PRICING SUPPLEMENT
- ------------------
(TO PROSPECTUS DATED OCTOBER 4, 1999 AS SUPPLEMENTED BY
PROSPECTUS SUPPLEMENT DATED OCTOBER 13, 1999)
$500,000,000 [LOGO]
PP&L CAPITAL FUNDING, INC.
7 3/4% NOTES DUE 2005
UNCONDITIONALLY GUARANTEED AS TO
PAYMENT OF PRINCIPAL AND ANY INTEREST AND PREMIUM BY
PP&L RESOURCES, INC.
-------------------
Interest payable on April 15 and October 15
-------------------
The 7 3/4% Notes Due 2005 (the "Offered Notes"), are a tranche of PP&L
Capital Funding's securities designated Medium-Term Notes, Series C, and are
described in the accompanying prospectus and prospectus supplement. PP&L Capital
Funding's payment obligations on the Offered Notes will be unconditionally
guaranteed by PP&L Capital Funding's parent, PP&L Resources. Interest on the
Offered Notes will be payable on April 15 and October 15, commencing October 15,
2000, as described herein and in the accompanying prospectus and prospectus
supplement. The Offered Notes will mature on April 15, 2005, and are redeemable
at the option of PP&L Capital Funding, in whole at any time or in part from time
to time, as described herein.
<TABLE>
<CAPTION>
UNDERWRITING DISCOUNTS PROCEEDS TO
PRICE TO PUBLIC(1) AND COMMISSIONS PP&L CAPITAL FUNDING (1)
------------------ ----------------------- ------------------------
<S> <C> <C> <C>
Per Offered Note ......... 99.88% .60% 99.28%
Total .................... $ 499,400,000 $ 3,000,000 $ 496,400,000
</TABLE>
- -----------
(1) Plus accrued interest, if any, from date of issuance.
-------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PRICING SUPPLEMENT, THE ACCOMPANYING
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Underwriters expect to deliver the Offered Notes to the purchasers
in book-entry form through the facilities of The Depository Trust Company on or
about February 8, 2000.
-------------------
JOINT BOOK-RUNNERS:
CREDIT SUISSE FIRST BOSTON MORGAN STANLEY DEAN WITTER
-------------------
BANC OF AMERICA SECURITIES LLC
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
PAINEWEBBER INCORPORATED
February 3, 2000
<PAGE>
You should rely on the information contained in or incorporated by
reference in this pricing supplement and the accompanying prospectus supplement
and prospectus. We have not authorized anyone to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information contained
in or incorporated by reference in this pricing supplement and the accompanying
prospectus supplement and prospectus is accurate as of any date after the date
of this pricing supplement.
TABLE OF CONTENTS
PRICING SUPPLEMENT
Page
----
Use of Proceeds..............................................................P-3
Description of the Offered Notes.............................................P-3
Underwriters.................................................................P-5
PROSPECTUS SUPPLEMENT
Description of the Notes.....................................................S-2
Certain United States Federal Income Tax Considerations.....................S-19
Validity of the Notes and the Guarantee.....................................S-22
Supplemental Plan of Distribution...........................................S-22
PROSPECTUS
About this Prospectus..........................................................2
Where You Can Find More Information............................................3
PP&L Resources.................................................................5
PP&L Capital Funding...........................................................7
PP&L Capital Funding Trust I...................................................7
Use of Proceeds................................................................7
Ratios of Earnings to Fixed Charges and Earnings to Fixed Changes
and Preferred Dividends......................................................8
Description of PP&L Resources' Capital Stock...................................8
Description of Stock Purchase Contracts and Stock Purchase Units..............10
Description of the Debt Securities............................................10
Description of the Trust Securities...........................................20
Description of the Preferred Securities Guarantee.............................28
Description of the Subordinated Debt Securities...............................31
Information Concerning the Trustees...........................................45
Experts.......................................................................45
Validity of the Securities and the Securities Guarantees......................45
Plan of Distribution..........................................................45
P-2
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by PP&L Capital Funding, Inc. from the
sale of the Offered Notes will be used for general corporate purposes, including
making loans to the unregulated subsidiaries of PP&L Resources, Inc. and
reduction of commercial paper balances. At December 31, 1999, PP&L Capital
Funding had $298 million aggregate principal amount of commercial paper notes
outstanding, bearing interest at a weighted average rate of 6.67% per annum.
Certain proceeds from the sale of commercial paper notes were loaned to a
subsidiary of PP&L Resources, Inc. to partially finance the $757 million
acquisition of generation assets from The Montana Power Company in December
1999.
DESCRIPTION OF THE OFFERED NOTES
The following description of the particular terms of the Offered Notes
supplements, and to the extent inconsistent replaces, the description of the
general terms and provisions of the Debt Securities set forth under "Description
of the Debt Securities" in the accompanying prospectus, and of the Notes set
forth under "Description of the Notes" in the accompanying prospectus
supplement, to which general description reference is hereby made. The following
summary of certain terms and provisions of the Offered Notes, the Guarantees and
the Indenture does not purport to be complete and is qualified in its entirety
by reference to the actual provisions of the Offered Notes, the Guarantees and
the Indenture. Capitalized terms used but not defined herein shall have the
meanings given to them in the accompanying prospectus and prospectus supplement,
the Offered Notes or the Indenture, as the case may be.
GENERAL
The Offered Notes will be issued as a separate tranche of Medium-Term
Notes, Series C, under the Indenture among PP&L Capital Funding, PP&L Resources
and The Chase Manhattan Bank, as trustee, which is more fully described in the
accompanying prospectus and prospectus supplement. PP&L Resources will
unconditionally guarantee PP&L Capital Funding's obligation to pay principal and
any interest and premium payable with respect to the Offered Notes.
The Offered Notes will be initially issued as Book-Entry Notes as
described under "Description of the Notes-Book-Entry Notes" in the accompanying
prospectus supplement.
MATURITY; INTEREST
The Offered Notes will mature on April 15, 2005 (the "Stated Maturity
Date"), and will be issued as Fixed Rate Notes bearing interest at a rate of 7
3/4% per annum from the date of issuance (the "Original Issue Date"). Interest
on the Offered Notes will be payable on each April 15 and October 15, commencing
October 15, 2000 (each such date, an "Interest Payment Date"). The Regular
Record Date with respect to any Interest Payment Date will be the March 31 or
September 30, as the case may be, immediately preceding such Interest Payment
Date (whether or not any such Regular Record Date is also a Business Day).
REDEMPTION
The information regarding redemption set forth in the accompanying
prospectus supplement in the first paragraph under "Description of the
Notes-Redemption at the Option of PP&L Capital Funding" will not be applicable
to the Offered Notes.
P-3
<PAGE>
The Offered Notes will be redeemable at the election of PP&L Capital
Funding, in whole at any time or in part from time to time, at a redemption
price equal to the greater of:
(a) 100% of the principal amount of the Offered Notes to be so
redeemed; or
(b) as determined by an Independent Investment Banker, the sum of the
present values of the remaining scheduled payments of principal
and interest on the Offered Notes to be so redeemed (not
including any portion of such payments of interest accrued to the
date of redemption) discounted to the redemption date on a
semiannual basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate, plus 15 basis
points,
plus, in either of the above cases, accrued and unpaid interest to the date of
redemption.
"Adjusted Treasury Rate" means, with respect to any redemption date:
(a) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently
published statistical release designated "H.15(519)" or any
successor publication which is published weekly by the Board of
Governors of the Federal Reserve System and which establishes
yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury
Constant Maturities," for the maturity corresponding to the
Comparable Treasury Issue (if no maturity is within three months
before or after the Remaining Life (as defined below), yields for
the two published maturities most closely corresponding to the
Comparable Treasury Issue shall be determined and the Adjusted
Treasury Rate shall be interpolated or extrapolated from such
yields on a straight line basis, rounding to the nearest month);
or
(b) if such release (or any successor release) is not published
during the week preceding the calculation date or does not
contain such yields, the rate per annum equal to the semi-annual
equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date.
The Adjusted Treasury Rate shall be calculated on the third Business Day
preceding the 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 to the Stated Maturity Date of the Offered 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 of such securities (the "Remaining
Life").
"Comparable Treasury Price" means (1) the average of six Reference
Treasury Dealer Quotations for such redemption date, after excluding the highest
and lowest Reference Treasury Dealer Quotations, or (2) if the Independent
Investment Banker obtains fewer than six such Reference Treasury Dealer
Quotations, the average of all such quotations.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by PP&L Capital Funding.
P-4
<PAGE>
"Reference Treasury Dealer" means:
(a) each of Credit Suisse First Boston Corporation, Morgan Stanley &
Co. Incorporated, Banc of America Securities LLC, Goldman, Sachs
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
PaineWebber Incorporated, and their respective successors;
provided, however, that if any of the foregoing shall cease to be
a primary U.S. Government securities dealer in New York City (a
"Primary Treasury Dealer"), PP&L Capital Funding will substitute
another Primary Treasury Dealer; and
(b) any other Primary Treasury Dealer selected by PP&L Capital
Funding.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker at 5:00
p.m., New York City time, on the third Business Day preceding such redemption
date.
Additional information concerning redemption is contained under
"Description of the Debt Securities--Redemption" in the accompanying prospectus.
The Offered Notes will not be subject to a sinking fund or other
mandatory redemption provisions, and will not be repayable at the option of the
Holder prior to the Stated Maturity Date.
UNDERWRITERS
Under the terms and subject to the conditions contained in a Terms
Agreement dated the date hereof, the Underwriters named below have agreed to
purchase, and PP&L Capital Funding has agreed to sell to them, severally, the
respective principal amounts of Offered Notes set forth opposite their
respective names below:
PRINCIPAL AMOUNT
NAME OF OFFERED NOTES
---- ----------------
Credit Suisse First Boston Corporation.................$ 200,000,000
Morgan Stanley & Co. Incorporated ..................... 200,000,000
Banc of America Securities LLC ........................ 25,000,000
Goldman, Sachs & Co. .................................. 25,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated ............................. 25,000,000
PaineWebber Incorporated .............................. 25,000,000
-------------
Total..............................................$ 500,000,000
=============
Credit Suisse First Boston Corporation and Morgan Stanley & Co.
Incorporated are acting as joint book-runners for the Offered Notes. The Terms
Agreement provides that the obligation of the several Underwriters to pay for
and accept delivery of the Offered Notes is subject to the approval of certain
legal matters by their counsel and to certain other conditions. The Underwriters
are obligated to take and pay for the Offered Notes if any are taken.
The Underwriters of the Offered Notes propose to offer part of the
Offered Notes directly to the public at the public offering price set forth on
the cover page hereof and part to certain dealers at a price that represents a
concession not in excess of .35% of the principal amount of the Offered Notes.
The Underwriters and such dealers may reallow a discount of .20% of such
principal amount to certain other dealers. After the initial offering of the
Offered Notes, the offering price and other selling terms may from time to time
be varied.
P-5
<PAGE>
PP&L Capital Funding and PP&L Resources have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended.
PP&L Capital Funding does not intend to apply for listing of the
Offered Notes on a national securities exchange, but has been advised by the
Underwriters that they presently intend to make a market in the Offered Notes as
permitted by applicable laws and regulations. The Underwriters are not
obligated, however, to make a market in the Offered Notes and any such market
making may be discontinued at any time at the sole discretion of the
Underwriters. Accordingly, no assurance can be given as to the liquidity of, or
trading markets for, the Offered Notes.
In order to facilitate the offering of the Offered Notes, the
Underwriters may engage in transactions that stabilize, maintain or otherwise
affect the price of the Offered Notes. Specifically, the Underwriters may
overallot in connection with the offering, creating a short position in the
Offered Notes for their own account. In addition, to cover overallotments or to
stabilize the price of the Offered Notes, the Underwriters may bid for, and
purchase, the Offered Notes in the open market. Finally, the underwriting
syndicate may reclaim selling concessions allowed to an underwriter or a dealer
for distributing the Offered Notes in the offering, if the syndicate repurchases
previously distributed Offered Notes in transactions to cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the Offered Notes above
independent market levels. The Underwriters are not required to engage in these
activities, and may end of these activities at any time.
In the ordinary course of their business, Morgan Stanley & Co.
Incorporated and Credit Suisse First Boston Corporation and certain of the other
Underwriters have engaged and may in the future engage in investment and
commercial banking transactions with PP&L Resources, PP&L Capital Funding and
certain of their affiliates.
P-6
