View:
Registration Nos. 333-01035-01 and 333-01035
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
-----------------------------
MINNESOTA POWER & LIGHT COMPANY
(Exact name of registrant as specified in its charter)
MINNESOTA 41-0418150
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
MP&L CAPITAL I
(Exact name of registrant as specified in its charter)
DELAWARE TO BE APPLIED FOR
(State of incorporation or organization) (I.R.S. Employer
Identification No.)
30 WEST SUPERIOR STREET
DULUTH, MINNESOTA 55802
(218) 722-2641
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
DAVID G. GARTZKE PHILIP R. HALVERSON, Esq.
Senior Vice President-Finance Vice President, General Counsel
and Chief Financial Officer and Corporate Secretary
30 West Superior Street 30 West Superior Street
Duluth, Minnesota 55802 Duluth, Minnesota 55802
(218) 722-2641 (218) 722-2641
JAMES K. VIZANKO ROBERT J. REGER, JR., Esq.
Corporate Treasurer Reid & Priest LLP
30 West Superior Street 40 West 57th Street
Duluth, Minnesota 55802 New York, New York 10019
(218) 722-2641 (212) 603-2000
(Names and addresses, including zip codes, and telephone numbers,
including area codes, of agents for service)
-----------------------------
It is respectfully requested that the Commission
send copies of all notices, orders and communications to:
MICHAEL CONNOLLY, Esq.
Lane & Mittendorf LLP
320 Park Avenue
New York, New York 10022
-----------------------------
=========================================================================
CALCULATION OF REGISTRATION FEE
===========================================================================
PROPOSED PROPOSED
TITLE MAXIMUM MAXIMUM
OF EACH CLASS OF AMOUNT OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT(1) PRICE(1)(2) FEE
---------------------------------------------------------------------------
MP&L CAPITAL I
CUMULATIVE
QUARTERLY
INCOME PREFERRED
SECURITIES . . . . 3,000,000(3) $25 $75,000,000(3) $25,862(3)
--------------------------------------------------------------------------
MINNESOTA POWER &
LIGHT COMPANY
GUARANTEE WITH
RESPECT TO MP&L
CAPITAL I CUMULATIVE
QUARTERLY INCOME
PREFERRED SECURITIES
AND MINNESOTA POWER
& LIGHT COMPANY
OBLIGATIONS WITH
RESPECT TO SUCH
PREFERRED SECURITIES
UNDER AN INDENTURE,
AN AMENDED AND
RESTATED TRUST
AGREEMENT AND AN
AGREEMENT AS TO
EXPENSES AND
LIABILITIES(4) . .
--------------------------------------------------------------------------
MINNESOTA POWER &
LIGHT COMPANY
JUNIOR SUBORDINATED
DEBENTURES,
SERIES(5) . . . . .
==========================================================================
(1) ESTIMATED SOLELY FOR THE PURPOSE OF CALCULATING THE REGISTRATION
FEE.
(2) EXCLUSIVE OF ACCRUED DISTRIBUTIONS, IF ANY.
(3) THE CUMULATIVE QUARTERLY INCOME PREFERRED SECURITIES BEING
REGISTERED ARE HEREBY REDUCED FROM 5,000,000 TO 3,000,000.
(4) NO SEPARATE CONSIDERATION WILL BE RECEIVED FOR THE MINNESOTA
POWER & LIGHT COMPANY GUARANTEE AND OTHER OBLIGATIONS.
(5) THE JUNIOR SUBORDINATED DEBENTURES WILL BE PURCHASED BY MP&L
CAPITAL I WITH THE PROCEEDS OF THE SALE OF THE PREFERRED
SECURITIES. NO SEPARATE CONSIDERATION WILL BE RECEIVED FOR THE
JUNIOR SUBORDINATED DEBENTURES.
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
registrant 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
this Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
SUBJECT TO COMPLETION, DATED MARCH 14, 1996
3,000,000 Preferred Securities
MP&L CAPITAL I
% Cumulative Quarterly Income Preferred Securities (QUIPSSM)*
(Liquidation preference $25.00 per Preferred Security)
Guaranteed to the extent MP&L Capital I has funds as set forth herein by
MINNESOTA POWER & LIGHT COMPANY
______________________
The % Cumulative Quarterly Income Preferred Securities (the "Preferred
Securities") offered hereby are being issued by and represent undivided
preferred beneficial interests in the assets of MP&L Capital I ("MP&L
Capital"), a statutory business trust created under the laws of the State
of Delaware. Minnesota Power & Light Company (the "Company"), a Minnesota
corporation, will be the owner of the undivided common beneficial interests
in the assets represented by common securities of MP&L Capital (the "Common
Securities", together with the Preferred Securities herein referred to as
the "Trust Securities"). The Bank of New York is the Property Trustee of
MP&L Capital. MP&L Capital exists for the sole purpose of issuing the
Preferred Securities and the Common Securities and investing the proceeds
thereof in % Junior Subordinated Debentures, Series , Due 2015, to be
issued by the Company (the "Junior Subordinated Debentures") in an
aggregate principal amount equal to the aggregate liquidation preference
amount of the Trust Securities. The Preferred Securities will have a
preference under certain circumstances with respect to cash distributions
and amounts payable on liquidation, redemption or otherwise over the Common
Securities. See "Description of the Preferred Securities -- Subordination
of Common Securities."
(cover continued on following page)
---------------------
See "Risk Factors," beginning on page 6, for certain information
relevant to an investment in the Preferred Securities, including the period
and circumstances during and under which payment of distributions on the
Preferred Securities may be deferred and certain related federal income tax
consequences.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR BY 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.
---------------------
Initial
Public
Offering Underwriting Proceeds to
Price Commission(1) Company(2)(3)
-------- ------------- -------------
Per Preferred
Security...... $ (2) $
Total........... $ (2) $
---------------------
(1) MP&L Capital and the Company have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended. See "Underwriting."
(2) In view of the fact that the entire proceeds of the sale of the
Preferred Securities will be used to purchase the Junior Subordinated
Debentures, the Underwriting Agreement provides that the Company will
pay to the Underwriters, as compensation for their arranging the
investment therein of such proceeds, $ per Preferred Security (or
$ in the aggregate). See "Underwriting."
(3) Expenses of the offering, which are payable by the Company, are
estimated to be $ .
---------------------
The Preferred Securities offered hereby are offered severally by the
Underwriters, as specified herein, and subject to receipt and acceptance by
them and subject to their right to reject any order in whole or in part.
It is expected that delivery of the Preferred Securities will be made only
in book-entry form through the facilities of DTC on or about ,
1996 against payment therefor in immediately available funds.
------------
*QUIPS is a service mark of Goldman, Sachs & Co.
GOLDMAN, SACHS & CO. PAINEWEBBER INCORPORATED
The date of this Prospectus is , 1996.
Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the Registration Statement
becomes effective. This prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of these
securities in any jurisdiction in which such offer, solicitation, or sale
would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
(cover continued)
Registered owners (the "Holders") of the Preferred Securities will be
entitled to receive preferential cumulative cash distributions accruing
from the date of original issuance and payable quarterly in arrears on the
last day of March, June, September and December of each year, commencing
, 1996, at the per annum rate of % of the liquidation preference
amount of $25 per Preferred Security (together, at any given time, with any
accrued but unpaid such amounts and interest thereon, if any,
"Distributions"). Interest on the Junior Subordinated Debentures is the
sole source of income for MP&L Capital from which payment of Distributions
on the Preferred Securities can be made. The Company has the right to
defer payments of interest on the Junior Subordinated Debentures by
extending the interest payment period thereon at any time or from time to
time for up to 20 consecutive quarters with respect to each deferral period
(each, an "Extension Period"), provided that any such Extension Period may
not extend beyond the maturity of the Junior Subordinated Debentures.
Upon the termination of any Extension Period and the payment of all amounts
then due, including interest on deferred interest payments, the Company may
select a new Extension Period, subject to the above requirements.
If interest payments on the Junior Subordinated Debentures are deferred,
Distributions on the Preferred Securities will also be deferred and the
Company will not be permitted, subject to certain exceptions set forth
herein, to (i) declare or pay dividends or distributions on (other than
dividends or distributions paid in shares of Common Stock of the Company)
or redeem, purchase, acquire or make a liquidation payment with respect to,
any of its capital stock, or (ii) make any payment of principal of,
interest or premium, if any, on, or repay, repurchase or redeem any
indebtedness that is pari passu with the Junior Subordinated Debentures
(including other Debt Securities, as defined herein) or make any guarantee
payment with respect to the foregoing. During an Extension Period,
quarterly Distributions on the Preferred Securities will continue to accrue
and Distributions that are in arrears will bear interest on the amount
thereof at the per annum rate of % (to the extent permitted by applicable
law, compounded quarterly), and Holders of Preferred Securities will be
required to accrue income for United States federal income tax purposes.
See "Description of the Junior Subordinated Debentures -- Option to Extend
Interest Payment Period" and "Certain United States Federal Income Tax
Consequences -- Potential Extension of Interest Payment Period and Original
Issue Discount." Any Extension Period with respect to payment of
interest on the Junior Subordinated Debentures, other Debt Securities (as
defined herein) or on any similar securities will apply to all such
securities and will also apply to Distributions with respect to the
Preferred Securities and all other securities with terms substantially the
same as the Preferred Securities. Based upon the Company's current
financial condition and, in light of the restriction on payment of
dividends on the Company's securities during an Extension Period, the
Company believes that an extension of a distribution payment period on the
Preferred Securities is currently unlikely and has no current intention to
cause such an extension. See "Description of the Preferred Securities --
Distributions."
The payment of Distributions and payments on liquidation of MP&L Capital
or the redemption of Preferred Securities, in each case out of moneys held
by MP&L Capital as set forth below, are guaranteed by the Company to the
extent MP&L Capital has sufficient funds available to make such payments
(the "Guarantee"). See "Description of the Guarantee." If the Company
fails to make interest payments on the Junior Subordinated Debentures held
by MP&L Capital, MP&L Capital will have insufficient funds to pay
Distributions on the Preferred Securities. The Guarantee does not cover
payment of Distributions when MP&L Capital does not have sufficient funds
to pay such Distributions. In such event, the remedy of a Holder of
Preferred Securities would be enforcement of the rights of MP&L Capital
under the Junior Subordinated Debentures held by MP&L Capital. See
"Description of the Preferred Securities -- Voting Rights." The Company's
obligations under the Guarantee are subordinate and junior in right of
payment to Senior Indebtedness of the Company except any liabilities that
may be made pari passu expressly by their terms. The Company has agreed in
an Agreement as to Expenses and Liabilities (the "Expense Agreement") to
provide funds to MP&L Capital as needed to pay obligations of MP&L Capital
to parties other than Holders of Trust Securities. The Junior Subordinated
Debentures and the Guarantee, together with the obligations of the Company
with respect to the Preferred Securities under the Indenture, the Trust
Agreement (each as defined herein) and the Expense Agreement constitute a
full and unconditional guarantee of the Preferred Securities by the
Company.
The Preferred Securities are subject to mandatory redemption upon
repayment of the Junior Subordinated Debentures at maturity or upon their
earlier redemption. See "Description of the Preferred Securities --
Redemption Procedures." The Company will have the option at any time on or
after , to redeem the Junior Subordinated Debentures, in
whole or in part. The Company also will have the option, upon the
occurrence and during the continuation of a Special Event (as defined
herein), (i) to redeem at any time the Junior Subordinated Debentures, in
whole but not in part, which will result in the redemption of all the Trust
Securities by MP&L Capital or (ii) to cause the termination of MP&L Capital
and, in connection therewith, after satisfaction of creditors of MP&L
(cover continued)
Capital, if any, to cause the distribution of Junior Subordinated
Debentures to the Holders of Preferred Securities and the Common
Securities. Any redemption of Trust Securities by MP&L Capital will be in
amounts having an aggregate liquidation preference amount equal to the
aggregate principal of Junior Subordinated Debentures to be redeemed and
will be at a redemption price equal to 100% of such liquidation preference
amount, plus accrued and unpaid Distributions, if any, to the redemption
date (the "Redemption Price"). Each class of the Trust Securities will be
redeemed in proportion to the percentage they represent of all the Trust
Securities. See "Description of the Junior Subordinated Debentures --
Optional Redemption."
The Junior Subordinated Debentures are subordinate and junior in right
of payment to all Senior Indebtedness (as defined herein) of the Company.
The terms of the Junior Subordinated Debentures place no limitation on the
amount of Senior Indebtedness that may be incurred by the Company. As of
December 31, 1995, the Company had approximately $790 million of principal
amount of indebtedness for borrowed money and capital lease obligations
constituting Senior Indebtedness (as defined herein). See "Description of
the Junior Subordinated Debentures -- Subordination" and "Description of
the Preferred Securities."
In the event of the liquidation of MP&L Capital, the Holders of the
Trust Securities will be entitled to receive either (i) Junior Subordinated
Debentures in an aggregate principal amount of $25 per Preferred Security
or (ii) a liquidation preference amount of $25 per Preferred Security, plus
accrued and unpaid Distributions thereon to the date of payment, subject to
certain limitations. See Description of the "Preferred Securities --
Liquidation Distribution upon Termination."
Application will be made to list the Preferred Securities on the New
York Stock Exchange (the "NYSE").
The Preferred Securities will be represented by global certificates
registered in the name of The Depository Trust Company (the "DTC") or its
nominee. Beneficial interests in the Preferred Securities will be shown
on, and transfers thereof will be effected only through, records maintained
by participants in DTC. Except as described herein, Preferred Securities
in certificated form will not be issued in exchange for the global
certificates. See "Description of the Preferred Securities -- Book-Entry
Only Issuance - The Depository Trust Company."
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
PREFERRED SECURITIES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON
THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "1934 Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the
following Regional Offices of the Commission: New York Regional Office, 7
World Trade Center, 13th Floor, New York, New York 10048; and Chicago
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material may also be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. The Company's Common Stock is
listed on the New York Stock Exchange. Reports and other information
concerning the Company may be inspected and copied at the office of such
Exchange at 20 Broad Street, New York, New York. In addition, certain of
the Company's preferred stocks are listed on the American Stock Exchange.
Reports and other information concerning the Company may be inspected and
copied at the office of such Exchange at 86 Trinity Place, New York, New
York.
No separate financial statements of MP&L Capital are included herein.
The Company considers that such financial statements would not be material
to Holders of the Preferred Securities because the Company is a reporting
company under the 1934 Act and MP&L Capital has no independent operations,
but exists for the sole purpose of issuing the Trust Securities and holding
as trust assets the Junior Subordinated Debentures.
MP&L Capital intends not to file separate reports under the 1934 Act
but must apply for and be granted relief by the Commission to avoid the
requirement to file such reports. The Junior Subordinated Debentures and
the Guarantee, together with the obligations of the Company with respect to
the Preferred Securities under the Indenture, the Trust Agreement and the
Expense Agreement constitute a full and unconditional guarantee of the
Preferred Securities by the Company. See "Description of the Junior
Subordinated Debentures -- Additional Interest" and "Description of the
Guarantee -- Events of Default."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Commission
pursuant to the 1934 Act, are hereby incorporated by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1994 (the "Company 1994 10-K") except for Items 7, 8
and 14(a)(1) thereof;
2. The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1995, June 30, 1995 and September 30, 1995;
3. The Company's Current Reports on Form 8-K dated January 5, 1995,
February 23, 1995, February 27, 1995 (as amended on Form 8-K/A
dated May 25, 1995), March 3, 1995, July 12, 1995 (as amended on
Form 8-K/A dated September 8, 1995), October 6, 1995, January 8,
1996, February 16, 1996 and March 11, 1996.
Each document filed subsequent to the date of this Prospectus pursuant
to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act prior to the
termination of the offering made by this Prospectus shall be deemed to be
incorporated by reference in this Prospectus and shall be a part hereof
from the date of filing of such document; provided, however, that the
documents enumerated above or subsequently filed by the Company pursuant to
Section 13 of the 1934 Act prior to the filing with the Commission of the
Company's most recent Annual Report on Form 10-K shall not be incorporated
by reference in this Prospectus or be a part hereof from and after the
filing of such Annual Report on Form 10-K. The documents which are
incorporated by reference in this Prospectus are sometimes hereinafter
referred to as the Incorporated 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 a statement
contained herein or in any other subsequently filed document which is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any document referred
to above which has been or may be incorporated in this Prospectus by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Requests for
such copies should be directed to: Shareholder Services, Minnesota Power,
30 West Superior Street, Duluth, Minnesota 55802, telephone number (218)
723-3974 or (800) 535-3056.
PROSPECTUS SUMMARY
The following is a summary of certain information contained herein and
should be read in conjunction with such information contained elsewhere in
this Prospectus and is subject to and qualified by reference to such
information. Capitalized terms used herein have the respective meanings
ascribed to them elsewhere in this Prospectus.
THE COMPANY
The Company was incorporated under the laws of the State of Minnesota
in 1906 and is a diversified electric utility engaged in the generation,
purchase, transmission, distribution and sale of electric energy wholly
within the state of Minnesota. The principal executive offices of the
Company are located at 30 West Superior Street, Duluth, Minnesota 55802;
and the telephone number is (218) 722-2641.
MP&L CAPITAL
MP&L Capital is a Delaware statutory business trust created for the
exclusive purposes of (i) issuing the Preferred Securities and Common
Securities representing undivided beneficial interests in the assets of
MP&L Capital, (ii) holding as trust assets the Junior Subordinated
Debentures and (iii) engaging in only those other activities necessary or
incidental thereto. Upon issuance of the Preferred Securities, the Holders
thereof will own all of the issued and outstanding Preferred Securities.
The Company has agreed to acquire Common Securities in an amount equal to
at least 3% of the total capital of MP&L Capital and will own all of the
issued and outstanding Common Securities.
DESCRIPTION OF PREFERRED SECURITIES AND JUNIOR SUBORDINATED DEBENTURES
The Preferred Securities are undivided preferred beneficial interests
in the assets of MP&L Capital and will have a preference, under certain
circumstances, with respect to cash Distributions and amounts payable on
liquidation, redemption or otherwise over the trust interests represented
by the Common Securities issued by MP&L Capital.
Holders of the Preferred Securities will be entitled to receive
cumulative cash Distributions accruing from the date of original issuance
and payable quarterly in arrears on the last day of March, June, September
and December of each year, commencing , 1996, at the per annum
rate of % of the liquidation preference amount thereof to the persons
in whose names the Preferred Securities are registered at the close of
business on the relevant record dates. Such Distributions will originally
accrue from, and include, the Closing Date and will accrue to, and include,
the first distribution payment date, and thereafter will accrue from, and
exclude, the last distribution payment date through which Distributions
have been paid. In the event that any date on which a distribution is
payable on the Preferred Securities is not a Business Day (as defined
herein), then such distribution will be made on the next succeeding
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.
MP&L Capital will hold Junior Subordinated Debentures in an aggregate
principal amount equal to the liquidation preference amount of the Trust
Securities. The Junior Subordinated Debentures are unsecured subordinated
debt securities issued under an Indenture dated as of , 1996,
between the Company and The Bank of New York, as Trustee (the "Indenture").
MP&L Capital will use interest payments on the Junior Subordinated
Debentures to make Distributions on the Preferred Securities. The Junior
Subordinated Debentures will be subordinate to all Senior Indebtedness of
the Company but are senior to all capital stock of the Company.
The Company has the right to defer payments of interest on the Junior
Subordinated Debentures during Extension Periods of up to 20 consecutive
quarters, provided that no single distribution payment period, as extended,
may exceed 20 consecutive quarterly interest payment periods or extend
beyond the maturity of the Junior Subordinated Debentures. Distributions
on the Preferred Securities will accrue with interest, compounded
quarterly, but will not be payable, during an Extension Period. The
Company may prepay at any time all or any portion of the interest accrued
during an Extension Period. Based upon the Company's current financial
condition and, in light of the restriction on payment of dividends during
an Extension Period, the Company believes that an extension of a
distribution payment period on the Preferred Securities is unlikely
and has no current intention to cause such an extension of a distribution
payment period. Upon the termination of any Extension Period and the
payment of all amounts then due, the Company may elect another Extension
Period. The Company will give MP&L Capital and the Debenture Trustee
notice of its election of an Extension Period prior to the earlier of
(i) one Business Day prior to the record date for the distribution which
would occur but for such election or (ii) the date the Company is required
to give notice to the NYSE or other applicable self-regulatory
organization of such record date and will cause MP&L Capital to send
notice of such election to the Holders of Preferred Securities.
If and to the extent the Company makes interest payments on the Junior
Subordinated Debentures deposited in MP&L Capital as trust assets, the
Property Trustee is obligated to make Distributions promptly on the
Preferred Securities. The payment of Distributions on the Preferred
Securities and payments on liquidation of MP&L Capital and the redemption
of Preferred Securities are guaranteed by the Company if and to the extent
that MP&L Capital has funds available therefor.
The Junior Subordinated Debentures are redeemable, in whole or in
part, on or after , or at any time upon the occurrence of a
Special Event and in certain other circumstances, at the option of the
Company. Upon redemption of the Junior Subordinated Debentures, the
Preferred Securities and the Common Securities will be redeemed on a pro
rata basis to the same extent as the Junior Subordinated Debentures are
redeemed.
Upon the occurrence and during the continuation of a Special Event,
the Company may elect (i) to redeem the Junior Subordinated Debentures at
any time, in whole but not in part, in which event all of the Trust
Securities will be redeemed or (ii) to cause the termination of MP&L
Capital, in which event, after the satisfaction of creditors of MP&L
Capital, if any, the Junior Subordinated Debentures will be distributed to
the Holders of the Preferred Securities and the Common Securities on a pro
rata basis. If at any time MP&L Capital is not or will not be taxed as a
grantor trust but a Tax Event in respect of the Preferred Securities has
not occurred, the Company has the right to terminate MP&L Capital and cause
the Junior Subordinated Debentures to be distributed to the Holders of the
Preferred Securities in liquidation of MP&L Capital. If the Junior
Subordinated Debentures are distributed to the Holders of the Preferred
Securities, the Company will use its best efforts to have the Junior
Subordinated Debentures listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities are then listed. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution."
The Company will guarantee payment, where applicable, of accrued and
unpaid Distributions, the Redemption Price and amounts due upon
liquidation, to the extent MP&L Capital has funds available therefor.
The Trust Agreement (as defined herein) provides that the Company
shall pay for all debts and obligations (other than with respect to the
Trust Securities) and all costs and expenses of MP&L Capital, including any
taxes and all costs and expenses with respect thereto, to which MP&L
Capital may become subject, except for United States withholding taxes.
No sinking fund will be established for the benefit of the Preferred
Securities.
RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review
the information contained elsewhere herein and should particularly consider
the following risk factors with respect to the Preferred Securities:
Ranking of Subordinated Obligations Under the Guarantee and the Junior
Subordinated Debentures
The Company's obligations under the Guarantee issued by the Company
for the benefit of the Holders of the Preferred Securities are unsecured
and rank subordinate and junior in right of payment to Senior Indebtedness
of the Company, except any liabilities that may be made pari passu
expressly by their terms. The obligations of the Company under the Junior
Subordinated Debentures are subordinate and junior in right of payment to
Senior Indebtedness of the Company. As of December 31, 1995, Senior
Indebtedness of the Company aggregated approximately $790 million. There
are no terms of the Preferred Securities, the Junior Subordinated
Debentures or the Guarantee that limit the Company's ability to incur
additional indebtedness, including indebtedness that would rank senior to
the Junior Subordinated Debentures and the Guarantee. See "Description of
the Guarantee -- Status of the Guarantee" and "Description of the Junior
Subordinated Debentures -- Subordination."
The ability of MP&L Capital to pay amounts due on the Preferred
Securities is solely dependent upon the Company making payments on the
Junior Subordinated Debentures as and when required.
Option to Extend Interest Payment Period; Tax Consequences
The Company has the right under the Indenture to extend the interest
payment period at any time and from time to time on the Junior Subordinated
Debentures, for a period not exceeding 20 consecutive quarters. As a
consequence of any such extension, quarterly Distributions on the Preferred
Securities would be deferred by MP&L Capital during such Extension Period,
but would continue to accumulate additional Distributions thereon at the
rate of % per annum. In the event that the Company exercises this
right, during any Extension Period the Company may not (i) declare or pay
dividends or distributions (other than dividends or distributions in Common
Stock of the Company) on, or redeem, purchase, acquire, or make a
liquidation payment with respect to any of its capital stock, or (ii) make
any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any indebtedness that is pari passu with the Junior
Subordinated Debentures (including other Debt Securities, as defined
herein) or make any guarantee payment with respect to the foregoing. Prior
to the termination of any such Extension Period, the Company may further
extend the interest payment period, provided that such Extension Period
together with all such previous and further extensions thereof may not
exceed 20 consecutive quarters and that such extended interest payment
period may not extend beyond the maturity date of the Junior Subordinated
Debentures. Any Extension Period with respect to payment of interest on the
Junior Subordinated Debentures, other Debt Securities or on any similar
securities will apply to all such securities and will also apply to
distributions with respect to the Preferred Securities and all other
securities with terms substantially the same as the Preferred Securities.
See "Description of the Preferred Securities -- Distributions" and
"Description of the Junior Subordinated Debentures -- Option to Extend
Interest Payment Period."
Because the Company has the right to extend the interest payment
period on the Junior Subordinated Debentures, the Junior Subordinated
Debentures will be treated as having been issued with original issue
discount ("OID") for United States federal income tax purposes. As a
result, Holders of Preferred Securities will be required to include in
their gross income Distributions as they accrue, rather than when they are
paid, regardless of the Holder's regular method of accounting. OID on the
Preferred Securities will be treated as interest and will generally be
equal to the Distributions on the Preferred Securities each year. Should
an Extension Period occur, a Holder of Preferred Securities will continue
to accrue interest (in the form of OID) in income in respect of its pro
rata share of the Junior Subordinated Debentures held by MP&L Capital for
United States federal income tax purposes. As a result, a Holder of
Preferred Securities will include such interest in gross income for United
States federal income tax purposes in advance of the receipt of cash, and
will not receive the cash related to such income from MP&L Capital if the
Holder disposes of the Preferred Securities prior to the record date for
the payment of Distributions. See "Certain United States Federal Income
Tax Considerations -- Potential Extension of Interest Payment Period and
Original Issue Discount."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, should the Company elect to exercise
such right in the future, the market price of the Preferred Securities is
likely to be affected. A Holder that disposes of its Preferred Securities
during an Extension Period, therefore, might not receive the same return on
its investment as a Holder that continues to hold its Preferred Securities.
In addition, as a result of the existence of the Company's right to defer
interest payments, the market price of the Preferred Securities (which
represent a preferred undivided beneficial interest in the Junior
Subordinated Debentures) may be more volatile than other securities on
which original issue discount accrues that do not have such rights.
Special Event Redemption or Distribution; Potential Adverse Effect on
Market Price
Upon the occurrence and continuation of a Special Event, the Company
has the right to (i) redeem the Junior Subordinated Debentures, in whole
but not in part, and therefore cause a mandatory redemption of all the
Preferred Securities at the Redemption Price within 90 days following the
occurrence of such Special Event or (ii) cause the termination of MP&L
Capital and, in connection therewith, after satisfaction of creditors of
MP&L Capital, if any, cause the Junior Subordinated Debentures to be
distributed to the Holders of Trust Securities at the Redemption Price
within 90 days following the occurrence of such Special Event. If at any
time MP&L Capital is not or will not be taxed as a grantor trust but a Tax
Event (as defined herein) in respect of the Preferred Securities has not
occurred, the Company has the right to terminate MP&L Capital and cause the
Junior Subordinated Debentures to be distributed to the Holders of the
Preferred Securities in liquidation of MP&L Capital. There can be no
assurance as to the market prices for the Junior Subordinated Debentures
which may be distributed in exchange for Preferred Securities if a
termination and liquidation of MP&L Capital were to occur. Accordingly,
such Junior Subordinated Debentures could, if distributed, trade at a
discount to the price of the Preferred Securities exchanged. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution" and "Certain United States Federal Income Tax Consequences."
On December 7, 1995, the U.S. Treasury Department proposed certain tax
law changes that, among other things, would generally deny interest
deductions to corporate issuers of debt if the debt instrument has a term
exceeding 20 years and is not reflected as indebtedness on the issuer's
balance sheet. As described in the Treasury Department's proposal, the
proposed changes would not affect the ability of the Company to deduct
interest on the Junior Subordinated Debentures because the term of the
Junior Subordinated Debentures is less than 20 years. However, there can
be no assurance that subsequent proposals or final legislation will not
affect the ability of the Company to deduct interest on the Junior
Subordinated Debentures, which in turn could give rise to a Tax Event, as
described more fully under "Description of the Preferred Securities --
Special Event Redemption or Distribution." Accordingly, there can be no
assurance that a Special Event will not occur.
There can be no assurance as to the market prices for Preferred
Securities or Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a dissolution or liquidation of MP&L
Capital were to occur. Accordingly, the Preferred Securities that an
investor may purchase, whether pursuant to the offer made hereby or in the
secondary market, or the Junior Subordinated Debentures that a Holder of
Preferred Securities may receive on termination and liquidation of the MP&L
Capital, may trade at a discount to the price that the investor paid to
purchase the Preferred Securities offered hereby. Because Holders of
Preferred Securities may receive Junior Subordinated Debentures upon the
occurrence of a Special Event, prospective purchasers of Preferred
Securities are also making an investment decision with regard to the Junior
Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution" and "Description of the Junior Subordinated Debentures --
General" in the accompanying Prospectus.
Rights Under the Guarantee; Limitation as to Funds Available to MP&L
Capital
The Guarantee will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Bank of
New York will act as indenture trustee under the Guarantee for the purposes
of compliance with the Trust Indenture Act (the "Guarantee Trustee") and
will hold the Guarantee for the benefit of the Holders of the Preferred
Securities. The Bank of New York will also act as trustee for the Junior
Subordinated Debentures and as Property Trustee under the Trust Agreement.
The Guarantee guarantees to the Holders of the Preferred Securities to
the extent not paid by MP&L Capital, the payment (but not the collection)
of (i) any accrued and unpaid Distributions required to be paid on the
Preferred Securities, to the extent MP&L Capital has funds available
therefor, (ii) the Redemption Price with respect to Preferred Securities
called for redemption by MP&L Capital, to the extent MP&L Capital has funds
available therefor and (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of MP&L Capital (unless the Junior Subordinated
Debentures are distributed to Holders of the Preferred Securities), the
lesser of (a) the aggregate of the liquidation preference amount and all
accrued and unpaid Distributions on the Preferred Securities to the date of
payment and (b) the amount of assets of MP&L Capital remaining available
for distribution to Holders of the Preferred Securities in liquidation of
MP&L Capital. The Holders of not less than a majority in aggregate
liquidation preference amount of the Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any
remedy available to the Guarantee Trustee or to direct the exercise of any
trust power conferred upon the Guarantee Trustee under the Guarantee. Any
Holder of Preferred Securities may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
instituting a legal proceeding against MP&L Capital, the Guarantee Trustee
or any other person or entity. If the Company were to default on its
obligations under the Junior Subordinated Debentures, MP&L Capital would
lack available funds for the payment of Distributions or amounts payable on
redemption of the Preferred Securities or otherwise, and in such event
Holders of the Preferred Securities would not be able to rely upon the
Guarantee for payment of such amounts. If the Property Trustee fails to
enforce its rights under the Junior Subordinated Debentures or the Trust
Agreement, any Holder of Preferred Securities may institute a legal
proceeding directly against the Company to enforce the Property Trustee's
rights under the Junior Subordinated Debentures or the Trust Agreement, to
the fullest extent permitted by law, without first instituting any legal
proceeding against the Property Trustee or any other person or entity. In
addition, a Holder of Preferred Securities may directly institute a
proceeding for enforcement of payment to such Holder directly of principal
of or interest on the Junior Subordinated Debentures having a principal
amount equal to the aggregate liquidation preference amount of the
Preferred Securities of such Holder on or after the due dates specified in
the Junior Subordinated Debentures. See "Description of the Guarantee --
Status of the Guarantee" and "Description of the Junior Subordinated
Debentures -- Subordination" herein. The Trust Agreement pursuant to which
MP&L Capital has been formed provides that each Holder of Preferred
Securities by acceptance thereof agrees to the provisions of the Guarantee
and the Indenture.
The Preferred Securities are subject to mandatory redemption upon
repayment of the Junior Subordinated Debentures at maturity or upon their
earlier redemption. See "Description of the Preferred Securities --
Redemption Procedures." The Company will have the option at any time on or
after upon not less than 45 days' notice, to redeem the
Junior Subordinated Debentures, in whole or in part.
Limited Voting Rights
Holders of Preferred Securities will generally have limited voting
rights relating only to the modification of the Preferred Securities and
the dissolution, winding-up or termination of MP&L Capital. Holders of
Preferred Securities will not be entitled to vote to appoint, remove or
replace the Property Trustee or the Delaware Trustee, which voting rights
are vested exclusively in the Holder of the Common Securities except upon
the occurrence of certain events described herein. The Administrative
Trustees and the Company may amend the Trust Agreement to ensure that MP&L
Capital will be classified for United States federal income tax purposes as
a grantor trust without the consent of Holders, even if such action
adversely affects the interests of Holders. See "Description of the
Preferred Securities -- Voting Rights", "-- Amendments" and "-- Co-Trustees
and Separate Property Trustees."
Trading Characteristics of Preferred Securities
The Preferred Securities constitute a new issue of securities with no
established trading market. While the Company will apply to list the
Preferred Securities on the NYSE, a minimum of 400 beneficial holders and
1,000,000 outstanding securities is required for listing a new class of
securities on the NYSE. Accordingly, no assurance can be given as to the
liquidity of, or the development and maintenance of trading markets for,
the Preferred Securities. If approved for listing, the Preferred
Securities may trade at a price that does not fully reflect the value of
accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A Holder that disposes of Preferred Securities
between record dates for payments of Distributions thereon will be required
to include accrued but unpaid interest on the Junior Subordinated
Debentures through the date of disposition in income as ordinary income and
to add such amount to such Holder's adjusted tax basis in such Holder's pro
rata share of the underlying Junior Subordinated Debentures deemed disposed
of. To the extent the selling price is less than such Holder's adjusted
tax basis (which will include, in the form of OID, all accrued and unpaid
interest), such Holder will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary
income for United States federal income tax purposes. See "Certain United
States Federal Income Tax Consequences -- Potential Extension of Interest
Payment Period and Original Issue Discount" and "-- Sale, Exchange and
Redemption of the Preferred Securities."
THE COMPANY
The Company is an operating public utility incorporated under the laws
of the State of Minnesota since 1906. Its principal executive office is at
30 West Superior Street, Duluth, Minnesota 55802, and its telephone number
is (218) 722-2641. The Company has operations in four business segments:
(1) electric operations, which include electric and gas services, and coal
mining; (2) water operations, which include water and wastewater services;
(3) automobile auctions, which also include a finance company and an auto
transport company; and (4) investments, which include real estate
operations, a 22.1 percent equity investment in a financial guaranty
reinsurance company, and a securities portfolio. As of December 31, 1995,
the Company and its subsidiaries had approximately 5,600 employees.
SUMMARY OF EARNINGS PER SHARE
YEAR ENDED DECEMBER 31,
------------------------
1993 1994 1995
---- ---- ----
CONSOLIDATED EARNINGS PER SHARE
Continuing Operations $ 2.27 $ 1.99 $ 2.06
Discontinued Operations(*) (.07) .07 .10
------ ------ ------
Total $ 2.20 $ 2.06 $ 2.16
PERCENTAGE OF EARNINGS BY BUSINESS SEGMENT
Continuing Operations
Electric Operations 63% 63% 61%
Water Operations 4 23 ( 2)
Automobile Auctions - - 0
Investments 36 11 36
Discontinued Operations(*) ( 3) 3 5
---- ---- ----
100% 100% 100%
==== ==== ====
------------------------
(*) On June 30,1995, the Company sold its interest in its paper and pulp
business to Consolidated Papers, Inc. ("CPI") for $118 million in
cash, plus CPI's assumption of certain debt and lease obligations.
The Company is still committed to a maximum guarantee of $90 million
to ensure a portion of a $33.4 million annual lease obligation for
paper mill equipment under an operating lease extending to 2012. CPI
has agreed to indemnify the Company for any payments the Company may
make as a result of the Company's obligation relating to this
operating lease.
Electric Operations
Electric operations generate, transmit, distribute and sell electricity.
The Company provides electricity to 122,000 customers in northern
Minnesota, while the Company's wholly owned subsidiary, Superior Water,
Light and Power Company, sells electricity to 14,000 customers and natural
gas to 11,000 customers, and provides water to 10,000 customers in
northwestern Wisconsin. Another wholly owned subsidiary, BNI Coal, Ltd.
("BNI Coal") owns and operates a lignite mine in North Dakota. Two
electric generating cooperatives, Minnkota Power Cooperative, Inc. and
Square Butte Electric Cooperative ("Square Butte"), presently consume
virtually all of BNI Coal's production of lignite coal under coal supply
agreements extending to 2027. Under an agreement with Square Butte, the
Company purchases 71 percent of the output from the Square Butte unit which
is capable of generating up to 470 megawatts.
In 1995 large industrial customers contributed about half of the
Company's electric operating revenue. The Company has large power
contracts to sell power to eleven industrial customers (five taconite
producers, five paper companies and a pipeline company) each requiring 10
megawatts or more of power. These contracts, which have termination dates
ranging from April 1997 to December 2005, require the payment of minimum
monthly demand charges that cover most of the fixed costs, including a
return on common equity, associated with having the capacity available to
serve these customers.
Water Operations
Water operations include Southern States Utilities, Inc. ("SSU") and
Heater Utilities, Inc. ("Heater"), both wholly owned subsidiaries of the
Company. SSU is the largest private water supplier in Florida. At
December 31, 1995, SSU provided water to 117,000 customers and wastewater
treatment services to 53,000 customers in Florida. At December 31, 1995,
Heater provided water to 26,000 customers and wastewater treatment services
to 3,000 customers in North Carolina and South Carolina. These water
operations have been upgrading existing facilities and building new
facilities.
Responding to a Florida Supreme Court decision addressing the issue of
retroactive ratemaking with respect to another company, on March 5, 1996,
the Florida Public Service Commission ("FPSC") voted to reconsider an
October 1995 order (the "Refund Order") which would have required SSU to
refund about $10 million, including interest, to customers who paid more
since October 1993 under uniform rates than they would have paid under
stand-alone rates. Under the Refund Order, the collection of the $10
million from customers who paid less under uniform rates would not be
permitted. The Refund Order was in response to the Florida First District
Court of Appeals reversal in April 1995 of the 1993 FPSC order which
approved uniform rates for most of SSU's service areas in Florida. With
"uniform rates," all customers in the uniform rate areas pay the same rates
for water and wastewater services. Uniform rates are an alternative to
"stand-alone" rates which are calculated based on the cost of serving each
service area. The FPSC will reconsider the Refund Order at an undetermined
date. SSU continues to believe that it would be improper for the FPSC to
order a refund to one group of customers without permitting recovery of a
similar amount from the remaining customers since the First District Court
of Appeals affirmed SSU's total revenue requirement for operations in
Florida. No provision for refund has been recorded.
In June 1995 SSU filed a request with the FPSC for an $18.1 million
annual increase in water and wastewater treatment rates. On November 1,
1995, the FPSC denied SSU's original $12 million interim rate request for
two reasons: (1) it was based on uniform rates which were deemed improper
by a court order subsequent to the SSU's original filing, and (2) the FPSC
had not yet formulated a policy on allowable investments and expenses to be
included in a forward-looking interim test year. SSU submitted additional
information to support interim rate approval of $12 million based on a
forward-looking test year and $8.4 million based on a historical test year.
On January 4, 1996, the FPSC permitted SSU to implement an interim rate
increase (based on a historical test year) of $7.9 million, on an
annualized basis, over revenue previously collected under a uniform rate
structure. Interim rates went into effect on January 23, 1996. Final
rates are anticipated to become effective in the fourth quarter of 1996.
Autmobile Auctions
The Company has an 83 percent ownership interest in ADESA Corporation
("ADESA"), the third largest automobile auction business in the United
States. ADESA, headquartered in Indianapolis, Indiana, owns and operates
19 automobile auctions in the United States and Canada through which used
cars and other vehicles are sold to franchised automobile dealers and
licensed used car dealers. Two wholly owned subsidiaries of ADESA,
Automotive Finance Company and ADESA Auto Transport, perform related
services. Sellers at ADESA's auctions include domestic and foreign auto
manufacturers, car dealers, fleet/lease companies, banks and finance
companies.
The Company acquired 80 percent of ADESA on July 1, 1995, for $167
million in cash. Proceeds from the sale of the paper and pulp business
combined with proceeds from the sale of securities investments were used to
fund this acquisition. Acquired goodwill and other intangible assets
associated with this acquisition are being amortized on a straight line
basis over periods not exceeding 40 years. In January 1996 the Company
provided an additional $15 million of capital in exchange for 1,982,346
original issue common stock shares of ADESA. This capital contribution
increased the Company's ownership interest in ADESA to 83 percent. Put and
call agreements with ADESA's four top managers provide ADESA management the
right to sell to the Company, and the Company the right to purchase, ADESA
management's 17 percent retained ownership interest in ADESA, in increments
during the years 1997, 1998 and 1999, at a price based on ADESA's financial
performance.
Investments
The Company owns 80 percent of Lehigh Acquisition Corporation, a real
estate company which owns various real estate properties and operations in
Florida.
The Company has a 22.1 percent equity investment in Capital Re
Corporation ("Capital Re"). Capital Re is a Delaware holding company
engaged primarily in financial and mortgage guaranty reinsurance through
its wholly owned subsidiaries, Capital Reinsurance Company and Capital
Mortgage Reinsurance Company. Capital Reinsurance Company is a reinsurer
of financial guarantees of municipal and non-municipal debt obligations.
Capital Mortgage Reinsurance Company is a reinsurer of residential mortgage
guaranty insurance. The Company's equity investment in Capital Re at
December 31, 1995, was $93 million.
As of December 31, 1995, the Company had approximately $106 million
invested in a securities portfolio. The majority of the securities are
investment grade stocks of other utility companies and are considered by
the Company to be conservative investments. Additionally, the Company
sells common stock securities short and enters into short sales of treasury
futures contracts as part of an overall investment portfolio hedge
strategy.
MP&L CAPITAL
MP&L Capital is a statutory business trust created under Delaware law
pursuant to (i) a trust agreement executed by the Company, as depositor for
MP&L Capital, the Property Trustee, the Delaware Trustee (each as defined
herein) and an Administrative Trustee, an employee of the Company (together
with such other Administrative Trustees from time to time appointed by the
Company, the "Administrative Trustees") of such trust (the "Original Trust
Agreement") and (ii) the filing of a certificate of trust with the Delaware
Secretary of State on February 15, 1996. Such trust agreement will be
amended and restated in its entirety (as so amended and restated, the
"Trust Agreement") substantially in the form filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. The Trust
Agreement will be qualified as an indenture under the Trust Indenture Act.
MP&L Capital exists for the exclusive purposes of (i) issuing Trust
Securities representing undivided beneficial interests in the assets of
MP&L Capital, (ii) holding the Junior Subordinated Debentures as trust
assets and (iii) engaging in only those other activities necessary or
incidental thereto. All of the Common Securities will be owned by the
Company. The Common Securities will rank pari passu, and payments will be
made thereon pro rata, with the Preferred Securities, except that upon the
occurrence and continuance of a default under the Indenture, the rights of
the Holder of the Common Securities to payment in respect of Distributions
and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the Holders of the Preferred Securities. The
Company will acquire Common Securities having an aggregate liquidation
preference amount equal to 3% of the total capital of MP&L Capital. MP&L
Capital has a term of approximately 25 years, but may terminate earlier as
provided in the Trust Agreement. MP&L Capital's business and affairs will
be conducted by the Administrative Trustees. The office of the Delaware
Trustee in the State of Delaware is White Clay Center, Route 273, Newark,
Delaware 19711. The principal place of business of MP&L Capital is c/o
Minnesota Power & Light Company, 30 West Superior Street, Duluth, Minnesota
55802.
MINNESOTA POWER & LIGHT COMPANY
SUMMARY FINANCIAL INFORMATION
HISTORICAL PRO FORMA (1)
--------------------------- -----------------
YEAR ENDED DECEMBER 31,
1993 1994 1995 1994 1995
---- ---- ---- ---- ----
(In thousands except per share amounts)
INCOME STATEMENT DATA:
Operating revenue
and income $582,495 $582,167 $672,917 $674,696 $729,674
Income
Continuing
operations $ 64,374 $ 59,465 $ 61,857 $ 61,771 $ 61,422
Discontinued
operations (1,753) $ 1,868 $ 2,848 $ 1,868 $ 2,848
-------- -------- -------- -------- --------
Net Income $ 62,621 $ 61,333 $ 64,705 $ 63,639 $ 64,270
Earnings per share
of common stock
Continuing
operations $ 2.27 $ 1.99 $ 2.06 $ 2.07 $ 2.04
Discontinued
operations $ (.07) $ .07 $ .10 $ .07 $ .10
-------- -------- -------- -------- --------
Total $ 2.20 $ 2.06 $ 2.16 $ 2.14 $ 2.14
DECEMBER 31, 1995 PERCENT
----------------- -------
(In thousands)
BALANCE SHEET DATA:
Common stock equity $ 584,072 46%
Preferred stock not subject to mandatory
redemption 28,547 2
Preferred stock subject to mandatory
redemption 20,000 2
Long-term debt (excluding current maturities) $ 639,548 50
---------- ----
Total capitalization $1,272,167 100%
RATIOS OF EARNINGS TO FIXED CHARGES (2)
YEAR ENDED DECEMBER 31,
-----------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
Ratios of Earnings to Fixed Charges 2.55 2.60 2.52 2.17 1.90
SUPPLEMENTAL RATIOS OF EARNINGS TO FIXED CHARGES (2)(3)
YEAR ENDED DECEMBER 31,
-----------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
Supplemental Ratios of Earnings to
Fixed Charges 2.20 2.25 2.19 1.95 1.73
RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS (2)
YEAR ENDED DECEMBER 31,
-----------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
Ratios of Earnings to Fixed Charges
and Preferred Dividends 2.32 2.38 2.32 2.03 1.76
SUPPLEMENTAL RATIOS OF EARNINGS TO FIXED CHARGES
AND PREFERRED DIVIDENDS (2)(3)
YEAR ENDED DECEMBER 31,
-----------------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
Supplemental Ratios of Earnings to
Fixed Charges and Preferred
Dividends 2.04 2.10 2.05 1.84 1.63
----------
(1) Presents unaudited pro forma consolidated results as if ADESA was
acquired on January 1, 1994. See Note 3 to the Company's Consolidated
Financial Statements in the Company's Form 8-K dated February 16, 1996,
incorporated herein by reference.
(2) Ratios for prior periods have been restated to reflect discontinued
operations.
(3) The supplemental ratio of earnings to fixed charges includes the
Company's obligation under a contract with Square Butte which extends
through 2007, pursuant to which the Company is purchasing 71 percent of the
output of a generating unit capable of generating up to 470 megawatts. The
Company is obligated to pay Square Butte all of Square Butte's leasing,
operating and debt service costs (less any amounts collected from the sale
of power or energy to others) that shall not have been paid by Square Butte
when due. See Note 12 to the Company's Consolidated Financial Statements
in the Company's Form 8-K dated February 16, 1996, incorporated herein by
reference.
USE OF PROCEEDS
The proceeds to be received by MP&L Capital from the sale of the
Preferred Securities will be used to purchase Junior Subordinated
Debentures of the Company. The proceeds of such purchase will be applied
by the Company for general corporate purposes, which may include the
acquisition of outstanding securities of the Company.
DESCRIPTION OF THE PREFERRED SECURITIES
MP&L Capital was authorized and created by the Original Trust Agreement.
The Preferred Securities and the Common Securities will be created pursuant
to the terms of the Trust Agreement. The Preferred Securities will
represent undivided beneficial interests in the assets of MP&L Capital and
entitle the Holders thereof to a preference over the Common Securities in
certain circumstances with respect to Distributions and amounts payable on
redemption or liquidation, as well as other benefits as described in the
Trust Agreement. The following summaries of certain provisions of the
Trust Agreement do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, the provisions of the Trust
Agreement, including the definitions therein of certain terms, and the
Trust Indenture Act. Wherever particular sections or defined terms of the
Trust Agreement are referred to, such sections or defined terms are
incorporated herein by reference. The Trust Agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a
part.
General
All of the Common Securities are owned by the Company. The Common
Securities will rank pari passu, and payments will be made thereon pro
rata, with the Preferred Securities based on the liquidation preference
amount of the Trust Securities, except as described under "Subordination of
Common Securities." (Section 4.03). The Junior Subordinated Debentures
will be owned by MP&L Capital and held by the Property Trustee in trust for
the benefit of the Holders of the Trust Securities. (Section 2.09). The
Junior Subordinated Debentures and the Guarantee, together with the
obligations of the Company with respect to the Preferred Securities under
the Indenture, the Trust Agreement and the Expense Agreement constitute a
full and unconditional guarantee of the Preferred Securities by the
Company.
Distributions
The Distributions payable on the Preferred Securities will be fixed at a
rate per annum of % of the stated liquidation preference amount
thereof. The term "Distributions" as used herein includes interest payable
on overdue Distributions, unless otherwise stated. The amount of
Distributions payable for any period will be computed on the basis of a
360-day year of twelve 30-day months and for any period shorter than a full
month, on the basis of the actual number of days elapsed.
(Section 4.01(b)). Distributions that are in arrears will bear interest on
the amount thereof at the per annum rate of % (to the extent permitted
by applicable law, compounded quarterly).
Distributions on the Preferred Securities will be cumulative, will
accrue from the date of initial issuance thereof, and will be payable
quarterly in arrears, on March 31, June 30, September 30 and December 31 of
each year, commencing , 1996, except as otherwise described
below. Such Distributions will originally accrue from, and include, the
date of initial issuance and will accrue to, and include, the first
distribution payment date, and thereafter will accrue from, and exclude,
the last distribution payment date through which Distributions have been
paid. In the event that any date on which Distributions are otherwise
payable on the Preferred Securities is not a Business Day, payment of the
distribution payable on such date will be made on the next succeeding
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, payment of such distribution shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on such date (each date on which Distributions are
otherwise payable in accordance with the foregoing, a distribution payment
date). (Section 4.01(a)). A Business Day is used herein to mean any day
other than a Saturday or a Sunday or a day on which banking institutions in
The City of New York are authorized or required by law or executive order
to remain closed or a day on which the Corporate Trust Office of the
Property Trustee or the Debenture Trustee (as defined herein) is closed for
business.
The Company has the right under the Indenture pursuant to which it will
issue the Junior Subordinated Debentures to extend the interest payment
period at any time or from time to time on the Junior Subordinated
Debentures to a period not exceeding 20 consecutive quarters, with the
consequence that quarterly Distributions on the Preferred Securities would
be deferred (but would continue to accrue with interest payable on unpaid
Distributions at the rate per annum set forth above, compounded quarterly)
by MP&L Capital during any such Extension Period. In the event that the
Company exercises this right, during such period the Company may not
(i) declare or pay dividends or distributions (other than dividends or
distributions in Common Stock of the Company) on, or redeem, purchase,
acquire, or make a liquidation payment with respect to any of its capital
stock, or (ii) make any payment of principal of, interest or premium, if
any, on, or repay, repurchase or redeem any indebtedness that is pari passu
with the Junior Subordinated Debentures (including other Debt Securities)
or make any guarantee payment with respect to the foregoing. Prior to the
termination of any such Extension Period, the Company may further extend
the interest payment period, provided that such Extension Period together
with all such previous and further extensions thereof may not exceed 20
consecutive quarters and that such Extension Period may not extend beyond
the maturity date of the Junior Subordinated Debentures. Any Extension
Period with respect to payment of interest on the Junior Subordinated
Debentures, other Debt Securities or on any similar securities will apply
to all such securities and will also apply to Distributions with respect to
the Preferred Securities and all other securities with terms substantially
the same as the Preferred Securities. Upon the termination of any
Extension Period and the payment of all amounts then due, the Company may
select a new extended interest payment period, subject to the foregoing
requirements. See "Description of the Junior Subordinated Debentures --
Interest" and "-- Option to Extend Interest Payment Period."
It is anticipated that the income of MP&L Capital available for
distribution to the Holders of the Preferred Securities will be limited to
payments on the Junior Subordinated Debentures to be purchased by MP&L
Capital with the proceeds of the sale of the Preferred Securities. See
"Description of the Junior Subordinated Debentures." If the Company does
not make interest payments on the Junior Subordinated Debentures, the
Property Trustee will not have funds available to pay Distributions on the
Preferred Securities and the Common Securities. The payment of
Distributions (if and to the extent MP&L Capital has sufficient funds
available for the payment of such Distributions) is guaranteed by the
Company as set forth herein under "Descriptions of the Guarantee."
Distributions on the Preferred Securities will be payable to the Holders
thereof as they appear on the register of MP&L Capital on the relevant
record dates, which as long as the Preferred Securities remain in book-
entry form, will be one Business Day prior to the relevant Distribution
Date. Subject to any applicable laws and regulations and the Trust
Agreement, each such payment will be made as described under "-- Book-Entry
Only Issuance - The Depository Trust Company." In the event any Preferred
Securities are not in book-entry form, the relevant record date for such
Preferred Securities shall be the date 15 days prior to the relevant
Distribution Date or if such date is not a Business Day, the next
succeeding Business Day. (Section 4.01(d)).
Redemption
The Junior Subordinated Debentures will mature on December 31, 2015, and
the Company has the right to redeem the Junior Subordinated Debentures
(a) in whole or in part, on or after , or (b) at any time, in
whole but not in part, upon the occurrence of a Tax Event or an Investment
Company Event (each, as defined below, a "Special Event"), subject to the
conditions described under "Description of the Junior Subordinated
Debentures -- Optional Redemption."
Mandatory Redemption
Upon the repayment of the Junior Subordinated Debentures, whether at
maturity or upon earlier redemption as provided in the Indenture, the
proceeds from such repayment shall be applied by the Property Trustee to
redeem a Like Amount (as defined herein) of Trust Securities, upon not less
than 30 nor more than 60 days' notice, at the Redemption Price. See
"Description of the Junior Subordinated Debentures -- Optional Redemption."
Special Event Redemption or Distribution
If a Special Event shall occur and be continuing with respect to the
Preferred Securities, the Company has the right to (i) redeem the Junior
Subordinated Debentures in whole, but not in part, and therefore cause a
mandatory redemption of all the Preferred Securities at the Redemption
Price within 90 days following the occurrence of such Special Event, or
(ii) cause the termination of MP&L Capital and in connection therewith,
after satisfaction of MP&L creditors, if any, cause the Junior Subordinated
Debentures to be distributed to the Holders of the Trust Securities at the
Redemption Price within 90 days following the occurrence of such Special
Event. If at any time MP&L Capital is not or will not be taxed as a
grantor trust but a Tax Event has not occurred, the Company has the right
to terminate MP&L Capital and cause the Junior Subordinated Debentures to
be distributed to the holders of the Preferred Securities in liquidation of
MP&L Capital. See "Certain United States Federal Income Tax Consequences -
- Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of
MP&L Capital." If the Company does not elect either option (i) or (ii)
above, the Preferred Securities will remain outstanding and, in the event a
Tax Event has occurred and is continuing, Additional Interest (as defined
below) will be payable on the Junior Subordinated Debentures.
"Like Amount" means (i) with respect to a redemption of Trust
Securities, Preferred Securities and Common Securities, each in amounts
having a liquidation value equal to the proportion all such securities have
to the liquidation value of all the Trust Securities, together having an
aggregate liquidation value equal to the principal amount of Junior
Subordinated Debentures to be contemporaneously redeemed in accordance with
the Indenture, the proceeds of which are to be used to pay the Redemption
Price of such Trust Securities and (ii) with respect to a distribution of
Junior Subordinated Debentures to Holders of Trust Securities in connection
with a liquidation of MP&L Capital upon the occurrence of a Special Event
or the bankruptcy, termination or liquidation of the Company or an order
for judicial termination of MP&L Capital having been entered by a court of
competent jurisdiction, Junior Subordinated Debentures having a principal
amount equal to the liquidation value of the Trust Securities of the
Holders to which such Junior Subordinated Debentures are distributed.
"Tax Event" means the receipt by MP&L Capital of an opinion of counsel
(which may be counsel to the Company or an affiliate but not an employee
thereof and which must be acceptable to the Property Trustee) experienced
in such matters to the effect that, as a result of 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 affecting taxation, or as a result
of any official administrative or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective
or such pronouncement or decision is announced on or after the date of
original issuance of the Preferred Securities, there is more than an
insubstantial risk that (i) MP&L Capital is, or will be within 90 days of
the date thereof, subject to United States federal income tax with respect
to income received or accrued on the Junior Subordinated Debentures, (ii)
interest payable by the Company on the Junior Subordinated Debentures, is
not, or within 90 days of the date thereof, will not be, deductible, in
whole or in part, for United States federal income tax purposes, or (iii)
MP&L Capital is, or will be within 90 days of the date thereof, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
"Investment Company Event" means the occurrence of a change in law or
regulation or a change in interpretation or application of law or
regulation by any legislative body, court, governmental agency or
regulatory authority ("Change in 1940 Act Law") to the effect that MP&L
Capital is or will be considered an "investment company" that is required
to be registered under the Investment Company Act of 1940, as amended,
which Change in 1940 Act Law becomes effective on or after the date of
original issuance of the Preferred Securities.
On December 7, 1995, the U.S. Treasury Department proposed certain tax
law changes that, among other things, would generally deny interest
deductions to corporate issuers of debt if the debt instrument has a term
exceeding 20 years and is not reflected as indebtedness on the issuer's
balance sheet. As described in the Treasury Department's proposal, the
proposed changes would not affect the ability of the Company to deduct
interest on the Junior Subordinated Debentures, because the term of the
Junior Subordinated Debentures is less than 20 years. However, there can
be no assurance that subsequent proposals or final legislation will not
affect the ability of the Company to deduct interest on the Junior
Subordinated Debentures, which in turn could give rise to a Tax Event.
Accordingly, there can be no assurance that a Special Event will not occur.
On the date fixed for any distribution of Junior Subordinated
Debentures, upon termination of MP&L Capital (i) the Preferred Securities
and the Common Securities will no longer be deemed to be outstanding, (ii)
DTC or its nominee, as the record holder of such Preferred Securities, will
receive a registered global certificate or certificates representing the
Junior Subordinated Debentures to be delivered upon such distribution and
(iii) certificates representing Preferred Securities will be deemed to
represent Junior Subordinated Debentures having an aggregate principal
amount equal to the stated liquidation preference amount of, and bearing
accrued and unpaid interest equal to accrued and unpaid Distributions on,
such Preferred Securities until such certificates are presented to the
Company or its agent for transfer or reissuance.
There can be no assurance as to the market price for the Junior
Subordinated Debentures which may be distributed in exchange for Preferred
Securities if a termination and liquidation of MP&L Capital were to occur.
Accordingly, the Junior Subordinated Debentures which an investor may
subsequently receive on termination and liquidation of MP&L Capital, may
trade at a discount to the price of the Preferred Securities exchanged. If
the Junior Subordinated Debentures are distributed to the Holders of
Preferred Securities upon the dissolution of MP&L Capital, the Company will
use its best efforts to list the Junior Subordinated Debentures on the NYSE
or on such other exchange on which the Preferred Securities are then
listed.
Redemption Procedures
The Company may not redeem fewer than all the Junior Subordinated
Debentures and MP&L Capital may not redeem fewer than all the outstanding
Preferred Securities unless all accrued and unpaid Distributions have been
paid on all Preferred Securities for all quarterly distribution periods
terminating on or prior to the date of redemption or if a partial
redemption of the Preferred Securities would result in the delisting of
the Preferred Securities by any national securities exchange on which the
Preferred Securities are then listed.
Preferred Securities redeemed on each Redemption Date shall be redeemed
at the Redemption Price with the proceeds from the contemporaneous
redemption of Junior Subordinated Debentures. Redemptions of the Preferred
Securities shall be made and the Redemption Price shall be deemed payable
on each date selected for redemption (the "Redemption Date") only to the
extent that MP&L Capital has funds available for the payment of such
Redemption Price. (Section 4.02(c)). See also "Subordination of Common
Securities."
If MP&L Capital gives a notice of redemption in respect of Preferred
Securities (which notice will be irrevocable), then, on or before the
Redemption Date, MP&L Capital will irrevocably deposit with DTC funds
sufficient to pay the applicable Redemption Price and will give DTC
irrevocable instructions and authority to pay the Redemption Price to the
beneficial holders of such Preferred Securities. If such Preferred
Securities are no longer in book-entry form, MP&L Capital, to the extent
funds are available, will irrevocably deposit with the paying agent for
such Preferred Securities funds sufficient to pay the applicable Redemption
Price and will give such paying agent irrevocable instructions and
authority to pay the Redemption Price to the Holders thereof upon surrender
of their certificates evidencing such Preferred Securities.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Preferred Securities called for redemption shall be
payable to the Holders of such Preferred Securities on the relevant record
dates for the related distribution payment dates. If notice of redemption
shall have been given and funds deposited as required, then on the
Redemption Date, all rights of Holders of such Preferred Securities so
called for redemption will cease, except the right of the Holders of such
Preferred Securities to receive the Redemption Price, but without interest
thereon, and such Preferred Securities will cease to be outstanding. In
the event that any date fixed for redemption of Preferred Securities is not
a Business Day, then payment of the amount 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). In the event that
payment of the Redemption Price in respect of Preferred Securities called
for redemption is improperly withheld or refused and not paid either by
MP&L Capital or by the Company pursuant to the Guarantee described herein
under "Description of the Guarantee", Distributions on such Preferred
Securities will continue to accrue at the then applicable rate, from the
original Redemption Date to the date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes
of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Company may at any time and from time to time
purchase outstanding Preferred Securities by tender, in the open market or
by private agreement.
If less than all the Trust Securities are to be redeemed on a Redemption
Date, then the aggregate liquidation preference of such securities to be
redeemed shall be allocated on a pro rata basis to the Common Securities
and the Preferred Securities. The particular Preferred Securities to be
redeemed shall be selected not more than 60 days prior to the Redemption
Date by the Property Trustee from the outstanding Preferred Securities not
previously called for redemption, by such method as the Property Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of Preferred Securities in liquidation preference amounts equal
to $25 or integral multiples thereof. The Property Trustee shall promptly
notify the security registrar in writing of the Preferred Securities
selected for redemption and, in the case of any Preferred Securities
selected for partial redemption, the liquidation preference amount thereof
to be redeemed. For all purposes of the Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the liquidation
preference amount of Preferred Securities that has been or is to be
redeemed. (Section 4.02(f)).
Subordination of Common Securities
Payment of Distributions on, and the Redemption Price of, the Trust
Securities, shall be made pro rata based on the Liquidation Amount of the
Trust Securities; provided, however, that if on any distribution payment
date or Redemption Date an Event of Default under the Indenture (as
described below, see "Events of Default; Notice") under the Trust Agreement
shall have occurred and be continuing, no payment of any Distribution on,
or Redemption Price of, any Common Security, and no other payment on
account of the redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all accrued and
unpaid Distributions on all outstanding Preferred Securities for all
distribution periods terminating on or prior thereto, or in the case of
payment of the Redemption Price, the full amount of such Redemption Price
on all outstanding Preferred Securities, shall have been made or provided
for, and all funds available to the Property Trustee shall first be applied
to the payment in full, in cash, of all Distributions on, or Redemption
Price of, Preferred Securities then due and payable. (Section 4.03(a)).
In the case of any default under the Trust Agreement resulting from an
Event of Default under the Indenture, the Company as Holder of the Common
Securities will be deemed to have waived any such default under the Trust
Agreement until the effect of all such Defaults with respect to the
Preferred Securities have been cured, waived or otherwise eliminated.
Until any such default under such Trust Agreement with respect to the
Preferred Securities has been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the Holders of the Preferred
Securities and not the Holders of the Common Securities, and only Holders
of Preferred Securities will have the right to direct the Property Trustee
to act on their behalf. (Section 4.03(b)).
Liquidation Distribution upon Termination
Pursuant to the Trust Agreement, MP&L Capital shall terminate and shall
be liquidated by the Property Trustee on the first to occur of: (i)
December 31, 2020, the expiration of the term of MP&L Capital; (ii) the
bankruptcy, dissolution or liquidation of the Company; (iii) the redemption
of all of the Preferred Securities, (iv) the termination and liquidation of
MP&L Capital upon (a) the occurrence of a Special Event or (b) in the event
MP&L Capital is not or will not be taxed as a grantor trust under the
United States federal income tax law, but a Tax Event has not occurred,
and, in either such case, the Company as Depositor has given written
direction to the Property Trustee to terminate MP&L Capital within 90 days
of such event (which direction is optional and wholly within the discretion
of the Company as Depositor) and (v) an order for judicial termination of
MP&L Capital having been entered by a court of competent jurisdiction.
(Sections 9.01 and 9.02).
If an early termination occurs as described in clause (ii), (iii), (iv)
or (v) above, MP&L Capital shall be liquidated by the Property Trustee as
expeditiously as the Property Trustee determines to be appropriate by
adequately providing for the satisfaction of liabilities of creditors, if
any, and by distributing to each Holder of Preferred Securities and Common
Securities a Like Amount of Junior Subordinated Debentures, unless such
distribution is determined by the Property Trustee not to be practical, in
which event such Holders will be entitled to receive, out of the assets of
MP&L Capital available for distribution to Holders after adequate
provision, as determined by the Property Trustee, has been made for the
satisfaction of liabilities of creditors, if any, an amount equal to, in
the case of Holders of Preferred Securities, the aggregate liquidation
preference of the Preferred Securities 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 MP&L Capital has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then the amounts payable
directly by MP&L Capital on the Preferred Securities shall be paid on a pro
rata basis. The Company, as Holder of the Common Securities, will be
entitled to receive Distributions upon any such termination pro rata with
the Holders of the Preferred Securities, except that if default has
occurred and is continuing under the Indenture, the Preferred Securities
shall have a preference over the Common Securities. (Sections 9.04(a) and
9.04(d)). If an early termination occurs as described in clause (v) above,
the Junior Subordinated Debentures will be subject to optional redemption
in whole but not in part.
Events of Default; Notice
Any one of the following events constitutes an Event of Default under
the Trust Agreement (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 801 of
the Indenture (see "Description of the Junior Subordinated Debentures --
Events of Default"); or
(ii) default by MP&L Capital in the payment of any distribution when
it becomes due and payable, and continuation of such default for a
period of 30 days; or
(iii) default by MP&L Capital in the payment of any Redemption Price,
of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Trustees in the Trust Agreement
(other than a covenant or warranty a default in the performance of which
or the breach of which is specifically 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
the Property Trustee by the Holders of Preferred Securities having at
least 10% of the total liquidation preference amount of the outstanding
Preferred 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 thereunder; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to MP&L Capital;
Within five Business Days after the occurrence of any Event of Default,
the Property Trustee shall transmit to the Holders of Trust Securities and
the Company notice of any such Event of Default actually known to the
Property Trustee, unless such Event of Default shall have been cured or
waived.
Merger or Consolidation of the Property Trustee or the Delaware Trustee
Any entity into which the Property Trustee or the Delaware Trustee may
be merged or with which it may be consolidated, or any entity resulting
from any merger, conversion or consolidation to which the Property Trustee
or the Delaware Trustee shall be a party, or any entity succeeding to all
or substantially all the corporate trust business of the Property Trustee
or the Delaware Trustee, shall be the successor to the Property Trustee or
the Delaware Trustee under the Trust Agreement, provided such entity shall
be otherwise qualified and eligible. (Section 8.12).
Book-Entry Only Issuance -- The Depository Trust Company
The Depository Trust Company (the "DTC") will act as securities
depositary for all of the Preferred Securities. The Preferred Securities
will be issued only as fully-registered securities registered in the name
of Cede & Co. ("DTC's nominee"). One or more fully-registered global
Preferred Securities certificates, representing the aggregate number of
Preferred Securities, will be issued and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and
a "clearing agency" registered pursuant to the provisions of Section 17A of
the 1934 Act. DTC holds securities that its participants ("Participants")
deposit with DTC. DTC also facilitates the settlement among Participants
of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement
of securities certificates. Direct Participants include securities brokers
and dealers, banks, trust companies, clearing corporations and certain
other organizations ("Direct Participants"). DTC is owned by a number of
its Direct Participants and by the New York Stock Exchange, the American
Stock Exchange, Inc., and the National Association of Securities Dealers,
Inc. Access to the DTC system is also available to others, such as
securities brokers and dealers, banks and trust companies that clear
transactions through or maintain a direct or indirect custodial
relationship with a Direct Participant ("Indirect Participants"). The
rules applicable to DTC and its Direct Participants and Indirect
Participants are on file with the Commission.
Purchases of Preferred Securities within the DTC system must be made by
or through Direct Participants, which will receive a credit for the
Preferred Securities on DTC's records. The ownership interest of each
actual purchaser of each Preferred Security (the "Beneficial Owner") is in
turn to be recorded on the Participants' records. Beneficial Owners will
not receive written confirmation from DTC of their purchases, but
Beneficial Owners are expected to receive written confirmations providing
details of the transactions, as well as periodic statements of their
holdings, from the Participants through which the Beneficial Owners
purchased Preferred Securities. Transfers of ownership interests in the
Preferred Securities are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will
not receive certificates representing their ownership interests in the
Preferred Securities, except in the event that use of the book-entry system
for the Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Preferred Securities
deposited by Direct Participants with DTC are registered in the name of
DTC's nominee, Cede & Co. The deposit of Preferred Securities with DTC and
their registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the
Preferred Securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Preferred Securities are credited,
which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of
their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by
Participants to Beneficial Owners will be governed by arrangements among
them, subject to any statutory or regulatory requirements that may be in
effect from time to time.
Redemption notices shall be sent to Cede & Co. as the registered Holder
of Preferred Securities. If less than all of the Preferred Securities are
being redeemed, DTC's current practice is to determine by lot the amount of
the interest of each Direct Participant in such issue to be redeemed.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will
itself consent or vote with respect to Preferred Securities. Under its
usual procedures, DTC would mail an Omnibus Proxy to MP&L Capital as soon
as possible after the record date. The Omnibus Proxy assigns Cede & Co.
consenting or voting rights to those Direct Participants to whose accounts
the Preferred Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy). The Company and MP&L Capital
believe that the arrangements among DTC, Direct and Indirect Participants,
and Beneficial Owners will enable the Beneficial Owners to exercise rights
equivalent in substance to the rights that can be directly exercised by a
holder of a beneficial interest in MP&L Capital.
Distribution payments on the Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payments
on such payment date. Payments by Participants to Beneficial Owners will
be governed by standing instructions and customary practices, as is the
case with securities held for the account of customers in bearer form or
registered in "street name," and such payments will be the responsibility
of such Participant and not of DTC, the Property Trustee, MP&L Capital or
the Company, subject to any statutory or regulatory requirements to the
contrary that may be in effect from time to time. Payment of Distributions
to DTC is the responsibility of MP&L Capital, disbursement of such payments
to Direct Participants is the responsibility of DTC, and disbursement of
such payments to the Beneficial Owners is the responsibility of
Participants.
Except as provided herein, a Beneficial Owner will not be entitled to
receive physical delivery of Preferred Securities. Accordingly, each
Beneficial Owner must rely on the procedures of DTC to exercise any rights
under the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice
to MP&L Capital and the Company. Under such circumstances, in the event
that a successor securities depositary is not obtained, Preferred
Securities certificates are required to be printed and delivered.
Additionally, the Administrative Trustees (with the consent of the Company)
may decide to discontinue use of the system of book-entry transfers through
DTC (or any successor depositary) with respect to the Preferred Securities.
In that event, certificates for the Preferred Securities will be printed
and delivered.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Company and MP&L Capital
believe to be reliable, but neither the Company nor MP&L Capital takes
responsibility for the accuracy thereof.
Voting Rights
Holders of Trust Securities shall be entitled to one vote for each $25
in liquidation preferences represented by their Trust Securities in respect
of any matter as to which such Holders of Trust Securities are entitled to
vote. Except as described below and under "-- Amendments," and under
"Description of the Guarantee -- Amendments and Assignment" and as
otherwise required by law and the Trust Agreement, the Holders of the
Preferred Securities will have no voting rights. (Section 6.01(a)).
So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Property Trustee shall not (i) direct the time, method and
place of conducting any proceeding for any remedy available to the
Debenture Trustee, or executing any trust or power conferred on the
Debenture Trustee with respect to the Junior Subordinated Debentures, (ii)
waive any past default which is waivable under Section 813 of the
Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all the Junior Subordinated Debentures shall be due and
payable or (iv) consent to any amendment, modification or termination of
the Indenture or the Junior Subordinated Debentures, where such consent
shall be required, without, in each case, obtaining the prior approval of
the Holders of Preferred Securities having of at least 66 2/3% of the
liquidation preference amount of the outstanding Preferred Securities;
provided, however, that where a consent under the Indenture would require
the consent of each Holder of Junior Subordinated Debentures affected
thereby, no such consent shall be given by the Property Trustee without the
prior consent of each Holder of Preferred Securities. The Property Trustee
shall not revoke any action previously authorized or approved by a vote of
the Preferred Securities. If the Property Trustee fails to enforce its
rights under the Junior Subordinated Debentures or the Trust Agreement, any
Holder of Preferred Securities may institute a legal proceeding directly
against the Company to enforce the Property Trustee's rights under the
Junior Subordinated Debentures or the Trust Agreement, to the fullest
extent permitted by law, without first instituting any legal proceeding
against the Property Trustee or any other person or entity. The Property
Trustee shall notify all Holders of the Preferred Securities of any notice
of default received from the Debenture Trustee. In addition to obtaining
the foregoing approvals of the Holders of the Preferred Securities, prior
to taking any of the foregoing actions, the Property Trustee shall receive
an opinion of counsel experienced in such matters to the effect that MP&L
Capital will be classified as a "grantor trust" and will not be classified
as an association taxable as a corporation for United States federal income
tax purposes on account of such action. (Section 6.01(b)). In addition, a
Holder of Preferred Securities may institute a proceeding for enforcement
of payment to such Holder directly of principal of or interest on the
Junior Subordinated Debentures having a principal amount equal to the
aggregate liquidation preference amount of the Preferred Securities of such
Holder on or after the due dates specified in the Junior Subordinated
Debentures.
Any required approval of Holders of Preferred Securities may be given at
a separate meeting of Holders of Preferred Securities convened for such
purpose or pursuant to written consent. The Administrative Trustees will
cause a notice of any meeting at which Holders of Preferred Securities are
entitled to vote, or of any matter upon which action by written consent of
such Holders is to be taken, to be given to each Holder of Preferred
Securities in the manner set forth in the Trust Agreement. (Section 6.02).
No vote or consent of the Holders of Preferred Securities will be
required for MP&L Capital to redeem and cancel Preferred Securities in
accordance with the Trust Agreement.
Notwithstanding that Holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Company, the Property Trustee or
any affiliate of the Company or the Property Trustee, shall, for purposes
of such vote or consent, be treated as if they were not outstanding.
Amendments
The Trust Agreement may be amended from time to time by MP&L Capital (on
approval of a majority of the Administrative Trustees) and the Company,
without the consent of any Holders of 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, however, that any such amendment shall 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
MP&L Capital will not be classified for United States federal income tax
purposes as an association taxable as a corporation at any time that any
Trust Securities are outstanding or to ensure MP&L Capital's exemption from
the status of an "investment company" under the Investment Company Act of
1940, as amended (the "1940 Act"); provided, however, that, except in the
case of clause (ii), such action shall not adversely affect in any material
respect the interests of any Holder of Trust Securities and, in the case of
clause (i), any amendments of the Trust Agreement shall become effective
when notice thereof is given to the Holders of Trust Securities.
Except as provided below, any provision of the Trust Agreement may be
amended by the Trustees and the Company with (i) the consent of Holders of
Trust Securities representing not less than a majority in liquidation
preference of the Trust Securities then outstanding and (ii) receipt by the
Trustees of an opinion of counsel to the effect that such amendment or the
exercise of any power granted to the Trustees in accordance with such
amendment will not affect MP&L Capital's status as a grantor trust for
United States federal income tax purposes or affect MP&L Capital's
exemption from status of an "investment company" under the 1940 Act.
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 with respect to 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 or (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.
Removal of Property Trustee
Unless an Event of Default under the Indenture shall have occurred and
be continuing, the Property Trustee may be removed at any time by act of
the Holder of the Common Securities. If an Event of Default under the
Indenture has occurred and is continuing, the Property Trustee may be
removed at such time by act of the Holders of Preferred Securities having a
majority of the liquidation preference of the Preferred Securities. In no
event will the Holders of the Preferred Securities have the right to vote
to appoint, remove or replace the Administrative Trustees, which voting
rights are vested exclusively in the Company as the Holder of the Common
Securities. No resignation or removal of the Property Trustee and no
appointment of a successor trustee shall be effective until the acceptance
of appointment by the successor Property Trustee in accordance with the
provisions of the Trust Agreement. (Section 8.10).
Co-trustees and Separate Property Trustee
Unless an Event of Default under the Indenture shall have occurred and
be continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture 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, the Company, 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-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 the Company, 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 an Event of Default under the Indenture has
occurred and is continuing, the Property Trustee alone shall have power to
make such appointment. (Section 8.09).
Form, Exchange, and Transfer
Preferred Securities will be issuable only in fully registered form each
having a liquidation preference amount of $25 and any integral multiple
thereof.
At the option of the Holder, subject to the terms of the Trust
Agreement, Preferred Securities will be exchangeable for other Preferred
Securities, of any authorized denomination and of like tenor and aggregate
liquidation preference.
Subject to the terms of the Trust Agreement, Preferred Securities may be
presented for exchange as provided above or for registration of transfer
(duly endorsed or accompanied by a duly executed instrument of transfer) at
the office of the Transfer Agent designated for such purpose. The
Administrative Trustees may designate the Company as Transfer Agent and as
Registrar. No service charge will be made for any registration of transfer
or exchange of Preferred Securities, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. Such transfer or exchange will be effected upon the
Transfer Agent being satisfied with the documents of title and identity of
the person making the request. The Administrative Trustees may at any time
designate additional Transfer Agents or rescind the designation of any
Transfer Agent or approve a change in the office through which any Transfer
Agent acts.
MP&L Capital will not be required to (i) issue, register the transfer
of, or exchange any Preferred Securities during a period beginning at the
opening of business 15 calendar days before the day of mailing of a notice
of redemption of any Preferred Securities called for redemption and ending
at the close of business on the day of such mailing or (ii) register the
transfer of or exchange any Preferred Securities so selected for
redemption, in whole or in part, except the unredeemed portion of any such
Preferred Securities being redeemed in part.
Registrar and Transfer Agent
Initially, The Bank of New York will act as Registrar and Transfer Agent
for the Preferred Securities.
Registration of transfers of Preferred Securities will be effected
without charge by or on behalf of MP&L Capital, but upon payment (with the
giving of such indemnity as MP&L Capital or the Company may require) in
respect of any tax or other governmental charges which may be imposed in
relation to it.
MP&L Capital will not be required to register or cause to be registered
any transfer of Preferred Securities after they have been called for
redemption except the unredeemed portion of any Preferred Securities being
redeemed in part.
Concerning the Property Trustee
The Company maintains deposit accounts and conducts other banking
transactions with the Property Trustee in the ordinary course of their
businesses. The Property Trustee also acts as the Guarantee Trustee under
the Guarantee, the Debenture Trustee under the Indenture and trustee under
the Company's Mortgage and Deed of Trust with respect to all of the
electric generating plants and other materially important physical
properties of the Company and substantially all other properties described
in the Mortgage as owned by the Company, subject to certain exceptions.
Miscellaneous
Application will be made to list the Preferred Securities on the New
York Stock Exchange.
The Delaware Trustee will act as the resident trustee in the State of
Delaware and will have no other significant duties. The Property Trustee
will hold the Junior Subordinated Debentures on behalf of MP&L Capital and
will maintain a payment account with respect to the Trust Securities, and
will also act as trustee under the Trust Agreement for the purposes of the
Trust Indenture Act. See "Events of Default; Notice." The Administrative
Trustees will administer the day to day operations of MP&L Capital. See
"Voting Rights."
The Administrative Trustees are authorized and directed to conduct the
affairs of MP&L Capital and to operate MP&L Capital so that MP&L Capital
will not be deemed to be an "investment company" required to be registered
under the 1940 Act or taxed as a corporation for United States federal
income tax purposes and so that the Junior Subordinated Debentures will be
treated as indebtedness of the Company for United States federal income tax
purposes. In this connection, the Administrative Trustees and the Company
are authorized to take any action, not inconsistent with applicable law,
the certificate of trust or the Trust Agreement, that the Administrative
Trustees and the Company determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially
adversely affect the interests of the Holders of the Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar
rights.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee
that will be executed and delivered by the Company for the benefit of the
Holders from time to time of Preferred Securities. The Guarantee will be
qualified as an indenture under the Trust Indenture Act. The Bank of New
York will act as Guarantee Trustee under the Guarantee for the purposes of
compliance with the Trust Indenture Act. The terms of the Guarantee will
be those set forth in such Guarantee and those made part of such Guarantee
by the Trust Indenture Act. The 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 Guarantee, which is filed as an exhibit
to the Registration Statement of which this Prospectus forms a part, and
the Trust Indenture Act. The Guarantee Trustee will hold the Guarantee for
the benefit of the Holders of the Preferred Securities.
General
The Company will fully and unconditionally agree, to the extent set
forth herein, to pay the Guarantee Payments (as defined herein) in full to
the Holders of the Preferred Securities (except to the extent paid by or on
behalf of MP&L Capital), as and when due, regardless of any defense, right
of set-off or counterclaim that the Company may have or assert. The
following payments with respect to the Preferred Securities, to the extent
not paid by or on behalf of MP&L Capital (the "Guarantee Payments"), will
be subject to the Guarantee (without duplication): (i) any accrued and
unpaid Distributions required to be paid on the Preferred Securities, to
the extent the Property Trustee has available in the payment account
sufficient funds to make such payment, (ii) the Redemption Price with
respect to any Preferred Securities called for redemption by MP&L Capital,
to the extent the Property Trustee has available in the payment account
sufficient funds to make such payment and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of MP&L Capital (other
than in connection with a redemption of all of the Preferred Securities),
the lesser of (a) the aggregate of the liquidation preference amount and
all accrued and unpaid Distributions on the Preferred Securities to the
date of payment and (b) the amount of assets of MP&L Capital remaining
available for distribution to Holders of Preferred Securities in
liquidation of MP&L Capital. The Company's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Company to the Holders of Preferred Securities or by causing MP&L Capital
to pay such amounts to such Holders.
The Guarantee will be a guarantee with respect to the Preferred
Securities issued by MP&L Capital from the time of issuance of the
Preferred Securities, but will not apply to (i) any payment of
Distributions if and to the extent that MP&L Capital does not have funds
available to make such payments, or (ii) collection of payment. If the
Company does not make interest payments on the Junior Subordinated
Debentures held by MP&L Capital, MP&L Capital will not have funds available
to pay Distributions on the Preferred Securities. The Guarantee will rank
subordinate and junior in right of payment to all liabilities of the
Company (except those made pari passu by their terms). See "Status of the
Guarantee." The Company has agreed in the Expense Agreement to provide
funds to MP&L Capital as needed to pay obligations of MP&L Capital to
parties other than Holders of Trust Securities. The Junior Subordinated
Debentures and the Guarantee, together with the obligations of the Company
with respect to the Preferred Securities under the Indenture, the Trust
Agreement, the Guarantee and the Expense Agreement constitute a full and
unconditional guarantee of the Preferred Securities by the Company. No
single document standing alone or operating in conjunction with fewer than
all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a
full and unconditional guarantee by the Company of the Preferred
Securities.
Amendments and Assignment
Except with respect to any changes that do not materially adversely
affect the rights of Holders of Preferred Securities (in which case no vote
will be required), the terms of the Guarantee may be changed only with the
prior approval of the Holders of Preferred Securities having at least 66
2/3% of the liquidation preference amount of the outstanding Preferred
Securities. All guarantees and agreements contained in the Guarantee shall
bind the successors, assigns, receivers, trustees and representatives of
the Company and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding.
Events of Default
An event of default under the Guarantee will occur upon the failure of
the Company to perform any of its payment obligations thereunder. The
Holders of Preferred Securities having a majority of the liquidation
preference of the Preferred Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of the Guarantee or to direct the exercise
of any trust or power conferred upon the Guarantee Trustee under the
Guarantee.
Any Holder of Preferred Securities may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee
without first instituting a legal proceeding against MP&L Capital, the
Guarantee Trustee or any other person or entity.
The Company, as Guarantor, will be required to provide annually to the
Guarantee Trustee a statement as to the performance by the Company of
certain of its obligations under the Guarantee and as to any default in
such performance and an officer's certificate as to the Company's
compliance with all conditions under the Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, prior to the occurrence of a default by the
Company in performance of the Guarantee, has undertaken to perform only
such duties as are specifically set forth in the Guarantee and, after
default with respect to the Guarantee, must exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her
own affairs. Subject to this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by the Guarantee at
the request of any Holder of Preferred Securities unless it is offered
reasonable indemnity against the costs, expenses and liabilities that might
be incurred thereby. See "Description of the Preferred Securities --
Concerning the Property Trustee."
Termination of the Guarantee
The Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of all Preferred Securities, the
distribution of Junior Subordinated Debentures to Holders of Preferred
Securities in exchange for all of the Preferred Securities or full payment
of the amounts payable upon liquidation of MP&L Capital. The Guarantee
will continue to be effective or will be reinstated, as the case may be, if
at any time any Holder of Preferred Securities must restore payment of any
sums paid under the Preferred Securities or the Guarantee.
Status of the Guarantee
The Guarantee will constitute an unsecured obligation of the Company and
will rank (i) subordinate and junior in right of payment to all liabilities
of the Company (except liabilities that may be made pari passu by their
terms), (ii) pari passu with the most senior preferred or preference stock
now or hereafter issued by the Company and with any guarantee now or
hereafter entered into by the Company in respect of any preferred or
preference stock of any affiliate of the Company and (iii) senior to the
Company's common stock. The Trust Agreement provides that each Holder of
Preferred Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Guarantee.
The Guarantee will constitute a guarantee of payment and not of
collection (i.e., 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).
Governing Law
The Guarantee will be governed by and construed in accordance with the
laws of the State of New York.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the specific terms of the Junior
Subordinated Debentures which MP&L Capital will hold as trust assets. The
following description does not purport to be complete and is qualified in
its entirety by reference to the description in the Indenture between the
Company and the Trustee with respect to the Junior Subordinated Debentures
(the "Debenture Trustee"), which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. Whenever particular
provisions or defined terms in the Indenture are referred to herein, such
provisions or defined terms are incorporated by reference herein. Section
references used herein are references to provisions of the Indenture unless
otherwise noted.
The Indenture provides for the issuance of debentures (including the
Junior Subordinated Debentures), notes or other evidence of indebtedness by
the Company (each a "Debt Security") in an unlimited amount from time to
time. The Junior Subordinated Debentures constitute a separate series
under the Indenture.
General
The Junior Subordinated Debentures will be limited in aggregate
principal amount to the sum of the aggregate liquidation preference amount
of the Preferred Securities and the consideration paid by the Company for
the Common Securities and will have terms similar to the terms of the
Preferred Securities. The Junior Subordinated Debentures are unsecured,
subordinated obligations of the Company which rank junior to all of the
Company's Senior Indebtedness. The Junior Subordinated Debentures will
bear interest at the same rate, payable at the same times, as the
distributions payable on the Trust Securities, and will have a maturity and
redemption provisions correlative to those of the Trust Securities.
The entire outstanding principal amount of the Junior Subordinated
Debentures will become due and payable, together with any accrued and
unpaid interest thereon, including Additional Interest (as defined herein),
if any, on December 31, 2015. The amounts payable as principal and
interest on the Junior Subordinated Debentures will be sufficient to
provide for payment of Distributions payable on the Trust Securities.
The Articles of Incorporation of the Company limit the amount of
unsecured indebtedness with a maturity of more than one year that the
Company may create or assume, without the consent of the Holders of a
majority of the total number of shares of preferred stock then outstanding,
to not more than 25% of the aggregate of the sum of the principal amount of
the secured indebtedness of the Company and the capital stock and surplus
of the Company as stated on the Company's books of account. At December
31, 1995, the Company could have issued approximately $249 million of
unsecured indebtedness (such as the Junior Subordinated Debentures) without
violating this provision.
Also under the Articles of Incorporation, the creation or assumption
of unsecured indebtedness with a maturity of more than one year requires
that net earnings available for the payment of interest for 12 consecutive
out of the preceding 15 months be at least twice the annual interest
requirements on all outstanding indebtedness of the Company, including the
indebtedness to be created or assumed. At December 31, 1995, the Company
could have issued an additional $141 million of unsecured indebtedness,
including the Junior Subordinated Debentures, at an assumed annual interest
rate of 7.75%, without violating this provision.
If Junior Subordinated Debentures are distributed to Holders of
Preferred Securities in a termination of MP&L Capital, such Junior
Subordinated Debentures will be issued in fully registered certificated
form in denominations of $25 and integral multiples thereof and may be
transferred or exchanged at the offices described below.
Payments of principal and interest on Junior Subordinated Debentures
will be payable, the transfer of Junior Subordinated Debenture will be
registrable, and Junior Subordinated Debentures will be exchangeable for
Junior Subordinated Debentures of other denominations of a like aggregate
principal amount, at the corporate trust office of the Debenture Trustee in
The City of New York; provided that payment of interest may be made at the
option of the Company by check mailed to the address of the persons
entitled thereto and that the payment in full of principal with respect to
any Junior Subordinated Debenture will be made only upon surrender of such
Junior Subordinated Debenture to the Debenture Trustee.
Optional Redemption
On or after , the Company will have the right, at any
time and from time to time, to redeem the Junior Subordinated Debentures,
in whole or in part, at a redemption price equal to 100% of the principal
amount of the Junior Subordinated Debentures being redeemed, together with
any accrued but unpaid interest, including Additional Interest, if any, to
the Redemption Date.
If a Special Event shall occur and be continuing, the Company shall have
the right to redeem the Junior Subordinated Debentures, in whole but not in
part, at a redemption price equal to 100% of the principal amount of Junior
Subordinated Debentures then outstanding plus any accrued and unpaid
interest, including Additional Interest, if any, to the Redemption Date.
The Junior Subordinated Debentures will be subject to optional redemption
in whole but not in part upon the termination and liquidation of MP&L
Capital pursuant to an order for the dissolution, termination or
liquidation of MP&L Capital entered by a court of competent jurisdiction.
For so long as MP&L Capital is the Holder of all the outstanding Junior
Subordinated Debentures, the proceeds of any such redemption will be used
by MP&L Capital to redeem Preferred Securities and Common Securities in
accordance with their terms. The Company may not redeem less than all the
Junior Subordinated Debentures unless all accrued and unpaid interest
(including any Additional Interest) has been paid in full on all
outstanding Junior Subordinated Debentures for all quarterly interest
periods terminating on or prior to the date of redemption.
Any optional redemption of Junior Subordinated Debentures shall be made
upon not less than 30 nor more than 60 days' notice from the Debenture
Trustee to the Holders of Junior Subordinated Debentures, as provided in
the Indenture. All notices of redemption shall state the Redemption Date,
the redemption price plus accrued and unpaid distributions, if less than
all the Junior Subordinated Debentures are to be redeemed, the
identification of those to be redeemed and the portion of the principal
amount of any Junior Subordinated Debentures to be redeemed in part; that
on the Redemption Date, subject to the Debenture Trustee's receipt of the
redemption monies, the redemption price plus accrued and unpaid
distributions will become due and payable upon each such Junior
Subordinated Debentures to be redeemed and that interest thereon will cease
to accrue on and after said date; and the place or places where such
securities are to be surrendered for payment of the redemption price plus
accrued and unpaid distributions.
Interest
The Junior Subordinated Debentures shall bear interest at the rate of
% per annum. Such interest is payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year (each, an "Interest
Payment Date"), commencing , 1996, to the person in whose name
each Junior Subordinated Debenture is registered, by the close of business
on the Business Day 15 days preceding such Interest Payment Date. It is
anticipated that MP&L Capital will be the sole Holder of the Junior
Subordinated Debentures.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months and for any period shorter
than a full month, on the basis of the actual number of days elapsed
(Section 310). In the event that any date on which interest is payable on
the Junior Subordinated Debentures is not a Business Day, then payment of
the interest payable on such date will be made on the next succeeding day
which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day is in the
next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and
effect as if made on the date the payment was originally payable (Section
113).
Option to Extend Interest Payment Period
The Company has the right under the Indenture to extend the interest
payment period from time to time on the Junior Subordinated Debentures to a
period not exceeding 20 consecutive quarters during which period interest
will be compounded quarterly. At the end of an Extension Period, the
Company must pay all interest then accrued and unpaid (together with
interest thereon at the rate specified for the Junior Subordinated
Debentures compounded quarterly, to the extent permitted by applicable
law). However, during any such Extension Period, the Company shall not (i)
declare or pay any dividend or distribution (other than a dividend or
distribution in Common Stock of the Company) on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital
stock or (ii) make any payment of principal of, interest or premium, if
any, on, or repay, repurchase or redeem any indebtedness that is pari passu
with the Junior Subordinated Debentures (including other Debt Securities),
or make any guarantee payments with respect to the foregoing. Prior to the
termination of any such Extension Period, the Company may further extend
the interest payment period, provided that such Extension Period together
with all such previous and further extensions thereof shall not exceed 20
consecutive quarters at any one time or extend beyond the maturity date of
the Junior Subordinated Debentures. Any extension period with respect to
payment of interest on the Junior Subordinated Debentures, other Debt
Securities or on any similar securities will apply to all such securities
and will also apply to Distributions with respect to the Preferred
Securities and all other securities with terms substantially the same as
the Preferred Securities. Upon the termination of any such Extension
Period and the payment of all amounts then due, the Company may select a
new Extension Period, subject to the above requirements. No interest shall
be due and payable during an Extension Period, except at the end thereof.
The Company will give MP&L Capital and the Debenture Trustee notice of its
election of an Extension Period prior to the earlier of (i) one Business
Day prior to the record date for the distribution which would occur but for
such election or (ii) the date the Company is required to give notice to
the NYSE or other applicable self-regulatory organization of the record
date and will cause MP&L Capital to send notice of such election to the
Holders of Preferred Securities.
Additional Interest
So long as any Preferred Securities remain outstanding, if MP&L Capital
would be required to pay, with respect to its income derived from the
interest payments on the Junior Subordinated Debentures any amounts for or
on account of any taxes, duties, assessments or governmental charges of
whatever nature imposed by the United States, or any other taxing
authority, then, in any such case, the Company will pay as interest on such
Junior Subordinated Debentures such additional interest (the "Additional
Interest") as may be necessary in order that the net amounts received and
retained by MP&L Capital after the payment of such taxes, duties,
assessments or governmental charges shall result in the MP&L Capital's
having such funds as it would have had in the absence of the payment of
such taxes, duties, assessments or governmental charges.
Defeasance
The principal amount of any series of Debt Securities issued under the
Indenture will be deemed to have been paid for purposes of the Indenture
and the entire indebtedness of the Company in respect thereof will be
deemed to have been satisfied and discharged, if there shall have been
irrevocably deposited with the Debenture Trustee or any paying agent, in
trust: (a) money in an amount which will be sufficient, or (b) in the case
of a deposit made prior to the maturity of the Junior Subordinated
Debentures, Government Obligations (as defined herein), which do not
contain provisions permitting the redemption or other prepayment thereof at
the option of the issuer thereof, the principal of and the interest on
which when due, without any regard to reinvestment thereof, will provide
moneys which, together with the money, if any, deposited with or held by
the Debenture Trustee, will be sufficient, or (c) a combination of (a) and
(b) which will be sufficient, to pay when due the principal of and premium,
if any, and interest, if any, due and to become due on the Debt Securities
of such series that are outstanding. For this purpose, Government
Obligations, include direct obligations of, or obligations unconditionally
guaranteed by, the United States of America entitled to the benefit of the
full faith and credit thereof and certificates, depositary receipts or
other instruments which evidence a direct ownership interest in such
obligations or in any specific interest or principal payments due in
respect thereof.
It is possible that for United States federal income tax purposes any
deposit contemplated in the preceding paragraph could be treated as a
taxable exchange of the Junior Subordinated Debentures outstanding for an
issue of obligations of MP&L Capital or a direct interest in the cash and
securities held by MP&L Capital. In that case, Holders of the Junior
Subordinated Debentures outstanding would recognize a gain or loss for
federal income tax purposes, as if their share of MP&L Capital obligations
or the cash or securities deposited, as the case may be, had actually been
received by them in exchange for their Junior Subordinated Debentures. In
addition, such Holders thereafter would be required to include in income a
share of the income, gain or loss of MP&L Capital. The amount so required
to be included in income could be different from the amount that would be
includable in the absence of such deposit. Prospective investors are urged
to consult their own tax advisors as to the specific consequences to them
of any such deposit.
Subordination
The Junior Subordinated Debentures will be subordinate and junior in
right of payment to all Senior Indebtedness of the Company to the extent
provided in the Indenture. No payment of principal of (including
redemption and sinking fund payments), or interest on, the Junior
Subordinated Debentures may be made (i) upon the occurrence of certain
events of bankruptcy, insolvency or reorganization, (ii) if any Senior
Indebtedness is not paid when due, (iii) if any other default has occurred
pursuant to which the Holders of Senior Indebtedness have accelerated the
maturity thereof and with respect to (ii) and (iii), such default has not
been cured or waived, or (iv) if the maturity of any series of Debt
Securities has been accelerated, because of an event of default with
respect thereto, which remains uncured. Upon any payment or distribution
of assets of the Company to creditors upon any dissolution, winding-up,
liquidation or reorganization, whether voluntary or involuntary or in
bankruptcy, insolvency, receivership or other proceedings, all principal
of, and premium, if any, and interest due or to become due on, all Senior
Indebtedness must be paid in full before the Holders of the Junior
Subordinated Debentures are entitled to receive or retain any payment
thereon. (Section 1502). Subject to the prior payment of all Senior
Indebtedness, the rights of the Holders of the Junior Subordinated
Debentures will be subrogated to the rights of the Holders of Senior
Indebtedness to receive payments or distributions applicable to Senior
Indebtedness until all amounts owing on the Junior Subordinated Debentures
are paid in full. (Section 1504).
The term Senior Indebtedness is defined in the Indenture to mean all
obligations (other than non-recourse obligations and the indebtedness
issued under the Indenture) of, or guaranteed or assumed by, the Company
for borrowed money, including both senior and subordinated indebtedness for
borrowed money (other than the Debt Securities), or for the payment of
money relating to any lease which is capitalized on the consolidated
balance sheet of the Company and its subsidiaries in accordance with
generally accepted accounting principles as in effect from time to time, or
evidenced by bonds, debentures, notes or other similar instruments, and in
each case, amendments, renewals, extensions, modifications and refundings
of any such indebtedness or obligations, whether existing as of the date of
this Indenture or subsequently incurred by the Company unless, in the case
of any particular indebtedness, renewal, extension or refunding, the
instrument creating or evidencing the same or the assumption or guarantee
of the same expressly provides that such indebtedness, renewal, extension
or refunding is not superior in right of payment to or is pari passu with
the Junior Subordinated Debentures; provided that the Company's obligations
under the Guarantee shall not be deemed to be Senior Indebtedness. (Section
101).
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued. As of December 31, 1995, the Company had approximately
$790 million principal amount of indebtedness for borrowed money
constituting Senior Indebtedness.
Consolidation, Merger, and Sale of Assets
Under the terms of the Indenture, the Company may not consolidate with
or merge into any other entity or convey, transfer or lease its properties
and assets substantially as an entirety to any entity, unless (i) the
corporation formed by such consolidation or into which the Company is
merged or the entity which acquires by conveyance or transfer, or which
leases, the property and assets of the Company substantially as an entirety
shall be a entity organized and validly existing under the laws of any
domestic jurisdiction and such entity expressly assumes the Company's
obligations on all Debt Securities and under the Indenture,
(ii) immediately after giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have occurred and be continuing, and
(iii) the Company shall have delivered to the Debenture Trustee an
Officer's Certificate and an Opinion of Counsel as provided in the
Indenture. (Section 1101).
Events of Default
Each of the following will constitute an Event of Default under the
Indenture with respect to the Debt Securities of any series: (a) failure
to pay any interest on the Debt Securities of such series within 30 days
after the same becomes due and payable, provided that deferral of payment
during an Extension Period will not constitute an Event of Default; (b)
failure to pay principal or premium, if any, on the Debt Securities of such
series when due and payable; (c) failure to perform, or breach of, any
other covenant or warranty of the Company in the Indenture (other than a
covenant or warranty of the Company in the Indenture solely for the benefit
of one or more series of Debt Securities other than such series) for 60
days after written notice to the Company by the Debenture Trustee, or to
the Company and the Debenture Trustee by the Holders of at least 33% in
principal amount of the Debt Securities of such series outstanding under
the Indenture as provided in the Indenture; (d) the entry by a court having
jurisdiction in the premises of (1) a decree or order for relief in respect
of the Company in an involuntary case or proceeding under any applicable
Federal or state bankruptcy, insolvency, reorganization or other similar
law or (2) a decree or order adjudging the Company a bankrupt or insolvent,
or approving as properly filed a petition by one or more Persons other than
the Company seeking reorganization, arrangement, adjustment or composition
of or in respect of the Company under any applicable Federal or state law,
or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official for the Company or for any
substantial part of its property, or ordering the winding up or liquidation
of its affairs, and any such decree or order for relief or any such other
decree or order shall have remained unstayed and in effect for a period of
90 consecutive days; and (e) the commencement by the Company of a voluntary
case or proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by it
to the entry of a decree or order for relief in respect of the Company in a
case or other similar proceeding or to the commencement of any bankruptcy
or insolvency case or proceeding against it under any applicable Federal or
state law or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or state law, or the
consent by it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Company or of any substantial part
of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due, or the authorization of such action by
the Board of Directors. (Section 801).
An Event of Default with respect to the Debt Securities of a particular
series may not necessarily constitute an Event of Default with respect to
Debt Securities of any other series issued under the Indenture.
If an Event of Default due to the default in payment of principal of or
interest on any series of Debt Securities or due to the default in the
performance or breach of any other covenant or warranty of the Company
applicable to the Debt Securities of such series but not applicable to all
series occurs and is continuing, then either the Trustee or the Holders of
33% in principal amount of the outstanding Debt Securities of such series
may declare the principal of all of the Debt Securities of such series and
interest accrued thereon to be due and payable immediately (subject to the
subordination provisions of the Indenture). If an Event of Default due to
the default in the performance of any other covenants or agreements in the
Indenture applicable to all outstanding Debt Securities or due to certain
events of bankruptcy, insolvency or reorganization of the Company has
occurred and is continuing, either the Trustee or the Holders of not less
than 33% in principal amount of all outstanding Debt Securities, considered
as one class, and not the Holders of the Debt Securities of any one of such
series may make such declaration of acceleration (subject to the
subordination provisions of the Indenture).
At any time after the declaration of acceleration with respect to the
Debt Securities of any series has been made and before a judgment or decree
for payment of the money due has been obtained, the Event or Events of
Default giving rise to such declaration of acceleration will, without
further act, be deemed to have been waived, and such declaration and its
consequences will, without further act, be deemed to have been rescinded
and annulled, if
(a) the Company has paid or deposited with the Debenture Trustee a sum
sufficient to pay
(1) all overdue interest on all Debt Securities of such series;
(2) the principal of and premium, if any, on any Debt Securities of
such series which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates prescribed therefor
in such Debt Securities;
(3) interest upon overdue interest at the rate or rates prescribed
therefor in such Debt Securities, to the extent that payment of such
interest is lawful; and
(4) all amounts due to the Debenture Trustee under the Indenture; and
(b) any other Event or Events of Default with respect to Debt
Securities of such series, other than the nonpayment of the principal of
the Debt Securities of such series which has become due solely by such
declaration of acceleration, have been cured or waived as provided in the
Indenture. (Section 802).
Subject to the provisions of the Indenture relating to the duties of the
Debenture Trustee in case an Event of Default shall occur and be
continuing, the Debenture Trustee will be under no obligation to exercise
any of its rights or powers under the Indenture at the request or direction
of any of the Holders of the Junior Subordinated Debentures, unless such
Holders shall have offered to the Debenture Trustee reasonable indemnity.
(Section 903). If an Event of Default has occurred and is continuing in
respect of a series of Debt Securities, subject to such provisions for the
indemnification of the Debenture Trustee, the Holders of a majority in
principal amount of the outstanding Debt Securities of such series will
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or exercising
any trust or power conferred on the Debenture Trustee, with respect to the
Debt Securities of such series; provided, however, that if an Event of
Default occurs and is continuing with respect to more than one series of
Debt Securities, the Holders of a majority in aggregate principal amount of
the outstanding Debt Securities of all such series, considered as one
class, will have the right to make such direction, and not the Holders of
the Debt Securities of any one of such series; and provided, further, that
such direction will not be in conflict with any rule of law or with the
Indenture. (Section 812).
No Holder of Debt Securities of any series will have any right to
institute any proceeding with respect to the Indenture, or for the
appointment of a receiver or a trustee, or for any other remedy thereunder,
unless (i) such Holder has previously given to the Debenture Trustee
written notice of a continuing Event of Default with respect to the Debt
Securities of such series, (ii) the Holders of not less than a majority in
aggregate principal amount of the outstanding Debt Securities of all series
in respect of which an Event of Default shall have occurred and be
continuing, considered as one class, have made written request to the
Debenture Trustee, and such Holder or Holders have offered reasonable
indemnity to the Debenture Trustee to institute such proceeding in respect
of such Event of Default in its own name as trustee and (iii) the Debenture
Trustee has failed to institute any proceeding, and has not received from
the Holders of a majority in aggregate principal amount of the outstanding
Debt Securities of such series a direction inconsistent with such request,
within 60 days after such notice, request and offer. (Section 807).
However, such limitations do not apply to a suit instituted by a Holder of
a Debt Security for the enforcement of payment of the principal of or any
premium or interest on such Debt Security on or after the applicable due
date specified in such Debt Security. (Section 808).
The Company will be required to furnish to the Debenture Trustee
annually a statement by an appropriate officer as to such officer's
knowledge of the Company's compliance with all conditions and covenants
under the Indenture, such compliance to be determined without regard to any
period of grace or requirement of notice under the Indenture. (Section
606).
Modification and Waiver
Without the consent of any Holder of Debt Securities, the Company and
the Debenture Trustee may enter into one or more supplemental indentures
for any of the following purposes: (a) to evidence the assumption by any
permitted successor to the Company of the covenants of the Company in the
Indenture and in the Debt Securities; or (b) to add one or more covenants
of the Company or other provisions for the benefit of the Holders of
outstanding Debt Securities or to surrender any right or power conferred
upon the Company by the Indenture; or (c) to add any additional Events of
Default with respect to outstanding Debt Securities; or (d) to change or
eliminate any provision of the Indenture or to add any new provision to the
Indenture, provided that if such change, elimination or addition will
adversely affect the interests of the Holders of Debt Securities of any
series in any material respect, such change, elimination or addition will
become effective with respect to such series only (1) when the consent of
the Holders of Debt Securities of such series has been obtained in
accordance with the Indenture, or (2) when no Debt Securities of such
series remain outstanding under the Indenture; or (e) to provide collateral
security for all but not part of the Debt Securities; (f) to establish the
form or terms of Debt Securities of any other series as permitted by the
Indenture; or (g) to provide for the authentication and delivery of bearer
securities and coupons appertaining thereto representing interest, if any,
thereon and for the procedures for the registration, exchange and
replacement thereof and for the giving of notice to, and the solicitation
of the vote or consent of, the Holders thereof, and for any and all other
matters incidental thereto; or (h) to evidence and provide for the
acceptance of appointment of a successor Debenture Trustee under the
Indenture with respect to the Debt Securities of one or more series and to
add to or change any of the provisions of the Indenture as shall be
necessary to provide for or to facilitate the administration of the trusts
under the Indenture by more than one trustee; or (i) to provide for the
procedures required to permit the utilization of a noncertificated system
of registration for the Debt Securities of all or any series; or (j) to
change any place where (1) the principal of and premium, if any, and
interest, if any, on all or any series of Debt Securities shall be payable,
(2) all or any series of Debt Securities may be surrendered for
registration of transfer or exchange and (3) notices and demands to or upon
the Company in respect of Debt Securities and the Indenture may be served;
or (k) to cure any ambiguity or inconsistency or to add or change any other
provisions with respect to matters and questions arising under the
Indenture, provided such changes or additions shall not adversely affect
the interests of the Holders of Debt Securities of any series in any
material respect. (Section 1201).
The Holders of at least a majority in aggregate principal amount of the
Debt Securities of all series then outstanding may waive compliance by the
Company with certain restrictive provisions of the Indenture. (Section
607). The Holders of not less than a majority in principal amount of the
outstanding Debt Securities of any series may waive any past default under
the Indenture with respect to such series, except a default in the payment
of principal, premium, or interest and certain covenants and provisions of
the Indenture that cannot be modified or be amended without the consent of
the Holder of each outstanding Debt Security of such series affected.
(Section 813).
Without limiting the generality of the foregoing, if the Trust Indenture
Act is amended after the date of the Indenture in such a way as to require
changes to the Indenture or the incorporation therein of additional
provisions or so as to permit changes to, or the elimination of, provisions
which, at the date of the Indenture or at any time thereafter, were
required by the Trust Indenture Act to be contained in the Indenture, the
Indenture will be deemed to have been amended so as to conform to such
amendment of the Trust Indenture Act or to effect such changes, additions
or elimination, and the Company and the Debenture Trustee may, without the
consent of any Holders, enter into one or more supplemental indentures to
evidence or effect such amendment. (Section 1201).
Except as provided above, the consent of the Holders of not less than a
majority in aggregate principal amount of the Debt Securities of all series
then outstanding, considered as one class, is required for the purpose of
adding any provisions to, or changing in any manner, or eliminating any of
the provisions of, the Indenture or modifying in any manner the rights of
the Holders of such Debt Securities under the Indenture pursuant to one or
more supplemental indentures; provided, however, that if less than all of
the series of Debt Securities outstanding are directly affected by a
proposed supplemental indenture, then the consent only of the Holders of a
majority in aggregate principal amount of outstanding Debt Securities of
all series so directly affected, considered as one class, will be required;
and provided further, that no such amendment or modification may (a) change
the Stated Maturity of the principal of, or any installment of principal of
or interest on, any Debt Security, or reduce the principal amount thereof
or the rate of interest thereon (or the amount of any installment of
interest thereon) or change the method of calculating such rate or reduce
any premium payable upon the redemption thereof, or change the coin or
currency (or other property) in which any Debt Security or any premium or
the interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment on or after the Stated Maturity of any
Debt Security (or, in the case of redemption, on or after the Redemption
Date) without, in any such case, the consent of the Holder of such Debt
Security, (b) reduce the percentage in principal amount of the outstanding
Debt Security of any series, (or, if applicable, in liquidation preference
of Preferred Securities) the consent of the Holders of which is required
for any such supplemental indenture, or the consent of the Holders of which
is required for any waiver of compliance with any provision of the
Indenture or any default thereunder and its consequences, or reduce the
requirements for quorum or voting, without, in any such case, the consent
of the Holder of each outstanding Debt Security of such series, or (c)
modify certain of the provisions of the Indenture relating to supplemental
indentures, waivers of certain covenants and waivers of past defaults with
respect to the Debt Security of any series, without the consent of the
Holder of each outstanding Junior Subordinated Debenture affected thereby.
A supplemental indenture which changes or eliminates any covenant or other
provision of the Indenture which has expressly been included solely for the
benefit of one or more particular series of Debt Securities, or modifies
the rights of the Holders of Debt Securities of such series with respect to
such covenant or other provision, will be deemed not to affect the rights
under the Indenture of the Holders of the Debt Securities of any other
series. (Section 1202).
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the outstanding Debt Securities have given
any request, demand, authorization, direction, notice, consent or waiver
under the Indenture, or whether a quorum is present at the meeting of the
Holders of Debt Securities, Debt Securities owned by the Company or any
other obligor upon the Debt Securities or any affiliate of the Company or
of such other obligor (unless the Company, such affiliate or such obligor
owns all Debt Securities outstanding under the Indenture, determined
without regard to this provision) shall be disregarded and deemed not to
be outstanding.
If the Company shall solicit from Holders any request, demand,
authorization, direction, notice, consent, election, waiver or other Act,
the Company may, at its option, fix in advance a record date for the
determination of Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other such act, but
the Company shall have no obligation to do so. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record date, but only
the Holders of record at the close of business on such record date shall be
deemed to be Holders for the purposes of determining whether Holders of the
requisite proportion of the outstanding Debt Securities have authorized or
agreed or consented to such request, demand, authorization, direction,
notice, consent, waiver or other Act, and for that purpose the outstanding
Debt Securities shall be computed as of the record date. Any request,
demand, authorization, direction, notice, consent, election, waiver or
other Act of a Holder shall bind every future Holder of the same Debt
Security and the Holder of every Debt Security issued upon the registration
of transfer thereof or in exchange therefor or in lieu thereof in respect
of anything done, omitted or suffered to be done by the Debenture Trustee
or the Company in reliance thereon, whether or not notation of such action
is made upon such Debt Security. (Section 104).
Resignation of Debenture Trustee
The Debenture Trustee may resign at any time by giving written notice
thereof to the Company or may be removed at any time by Act of the Holders
of a majority in principal amount of all series of Debt Securities then
outstanding delivered to the Debenture Trustee and the Company. No
resignation or removal of the Debenture Trustee and no appointment of a
successor trustee will become effective until the acceptance of appointment
by a successor trustee in accordance with the requirements of the
Indenture. So long as no Event of Default or event which, after notice or
lapse of time, or both, would become an Event of Default has occurred and
is continuing and except with respect to a Debenture Trustee appointed by
Act of the Holders, if the Company has delivered to the Debenture Trustee a
resolution of its Board of Directors appointing a successor trustee and
such successor has accepted such appointment in accordance with the terms
of the Indenture, the Trustee will be deemed to have resigned and the
successor will be deemed to have been appointed as trustee in accordance
with the Indenture. (Section 910).
Notices
Notices to Holders of Debt Securities will be given by mail to the
addresses of such Holders as they may appear in the security register
therefor.
Title
The Company, the Debenture Trustee, and any agent of the Company or the
Debenture Trustee, may treat the Person in whose name Debt Securities are
registered as the absolute owner thereof (whether or not such Debt
Securities may be overdue) for the purpose of making payments and for all
other purposes irrespective of notice to the contrary.
Governing Law
The Indenture and the Debt Securities will be governed by, and construed
in accordance with, the laws of the State of New York.
Concerning the Debenture Trustee
The Debenture Trustee under the Indenture is The Bank of New York. In
addition, The Bank of New York acts as Property Trustee under the Trust
Agreement and as Guarantee Trustee under the Guarantee. The Bank of New
York (Delaware) acts as the Delaware Trustee under the Trust Agreement.
See "Description of the Preferred Securities -- Concerning the Property
Trustee."
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain United States federal income tax
consequences relevant to the purchase, ownership and disposition of
Preferred Securities as of the date hereof and represents the opinion of
Reid & Priest LLP, counsel to the Company, insofar as it relates to matters
of law or legal conclusions. Except where noted, it deals only with
Preferred Securities held as capital assets and does not deal with special
situations, such as those of dealers in securities or currencies, financial
institutions, life insurance companies, persons holding Preferred
Securities as a part of a hedging or conversion transaction or a straddle,
United States Holders (as defined herein) whose "functional currency" is
not the U.S. dollar, or persons who are not United States Holders. In
addition, this discussion does not address the tax consequences to persons
who purchase Preferred Securities other than pursuant to their initial
issuance and distribution. Furthermore, the discussion below is based upon
the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), and regulations, rulings and judicial decisions thereunder as of
the date hereof, and such authorities may be repealed, revoked or modified
at any time so as to result in United States federal income tax
consequences different from those discussed below. These authorities are
subject to various interpretations and it is therefore possible that the
United States federal income tax treatment of the Preferred Securities may
differ from the treatment described below.
PROSPECTIVE PURCHASERS OF PREFERRED SECURITIES, INCLUDING PERSONS WHO
ARE NOT UNITED STATES HOLDERS AND PERSONS WHO PURCHASE PREFERRED SECURITIES
IN THE SECONDARY MARKET, ARE ADVISED TO CONSULT WITH THEIR TAX ADVISORS AS
TO THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF PREFERRED SECURITIES IN LIGHT OF THEIR
PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR
OTHER TAX LAWS.
United States Holders
As used herein, a "United States Holder" means a Holder that is a
citizen or resident of the United States, a corporation, partnership or
other entity created or organized in or under the laws of the United States
or any political subdivision thereof, or an estate or trust the income of
which is subject to United States federal income taxation regardless of its
source.
Classification of MP&L Capital
Reid & Priest LLP, counsel to the Company and MP&L Capital, is of the
opinion that, under current law and assuming full compliance with the terms
of the Indenture and the instruments establishing MP&L Capital (and certain
other documents), MP&L Capital will be classified as a "grantor trust" for
United States federal income tax purposes and will not be classified as an
association taxable as a corporation. Each Holder will be treated as
owning an undivided beneficial interest in the Junior Subordinated
Debentures. Accordingly, each Holder will be required to include in its
gross income interest (in the form of OID) accrued with respect to its
allocable share of Junior Subordinated Debentures as described below. No
amount included in income with respect to the Preferred Securities will be
eligible for the dividends received deduction. Investors should be aware
that the opinion of Reid & Priest LLP does not address any other issue and
is not binding on the Internal Revenue Service or the courts.
Classification of the Junior Subordinated Debentures
Based on the advice of its counsel, the Company believes and intends to
take the position that the Junior Subordinated Debentures will constitute
indebtedness for United States federal income tax purposes. No assurance
can be given that such position will not be challenged by the Internal
Revenue Service or, if challenged, that such a challenge will not be
successful. By purchasing and accepting Preferred Securities, each Holder
covenants to treat the Junior Subordinated Debentures as indebtedness and
the Preferred Securities as evidence of an indirect beneficial ownership in
the Junior Subordinated Debentures. The remainder of this discussion
assumes that the Junior Subordinated Debentures will be classified as
indebtedness of the Company for United States federal income tax purposes.
On December 7, 1995, the U.S. Treasury Department proposed certain tax
law changes that, among other things, would generally deny interest
deductions to corporate issuers of debt if the debt instrument has a term
exceeding 20 years and is not reflected as indebtedness on the issuer's
balance sheet. As described in the Treasury Department's proposal, the
proposed changes would not affect the ability of the Company to deduct
interest on the Junior Subordinated Debentures because the term of the
Junior Subordinated Debentures is less than 20 years. However, there can
be no assurance that subsequent proposals or final legislation will not
affect the ability of the Company to deduct interest on the Junior
Subordinated Debentures, which in turn could give rise to a Tax Event,
which would permit the Company to cause a redemption of the Preferred
Securities or a distribution of the Junior Subordinated Debentures in
liquidation of MP&L Capital, as described more fully in the Prospectus
under "Description of the Preferred Securities -- Special Event Redemption
or Distribution."
Potential Extension of Interest Payment Period and Original Issue
Discount
Under the terms of the Junior Subordinated Debentures, the Company has
the option to defer payments of interest for up to 20 consecutive quarterly
distribution payment periods and to pay as a lump sum at the end of such
period all of the interest that has accrued during such period. During any
such Extension Period, Distributions on the Preferred Securities will also
be deferred. Because of this option to extend the interest payment
periods, the Junior Subordinated Debentures will be treated as having been
issued with OID for United States federal income tax purposes. As a
result, United States Holders will be required to accrue interest income
(in the form of OID) on an economic accrual basis even if they use the cash
method of tax accounting. In the event of an Extension Period, a United
States Holder will be required to continue to include OID in income
notwithstanding that MP&L Capital will not make any Distribution on the
Preferred Securities during such Extension Period. As a result, any Holder
who disposes of Preferred Securities prior to the record date for the
payment of Distributions following such Extension Period will include
interest in gross income but will not receive any Distributions related
thereto from MP&L Capital. The tax basis of a Preferred Security will be
increased by the amount of any OID that is included in income, and will be
decreased when and if Distributions are subsequently received from MP&L
Capital by such Holders.
Receipt of Junior Subordinated Debentures or Cash Upon Liquidation of
MP&L Capital
Under certain circumstances, as described under the caption "Description
of the Preferred Securities -- Special Event Redemption or Distribution,"
Junior Subordinated Debentures may be distributed to Holders of Preferred
Securities in exchange for the Preferred Securities and in liquidation of
MP&L Capital. Under current law, for United States federal income tax
purposes, if MP&L Capital is treated as a grantor trust at the time of
distribution, such a distribution would be treated as a non-taxable event
to each United States Holder, and each United States Holder would receive
an aggregate tax basis in the Junior Subordinated Debentures equal to such
Holder's aggregate tax basis in its Preferred Securities. A United States
Holder's holding period for the Junior Subordinated Debentures received in
liquidation of MP&L Capital would include the period during which such
Holder held the Preferred Securities.
Under certain circumstances, as described under the caption "Description
of the Preferred Securities -- Redemption of Preferred Securities," the
Junior Subordinated Debentures may be redeemed for cash and the proceeds of
such redemption distributed to Holders of Preferred Securities in
redemption of the Preferred Securities. Under current law, such a
redemption would, for United States federal income tax purposes, constitute
a taxable disposition of the Preferred Securities, and a Holder would
recognize gain or loss as if such Holder had sold such redeemed Preferred
Securities. See "Sale, Exchange and Redemption of the Preferred
Securities."
Sale, Exchange and Redemption of the Preferred Securities
Upon the sale, exchange or redemption of Preferred Securities, a United
States Holder will recognize gain or loss equal to the difference between
the amount realized upon the sale, exchange or redemption and such Holder's
adjusted tax basis in the Preferred Securities. A United States Holder's
adjusted tax basis will, in general, be the issue price of the Preferred
Securities, increased by the OID previously included in income by the
United States Holder and reduced by any Distributions on the Preferred
Securities. Such gain or loss will be capital gain or loss and will be
long-term capital gain or loss if at the time of sale, exchange or
redemption, the Preferred Securities have been held for more than one year.
Under current law, net capital gains of individuals are, under certain
circumstances, taxed at lower rates than items of ordinary income. The
deductibility of capital losses is subject to limitations.
Information Reporting and Backup Withholding
Subject to the qualification discussed below, income on the Preferred
Securities will be reported to holders on Form 1099, which should be mailed
to such Holders by January 31, following each calendar year.
MP&L Capital will be obligated to report annually to Cede & Co., as
holder of record of the Preferred Securities, the OID related to the Junior
Subordinated Debentures that accrued during the year. MP&L Capital
currently intends to report such information on Form 1099 prior to January
31, following each calendar year. The Underwriters have indicated to MP&L
Capital that, to the extent that they hold Preferred Securities as nominees
for beneficial holders, they currently expect to report the OID that
accrued during the calendar year on such Preferred Securities to such
beneficial holders on Forms 1099 by January 31, following each calendar
year. Under current law, holders of Preferred Securities who hold as
nominees for beneficial holders will not have any obligation to report
information regarding the beneficial holders to MP&L Capital. MP&L
Capital, moreover, will not have any obligation to report to beneficial
holders who are not also record holders. Thus, beneficial holders of
Preferred Securities who hold their Preferred Securities through the
Underwriters will receive Forms 1099 reflecting the income on their
Preferred Securities from such nominee holders rather than from MP&L
Capital.
Payments made in respect of, and proceeds from the sale of, Preferred
Securities (or Junior Subordinated Debentures distributed to holders of
Preferred Securities) may be subject to "backup" withholding tax of 31%
unless the holder complies with certain identification requirements or
fails to report in full dividend and interest income. Any withheld amounts
will be allowed as a refund or a credit against the holder's United Stated
federal income tax liability, provided the required information is provided
to the Internal Revenue Service.
These information reporting and backup withholding tax rules are subject
to temporary Treasury Regulations. Accordingly, the application of such
rules to the Preferred Securities could be changed.
EXPERTS
The Company's financial statements incorporated in this Prospectus by
reference to the Company's Current Report on Form 8-K, dated February 16,
1996, except as they relate to ADESA (an 80% owned subsidiary of the
Company), have been audited by Price Waterhouse LLP, independent
accountants, and, insofar as they relate to ADESA, by Ernst & Young LLP,
independent auditors. The report of Price Waterhouse LLP thereon appears
on page 10 of such Form 8-K. Such financial statements, except as they
relate to ADESA, have been so incorporated in reliance on the report of
Price Waterhouse LLP, given on the authority of said firm as experts in
auditing and accounting.
The financial statement schedule incorporated in this Prospectus by
reference to the Company 1994 10-K has been so incorporated in reliance on
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements of ADESA appearing in the
Company's Current Report on Form 8-K, dated July 12, 1995, for the year
ended December 31, 1994, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included in said
Current Report on Form 8-K and incorporated herein by reference in reliance
upon such report given upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of ADESA for the period from July
1, 1995 to December 31, 1995 which are included in the consolidated
financial statements of the Company contained in the Company's Current
Report on Form 8-K, dated February 16, 1996 have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon
included in said Current Report on Form 8-K. Such report is given upon the
authority of such firm as experts in accounting and auditing.
The statements made in the Company 1994 10-K under Part I, Item 1 --
Business-Regulation and Rates and Environmental Matters, incorporated
herein by reference, have been reviewed by Philip R. Halverson, Esq.,
Duluth, Minnesota, General Counsel for the Company. All of such statements
are set forth or incorporated by reference herein in reliance upon the
opinion of Mr. Halverson given upon his authority as an expert. At
December 31, 1995, Mr. Halverson owned approximately 4001 shares of the
common stock of the Company. Statements as to United States federal income
taxation under "Certain United States Federal Income Tax Consequences"
herein have been passed upon for the Company and MP&L Capital by Reid &
Priest LLP, New York, New York, counsel to the Company.
LEGALITY
Certain matters of Delaware law relating to the validity of the
Preferred Securities, the enforceability of the Trust Agreement and the
creation of MP&L Capital are being passed upon by Richards, Layton &
Finger, Special Delaware counsel for the Company and MP&L Capital. The
legality of the other securities offered hereby will be passed upon for the
Company and MP&L Capital by Philip R. Halverson, Esq. and by Reid & Priest
LLP, and for the Underwriters by Lane & Mittendorf LLP, New York, New York.
However, all matters pertaining to incorporation of the Company and all
other matters of Minnesota law will be passed upon only by Philip R.
Halverson, Esq.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Company and MP&L Capital have agreed that MP&L Capital will issue and sell
to each of the Underwriters named below, and each of the Underwriters, for
whom Goldman, Sachs & Co. and PaineWebber Incorporated are acting as
Representatives, has severally agreed to purchase from MP&L Capital the
respective number of Preferred Securities set forth opposite its name
below:
NUMBER OF
UNDERWRITER PREFERRED SECURITIES
----------- --------------------
Goldman, Sachs & Co. ..............
PaineWebber Incorporated ..........
----------------
Total..............................
================
Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all the Preferred Securities
offered hereby, if any are taken.
The Underwriters propose to offer the Preferred Securities in part
directly to the public at the initial public offering price set forth on
the cover page of this Prospectus, and in part to certain securities
dealers at such price less a concession of $ per Preferred Security. The
Underwriters may allow, and such dealers may reallow, a concession not in
excess of $ per Preferred Security to certain brokers and dealers.
After the Preferred Securities are released for sale to the public, the
offering price and other selling terms may from time to time be varied by
the Representatives.
In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures, the
Underwriting Agreement provides that the Company will pay as compensation,
for the Underwriters' arranging the investment therein of such proceeds, an
amount of $ per Preferred Security for the accounts of the several
Underwriters.
The Company and MP&L Capital have agreed that, during the period
beginning from the date of the Underwriting Agreement and continuing to and
including the earlier of (i) the date on which the distribution of the
Preferred Securities ceases, as determined by the Representatives, or (ii)
90 days after the issuance of the Preferred Securities, neither will offer,
sell, contract to sell or otherwise dispose of, any other beneficial
interests in MP&L Capital or any other securities of MP&L Capital or the
Company, as the case may be, that are substantially similar to the
Preferred Securities (including any guarantee of such securities) or any
securities that are convertible into or exchangeable for, or that represent
the right to receive, any such substantially similar securities of either
MP&L Capital or the Company, without the prior written consent of the
Representatives, provided that this restriction shall specifically not
apply to the Company's common stock, preferred stock, secured indebtedness
and unsecured indebtedness which is not subordinated.
Prior to this offering, there has been no public market for the
Preferred Securities. Application will be made to list the Preferred
Securities on the NYSE. In order to meet one of the requirements for
listing the Preferred Securities on the NYSE, the Underwriters will
undertake to sell lots of 100 or more Preferred Securities to a minimum of
400 beneficial holders. Trading of the Preferred Securities on the NYSE is
expected to commence within a seven-day period after the initial delivery
of the Preferred Securities. The Representatives have advised the Company
that they intend to make a market in the Preferred Securities prior to
commencement of trading on the NYSE, but are not obligated to do so and may
discontinue any such market making at any time without notice.
The Company and MP&L Capital have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended.
Certain of the Underwriters or their affiliates have provided from time
to time, and expect to provide in the future, services to the Company and
its affiliates, in the ordinary course of business, for which such
Underwriters or their affiliates have received or will receive customary
fees and commissions.
=================================== ===================================
No person has been authorized to
give any information or to make any
representations other than those
contained in this Prospectus and, 3,000,000 Preferred Securities
if given or made, such information
or representations must not be relied MP&L CAPITAL I
upon as having been authorized. This
Prospectus does not constitute an
offer to sell or the solicitation
of an offer to buy any securities % Cumulative Quarterly Incomer
other than the securities described Preferred Securities(QUIPSsm)
in this Prospectus or an offer to
sell or the solicitation of any
offer to buy such securities in Guaranteed to the extent
any circumstances in which such MP&L Capital I has funds as
offer or solicitation is unlawful. set forth herein
Neither the delivery of this Prospectus
nor any sale made hereunder shall,
under any circumstances, create any
implication that the information
contained herein or therein is correct
as of any time subsequent to the date
of such information.
MINNESOTA POWER
------------------ & LIGHT COMPANY
TABLE OF CONTENTS
Page
----
Available Information............... 2
Incorporation of Certain
Documents by Reference............ 2
Prospectus Summary.................. 4 -------------------------
Risk Factors........................ 6 PROSPECTUS
The Company......................... 9 -------------------------
MP&L Capital....................... 11
Summary Financial Information...... 13 GOLDMAN, SACHS & CO.
PAINEWEBBER INCORPORATED
Use of Proceeds.................... 14
Description of the
Preferred Securities............. 14 Representatives
of the Underwriters
Description of the Guarantee....... 25
Description of the Junior
Subordinated Debentures.......... 27
Certain United States Federal
Income Tax Consequences............ 36
Experts............................ 38
Legality........................... 39
Underwriting....................... 39
======================================= =============================
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses payable by the
Company in connection with the issuance and distribution of the securities
to be registered.
Filing fee - Securities and
Exchange Commission . . . . . . . . . . . . $45,103.45*
Fees of the Trustee . . . . . . . . . . . . . 35,000.00
Counsel Fees . . . . . . . . . . . . . . . . . 125,000.00
Auditors' fees . . . . . . . . . . . . . . . . 30,000.00
Printing, including Registration Statement,
prospectuses, exhibits, etc. . . . . . . . 15,000.00
Miscellaneous . . . . . . . . . . . . . . . . 24,896.55
Total expenses . . . . . . . . . . . . . . . . $275,000.00
===========
___________________________
* Original filing fee paid by the Company at the time the Registration
Statement (Nos. 333-01035-01 and 333-01035) was filed on
February 16, 1996.
Item 15. Indemnification of Directors and Officers.
Section 302A.521 of the Minnesota Business Corporation Act generally
provides for the indemnification of directors, officers or employees of a
corporation made or threatened to be made a party to a proceeding by reason
of the former or present official capacity of the person against judgments,
penalties and fines (including attorneys' fees and disbursements) where
such person, among other things, has not been indemnified by another
organization, acted in good faith, received no improper personal benefit
and with respect to any criminal proceeding, had no reasonable cause to
believe his conduct was unlawful.
Section 13 of the Bylaws of the Company contains the following
provisions relative to indemnification of directors and officers:
"The Company shall reimburse or indemnify each present and future
director and officer of the Company (and his or her heirs, executors and
administrators) for or against all expenses reasonably incurred by such
director or officer in connection with or arising out of any action, suit
or proceeding in which such director or officer may be involved by reason
of being or having been a director or officer of the Company. Such
indemnification for reasonable expenses is to be to the fullest extent
permitted by the Minnesota Business Corporation Act, Minnesota Statutes
Chapter 302A. By affirmative vote of the Board of Directors or with written
approval of the Chairman and Chief Executive Officer, such indemnification
may be extended to include agents and employees who are not directors or
officers of the Company, but who would otherwise be indemnified for acts
and omissions under Chapter 302A of the Minnesota Business Corporation
Act, if such agent or employee were an officer of the Company."
"Reasonable expenses may include reimbursement of attorney's fees and
disbursements, including those incurred by a person in connection with an
appearance as a witness."
"Upon written request to the Company and approval by the Chairman and
Chief Executive Officer, an agent or employee for whom indemnification has
been extended, or an officer or director may receive an advance for
reasonable expenses if such agent, employee, officer or director is made or
threatened to be made a party to a proceeding involving a matter for which
indemnification is believed to be available under Minnesota Statutes
Chapter 302A."
"The foregoing rights shall not be exclusive of other rights to which
any director or officer may otherwise be entitled and shall be available
whether or not the director or officer continues to be a director or
officer at the time of incurring such expenses and liabilities."
The Company has insurance covering its expenditures which might arise in
connection with the lawful indemnification of its directors and officers
for their liabilities and expenses, and insuring officers and directors of
the Company against certain other liabilities and expenses.
Item 16. Exhibits.
**1(a) - Form of Underwriting Agreement.
+3(a)1 - Articles of Incorporation, restated as of July 27, 1988
(filed as Exhibit 3(a), File No. 33-24936).
+3(a)2 - Certificate Fixing Terms of Serial Preferred Stock A,
$7.125 Series (filed as Exhibit 3(a)2, File No. 33
-50143).
+3(a)3 - Certificate Fixing Terms of Serial Preferred Stock A,
$6.70 Series (filed as Exhibit 3(a)3, File No. 33-
50143).
+3(b) - Bylaws as amended January 23, 1991 (filed as Exhibit
3(b), File No. 33-45549).
**4(a) - Trust Agreement relating to the Preferred Securities.
**4(b) - Form of Amended and Restated Trust Agreement relating
to the Preferred Securities.
**4(c) - Form of Indenture relating to the Junior Subordinated
Debentures.
**4(d) - Form of Guarantee Agreement.
**4(e) - Form of Agreement as to Expenses and Liabilities.
**4(f) - Form of Officer's Certificate establishing Debentures.
**4(g) - Form of Preferred Securities.
**5(a) - Opinion and Consent of Philip R. Halverson, Esq.,
General Counsel and Corporate Secretary of the Company.
**5(b)
and 8 - Opinion and Consent of Reid & Priest LLP.
**5(c) - Opinion and Consent of Richards, Layton & Finger,
Special Delaware Counsel to the Company and MP&L
Capital.
**12(a) - Computation of Ratio of Earnings to Fixed Charges and
Supplemental Ratio of Earnings to Fixed Charges of the
Company.
**12(b) - Computation of Ratio of Earnings to Fixed Charges and
Preferred Dividends and Supplemental Ratio of Earnings
to Fixed Charges and Preferred Dividends of the
Company.
**23(a) - Consent of Price Waterhouse LLP.
**23(b) - Consent of Ernst & Young LLP.
**23(c) - Consents of Philip R. Halverson, Esq., Reid & Priest
LLP and Richards, Layton & Finger are contained in
Exhibits 5(a), 5(b) and 5(c), respectively.
**24 - Power of Attorney (see page II-6).
**25(a) - Statement on Form T-1 of The Bank of New York relating
to Amended and Restated Trust Agreement.
**25(b) - Statement on Form T-1 of The Bank of New York relating
to Indenture.
**25(c) - Statement on Form T-1 of The Bank of New York relating
to Guarantee Agreement.
------------------
** Previously filed.
+ Incorporated herein by reference as indicated.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) That, for purposes of determining any liability under the 1933
Act, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the 1934 Act 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.
(2) That, for purposes of determining any liability under the 1933
Act, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the 1933 Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
(3) That, for the purpose of determining any liability under the 1933
Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(4) That, insofar as indemnification for liabilities arising under
the 1933 Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under
Item 15 above, or otherwise, the 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 the registrant of expenses
incurred or paid by a director, officer or controlling person of the
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, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this amendment to the registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York, State
of New York, on March 13, 1996.
MINNESOTA POWER & LIGHT COMPANY
(Registrant)
By /s/ Robert J. Reger, Jr.
______________________________
Robert J. Reger, Jr.
(Attorney-In-Fact)
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Edwin L. Russell* President, March 13, 1996
____________________ Chief Executive Officer
Edwin L. Russell and Director
President,
Chief Executive Officer
and Director
/s/ D. G. Gartzke* Senior Vice President- March 13, 1996
__________________ Finance and Chief
D. G. Gartzke Financial
Senior Vice President-Finance Officer
and Chief Financial
Officer
/s/ Mark A. Schober* Corporate Controller March 13, 1996
___________________
Mark A. Schober
Corporate Controller
Merrill K. Cragun* Director March 13, 1996
Dennis E. Evans* Director March 13, 1996
Sister Kathleen Hofer* Director March 13, 1996
D. Michael Hockett* Director March 13, 1996
Peter J. Johnson* Director March 13, 1996
Jack R. Kelly, Jr.* Director March 13, 1996
Paula F. McQueen* Director March 13, 1996
Robert S. Nickoloff* Director March 13, 1996
Jack I. Rajala* Director March 13, 1996
Charles A. Russell* Director March 13, 1996
Arend J. Sandbulte* Chairman and Director March 13, 1996
Nick Smith* Director March 13, 1996
Bruce W. Stender* Director March 13, 1996
Donald C. Wegmiller* Director March 13, 1996
*By:/s/ Robert J. Reger, Jr.
______________________________
Robert J. Reger, Jr.
(Attorney-In-Fact)
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this amendment to the registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Duluth, State of Minnesota, on March 13, 1996.
MP&L Capital I
By: /s/ Philip R. Halverson
------------------------------
Philip R. Halverson