchange Offer--Fees and Expenses." Holders of the Original
Capital Securities whose Original Capital Securities are accepted for exchange
will not receive distributions on such Original Capital Securities and will be
deemed to have waived the right to receive any distributions on such Original
Capital Securities accumulated from and after February 4, 1997. Accordingly,
holders of Exchange Capital Securities as of the record date for the payment
of distributions on August 1, 1997 will be entitled to receive distributions
accumulated from and after February 4, 1997. See "The Exchange Offer--
Distributions on Exchange Capital Securities."
Neither Southern, Capital nor the Trust will receive any cash proceeds from
the issuance of the Exchange Capital Securities offered hereby. No dealer-
manager is being used in connection with this Exchange Offer. See "Use of
Proceeds" and "Plan of Distribution."
----------------
As used herein, as the context may require, (i) "Capital Securities" and
"Trust Securities" include the Original Capital Securities and the Exchange
Capital Securities, (ii) "Junior Subordinated Notes" includes the Original
Junior Subordinated Notes and the Exchange Junior Subordinated Notes, (iii)
"Capital Securities Guarantee" includes the Original Capital Securities
Guarantee and the Exchange Capital Securities Guarantee and (iv) "Notes
Guarantee" includes the Original Notes Guarantee and the Exchange Notes
Guarantee.
6
<PAGE>
AVAILABLE INFORMATION
Southern is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commission's regional offices at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material may also be
obtained at prescribed rates by writing to the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
maintains a Web site that contains reports, proxy and information statements
and other information regarding registrants including Southern that file
electronically at http://www.sec.gov. In addition, reports and other material
concerning Southern may be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005, on which Exchange the
common stock of Southern is listed.
No separate financial statements of Capital or the Trust have been included
herein. Southern, Capital and the Trust do not consider that such financial
statements would be material to holders of the Capital Securities because each
of Capital and the Trust is a special purpose entity, has no significant
operating history or independent operations and is not engaged in and does not
propose to engage in any activity other than, in the case of Capital,
obtaining financing for Southern and direct and indirect subsidiaries of
Southern other than the operating affiliates (as defined herein) and, in the
case of the Trust, holding as trust assets the Junior Subordinated Notes,
issuing the Trust Securities and engaging in other activities as are
necessary, advisable or incidental thereto. See "Southern Company Capital
Funding, Inc.," "Southern Company Capital Trust I," "Description of the
Exchange Capital Securities," "Description of the Exchange Junior Subordinated
Notes," "Description of the Exchange Notes Guarantee," and "Description of the
Exchange Capital Securities Guarantee." In addition, Southern does not expect
that Capital or the Trust will file reports, proxy statements and other
information under the Exchange Act with the Commission.
This Prospectus constitutes a part of a registration statement on Form S-4
(the "Registration Statement") filed by Southern, Capital and the Trust with
the Commission under the Securities Act. This Prospectus does not contain all
the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission, and reference is hereby made to the Registration Statement and to
the exhibits relating thereto for further information with respect to
Southern, Capital, the Trust and the Exchange Securities. Any statements
contained herein concerning the provisions of any document are not necessarily
complete, and, in each instance, reference is made to the copy of such
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission. Each such statement is qualified in its entirety by such
reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by Southern with the Commission
pursuant to the Exchange Act and are incorporated herein by reference and made
a part of this Prospectus:
(a)Southern's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(b)Southern's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997; and
(c)Southern's Current Report on Form 8-K dated February 12, 1997.
All documents filed by Southern with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated herein by reference and made a part of this Prospectus from the
respective dates of filing of such documents. Any statement contained 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
7
<PAGE>
a statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein 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.
SOUTHERN WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROSPECTUS
IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY
OR ALL DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN THE EXHIBITS TO
SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE). SUCH REQUESTS SHOULD BE DIRECTED TO TOMMY CHISHOLM, SECRETARY, THE
SOUTHERN COMPANY, 270 PEACHTREE STREET, N.W., ATLANTA, GEORGIA 30303,
TELEPHONE: (770) 393-0650.
8
<PAGE>
SUMMARY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information contained elsewhere in this
Prospectus or incorporated herein by reference.
THE SOUTHERN COMPANY
Southern was incorporated under the laws of Delaware on November 9, 1945.
Southern is domesticated under the laws of Georgia and is qualified to do
business as a foreign corporation under the laws of Alabama. The principal
executive offices of Southern are located at 270 Peachtree Street, N.W.,
Atlanta, Georgia 30303, and the telephone number is (770) 393-0650.
Southern owns all the outstanding common stock of Alabama Power Company
("ALABAMA"), Georgia Power Company ("GEORGIA"), Gulf Power Company ("GULF"),
Mississippi Power Company ("MISSISSIPPI") and Savannah Electric and Power
Company ("SAVANNAH") (ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH being
collectively referred to herein as the "operating affiliates"), each of which
is an operating public utility company, and of Southern Company Services, Inc.
(the system service company). ALABAMA and GEORGIA each owns 50% of the
outstanding common stock of Southern Electric Generating Company ("SEGCO"). The
operating affiliates supply electric service in the states of Alabama, Georgia,
Florida, Mississippi and Georgia, respectively, and SEGCO owns generating units
at a large electric generating station which supplies power to ALABAMA and
GEORGIA. Southern also owns all the outstanding common stock of Southern
Energy, Inc. ("Southern Energy"), The Southern Development and Investment
Group, Inc. ("Southern Development"), Southern Nuclear Operating Company, Inc.
("Southern Nuclear") and Southern Communications Services, Inc. ("Southern
Communications"). Southern Energy designs, builds, owns and operates power
production and delivery facilities and provides a broad range of technical
services to industrial companies and utilities in the United States and a
number of international markets. Southern Development explores, develops and
markets energy management services and other business lines relating to
Southern's core business of generating and distributing energy. Southern
Nuclear provides services to the Southern electric system's nuclear plants.
Southern Communications provides digital wireless communications services to
the operating affiliates and regional non-affiliates.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
TWELVE
MONTHS
ENDED
APRIL 30,
1997(1)
1992 1993 1994(1) 1995(1) 1996(1) (UNAUDITED)
------ ------ ------ ------- ------- -----------
(MILLIONS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues....... $8,073 $8,489 $8,297 $9,180 $10,358 $10,576
Income Before Interest
Charges.................. $1,793 $1,827 $1,756 $1,900 $ 1,944 $ 1,951
Consolidated Net Income.. $ 953 $1,002 $ 989 $1,103 $ 1,127 $ 1,064
Earnings per Share of
Common Stock............. $ 1.51 $ 1.57 $ 1.52 $ 1.66 $ 1.68 $ 1.58
Dividends Paid per Share
of Common Stock.......... $ 1.10 $ 1.14 $ 1.18 $ 1.22 $ 1.26 $ 1.27
Ratio of Earnings to
Fixed Charges (2)........ 3.23 3.41 3.63 3.75 3.68 3.42
Ratio of Earnings to
Fixed Charges Plus
Preferred Dividend
Requirements
(Pre-Income Tax Basis)
(3)..................... 2.66 2.84 3.01 3.13 3.12 2.95
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
CAPITALIZATION AS OF
MARCH 31,1997
------------------------
ACTUAL AS ADJUSTED(4)
------- ----------------
(MILLIONS, EXCEPT
PERCENTAGES)
<S> <C> <C> <C>
Common Stock Equity.................................. $ 9,262 $ 9,262 43.4%
Preferred Stock of Subsidiaries...................... 833 833 3.9
Subsidiary Obligated Mandatorily Redeemable Capital
and Preferred Securities............................ 1,354 1,554 7.3
Long-Term Debt....................................... 9,700 9,700 45.4
------- -------- ------
Total, excluding amounts due within one year of $583
million............................................. $21,149 $ 21,349 100.0%
======= ======== ======
</TABLE>
- --------
(1) "Income Before Interest Charges" and "Consolidated Net Income" for the
years ended December 31, 1994, 1995 and 1996 and the twelve months ended
April 30, 1997 reflect charges of approximately $61,000,000, $17,000,000,
$53,000,000 and $39,000,000, respectively, after taxes relating to benefits
provided pursuant to work force reduction programs.
(2) This ratio is computed as follows: (i) "Earnings" have been calculated by
adding to "Income Before Interest Charges" all income taxes deducted
therefrom and the debt portion of allowance for funds used during
construction; and (ii) "Fixed Charges" consist of "Net Interest Charges"
plus the debt portion of allowance for funds used during construction.
(3) In computing this ratio, "Preferred Dividend Requirements" represent the
before-tax earnings necessary to pay such dividends, computed at the
effective tax rates for the applicable periods.
(4) Reflects the contemplated issuance of $200,000,000 aggregate liquidation
amount of new preferred securities for the benefit of Southern.
10
<PAGE>
SOUTHERN COMPANY CAPITAL FUNDING, INC.
Capital was established to obtain financing for Southern and direct and
indirect subsidiaries of Southern other than the operating affiliates. Capital
does not and will not engage in business activities other than such financing.
Capital was incorporated under the laws of Delaware on January 24, 1997 and
is a wholly-owned subsidiary of SEI Holdings, Inc., which itself is a wholly-
owned subsidiary of Southern. The principal executive offices of Capital are
located at 270 Peachtree Street, N.W., Atlanta, Georgia 30303, and the
telephone number is (770) 393-0650.
[CHART SHOWING ORIGINAL SECURITIES OFFERING APPEARS HERE]
11
<PAGE>
THE EXCHANGE OFFER
The Exchange Offer.......... Up to $325,000,000 aggregate liquidation amount
of Exchange Capital Securities are being offered
in exchange for a like aggregate liquidation
amount of Original Capital Securities. Original
Capital Securities may be tendered for exchange
in whole or in part in a liquidation amount of
$100,000 (100 Original Capital Securities) or any
integral multiple of $1,000 (one Original Capital
Security) in excess thereof. Southern, Capital
and the Trust are making the Exchange Offer in
order to satisfy their obligations under the Reg-
istration Rights Agreement relating to the Origi-
nal Capital Securities. For a description of
the procedures for tendering Original Capital Se-
curities, see "The Exchange Offer--Procedures
for Tendering Original Capital Securities."
Expiration Date............. 5:00 p.m., New York City time, on , 1997, un-
less the Exchange Offer is extended by Southern,
Capital or the Trust (in which case the Expira-
tion Date will be the latest date and time to
which the Exchange Offer is extended). See "The
Exchange Offer--Terms of the Exchange Offer."
Conditions to the Exchange The Exchange Offer is subject to certain condi-
Offer...................... tions, which may be waived by Southern, Capital
and the Trust in their sole discretion. The Ex-
change Offer is not conditioned upon any minimum
liquidation amount of Original Capital Securities
being tendered. See "The Exchange Offer--Condi-
tions to the Exchange Offer." Southern, Capital
and the Trust reserve the right in their sole and
absolute discretion, subject to applicable law,
at any time and from time to time, (i) to delay
the acceptance of the Original Capital Securities
for exchange, (ii) to terminate the Exchange Of-
fer if certain specified conditions have not been
satisfied, (iii) to extend the Expiration Date of
the Exchange Offer and retain all Original Capi-
tal Securities tendered pursuant to the Exchange
Offer, subject, however, to the right of holders
of Original Capital Securities to withdraw their
tendered Original Capital Securities, or (iv) to
waive any condition or otherwise amend the terms
of the Exchange Offer in any respect. See "The
Exchange Offer--Terms of the Exchange Offer."
Withdrawal Rights........... Tenders of Original Capital Securities may be
withdrawn at any time on or prior to the Expira-
tion Date by delivering a written notice of such
withdrawal to the Exchange Agent in conformity
with certain procedures set forth below under
"The Exchange Offer--Withdrawal Rights."
Procedures for Tendering
Original Capital Tendering holders of Original Capital Securities
Securities................. must complete and sign a Letter of Transmittal in
accordance with the instructions contained
therein and forward the same by mail, facsimile
or hand delivery, together with any other re-
quired documents, to the Exchange Agent, either
with the Original Capital Securities to be ten-
dered or in compliance with the specified proce-
dures for guaranteed delivery
12
<PAGE>
of Original Capital Securities. Certain brokers,
dealers, commercial banks, trust companies and
other nominees may also effect tenders by book-
entry transfer. Holders of Original Capital Secu-
rities registered in the name of a broker, deal-
er, commercial bank, trust company or other nomi-
nee are urged to contact such person promptly if
they wish to tender Original Capital Securities
pursuant to the Exchange Offer. See "The Exchange
Offer--Procedures for Tendering Original Capital
Securities."
Letters of Transmittal and certificates repre-
senting Original Capital Securities should not be
sent to Southern, Capital or the Trust. Such doc-
uments should only be sent to the Exchange Agent.
Resales of Exchange Capital
Securities................. Southern, Capital and the Trust are making the
Exchange Offer in reliance on the position of the
staff of the Division of Corporation Finance of
the Commission as set forth in certain
interpretive letters addressed to third parties
in other transactions. However, neither Southern,
Capital nor the Trust has sought its own
interpretive letter and there can be no assurance
that the staff of the Division of Corporation Fi-
nance of the Commission would make a similar de-
termination with respect to the Exchange Offer as
it has in such interpretive letters to third par-
ties. Based on these interpretations by the staff
of the Division of Corporation Finance of the
Commission, and subject to the two immediately
following sentences, Southern, Capital and the
Trust believe that Exchange Capital Securities
issued pursuant to this Exchange Offer in ex-
change for Original Capital Securities may be of-
fered for resale, resold and otherwise trans-
ferred by a holder thereof (other than a holder
who is a broker-dealer) without further compli-
ance with the registration and prospectus deliv-
ery requirements of the Securities Act, provided
that such Exchange Capital Securities are ac-
quired in the ordinary course of such holder's
business and that such holder is not participat-
ing, and has no arrangement or understanding with
any person to participate, in a distribution
(within the meaning of the Securities Act) of
such Exchange Capital Securities. However, any
holder of Original Capital Securities who is an
"affiliate" of Southern, Capital or the Trust or
who intends to participate in the Exchange Offer
for the purpose of distributing the Exchange Cap-
ital Securities, or any broker-dealer who pur-
chased the Original Capital Securities from the
Trust to resell pursuant to Rule 144A or any
other available exemption under the Securities
Act, (a) will not be able to rely on the inter-
pretations of the staff of the Division of Corpo-
ration Finance of the Commission set forth in the
above-mentioned interpretive letters, (b) will
not be permitted or entitled to tender such Orig-
inal Capital Securities in the Exchange Offer and
(c) must comply with the registration and pro-
spectus delivery requirements of the Securities
Act in connection with any sale or other transfer
of such Original Capital Securities unless such
sale is made pursuant to an exemption from such
requirements. In addition, as described below, if
any broker-dealer
13
<PAGE>
holds Original Capital Securities acquired for
its own account as a result of market-making or
other trading activities and exchanges such Orig-
inal Capital Securities for Exchange Capital Se-
curities, then such broker-dealer must deliver a
prospectus meeting the requirements of the Secu-
rities Act in connection with any resales of such
Exchange Capital Securities.
Each holder of Original Capital Securities who
wishes to exchange Original Capital Securities
for Exchange Capital Securities in the Exchange
Offer will be required to represent that (i) it
is not an "affiliate" of Southern, Capital or the
Trust, (ii) any Exchange Capital Securities to be
received by it are being acquired in the ordinary
course of its business, (iii) it has no arrange-
ment or understanding with any person to partici-
pate in a distribution (within the meaning of the
Securities Act) of such Exchange Capital Securi-
ties, and (iv) if such holder is not a broker-
dealer, such holder is not engaged in, and does
not intend to engage in, a distribution (within
the meaning of the Securities Act) of such Ex-
change Capital Securities. Each broker-dealer
that receives Exchange Capital Securities for its
own account in exchange for Original Capital Se-
curities must acknowledge that such Original Cap-
ital Securities were acquired by such broker-
dealer as a result of market-making activities or
other trading activities and must agree that it
will deliver a prospectus in connection with any
resale of such Exchange Capital Securities. See
"Plan of Distribution." The Letter of Transmittal
states that, by so acknowledging and by deliver-
ing a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. Based
on the position taken by the staff of the Divi-
sion of Corporation Finance of the Commission in
the interpretive letters referred to above,
Southern, Capital and the Trust believe that Par-
ticipating Broker-Dealers who acquired Original
Capital Securities for their own accounts as a
result of market-making activities or other trad-
ing activities may fulfill their prospectus de-
livery requirements with respect to the Exchange
Capital Securities received upon exchange of such
Original Capital Securities (other than Original
Capital Securities which represent an unsold al-
lotment from the initial sale of the Original
Capital Securities) with a prospectus meeting the
requirements of the Securities Act, which may be
the prospectus prepared for an exchange offer so
long as it contains a description of the plan of
distribution with respect to the resale of such
Exchange Capital Securities. Accordingly, this
Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating
Broker-Dealer in connection with resales of Ex-
change Capital Securities received in exchange
for Original Capital Securities where such Origi-
nal Capital Securities were acquired by such Par-
ticipating Broker-Dealer for its own account as a
result of market-making or other trading activi-
ties. Subject to certain provisions set forth in
the Registration Rights Agreement and to the lim-
itations described below under "The Exchange Of-
fer--Resales of Exchange Capital Securities,"
Southern, Capital
14
<PAGE>
and the Trust have agreed that this Prospectus,
as it may be amended or supplemented from time to
time, may be used by a Participating Broker-
Dealer in connection with resales of such Ex-
change Capital Securities for a period not ex-
ceeding 90 days after the Expiration Date (sub-
ject to extension under certain limited
circumstances). See "Plan of Distribution." Any
Participating Broker-Dealer who is an "affiliate"
of Southern, Capital or the Trust may not rely on
such interpretive letters and must comply with
the registration and prospectus delivery require-
ments of the Securities Act in connection with
any resale transaction. See "The Exchange Offer--
Resales of Exchange Capital Securities."
Exchange Agent..............
The exchange agent with respect to the Exchange
Offer is Bankers Trust Company (the "Exchange
Agent"). The addresses, and telephone and facsim-
ile numbers, of the Exchange Agent are set forth
in "The Exchange Offer--Exchange Agent" and in
the Letter of Transmittal.
Use of Proceeds............. Neither Southern, Capital nor the Trust will re-
ceive any cash proceeds from the issuance of the
Exchange Capital Securities offered hereby. See
"Use of Proceeds."
Certain United States
Federal Income Tax
Consequences; ERISA
Considerations.............
Holders of Original Capital Securities should re-
view the information set forth under "Certain
Federal Income Tax Considerations" and "Certain
ERISA Considerations" prior to tendering Original
Capital Securities in the Exchange Offer.
15
<PAGE>
THE EXCHANGE CAPITAL SECURITIES
Securities Offered.......... Up to $325,000,000 aggregate liquidation amount
of the Trust's Exchange Capital Securities which
have been registered under the Securities Act
(liquidation amount $1,000 per Exchange Capital
Security). The Exchange Capital Securities will
be issued and the Original Capital Securities
were issued under the Trust Agreement. The Ex-
change Capital Securities and any Original Capi-
tal Securities which remain outstanding after
consummation of the Exchange Offer will vote to-
gether as a single class for purposes of deter-
mining whether holders of the requisite percent-
age in outstanding liquidation amount thereof
have taken certain actions or exercised certain
rights under the Trust Agreement. See "Descrip-
tion of the Exchange Capital Securities--Voting
Rights; Amendment of the Trust Agreement." The
terms of the Exchange Capital Securities are
identical in all material respects to the terms
of the Original Capital Securities, except that
the Exchange Capital Securities have been regis-
tered under the Securities Act and will not be
subject to certain restrictions on transfer ap-
plicable to the Original Capital Securities and
will not provide for any increase in the distri-
bution rate thereon. See "The Exchange Offer--
Purpose of the Exchange Offer," "Description of
the Exchange Capital Securities" and "Description
of the Original Securities."
Distribution Dates.......... February 1 and August 1 of each year, commencing
August 1, 1997.
Extension Periods........... Distributions on Capital Securities will be de-
ferred for the duration of any Extension Period
elected by Capital with respect to the payment of
interest on the Junior Subordinated Notes. No Ex-
tension Period will exceed 10 consecutive semi-
annual periods or extend beyond the stated matu-
rity date of the Junior Subordinated Notes. See
"Description of the Exchange Junior Subordinated
Notes--Option to Extend Interest Payment Period"
and "Certain Federal Income Tax Considerations--
Original Issue Discount."
Ranking..................... The Exchange Capital Securities will rank pari
passu, and payments thereon will be made pro ra-
ta, with the Original Capital Securities and the
Common Securities except as described under "De-
scription of the Exchange Capital Securities."
The Exchange Junior Subordinated Notes will con-
stitute unsecured obligations of Capital and will
rank junior in right of payment to all Senior In-
debtedness of Capital to the extent and in the
manner set forth in the Subordinated Note Inden-
ture. See "Description of the Exchange Junior
Subordinated Notes--Subordination." Southern's
obligation under the Exchange Capital Securities
Guarantee to make any Guarantee Payments (as de-
fined herein) will rank pari passu with the Orig-
inal Capital Securities Guarantee and will con-
stitute an unsecured obligation of Southern and
will rank subordinate and junior in right of pay-
ment to all other liabilities of Southern, except
for liabilities made pari passu or subordinate by
their terms. See "Description of the Exchange
Capital Securities Guarantee--Subordination." The
16
<PAGE>
Exchange Notes Guarantee will rank pari passu
with the Original Notes Guarantee and will con-
stitute an unsecured obligation of Southern and
will rank subordinate and junior to all Senior
Indebtedness of Southern. See "Description of the
Exchange Notes Guarantee."
Redemption..................
The Capital Securities are subject to mandatory
redemption upon repayment of the Junior Subordi-
nated Notes at maturity or their earlier redemp-
tion. The Junior Subordinated Notes are redeem-
able by Capital in whole or in part at any time
on or after February 1, 2007, or at any time in
whole upon the occurrence of a Special Event, in
each case at the applicable Redemption Price.
Upon the occurrence of a Special Event, Capital
will have the option to redeem the Junior Subor-
dinated Notes (and thus cause the redemption of
the Trust Securities), in whole, or distribute
the Junior Subordinated Notes pro rata to the
holders of the Trust Securities. See "Description
of the Exchange Capital Securities--Redemption"
and "--Special Event Redemption or Distribution."
The Exchange Capital Securities will be issued,
Transfer Restrictions....... and may be transferred, only in minimum denomina-
tions of not less than $1,000. See "Description
of the Exchange Capital Securities--Restrictions
on Transfer." Any such transfer of Exchange Capi-
tal Securities in denominations of less than
$1,000 shall be deemed to be void and of no legal
effect whatsoever.
ERISA Considerations........
Prospective purchasers must carefully consider
the restrictions on purchases set forth under
"Certain ERISA Considerations."
Absence of Market for the
Capital Securities......... The Exchange Capital Securities will be a new is-
sue of securities for which there currently is no
market. Although the Initial Purchasers have in-
formed Southern, Capital and the Trust that they
each currently intend to make a market in the Ex-
change Capital Securities, the Initial Purchasers
are not obligated to do so, and any such market
making may be discontinued at any time without
notice. Accordingly, there can be no assurance as
to the development or liquidity of any market for
the Exchange Capital Securities. If an active
market does not develop, the market price and li-
quidity of the Exchange Capital Securities may be
adversely affected. Southern, Capital and the
Trust do not intend to apply for listing of the
Exchange Capital Securities on any securities ex-
change or for quotation through the NASD Auto-
mated Quotation System. See "Plan of Distribu-
tion."
Risk Factors................ Prospective investors should carefully consider
the matters set forth under "Risk Factors."
17
<PAGE>
RISK FACTORS
Prospective investors should carefully review the information contained
elsewhere in this Prospectus and should consider particularly the following
matters in connection with the Exchange Offer and the Exchange Capital
Securities offered hereby:
CONSEQUENCES OF A FAILURE TO EXCHANGE ORIGINAL CAPITAL SECURITIES
The Original Capital Securities have not been registered under the
Securities Act or any state securities laws and therefore may not be offered,
sold or otherwise transferred except in compliance with the registration
requirements of the Securities Act and any other applicable securities laws,
or pursuant to an exemption therefrom or in a transaction not subject thereto,
and in each case in compliance with certain other conditions and restrictions.
Original Capital Securities which remain outstanding after consummation of the
Exchange Offer will continue to bear a legend reflecting such restrictions on
transfer. In addition, upon consummation of the Exchange Offer, holders of
Original Capital Securities which remain outstanding will not be entitled to
any rights to have such Original Capital Securities registered under the
Securities Act or to any similar rights under the Registration Rights
Agreement (subject to certain limited exceptions). Southern, Capital and the
Trust do not intend to register under the Securities Act any Original Capital
Securities which remain outstanding after consummation of the Exchange Offer
(subject to such limited exceptions, if applicable). To the extent that
Original Capital Securities are tendered and accepted in the Exchange Offer, a
holder's ability to sell untendered Original Capital Securities could be
adversely affected.
The Exchange Capital Securities and any Original Capital Securities which
remain outstanding after consummation of the Exchange Offer will vote together
as a single class for purposes of determining whether holders of the requisite
percentage in outstanding liquidation amount thereof have taken certain
actions or exercised certain rights under the Trust Agreement. See
"Description of the Exchange Capital Securities--Voting Rights; Amendment of
the Trust Agreement."
The Original Capital Securities provide, among other things, that, if a
registration statement relating to the Exchange Offer has not been filed by
July 4, 1997 and declared effective by August 3, 1997, the distribution rate
borne by the Original Capital Securities will increase by 0.25% per annum
until such registration statement has been filed or declared effective, as the
case may be. Upon consummation of the Exchange Offer, holders of Original
Capital Securities will not be entitled to any increase in the distribution
rate thereon or any further registration rights under the Registration Rights
Agreement, except under limited circumstances. See "Description of the
Original Securities."
EXCHANGE OFFER PROCEDURES
Issuance of the Exchange Capital Securities in exchange for Original Capital
Securities pursuant to the Exchange Offer will be made only after a timely
receipt by the Exchange Agent of such Original Capital Securities, a properly
completed and duly executed Letter of Transmittal or Agent's Message in lieu
thereof and all other required documents. Therefore, holders of the Original
Capital Securities desiring to tender such Original Capital Securities in
exchange for Exchange Capital Securities should allow sufficient time to
ensure timely delivery. Neither Southern, Capital nor the Trust is under any
duty to give notification of defects or irregularities with respect to the
tenders of Original Capital Securities for exchange.
RANKING OF AND RIGHTS UNDER THE JUNIOR SUBORDINATED NOTES AND THE NOTES
GUARANTEE
No amounts will be available to make payments on the Capital Securities
except from payments made on the Junior Subordinated Notes. The obligations of
Capital under the Junior Subordinated Notes are subordinate and junior in
right of payment to all Senior Indebtedness of Capital whenever incurred.
Capital currently has no Senior Indebtedness outstanding. The obligations of
Southern under the Notes Guarantee will be subordinate and junior to all
present and future Senior Indebtedness of Southern. At March 31, 1997, Senior
Indebtedness of
18
<PAGE>
Southern aggregated approximately $794,000,000. There are no terms in the
Capital Securities, the Junior Subordinated Notes, the Capital Securities
Guarantee or the Notes Guarantee that limit Southern's or Capital's ability to
incur additional indebtedness, including indebtedness that ranks senior to the
Junior Subordinated Notes or the Notes Guarantee. See "Description of the
Exchange Capital Securities Guarantee," "Description of the Exchange Junior
Subordinated Notes--Subordination" and "Description of the Exchange Notes
Guarantee."
RANKING OF AND RIGHTS UNDER THE CAPITAL SECURITIES GUARANTEE
Southern's obligations under the Capital Securities Guarantee are
subordinate and junior in right of payment to all liabilities of Southern and
will be pari passu with the most senior preferred stock which may be issued by
Southern. If Capital were to default in its obligation to pay amounts payable
on the Junior Subordinated Notes, the Trust would lack available funds for the
payment of distributions or amounts payable on redemption of the Capital
Securities or otherwise, and in such event holders of the Capital Securities
would not be able to rely upon the Capital Securities Guarantee for payment of
such amounts.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Capital has the right under the Subordinated Note Indenture, and at any
time, and from time to time, to defer payments of interest on the Junior
Subordinated Notes for a period of up to 10 consecutive semi-annual periods
(each, an "Extension Period"), but not beyond the maturity of the Junior
Subordinated Notes. Prior to the termination of any Extension Period, Capital
may further defer payments of interest, provided that such Extension Period,
together with all such previous and further extensions thereof, may not exceed
10 consecutive semi-annual periods. Upon the termination of any Extension
Period and the payment of all amounts then due, Capital may select a new
Extension Period, subject to the above requirements. There could be multiple
Extension Periods of varying lengths throughout the term of the Junior
Subordinated Notes. Deferred installments of interest on the Junior
Subordinated Notes will bear interest, compounded semi-annually, at a rate per
annum equal to the Securities Rate to the extent permitted by applicable law.
The payment of such deferred interest, together with interest thereon, will be
passed through to the holders of the Capital Securities as received at the end
of any Extension Period.
The only restrictions on Capital's ability to defer payments of interest are
that during any Extension Period neither Southern nor Capital may, subject to
certain exceptions described herein, (i) pay dividends on or redeem any of its
capital stock or (ii) pay principal or interest on any debt securities ranking
pari passu with or subordinate to the Junior Subordinated Notes or the Notes
Guarantee. See "Description of the Exchange Capital Securities--Distributions"
and "Description of the Exchange Junior Subordinated Notes--Option to Extend
Interest Payment Period."
Should Capital exercise its rights to defer payments of interest, each
holder of Capital Securities will be required to include income in the form of
OID in its gross income for United States federal income tax purposes in
respect of the deferred interest allocable to its Capital Securities. As a
result, holders of Capital 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 the Trust related to such income if such holders dispose
of their Capital Securities prior to the record date for the date on which
distributions of such amounts are made. See "Certain Federal Income Tax
Considerations -- Original Issue Discount" and "-- Sale of Capital
Securities." INVESTORS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS WITH RESPECT
TO THE TAX CONSEQUENCES OF AN INVESTMENT IN THE CAPITAL SECURITIES.
Capital has no current intention of exercising its right to defer payments
of interest by extending the interest payment period on the Junior
Subordinated Notes. However, should Capital determine to exercise such right
in the future, the market price of the Capital Securities is likely to be
affected. A holder that disposes of its Capital Securities during an Extension
Period, therefore, might not receive the same return on its investment as a
holder that continues to hold its Capital Securities. In addition, as a result
of the existence of Capital's right to defer interest payments, the market
price of the Capital Securities (which represent an undivided beneficial
interest in the Junior Subordinated Notes) may be more volatile than other
similar securities that do not have such rights.
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SPECIAL EVENT REDEMPTION OR DISTRIBUTION
If a Special Event shall occur and be continuing, Capital will have the
option either to redeem the Junior Subordinated Notes in cash (with the result
that the Capital Securities shall be redeemed) or cause the termination of the
Trust, with the result that Junior Subordinated Notes with an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the Securities Rate of, and accrued and unpaid
interest equal to accrued and unpaid distributions on, the Trust Securities
will be distributed to the holders of the Trust Securities, in liquidation of
such holders' interest in the Trust on a pro rata basis, within 90 days
following the occurrence of such Special Event. See "Description of the
Exchange Capital Securities--Special Event Redemption or Distribution."
There can be no assurance as to the market price for the Junior Subordinated
Notes that may be distributed in exchange for Capital Securities if a
termination or liquidation of the Trust were to occur. Accordingly, the Junior
Subordinated Notes that the investor may receive on termination and
liquidation of the Trust may trade at a discount to the price that the
investor paid to purchase the Capital Securities offered hereby. See
"Description of the Exchange Junior Subordinated Notes."
CONDITIONAL RIGHT TO ADVANCE MATURITY
If a Tax Event occurs, Capital has the right under certain conditions to
advance the maturity date of the Junior Subordinated Notes. See "Description
of the Exchange Junior Subordinated Notes--Conditional Right to Advance
Maturity."
POSSIBLE TAX LAW CHANGES
On February 6, 1997, the revenue portion of President Clinton's fiscal 1998
budget proposal (the "Proposal") was released. The Proposal would, among other
things, generally deny interest deductions for interest on an instrument
issued by a corporation that has a maximum term of more than 15 years and that
is not shown as indebtedness on the separate balance sheet of the issuer. If
the Proposal were to apply to the Junior Subordinated Notes, Southern would be
unable to deduct interest on the Junior Subordinated Notes. As currently
drafted, however, the Proposal would be effective generally for instruments
issued on or after the date of first Congressional committee action and, as
such, is not expected to apply to the Junior Subordinated Notes. Southern
believes that, under current law, it will be able to deduct interest on the
Junior Subordinated Notes. There can be no assurance, however, that current or
future legislative proposals or final legislation will not affect the ability
of Southern to deduct interest on the Junior Subordinated Notes. Such a change
could give rise to a Tax Event, which would permit Capital to cause a
redemption of the Capital Securities, as described more fully under
"Description of the Exchange Capital Securities--Special Event Redemption or
Distribution."
LIMITED VOTING RIGHTS
Holders of Capital Securities will have limited voting rights and, except
for the rights of holders of Capital Securities to appoint a Substitute
Property Trustee upon the occurrence of certain events described herein, will
not be entitled to vote to appoint, remove or replace the Securities Trustees,
which voting rights are vested exclusively in the holder of the Common
Securities.
LACK OF ESTABLISHED TRADING MARKET FOR EXCHANGE CAPITAL SECURITIES
The Original Capital Securities were issued to, and Southern believes such
securities are currently owned by, a relatively small number of beneficial
owners. The Original Capital Securities have not been registered under the
Securities Act and will be subject to restrictions on transferability if they
are not exchanged for the Exchange Capital Securities. Although the Exchange
Capital Securities may be resold or otherwise transferred by the holders (who
are not affiliates of Southern, Capital or the Trust) without compliance with
the registration
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requirements under the Securities Act, they will constitute a new issue of
securities with no established trading market. Original Capital Securities may
be transferred by the holders thereof only in blocks having a liquidation
amount of not less than $100,000 (100 Original Capital Securities). Southern,
Capital and the Trust have been advised by the Initial Purchasers that the
Initial Purchasers presently intend to make a market in the Exchange Capital
Securities. However, the Initial Purchasers are not obligated to do so and any
market- making activity with respect to the Exchange Capital Securities may be
discontinued at any time without notice. In addition, such market-making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act and may be limited during the Exchange Offer. Accordingly, no
assurance can be given that an active public or other market will develop for
the Exchange Capital Securities or the Original Capital Securities, or as to
the liquidity of or the trading market for the Exchange Capital Securities or
the Original Capital Securities. If an active public market does not develop,
the market price and liquidity of the Exchange Capital Securities may be
adversely affected.
If a public trading market develops for the Exchange Capital Securities,
future trading prices will depend on many factors, including, among other
things, prevailing interest rates, the financial condition of Southern and the
market for similar securities. Depending on these and other factors, the
Exchange Capital Securities may trade at a discount.
Notwithstanding the registration of the Exchange Capital Securities in the
Exchange Offer, holders who are "affiliates" (as defined under Rule 405 of the
Securities Act) of Southern, Capital or the Trust may publicly offer for sale
or resell the Exchange Capital Securities only in compliance with the
provisions of Rule 144 under the Securities Act.
Each broker-dealer that receives Exchange Capital Securities for its own
account in exchange for Original Capital Securities, where such Original
Capital Securities were acquired by such broker-dealer as a result of market-
making activities or other trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Capital
Securities. See "Plan of Distribution."
THE SOUTHERN COMPANY
Southern was incorporated under the laws of Delaware on November 9, 1945.
Southern is domesticated under the laws of Georgia and is qualified to do
business as a foreign corporation under the laws of Alabama. The principal
executive offices of Southern are located at 270 Peachtree Street, N.W.,
Atlanta, Georgia 30303, and the telephone number is (770) 393-0650.
Southern owns all the outstanding common stock of Alabama Power Company
("ALABAMA"), Georgia Power Company ("GEORGIA"), Gulf Power Company ("GULF"),
Mississippi Power Company ("MISSISSIPPI") and Savannah Electric and Power
Company ("SAVANNAH") (ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH being
collectively referred to herein as the "operating affiliates"), each of which
is an operating public utility company, and of Southern Company Services, Inc.
(the system service company). ALABAMA and GEORGIA each owns 50% of the
outstanding common stock of Southern Electric Generating Company ("SEGCO").
The operating affiliates supply electric service in the states of Alabama,
Georgia, Florida, Mississippi and Georgia, respectively, and SEGCO owns
generating units at a large electric generating station which supplies power
to ALABAMA and GEORGIA. Southern also owns all the outstanding common stock of
Southern Energy, Inc. ("Southern Energy"), The Southern Development and
Investment Group, Inc. ("Southern Development"), Southern Nuclear Operating
Company, Inc. ("Southern Nuclear") and Southern Communications Services, Inc.
("Southern Communications"). Southern Energy designs, builds, owns and
operates power production and delivery facilities and provides a broad range
of technical services to industrial companies and utilities in the United
States and a number of international markets. Southern Development explores,
develops and markets energy management services and other business lines
relating to Southern's core business of generating and distributing energy.
Southern Nuclear provides services to the
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Southern electric system's nuclear plants. Southern Communications provides
digital wireless communications services to the operating affiliates and
regional non-affiliates.
SOUTHERN COMPANY CAPITAL FUNDING, INC.
Capital was established to obtain financing for Southern and direct and
indirect subsidiaries of Southern other than the operating affiliates. Capital
does not and will not engage in business activities other than such financing.
Capital was incorporated under the laws of Delaware on January 24, 1997 and
is a wholly-owned subsidiary of SEI Holdings, Inc., which itself is a wholly-
owned subsidiary of Southern. The principal executive offices of Capital are
located at 270 Peachtree Street, N.W., Atlanta, Georgia 30303, and the
telephone number is (770) 393-0650.
SOUTHERN COMPANY CAPITAL TRUST I
The Trust is a statutory business trust created under Delaware law pursuant
to the filing of a certificate of trust with the Delaware Secretary of State
on January 24, 1997. The Trust's business is defined in a trust agreement,
executed by Capital, as Depositor, and Bankers Trust (Delaware), as the
Delaware Trustee thereunder. This trust agreement was amended and restated in
its entirety as of February 1, 1997 (the "Trust Agreement"). The Trust exists
for the exclusive purposes of (i) issuing the Trust Securities representing
undivided beneficial interests in the assets of the Trust and effecting the
Exchange Offer, (ii) investing the gross proceeds of the Trust Securities in
the Junior Subordinated Notes, (iii) exchanging the Original Junior
Subordinated Notes for the Exchange Junior Subordinated Notes in the Exchange
Offer, and (iv) engaging in only those other activities necessary,
appropriate, convenient or incidental thereto. The Trust has a term of
approximately 45 years, but may terminate earlier as provided in the Trust
Agreement.
Upon issuance of the Capital Securities, the purchasers thereof owned all of
the Capital Securities. Capital acquired all of the Common Securities, which
have an aggregate liquidation amount equal to approximately 3% of the total
capital of the Trust. The Common Securities rank pari passu, and payments will
be made thereon pro rata, with the Capital Securities, except that upon the
occurrence and continuance of a Subordinated Note Indenture Event of Default,
the rights of the holders of 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 Capital Securities.
The Trust's business and affairs are conducted by the Securities Trustees,
which were appointed by Capital as the holder of the Common Securities. Two
employees of a subsidiary of Southern serve as Administrative Trustees.
Bankers Trust Company serves as Property Trustee and holds legal title to the
Junior Subordinated Notes issued by Capital on behalf of the Trust and the
holders of the Trust Securities. Bankers Trust (Delaware) serves as Delaware
Trustee. In certain circumstances, the holders of a majority in liquidation
amount of the Capital Securities are entitled to appoint a Substitute Property
Trustee. See "Description of the Exchange Capital Securities -- Voting
Rights."
The Property Trustee holds legal title to the Junior Subordinated Notes for
the benefit of the Trust and the holders of the Trust Securities and has the
power to exercise all rights, powers and privileges under the Subordinated
Note Indenture as the holder of the Junior Subordinated Notes. The Property
Trustee will make payments of distributions and payments on liquidation,
redemption and otherwise to the holders of the Trust Securities. Subject to
the right of the holders of the Capital Securities to appoint a Substitute
Property Trustee in certain instances, Capital, as the holder of all the
Common Securities, has the right to appoint, remove or replace all the
Securities Trustees.
The Junior Subordinated Notes constitute substantially all of the assets of
the Trust. Other assets that may constitute "Trust Property" (as that term is
defined in the Trust Agreement) include any cash on deposit in, or
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owing to, the payment account as established under the Trust Agreement, as
well as any other property or assets held by the Property Trustee pursuant to
the Trust Agreement. In addition, the Trust may, from time to time, receive
cash pursuant to the Agreement as to Expenses and Liabilities.
The rights of the holders of the Capital Securities, including economic
rights, rights to information and voting rights, are as set forth in the Trust
Agreement, the Delaware Business Trust Act, and the Trust Indenture Act of
1939, as amended (the "1939 Act"). See "Description of the Exchange Capital
Securities."
The Trust's office in the State of Delaware is c/o Bankers Trust (Delaware),
1001 Jefferson Street, Suite 550, Wilmington, Delaware 19801-1457. The
principal place of business of the Trust shall be c/o Southern, 270 Peachtree
Street, N.W., Atlanta, Georgia 30303, telephone (770) 393-0650, Attn:
Secretary.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a subsidiary
of Southern and, accordingly, the accounts of the Trust will be included in
the consolidated financial statements of Southern. The Capital Securities will
be presented as a separate line item in the consolidated balance sheet of
Southern, and appropriate disclosures concerning the Capital Securities, the
Capital Securities Guarantee, the Junior Subordinated Notes and the Notes
Guarantee will be included in the notes to the consolidated financial
statements. For financial reporting purposes, Southern will record
distributions payable on the Capital Securities as an expense.
USE OF PROCEEDS
Neither Southern, Capital nor the Trust will receive any cash proceeds from
the issuance of the Exchange Capital Securities offered hereby. In
consideration for issuing the Exchange Capital Securities in exchange for
Original Capital Securities as described in this Prospectus, the Trust will
receive Original Capital Securities in like liquidation amount. The Original
Capital Securities surrendered in exchange for the Exchange Capital Securities
will be retired and canceled.
All of the proceeds from the sale of the Original Capital Securities were
invested by the Trust in the Original Junior Subordinated Notes. The proceeds
from such investment were remitted to Southern and used by it to repay a
portion of its outstanding short-term debt.
RECENT RESULTS OF OPERATIONS
For the twelve months ended April 30, 1997, the unaudited amounts of
"Operating Revenues," "Income Before Interest Charges," "Consolidated Net
Income," "Earnings per Share of Common Stock" and "Dividends Paid per Share of
Common Stock" were $10,576,000,000, $1,951,000,000, $1,064,000,000, $1.58 and
$1.27, respectively. In the opinion of the management of Southern, the above
amounts for the twelve months ended April 30, 1997 reflect all adjustments
(which were only normal recurring adjustments, except as indicated in Note (1)
to the Selected Consolidated Financial Information under "Summary" above)
necessary to present fairly the results of operations for such period. The
"Ratio of Earnings to Fixed Charges" and the "Ratio of Earnings to Fixed
Charges Plus Preferred Dividend Requirements (Pre-Income Tax Basis)" for the
twelve months ended April 30, 1997 were 3.42 and 2.95, respectively.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the Original Capital Securities, Southern,
Capital and the Trust entered into the Registration Rights Agreement with the
Initial Purchasers, pursuant to which Southern, Capital and the Trust agreed
to use their reasonable best efforts to file and to cause to become effective
with the Commission a registration statement with respect to the exchange of
the Original Capital Securities for capital securities with terms identical in
all material respects to the terms of the Original Capital Securities except
as described herein. A copy of the Registration Rights Agreement has been
filed as an exhibit to the Registration Statement of which this Prospectus is
a part.
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The Exchange Offer is being made to satisfy the contractual obligations of
Southern, Capital and the Trust under the Registration Rights Agreement. The
form and terms of the Exchange Capital Securities are the same as the form and
terms of the Original Capital Securities except that the Exchange Capital
Securities have been registered under the Securities Act and will not be
subject to certain restrictions on transfer applicable to the Original Capital
Securities, and will not provide for any increase in the distribution rate
thereon. In that regard, the Original Capital Securities provide, among other
things, that, if a registration statement relating to the Exchange Offer has
not been filed by July 4, 1997 and declared effective by August 3, 1997, the
distribution rate borne by the Original Capital Securities will increase by
0.25% per annum until such registration statement is filed or declared
effective, as the case may be. Upon consummation of the Exchange Offer,
holders of Original Capital Securities will not be entitled to any increase in
the distribution rate thereon or any further registration rights under the
Registration Rights Agreement, except under limited circumstances. See "Risk
Factors--Consequences of a Failure to Exchange Original Capital Securities"
and "Description of the Original Securities."
The Exchange Offer is not being made to, nor will the Trust accept tenders
for exchange from, holders of Original Capital Securities in any jurisdiction
in which the Exchange Offer or the acceptance thereof would not be in
compliance with the securities or blue sky laws of such jurisdiction.
Unless the context requires otherwise, the term "holder" with respect to the
Exchange Offer means any person in whose name the Original Capital Securities
are registered on the books of the Trust or any other person who has obtained
a properly completed bond power from the registered holder, or any person
whose Original Capital Securities are held of record by DTC who desires to
deliver such Original Capital Securities by book-entry transfer at DTC.
Pursuant to the Exchange Offer, Capital will exchange as soon as practicable
after the date hereof the Original Junior Subordinated Notes for a like
aggregate principal amount of the Exchange Junior Subordinated Notes and
Southern will exchange as soon as practicable after the date hereof the
Original Capital Securities Guarantee for the Exchange Capital Securities
Guarantee and the Original Notes Guarantee for the Exchange Notes Guarantee.
The Exchange Capital Securities Guarantee, the Exchange Notes Guarantee and
Exchange Junior Subordinated Notes have also been registered under the
Securities Act.
TERMS OF THE EXCHANGE OFFER
The Trust hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and in the accompanying Letter of Transmittal, to
exchange up to $325,000,000 aggregate liquidation amount of Exchange Capital
Securities for a like aggregate liquidation amount of Original Capital
Securities properly tendered on or prior to the Expiration Date and not
properly withdrawn in accordance with the procedures described below. The
Trust will issue, promptly after the Expiration Date, an aggregate liquidation
amount of up to $325,000,000 of Exchange Capital Securities in exchange for a
like liquidation amount of outstanding Original Capital Securities tendered
and accepted in connection with the Exchange Offer. Holders may tender their
Original Capital Securities in whole or in part in a liquidation amount of not
less than $100,000 (100 Original Capital Securities) or any integral multiple
of $1,000 liquidation amount (one Original Capital Security) in excess
thereof.
The Exchange Offer is not conditioned upon any minimum liquidation amount of
Original Capital Securities being tendered. As of the date of this Prospectus,
$325,000,000 aggregate liquidation amount of the Original Capital Securities
is outstanding.
Holders of Original Capital Securities do not have any appraisal or
dissenters' rights in connection with the Exchange Offer. Original Capital
Securities which are not tendered for or are tendered but not accepted in
connection with the Exchange Offer will remain outstanding and be entitled to
the benefits of the Trust Agreement, but will not be entitled to any further
registration rights under the Registration Rights Agreement,
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except under limited circumstances. See "Risk Factors--Consequences of a
Failure to Exchange Original Capital Securities" and "Description of the
Original Securities."
If any tendered Original Capital Securities are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Original Capital
Securities will be returned, or appropriate book-entry transfer will be made,
as the case may be, without expense, to the tendering holder thereof promptly
after the Expiration Date.
Holders who tender Original Capital Securities in connection with the
Exchange Offer will not be required to pay brokerage commissions or fees or,
subject to the instructions in the Letter of Transmittal, transfer taxes with
respect to the exchange of Original Capital Securities in connection with the
Exchange Offer. Southern will pay all charges and expenses, other than certain
applicable taxes described below, in connection with the Exchange Offer. See
"--Fees and Expenses."
NEITHER SOUTHERN, THE BOARD OF DIRECTORS OF SOUTHERN, CAPITAL, THE BOARD OF
DIRECTORS OF CAPITAL NOR ANY TRUSTEE OF THE TRUST MAKES ANY RECOMMENDATION TO
HOLDERS OF ORIGINAL CAPITAL SECURITIES AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING ALL OR ANY PORTION OF THEIR ORIGINAL CAPITAL SECURITIES PURSUANT TO
THE EXCHANGE OFFER. IN ADDITION, NO ONE HAS BEEN AUTHORIZED TO MAKE ANY SUCH
RECOMMENDATION. HOLDERS OF ORIGINAL CAPITAL SECURITIES MUST MAKE THEIR OWN
DECISIONS WHETHER TO TENDER PURSUANT TO THE EXCHANGE OFFER AND, IF SO, THE
AGGREGATE AMOUNT OF ORIGINAL CAPITAL SECURITIES TO TENDER BASED ON SUCH
HOLDERS' OWN FINANCIAL POSITIONS AND REQUIREMENTS.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on ,
1997, unless the Exchange Offer is extended by Southern, Capital or the Trust
(in which case the term "Expiration Date" shall mean the latest date and time
to which the Exchange Offer is extended).
Southern, Capital and the Trust expressly reserve the right in their sole
and absolute discretion, subject to applicable law, at any time and from time
to time, (i) to delay the acceptance of the Original Capital Securities for
exchange, (ii) to terminate the Exchange Offer (whether or not any Original
Capital Securities have theretofore been accepted for exchange) if Southern,
Capital or the Trust determines, in its sole and absolute discretion, that any
of the events or conditions referred to under "--Conditions to the Exchange
Offer" have occurred or exist or have not been satisfied, (iii) to extend the
Expiration Date of the Exchange Offer and retain all Original Capital
Securities tendered pursuant to the Exchange Offer, subject, however, to the
right of holders of Original Capital Securities to withdraw their tendered
Original Capital Securities as described under "--Withdrawal Rights," and (iv)
to waive any condition or otherwise amend the terms of the Exchange Offer in
any respect. If the Exchange Offer is amended in a manner determined by
Southern, Capital and the Trust to constitute a material change, or if
Southern, Capital and the Trust waive a material condition of the Exchange
Offer, Southern, Capital and the Trust will promptly disclose such amendment
by means of a prospectus supplement that will be distributed to the registered
holders of the Original Capital Securities, and Southern, Capital and the
Trust will extend the Exchange Offer to the extent required by Rule 14e-1
under the Exchange Act.
Any such delay in acceptance, extension, termination or amendment will be
followed promptly by oral or written notice thereof to the Exchange Agent and
by making a public announcement thereof, and such announcement in the case of
an extension will be made no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date. Without
limiting the manner in which Southern, Capital and the Trust may choose to
make any public announcement and, subject to applicable law, Southern, Capital
and the Trust shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by issuing a release to an
appropriate news agency.
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ACCEPTANCE FOR EXCHANGE AND ISSUANCE OF EXCHANGE CAPITAL SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, the
Trust will exchange, and will issue to the Exchange Agent, Exchange Capital
Securities for Original Capital Securities validly tendered and not withdrawn
promptly after the Expiration Date.
In all cases, delivery of Exchange Capital Securities in exchange for
Original Capital Securities tendered and accepted for exchange pursuant to the
Exchange Offer will be made only after timely receipt by the Exchange Agent of
(i) Original Capital Securities or a book-entry confirmation of a book-entry
transfer of Original Capital Securities into the Exchange Agent's account at
DTC, including an Agent's Message (as defined below) if the tendering holder
has not delivered a Letter of Transmittal, (ii) the Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or (in the case of a book-entry transfer) an Agent's
Message in lieu of the Letter of Transmittal, and (iii) any other documents
required by the Letter of Transmittal.
The term "book-entry confirmation" means a timely confirmation of a book-
entry transfer of Original Capital Securities into the Exchange Agent's
account at DTC. The term "Agent's Message" means a message, transmitted by DTC
to and received by the Exchange Agent and forming a part of a book-entry
confirmation, which states that DTC has received an express acknowledgment
from the tendering DTC participant, which acknowledgment states that such
participant has received and agrees to be bound by the Letter of Transmittal
and that the Trust, Capital and Southern may enforce such Letter of
Transmittal against such participant.
Subject to the terms and conditions of the Exchange Offer, the Trust will be
deemed to have accepted for exchange, and thereby exchanged, Original Capital
Securities validly tendered and not withdrawn as, if and when the Trust gives
oral or written notice to the Exchange Agent of the Trust's acceptance of such
Original Capital Securities for exchange pursuant to the Exchange Offer. The
Exchange Agent will act as agent for the Trust for the purpose of receiving
tenders of Original Capital Securities, Letters of Transmittal and related
documents, and as agent for tendering holders for the purpose of receiving
Original Capital Securities, Letters of Transmittal and related documents and
transmitting Exchange Capital Securities to validly tendering holders. Such
exchange will be made promptly after the Expiration Date. If for any reason
whatsoever, acceptance for exchange or the exchange of any Original Capital
Securities tendered pursuant to the Exchange Offer is delayed (whether before
or after the Trust's acceptance for exchange of Original Capital Securities)
or the Trust extends the Exchange Offer or is unable to accept for exchange or
exchange Original Capital Securities tendered pursuant to the Exchange Offer,
then, without prejudice to the Trust's rights set forth herein, the Exchange
Agent may, nevertheless, on behalf of the Trust and subject to Rule 14e-1(c)
under the Exchange Act, retain tendered Original Capital Securities and such
Original Capital Securities may not be withdrawn except to the extent
tendering holders are entitled to withdrawal rights as described under "--
Withdrawal Rights."
Pursuant to the Letter of Transmittal or Agent's Message in lieu thereof, a
holder of Original Capital Securities will warrant and agree in the Letter of
Transmittal that it has full power and authority to tender, exchange, sell,
assign and transfer Original Capital Securities, that the Trust will acquire
good, marketable and unencumbered title to the tendered Original Capital
Securities, free and clear of all liens, restrictions, charges and
encumbrances, and the Original Capital Securities tendered for exchange are
not subject to any adverse claims or proxies. The holder also will warrant and
agree that it will, upon request, execute and deliver any additional documents
deemed by the Trust or the Exchange Agent to be necessary or desirable to
complete the exchange, sale, assignment, and transfer of the Original Capital
Securities tendered pursuant to the Exchange Offer.
PROCEDURES FOR TENDERING ORIGINAL CAPITAL SECURITIES
Valid Tender. Except as set forth below, in order for Original Capital
Securities to be validly tendered pursuant to the Exchange Offer, a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, or (in the case of a book-entry tender) an
Agent's Message in
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lieu of the Letter of Transmittal, and any other required documents, must be
received by the Exchange Agent at one of its addresses set forth under "--
Exchange Agent," and either (i) tendered Original Capital Securities must be
received by the Exchange Agent, or (ii) such Original Capital Securities must
be tendered pursuant to the procedures for book-entry transfer set forth below
and a book-entry confirmation, including an Agent's Message if the tendering
holder has not delivered a Letter of Transmittal, must be received by the
Exchange Agent, in each case on or prior to the Expiration Date, or (iii) the
guaranteed delivery procedures set forth below must be complied with.
If less than all of the Original Capital Securities are tendered, a
tendering holder should fill in the amount of Original Capital Securities
being tendered in the appropriate box on the Letter of Transmittal. The entire
amount of Original Capital Securities delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated.
THE METHOD OF DELIVERY OF CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND SOLE RISK OF THE TENDERING
HOLDER, AND DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
EXCHANGE AGENT. IF DELIVERY IS BY MAIL, REGISTERED MAIL, RETURN RECEIPT
REQUESTED, PROPERLY INSURED, OR AN OVERNIGHT DELIVERY SERVICE IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Book-Entry Transfer. The Exchange Agent will establish an account with
respect to the Original Capital Securities at DTC for purposes of the Exchange
Offer within two business days after the date of this Prospectus. Any
financial institution that is a participant in DTC's book-entry transfer
facility system may make a book-entry delivery of the Original Capital
Securities by causing DTC to transfer such Original Capital Securities into
the Exchange Agent's account at DTC in accordance with DTC's procedures for
transfers. However, although delivery of Original Capital Securities may be
effected through book-entry transfer into the Exchange Agent's account at DTC,
the Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message in
lieu of the Letter of Transmittal, and any other required documents, must in
any case be delivered to and received by the Exchange Agent at its address set
forth under "--Exchange Agent" on or prior to the Expiration Date, or the
guaranteed delivery procedure set forth below must be complied with.
DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH DTC'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
Signature Guarantees. Certificates for the Original Capital Securities need
not be endorsed and signature guarantees on the Letter of Transmittal are
unnecessary unless (a) a certificate for the Original Capital Securities is
registered in a name other than that of the person surrendering the
certificate or (b) such holder completes the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" in the Letter of Transmittal.
In the case of (a) or (b) above, such certificates for Original Capital
Securities must be duly endorsed or accompanied by a properly executed bond
power, with the endorsement or signature on the bond power and on the Letter
of Transmittal guaranteed by a firm or other entity identified in Rule 17Ad-15
under the Exchange Act as an "eligible guarantor institution," including (as
such terms are defined therein): (i) a bank; (ii) a broker, dealer, municipal
securities broker or dealer or government securities broker or dealer; (iii) a
credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings association that is a
participant in a Securities Transfer Association (an "Eligible Institution"),
unless surrendered on behalf of such Eligible Institution. See Instruction 1
to the Letter of Transmittal.
Guaranteed Delivery. If a holder desires to tender Original Capital
Securities pursuant to the Exchange Offer and the certificates for such
Original Capital Securities are not immediately available or time will not
permit all required documents to reach the Exchange Agent on or prior to the
Expiration Date, or the procedures
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for book-entry transfer cannot be completed on a timely basis, such Original
Capital Securities may nevertheless be tendered, provided that all of the
following guaranteed delivery procedures are complied with:
(a) such tenders are made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form accompanying the Letter of Transmittal, is
received by the Exchange Agent, as provided below, on or prior to the
Expiration Date; and
(c) the certificates (or a book-entry confirmation) representing all
tendered Original Capital Securities, in proper form for transfer, together
with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees, or an Agent's
Message in lieu of the Letter of Transmittal, and any other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within three New York Stock Exchange trading days after the date of
execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand, or transmitted
by facsimile or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such notice.
Notwithstanding any other provision hereof, the delivery of Exchange Capital
Securities in exchange for Original Capital Securities tendered and accepted
for exchange pursuant to the Exchange Offer will in all cases be made only
after timely receipt by the Exchange Agent of Original Capital Securities, or
of a book-entry confirmation with respect to such Original Capital Securities,
and a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), together with any required signature guarantees, or an Agent's
Message in lieu of the Letter of Transmittal, and any other documents required
by the Letter of Transmittal. Accordingly, the delivery of Exchange Capital
Securities might not be made to all tendering holders at the same time, and
will depend upon when Original Capital Securities, book-entry confirmations
with respect to Original Capital Securities and other required documents are
received by the Exchange Agent.
The Trust's acceptance for exchange of Original Capital Securities tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering holder and the Trust upon the terms and
subject to the conditions of the Exchange Offer.
Determination of Validity. All questions as to the form of documents,
validity, eligibility (including time of receipt) and acceptance for exchange
of any tendered Original Capital Securities will be determined by Southern,
Capital and the Trust, in their sole discretion, whose determination shall be
final and binding on all parties. Southern, Capital and the Trust reserve the
absolute right, in their sole and absolute discretion, to reject any and all
tenders determined by them not to be in proper form or the acceptance of
which, or exchange for, may, in the opinion of counsel to Southern, Capital
and the Trust, be unlawful. Southern, Capital and the Trust also reserve the
absolute right, subject to applicable law, to waive any of the conditions of
the Exchange Offer as set forth under "--Conditions to the Exchange Offer" or
any condition or irregularity in any tender of Original Capital Securities of
any particular holder whether or not similar conditions or irregularities are
waived in the case of other holders.
The interpretation by Southern, Capital and the Trust of the terms and
conditions of the Exchange Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding. No tender of Original Capital
Securities will be deemed to have been validly made until all irregularities
with respect to such tender have been cured or waived. Neither Southern,
Capital, the Trust, any affiliates or assigns of Southern, Capital or the
Trust, the Exchange Agent nor any other person shall be under any duty to give
any notification of any irregularities in tenders or incur any liability for
failure to give any such notification.
If any Letter of Transmittal, endorsement, bond power, power of attorney, or
any other document required by the Letter of Transmittal is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and unless waived by Southern,
Capital and the Trust, proper evidence satisfactory to Southern, Capital and
the Trust, in their sole discretion, of such person's authority to so act must
be submitted.
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A beneficial owner of Original Capital Securities that are held by or
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee or custodian is urged to contact such entity promptly if such
beneficial holder wishes to participate in the Exchange Offer.
RESALES OF EXCHANGE CAPITAL SECURITIES
The Trust is making the Exchange Offer for the Exchange Capital Securities
in reliance on the position of the staff of the Division of Corporation
Finance of the Commission as set forth in certain interpretive letters
addressed to third parties in other transactions. However, neither Southern,
Capital nor the Trust sought its own interpretive letter and there can be no
assurance that the staff of the Division of Corporation Finance of the
Commission would make a similar determination with respect to the Exchange
Offer as it has in such interpretive letters to third parties. Based on these
interpretations by the staff of the Division of Corporation Finance of the
Commission, and subject to the two immediately following sentences, Southern,
Capital and the Trust believe that Exchange Capital Securities issued pursuant
to this Exchange Offer in exchange for Original Capital Securities may be
offered for resale, resold and otherwise transferred by a holder thereof
(other than a holder who is a broker-dealer) without further compliance with
the registration and prospectus delivery requirements of the Securities Act,
provided that such Exchange Capital Securities are acquired in the ordinary
course of such holder's business and that such holder is not participating,
and has no arrangement or understanding with any person to participate, in a
distribution (within the meaning of the Securities Act) of such Exchange
Capital Securities. However, any holder of Original Capital Securities who is
an "affiliate" of Southern, Capital or the Trust or who intends to participate
in the Exchange Offer for the purpose of distributing Exchange Capital
Securities, or any broker-dealer who purchased Original Capital Securities
from the Trust to resell pursuant to Rule 144A or any other available
exemption under the Securities Act, (a) will not be able to rely on the
interpretations of the staff of the Division of Corporation Finance of the
Commission set forth in the above-mentioned interpretive letters, (b) will not
be permitted or entitled to tender such Original Capital Securities in the
Exchange Offer and (c) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any sale or
other transfer of such Original Capital Securities unless such sale is made
pursuant to an exemption from such requirements. In addition, as described
below, if any broker-dealer holds Original Capital Securities acquired for its
own account as a result of market-making or other trading activities and
exchanges such Original Capital Securities for Exchange Capital Securities,
then such broker-dealer must deliver a prospectus meeting the requirements of
the Securities Act in connection with any resales of such Exchange Capital
Securities.
Each holder of Original Capital Securities who wishes to exchange Original
Capital Securities for Exchange Capital Securities in the Exchange Offer will
be required to represent that (i) it is not an "affiliate" of Southern,
Capital or the Trust, (ii) any Exchange Capital Securities to be received by
it are being acquired in the ordinary course of its business, (iii) it has no
arrangement or understanding with any person to participate in a distribution
(within the meaning of the Securities Act) of such Exchange Capital
Securities, and (iv) if such holder is not a broker-dealer, such holder is not
engaged in, and does not intend to engage in, a distribution (within the
meaning of the Securities Act) of such Exchange Capital Securities. In
addition, Southern, Capital and the Trust may require such holder, as a
condition to such holder's eligibility to participate in the Exchange Offer,
to furnish to Southern, Capital and the Trust (or an agent thereof) in writing
information as to the number of "beneficial owners" (within the meaning of
Rule 13d-3 under the Exchange Act) on behalf of whom such holder holds the
Original Capital Securities to be exchanged in the Exchange Offer. Each
broker-dealer that receives Exchange Capital Securities for its own account
pursuant to the Exchange Offer must acknowledge that it acquired the Original
Capital Securities for its own account as the result of market-making
activities or other trading activities and must agree that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resale of such Exchange Capital Securities. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. Based on the position taken by the staff of the
Division of Corporation Finance of the Commission in the interpretive letters
referred to above, Southern, Capital and the Trust believe that Participating
Broker-Dealers who acquired Original Capital Securities for their own accounts
as a result of
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market-making activities or other trading activities may fulfill their
prospectus delivery requirements with respect to the Exchange Capital
Securities received upon exchange of such Original Capital Securities (other
than Original Capital Securities which represent an unsold allotment from the
initial sale of the Original Capital Securities) with a prospectus meeting the
requirements of the Securities Act, which may be the prospectus prepared for
an exchange offer so long as it contains a description of the plan of
distribution with respect to the resale of such Exchange Capital Securities.
Accordingly, this Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer during the period
referred to below in connection with resales of Exchange Capital Securities
received in exchange for Original Capital Securities where such Original
Capital Securities were acquired by such Participating Broker-Dealer for its
own account as a result of market-making or other trading activities. Subject
to certain provisions set forth in the Registration Rights Agreement,
Southern, Capital and the Trust have agreed that this Prospectus, as it may be
amended or supplemented from time to time, may be used by a Participating
Broker-Dealer in connection with resales of such Exchange Capital Securities
for a period not exceeding 90 days after the Expiration Date (subject to
extension under certain limited circumstances described below). See "Plan of
Distribution." However, a Participating Broker-Dealer who intends to use this
Prospectus in connection with the resale of Exchange Capital Securities
received in exchange for Original Capital Securities pursuant to the Exchange
Offer must notify Southern, Capital or the Trust, or cause Southern, Capital
or the Trust to be notified, on or prior to the Expiration Date, that it is a
Participating Broker-Dealer. Such notice may be given in the space provided
for that purpose in the Letter of Transmittal or may be delivered to the
Exchange Agent at one of the addresses set forth herein under "--Exchange
Agent." Any Participating Broker-Dealer who is an "affiliate" of Southern,
Capital or the Trust may not rely on such interpretive letters and must comply
with the registration and prospectus delivery requirements of the Securities
Act in connection with any resale transaction.
In that regard, each Participating Broker-Dealer who surrenders Original
Capital Securities pursuant to the Exchange Offer will be deemed to have
agreed, by execution of the Letter of Transmittal or delivery of an Agent's
Message in lieu thereof, that upon receipt of notice from Southern, Capital or
the Trust of the occurrence of any event or the discovery of (i) any fact
which makes any statement contained or incorporated by reference in this
Prospectus untrue in any material respect or (ii) any fact which causes this
Prospectus to omit to state a material fact necessary in order to make the
statements contained or incorporated by reference herein, in light of the
circumstances under which they were made, not misleading, or (iii) of the
occurrence of certain other events specified in the Registration Rights
Agreement, such Participating Broker-Dealer will suspend the sale of Exchange
Capital Securities (or the Exchange Capital Securities Guarantee, the Exchange
Notes Guarantee or the Exchange Junior Subordinated Notes, as applicable)
pursuant to this Prospectus until Southern, Capital or the Trust has amended
or supplemented this Prospectus to correct such misstatement or omission and
has furnished copies of the amended or supplemented Prospectus to such
Participating Broker-Dealer, or Southern, Capital or the Trust has given
notice that the sale of the Exchange Capital Securities (or the Exchange
Capital Securities Guarantee, the Exchange Notes Guarantee or the Exchange
Junior Subordinated Notes, as applicable) may be resumed, as the case may be.
If Southern, Capital or the Trust gives such notice to suspend the sale of the
Exchange Capital Securities (or the Exchange Capital Securities Guarantee, the
Exchange Notes Guarantee or the Exchange Junior Subordinated Notes, as
applicable), it shall extend the 90-day period referred to above during which
Participating Broker-Dealers are entitled to use this Prospectus in connection
with the resale of Exchange Capital Securities by the number of days during
the period from and including the date of the giving of such notice to and
including the date when Participating Broker-Dealers shall have received
copies of the amended or supplemented Prospectus necessary to permit resales
of the Exchange Capital Securities or to and including the date on which
Southern, Capital or the Trust has given notice that the sale of Exchange
Capital Securities (or the Exchange Capital Securities Guarantee, the Exchange
Notes Guarantee or the Exchange Junior Subordinated Notes, as applicable) may
be resumed, as the case may be.
WITHDRAWAL RIGHTS
Except as otherwise provided herein, tenders of Original Capital Securities
may be withdrawn at any time on or prior to the Expiration Date.
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In order for a withdrawal to be effective a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at its address set forth under "--Exchange Agent" on or
prior to the Expiration Date. Any such notice of withdrawal must specify the
name of the person who tendered the Original Capital Securities to be
withdrawn, the aggregate principal amount of Original Capital Securities to be
withdrawn, and (if certificates for such Original Capital Securities have been
tendered) the name of the registered holder of the Original Capital Securities
as set forth on the Original Capital Securities, if different from that of the
person who tendered such Original Capital Securities. If Original Capital
Securities have been delivered or otherwise identified to the Exchange Agent,
then prior to the physical release of such Original Capital Securities, the
tendering holder must submit the serial numbers shown on the particular
Original Capital Securities to be withdrawn and the signature on the notice of
withdrawal must be guaranteed by an Eligible Institution, except in the case
of Original Capital Securities tendered for the account of an Eligible
Institution. If Original Capital Securities have been tendered pursuant to the
procedures for book-entry transfer set forth in "--Procedures for Tendering
Original Capital Securities," the notice of withdrawal must specify the name
and number of the account at DTC to be credited with the withdrawal of
Original Capital Securities, in which case a notice of withdrawal will be
effective if delivered to the Exchange Agent by written, telegraphic, telex or
facsimile transmission. Withdrawals of tenders of Original Capital Securities
may not be rescinded. Original Capital Securities properly withdrawn will not
be deemed validly tendered for purposes of the Exchange Offer, but may be
retendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described above under "--Procedures for
Tendering Original Capital Securities."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Trust, in its
sole discretion, whose determination shall be final and binding on all
parties. Neither Southern, Capital, the Trust, any affiliates or assigns of
Southern, Capital or the Trust, the Exchange Agent nor any other person shall
be under any duty to give any notification of any irregularities in any notice
of withdrawal or incur any liability for failure to give any such
notification. Any Original Capital Securities which have been tendered but
which are withdrawn will be returned to the holder thereof promptly after
withdrawal.
DISTRIBUTIONS ON EXCHANGE CAPITAL SECURITIES
Holders of Original Capital Securities whose Original Capital Securities are
accepted for exchange will not receive distributions on such Original Capital
Securities and will be deemed to have waived the right to receive any
distributions on such Original Capital Securities accumulated from and after
February 4, 1997. Accordingly, holders of Exchange Capital Securities as of
the record date for the payment of distributions on August 1, 1997 will be
entitled to receive distributions accumulated from and after February 4, 1997.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, or any extension
of the Exchange Offer, Southern, Capital and the Trust will not be required to
accept for exchange, or to exchange, any Original Capital Securities for any
Exchange Capital Securities, and, as described below, may terminate the
Exchange Offer (whether or not any Original Capital Securities have
theretofore been accepted for exchange) or may waive any conditions to or
amend the Exchange Offer, if any of the following conditions has occurred or
exists or has not been satisfied:
(a) there shall occur a change in the current interpretation by the staff
of the Commission which permits the Exchange Capital Securities issued
pursuant to the Exchange Offer in exchange for Original Capital Securities
to be offered for resale, resold and otherwise transferred by holders
thereof (other than broker-dealers and any such holder which is an
"affiliate" of Southern, Capital or the Trust within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such
Exchange Capital Securities are acquired in the ordinary course of such
holders' business and such holders have no arrangement or understanding
with any person to participate in the distribution of such Exchange Capital
Securities; or
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(b) any law, statute, rule or regulation shall have been adopted or
enacted which, in the judgment of Southern, Capital or the Trust, would
reasonably be expected to impair its ability to proceed with the Exchange
Offer; or
(c) a stop order shall have been issued by the Commission or any state
securities authority suspending the effectiveness of the Registration
Statement, or proceedings shall have been initiated or, to the knowledge of
Southern, Capital or the Trust, threatened for that purpose, or any
governmental approval has not been obtained, which approval Southern,
Capital or the Trust shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby; or
(d) Southern shall receive an opinion of counsel experienced in such
matters to the effect that there is more than an insubstantial risk that
consummation of the Exchange Offer would result in interest payable to the
Trust on the Junior Subordinated Notes being not deductible by Southern for
United States income tax purposes.
If Southern, Capital or the Trust determines in its sole and absolute
discretion that any of the foregoing events or conditions has occurred or
exists or has not been satisfied, it may, subject to applicable law, terminate
the Exchange Offer (whether or not any Original Capital Securities have
theretofore been accepted for exchange) or may waive any such condition or
otherwise amend the terms of the Exchange Offer in any respect. If such waiver
or amendment constitutes a material change to the Exchange Offer, Southern,
Capital or the Trust will promptly disclose such waiver or amendment by means
of a prospectus supplement that will be distributed to the registered holders
of the Original Capital Securities and will extend the Exchange Offer to the
extent required by Rule 14e-1 under the Exchange Act.
EXCHANGE AGENT
Bankers Trust Company has been appointed as Exchange Agent for the Exchange
Offer. Delivery of the Letters of Transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this Prospectus or of the Letter of Transmittal should be directed
to the Exchange Agent as follows:
BY HAND, OVERNIGHT DELIVERY, REGISTERED OR CERTIFIED MAIL:
Bankers Trust Company
Four Albany Street
4th Floor
New York, New York 10006
Attention: Corporate Trust and Agency Group
Manager Public Utilities Group
Confirm By Telephone:
(212) 250-6826
Facsimile Transmissions:
(212) 250-6725
(ELIGIBLE INSTITUTIONS ONLY)
Delivery to other than the above address or facsimile number will not
constitute a valid delivery.
FEES AND EXPENSES
Southern has agreed to pay the Exchange Agent reasonable and customary fees
for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith. Southern will also pay brokerage houses and
other custodians, nominees and fiduciaries the reasonable out-of-pocket
expenses incurred by them
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in forwarding copies of this Prospectus and related documents to the
beneficial owners of Original Capital Securities, and in handling or tendering
for their customers.
Holders who tender their Original Capital Securities for exchange will not
be obligated to pay any transfer taxes in connection therewith. If, however,
Exchange Capital Securities are to be delivered to, or are to be issued in the
name of, any person other than the registered holder of the Original Capital
Securities tendered, or if a transfer tax is imposed for any reason other than
the exchange of Original Capital Securities in connection with the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered holder or any other persons) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering holder.
Neither Southern, Capital nor the Trust will make any payment to brokers,
dealers or other nominees soliciting acceptances of the Exchange Offer.
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DESCRIPTION OF THE EXCHANGE CAPITAL SECURITIES
The Original Capital Securities and the Common Securities were issued and
the Exchange Capital Securities will be issued pursuant to the terms of the
Trust Agreement. The Trust Agreement has been qualified as an indenture under
the 1939 Act. The Property Trustee will act as the indenture trustee with
respect to the Trust, as well as the Exchange Capital Securities Guarantee,
for purposes of compliance with the provisions of the 1939 Act. The terms of
the Exchange Capital Securities will include those stated in the Trust
Agreement, the Delaware Business Trust Act, and those made part of the Trust
Agreement by the 1939 Act. A copy of the Trust Agreement is filed as an
exhibit to the Registration Statement of which this Prospectus is a part. The
following summary of the principal terms and provisions of the Exchange
Capital Securities does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Trust Agreement, as well as the
1939 Act.
GENERAL
The Trust Agreement authorizes the Administrative Trustees, on behalf of the
Trust, to issue the Capital Securities (including the Original Capital
Securities and the Exchange Capital Securities), which represent preferred
undivided beneficial interests in the assets of the Trust, and the Common
Securities, which represent common undivided beneficial interests in the
assets of the Trust. All of the Common Securities are owned by Capital. The
Common Securities rank pari passu, and payments will be made thereon on a pro
rata basis, with the Capital Securities, except that upon the occurrence of a
Subordinated Note Indenture Event of Default, the rights of the holders of the
Common Securities to receive payment of periodic distributions and payments
upon liquidation, redemption and otherwise will be subordinated to the rights
of the holders of the Capital Securities. The Trust Agreement 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 Trust
Agreement, the Property Trustee will own and hold the Junior Subordinated
Notes for the benefit of the Trust and the holders of the Trust Securities.
The payment of distributions out of money held by the Trust, and payments upon
redemption of the Exchange Capital Securities or liquidation of the Trust, are
guaranteed by Southern on a subordinated basis as and to the extent described
under "Description of the Exchange Capital Securities Guarantee". The Exchange
Capital Securities Guarantee does not cover payment of distributions on the
Exchange Capital Securities when the Trust does not have legally and
immediately available funds sufficient to make such distributions. In such
event, the remedy of a holder of Exchange Capital Securities is to direct the
Property Trustee to enforce its rights under the Junior Subordinated Notes. In
addition, a holder of Exchange Capital Securities may institute a legal
proceeding directly against Capital, without first instituting a legal
proceeding against the Property Trustee or any other person or entity, for
enforcement of payment to such holder of principal of or interest on the
Junior Subordinated Notes having a principal amount equal to the aggregate
stated liquidation amount of the Exchange Capital Securities of such holder on
or after the due dates specified in the Junior Subordinated Notes. The above
mechanisms and obligations, together with Southern's obligations under the
Exchange Notes Guarantee and the Agreement as to Expenses and Liabilities,
constitute a full and unconditional guarantee by Southern and Capital of
payments due on the Exchange Capital Securities. See "--Voting Rights" below.
DISTRIBUTIONS
Distributions on the Capital Securities will be fixed at the Securities Rate
and will accrue from February 4, 1997 and, except in the event of an Extension
Period, will be payable semi-annually in arrears on February 1 and August 1 of
each year. In the event that any date on which distributions are to be made on
the Capital Securities is not a Business Day, then payment of the
distributions payable on such date will be made on the next succeeding day
that 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
date. A "Business Day" shall mean any day other than a Saturday or Sunday, a
day on which banks in New York City are authorized or obligated by law or
executive order to remain closed or a day on which the principal corporate
trust office of the Property Trustee or the Indenture Trustee is closed for
business.
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Distributions payable on any Distribution Date will be payable to the
holders of record on the Record Date for such Distribution Date, which is the
close of business on the fifteenth calendar day preceding such Distribution
Date. Subject to any applicable laws and regulations and the provisions of the
Trust Agreement, each such payment will be made as described under "Form,
Denomination, Book-Entry Procedures and Transfer" below. The amount of
distributions payable for any period will be computed on the basis of a 360-
day year of twelve 30-day months.
Capital has the right under the Subordinated Note Indenture to defer
payments of interest on the Junior Subordinated Notes by extending the
interest payment period from time to time on the Junior Subordinated Notes
(each, an "Extension Period") which, if exercised, would defer semi-annual
distributions on the Capital Securities during any such extended interest
payment period. Deferred installments of interest on the Junior Subordinated
Notes will bear interest, compounded semi-annually, at a rate per annum equal
to the Securities Rate to the extent permitted by applicable law. If
distributions are deferred, the deferred distributions and accrued interest
thereon shall be paid, if funds are legally available therefor, to holders of
record of the Capital Securities as they appear on the books and records of
the Trust on the Record Date next following the termination of such Extension
Period. See "Description of the Exchange Junior Subordinated Notes--Interest"
and "--Option to Extend Interest Payment Period."
Distributions on the Capital Securities must be paid on the Distribution
Dates to the extent that the Trust has funds legally and immediately available
for the payment of such distributions. The Trust's funds available for
distribution to the holders of the Capital Securities will be limited to
payments received under the Junior Subordinated Notes. See "Description of the
Exchange Junior Subordinated Notes."
REDEMPTION
The Capital Securities are subject to mandatory redemption upon repayment of
the Junior Subordinated Notes at maturity or their earlier redemption. The
Junior Subordinated Notes will mature on February 1, 2037 (subject to
Capital's right to advance such maturity as described under "Description of
the Exchange Junior Subordinated Notes--Conditional Right to Advance
Maturity"), and may be redeemed at the option of Capital, (i) in whole or in
part at any time on or after February 1, 2007, or (ii) at any time in whole
upon the occurrence of a Special Event. Upon the repayment of the Junior
Subordinated Notes, whether at maturity or upon redemption, the proceeds from
such repayment or payment shall simultaneously be applied to redeem a like
amount of Trust Securities upon not less than 30 nor more than 60 days'
notice, at the applicable Redemption Price (as defined below). See
"Description of the Exchange Junior Subordinated Notes--Optional Redemption."
In the event that fewer than all of the outstanding Trust Securities are to be
redeemed, the Capital Securities to be redeemed will be selected in accordance
with DTC's procedures if the Capital Securities are in book-entry only form.
If the Capital Securities are not in book-entry only form, the Capital
Securities to be redeemed will be selected by such method as the Property
Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to $1,000 or integral multiples
thereof) of the aggregate liquidation amount of Capital Securities of a
denomination larger than $1,000; provided, however, that before undertaking
the redemption of the Capital Securities on other than a pro rata basis, the
Property Trustee shall have received an opinion of counsel that the status of
the Trust as a grantor trust for federal income tax purposes would not be
adversely affected.
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The Redemption Price, in the case of a redemption under (i) above, shall
equal the following prices, expressed in percentages of the liquidation amount
of the Capital Securities being redeemed, plus accumulated and unpaid
distributions thereon to the date of redemption, if redeemed during the 12-
month period beginning February 1 of the years indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2007.............................. 104.0950%
2008.............................. 103.6855
2009.............................. 103.2760
2010.............................. 102.8665
2011.............................. 102.4570
2012.............................. 102.0475
2013.............................. 101.6380
2014.............................. 101.2285
2015.............................. 100.8190
2016.............................. 100.4095
</TABLE>
and at 100% on or after February 1, 2017.
The Redemption Price, in the case of a redemption prior to February 1, 2007
upon the occurrence of a Special Event as described under (ii) above, shall
equal for each Capital Security the Make-Whole Amount for a corresponding
$1,000 principal amount of Junior Subordinated Notes plus accumulated and
unpaid distributions thereon to the date of redemption. The "Make-Whole
Amount" shall be equal to the greater of (i) the amount equal to 100% of the
principal amount of the Junior Subordinated Notes being redeemed or (ii) the
amount equal to the sum of the present values of the remaining scheduled
payments of principal of and interest on the Junior Subordinated Notes being
redeemed through February 1, 2007 discounted to the date of redemption on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at a discount rate equal to the Treasury Yield plus 100 basis points, in the
case of such a redemption before February 1, 1998, and the Treasury Yield plus
50 basis points, in the case of such a redemption on or after February 1, 1998
but prior to February 1, 2007.
"Treasury Yield" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the Comparable Treasury
Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable
to the remaining term through February 1, 2007 of the Junior Subordinated
Notes to be redeemed that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term through
February 1, 2007 of the Junior Subordinated Notes.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the most recent
weekly statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "H.15 (519)" or (ii) if such release
(or any successor release) is not published or does not contain such prices on
such business day, the Reference Treasury Dealer Quotation for such redemption
date.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by Capital and reasonably
acceptable to the Indenture Trustee.
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"Reference Treasury Dealer Quotation" means, with respect to the Reference
Treasury Dealer and any redemption date, the average, as determined by the
Indenture Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount and
quoted in writing to the Indenture Trustee by such Reference Treasury Dealer
at 5:00 p.m. on the third business day preceding such redemption date).
"Reference Treasury Dealer" means a primary US Government securities dealer
in New York City appointed by Capital and reasonably acceptable to the
Indenture Trustee.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Special Event at any time, Capital will have the
option to redeem the Junior Subordinated Notes in whole (and thus cause the
redemption of the Capital Securities in whole) or cause the distribution of
the Junior Subordinated Notes pro rata to the holders of the Trust Securities.
A Special Event is either an Investment Company Act Event or a Tax Event.
An "Investment Company Act Event" means that the Administrative Trustees,
Southern and Capital shall have received an opinion of independent counsel
(which may be counsel to Southern or Capital) to the effect that, as a result
of a change in law or regulation or a written change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority after February 4, 1997, there is more than an
insubstantial risk that the Trust is or will be considered an investment
company under the 1940 Act.
"Tax Event" means that the Administrative Trustees, Southern and Capital
shall have received an opinion from independent tax counsel experienced in
such matters (which may be counsel to Southern or Capital) to the effect that,
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 such
laws or regulations, there is more than an insubstantial risk that (i) the
Trust would be subject to United States federal income tax with respect to
income accrued or received on the Junior Subordinated Notes, (ii) interest
payable to the Trust on the Junior Subordinated Notes would not be deductible
by a member of Southern's consolidated tax group for United States federal
income tax purposes or (iii) the Trust would be subject to more than a de
minimis amount of other taxes, duties or other governmental charges, which
change or amendment becomes effective on or after February 4, 1997. See "Risk
Factors--Possible Tax Law Changes."
After the date for any distribution of Junior Subordinated Notes upon
termination of the Trust, (i) the Capital Securities and the Capital
Securities Guarantee will no longer be deemed to be outstanding, (ii) the
depositary or its nominee, as the record holder of the Capital Securities,
will receive a registered global certificate or certificates representing the
Junior Subordinated Notes to be delivered upon such distribution and (iii) any
certificates representing Capital Securities and the Capital Securities
Guarantee not held by the depositary or its nominee will be deemed to
represent Junior Subordinated Notes having an aggregate principal amount equal
to the aggregate stated liquidation amount of, with an interest rate identical
to the Securities Rate of, and accrued and unpaid interest equal to accrued
and unpaid distributions on, such Capital Securities, until such certificates
are presented to Capital or its agent for transfer or reissuance.
There can be no assurance as to the market prices for the Capital Securities
or the Junior Subordinated Notes that may be distributed in exchange for the
Capital Securities if a termination and liquidation of the Trust were to
occur. Accordingly, the Capital Securities that an investor may purchase, or
the Junior Subordinated Notes that the investor may receive on termination and
liquidation of the Trust, may trade at a discount to the price that the
investor paid to purchase the Capital Securities offered hereby.
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REDEMPTION PROCEDURES
In the event that fewer than all of the Trust Securities are to be redeemed,
then the aggregate liquidation amount of the Trust Securities to be redeemed
shall be allocated 97% to the Capital Securities and 3% to the Common
Securities.
The Capital Securities redeemed on each redemption date shall be redeemed at
the applicable Redemption Price with the proceeds from the contemporaneous
redemption of the Junior Subordinated Notes. The Redemption Price of Capital
Securities shall be deemed payable on each redemption date only to the extent
that the Trust has funds legally and immediately available for payment of such
Redemption Price.
If the Property Trustee gives a notice of redemption in respect of Capital
Securities (which notice will be irrevocable), then, by 2:00 P.M., New York
City time, on the redemption date, subject to the immediately preceding
paragraph, the Property Trustee will irrevocably deposit with the securities
depositary, so long as the Capital Securities are in book-entry only form,
sufficient funds to pay the applicable Redemption Price. See""--Form,
Denomination, Book-Entry Procedures and Transfer" below. If the Capital
Securities are not in book-entry only form, the Property Trustee, subject to
the immediately preceding paragraph, shall irrevocably deposit with the Paying
Agent funds sufficient to pay the applicable Redemption Price and will give
the Paying Agent irrevocable instructions to pay the Redemption Price to the
holders thereof upon surrender of their Capital Securities certificates. 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 Capital
Securities so called for redemption will cease, except the right of the
holders of such Capital Securities to receive the applicable Redemption Price,
but without interest on such Redemption Price. In the event that any date
fixed for redemption of Capital Securities is not a Business Day, then payment
of the Redemption Price 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 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 Capital Securities is improperly withheld or refused and not paid
either by the Trust or by Southern pursuant to the Capital Securities
Guarantee or the Notes Guarantee, distributions on such Capital Securities
will continue to accrue at the then applicable rate, from such redemption date
originally established by the Trust for such Capital Securities to the date
such Redemption Price is actually paid. See "--Events of Default" below,
"Relationship Among the Capital Securities, the Junior Subordinated Notes, the
Capital Securities Guarantee and the Notes Guarantee" and "Description of the
Exchange Capital Securities Guarantee--Events of Default."
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), Southern, Capital or any
of their affiliates may, at any time and from time to time, purchase
outstanding Capital Securities by tender, in the open market or by private
agreement.
FORM, DENOMINATION, BOOK-ENTRY PROCEDURES AND TRANSFER
The Exchange Capital Securities will be issued in blocks having a
liquidation amount of not less than $1,000 and may be transferred or exchanged
in such blocks in the manner and at the offices described below. The Exchange
Capital Securities initially will be represented by one or more Capital
Securities in registered, global form (collectively, the "Global Capital
Securities"). The Global Capital Securities will be deposited upon issuance
with the Property Trustee as custodian for DTC, in New York, New York, and
registered in the name of DTC or its nominee, in each case for credit to an
account of a direct or indirect participant in DTC as described below.
Except as set forth below, the Global Capital Securities may be transferred,
in whole and not in part, only to another nominee of DTC or to a successor of
DTC or its nominee. Beneficial interests in the Global Capital Securities may
not be exchanged for Capital Securities in certificated form except in the
limited circumstances described below.
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Transfers of beneficial interests in the Global Capital Securities will be
subject to the applicable rules and procedures of DTC and its direct or
indirect participants (including, if applicable, those of the Euroclear System
("Euroclear") and Cedel Bank, societe anonyme ("Cedel Bank")), which may
change from time to time.
Depositary Procedures
DTC has advised Southern, Capital and the Trust that DTC is a limited-
purpose trust company created to hold securities for its participants
("Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic book-
entry changes in accounts of its Participants. The Participants include
securities brokers and dealers (including the Initial Purchasers), banks,
trust companies, clearing corporations and certain other organizations. Access
to DTC's system is also available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may
beneficially own securities held by or on behalf of DTC only through the
Participants or the Indirect Participants. The ownership interest and transfer
of ownership interest of each actual purchaser of each security held by or on
behalf of DTC are recorded on the records of the Participants and Indirect
Participants.
DTC has also advised Southern, Capital and the Trust that, pursuant to
procedures established by it, (i) upon deposit of the Global Capital
Securities, DTC will credit the accounts of Participants designated by the
Initial Purchasers with portions of the liquidation amount of the Global
Capital Securities and (ii) ownership of such interests in the Global Capital
Securities will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC (with respect to the
Participants) or by the Participants and the Indirect Participants (with
respect to other owners of beneficial interests in the Global Capital
Securities).
Southern and Capital understand that under existing industry practices, if
either Capital or the Property Trustee requests any action of holders of
Capital Securities or if an owner of an interest in the Capital Securities
desires to give or take any action that a holder is entitled to give or take,
DTC would authorize the Participants owning the relevant interests in the
Capital Securities to give or take such action, and such Participants would
authorize Indirect Participants to give or take such action or would otherwise
act upon the instructions of owners of interests in such Capital Securities
holding through them.
Investors in the Global Capital Securities may hold their interests therein
directly through DTC if they are participants in such system, or indirectly
through organizations (including Euroclear and Cedel Bank) which are
participants in such system. Euroclear and Cedel Bank will hold interests in
the Global Capital Securities on behalf of their participants through
customers' securities accounts in their respective names on the books of their
respective depositaries, which are Morgan Guaranty Trust Company of New York,
Brussels office, as operator of Euroclear, and Citibank, N.A., as facilitator
for Cedel Bank's access to DTC. The depositaries, in turn, will hold such
interests in the Global Capital Securities in customers' securities accounts
in the depositaries' names on the books of DTC. All interests in a Global
Capital Security, including those held through Euroclear or Cedel Bank, may be
subject to the procedures and requirements of DTC. Those interests held
through Euroclear or Cedel Bank may also be subject to the procedures and
requirements of such system. The laws of some states require that certain
persons take physical delivery in certificated form of securities that they
own. Consequently, the ability to transfer beneficial interests in a Global
Capital Security to such persons will be limited to that extent. Because DTC
can act only on behalf of Participants, which in turn act on behalf of
Indirect Participants and certain banks, the ability of a person having
beneficial interests in a Global Capital Security to pledge such interests to
persons or entities that do not participate in the DTC system, or otherwise
take actions in respect of such interests, may be affected by the lack of a
physical certificate evidencing such interests.
Except as described below, owners of interests in the Global Capital
Securities will not have Capital Securities registered in their name, will not
receive physical delivery of Capital Securities in certificated form and will
not be considered the registered owners or holders thereof under the Trust
Agreement for any purpose.
39
<PAGE>
Payments in respect of the Global Capital Security registered in the name of
DTC or its nominee will be payable by the Property Trustee to DTC in its
capacity as the registered holder under the Trust Agreement. Under the terms
of the Trust Agreement, the Property Trustee will treat the persons in whose
names the Capital Securities, including the Global Capital Securities, are
registered as the owners thereof for the purpose of receiving such payments
and for any and all other purposes whatsoever. Consequently, neither the
Administrative Trustees, Property Trustee nor any agent of either thereof has
or will have any responsibility or liability for (i) any aspect of DTC's
records or any Participant's or Indirect Participant's records relating to or
payments made on account of beneficial ownership interests in the Global
Capital Securities, or for maintaining, supervising or reviewing any of DTC's
records or any Participant's or Indirect Participant's records relating to the
beneficial ownership interests in the Global Capital Securities or (ii) any
other matter relating to the actions and practices of DTC or any of its
Participants or Indirect Participants. DTC has advised Southern, Capital and
the Trust that its current practice, upon receipt of any payment in respect of
securities such as the Capital Securities, is to credit the accounts of the
relevant Participants with the payment on the payment date, in amounts
proportionate to their respective holdings in liquidation amount of beneficial
interests in the relevant security as shown on the records of DTC unless DTC
has reason to believe it will not receive payment on such payment date.
Payments by the Participants and the Indirect Participants to the beneficial
owners of Capital Securities will be governed by standing instructions and
customary practices and will be the responsibility of the Participants or the
Indirect Participants and will not be the responsibility of DTC, the Property
Trustee, the Trust, Southern or Capital. Neither the Trust, Southern, Capital
nor the Property Trustee will be liable for any delay by DTC or any of its
Participants in identifying the beneficial owners of the Capital Securities,
and the Trust, Southern, Capital and the Property Trustee may conclusively
rely on and will be protected in relying on instructions from DTC or its
nominee for all purposes.
Except for trades involving only Euroclear and Cedel Bank participants,
interests in the Global Capital Securities will trade in DTC's Same-Day Funds
Settlement System and secondary market trading activity in such interests will
therefore settle in immediately available funds, subject in all cases to the
rules and procedures of DTC and its participants.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear and Cedel Bank will be effected in the ordinary way
in accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
Capital Securities described herein, cross-market transfers between the
Participants in DTC, on the one hand, and Euroclear and Cedel Bank
participants, on the other hand, will be effected through DTC in accordance
with DTC's rules on behalf of Euroclear or Cedel Bank, as the case may be, by
its respective depositary; however, such cross-market transactions will
require delivery of instructions to Euroclear or Cedel Bank, as the case may
be, by the counterparty in such system in accordance with the rules and
procedures and within the established deadlines (Brussels time) of such
system. Euroclear or Cedel Bank, as the case may be, will, if the transaction
meets its settlement requirements, deliver instructions to its respective
depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant Global Capital Securities in
DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Euroclear participants and Cedel
Bank participants may not deliver instructions directly to the depositaries
for Euroclear and Cedel Bank.
Because of time zone differences, the securities account of a Euroclear or
Cedel Bank participant purchasing an interest in a Global Capital Security
from a participant in DTC will be credited, and any such crediting will be
reported to the relevant Euroclear or Cedel Bank participant, during the
securities settlement processing day (which must be a business day for
Euroclear or Cedel Bank) immediately following the settlement date of DTC.
Cash received in Euroclear or Cedel Bank as a result of sales of interests in
a Global Capital Security by or through a Euroclear or Cedel Bank participant
to a Participant in DTC will be received with value on the settlement date of
DTC but will be available in the relevant Euroclear or Cedel Bank cash account
only as of the business day for Euroclear or Cedel Bank following DTC's
settlement date.
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DTC has advised Southern, Capital and the Trust that it will take any action
permitted to be taken by a holder of Capital Securities only at the direction
of one or more Participants to whose account with DTC interests in the Global
Capital Securities are credited and only in respect of such portion of the
liquidation amount of the Capital Securities as to which such Participant or
Participants has or have given such direction. However, if there is an Event
of Default under the Trust Agreement, DTC reserves the right to exchange the
Global Capital Securities for Capital Securities in certificated form and to
distribute such Capital Securities to its Participants.
The information in this section concerning DTC, Euroclear and Cedel Bank and
their book-entry systems has been obtained from sources that Southern, Capital
and the Trust believe to be reliable, but neither Southern, Capital nor the
Trust takes responsibility for the accuracy thereof.
Although DTC, Euroclear and Cedel Bank have agreed to the foregoing
procedures to facilitate transfers of interest in the Global Capital
Securities among participants in DTC, Euroclear and Cedel Bank, they are under
no obligation to perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. Neither Southern, Capital, the
Trust nor the Property Trustee will have any responsibility for the
performance by DTC, Euroclear and Cedel Bank or their respective participants
or indirect participants of their respective obligations under the rules and
procedures governing their operations.
Euroclear and Cedel Bank
Euroclear and Cedel Bank each hold securities for their account holders and
facilitate the clearance and settlement of securities transactions by
electronic book-entry transfer between their respective account holders,
thereby eliminating the need for physical movements of certificates and any
risk from lack of simultaneous transfers of securities.
Euroclear and Cedel Bank provide various services including safekeeping,
administration, clearance and settlement of internationally traded securities
lending and borrowing. Euroclear and Cedel Bank also deal with domestic
securities markets in several countries through established depositary and
custodial relationships. Euroclear and Cedel Bank have established an
electronic bridge between their two systems across which their respective
account holders may settle trades with each other.
Account holders in Euroclear and Cedel Bank are world-wide financial
institutions, including underwriters, securities brokers and dealers, banks,
trust companies and clearing corporations. Indirect access to Euroclear and
Cedel Bank is available to other institutions that clear through or maintain a
custodial relationship with an account holder of either system.
Account holders' overall contractual relations with Euroclear and Cedel Bank
are governed by the respective rules and operating procedures of Euroclear and
Cedel Bank and any applicable laws. Euroclear and Cedel Bank act under such
rules and operating procedures only on behalf of their respective account
holders and have no record of or relationship with persons holding through
their respective account holders.
Exchange of Book-Entry Capital Securities for Certificated Exchange Capital
Securities
A Global Capital Security is exchangeable for Exchange Capital Securities in
registered certificated form if (i) DTC (x) notifies the Trust that it is
unwilling or unable to continue as Depositary for the Global Capital Security
and the Trust thereupon fails to appoint a successor Depositary within 90 days
or (y) has ceased to be a clearing agency registered under the Exchange Act,
(ii) Capital in its sole discretion elects to cause the issuance of the
Exchange Capital Securities in certificated form or (iii) there shall have
occurred and be continuing an Event of Default or any event which after notice
or lapse of time or both would be an Event of Default under the Trust
Agreement. In addition, beneficial interests in a Global Capital Security may
be exchanged for certificated Exchange Capital Securities upon request but
only upon at least 20 days' prior written notice given to the Property Trustee
by or on behalf of DTC in accordance with customary procedures. In all cases,
certificated Exchange Capital Securities delivered in exchange for any Global
Capital Security or beneficial interests therein
41
<PAGE>
will be registered in the names, and issued in any approved denominations,
requested by or on behalf of the Depositary (in accordance with its customary
procedures).
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to the Trust Agreement, the Trust shall terminate on December 31,
2042, or earlier upon (i) the occurrence of a Bankruptcy Event (as defined in
the Trust Agreement) in respect of Capital, dissolution or liquidation of
Capital, or dissolution of the Trust pursuant to a judicial decree; (ii) the
distribution of the Junior Subordinated Notes to the holders of the Trust
Securities in liquidation of the Trust (see "--Special Event Redemption or
Distribution" above); or (iii) the payment at maturity or redemption of all of
the Junior Subordinated Notes, and the consequent payment of the Trust
Securities.
If an early termination occurs as described in clause (i) or (ii) above, the
Trust shall be liquidated, and the Property Trustee shall distribute to each
holder of Capital Securities and Common Securities a like amount of Junior
Subordinated Notes, unless in the case of an event described in clause (i)
such distribution is determined by the Administrative Trustees not to be
practical, in which event such holders will be entitled to receive, out of the
assets of the Trust available for distribution to holders after satisfaction
of liabilities to creditors, an amount equal to the aggregate of the stated
liquidation preference of $1,000 per Trust Security plus accrued and unpaid
distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then subject to the next succeeding
sentence, the amounts payable directly by the Trust on the Trust Securities
shall be paid on a pro rata basis. The holder of the Common Securities will be
entitled to receive distributions upon any such dissolution pro rata with the
holders of the Capital Securities, except that if a Subordinated Note
Indenture Event of Default has occurred and is continuing, the holders of
Capital Securities shall have a preference over the holders of Common
Securities.
EVENTS OF DEFAULT
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement ("Trust Agreement Event of Default") with respect to the Trust
Securities issued thereunder (whatever the reason for such Event of Default,
and whether it shall be voluntary or involuntary or be effected by operation
of law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body):
(i) the occurrence of an "Event of Default" as defined in Section 501 of
the Subordinated Note Indenture ("Subordinated Note Indenture Event of
Default") (see "Description of the Exchange Junior Subordinated Notes--
Events of Default"); or
(ii) default by the Trust in the payment of any distribution when it
becomes due and payable, and the continuation of such default for a period
of 30 days; or
(iii) default by the Trust in the payment of any Redemption Price of any
Capital Security or Common Security when it becomes due and payable; or
(iv) default in the performance, or breach, of any covenant or warranty
of the Securities Trustees in the Trust Agreement (other than a covenant or
warranty a default in the performance of which or the breach of which is
dealt with in clause (ii) or (iii) above), and continuation of such default
or breach for a period of 60 days after there has been given, by registered
or certified mail, to such Securities Trustees by the holders of at least
10% in liquidation amount of the outstanding Capital Securities a written
notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" under the Trust
Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Trust.
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Within 90 days after the occurrence of any Trust Agreement Event of Default,
the Property Trustee shall transmit notice of any default known to the
Property Trustee to the holders of Trust Securities, Southern and Capital,
unless such Trust Agreement Event of Default shall have been cured or waived.
If a Trust Agreement Event of Default occurs and is continuing, then,
pursuant to the Trust Agreement, holders of a majority in aggregate
liquidation amount of Capital Securities have the right to direct the exercise
of any trust or power conferred upon the Property Trustee under the Trust
Agreement, including the right to direct the Property Trustee under the Trust
Agreement to exercise the remedies available to it as holder of the Junior
Subordinated Notes and the Notes Guarantee. If the Property Trustee fails to
enforce its rights under the Junior Subordinated Notes and the Notes
Guarantee, a holder of Capital Securities may, to the fullest extent permitted
by applicable law, institute a legal proceeding directly against Southern and
Capital to enforce its rights under the Trust Agreement without first
instituting any legal proceeding against the Property Trustee or the Trust.
Notwithstanding the foregoing, a holder of Capital Securities may institute a
legal proceeding directly against Southern and Capital, without first
instituting a legal proceeding against the Property Trustee or any other
person or entity, for enforcement of payment to such holder of principal of or
interest on the Junior Subordinated Notes having a principal amount equal to
the aggregate stated liquidation amount of the Capital Securities of such
holder on or after the due dates specified in the Junior Subordinated Notes.
See "Relationship Among the Capital Securities, the Junior Subordinated Notes,
the Capital Securities Guarantee and the Notes Guarantee" and "Description of
the Exchange Capital Securities Guarantee--Events of Default."
Unless a Subordinated Note Indenture Event of Default shall have occurred
and be continuing, the Securities Trustees may be removed at any time by act
of the holder of the Common Securities. If a Subordinated Note Indenture Event
of Default has occurred and is continuing, any Securities Trustee may be
removed at such time by act of the holders of a majority in liquidation amount
of the Capital Securities, delivered to the appropriate Securities Trustee (in
its individual capacity and on behalf of the Trust). No resignation or removal
of any Securities Trustee and no appointment of a successor shall be effective
until the acceptance of appointment by the successor Trustee in accordance
with the requirements of the Trust Agreement.
If a Subordinated Note Indenture Event of Default has occurred and is
continuing, the holders of Capital Securities shall have a preference over the
holders of Common Securities upon dissolution of the Trust as described above.
See "--Liquidation Distribution Upon Dissolution."
VOTING RIGHTS
Except as provided below and under "Description of the Exchange Capital
Securities Guarantee--Amendments and Assignment" and as otherwise required by
law and the Trust Agreement, the holders of the Capital Securities will have
no voting rights.
If any proposed amendment to the Trust Agreement provides for, or the
Securities Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Capital
Securities, whether by way of amendment to the Trust Agreement or otherwise,
or (ii) the dissolution, winding-up or termination of the Trust, other than
pursuant to the Trust Agreement, then the holders of outstanding Capital
Securities will be entitled to vote as a class on such amendment or proposal
of the Securities Trustees, and such amendment or proposal shall not be
effective except with the approval of the holders of at least 66 2/3% in
liquidation amount of such outstanding Capital Securities.
So long as any Junior Subordinated Notes are held by the Property Trustee,
the Securities Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee
(as defined herein), or executing any trust or power conferred on the
Indenture Trustee with respect to the Junior Subordinated Notes, (ii) waive
any past default which is waivable under the applicable provisions of the
Subordinated Note Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Junior Subordinated Notes shall be
due and payable, or (iv) consent to any amendment, modification or termination
of the Subordinated Note Indenture or the Junior Subordinated Notes, where
such consent shall be
43
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required, or to any other action, as the holder of the Junior Subordinated
Notes, under the Subordinated Note Indenture, without, in each case, obtaining
the prior approval of the holders of at least 66 2/3% in liquidation amount of
the outstanding Capital Securities; provided, however, that where a consent
under the Subordinated Note Indenture would require the consent of each holder
of Junior Subordinated Notes affected thereby, no such consent shall be given
by the Securities Trustees without the prior consent of each holder of Capital
Securities. The Securities Trustees shall not revoke any action previously
authorized or approved by a vote of the holders of the Capital Securities,
except pursuant to a subsequent vote of such holders. The Property Trustee
shall notify all holders of the Capital Securities of any notice of default
received from the Indenture Trustee with respect to the Junior Subordinated
Notes. In addition to obtaining the foregoing approvals of the holders of the
Capital Securities, prior to taking any of the foregoing actions, the
Securities Trustees shall obtain an opinion of counsel experienced in such
matters to the effect that the Trust will not be classified as other than a
grantor trust for federal income tax purposes on account of such action.
Any required approval of holders of Capital Securities may be given at a
separate meeting of holders of Capital Securities convened for such purpose or
pursuant to written consent. The Administrative Trustees will cause a notice
of any meeting at which holders of Capital Securities are entitled to vote to
be given to each holder of record of Capital Securities in the manner set
forth in the Trust Agreement.
Notwithstanding that holders of Capital Securities are entitled to vote or
consent under any of the circumstances described above, any of the Capital
Securities that are owned by Southern, Capital, the Securities Trustees or any
affiliate of Southern, Capital or any Securities Trustee, shall, for purposes
of such vote or consent, be treated as if they were not outstanding.
CO-PROPERTY TRUSTEES AND SEPARATE PROPERTY TRUSTEE
At any time or times, for the purpose of meeting the legal requirements of
the 1939 Act or of any jurisdiction in which any part of the Trust Property
(as defined in the Trust Agreement) may at the time be located, the holder of
the Common Securities and the Property Trustee shall have power to appoint,
and upon the written request of the Property Trustee, Capital, as Depositor,
shall for such purpose join with the Property Trustee in the execution,
delivery and performance of all instruments and agreements necessary or proper
to appoint, one or more persons approved by the Property Trustee either to act
as co-property trustee, jointly with the Property Trustee, of all or any part
of such Trust Property, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such person or persons in such capacity, any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement. If Capital, as Depositor, does not join in
such appointment within 15 days after the receipt by it of a request so to do,
or in case a Subordinated Note Indenture Event of Default has occurred and is
continuing, the Property Trustee alone shall have power to make such
appointment.
AMENDMENT OF THE TRUST AGREEMENT
The Trust Agreement may be amended from time to time by Capital and the
Securities Trustees without the consent of the holders of the Trust Securities
(i) to cure any ambiguity, correct or supplement any provision therein which
may be inconsistent with any other provision therein, or to make any other
provisions with respect to matters or questions arising under the Trust
Agreement, which shall not be inconsistent with the other provisions of the
Trust Agreement, provided that the amendment does not adversely affect in any
material respect the interests of any holder of Trust Securities, or (ii) to
modify, eliminate or add to any provisions of the Trust Agreement to such
extent as shall be necessary to ensure that the Trust will not be classified
as other than a grantor trust for federal income tax purposes. Except as
provided in the succeeding paragraph, other amendments to the Trust Agreement
may be made (i) upon approval of the holders of not less than 66 2/3% in
aggregate liquidation amount of the Trust Securities then outstanding and (ii)
upon receipt by the Securities Trustees of an opinion of counsel to the effect
that such amendment will not affect the Trust's status as a grantor trust or
the Trust's exemption from the 1940 Act.
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Notwithstanding the foregoing, without the consent of each affected holder
of Trust Securities, the Trust Agreement may not be amended to (i) change the
amount or timing of any distribution on the Trust Securities or otherwise
adversely affect the amount of any distribution required to be made in respect
of the Trust Securities as of a specified date, (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date, or (iii) change the consent required to amend
the Trust Agreement.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust 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. The Trust may at the request of Capital, with the consent of
the Administrative Trustees and without the consent of the holders of the
Trust Securities, consolidate, amalgamate, merge with or into, or be replaced
by a trust organized as such under the laws of any state; provided, that (i)
such successor entity either (x) expressly assumes all of the obligations of
the Trust with respect to the Trust Securities or (y) substitutes for the
Capital Securities other securities having substantially the same terms as the
Trust Securities (the "Successor Securities") so long as the Successor
Securities rank the same as the Trust Securities rank in priority with respect
to distributions and payments upon liquidation, redemption and otherwise, (ii)
Capital expressly appoints a trustee of such successor entity possessing the
same powers and duties as the Property Trustee as the holder of the Junior
Subordinated Notes, (iii) the Capital Securities or any Successor Securities
are listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other organization on which
the Capital Securities are then listed, (iv) such merger, consolidation,
amalgamation or replacement does not cause the Capital Securities (including
any Successor Securities) to be downgraded by any nationally recognized
statistical rating organization, (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, (vi) such successor entity has a purpose
substantially identical to that of the Trust, (vii) prior to such merger,
consolidation, amalgamation or replacement, Southern has received an opinion
of counsel 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, and (B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor such successor entity will
be required to register as an investment company under the 1940 Act, and
(viii) Southern guarantees the obligations of such successor entity under the
Successor Securities at least to the extent provided by the Capital Securities
Guarantee. Notwithstanding the foregoing, the Trust 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 the Trust or the successor entity to be classified as other than a
grantor trust for federal income tax purposes.
Any corporation or other body into which any of the Property Trustee, the
Delaware Trustee or any Administrative Trustee that is not a natural person
may be merged or converted or with which it may be consolidated, or any
corporation or other body resulting from any merger, conversion or
consolidation to which any such Securities Trustee shall be a party, or any
corporation or other body succeeding to all or substantially all the corporate
trust business of any such Securities Trustee, shall be the successor of such
Securities Trustee under the Trust Agreement, provided such corporation is
otherwise qualified and eligible under the Trust Agreement.
PAYMENT AND PAYING AGENT
So long as DTC is acting as securities depositary for the Capital
Securities, payments in respect of the Capital Securities in global form shall
be made to DTC, which is to credit the relevant accounts at DTC on the
applicable Distribution Dates. If the Capital Securities are not held by DTC,
such payments shall be made by check mailed to the address of the holder
entitled thereto as such address shall appear on the Securities Register
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(as such term is defined in the Trust Agreement). The Paying Agent shall
initially be the Property Trustee. The Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice to the Administrative
Trustees and Capital. In such event, the Administrative Trustees shall appoint
a successor to act as Paying Agent.
RESTRICTIONS ON TRANSFER
The Exchange Capital Securities will be issued, and may be transferred only
in minimum denominations of not less than $1,000 and multiples of $1,000 in
excess thereof. Any transfer, sale or other disposition of Exchange Capital
Securities in a denomination of less than $1,000 shall be deemed to be void
and of no legal effect whatsoever. Any such transferee shall be deemed not to
be the holder of such Exchange Capital Securities for any purpose, including
but not limited to the receipt of distributions on such Exchange Capital
Securities, and such transferee shall be deemed to have no interest whatsoever
in such Exchange Capital Securities.
REGISTRAR AND TRANSFER AGENT
It is anticipated that the Property Trustee, or one of its affiliates, will
act as registrar and transfer agent (the "Securities Registrar") for the
Capital Securities.
Registration of transfers of Capital Securities will be effected without
charge by or on behalf of the Trust, but upon payment in respect of any tax or
other governmental charges which may be imposed in relation to it.
The Securities Registrar will not be required to register or cause to be
registered any transfer of Capital Securities after they have been called for
redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a Trust Agreement Event of
Default with respect to the Trust Securities, undertakes to perform only such
duties as are specifically set forth in the Trust Agreement 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 Property Trustee is under no obligation to exercise any of the powers
vested in it by the Trust Agreement at the request of any holder of Capital
Securities, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby.
Bankers Trust Company, the Property Trustee, also serves as Indenture
Trustee and Guarantee Trustee. Southern and certain of its subsidiaries
maintain deposit accounts and banking relationships with Bankers Trust
Company. Bankers Trust Company serves as trustee under other indentures
pursuant to which securities of subsidiaries of Southern are outstanding.
GOVERNING LAW
The Trust Agreement and the Trust Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware;
provided that the immunities and standard of care of the Property Trustee
shall be governed by New York law.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to operate the Trust
so that the Trust will not be deemed to be an "investment company" required to
be registered under the 1940 Act or taxed as other than a grantor trust for
federal income tax purposes and so that the Junior Subordinated Notes will be
treated as indebtedness of Capital for federal income tax purposes. In this
connection, the Administrative Trustees and Capital are authorized to take any
action, not inconsistent with applicable law, the Trust's certificate of trust
or the Trust Agreement, that the Administrative Trustees and Capital determine
in their discretion to be necessary or desirable for such purposes, as long as
such action does not materially and adversely affect the interests of the
holders of the Capital Securities.
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DESCRIPTION OF THE EXCHANGE JUNIOR SUBORDINATED NOTES
Set forth below is a description of the terms of the Exchange Junior
Subordinated Notes. The following description does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the
Subordinated Note Indenture, dated as of February 1, 1997, among Capital,
Southern and Bankers Trust Company, as trustee (the "Indenture Trustee"), as
supplemented by a supplemental indenture thereto (the Subordinated Note
Indenture, as so supplemented, is hereinafter referred to as the "Subordinated
Note Indenture"), which Indenture and Supplemental Indenture are filed as
exhibits to the Registration Statement of which this Prospectus is a part. The
Subordinated Note Indenture has been qualified as an indenture under the 1939
Act. The terms of the Junior Subordinated Notes will include those stated in
the Subordinated Note Indenture and those made a part of the Subordinated Note
Indenture by reference to the 1939 Act. Certain capitalized terms used herein
are defined in the Subordinated Note Indenture.
GENERAL
Concurrently with the issuance of the Common Securities and the Original
Capital Securities, the Trust invested the proceeds thereof in the Original
Junior Subordinated Notes issued by the Trust.
The Original Junior Subordinated Notes were issued and the Exchange Junior
Subordinated Notes will be issued as a series of junior subordinated notes
under the Subordinated Note Indenture. The Junior Subordinated Notes will be
limited in aggregate principal amount to $335,052,000, such amount being the
approximate aggregate liquidation amount of the Trust Securities.
The entire principal amount of the Junior Subordinated Notes will mature and
become due and payable, together with any accrued and unpaid interest thereon,
including Additional Interest, if any, on February 1, 2037, subject to
Capital's right to advance such maturity as described below. The Junior
Subordinated Notes are not subject to any sinking fund provision.
The terms of the Junior Subordinated Notes correspond to those of the
Capital Securities, as described herein.
The Subordinated Note Indenture does not contain provisions that afford
holders of Junior Subordinated Notes protection in the event of a highly
leveraged transaction involving Southern or Capital.
CONDITIONAL RIGHT TO ADVANCE MATURITY
If a Tax Event occurs, Capital will have the right (a) prior to the
dissolution of the Trust, to advance the stated maturity of the Junior
Subordinated Notes to the minimum extent required, but not less than 19 and
one-half years from the date of original issuance thereof, or (b) to direct
the Property Trustee to dissolve the Trust (if not previously dissolved) and
advance the stated maturity of the Junior Subordinated Notes to the minimum
extent required, but not less than 19 and one-half years from the date of
original issuance thereof, in each case such that in the opinion of counsel to
Capital experienced in such matters, after advancing the stated maturity,
interest paid on the Junior Subordinated Notes will be deductible for federal
income tax purposes.
SUBORDINATION
The Junior Subordinated Notes are subordinated and junior in right of
payment to all Senior Indebtedness (as defined below) of Capital. No payment
of principal of (including redemption payments, if any), or premium, if any,
or interest on (including Additional Interest (as defined herein)) the Junior
Subordinated Notes may be made if (a) any Senior Indebtedness is not paid when
due and any applicable grace period with respect to such default has ended
with such default not being cured or waived or otherwise ceasing to exist, or
(b) the maturity of any Senior Indebtedness has been accelerated because of a
default, or (c) notice has been given of the exercise of an option to require
repayment, mandatory payment or prepayment or otherwise. Upon any payment or
distribution of assets of Capital to creditors upon any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of
creditors, marshalling of assets or liabilities, or any bankruptcy, insolvency
or
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similar proceedings of Capital, the holders of Senior Indebtedness shall be
entitled to receive payment in full of all amounts due or to become due on or
in respect of all Senior Indebtedness before the holders of the Junior
Subordinated Notes are entitled to receive or retain any payment or
distribution. Subject to the prior payment of all Senior Indebtedness, the
rights of the holders of the Junior Subordinated Notes will be subrogated to
the rights of the holders of Senior Indebtedness to receive payments and
distributions applicable to such Senior Indebtedness until all amounts owing
on the Junior Subordinated Notes are paid in full.
The term "Senior Indebtedness" means, with respect to any person, (i) any
payment due in respect of indebtedness of such person, whether outstanding at
the date of execution of the Subordinated Note Indenture or thereafter
incurred, created or assumed, (a) in respect of money borrowed (including any
financial derivative, hedging or futures contract or similar instrument) and
(b) evidenced by securities, debentures, bonds, notes or other similar
instruments issued by such person that, by their terms, are senior or senior
subordinated debt securities; (ii) all capital lease obligations; (iii) all
obligations issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all obligations of such person under any
title retention agreement (but excluding trade accounts payable arising in the
ordinary course of business and long-term purchase obligations); (iv) all
obligations for the reimbursement of 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 the payment of which such person 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 such person (whether or not such obligation is assumed by
such person), except for (1) any such indebtedness that is by its terms
subordinated to or pari passu with the Junior Subordinated Notes and (2) any
unsecured indebtedness between or among such person or its affiliates. Such
Senior Indebtedness shall continue to be Senior Indebtedness and be entitled
to the benefits of the subordination provisions contained in the Subordinated
Note Indenture irrespective of any amendment, modification or waiver of any
term of such Senior Indebtedness.
The Subordinated Note Indenture does not limit the aggregate amount of
Senior Indebtedness that may be issued by Capital. Capital currently has no
Senior Indebtedness outstanding.
OPTIONAL REDEMPTION
Capital shall have the right to redeem the Junior Subordinated Notes, (i) in
whole or in part, from time to time, on or after February 1, 2007, or (ii) at
any time in whole upon the occurrence of a Special Event as described under
"Description of the Exchange Capital Securities--Special Event Redemption or
Distribution," upon not less than 30 nor more than 60 days' notice, at the
applicable Redemption Price described below.
The Redemption Price, in the case of a redemption under (i) above, shall
equal the following prices, expressed in percentages of the principal amount
of the Junior Subordinated Notes being redeemed, plus accrued and unpaid
interest thereon to the date of redemption, if redeemed during the 12-month
period beginning February 1 of the years indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2007.............................. 104.0950%
2008.............................. 103.6855
2009.............................. 103.2760
2010.............................. 102.8665
2011.............................. 102.4570
2012.............................. 102.0475
2013.............................. 101.6380
2014.............................. 101.2285
2015.............................. 100.8190
2016.............................. 100.4095
</TABLE>
and at 100% on or after February 1, 2017.
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The Redemption Price, in the case of a redemption prior to February 1, 2007
upon the occurrence of a Special Event as described under (ii) above, shall
equal the Make-Whole Amount (as defined under "Description of the Exchange
Capital Securities--Redemption") plus accrued and unpaid interest thereon to
the date of redemption.
INTEREST
Each Junior Subordinated Note shall bear interest at the Securities Rate
from February 4, 1997, payable semi-annually in arrears on February 1 and
August 1 of each year to the person in whose name such Junior Subordinated
Note is registered at the close of business on the fifteenth calendar day
prior to such payment date. The amount of interest payable will be computed on
the basis of a 360-day year of twelve 30-day months. In the event that any
date on which interest is payable on the Junior Subordinated Notes 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, 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.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Capital shall have the right at any time, and from time to time, to defer
payments of interest on the Junior Subordinated Notes by extending the
interest payment period for up to 10 consecutive semi-annual periods, but not
beyond the maturity date. At the end of an Extension Period, Capital shall pay
all interest then accrued and unpaid (including any Additional Interest)
(together with interest thereon at the Securities Rate compounded semi-
annually to the extent permitted by applicable law); provided, that if Capital
shall have given notice of its election to select an Extension Period, subject
to the exceptions described under "--Certain Covenants" below, (a) neither
Southern nor Capital shall declare or pay any dividend or distribution on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any
of its capital stock or make any guarantee payments with respect to the
foregoing, and (b) neither Southern nor Capital shall make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by it which rank pari passu with or junior to the
Junior Subordinated Notes or the Notes Guarantee. Prior to the termination of
any Extension Period, Capital may further defer payments of interest by
extending the interest payment period, provided that such Extension Period,
together with all such previous and further extensions thereof, may not exceed
10 consecutive semi-annual periods. Upon the termination of any Extension
Period and the payment of all amounts then due, Capital may select a new
Extension Period, subject to the above requirements. Capital has no present
intention of exercising its rights to defer payments of interest by extending
the interest payment period on the Junior Subordinated Notes. See "Certain
Federal Income Tax Considerations--Original Issue Discount."
Capital shall give the holder or holders of the Junior Subordinated Notes
and the Indenture Trustee notice of its selection or extension of an Extension
Period at least one Business Day prior to the earlier of (i) the record date
relating to the interest payment date on which the Extension Period is to
commence or relating to the interest payment date on which an Extension Period
that is being extended would otherwise terminate or (ii) the date Capital or
the Trust is required to give notice to any applicable self-regulatory
organization of the record date or the date such distributions are payable.
ADDITIONAL INTEREST
"Additional Interest" is defined in the Subordinated Note Indenture as (i)
such additional amounts as may be required so that the net amounts received
and retained by a holder of Junior Subordinated Notes (if the holder is a
Trust) after paying taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed by the United States or
any other taxing authority will not be less than the amounts the holder would
have received had no such taxes, duties, assessments, or other governmental
charges been imposed; and (ii) any interest due and not paid on an interest
payment date, together with interest thereon from such interest payment date
to the date of payment, compounded semi-annually, on each interest payment
date.
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NOTES GUARANTEE
Pursuant to the Subordinated Note Indenture, Southern will irrevocably and
unconditionally guarantee the Junior Subordinated Notes as described under
"Description of the Exchange Notes Guarantee."
CERTAIN COVENANTS
Southern and Capital each covenants in the Subordinated Note Indenture, for
the benefit of the holders of each series of Junior Subordinated Notes, that,
(i) if at such time Capital shall have given notice of its election to extend
an interest payment period for such series of Junior Subordinated Notes and
such extension shall be continuing, (ii) if at such time Southern shall be in
default with respect to its payment or other obligations under (A) the Capital
Securities Guarantee with respect to the Trust Securities, if any, related to
such series of Junior Subordinated Notes or (B) the Notes Guarantee, if any,
related to such series of Junior Subordinated Notes, or (iii) if at such time
an Event of Default thereunder with respect to such series of Junior
Subordinated Notes shall have occurred and be continuing, (a) neither Southern
nor Capital shall declare or pay any dividend or make any distributions with
respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock, and (b) neither Southern nor Capital
shall make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by it which rank pari passu
with or junior to the Junior Subordinated Notes or the Notes Guarantee. None
of the foregoing, however, shall restrict (i) any of the actions described in
the preceding sentence resulting from any reclassification of Southern's or
Capital's capital stock or the exchange or conversion of one class or series
of Southern's or Capital's capital stock for another class or series of
Southern's or Capital's capital stock, (ii) the purchase of fractional
interests in shares of Southern's or Capital's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (iii) dividends, payments or distributions payable in
shares of capital stock, (iv) redemptions, purchases or other acquisitions of
shares of capital stock in connection with any employment contract, incentive
plan, benefit plan or other similar arrangement of Southern or any of its
subsidiaries or in connection with a dividend reinvestment or stock purchase
plan, or (v) any declaration of a dividend in connection with implementation
of any stockholders' rights plan, or the issuance of rights, stock or other
property under any such plan, or the redemption, repurchase or other
acquisition of any such rights pursuant thereto.
The Subordinated Note Indenture further provides that, for so long as the
Trust Securities of any Trust remain outstanding, Capital covenants (i) to
directly or indirectly maintain 100% ownership of the Common Securities of
such Trust; provided, however, that any permitted successor of Capital or
Southern under the Subordinated Note Indenture may succeed to the Capital's
ownership of such Common Securities, and (ii) to use its reasonable efforts to
cause such Trust (a) to remain a statutory business trust, except in
connection with the distribution of Junior Subordinated Notes to the holders
of Trust Securities in liquidation of such Trust, the redemption of all of the
Trust Securities of such Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the related Trust Agreement, and (b) to
otherwise continue to be classified as a grantor trust for United States
federal income tax purposes.
EVENTS OF DEFAULT
The Subordinated Note Indenture provides that any one or more of the
following described events with respect to the Junior Subordinated Notes of
any series, which has occurred and is continuing, constitutes an "Event of
Default" with respect to the Junior Subordinated Notes of such series:
(a) failure for 10 days to pay interest on the Junior Subordinated Notes
of such series, including any Additional Interest (as defined in clause
(ii) of the definition thereof in the Subordinated Note Indenture) in
respect thereof, when due on an Interest Payment Date other than at
maturity or upon earlier redemption; provided, however, that a valid
extension of the interest payment period by Capital shall not constitute a
default in the payment of interest for this purpose; or
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(b) failure for 10 days to pay Additional Interest (as defined in clause
(i) of the definition thereof in the Subordinated Note Indenture); or
(c) failure to pay principal or premium, if any, or interest, including
Additional Interest (as defined in clause (ii) of the definition thereof in
the Subordinated Note Indenture), on the Junior Subordinated Notes of such
series when due at maturity or upon earlier redemption; or
(d) failure for three Business Days to deposit any sinking fund payment
when due by the terms of a Junior Subordinated Note of such series; or
(e) failure to observe or perform any other covenant or warranty in the
Subordinated Note Indenture (other than a covenant or warranty which has
expressly been included therein solely for the benefit of one or more
series of Junior Subordinated Notes other than such series) for 90 days
after written notice to Southern and Capital from the Indenture Trustee or
the holders of at least 25% in principal amount of the outstanding Junior
Subordinated Notes of such series; or
(f) certain events of bankruptcy, insolvency, or reorganization of
Southern or Capital.
The holders of not less than a majority in aggregate outstanding principal
amount of the Junior Subordinated Notes of any series have the right to direct
the time, method and place of conducting any proceeding for any remedy
available to the Indenture Trustee with respect to the Junior Subordinated
Notes of such series. If a Subordinated Note Indenture Event of Default occurs
and is continuing with respect to the Junior Subordinated Notes of any series,
then the Indenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the Junior Subordinated Notes of such series
may declare the principal amount thereof due and payable immediately by notice
in writing to Southern and Capital (and to the Indenture Trustee if given by
the holders), and upon any such declaration such principal amount shall become
immediately due and payable. At any time after such a declaration of
acceleration with respect to the Junior Subordinated Notes of any series has
been made and before a judgment or decree for payment of the money due has
been obtained as provided in Article Five of the Subordinated Note Indenture,
the holders of not less than a majority in aggregate outstanding principal
amount of the Junior Subordinated Notes of such series may rescind and annul
such declaration and its consequences if the default has been cured or waived
and Southern or Capital has paid or deposited with the Indenture Trustee a sum
sufficient to pay all matured installments of interest (including any
Additional Interest) and principal due otherwise than by acceleration and all
sums paid or advanced by the Indenture Trustee, including reasonable
compensation and expenses of the Indenture Trustee.
A holder of Capital Securities may institute a legal proceeding directly
against Southern and Capital, without first instituting a legal proceeding
against the Property Trustee or any other person or entity, for enforcement of
payment to such holder of principal of or interest on the Junior Subordinated
Notes of the related series having a principal amount equal to the aggregate
stated liquidation amount of the Capital Securities of such holder on or after
the due dates specified in the Junior Subordinated Notes of such series.
The holders of not less than a majority in aggregate outstanding principal
amount of the Junior Subordinated Notes of any series may, on behalf of the
holders of all the Junior Subordinated Notes of such series, waive any past
default with respect to such series, except (i) a default in the payment of
principal or interest or (ii) a default in respect of a covenant or provision
which under Article Nine of the Subordinated Note Indenture cannot be modified
or amended thereunder without the consent of the holder of each outstanding
Junior Subordinated Note of such series affected thereby.
FORM, REGISTRATION AND TRANSFER
If the Junior Subordinated Notes are distributed to the holders of the Trust
Securities, the Junior Subordinated Notes may be represented by one or more
global certificates registered in the name of Cede & Co. as the nominee of
DTC. The depositary arrangements for such Junior Subordinated Notes are
expected to be substantially similar to those in effect for the Capital
Securities. For a description of DTC and the terms of the depositary
arrangements relating to payments, transfers, voting rights, redemptions and
other
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notices and other matters, see "Description of the Exchange Capital
Securities--Form, Denomination, Book-Entry Procedures and Transfer."
REGISTRATION AND TRANSFER
Capital shall not be required to (i) issue, register the transfer of or
exchange Junior Subordinated Notes of any series during a period of 15 days
immediately preceding the date notice is given identifying the Junior
Subordinated Notes of such series called for redemption, or (ii) register the
transfer of or exchange any Junior Subordinated Notes so selected for
redemption, in whole or in part, except the unredeemed portion of any Junior
Subordinated Note being redeemed in part.
RESTRICTIONS ON TRANSFER
The Exchange Junior Subordinated Notes will be issued, and may be
transferred only, in minimum denominations of not less than $1,000 and
multiples of $1,000 in excess thereof. Any transfer, sale or other disposition
of Exchange Junior Subordinated Notes in a denomination of less than $1,000
shall be deemed to be void and of no legal effect whatsoever. Any such
transferee shall be deemed not to be the holder of such Exchange Junior
Subordinated Notes for any purpose, including but not limited to the receipt
of payments on such Exchange Junior Subordinated Notes, and such transferee
shall be deemed to have no interest whatsoever in such Exchange Junior
Subordinated Notes.
PAYMENT AND PAYING AGENT
Payment of principal of any Junior Subordinated Notes will be made only
against surrender to the Paying Agent of such Junior Subordinated Notes.
Principal of and interest on Junior Subordinated Notes will be payable,
subject to any applicable laws and regulations, at the office of such Paying
Agent or Paying Agents as Capital may designate from time to time, except
that, at the option of Capital, payment of any interest may be made by wire
transfer or by check mailed to the address of the person entitled thereto as
such address shall appear in the Security Register with respect to the Junior
Subordinated Notes. Payment of interest on Junior Subordinated Notes on any
interest payment date will be made to the person in whose name the Junior
Subordinated Notes (or predecessor security) are registered at the close of
business on the Record Date for such interest payment (the fifteenth calendar
day before such interest payment date).
The Indenture Trustee will act as Paying Agent with respect to the Junior
Subordinated Notes. Capital may at any time designate additional Paying Agents
or rescind the designation of any Paying Agents or approve a change in the
office through which any Paying Agent acts.
All moneys paid by Capital to a Paying Agent for the payment of the
principal of or interest on the Junior Subordinated Notes of any series which
remain unclaimed at the end of two years after such principal or interest
shall have become due and payable will be repaid to Capital, and the holder of
such Junior Subordinated Notes will thereafter look only to Capital for
payment thereof.
MODIFICATION
The Subordinated Note Indenture contains provisions permitting Capital,
Southern and the Indenture Trustee, with the consent of the holders of not
less than a majority in principal amount of the outstanding Junior
Subordinated Notes of each series affected thereby, to modify the Subordinated
Note Indenture or the rights of the holders of the Junior Subordinated Notes
of such series; provided, that no such modification may, without the consent
of the holder of each outstanding Junior Subordinated Note affected thereby,
(i) change the stated maturity of the principal of, or any installment of
principal of or interest on, any Junior Subordinated Note, or reduce the
principal amount thereof or the rate of interest (including Additional
Interest) thereon or any premium payable upon the redemption thereof, or
change the method of calculating the rate of interest thereon, or impair the
right to institute suit for the enforcement of any such payment on or after
the stated maturity thereof (or, in
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the case of redemption, on or after the redemption date), or (ii) reduce the
percentage of principal amount of the outstanding Junior Subordinated Notes of
any series, the consent of whose holders is required for any such supplemental
indenture, or the consent of whose holders is required for any waiver (of
compliance with certain provisions of the Subordinated Note Indenture or
certain defaults thereunder and their consequences) provided for in the
Subordinated Note Indenture, or (iii) modify any of the provisions of the
Subordinated Note Indenture relating to supplemental indentures, waiver of
past defaults, or waiver of certain covenants, except to increase any such
percentage or to provide that certain other provisions of the Subordinated
Note Indenture cannot be modified or waived without the consent of the holder
of each outstanding Junior Subordinated Note affected thereby, or (iv) reduce
any amount payable under, delay or defer the required time of payment under,
or impair the right to institute suit to enforce any payment under the Notes
Guarantee, or (v) modify the provisions of the Subordinated Note Indenture
with respect to the subordination of the Junior Subordinated Notes or the
Notes Guarantee in a manner adverse to such holder.
In addition, Capital, Southern and the Indenture Trustee may execute,
without the consent of any holders of Junior Subordinated Notes, any
supplemental indenture for certain other usual purposes, including the
creation of any new series of junior subordinated notes.
CONSOLIDATION, MERGER AND SALE
Neither Southern nor Capital shall consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets
substantially as an entirety to any person, unless (1) such other corporation
or person is a corporation organized and existing under the laws of the United
States, any state thereof or the District of Columbia and such other
corporation or person expressly assumes, by supplemental indenture executed
and delivered to the Indenture Trustee, the payment of the principal of (and
premium, if any) and interest (including Additional Interest) on all the
Junior Subordinated Notes and the performance of every covenant of the
Subordinated Note Indenture and the Notes Guarantee on the part of Southern or
Capital, as the case may be, to be performed or observed; (2) immediately
after giving effect to such transactions, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of
Default, shall have happened and be continuing; and (3) Southern or Capital,
as the case may be, has delivered to the Indenture Trustee an officers'
certificate and an opinion of counsel, each stating that such transaction
complies with the provisions of the Subordinated Note Indenture governing
consolidation, merger, conveyance, transfer or lease and that all conditions
precedent thereto have been complied with.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee, prior to an Event of Default with respect to Junior
Subordinated Notes of any series, undertakes to perform, with respect to
Junior Subordinated Notes of such series, only such duties as are specifically
set forth in the Subordinated Note Indenture and, in case an Event of Default
with respect to Junior Subordinated Notes of any series has occurred and is
continuing, shall exercise, with respect to Junior Subordinated Notes of such
series, 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 Indenture
Trustee is under no obligation to exercise any of the powers vested in it by
the Subordinated Note Indenture at the request of any holder of Junior
Subordinated Notes of any series, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be incurred
thereby. The Indenture Trustee is not required to expend or risk its own funds
or otherwise incur any financial liability in the performance of its duties if
the Indenture Trustee reasonably believes that repayment or adequate indemnity
is not reasonably assured to it.
Bankers Trust Company, the Indenture Trustee, also serves as Property
Trustee and as Guarantee Trustee. Southern and certain of its subsidiaries
maintain deposit accounts and banking relationships with Bankers Trust
Company. Bankers Trust Company also serves as trustee under other indentures
pursuant to which securities of subsidiaries of Southern are outstanding.
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GOVERNING LAW
The Subordinated Note Indenture and the Junior Subordinated Notes will be
governed by, and construed in accordance with, the internal laws of the State
of New York.
MISCELLANEOUS
Each of Southern and Capital will have the right at all times to assign any
of its rights or obligations under the Subordinated Note Indenture to a direct
or indirect wholly-owned subsidiary of Southern; provided, that, in the event
of any such assignment, Southern or Capital, as the case may be, will remain
primarily liable for all such obligations. Subject to the foregoing, the
Subordinated Note Indenture will be binding upon and inure to the benefit of
the parties thereto and their respective successors and assigns.
DESCRIPTION OF THE EXCHANGE CAPITAL SECURITIES GUARANTEE
Set forth below is a summary of information concerning the Exchange Capital
Securities Guarantee that will be executed and delivered by Southern in
connection with the issuance by the Trust of the Exchange Capital Securities
for the benefit of the holders of Exchange Capital Securities from time to
time. The Original Capital Securities Guarantee was executed and delivered by
Capital concurrently with the issuance of the Original Capital Securities by
the Trust for the benefit of the holders from time to time of the Original
Capital Securities. As soon as practicable after the date hereof, the Original
Capital Securities Guarantee will be exchanged by Capital for the Exchange
Capital Securities Guarantee. The Exchange Capital Securities Guarantee has
been qualified as an indenture under the 1939 Act. Bankers Trust Company will
act as indenture trustee under the Exchange Capital Securities Guarantee (the
"Guarantee Trustee") for purposes of the 1939 Act. The terms of the Exchange
Capital Securities Guarantee will be those set forth therein and those made
part thereof by the 1939 Act. The following summary does not purport to be
complete and is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the Exchange Capital Securities Guarantee,
which is filed as an
exhibit to the Registration Statement of which this Prospectus is a part, and
the 1939 Act. The Exchange Capital Securities Guarantee will be held by the
Guarantee Trustee for the benefit of holders of the Exchange Capital
Securities.
GENERAL
Pursuant to the Capital Securities Guarantee, Southern will irrevocably and
unconditionally agree, to the extent set forth therein, to pay in full, to the
holders of the Capital Securities, the Guarantee Payments (as defined herein),
to the extent not paid by, or on behalf of, the Trust, regardless of any
defense, right of set-off or counterclaim that Southern may have or assert
against any person. The following payments or distributions with respect to
the Capital Securities to the extent not paid or made by, or on behalf of, the
Trust will be subject to the Capital Securities Guarantee (without
duplication): (i) any accrued and unpaid distributions required to be paid on
the Capital Securities but if and only if and to the extent that the Trust has
funds legally and immediately available therefor, (ii) the applicable
Redemption Price with respect to any Capital Securities called for redemption
by the Trust, but if and only to the extent the Trust has funds legally and
immediately available therefor, and (iii) upon a dissolution, winding-up or
termination of the Trust (other than in connection with the distribution of
Junior Subordinated Notes to the holders of Trust Securities or the redemption
of all of the Capital Securities), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on the Capital
Securities to the date of payment, to the extent the Trust has funds legally
and immediately available therefor, and (b) the amount of assets of the Trust
remaining available for distribution to holders of Capital Securities in
liquidation of the Trust (the "Guarantee Payments"). Southern's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by Southern to the holders of the Capital Securities or by causing the
Trust to pay such amounts to such holders.
The Capital Securities Guarantee will be a guarantee of the Guarantee
Payments with respect to the Capital Securities from the time of issuance of
the Capital Securities, but will not apply to the payment of distributions
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and other payments on the Capital Securities when the Trust does not have
sufficient funds legally and immediately available to make such distributions
or other payments. IF CAPITAL DOES NOT MAKE INTEREST PAYMENTS ON THE JUNIOR
SUBORDINATED NOTES HELD BY THE PROPERTY TRUSTEE, THE TRUST WILL NOT MAKE
DISTRIBUTIONS ON THE CAPITAL SECURITIES.
SUBORDINATION
Southern's obligations under the Capital Securities Guarantee to make the
Guarantee Payments will constitute an unsecured obligation of Southern and
will rank (i) subordinate and junior in right of payment to all other
liabilities of Southern, except those obligations or liabilities made pari
passu or subordinate by their terms, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by Southern and with any
guarantee now or hereafter entered into by Southern in respect of any
preferred or preference securities of any affiliate of Southern, and (iii)
senior to all common stock of Southern. The terms of the Capital Securities
will provide that each holder of Capital Securities by acceptance thereof
agrees to the subordination provisions and other terms of the Capital
Securities Guarantee.
The Capital Securities 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 first instituting a legal proceeding against any other
person or entity).
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially and adversely
affect the rights of holders of the Capital Securities (in which case no
consent will be required), the Capital Securities Guarantee may be amended
only with the prior approval of the holders of not less than 66 2/3% in
liquidation amount of the outstanding Capital Securities. The manner of
obtaining any such approval of holders of the Capital Securities is set forth
under "Description of the Exchange Capital Securities--Voting Rights." All
guarantees and agreements contained in the Capital Securities Guarantee shall
bind the successors, assigns, receivers, trustees and representatives of
Southern and shall inure to the benefit of the holders of the Capital
Securities then outstanding.
TERMINATION
The Capital Securities Guarantee will terminate and be of no further force
and effect as to the Capital Securities upon full payment of the applicable
Redemption Price of all Capital Securities, upon distribution of Junior
Subordinated Notes to the holders of such Capital Securities, or upon full
payment of the amounts payable upon liquidation of the Trust. The Capital
Securities Guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any holder of the Capital Securities must
restore payment of any sums paid with respect to the Capital Securities or
under the Capital Securities Guarantee.
EVENTS OF DEFAULT
An event of default under the Capital Securities Guarantee will occur upon
the failure by Southern to perform any of its payment obligations thereunder.
The holders of a majority in liquidation amount of the Capital Securities 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 Capital
Securities Guarantee or to direct the exercise of any trust or power conferred
upon the Guarantee Trustee under the Capital Securities Guarantee. Any holder
of Capital Securities may institute a legal proceeding directly against
Southern to enforce its rights under the Capital Securities Guarantee without
first instituting a legal proceeding against the Guarantee Trustee or any
other person or entity. The holders of a majority in liquidation amount of
Capital Securities may, by vote, on behalf of the holders of all the Capital
Securities, waive any past event of default and its consequences.
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INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of any event of default with
respect to the Capital Securities Guarantee and after the curing or waiving of
all events of default with respect to the Capital Securities Guarantee,
undertakes to perform only such duties as are specifically set forth in the
Capital Securities Guarantee and, in case an event of default has occurred,
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 Capital Securities Guarantee at the request of any holder of the
Capital Securities, unless offered reasonable indemnity against the costs,
expenses and liabilities which might be incurred thereby.
Bankers Trust Company, the Guarantee Trustee, also serves as Property
Trustee and as Indenture Trustee. Southern and certain of its subsidiaries
maintain deposit accounts and banking relationships with Bankers Trust
Company. Bankers Trust Company serves as trustee under other indentures
pursuant to which securities of subsidiaries of Southern are outstanding.
GOVERNING LAW
The Capital Securities Guarantee will be governed by, and construed in
accordance with, the internal laws of the State of New York.
THE AGREEMENT AS TO EXPENSES AND LIABILITIES
Pursuant to an Agreement as to Expenses and Liabilities entered into by
Southern under the Trust Agreement, Southern will irrevocably and
unconditionally guarantee to each person or entity to whom the Trust becomes
indebted or liable the full payment of any indebtedness, expenses or
liabilities of the Trust, other than obligations of the Trust to pay to the
holders of the Capital Securities or other similar interests in the Trust the
amounts due such holders pursuant to the terms of the Capital Securities or
such other similar interests, as the case may be.
DESCRIPTION OF THE EXCHANGE NOTES GUARANTEE
Pursuant to the Subordinated Note Indenture, Southern will irrevocably and
unconditionally guarantee the due and punctual payment of principal, premium,
if any, and interest on the Junior Subordinated Notes when and as the same
shall become due and payable, whether at maturity, upon redemption or
otherwise. The Original Notes Guarantee was executed and delivered by Southern
concurrently with the issuance of the Original Junior Subordinated Notes by
Capital. As soon as practicable after the date hereof, the Original Notes
Guarantee will be exchanged by Southern for the Exchange Notes Guarantee. The
Exchange Notes Guarantee will constitute an unsecured obligation of Southern
and will rank subordinate and junior to all Senior Indebtedness that may be
issued by Southern. As of March 31, 1997, Senior Indebtedness of Southern
aggregated approximately $794,000,000. Since Southern is a holding company,
the right of Southern and, hence, the right of creditors of Southern
(including the holders of the Junior Subordinated Notes) to participate in any
distribution of the assets of any subsidiary of Southern, whether upon
liquidation, reorganization or otherwise, is subject to prior claims of
creditors of each such subsidiary.
DESCRIPTION OF THE ORIGINAL SECURITIES
The terms of the Original Securities are identical in all material respects
to the Exchange Securities, except that (i) the Original Securities have not
been registered under the Securities Act, are subject to certain restrictions
on transfer and are entitled to certain rights under the Registration Rights
Agreement (which rights will terminate upon consummation of the Exchange
Offer, except under limited circumstances), (ii) the Exchange Capital
Securities will not contain the $100,000 minimum liquidation amount transfer
restriction and certain
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other restrictions on transfer applicable to Original Capital Securities,
(iii) the Exchange Capital Securities will not provide for any increase in the
distribution rate thereon and (iv) the Exchange Junior Subordinated Notes will
not provide for any increase in the interest rate thereon. The Original
Securities provide that, in the event that a registration statement relating
to the Exchange Offer has not been filed by July 4, 1997 and been declared
effective by August 3, 1997, or, in certain limited circumstances, in the
event a shelf registration statement (the "Shelf Registration Statement") with
respect to the resale of the Original Capital Securities is not declared
effective by the time required by the Registration Rights Agreement, then
liquidated damages will accrue at the rate of 0.25% per annum on the principal
amount of the Original Junior Subordinated Notes and Additional Distributions
will accrue at the rate of 0.25% per annum on the liquidation amount of the
Original Capital Securities, for the period from the occurrence of such event
until such time as such registration statement has been filed or declared
effective, as the case may be. The Exchange Securities are not, and upon
consummation of the Exchange Offer the Original Securities will not be,
entitled to any such additional interest or distributions. Accordingly,
holders of Original Capital Securities should review the information set forth
under "Risk Factors--Consequences of a Failure to Exchange Original Capital
Securities" and "Description of the Exchange Capital Securities."
RELATIONSHIP AMONG THE CAPITAL SECURITIES,
THE SUBORDINATED NOTES, THE CAPITAL SECURITIES GUARANTEE AND THE NOTES
GUARANTEE
As long as payments of interest and other payments are made when due on the
Junior Subordinated Notes, such payments will be sufficient to cover
distributions and payments due on the Trust Securities primarily because (i)
the aggregate principal amount of Junior Subordinated Notes will be equal to
the sum of the aggregate stated liquidation amount of the Trust Securities;
(ii) the interest rate and interest and other payment dates on the Junior
Subordinated Notes will match the distribution rate and distribution and other
payment dates for the Capital Securities; (iii) Southern shall pay for all
costs and expenses of the Trust pursuant to the Agreement as to Expenses and
Liabilities; and (iv) the Trust Agreement provides that the Securities
Trustees shall not cause or permit the Trust to, among other things, engage in
any activity that is not consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are legally and
immediately available) and other payments due on the Capital Securities (to
the extent funds therefor are legally and immediately available) are
guaranteed by Southern as and to the extent set forth under "Description of
the Exchange Capital Securities Guarantee." If Capital does not make interest
payments on the Junior Subordinated Notes, it is not expected that the Trust
will have sufficient funds to pay distributions on the Capital Securities. The
Capital Securities Guarantee is a guarantee from the time of its issuance, but
does not apply to any payment of distributions unless and until the Trust has
sufficient funds legally and immediately available for the payment of such
distributions.
If Capital fails to make interest or other payments on the Junior
Subordinated Notes when due (taking into account any Extension Period), the
Trust Agreement provides a mechanism whereby the holders of the Capital
Securities may appoint a substitute Property Trustee. Such holders may also
direct the Property Trustee to enforce its rights under the Junior
Subordinated Notes and the Notes Guarantee, including proceeding directly
against Capital to enforce the Junior Subordinated Notes and Southern to
enforce the Notes Guarantee. If the Property Trustee fails to enforce its
rights under the Junior Subordinated Notes or the Notes Guarantee, to the
fullest extent permitted by applicable law, any holder of Capital Securities
may institute a legal proceeding directly against Capital to enforce the
Property Trustee's rights under the Junior Subordinated Notes and against
Southern to enforce such rights under the Notes Guarantee without first
instituting any legal proceeding against the Property Trustee or any other
person or entity. Notwithstanding the foregoing, a holder of Capital
Securities may institute a legal proceeding directly against Southern and
Capital, without first instituting a legal proceeding against the Property
Trustee or any other person or entity, for enforcement of payment to such
holder of principal of or interest on the Junior Subordinated Notes having a
principal amount equal to the aggregate stated
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liquidation amount of the Capital Securities of such holder on or after the
due dates specified in the Junior Subordinated Notes.
If Southern fails to make payments under the Capital Securities Guarantee,
the Capital Securities Guarantee provides a mechanism whereby the holders of
the Capital Securities may direct the Guarantee Trustee to enforce its rights
thereunder. In addition, any holder of Capital Securities may institute a
legal proceeding directly against Southern to enforce the Guarantee Trustee's
rights under the Capital Securities Guarantee without first instituting a
legal proceeding against the Guarantee Trustee or any other person or entity.
The Notes Guarantee, the Capital Securities Guarantee, the Subordinated Note
Indenture, the Junior Subordinated Notes, the Trust Agreement and the
Agreement as to Expenses and Liabilities, as described above, constitute a
full and unconditional guarantee by Southern and Capital of the payments due
on the Capital Securities.
Upon any voluntary or involuntary dissolution, winding-up or termination of
the Trust, unless the Junior Subordinated Notes are distributed in connection
therewith, the holders of Capital Securities will be entitled to receive, out
of assets legally available for distribution to holders, the Liquidation
Distribution in cash. See "Description of the Exchange Capital Securities--
Liquidation Distribution Upon Dissolution." Upon any voluntary or involuntary
liquidation or bankruptcy of Capital, the Property Trustee, as holder of the
Junior Subordinated Notes, would be a subordinated creditor of Capital,
subordinated in right of payment to all Senior Indebtedness, but entitled to
receive payment in full of principal and interest, before any stockholders of
Capital receive payments or distributions. Because Southern is guarantor under
the Capital Securities Guarantee and the Notes Guarantee and has agreed to pay
for all costs, expenses and liabilities of the Trust (other than the Trust's
obligations to holders of the Capital Securities) pursuant to the Agreement as
to Expenses and Liabilities, the positions of a holder of Capital Securities
and a holder of Junior Subordinated Notes relative to other creditors and to
stockholders of Southern in the event of liquidation or bankruptcy of Southern
would be substantially the same.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Subordinated Note
Indenture. However, in the event of payment defaults under, or acceleration
of, Senior Indebtedness, the subordination provisions of the Junior
Subordinated Notes provide that no payments may be made in respect of the
Junior Subordinated Notes until such Senior Indebtedness has been paid in full
or any payment default thereunder has been cured or waived. Failure to make
required payments on the Junior Subordinated Notes would constitute an Event
of Default under the Subordinated Note Indenture except that failure to make
interest payments on the Junior Subordinated Notes will not be an Event of
Default during an Extension Period; provided, however, that any Extension
Period may not exceed 10 consecutive semi-annual periods or extend beyond the
maturity of the Junior Subordinated Notes.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain material United States federal income
tax consequences of the ownership and disposition of the Capital Securities
and constitutes the opinion of Troutman Sanders LLP, counsel to Southern,
Capital and the Trust, insofar as it relates to matters of law and legal
conclusions. This summary deals only with Capital Securities held as capital
assets within the meaning of Section 1221 of the Internal Revenue Code of
1986, as amended to the date hereof (the "Code"), by Holders (as defined
herein). Moreover, it does not discuss all of the tax consequences that may be
relevant to a Holder in light of his particular circumstances or to Holders
subject to special rules, such as certain financial institutions, insurance
companies, dealers in securities, individual retirement and certain tax
deferred accounts, and persons who engage in a straddle or a hedge relating to
a Capital Security. Prospective investors should consult their own tax
advisors with regard to the application of the tax considerations discussed
below to their particular situations as well as the application of any state,
local or other tax laws. This summary is based on laws, existing and proposed
regulations, and applicable judicial and administrative determinations, all of
which are subject to change at any time, and any such changes may be
retroactively applied in a manner that could adversely affect Holders. As used
herein, the term "Holder" means a beneficial owner of a Capital Security that
for United States federal income tax purposes is (i) a citizen or resident of
the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof, or (iii) a trust that is not a foreign trust or an estate
the income of which is subject to United States federal income taxation
regardless of its source. Thus, the following summary does not address any tax
consequences that apply specifically to nonresident aliens or foreign
entities.
EXCHANGE OF CAPITAL SECURITIES
The exchange of Original Capital Securities for Exchange Capital Securities
should not be a taxable event for United States federal income tax purposes,
and the tax attributes of the Original Capital Securities immediately before
the exchange should carry over to the Exchange Capital Securities. For
example, a U.S. Holder should have the same issue price, tax basis, holding
period and market discount or bond premium in the Exchange Capital Securities
as the holder did in the Original Capital Securities immediately before the
exchange.
TREATMENT OF THE TRUST AND CAPITAL SECURITIES FOR FEDERAL INCOME TAX PURPOSES
The Trust will be treated as a "grantor trust" and not as an association
taxable as a corporation for federal income tax purposes. Thus, for federal
income tax purposes, each Holder will be treated as the beneficial owner of a
pro rata undivided interest in the Junior Subordinated Notes and,
consequently, will be required to include in income the Holder's pro rata
share of the entire income from the Junior Subordinated Notes. Each Holder
generally will determine its net income or loss with respect to the Trust in
accordance with its own method of accounting, although income arising from
OID, if any, must be taken into account under the accrual method of accounting
even if the Holder otherwise would use the cash receipts and disbursements
method.
PAYMENTS OF INTEREST
Except as set forth below, stated interest on a Junior Subordinated Note
will generally be taxable to a Holder as ordinary income at the time it is
paid or accrued in accordance with the Holder's own method of accounting.
ORIGINAL ISSUE DISCOUNT
Under applicable income tax regulations, Southern and Capital believe that
the Junior Subordinated Notes will not be treated as issued with OID. It
should be noted that these regulations have not yet been addressed in any
rulings or other interpretations by the Internal Revenue Service (the "IRS").
Accordingly, it is possible that the IRS could take a position contrary to the
interpretations described herein.
The terms of the Junior Subordinated Notes permit Capital to defer the
payment of interest on the Junior Subordinated Notes at any time and from time
to time by extending the interest payment period for up to 10
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consecutive semi-annual periods with respect to each Extension Period;
provided, however, that no Extension Period may extend beyond the maturity
date of the Junior Subordinated Notes. Should Capital exercise this option to
defer payments of interest, the Junior Subordinated Notes would at that time
be treated as reissued with OID and interest would be taxable on an economic
accrual basis. As a result, all Holders would, in effect, be required to
accrue interest income even if such Holders are on a cash method of
accounting. Consequently, in the event that the payment of interest is
deferred, a Holder could be required to include OID in income on an economic
accrual basis, notwithstanding that Capital will not make any interest
payments during such period on the Junior Subordinated Notes.
MARKET DISCOUNT
A purchaser of a Capital Security at a discount from the liquidation amount
at maturity of such purchaser's pro rata share of the Junior Subordinated
Notes acquires such Capital Security with "market discount." However, market
discount with respect to a Capital Security will be considered to be zero if
it is de minimis. Market discount will be de minimis with respect to a Capital
Security if it is less than the product of (i) 0.25% of the adjusted issue
price of the purchaser's pro rata share of the Junior Subordinated Notes
multiplied by (ii) the number of complete years to maturity of such Junior
Subordinated Notes after the date of purchase. The purchaser of a Capital
Security with more than a de minimis amount of market discount generally will
be required to treat any gain on the sale, exchange, redemption or other
disposition of all or part of the Capital Securities (or related Junior
Subordinated Notes) as ordinary income to the extent of accrued (but not
previously taxed) market discount. Market discount generally will accrue
ratably during the period from the date of purchase of such Capital Security
to the maturity date of the Junior Subordinated Notes, unless the Holder
irrevocably elects to accrue such market discount on the basis of a constant
interest rate.
A Holder who has acquired a Capital Security at a market discount generally
will be required to defer any deductions of interest expense attributable to
any indebtedness incurred or continued to purchase or carry the Capital
Security, to the extent such interest expense exceeds the related interest
income. Any such deferred interest expense generally will be allowable as a
deduction not later than the year in which the related market discount income
is recognized. As an alternative to the inclusion of market discount in income
upon disposition of all or a portion of a Capital Security or the related
Junior Subordinated Notes (including redemptions thereof), a Holder may make
an election (which may not be revoked without the IRS's consent) to include
market discount in income as it accrues on all market discount instruments
acquired by the Holder during or after the taxable year for which the election
is made. In that case, the preceding deferral rule for interest expense will
not apply.
In lieu of the foregoing treatment of market discount and interest expense,
a Holder may elect to treat any market discount (including a de minimis
amount) as OID and accrue such discount on a constant-yield basis in the same
manner as the Holder accrues OID.
SALE OF CAPITAL SECURITIES
Upon the sale, retirement (including redemption) or other taxable
disposition of all or part of a Capital Security, a Holder thereof will
recognize gain or loss equal to the difference between the amount realized on
such sale, retirement or other disposition and such Holder's adjusted tax
basis in the Capital Security or part thereof. If the Holder disposes of a
Capital Security prior to the occurrence of an Extension Period, any portion
of the amount received that is attributable to accrued interest will be
treated as interest income to the Holder and will not be treated as part of
the amount realized for purposes of determining gain or loss on the
disposition of the Capital Security. Any recognized gain or loss will be
capital gain or loss, except to the extent of any accrued market discount (see
"Market Discount" above), and such capital gain or loss will be long-term if
the holding period for the Capital Security is more than one year at the time
of sale, retirement or other disposition. A Holder's adjusted tax basis in a
Capital Security acquired by purchase will equal the cost of such Capital
Security to the Holder, increased by the amount of any related accrued OID and
market discount included in taxable income by the Holder and reduced by any
prior payments on the Junior Subordinated Notes which are not qualified stated
interest. The redemption of only part of a Capital Security will require an
allocation of the
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<PAGE>
Holder's adjusted tax basis in his pro rata share of the related Junior
Subordinated Notes between the portion of the Junior Subordinated Notes
redeemed and retained by the Holder in order to determine gain or loss.
RECEIPT OF JUNIOR SUBORDINATED NOTES UPON LIQUIDATION OF THE TRUST
As described under "Description of the Exchange Capital Securities--Special
Event Redemption or Distribution," Junior Subordinated Notes may be
distributed to Holders in exchange for the Capital Securities and in
liquidation of the Trust. Such a distribution would be treated as a non-
taxable event to each Holder and each Holder would receive an aggregate tax
basis in the Holder's Junior Subordinated Notes equal to the Holder's
aggregate tax basis in its Capital Securities. A Holder's holding period with
respect to the Junior Subordinated Notes so received in liquidation of the
Trust would include the period for which the Capital Securities were held by
such Holder.
INFORMATION REPORTING TO HOLDERS
Income on the Capital Securities will be reported to Holders on Form 1099,
which form should be mailed to Holders of Capital Securities by January 31
following each calendar year.
BACKUP WITHHOLDING
A Holder may be subject to "backup withholding" under certain circumstances.
Backup withholding applies to a Holder if the Holder, among other things, (i)
fails to furnish his social security number or other taxpayer identification
number ("TIN") to the payor responsible for backup withholding (for example,
the Holder's securities broker), (ii) furnishes such payor an incorrect TIN,
(iii) fails to provide such payor with a certified statement, signed under
penalties of perjury, that the TIN provided to the payor is correct and that
the Holder is not subject to backup withholding, or (iv) fails to report
properly interest and dividends on his tax return. Backup withholding,
however, does not apply to payments made to certain exempt recipients, such as
corporations and tax-exempt organizations. The backup withholding rate is 31%
of "reportable payments," which generally will include distributions of
interest and principal payments on the Junior Subordinated Notes.
POSSIBLE TAX LAW CHANGES
On February 6, 1997, the revenue portion of President Clinton's fiscal 1998
budget proposal was released. The Proposal would, among other things,
generally deny interest deductions for interest on an instrument issued by a
corporation that has a maximum term of more than 15 years and that is not
shown as indebtedness on the separate balance sheet of the issuer. If the
Proposal were to apply to the Junior Subordinated Notes, Southern would be
unable to deduct interest on the Junior Subordinated Notes. As currently
drafted, however, the Proposal would be effective generally for instruments
issued on or after the date of first Congressional committee action and, as
such, is not expected to apply to the Junior Subordinated Notes. Southern
believes that, under current law, it will be able to deduct interest on the
Junior Subordinated Notes. There can be no assurance, however, that current or
future legislative proposals or final legislation will not affect the ability
of Southern to deduct interest on the Junior Subordinated Notes. Such a change
could give rise to a Tax Event, which would permit Capital to cause a
redemption of the Capital Securities, as described more fully under
"Description of the Exchange Capital Securities--Special Event Redemption or
Distribution."
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE MAY NOT BE APPLICABLE TO A
HOLDER, DEPENDING UPON A HOLDER'S PARTICULAR SITUATION, AND THEREFORE EACH
HOLDER SHOULD CONSULT HIS TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF
THE OWNERSHIP AND DISPOSITION OF CAPITAL SECURITIES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAW.
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CERTAIN ERISA CONSIDERATIONS
A fiduciary of a pension, profit-sharing or other employee benefit plan
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), (an "ERISA Plan") should consider the fiduciary standards of ERISA
in the context of the ERISA Plan's particular circumstances before authorizing
an investment in the Capital Securities. Among other factors, the fiduciary
should consider whether such an investment is in accordance with the documents
governing the ERISA Plan and whether the investment is appropriate for the
ERISA Plan in view of its overall investment policy and diversification of its
portfolio.
Certain provisions of ERISA and the Code prohibit ERISA Plans, as well as
individual retirement accounts and Keogh plans subject to section 4975 of the
Code (collectively, "Plans"), from engaging in certain transactions involving
"plan assets" with parties that are "parties in interest" under ERISA or
"disqualified persons" under the Code with respect to the Plan. The U.S.
Department of Labor has issued a final regulation (the "Regulation") with
regard to whether the underlying assets of an entity in which employee benefit
plans acquire equity interests are deemed to be plan assets.
Under such Regulation, for purposes of ERISA and section 4975 of the Code,
the assets of the Trust would be deemed to be "plan assets" of a Plan whose
assets were used to purchase Capital Securities if the Capital Securities were
considered to be equity interests in the Trust and no exception to plan asset
status were applicable under the Regulation.
If the assets of the Trust were deemed to be plan assets of Plans that are
holders of the Capital Securities, a Plan's investment in the Capital
Securities might be deemed to constitute a delegation under ERISA of the duty
to manage plan assets by a fiduciary investing in Capital Securities. In
addition, Southern or Capital might be considered a "party in interest" or
"disqualified person" with respect to Plans whose assets were used to purchase
Capital Securities. If this were the case, an investment in Capital Securities
by a Plan might constitute or, in the course of the operation of the Trust,
give rise to a prohibited transaction under ERISA or the Code. In particular,
it is likely that, under such circumstances, a prohibited "extension of
credit" to Southern or Capital would be considered to occur under ERISA and
the Code.
Because of the possibility that the assets of the Trust would be considered
plan assets of Plans whose assets were invested in the Capital Securities, and
the likelihood that under such circumstances a prohibited extension of credit
would occur, the Capital Securities may not be purchased or held by any Plan
or any person investing "plan assets" of any Plan, unless such purchaser or
holder is eligible for the exemptive relief available under Prohibited
Transaction Class Exemption ("PTCE") 96-23 (for certain transactions
determined by in-house asset managers), PTCE 95-60 (for certain transactions
involving insurance company general accounts), PTCE 91-38 (for certain
transactions involving bank collective investment funds), PTCE 90-1 (for
certain transactions involving insurance company separate accounts) or PTCE
84-14 (for certain transactions determined by independent qualified asset
managers). Any purchaser of the Capital Securities or any interest therein
will be deemed to have represented that either (a) it is not a Plan and is not
purchasing such securities (or interest therein) on behalf of or with "plan
assets" of any Plan or (b) its purchase and holding of the Capital Securities
(or interest therein) is eligible for the exemptive relief available under
PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
Due to the complexity of these rules and the penalties imposed upon persons
involved in prohibited transactions, it is important that any person
considering the purchase of Capital Securities with Plan assets consult with
its counsel regarding the consequences under ERISA and the Code of the
acquisition and ownership of Capital Securities and the availability of
exemptive relief under the class exemptions listed above. Employee benefit
plans which are governmental plans (as defined in Section 3(32) of ERISA) and
certain church plans (as defined in Section 3(33) of ERISA) generally are not
subject to ERISA requirements.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Capital Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Capital Securities.
This Prospectus, as it may be amended or supplemented from time to time, may
be used by a broker-dealer during the period referred to below in connection
with resales of Exchange Capital Securities received in exchange for Capital
Securities where such Capital Securities were acquired by such broker-dealer
for its own account as a result of market-making activities or other trading
activities. The Trust, Capital and Southern have agreed that, for a period not
exceeding 90 days after the Expiration Date, they will make this Prospectus,
as amended or supplemented, available to any broker-dealer for use in
connection with any such resale. In addition, until [ ], 1997, all dealers
effecting transactions in the Exchange Securities may be required to deliver a
prospectus.
The Trust, Capital and Southern will not receive any proceeds from any sale
of Exchange Capital Securities offered hereby. Exchange Capital Securities
received by broker-dealers for their own accounts pursuant to the Exchange
Offer may be sold from time to time in one or more transactions, in the over-
the-counter market, in negotiated transactions, through the writing of options
on the Exchange Capital Securities or a combination of such methods of resale,
at market prices prevailing at the time of resale, at prices related to such
prevailing market prices or at negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such broker-
dealer and/or the purchasers of any such Exchange Capital Securities. Any
broker-dealer that resells Exchange Capital Securities that were received by
it for its own account pursuant to the Exchange Offer and any broker or dealer
that participates in a distribution of such Exchange Capital Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of Exchange Capital Securities and any commissions
or concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that
by acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
The National Association of Securities Dealers, Inc. ("NASD") is expected to
view the Exchange Capital Securities as interests in a "direct participation
program" (as defined in Rule 2810 of the NASD's Conduct Rules). Broker-dealers
who are members of the NASD may participate in a public offering of a direct
participation program only in accordance with the terms of said Rule 2810.
VALIDITY OF EXCHANGE CAPITAL SECURITIES
Certain matters of Delaware law relating to the validity of the Exchange
Capital Securities will be passed upon on behalf of Capital and the Trust by
Richards, Layton & Finger, Wilmington, Delaware, special Delaware counsel to
Capital and the Trust. The validity of the Junior Subordinated Notes, the
Capital Securities Guarantee and the Notes Guarantee and certain matters
relating thereto will be passed upon on behalf of Southern and Capital by
Troutman Sanders LLP, Atlanta, Georgia. Troutman Sanders LLP will also pass
upon certain matters relating to United States federal income tax
considerations.
EXPERTS
The consolidated financial statements and schedule of Southern included in
Southern's Annual Report on Form 10-K for the year ended December 31, 1996,
incorporated by reference in this Prospectus, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports
with respect thereto, and are incorporated herein in reliance upon the
authority of said firm as experts in giving said reports.
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<PAGE>
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY SOUTHERN, CAPITAL OR THE TRUST. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCE CRE-
ATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF SOUTHERN,
CAPITAL OR THE TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTI-
TUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OF-
FER 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..................................................... 7
Incorporation of Certain Documents by Reference........................... 7
Summary................................................................... 9
Risk Factors.............................................................. 18
The Southern Company...................................................... 21
Southern Company Capital Funding, Inc. ................................... 22
Southern Company Capital Trust I.......................................... 22
Accounting Treatment...................................................... 23
Use of Proceeds........................................................... 23
Recent Results of Operations.............................................. 23
The Exchange Offer........................................................ 23
Description of the Exchange Capital
Securities............................................................... 34
Description of the Exchange Junior
Subordinated Notes....................................................... 47
Description of the Exchange Capital Securities Guarantee.................. 54
Description of the Exchange Notes
Guarantee................................................................ 56
Description of the Original Securities.................................... 56
Relationship Among the Capital Securities, the Subordinated Notes, the
Capital Securities Guarantee and the Notes Guarantee..................... 57
Certain Federal Income Tax Considerations................................. 59
Certain ERISA Considerations.............................................. 62
Plan of Distribution...................................................... 63
Validity of Exchange Capital Securities................................... 63
Experts................................................................... 63
</TABLE>
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$325,000,000
SOUTHERN COMPANY
CAPITAL TRUST I
8.19% EXCHANGE CAPITAL SECURITIES
(LIQUIDATION AMOUNT $1,000 PER
EXCHANGE CAPITAL SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED,
AS DESCRIBED HEREIN, BY
[LOGO OF SOUTHERN COMPANY APPEARS HERE]
-----------------
PROSPECTUS
, 1997
-----------------
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- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of Title 8 of the Delaware Code gives a corporation power to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The same Section also
gives a corporation power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to
the extent that the Court of Chancery or the court in which such action or
suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper. Also, the
Section states that, to the extent that a director, officer, employee or agent
of a corporation has been successful on the merits or otherwise in defense of
any such action, suit or proceeding, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
The By-Laws of Southern provide in substance that no present or future
director or officer of Southern shall be liable for any act, omission, step or
conduct taken or had in good faith which is required, authorized or approved
by order issued pursuant to the Public Utility Holding Company Act of 1935,
the Federal Power Act, or any state statute regulating Southern or its
subsidiaries by reason of their being public utility companies or public
utility holding companies, or any amendment to any thereof. In the event that
such provisions are found by a court not to constitute a valid defense, each
such director and officer shall be reimbursed for, or indemnified against, all
expenses and liabilities incurred by him or imposed on him in connection with,
or arising out of, any such action, suit or proceeding based on any act,
omission, step or conduct taken or had in good faith as in such By-Laws
described.
The By-Laws of Southern further provide as follows:
"Each person who is or was a director or officer of the Corporation and who
was or is a party or was or is threatened to be made a party to any
threatened, pending or completed claim, action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee,
agent or trustee of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, shall be indemnified by the
Corporation as a matter of right against any and all expenses (including
attorneys' fees) actually and reasonably incurred by him and against any
and all claims, judgments, fines, penalties, liabilities and amounts paid
in settlement actually incurred by him in defense of
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<PAGE>
such claim, action, suit or proceeding, including appeals, to the full
extent permitted by applicable law. The indemnification provided by this
Section shall inure to the benefit of the heirs, executors and
administrators of such person.
Expenses (including attorneys' fees) incurred by a director or officer of
the Corporation with respect to the defense of any such claim, action, suit
or proceeding may be advanced by the Corporation prior to the final
disposition of such claim, action, suit or proceeding, as authorized by the
Board of Directors in the specific case, upon receipt of an undertaking by
or on behalf of such person to repay such amount unless it shall ultimately
be determined that such person is entitled to be indemnified by the
Corporation under this Section or otherwise; provided, however, that the
advancement of such expenses shall not be deemed to be indemnification
unless and until it shall ultimately be determined that such person is
entitled to be indemnified by the Corporation."
Southern has an insurance policy covering its liabilities and expenses which
might arise in connection with its lawful indemnification of its directors and
officers for certain of their liabilities and expenses and also covering its
officers and directors against certain other liabilities and expenses.
Paragraph 10 of the Certificate of Incorporation of Capital provides as
follows:
No director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, or (iii) for any transaction from which the
director received an improper personal benefit.
Article VII of the By-Laws of Capital provides in pertinent part:
Section 1. The corporation shall have power to indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person
acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe such conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendre or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which
he or she reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his or her conduct was unlawful.
Section 2. The corporation shall have power to indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation
to procure a judgment in its favor by reason of the fact that such person
is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise against expenses (including attorneys' fees) actually
and reasonably incurred by such person in connection with the defense or
settlement of such action or suit if he or she acted in good faith and in a
manner reasonably believed to be in or not opposed to the best interest of
the corporation and except that no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of
his or her duty to the
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<PAGE>
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 3. To the extent that a director, officer, employee or agent of
the corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in Sections 1. and 2., or in
defense of any claim, issue or matter therein, such individual shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.
Section 4. Any indemnification under Sections 1. and 2. (unless ordered
by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in Sections 1. and 2.
Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to
such action, suit or proceeding, or (2) if such a quorum is not obtainable,
or, even if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the stockholders.
Section 5. Expenses incurred by an officer or director in defending a
civil or criminal action, suit or proceeding may be paid by the corporation
in advance of the final disposition of such action, suit or proceeding as
authorized by the board of directors in the specific case upon receipt of
an undertaking by or on behalf of such director or officer to repay such
amount unless it shall ultimately be determined that such individual is
entitled to be indemnified by the corporation as authorized in this
Section. Such expenses incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
Section 6. The indemnification provided by this Article VII shall not be
exclusive of any other rights to which those seeking indemnification may be
entitled under any agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such individual's official
capacity and as to action in another capacity while holding such office,
and shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
Section 7. The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against such person and incurred by such in any such
capacity, or arising out of his or her status as such, whether or not the
corporation would have the power to indemnify against such liability under
the provisions of this section.
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<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S>
4.1 Subordinated Note Indenture of The Southern Company and Southern
Company Capital Funding, Inc. relating to the Junior Subordinated
Notes*
4.2 First Supplemental Indenture to Subordinated Note Indenture of
Southern Company Capital Funding, Inc. and The Southern Company
relating to the Junior Subordinated Notes*
4.3 Form of Certificate of Junior Subordinated Notes (included as Ex-
hibit A to Exhibit 4.2)*
4.4 Certificate of Trust of Southern Company Capital Trust I
4.5 Trust Agreement of Southern Company Capital Trust I
4.6 Amended and Restated Trust Agreement of Southern Company Capital
Trust I*
4.7 Form of Exchange Capital Security Certificate for Southern Com-
pany Capital Trust I (included as Exhibit E to Exhibit 4.6)*
4.8 Form of Exchange Capital Securities Guarantee of Southern Company
Capital Funding, Inc. relating to the Exchange Capital Securi-
ties*
4.9 Registration Rights Agreement*
4.10 Capital Securities Guarantee of The Southern Company relating to
the Original Capital Securities*
4.11 Agreement as to Expenses and Liabilities (included as Exhibit D
to Exhibit 4.6)*
5.1 Opinion of Troutman Sanders LLP to Southern Company Capital Fund-
ing, Inc. as to legality of the Exchange Junior Subordinated
Notes to be issued by Southern Company Capital Funding, Inc.*
5.2 Opinion of Richards, Layton & Finger, special Delaware counsel,
as to legality of the Exchange Capital Securities to be issued by
Southern Company Capital Trust I*
5.3 Opinion of Troutman Sanders LLP to The Southern Company as to le-
gality of the Exchange Capital Securities Guarantee and the Ex-
change Notes Guarantee to be issued by The Southern Company*
8.1 Opinion of Troutman Sanders LLP, special tax counsel, as to
certain United States federal income tax matters*
12.1 Computation of ratio of earnings to fixed charges (Designated in
Registration No. 333-28187 as Exhibit 12.1)
12.2 Computation of ratio of earnings to fixed charges plus preferred
dividend requirements (Designated in Registration No. 333-28187
as Exhibit 12.2)
21.1 List of Subsidiaries of The Southern Company (Designated in Form
10-K for the year ended December 31, 1996, File No. 1-3536, as
Exhibit 21)
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Troutman Sanders LLP (included in Exhibit 5.1)*
23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.2)*
23.4 Consent of Troutman Sanders LLP (included in Exhibit 5.3)*
23.5 Consent of Troutman Sanders LLP (included in Exhibit 8.1)*
24.1 Power of Attorney of certain officers and directors of The
Southern Company (Designated in Registration No. 333-28187 as
Exhibit 24.1)
24.2 Resolution of The Southern Company re: Power of Attorney
(Designated in Registration No. 333-28187 as Exhibit 24.2)
25.1 Form T-1 Statement of Eligibility of Bankers Trust Company
99.1 Form of Letter of Transmittal*
99.2 Form of Notice of Guaranteed Delivery*
99.3 Form of Exchange Agent Agreement*
</TABLE>
Exhibits listed above which have heretofore been filed with the Commission
and which were designated as noted above are hereby incorporated by reference
and made a part hereof with the same effect as if filed herewith.
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* To be filed by amendment.
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<PAGE>
ITEM 22. UNDERTAKINGS
Each of the undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of a Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by reference in
this Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, 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
of 1933 may be permitted to directors, officers and controlling persons of
each undersigned Registrant pursuant to the foregoing provisions, or
otherwise, each Registrant has 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 each undersigned Registrant of expenses incurred or paid by a
director, officer of controlling person of each Registrant 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, each Registrant will, unless in the opinion of its counsel the
matter has been settled by the 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 undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned Registrants hereby undertake to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired or involved therein, that was not the subject of and included
in the registration statement when it became effective.
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
THE SOUTHERN COMPANY, A DELAWARE CORPORATION, HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF ATLANTA, STATE OF GEORGIA, ON THE 3RD DAY OF JUNE,
1997.
The Southern Company
A.W. DAHLBERG
By: CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
/s/ Wayne Boston
By: ___________________________________
WAYNE BOSTON
ATTORNEY-IN-FACT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BY THE FOLLOWING DIRECTORS AND OFFICERS OF THE
SOUTHERN COMPANY IN THE CAPACITIES AND ON THE DATE INDICATED:
SIGNATURE TITLE DATE
A.W. Dahlberg Chairman of the
Board, President,
Chief Executive
Officer and
Director
(Principal
Executive Officer)
W.L. Westbrook Financial Vice
President, Chief
Financial Officer
and Treasurer
(Principal
Financial and
Accounting
Officer)
John C. Adams
A.D. Correll
Paul J. DeNicola
Jack Edwards
H. Allen Franklin
Bruce S. Gordon
L.G. Hardman III Directors
Elmer B. Harris
William A. Parker, Jr.
William J. Rushton, Jr.
Gloria M. Shatto
Gerald J. St. Pe
Herbert Stockham
II-6
<PAGE>
SIGNATURE TITLE DATE
June 3, 1997
/s/ Wayne Boston
- -------------------------------------
WAYNE BOSTON
Attorney-in-Fact
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT,
SOUTHERN COMPANY CAPITAL FUNDING, INC., A DELAWARE CORPORATION, HAS DULY
CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ATLANTA, STATE OF
GEORGIA, ON THE 3RD DAY OF JUNE, 1997.
Southern Company Capital Funding,
Inc.
/s/ W.L. Westbrook
By: _________________________________
W.L. WESTBROOK
Director
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING DIRECTOR AND OFFICERS
OF SOUTHERN COMPANY CAPITAL FUNDING, INC. IN THE CAPACITIES AND ON THE DATE
INDICATED.
SIGNATURE TITLE DATE
/s/ W.L. Westbrook President, Chief June 3, 1997
By: _________________________________ Executive Officer
W.L. WESTBROOK and Director
(Principal
Executive Officer)
/s/ C.O. Rawlins Vice President and June 3, 1997
By: _________________________________ Chief Financial
C.O. RAWLINS Officer (Principal
Financial and
Accounting Officer)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SOUTHERN COMPANY
CAPITAL TRUST I HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
ATLANTA, STATE OF GEORGIA, ON THE 3RD DAY OF JUNE, 1997.
Southern Company Capital Trust I
/s/ Wayne Boston
By: _________________________________
WAYNE BOSTON
ADMINISTRATIVE TRUSTEE
II-7
<PAGE>
Exhibit Index
EXHIBIT DESCRIPTION
------- -----------
4.1 Subordinated Note Indenture of The Southern Company and Southern
Company Capital Funding, Inc. relating to the Junior Subordinated
Notes*
4.2 First Supplemental Indenture to Subordinated Note Indenture of
Southern Company Capital Funding, Inc. and The Southern Company
relating to the Junior Subordinated Notes*
4.3 Form of Certificate of Junior Subordinated Notes (included as Ex-
hibit A to Exhibit 4.2)*
4.4 Certificate of Trust of Southern Company Capital Trust I
4.5 Trust Agreement of Southern Company Capital Trust I
4.6 Amended and Restated Trust Agreement of Southern Company Capital
Trust I*
4.7 Form of Exchange Capital Security Certificate for Southern Com-
pany Capital Trust I (included as Exhibit E to Exhibit 4.6)*
4.8 Form of Exchange Capital Securities Guarantee of Southern Company
Capital Funding, Inc. relating to the Exchange Capital Securi-
ties*
4.9 Registration Rights Agreement*
4.10 Capital Securities Guarantee of The Southern Company relating to
the Original Capital Securities*
4.11 Agreement as to Expenses and Liabilities (included as Exhibit D
to Exhibit 4.6)*
5.1 Opinion of Troutman Sanders LLP to Southern Company Capital Fund-
ing, Inc. as to legality of the Exchange Junior Subordinated
Notes to be issued by Southern Company Capital Funding, Inc.*
5.2 Opinion of Richards, Layton & Finger, special Delaware counsel,
as to legality of the Exchange Capital Securities to be issued by
Southern Company Capital Trust I*
5.3 Opinion of Troutman Sanders LLP to The Southern Company as to le-
gality of the Exchange Capital Securities Guarantee and the Ex-
change Notes Guarantee to be issued by The Southern Company*
8.1 Opinion of Troutman Sanders LLP, special tax counsel, as to
certain United States federal income tax matters*
12.1 Computation of ratio of earnings to fixed charges (Designated in
Registration No. 333-28187 as Exhibit 12.1)
12.2 Computation of ratio of earnings to fixed charges plus preferred
dividend requirements (Designated in Registration No. 333-28187
as Exhibit 12.2)
21.1 List of Subsidiaries of The Southern Company (Designated in Form
10-K for the year ended December 31, 1996, File No. 1-3536, as
Exhibit 21)
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Troutman Sanders LLP (included in Exhibit 5.1)*
23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.2)*
23.4 Consent of Troutman Sanders LLP (included in Exhibit 5.3)*
23.5 Consent of Troutman Sanders LLP (included in Exhibit 8.1)*
24.1 Power of Attorney of certain officers and directors of The
Southern Company (Designated in Registration No. 333-28187 as
Exhibit 24.1)
24.2 Resolution of The Southern Company re: Power of Attorney
(Designated in Registration No. 333-28187 as Exhibit 24.2)
25.1 Form T-1 Statement of Eligibility of Bankers Trust Company
99.1 Form of Letter of Transmittal*
99.2 Form of Notice of Guaranteed Delivery*
99.3 Form of Exchange Agent Agreement*
Exhibit 4.4
CERTIFICATE OF TRUST
OF
SOUTHERN COMPANY CAPITAL TRUST I
THIS CERTIFICATE OF TRUST of Southern Company Capital Trust I (the
"Trust"), dated January 24, 1997, is being duly executed and filed by the
undersigned, as trustee of the Trust, to form a business trust under the
Delaware Business Trust Act (12 Del. C. Section 3801, et seq.).
1. Name. The name of the business trust being formed hereby is Southern
Company Capital Trust I.
2. Delaware Trustee. The name and business address of the trustee of the
Trust with a principal place of business in the State of Delaware are Bankers
Trust (Delaware), 1001 Jefferson Street, Suite 550, Wilmington, Delaware 19801.
3. Effective Date. This Certificate of Trust shall be effective as of its
filing.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
BANKERS TRUST (DELAWARE),
as Delaware Trustee
By:
Name: M. Lisa Wilkins
Title: Assistant Secretary
Exhibit 4.5
TRUST AGREEMENT
THIS TRUST AGREEMENT is made as of January 24, 1997, by and between
Southern Company Capital Funding, Inc., a Delaware corporation, as Depositor
(the "Depositor"), and Bankers Trust (Delaware), duly organized and existing in
the State of Delaware, as Trustee (the "Trustee"). The Depositor and the Trustee
hereby agree as follows:
1. The trust created hereby shall be known as "Southern Company Capital
Trust I", in which name the Trustee, or the Depositor to the extent provided
herein, may conduct the business of the Trust, make and execute contracts, and
sue and be sued.
2. The Depositor hereby assigns, transfers, conveys and sets over to
the Trustee the sum of $10. The Trustee hereby acknowledges receipt of such
amount in trust from the Depositor, which amount shall constitute the initial
trust estate. The Trustee hereby declares that it will hold the trust estate in
trust for the Depositor. It is the intention of the parties hereto that the
Trust created hereby constitute a business trust under Chapter 38 of Title 12 of
the Delaware Code, 12 Del. C. ss. 3801, et seq. (the "Business Trust Act"), and
that this document constitute the governing instrument of the Trust. The Trustee
is hereby authorized and directed to execute and file a certificate of trust
with the Delaware Secretary of State substantially in the form attached hereto
or in such other form as the Trustee may approve.
3. The Depositor and the Trustee and certain other parties will enter
into an amended and restated Trust Agreement satisfactory to each such party and
having substantially the terms described in the Offering Memorandum (as defined
below), to provide for the contemplated operation of the Trust created hereby
and the issuance of the Capital Securities and Common Securities referred to
therein. Prior to the execution and delivery of such amended and restated Trust
Agreement, the Trustee shall not have any duty or obligation hereunder or with
respect of the trust estate, except as otherwise required by applicable law or
as may be necessary to obtain prior to such execution and delivery any licenses,
consents or approvals required by applicable law or otherwise. However,
notwithstanding the foregoing, the Trustee may take all actions deemed proper as
are necessary to effect the transactions contemplated herein.
4. The Depositor and the Trustee hereby authorize and direct the
Depositor, as the sponsor of the Trust, (i) to prepare and distribute one or
more offering memoranda on behalf of the Trust, including any necessary or
desirable supplements or amendments thereto (the "Offering Memorandum"),
relating to the Capital Securities and Common Securities of the Trust and
certain other securities; (ii) to file and execute on behalf of the Trust such
applications, reports, surety bonds, irrevocable consents, appointments of
attorney for service of process and other papers and documents as shall be
necessary or desirable to register the Capital Securities under, or to obtain
for the Capital Securities an exemption from, the securities or "Blue Sky" laws
of such jurisdictions as the Depositor, on behalf of the Trust, may deem
necessary or desirable; (iii) to execute, deliver and perform on behalf of the
Trust an underwriting or purchase agreement with the Depositor and the
underwriter or underwriters or purchaser or purchasers of the Capital Securities
of the Trust and (iv) to execute on behalf of the Trust any and all documents,
papers and instruments as may be desirable in connection with any of the
foregoing. The Trustee further hereby ratifies and approves all actions having
previously been taken with respect to the foregoing. In the event that any
filing or distribution referred to in clause (i) or (ii) above is required by
the rules and regulations of any applicable governmental agency, self-regulatory
organization or other person or organization to be executed on behalf of the
Trust by the Trustee, Bankers Trust (Delaware), in its capacity as Trustee of
the Trust, is hereby authorized and directed to join in any such filing and to
execute on behalf of the Trust any and all of the foregoing, it being understood
that Bankers Trust (Delaware) in its capacity as Trustee of the Trust shall not
be required to join in any such filing or execute on behalf of the Trust any
such document unless required by such rules and regulations.
5. This Trust Agreement may be executed in one or more counterparts.
6. The number of Trustees initially shall be one (1) and thereafter the
number of Trustees shall be such number as shall be fixed from time to time by a
written instrument signed by the Depositor which may increase or decrease the
number of Trustees; provided, however, that to the extent required by the
Business Trust Act, one Trustee shall either be a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware. Subject to the
foregoing the Depositor is entitled to appoint or remove without cause any
Trustee at any time. Any Trustee may resign upon thirty days' prior notice to
the Depositor.
7. This Trust Agreement shall be construed in accordance with and governed
by the internal laws of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed as of the day and year first above written.
SOUTHERN COMPANY CAPITAL FUNDING, INC.,
as Depositor
By:
Name: Richard Childs
Title: Assistant Secretary
BANKERS TRUST (DELAWARE),
as Trustee
By:
Name: M. Lisa Wilkins
Title: Assistant Secretary
EXHIBIT 23.1
Arthur Andersen LLP
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-4 (relating to Southern
Company Capital Trust I Exchange Capital Securities, Southern Company Capital
Funding, Inc. Exchange Series A Junior Subordinated Deferrable Interest Notes,
The Southern Company Exchange Capital Securities Guarantees and The Southern
Company Exchange Junior Subordinated Notes Guarantee) of our reports dated
February 12, 1997 on the financial statements of The Southern Company and the
related financial statement schedule included in The Southern Company's Form
10-K for the year ended December 31, 1996 and to all references to our Firm
included in this registration statement.
/s/Arthur Andersen LLP
Atlanta, Georgia
May 30, 1997
Exhibit 25.1
- ----------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT
TO SECTION 305(b)(2) ___________
------------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
Bankers Trust Company
Legal Department
130 Liberty Street, 31st Floor
New York, New York 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
---------------------------------
The Southern Company
Southern Company Capital Funding, Inc.
Southern Company Capital Trust I
(Exact Name of Registrant as specified in its charter)
Delaware 58-0690070
Delaware Applied For
Delaware Applied For
(State or other (I.R.S. Employer
jurisdiction of idenification No.)
Incorporation or
organization)
270 Peachtree Street, N.W.
Atlanta, GA 30303
(770) 393-0650
(Address, including zip code of principal executive offices)
Exchange Capital Securities of Southern Company Capital Trust I
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising authority
to which it is subject.
Name Address
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the Trustee, describe each
such affiliation.
None.
Item 3. -15. Not Applicable
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of
Bankers Trust Company dated August 7, 1990,
Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated
June 21, 1995 - Incorporated herein by
reference to Exhibit 1 filed with Form T-1
Statement, Registration No. 33-65171, and
Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated
March 20, 1996, copy attached.
Exhibit 2 - Certificate of Authority to commence
business - Incorporated herein by reference
to Exhibit 2 filed with Form T-1 Statement,
Registration No.
33-21047.
Exhibit 3 - Authorization of the Trustee to exercise
corporate trust powers Incorporated herein
by reference to Exhibit 2 filed with Form
T-1 Statement, Registration No. 33-21047.
Exhibit 4 - Existing By-Laws of Bankers Trust
Company, as amended on September 17, 1996
Incorporated herein by reference to Exhibit
4 filed with Form T-1 Statement,
Registration No. 333-15263.
-2-
<PAGE>
Exhibit 5 - Not applicable.
Exhibit 6 - Consent of Bankers Trust Company
required by Section 321(b) of the Act.
Incorporated herein by reference to Exhibit
4 filed with Form T-1 Statement,
Registration No. 22-18864.
Exhibit 7 - A copy of the latest report of condition of
Bankers Trust Company dated as of
September 30, 1996.
Exhibit 8 - Not Applicable.
Exhibit 9 - Not Applicable.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 30th day
of May, 1997.
BANKERS TRUST COMPANY
By: James C. McDonough
James C. McDonough
Vice President
-5-
<PAGE>
Legal Title of Bank:Bankers Trust Company Call Date:93096 ST-BK:36-4840FFIEC 031
Address: 130 Liberty Street Vendor ID:D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: 0 0 6 2 3
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks September 30, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
---------------
C400
Dollar Amounts in Thousands RCFD Bil Mil Thou
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1).0081 809,000 1.a.
b. Interest-bearing balances(2) .........................0071 4,453,000 1.b.
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B,
column A) ............................................1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B,
column D).............................................1773 4,133,000 2.b.
3 Federal funds sold and securities purchased under
agreements to resell in domestic offices
of the bank and of its Edge and Agreement subsidiaries,
and in IBFs:
a. Federal funds sold ...................................0276 5,933,000 3.a.
b. Securities purchased under agreements to resell ......0277 413,000 3.b.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income
(from Schedule RC-C)..........RCFD 2122 27,239,000 4.a.
b. LESS: Allowance for loan
and lease losses........RCFD 3123 917,000 4.b.
c. LESS: Allocated transfer
risk reserve ...........RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance,
and reserve (item 4.a minus 4.b and 4.c) .............2125 26,322,000 4.d.
5. Assets held in trading accounts .........................3545 36,669,000 5.
6. Premises and fixed assets (including capitalized leases).2145 870,000 6.
7. Other real estate owned (from Schedule RC-M) ............2150 215,000 7.
8. Investments in unconsolidated subsidiaries and
associated companies (from Schedule RC-M)................2130 212,000 8.
9. Customers' liability to this bank on acceptances
outstanding .............................................2155 577,000 9.
10.Intangible assets (from Schedule RC-M) ..................2143 18,000 10.
11.Other assets (from Schedule RC-F) .......................2160 8,808,000 11.
12.Total assets (sum of items 1 through 11) ................2170 89,432,000 12.
- --------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
<PAGE>
Legal Title of Bank:Bankers Trust Company Call Date:93096 ST-BK:36-4840FFIEC 031
Address: 130 Liberty Street Vendor ID:D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: 0 0 6 2 3
Schedule RC--Continued ___________________________________
Dollar Amounts in Thousands Bil Mil Thou
- -------------------------------------------------------------------------------
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of
columns A and C from Schedule RC-E, part I)RCON 2200 9,391,000 13.a.
(1) Noninterest-bearing(1) ................RCON 6631 2,734,000 13.a.(1)
(2) Interest-bearing ......................RCON 6636 6,657,000 13.a.(2)
b. In foreign offices, Edge and Agreement
subsidiaries, and IBFs (from Schedule RC-E
part II)...................................RCFN 2200 23,385,000 13.b.
(1) Noninterest-bearing.RCFN 6631 654,000 13.b.(1)
(2) Interest-bearing....RCFN 6636 22,731,000 13.b.(2)
14. Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
a. Federal funds purchased ...................RCFD 0278 3,090,000 14.a.
b. Securities sold under agreements
to repurchase .............................RCFD 0279 99,000 14.b.
15. a. Demand notes issued to the U.S. Treasury...RCON 2840 0 15.a.
b. Trading liabilities .......................RCFD 3548 18,326,000 15.b.
16. Other borrowed money:
a. With original maturity of one year or less RCFD 2332 17,476,000 16.a.
b. With original maturity of more than
one year ..................................RCFD 2333 2,771,000 16.b.
17. Mortgage indebtedness and obligations under
capitalized leases ...........................RCFD 2910 31,000 17.
18. Bank's liability on acceptances executed
and outstanding ..............................RCFD 2920 577,000 18.
19. Subordinated notes and debentures ............RCFD 3200 1,228,000 19.
20. Other liabilities (from Schedule RC-G) .......RCFD 2930 8,398,000 20.
21. Total liabilities (sum of items 13 through 20)RCFD 2948 84,772,000 21.
22. Limited-life preferred stock and
related surplus ..............................RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.RCFD 3838 500,000 23.
24. Common stock .................................RCFD 3230 1,002,000 24.
25. Surplus (exclude all surplus related to
preferred stock) .............................RCFD 3839 527,000 25.
26. a. Undivided profits and capital reserves ....RCFD 3632 3,017,000 26.a.
b. Net unrealized holding gains (losses)
on available-for-sale securities ..........RCFD 8434 (16,000)26.b.
27. Cumulative foreign currency translation
adjustments ..................................RCFD 3284 (370,000)27.
28. Total equity capital (sum of items 23
through 27) ..................................RCFD 3210 4,660,000 28.
29. Total liabilities, limited-life preferred
stock, and equity capital (sum of items 21,
22, and 28) ..................................RCFD 3300 89,432,000 29.
- ---------------------------
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the
number of the statement below that
best describes the most comprehensive
level of auditing work performed
for the bank by independent external Number
auditors as of any date during 1995.......RCFD 6724 N A M.1
1 = Independent audit of the bank conducted in accordance
with generally accepted auditing standards by a certified
public accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company
conducted in accordance with generally accepted auditing
standards by a certified public accounting firm which
submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other
external auditors (may be required by state chartering
authority)
5 = Review of the bank's financial statements by external
auditors
6 = Compilation of the bank's financial statements by external
auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- ----------------------
(1) Including total demand deposits and noninterest-bearing time and
savings deposits.
<PAGE>
State of New York,
Banking Department
I, PETER M. PHILBIN, Deputy Superintendent of Bank of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section
8005 of the Banking Law," dated March 20, 1996, providing for an increase in
authorized capital stock from $1,351,666,670 consisting of 85,166,667 shares
with a par value of $10 each designated as Common Stock and 500 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$1,501,666,670 consisting of 100,166,667 shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the City of New
York, this 21st day of March in the Year of our Lord one thousand nine hundred
and ninety-six.
Peter M. Philbin
Deputy Superintendent of Banks
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary of Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of march, 1903.
3. The organization certificate as heretofore amended is hereby amended to
increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Three Hundred Fifty One Million, Six Hundred
Sixty-Six Thousand, Six Hundred Seventy Dollars ($1,351,666,670),
divided into Eighty-Five Million, One Hundred Sixty-Six Thousand, Six
Hundred Sixty-Seven (85,166,667) shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Five Hundred One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,501,666,670), divided into
One Hundred Million, One Hundred Sixty Six Thousand, Six Hundred
Sixty-Seven (100,166,667) shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
<PAGE>
6. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
20th day of March , 1996.
James T. Byrne, Jr.
James T. Byrne, Jr.
Managing Director
Lea Lahtinen
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows the
contents thereof, and that the statements herein contained are true.
Lea Lahtinen
Lea Lahtinen
Sworn to before me this 20th day of March, 1996.
Sandra L. West
Notary Public
SANDRA L. WEST Counterpart filed in the
Notary Public State of New York Office of the Superintendent of
No. 31-4942101 Banks, State of New York,
Qualified in New York County This 21st day of March, 1996
Commission Expires September 19, 1996
