Cleco Power S-3 Amendment 1
As filed with the
Securities and Exchange Commission on December 18, 2003
Registration
No. 333-109507
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CLECO POWER LLC
(Exact name of registrant as specified
in its charter)
Louisiana
(State or other jurisdiction
of incorporation or organization)
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72-0244480
(I.R.S. Employer
Identification No.)
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2030 Donahue
Ferry Road
Pineville, Louisiana 71360‑5226
(318) 484‑7400
(Address, including
zip code, and telephone
number, including area code, of registrant's
principal executive offices)
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R. O'Neal
Chadwick, Jr.
Senior Vice President, General Counsel
and Corporate Secretary
2030 Donahue Ferry Road
Pineville, Louisiana 71360‑5226
(318) 484‑7400
(Name, address,
including zip code, and telephone
number, including area code, of agent for service)
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Copy
to:
Timothy S. Taylor
Baker Botts L.L.P.
910 Louisiana
One Shell Plaza
Houston, Texas 77002‑4995
(713) 229‑1234
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Approximate date of commencement of proposed sale
to public: From time to time after the effective date of this registration
statement.
If the only securities being
registered on this Form are being offered pursuant to dividend or interest
reinvestment plans, please check the following box.
If any of the securities being registered on this
Form are to be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. X
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. _______
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
_______
If delivery of the prospectus is
expected to be made pursuant to Rule 434, please check the following box.
CALCULATION
OF REGISTRATION FEE
Title of each class of securities
to be registered
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Amount to be
registered (1)
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Proposed
maximum offering
price per unit
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Proposed
maximum aggregate
offering price (1)
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Amount of
registration fee
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Debt Securities.........................................
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$150,000,000
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100%
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$150,000,000
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$12,135
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(1) Estimated solely for the purpose of calculating
the registration fee pursuant to Rule 457(o) under the Securities Act and
exclusive of accrued interest, if any. The aggregate initial offering price of
all debt securities issued from time to time pursuant to this registration
statement shall not exceed $150,000,000 or the equivalent thereof in foreign
currencies, foreign currency units or composite currencies. Such amount represents
the principal amount of any debt securities issued at their stated principal
amount and the issue price rather than the principal amount of any debt
securities issued at an original issue discount. The aggregate principal
amount of the debt securities may be increased if any debt securities are
issued at an original issue discount by an amount such that the offering price
to be received by the registrant shall be equal to the above amount to be
registered. Any offering of debt securities denominated other than in U.S.
dollars will be treated as the equivalent of U.S. dollars based on the exchange
rate applicable to the purchase of such securities at the time of the initial
offering.
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 the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The information in this prospectus supplement is not
complete and may be changed. We may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus supplement is not an offer to sell these
securities and it is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
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Subject to
completion, dated December 18, 2003.
PROSPECTUS SUPPLEMENT
(To prospectus
dated 2003)
[LOGO]
$100,000,000
CLECO POWER LLC
Medium‑Term Notes, Series C
Due One Year or More From Date of Issue
The Company: Cleco
Power LLC. Our principal executive office is located at 2030 Donahue Ferry
Road, Pineville, Louisiana, 71360-5226, and our telephone number is (318)
484-7400.
Terms: We
plan to offer and sell notes with various terms, including the following:
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Ranking as senior unsecured indebtedness of the Company
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Interest at fixed or floating rates, or no interest at
all. The floating interest rate may be based on one or more of the following
indices plus or minus a spread and/or multiplied by a spread multiplier:
*
Commercial paper rate
* LIBOR
* Treasury rate
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Stated maturities of one year or more from date of issue
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Redemption and/or repayment provisions, if applicable,
whether mandatory or at the option of the Company or noteholders
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Minimum denominations of $1,000
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Interest payments on fixed rate notes on each March 15 and
September 15
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Book‑entry (through The Depository Trust Company) or
certificated for
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Interest payments on floating rate notes on a monthly,
quarterly, semiannual or annual basis
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We will specify the final terms for each note, which may
be different from the terms described in this prospectus supplement, in the
applicable pricing supplement.
Investing in the Notes involves certain risks. See
"Risk Factors" on page S-2.
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Public Offering Price |
Agent's Discounts
and Commissions
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Proceeds to
Company
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Per Note......................... |
100% |
.125%
- .750% |
99.875%
- 99.250% |
Total............................... |
$100,000,000 |
$125,000 - $750,000 |
$99,875,000 - $99,250,000 |
Neither the Securities and Exchange Commission nor any
state securities commission has approved or disapproved of these securities
or determined if this prospectus supplement, the accompanying prospectus or
any pricing supplement is truthful or complete. Any representation to the
contrary is a criminal offense.
We may sell notes to the agents
referred to below as principal for resale at varying or fixed offering prices
or through the agents as agent using their reasonable efforts on our behalf.
We may also sell notes without the assistance of any agent.
Merrill Lynch & Co.
Banc One Capital Markets, Inc.
Citigroup
The date of this prospectus
supplement is , 2003
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Table of
Contents
Prospectus
Supplement
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Page
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About This Prospectus Supplement
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S-1
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Risk Factors
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S-2
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Description of the Notes
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S-3
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United States Federal Income Taxation
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S-15
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Plan of Distribution
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S-23
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Validity of the Notes
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S-24
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Prospectus
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About This Prospectus
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1
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Cautionary Statement Regarding
Forward-Looking Statements
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2
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The Company
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4
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Ratio of Earnings to Fixed Charges
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4
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Selected Financial Data
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5
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Use of Proceeds
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5
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Risk Factors
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6
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Description of the Debt Securities
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8
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Plan of Distribution
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Where You Can Find More Information
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Validity of Securities
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Experts
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About This
Prospectus Supplement
This prospectus supplement is part of a
registration statement we have filed with the Securities and Exchange
Commission, or "SEC," using a "shelf" registration process. By using this
process, we may offer up to $100 million of our notes in one or more
offerings. This prospectus supplement and the accompanying prospectus provide
you with a description of the notes we may offer. Each time we offer notes, we
will provide a pricing supplement to this prospectus supplement. The pricing
supplement will describe the specific terms of the offering. The pricing
supplement may also add, update or change the information contained in this
prospectus supplement or in the accompanying prospectus. Please carefully read
the accompanying prospectus, this prospectus supplement, the applicable pricing
supplement and the information contained in the documents we refer to in the
"Where You Can Find More Information" section of the accompanying prospectus.
References in this prospectus supplement to
"the Company," "we," "us" or other similar terms mean Cleco Power LLC, unless
the context clearly indicates otherwise. We are the successor to Cleco Utility
Group, Inc., a Louisiana corporation, as the result of a merger of Cleco
Utility Group with and into us on December 31, 2000. Accordingly, references in
this prospectus supplement to "the Company," "we," "us" or other similar terms
mean and include Cleco Utility Group, if the references are to events or facts
occurring or existing prior to the merger. References in this prospectus
supplement to an "agent" are to any agent that has executed a distribution
agreement with us to purchase notes as principal for resale or to use
reasonable efforts to distribute the notes as agent on our behalf.
You should rely only on the information
contained or incorporated by reference in this prospectus supplement, the
accompanying prospectus and any pricing supplement. We have not authorized
anyone else to provide you with different or additional information. If anyone
provides you with different or additional information, you should not rely on
it. We are not making an offer to sell the notes in any jurisdiction where the
offer or sale is not permitted. The information contained in this prospectus
supplement, the accompanying prospectus and any pricing supplement is current
only as of its date.
S-1
Risk Factors
Your investment in the notes involves certain
risks. In consultation with your own financial and legal advisers, you should
carefully consider, among other matters, the following discussion of risks
before deciding whether an investment in the notes is suitable for you. Notes
are not an appropriate investment for you if you are unsophisticated with
respect to their significant components.
Redemption May Reduce Your Return on the Notes
If your notes are redeemable at our option, we
may choose to redeem your notes at times when prevailing interest rates are
relatively low. In addition, if your notes are subject to mandatory
redemption, we may be required to redeem your notes also at times when
prevailing interest rates are relatively low. As a result, you generally will
not be able to reinvest the redemption proceeds in a comparable security at an
effective interest rate as high as your notes being redeemed.
There May Not Be Any Trading Market for Your Notes; Many
Factors Affect the
Trading and Market Value of Your Notes
Upon issuance, your notes will not have an
established trading market. We cannot assure you a trading market for your
notes will ever develop or be maintained if developed. In addition to our
creditworthiness, many other factors affect the trading market for and trading
value of your notes. These factors include:
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the method of calculating the principal, premium and
interest in respect of your notes,
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the time remaining to the maturity of your notes,
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the outstanding amount of notes having terms identical
to your notes,
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any redemption features of your notes, and
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the level, direction and volatility of market interest
rates generally.
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There may be a limited number of buyers when
you decide to sell your notes. This may affect the price you receive for your
notes or your ability to sell your notes. In addition, notes that are designed
for specific investment objectives or strategies often experience a more
limited trading market and more price volatility than those not so designed.
You should not purchase notes unless you understand and know you can bear all
of the investment risks involving your notes.
Our Credit Ratings May Not Reflect All Risks of an
Investment in the Notes
The credit ratings of our medium-term note
program may not reflect the potential impact of all risks related to structure
and other factors on any trading market for or trading value of your notes. In
addition, real or anticipated changes in our credit ratings will generally
affect any trading market for or trading value of your notes.
S-2
Description of the Notes
General
We will issue the notes as a series of debt
securities under an indenture, dated as of October 1, 1988, between us (as successor to Cleco Utility Group, Inc.) and Bankers Trust Company, as
supplemented and amended. The Bank of New York is the current trustee under
the indenture. Copies of the indenture and
the Agreement of Resignation, Appointment and Acceptance under which The Bank
of New York succeeded Bankers Trust Company as trustee under the indenture are
included among the exhibits to the registration statement of which this
prospectus supplement and the accompanying prospectus are a part. The indenture is governed by
the Trust Indenture Act of 1939, as amended. The term "debt securities," as
used in this prospectus supplement, refers to all securities issued and
issuable from time to time under the indenture and includes the notes. The
debt securities and the indenture are more fully described in the accompanying
prospectus. The following summary of the material provisions of the notes and
of the indenture is not complete and is qualified in its entirety by reference
to the indenture.
The following description of the notes will apply unless
otherwise specified in an applicable pricing supplement.
All of our debt securities, including the
notes, issued and to be issued under the indenture will be our unsecured
general obligations and will rank equally with all of our other unsecured and
unsubordinated indebtedness outstanding from time to time. The indenture does
not limit the aggregate principal amount of debt securities that we may issue.
We may issue our debt securities from time to time in one or more series up to
the aggregate principal amount authorized by us for a particular series. We
may, from time to time, without the consent of the holders of the notes, issue
notes or other debt securities under our indenture in addition to the notes
offered by this prospectus supplement. We may also, from time to time, without
the consent of the holders of the notes, issue additional notes or other debt securities
having the same terms as previously issued notes, other than the date of
issuance, interest commencement date and offering price, which may vary, that
will form a single issue with the previously issued notes. At September 30, 2003, we had approximately $290 million principal amount of debt securities
issued and outstanding under the indenture, $140 million of which are
medium-term notes.
The notes will be offered on a continuing basis
and will mature on a date one year or more from their date of issue. We call
the date on which the notes mature the "Stated Maturity Date," as specified in
the applicable pricing supplement, unless the principal amount of the notes, or
any installment of the principal amount, becomes due and payable prior to the Stated
Maturity Date by the declaration of acceleration of maturity, notice of
redemption at our option, notice of the holder's option to elect repayment or
otherwise. The Stated Maturity Date or any date prior to the Stated Maturity
Date on which a particular note becomes due and payable, as the case may be, is
referred to in this prospectus supplement as the "Maturity Date" with respect
to the principal of the particular note repayable on that date.
Interest-bearing notes will bear interest at either fixed or floating rates as
specified in the applicable pricing supplement. We may also issue notes that
do not bear interest, or we may issue notes at significant discounts from their
principal amount payable at maturity.
The notes will be denominated in United States
dollars, and we will make payments of principal, premium, if any, and/or
interest, if any, on the notes in United States dollars. Unless otherwise
specified in the applicable pricing supplement, you will be required to pay the
purchase price of your notes in immediately available funds in United States
dollars in The City of New York on the date of settlement. The notes are
currently limited to up to $100 million aggregate initial offering price, but
we may from time to time provide for the issuance of additional notes without
the consent of the holders of outstanding notes.
Interest rates that we offer on the notes may
differ depending upon, among other factors, the aggregate principal amount of
notes purchased in any single transaction. Notes with different variable
terms, in addition to interest rates, may also be offered concurrently to
different investors. We may change interest rates or formulas and other
variable terms of the notes from time to time, but no change will affect any
note already issued or for which we have accepted an offer to purchase.
Each note will be issued in fully registered
book-entry form or certificated form, in denominations of $1,000 or any larger
amount that is an integral multiple of $1,000, unless otherwise specified in
the applicable pricing
S-3
supplement. Interests in notes in book-entry form may
be transferred or exchanged only through a participating member of The
Depository Trust Company, also known as DTC, or any other depository that is
identified in an applicable pricing supplement. For more information on notes
in book-entry form and on the depository, see "- Book-Entry Notes" in this
prospectus supplement and "Description of the Debt Securities-Form,
Denomination and Registration; Book-Entry System" in the accompanying
prospectus. Registration of any transfer of notes in certificated form will be
made at the corporate trust office of the trustee in the Borough of Manhattan,
The City of New York. You will not have to pay a service charge to transfer or
exchange notes, but we may require you to pay taxes or other governmental
charges for exchanges involving transfers under the terms of the indenture.
We will make payments of principal, premium, if
any, and/or interest, if any, on notes in book-entry form through the trustee
to the depository or its nominee. In the case of notes in certificated form,
we will make payment of principal, premium, if any, and/or interest, if any,
due on the Maturity Date through the trustee in immediately available funds
upon presentation and surrender of the certificated note and, in the case of
any repayment on an optional repayment date, upon submission of a duly
completed election form if and as required by the provisions described below,
at the corporate trust office of the trustee or at any other place as we may
designate. Payment of interest due on the Maturity Date of notes in
certificated form will be made to the person to whom payment of the principal
under the note will be made. Payment of interest due on notes in certificated
form other than on the Maturity Date will be made at the corporate trust office
of the trustee or, at our option, may be made by check mailed to the address of
the person entitled to receive payment as the address appears in the security
register. However, a holder of $10 million or more in aggregate principal
amount of notes in certificated form, whether having identical or different
terms and provisions, will be entitled to receive interest payments, other than
on the Maturity Date, by wire transfer of immediately available funds if
appropriate wire transfer instructions have been received in writing by the
trustee not less than 15 days prior to the applicable interest payment date.
Any wire instructions received by the trustee will remain in effect until
revoked by the applicable holder.
Redemption at the Option of the Company
The notes will not be subject to any sinking
fund. We may redeem the notes at our option before their Stated Maturity Date
only if an initial redemption date is specified in the applicable notes and in
the applicable pricing supplement. If an initial redemption date is specified
in the applicable notes and pricing supplement, we may redeem the related notes
at any time on or after the initial redemption date by providing notice to the
holders of the related notes not more than 60 days nor less than 30 days prior
to the date of redemption. We may make this type of redemption all at once or
in parts over time.
When we redeem any notes at our option as
provided above, we will pay the redemption price plus the interest that is
payable to (but not including) the date of redemption on the applicable note.
Unless otherwise specified in the applicable pricing supplement, the redemption
price with respect to a note will initially mean a percentage, the initial
redemption percentage, multiplied by the unpaid principal amount of the note to
be redeemed. The initial redemption percentage, if any, will be specified in
the applicable pricing supplement and will decline at each anniversary of the
initial redemption date by a percentage specified in the applicable pricing
supplement until the redemption price is 100% of the unpaid principal amount of
the note to be redeemed. If an initial redemption percentage is specified in
the applicable pricing supplement but no percentage for the annual reduction of
the initial redemption percentage is specified, the redemption price will be
based upon the initial redemption percentage of the unpaid principal amount of
the note to be redeemed. We will redeem the notes at our option in increments
of $1,000 or any other integral multiple of an authorized denomination
specified in the applicable pricing supplement, provided that any remaining
principal amount will be at least $1,000 or other authorized denomination of
the applicable note.
Repayment at the Option of the Holder
We will repay the notes in whole or in part at
the option of the holders of the notes on any optional repayment date specified
in an applicable pricing supplement. However, a note will not be repayable at
the option of a holder before its Stated Maturity Date if the applicable
pricing supplement does not specify an optional repayment date. Any repayment
in part will be in increments of $1,000 or any other integral multiple of an authorized
denomination specified in the applicable pricing supplement, provided that any
remaining principal amount will be at least
S-4
$1,000 or other authorized
denomination of the applicable note. The repayment price for any note to be
repaid will be 100% of the unpaid principal amount to be repaid, together with
interest on the principal of the applicable note payable to the date of
repayment.
For any note to be repaid, the trustee must
receive, at its corporate trust office, not more than 60 nor less than 30 days
before the optional repayment date, the particular note being repaid and:
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in the case of a note in certificated form, the form
entitled "Option to Elect Repayment" duly completed, or
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in the case of a note in book-entry form, repayment
instructions from the applicable beneficial owner of the note to the
depository and forwarded by the depository.
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Notices of elections from a
holder to exercise the repayment option must be received by the trustee by 5:00 p.m., New York City time, on the last day for giving notice. Exercise of the
repayment option by the holder of a note will be irrevocable.
Only the depository may exercise the repayment
option in respect of global securities representing notes in book-entry form.
Accordingly, beneficial owners of global securities that desire to have all or
any portion of the notes in book-entry form represented by global securities
repaid must instruct the "participant" through which they own their interests
to direct the depository to exercise the repayment option on their behalf by
forwarding repayment instructions to the trustee as discussed above. In order
to ensure that the instructions are received by the trustee on a particular
day, the applicable beneficial owner must provide the necessary instructions to
the participant through which it owns its interest before that participant's
deadline for accepting instructions for that day. Beneficial owners of notes
in book-entry form should consult the participants through which they own their
interests for the applicable deadlines, as different participants may have
different deadlines for accepting instructions from their customers. All
instructions given to participants from beneficial owners of notes in
book-entry form relating to the option to elect repayment will be irrevocable.
In addition, at the time instructions are given, each beneficial owner must
cause the participant through which the beneficial owner owns its interest to
transfer to the trustee, on the depository's records, its interest in the global
security or securities representing the related notes in book-entry form. For
more information on global securities and procedures relating to the
depository, see "-Book-Entry Notes" in this prospectus supplement and
"Description of the Debt Securities-Form, Denomination and Registration;
Book-Entry System" in the accompanying prospectus.
We may at any time purchase notes at any price
in the open market or otherwise. We may hold notes that we purchase in this
manner or surrender them to the trustee for cancellation at our discretion.
Interest
Each interest-bearing note will bear interest
at a fixed or floating rate as provided in the applicable pricing supplement
from its original issue date until the principal of the note is paid or made
available for payment. Fixed rate notes will bear interest at a rate per
annum, and floating rate notes will bear interest pursuant to an interest rate
formula. Interest payments on the notes will equal the amount of interest
accrued from and including
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the immediately preceding interest payment date on
which interest was paid, or
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the date of issue, if no interest has been paid with
respect to the notes.
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Interest on the notes will accrue to, but exclude, the
applicable interest payment date or the Maturity Date, as the case may be.
Interest will be payable in arrears on each
interest payment date specified in the applicable pricing supplement and on the
Maturity Date. Unless otherwise specified in an applicable pricing supplement,
interest will be payable to the persons who are registered holders of the notes
as of the close of business on the regular record date, which will be the
fifteenth calendar day immediately preceding the related interest payment date,
whether or not that day is
S-5
a "Business Day," as defined below. The first
payment of interest on any note originally issued between a regular record date
and the related interest payment date will be made on the interest payment date
immediately following the next succeeding regular record date to the persons
who are the registered holders on the next succeeding regular record date.
"Business Day" means any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on which
commercial banks are authorized or required by law, regulation or executive
order to close in The City of New York. Additionally, with respect to notes as
to which the London Interbank Offered Rate, or "LIBOR" is an applicable
"Interest Rate Basis," the day must also be a "London Banking Day," which means
a day on which commercial banks are open for business, including dealings in
the "LIBOR Currency," in London. The terms "LIBOR," "LIBOR Currency" and
"Interest Rate Basis" are discussed in "- Floating Rate Notes" below.
Fixed Rate Notes
Each fixed rate note will bear interest from
and including the date of issue, at the rate per annum specified in the
applicable pricing supplement, until the principal amount of the note is paid.
The interest rate on any fixed-rate note may not exceed 9% per year unless we
apply for and receive an order of the Louisiana Public Service Commission
allowing a higher rate to be paid. Interest on fixed rate notes will be
computed on the basis of a 360-day year of twelve 30-day months.
Unless otherwise specified in an applicable
pricing supplement, interest on fixed rate notes will be payable semiannually
on March 15 and September 15 of each year and on the Maturity Date. If any
interest payment date or the Maturity Date of a fixed rate note falls on a day
that is not a Business Day, the related payment of principal, premium, if any,
and/or interest will be made on the next succeeding Business Day as if made on
the date the applicable payment was due, and no additional interest will accrue
in respect of the payment made on that next succeeding Business Day.
Floating Rate Notes
We use various capitalized terms in this
section in describing the floating rate notes. If not already defined, these
terms are defined and discussed below.
Interest on floating rate notes will be
determined by reference to the applicable "Interest Rate Basis" or "Interest
Rate Bases," which may be one or more of:
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the "Commercial Paper Rate,"
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LIBOR,
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the "Treasury Rate," or
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any other Interest Rate Basis or interest rate formula
that is specified in the applicable pricing supplement.
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A floating rate note
may bear interest with respect to two or more Interest Rate Bases.
Each applicable
pricing supplement will specify certain terms of the floating rate note being
offered, including:
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whether the floating rate note is:
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a "Regular Floating Rate Note,"
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a "Floating Rate/Fixed Rate Note" or
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S-6
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an "Inverse Floating Rate Note,"
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the "Fixed Interest Rate," if applicable,
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the Interest Rate Basis or Bases,
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the "Initial Interest Rate," if any,
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the "Interest Reset Dates,"
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the interest payment dates,
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the period to maturity of the instrument or obligation
with respect to which the Interest Rate Basis or Bases will be calculated,
which we call the "Index Maturity,"
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the "Maximum Interest Rate" and "Minimum Interest Rate,"
if any,
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the number of basis points to be added to or
subtracted from the related Interest Rate Basis or Bases, which we call the
"Spread,"
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the percentage of the related Interest Rate Basis or
Bases by which the Interest Rate Basis or Bases will be multiplied to
determine the applicable interest rate, which we call the "Spread
Multiplier," and
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if one or more of the specified Interest Rate Bases is
LIBOR, the LIBOR Currency, the Index Maturity and the "Designated LIBOR
Page."
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Regular Floating Rate Note
A floating rate
note will be a "Regular Floating Rate Note" unless:
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it is designated as a Floating Rate/Fixed Rate Note or
an Inverse Floating Rate Note or
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a different interest rate formula applies to the note
as a result of an "Addendum" to or "Other Provision" of the note, as
described below in "- Other Provisions; Addenda."
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A Regular Floating Rate Note will bear interest at the
rate determined by reference to the applicable Interest Rate Basis or Bases:
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plus or minus the applicable Spread, if any, and/or
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multiplied by the applicable Spread Multiplier, if
any.
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Beginning on the first Interest Reset Date, the rate at
which interest on the Regular Floating Rate Note will be payable will be reset
as of each Interest Reset Date, except that the interest rate in effect for the
period from the date of issue to the first Interest Reset Date will be the
"Initial Interest Rate."
Floating Rate/Fixed Rate Notes
If a floating
rate note is designated as a "Floating Rate/Fixed Rate Note," it will bear
interest at the rate determined by reference to the applicable Interest Rate
Basis or Bases:
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plus or minus the applicable Spread, if any, and/or
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multiplied by the applicable Spread Multiplier, if
any.
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S-7
Beginning
on the first Interest Reset Date, the rate at which interest on the Floating
Rate/Fixed Rate Note will be payable will be reset as of each Interest Reset
Date, except that:
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the interest rate in effect for the period from the
date of issue to the first Interest Reset Date will be the Initial Interest Rate,
and
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the interest rate in effect commencing on, and
including, the date on which interest begins to accrue on a fixed rate basis
to maturity will be the "Fixed Interest Rate," if the rate is specified in
the applicable pricing supplement, or if no Fixed Interest Rate is specified,
the interest rate in effect on the Floating Rate/Fixed Rate Note on the day
immediately preceding the date on which interest begins to accrue on a fixed
rate basis.
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Inverse Floating Rate Notes
If a floating rate note is designated as an
"Inverse Floating Rate Note," it will bear interest equal to the Fixed Interest
Rate specified in the related pricing supplement minus the rate determined by
reference to the applicable Interest Rate Basis or Bases:
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plus or minus the applicable Spread, if any, and/or
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multiplied by the applicable Spread Multiplier, if
any.
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However, the interest rate on
the applicable Inverse Floating Rate Note will not be less than 0%. Beginning
on the first Interest Reset Date, the rate at which interest on the Inverse
Floating Rate Note is payable will be reset as of each Interest Reset Date,
except that the interest rate in effect for the period from the date of issue
to the first Interest Reset Date will be the Initial Interest Rate.
Interest Rate Determination
The interest
rate derived from an Interest Rate Basis will be determined in accordance with
the applicable provisions below. The interest rate in effect on each day will
be based on:
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if the day is an Interest Reset Date, the rate
determined as of the "Interest Determination Date" immediately preceding the
applicable Interest Reset Date, or
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if the day is not an Interest Reset Date, the rate
determined as of the Interest Determination Date immediately preceding the
most recent Interest Reset Date, except that the interest rate in effect for
the period from the date of issue to the first Interest Reset Date will be
the Initial Interest Rate.
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Interest Reset Dates. The
applicable pricing supplement will specify the "Interest Reset Dates," which are
the dates on which the interest rate on the related floating rate note will be
reset. The period between Interest Reset Dates is the "Interest Reset
Period." The Interest Reset Date will be, in the case of floating rate notes
that reset:
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daily - each Business Day;
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weekly - the Wednesday of each week, except for weekly
reset floating rate notes as to which the Treasury Rate is an applicable
Interest Rate Basis. These notes will reset the Tuesday of each week, except
as described below under "- Interest Determination Dates;"
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monthly - the third Wednesday of each month;
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quarterly - the third Wednesday of March, June,
September and December of each year;
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S-8
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semiannually - the third Wednesday of the two months
specified in the applicable pricing supplement; and
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annually - the third Wednesday of the month specified
in the applicable pricing supplement.
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However, the rate of interest
will not reset after the applicable date on which interest on a fixed rate
basis begins to accrue with respect to Floating Rate/Fixed Rate Notes.
If any Interest Reset Date for any floating
rate note would otherwise be a day that is not a Business Day, the particular
Interest Reset Date will be postponed to the next succeeding Business Day.
However, in the case of a floating rate note as to which LIBOR is an applicable
Interest Rate Basis, if the Business Day falls in the next succeeding calendar
month, the particular Interest Reset Date will be the immediately preceding
Business Day. In addition, in the case of a floating rate note as to which the
Treasury Rate is an applicable Interest Rate Basis, if the Interest
Determination Date would otherwise fall on an Interest Reset Date, the
particular Interest Reset Date will be postponed to the next succeeding
Business Day.
Interest Determination Dates. The
interest rate applicable to an Interest Reset Period commencing on the related
Interest Reset Date will be determined by reference to the applicable Interest
Rate Basis as of the particular "Interest Determination Date."
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The Interest Determination Date with respect to the
Commercial Paper Rate will be the second Business Day preceding the related
Interest Reset Date.
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The Interest Determination Date with respect to LIBOR
will be the second London Banking Day preceding the related Interest Reset
Date.
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The Interest Determination Date with respect to the
Treasury Rate will be the day in the week in which the related Interest Reset
Date falls on which day "Treasury Bills" are normally auctioned. Treasury
Bills are normally sold at auction on Monday of each week, unless that day is
a legal holiday, in which case the auction is normally held on the following
Tuesday, except that the auction may be held on the preceding Friday.
However, if an auction is held on the Friday of the week preceding the
related Interest Reset Date, the Interest Determination Date will be the
preceding Friday.
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The Interest Determination Date pertaining to a
floating rate note the interest rate of which is based on two or more
Interest Rate Bases will be the latest Business Day that is at least two
Business Days before the related Interest Reset Date for the applicable
floating rate note on which each Interest Rate Basis is determinable.
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Calculation Date. Unless otherwise
specified in the applicable pricing supplement, The Bank of New York will be
the calculation agent. The interest rate applicable to each Interest Reset
Period will be determined by the calculation agent on or prior to the
calculation date, except with respect to LIBOR, which will be determined on the
particular Interest Determination Date. Upon the request of the holder of any
floating rate note, the calculation agent will provide the interest rate then
in effect and, if determined, the interest rate that will become effective as a
result of a determination made for the next Interest Reset Date with respect to
that floating rate note. Unless otherwise specified in the applicable pricing
supplement, the calculation date, if applicable, pertaining to any Interest
Determination Date will be the earlier of:
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the tenth calendar day after the applicable Interest
Determination Date, or, if the tenth calendar day is not a Business Day, the
next succeeding Business Day, or
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the Business Day immediately preceding the applicable
interest payment date or the Maturity Date, as the case may be.
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S-9
Maximum and
Minimum Interest Rates. A floating rate note also may have either or both
of the following:
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a maximum numerical limitation, or ceiling, on the
rate at which interest may accrue during any Interest Reset Period, which we
call a "Maximum Interest Rate," and
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a minimum numerical limitation, or floor, on the rate
at which interest may accrue during any Interest Reset Period, which we call
a "Minimum Interest Rate."
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The indenture is, and any notes issued under
the indenture will be, governed by and construed in accordance with the laws of
the State of New York. In addition to any Maximum Interest Rate that may apply
to a floating rate note, the interest on floating rate notes will in no event
be higher than the maximum rate permitted by New York law, as it may be
modified by federal law.
Interest Payments and Calculations.
Each applicable pricing supplement will specify the dates on which interest
will be payable. The interest payment dates with respect to floating rate
notes that reset will be:
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in the case of floating rate notes that reset daily,
weekly or monthly - the third Wednesday of each month or - the third
Wednesday of March, June, September and December of each year, as specified
in the applicable pricing supplement;
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in the case of floating rate notes that reset
quarterly - the third Wednesday of March, June, September and December of
each year;
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in the case of floating rate notes that reset
semiannually - the third Wednesday of the two months of each year specified
in the applicable pricing supplement; and
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in the case of floating rate notes that reset annually
- the third Wednesday of the month of each year specified in the applicable
pricing supplement.
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In addition, the Maturity Date will also be an interest
payment date.
If any interest payment date, other than the
Maturity Date, for any floating rate note would otherwise be a day that is not
a Business Day, the interest payment date will be postponed to the next
succeeding Business Day. However, in the case of a floating rate note as to
which LIBOR is an applicable Interest Rate Basis, if the Business Day falls in
the next succeeding calendar month, the applicable interest payment date will
be the immediately preceding Business Day. If the Maturity Date of a floating
rate note falls on a day that is not a Business Day, the payment of principal,
premium, if any, and/or interest will be made on the next succeeding Business
Day as if made on the Maturity Date, and no additional interest will accrue in
respect of the payment made on that next succeeding Business Day.
All percentages resulting from any calculation
on floating rate notes will be rounded to the nearest one hundred-thousandth of
a percentage point, with five one-millionths of a percentage point rounded
upwards. For example, 9.876545%, or .09876545, would be rounded to 9.87655%,
or .0987655. All monetary amounts used in or resulting from any calculation on
floating rate notes will be rounded to the nearest cent or other comparable
unit, with one-half cent or unit being rounded upward.
With respect to each floating rate note,
accrued interest is calculated by multiplying its principal amount by an
accrued interest factor. The accrued interest factor is computed by adding the
interest factor calculated for each day in the period for which accrued
interest is being calculated.
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In the case of notes for which the Interest Rate Basis
is the Commercial Paper Rate or LIBOR, the interest factor for each day will
be computed by dividing the interest rate applicable to each day in the
period by 360.
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S-10
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In the case of notes for which the Interest Rate Basis
is the Treasury Rate, the interest factor for each day will be computed by
dividing the interest rate applicable to each day in the period by the actual
number of days in the year.
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The interest factor for notes for which the interest
rate is calculated with reference to two or more Interest Rate Bases will be
calculated in each period in the same manner as if only one of the applicable
Interest Rate Bases applied.
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Interest Rate Bases
The calculation
agent will determine the rate derived from each Interest Rate Basis in
accordance with the following provisions:
Commercial
Paper Rate. "Commercial Paper Rate" means:
(1)
the "Money Market Yield," as defined below, on the applicable Interest
Determination Date of the rate for commercial paper having the Index Maturity
specified in the applicable pricing supplement published in H.15(519), as
defined below, under the caption "Commercial Paper-Nonfinancial," or
(2)
if the rate referred to in clause (1) is not so published by 3:00 p.m.,
New York City time, on the related calculation date, the Money Market Yield on
the applicable Interest Determination Date of the rate for commercial paper
having the applicable Index Maturity as published in H.15 Daily Update, as
defined below, or other recognized electronic source used for the purpose of
displaying the applicable rate, under the caption "Commercial
Paper-Nonfinancial," or
(3)
if the rate referred to in clause (2) is not so published by 3:00 p.m.,
New York City time, on the related calculation date, the rate on the applicable
Interest Determination Date calculated by the calculation agent as the Money
Market Yield of the arithmetic mean of the offered rates at approximately 11:00
a.m., New York City time, on that Interest Determination Date of three leading
dealers of United States dollar commercial paper in The City of New York, which
may include an agent or its affiliates, selected by the calculation agent for
commercial paper having the applicable Index Maturity placed for industrial
issuers whose bond rating is "Aa," or the equivalent, from a nationally
recognized statistical rating organization, or
(4)
if the dealers selected by the calculation agent are not quoting as
mentioned in clause (3), the Commercial Paper Rate in effect on the applicable
Interest Determination Date.
"Money Market
Yield" means a yield calculated in accordance with the following formula and
expressed as a percentage:
Money
Market Yield =
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D x 360
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x 100
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360 - (D x M)
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where "D" refers to the
applicable per annum rate for commercial paper quoted on a bank discount basis
and expressed as a decimal, and "M" refers to the actual number of days in the
interest period for which interest is being calculated.
"H.15 (519)" means the weekly statistical
release designated as H.15(519), or any successor publication, published by the
Board of Governors of the Federal Reserve System.
"H.15 Daily Update" means the daily update of H.15(519),
available through the world-wide-web site of the Board of Governors of the
Federal Reserve System at http://www.federalreserve.gov/releases/h15/update/,
or any
S-11
successor site or publication (the referenced web site and its successor
sites or publications are not incorporated by reference into this prospectus
supplement).
LIBOR. "LIBOR" means:
(1)
if "LIBOR Telerate" is specified in the applicable pricing supplement or
if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the applicable
pricing supplement as the method for calculating LIBOR, LIBOR will be the rate
for deposits in the LIBOR Currency, as defined below, having the Index Maturity
specified in the applicable pricing supplement, commencing on the related
Interest Reset Date, that appears on the Designated LIBOR Page, as defined
below, as of 11:00 a.m., London time, on the applicable Interest Determination
Date, or
(2)
if "LIBOR Reuters" is specified in the applicable pricing supplement,
LIBOR will be the arithmetic mean of the offered rates, calculated by the
calculation agent, for deposits in the LIBOR Currency having the applicable
Index Maturity, commencing on the related Interest Reset Date, that appear on
the Designated LIBOR Page as of 11:00 a.m., London time, on the applicable
Interest Determination Date. If the Designated LIBOR Page by its terms
provides only for a single rate, then the single rate will be used, or
(3)
with respect to an Interest Determination Date on which fewer than two
offered rates appear, or no rate appears, as the case may be, on the Designated
LIBOR Page as specified in clauses (1) and (2), respectively, the rate
calculated by the calculation agent as the arithmetic mean of at least two
offered quotations obtained by the calculation agent after requesting the
principal London offices of each of four major reference banks, which may
include affiliates of an agent, in the London interbank market to provide the
calculation agent with its offered quotation for deposits in the LIBOR Currency
for the period of the applicable Index Maturity, commencing on the related
Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on the applicable Interest Determination
Date and in a principal amount that is representative for a single transaction
in the applicable LIBOR Currency in that market at that time, or
(4)
if fewer than two quotations referred to in clause (3) are so provided,
the rate calculated by the calculation agent as the arithmetic mean of the
rates quoted at approximately 11:00 a.m., in the applicable Principal Financial
Center, as defined below, on the applicable Interest Determination Date by
three major banks, which may include affiliates of an agent, in the applicable
Principal Financial Center selected by the calculation agent for loans in the
LIBOR Currency to leading European banks, having the applicable Index Maturity
and in a principal amount that is representative for a single transaction in
the applicable LIBOR Currency in that market at that time, or
(5)
if the banks so selected by the calculation agent are not quoting as
mentioned in clause (4), LIBOR in effect on the applicable Interest
Determination Date.
"LIBOR Currency" means the currency specified
in the applicable pricing supplement as to which LIBOR will be calculated or,
if no currency is specified in the applicable pricing supplement, United States
dollars.
"Designated
LIBOR Page" means either:
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if "LIBOR Telerate" is designated in the applicable
pricing supplement or neither "LIBOR Reuters" nor "LIBOR Telerate" is specified
in the applicable pricing supplement as the method for calculating LIBOR, the
display on Bridge Telerate, Inc., or any successor service on the page
specified in the pricing supplement, or any page as may replace the specified
page on that service, for the purpose of displaying the London interbank
rates of major banks for the applicable LIBOR Currency, or
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if "LIBOR Reuters" is specified in the applicable
pricing supplement, the display on the Reuters Monitor Money Rates Service or
any successor service on the page specified in the applicable pricing
supplement, or any other page as may replace the specified page on that
service, for the purpose of displaying the London interbank rates of major
banks for the applicable LIBOR Currency.
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S-12
"Principal Financial Center" means the capital
city of the country to which the LIBOR Currency relates, except that with
respect to United States dollars, Australian dollars, Canadian dollars,
Deutsche marks, Dutch guilders, Italian lire, Portuguese escudos, South African
rand and Swiss francs, the "Principal Financial Center" will be The City of New
York, Sydney, Toronto, Frankfurt, Amsterdam, Milan, London, Johannesburg and
Zurich, respectively.
Treasury Rate.
The "Treasury Rate" means:
(1)
the rate from the auction held on the applicable Interest Determination
Date, which we refer to as the "Auction," of direct obligations of the United
States, which we refer to as "Treasury Bills," having the Index Maturity
specified in the applicable pricing supplement under the caption "INVESTMENT
RATE" on the display on Bridge Telerate, Inc., or any successor service on page
56 or 57 or any other pages as may replace page 56 or 57 on that service, which
we refer to as "Telerate Page 56" and "Telerate Page 57," respectively, or
(2)
if the rate referred to in clause (1) is not so published by 3:00 p.m.,
New York City time, on the related calculation date, the "Bond Equivalent
Yield," as defined below, of the rate for the applicable Treasury Bills as
published in H.15 Daily Update, or other recognized electronic source used for
the purpose of displaying the applicable rate, under the caption "U.S.
Government Securities/Treasury Bills/Auction High," or
(3)
if the rate referred to in clause (2) is not so published by 3:00 p.m.,
New York City time, on the related calculation date, the Bond Equivalent Yield
of the auction rate of the applicable Treasury Bills announced by the United
States Department of the Treasury, or
(4)
if the rate referred to in clause (3) is not announced by the United
States Department of the Treasury, or if the Auction is not held, the Bond
Equivalent Yield of the rate on the applicable Interest Determination Date of
the applicable Treasury Bills published in H.15(519) under the caption "U.S.
Government Securities/Treasury Bills/Secondary Market," or
(5)
if the rate referred to in clause (4) is not so published by 3:00 p.m.,
New York City time, on the related calculation date, the rate on the applicable
Interest Determination Date of the applicable Treasury Bills published in H.15
Daily Update, or other recognized electronic source used for the purpose of
displaying the applicable rate, under the caption "U.S. Government
Securities/Treasury Bills/Secondary Market," or
(6)
if the rate referred to in clause (5) is not so published by 3:00 p.m.,
New York City time, on the related calculation date, the rate on the applicable
Interest Determination Date calculated by the calculation agent as the Bond
Equivalent Yield of the arithmetic mean of the secondary market bid rates, as
of approximately 3:30 p.m., New York City time, on the applicable Interest
Determination Date, of three primary United States government securities
dealers, which may include an agent or its affiliates, selected by the
calculation agent, for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity specified in the applicable pricing supplement,
or
(7)
if the dealers selected by the calculation agent are not quoting as
mentioned in clause (6), the Treasury Rate in effect on the applicable Interest
Determination Date.
S-13
"Bond Equivalent
Yield" means a yield calculated in accordance with the following formula and
expressed as a percentage:
Bond
Equivalent Yield =
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D x N
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x 100
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360 - (D x M)
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where "D" refers to the applicable per annum rate for
Treasury Bills quoted on a bank discount basis and expressed as a decimal, "N"
refers to 365 or 366, as the case may be, and "M" refers to the actual number
of days in the interest period for which interest is being calculated.
Other Provisions; Addenda
Any provisions with respect to a series of
notes, including the specification and determination of one or more Interest
Rate Bases, the calculation of the interest rate applicable to a floating rate
note, the applicable interest payment dates, the Stated Maturity Date, any
redemption or repayment provisions or any other matter relating to the
applicable notes may be modified by terms specified under "Other Provisions" on
the face of the applicable notes. Any of these provisions may also be modified
in an Addendum relating to the applicable notes, if specified on the face of
the applicable notes and in the applicable pricing supplement.
Defeasance and Covenant Defeasance
We will be discharged from all of our
obligations with respect to the notes, except for certain obligations to
exchange or register the transfer of notes, to replace stolen, lost or
mutilated notes, to maintain paying agencies and to hold moneys for payment in
trust, upon the deposit in trust for the benefit of the holders of the notes of
money or U.S. government obligations, or both. A deposit by us in this manner
will provide money in an amount sufficient to pay the principal, premium, if
any, and/or interest, if any, on the notes on the respective stated maturities
in accordance with the terms of the indenture and the notes through the payment
of principal and interest in respect of the deposited money or government
obligations in accordance with their terms. This defeasance or discharge may
occur only if, among other things, we have delivered to the trustee an opinion
of counsel to the effect that we have received from, or there has been
published by, the United States Internal Revenue Service a ruling, or there has
been a change in tax law, in either case to the effect that holders of the
notes will not recognize gain or loss for federal income tax purposes as a
result of the deposit, defeasance and discharge and will be subject to federal
income tax on the same amount, in the same manner and at the same times as
would have been the case if the deposit, defeasance and discharge were not to
occur.
In certain circumstances, we may omit to comply
with specified restrictive covenants applicable to the notes. In those
circumstances, the occurrence of certain events of default, which are described
in the accompanying prospectus under "- Events of Default," will be deemed not
to be or result in an event of default with respect to the notes. In order to
exercise this option, we will be required to deposit, in trust for the benefit
of the holders of the notes, money or U.S. government obligations, or both. A
deposit by us in this manner will provide money in an amount sufficient to pay
the principal, premium, if any, and/or interest, if any, on the notes on the
respective stated maturities in accordance with the terms of the indenture and
the notes through the payment of principal and interest in respect of the money
or government obligations in accordance with their terms. We will also be
required, among other things, to deliver to the trustee an opinion of counsel
to the effect that holders of the notes will not recognize gain or loss for
federal income tax purposes as a result of the deposit and defeasance of
certain obligations and will be subject to federal income tax on the same
amount, in the same manner and at the same times as would have been the case if
the deposit and defeasance were not to occur. In the event we exercise this
option with respect to any notes and the notes were declared due and payable
because of the occurrence of any event of default, the amount of money and U.S.
government obligations deposited in trust would be sufficient to pay amounts
due on the notes at the time of their respective stated maturities, but might
not be sufficient to pay amounts due on the notes upon any acceleration
resulting from the event of default. In this case, we would remain liable for
those payments.
S-14
Discount Notes
We may from time to time offer notes at a price
less than their redemption price at maturity, resulting in the applicable notes
being treated as if they were issued with original issue discount for federal
income tax purposes. These notes are called "Discount Notes." Discount Notes
may pay no current interest or interest at a rate that at the time of issuance
is below market rates. Additional considerations relating to any Discount
Notes will be described in the applicable pricing supplement.
Amortizing Notes
We may from time to time offer notes, which we
call "Amortizing Notes," with amounts of principal and interest payable in
installments over the term of the notes. Unless otherwise specified in an
applicable pricing supplement, interest on each Amortizing Note will be
computed on the basis of a 360-day year of twelve 30-day months. Payments with
respect to Amortizing Notes will be applied first to interest due and payable
on the Amortizing Notes and then to the reduction of the unpaid principal
amount of the Amortizing Notes. Further information concerning additional
terms and conditions of any issue of Amortizing Notes will be specified in the
applicable pricing supplement. A table setting forth repayment information in
respect of each Amortizing Note will be specified in the applicable pricing
supplement.
Book-Entry Notes
Description of the Global Securities
Upon issuance, all notes in book-entry form
having the same date of issue, maturity and otherwise having identical terms
and provisions will be represented by one or more fully registered global
securities, which we call the "Global Notes." Each Global Note will be
deposited with, or on behalf of, The Depository Trust Company, as depository,
and registered in the name of the depository or a nominee of the depository.
Unless and until it is exchanged in whole or in part for notes in certificated
form, no Global Note may be transferred except as a whole by the depository or
by a nominee of the depository.
Depository Procedures
For information about the depository and its
procedures, see "Description of the Debt Securities - Form, Denomination and
Registration; Book-Entry System" in the accompanying prospectus.
United States Federal Income Taxation
The following summary of material United States
federal income tax consequences of the purchase, ownership and disposition of
the notes is based upon laws, regulations, rulings and decisions now in effect,
all of which are subject to change, including changes in effective dates, or
possible differing interpretations. It deals only with notes held as capital
assets and does not purport to deal with persons in special tax situations,
such as financial institutions, insurance companies, regulated investment
companies, dealers in securities or currencies, U.S. expatriates, former
long-term residents, persons holding notes as a hedge against currency risks or
as a position in a "straddle" for tax purposes, or persons whose functional
currency is not the United States dollar. It also does not deal with holders
other than original purchasers, except where otherwise specifically noted.
Persons considering the purchase of the notes should consult their own tax
advisors concerning the application of United States federal income tax laws to
their particular situations as well as any consequences of the purchase,
ownership and disposition of the notes arising under the laws of any other
taxing jurisdiction.
S-15
As used in this
prospectus supplement, the term "U.S. Holder" means a beneficial owner of a
note that is for United States federal income tax purposes:
(1)
an individual who is either a citizen or resident of the United States,
(2)
a corporation, including any entity treated as a corporation for United
States federal income tax purposes, created or organized in or under the laws
of the United States, any state thereof or the District of Columbia,
(3)
an estate whose income is subject to United States federal income tax
regardless of its source, or
(4)
a trust if either -
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a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more
United States persons have the authority to control all substantial decisions
of the trust, or
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the trust has a valid election in effect under
applicable Treasury regulations to be treated as a domestic trust.
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As used in this prospectus supplement, the term "non-U.S.
Holder" means a beneficial owner of a note that is not a U.S. Holder. But if a
partnership, including any entity treated as a partnership for United States
federal income tax purposes, is the beneficial owner of a note, the tax
treatment of a partner will generally depend upon the status of the partner and
upon the activities of the partnership. Partners of partnerships holding a
note should consult their tax advisors.
U.S. Holders
Payments of Interest
Payments of interest on a note generally will
be taxable to a U.S. Holder as ordinary interest income at the time such
payments are accrued or are received, in accordance with the U.S. Holder's
regular method of tax accounting.
Original Issue Discount
The following summary is a general discussion
of the United States federal income tax consequences to U.S. Holders of the
purchase, ownership and disposition of notes issued with original issue
discount ("Discount Notes").
Fixed Rate Notes
For United States federal income tax purposes,
original issue discount is the excess of the stated redemption price at
maturity of a note over its issue price.
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The issue price of each note of an issue of notes
equals the first price at which a substantial amount of the notes has been
sold, ignoring sales to bond houses, brokers, or similar persons or
organizations acting in the capacity of underwriters, placement agents, or
wholesalers.
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The stated redemption price at maturity of a note is
the sum of all payments provided by the note other than "qualified stated
interest" payments.
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The term "qualified stated interest" generally means
stated interest that is unconditionally payable in cash or property (other
than debt instruments of the issuer) at least annually at a single fixed
rate.
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But if the amount of
original issue discount is less than a de minimis amount (generally 1/4 of 1% of
the note's stated redemption price at maturity multiplied by the number of
complete years to its maturity from its issue date or, in the case of a note
providing for the payment of any amount other than qualified stated interest
prior to maturity, multiplied by the weighted average maturity of the note), it
will be treated as zero. For the purpose of determining
S-16
whether the amount of
original issue discount exceeds the de minimis amount, if a note bears interest
for one or more accrual periods at a rate below the rate applicable for the
remaining term of the note (e.g., notes with teaser rates or interest
holidays), the note's stated redemption price at maturity is treated as equal
to the note's issue price plus the greater of (i) the amount of foregone interest
resulting from the reduced rates or (ii) the excess of the note's stated
principal amount over its issue price.
Payments of qualified stated interest on a note
are taxable to a U.S. Holder as ordinary interest income at the time such
payments are accrued or are received (in accordance with the U.S. Holder's
regular method of tax accounting). A U.S. Holder of a Discount Note generally
must include original issue discount in income as ordinary interest income for United
States federal income tax purposes as it accrues under a constant yield
method in advance of receipt of the cash payments attributable to such income,
regardless of the U.S. Holder's regular method of tax accounting. In general,
the amount of original issue discount included in income by the initial U.S.
Holder of a Discount Note is the sum of the daily portions of original issue
discount with respect to the Discount Note for each day during the taxable year
(or portion of the taxable year) on which the U.S. Holder held the Discount
Note. The "daily portion" of original issue discount on any Discount Note is
determined by allocating to each day in any accrual period a ratable portion of
the original issue discount allocable to that accrual period. An "accrual
period" may be of any length and the accrual periods may vary in length over
the term of the Discount Note, provided that each accrual period is no longer
than one year and each scheduled payment of principal or interest occurs either
on the final day of an accrual period or on the first day of an accrual
period. The amount of original issue discount allocable to each accrual period
is generally equal to the excess of
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the product of the Discount Note's adjusted issue
price at the beginning of such accrual period and its yield to maturity
(determined on the basis of compounding at the close of each accrual period
and appropriately adjusted to take into account the length of the particular
accrual period) over
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the amount of any qualified stated interest payments
allocable to such accrual period.
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The "adjusted issue
price" of a Discount Note at the beginning of any accrual period is the sum of
the issue price of the Discount Note plus the amount of original issue discount
included in the holder's income in all prior accrual periods minus the amount
of any prior payments on the Discount Note that were not qualified stated
interest payments. Under these rules, U.S. Holders generally will have to
include in income increasingly greater amounts of original issue discount in
successive accrual periods.
Acquisition Premium
A U.S. Holder who purchases a Discount Note for
an amount that is greater than its adjusted issue price as of the purchase date
and less than or equal to the sum of all amounts payable on the Discount Note
after the purchase date other than payments of qualified stated interest, will
be considered to have purchased the Discount Note at an "acquisition premium."
Under the acquisition premium rules, the amount of original issue discount
which such U.S. Holder must include in its gross income with respect to such
Discount Note for any taxable year (or portion thereof in which the U.S. Holder
holds the Discount Note) will be reduced (but not below zero) by the portion of
the acquisition premium properly allocable to the period.
Variable Notes
Floating rate
notes (referred to in this section as "Variable Notes") that qualify as
"variable rate debt instruments" are subject to special rules. A Variable Note
will qualify as a "variable rate debt instrument" if (i) its issue price does
not exceed the total principal payments due under the Variable Note by more
than a specified de minimis amount, (ii) no principal payments are contingent,
and (iii) it provides for stated interest, paid or compounded at least
annually, at current values of:
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one or more qualified floating rates,
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a single fixed rate and one or more qualified floating
rates,
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a single objective rate, or
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a single fixed rate and a single objective rate that
is a qualified inverse floating rate.
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S-17
A "qualified floating rate" is any variable
rate where variations in the value of such rate can reasonably be expected to
measure contemporaneous variations in the cost of newly borrowed funds in the
currency in which the Variable Note is denominated. Although a multiple of a
qualified floating rate will generally not itself constitute a qualified
floating rate, a variable rate equal to the product of a qualified floating
rate and a fixed multiple that is greater than .65 but not more than 1.35 will
constitute a qualified floating rate. A variable rate equal to the product of
a qualified floating rate and a fixed multiple that is greater than .65 but not
more than 1.35, increased or decreased by a fixed rate, will also constitute a
qualified floating rate. In addition, two or more qualified floating rates
that can reasonably be expected to have approximately the same values
throughout the term of the Variable Note (e.g., two or more qualified floating
rates with values within 25 basis points of each other as determined on the
Variable Note's issue date) will be treated as a single qualified floating
rate. Notwithstanding the foregoing, a variable rate that would otherwise
constitute a qualified floating rate but which is subject to one or more
restrictions such as a restriction on the maximum interest rate (i.e., a cap)
or the minimum interest rate (i.e., a floor) will not be treated as a qualified
floating rate, unless such cap or floor (i) is fixed throughout the term
of the note or (ii) is not reasonably expected to affect significantly the
yield of the note.
An "objective rate" is a rate that is not
itself a qualified floating rate but which is determined using a single fixed
formula that is based on objective financial or economic information. A rate
will not qualify as an objective rate if it is based on information that is
within the control of the issuer, or a related party, or that is unique to the
circumstances of the issuer, or a related party, such as dividends, profits, or
the value of the issuer's stock (although a rate does not fail to be an
objective rate merely because it is based on the credit quality of the issuer).
A "qualified inverse floating rate" is any
objective rate where such rate is equal to a fixed rate minus a qualified
floating rate, as long as variations in the rate can reasonably be expected to
inversely reflect contemporaneous variations in the qualified floating rate.
If a Variable Note provides for stated interest
at a fixed rate for an initial period of one year or less followed by a variable
rate that is either a qualified floating rate or an objective rate and if the
variable rate on the Variable Note's issue date is intended to approximate the
fixed rate (e.g., the value of the variable rate on the issue date does not
differ from the value of the fixed rate by more than 25 basis points), then the
fixed rate and the variable rate together will constitute either a single
qualified floating rate or objective rate, as the case may be.
If a Variable Note that provides for stated
interest at either a single qualified floating rate or a single objective rate
throughout the term thereof qualifies as a "variable rate debt instrument," and
if the interest on a Variable Note is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually, then
all stated interest on the Variable Note will constitute qualified stated
interest and will be taxed accordingly. Thus, such a Variable Note will
generally not be treated as having been issued with original issue discount
unless the Variable Note is issued at a "true" discount (i.e., at a price below
the Variable Note's stated principal amount) in excess of a specified de
minimis amount. The amount of qualified stated interest and the amount of
original issue discount, if any, that accrues during an accrual period on such
a Variable Note are determined under the rules (described above) applicable to
fixed rate notes by assuming that the variable rate is a fixed rate equal to
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in the case of a qualified floating rate or qualified
inverse floating rate, the value as of the issue date, of the qualified
floating rate or qualified inverse floating rate, or
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in the case of an objective rate (other than a
qualified inverse floating rate), a fixed rate that reflects the yield that
is reasonably expected for the Variable Note.
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The qualified stated interest allocable to an
accrual period is increased (or decreased) if the interest actually paid during
an accrual period exceeds (or is less than) the interest assumed to be paid
during the accrual period pursuant to the foregoing rules.
S-18
In general, any other Variable Note that
qualifies as a "variable rate debt instrument" will be converted into an
"equivalent" fixed rate debt instrument for purposes of determining the amount
and accrual of original issue discount and qualified stated interest on the
Variable Note. Such a Variable Note must be converted into an "equivalent"
fixed rate debt instrument by
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substituting any qualified floating rate or qualified
inverse floating rate provided for under the terms of the Variable Note with
a fixed rate equal to the value of the qualified floating rate or qualified
inverse floating rate, as the case may be, as of the Variable Note's issue
date, and
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substituting any objective rate (other than a
qualified inverse floating rate) provided for under the terms of the Variable
Note with a fixed rate that reflects the yield that is reasonably expected
for the Variable Note.
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In the case of a Variable Note that qualifies
as a "variable rate debt instrument" and provides for stated interest at a
fixed rate in addition to either one or more qualified floating rates or a
qualified inverse floating rate, the fixed rate is initially converted into a
qualified floating rate (or a qualified inverse floating rate, if the Variable
Note provides for a qualified inverse floating rate). Under such
circumstances, the qualified floating rate or qualified inverse floating rate
that replaces the fixed rate must be such that the fair market value of the
Variable Note as of the Variable Note's issue date is approximately the same as
the fair market value of an otherwise identical debt instrument that provides
for either the qualified floating rate or qualified inverse floating rate
rather than the fixed rate. Subsequent to converting the fixed rate into
either a qualified floating rate or a qualified inverse floating rate, the
Variable Note is then converted into an "equivalent" fixed rate debt instrument
in the manner described above.
Once the Variable Note is converted into an
"equivalent" fixed rate debt instrument pursuant to the foregoing rules, the
amount of original issue discount and qualified stated interest, if any, are
determined for the "equivalent" fixed rate debt instrument by applying the
general original issue discount rules to the "equivalent" fixed rate debt
instrument, and a U.S. Holder of the Variable Note will account for such
original issue discount and qualified stated interest as if the U.S. Holder
held the "equivalent" fixed rate debt instrument. At the end of each accrual
period, appropriate adjustments will be made to the amount of qualified stated
interest or original issue discount assumed to have been accrued or paid with
respect to the "equivalent" fixed rate debt instrument in the event that such
amounts differ from the actual amount of interest accrued or paid on the
Variable Note during the accrual period.
Contingent Payment Notes
If a Variable Note does not qualify as a
"variable rate debt instrument," then the Variable Note would be treated as a
contingent payment debt obligation. A U.S. Holder of such an instrument must
generally include future contingent and noncontingent interest payments in
income as such interest accrues based upon a projected payment schedule.
Moreover, in general, any gain recognized by a U.S. Holder on the sale,
exchange, or retirement of a contingent payment debt instrument will be treated
as ordinary income and all or a portion of any loss realized could be treated
as ordinary loss as opposed to capital loss, depending upon the circumstances.
The proper United States federal income tax treatment of Variable Notes that
are treated as contingent payment debt obligations will be more fully described
in the applicable pricing supplement.
Furthermore, any other special United States
federal income tax considerations, not otherwise discussed in this prospectus
supplement, which are applicable to any particular issue of notes will be
discussed in the applicable pricing supplement.
We may issue
notes that:
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may be redeemable at our option prior to their stated
maturity (a "call option")
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may be repayable at the option of the holder prior to
their stated maturity (a "put option").
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S-19
Notes containing such
features may be subject to rules that differ from the general rules discussed
above. Investors intending to purchase notes with such features should consult
their own tax advisors, since the original issue discount consequences will
depend, in part, on the particular terms and features of the purchased notes.
Elections
U.S. Holders may generally, upon election,
include in income all interest (including stated interest, acquisition
discount, original issue discount, de minimis original issue discount, market
discount, de minimis market discount, and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium) that accrues on a debt
instrument by using the constant yield method applicable to original issue
discount, subject to certain limitations and exceptions.
Short-Term Notes
Notes that have a fixed maturity of one year or
less ("Short-Term Notes") may be treated as having been issued with original
issue discount. In general, however, an individual or other cash method U.S.
Holder is not required to accrue such original issue discount unless the U.S.
Holder elects to do so. If such an election is not made, then
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any gain recognized by the U.S. Holder on the sale,
exchange or maturity of the Short-Term Note will be ordinary income to the
extent of the original issue discount accrued on a straight-line basis, or if
the U.S. Holder elects then under the constant yield method (based on daily
compounding), through the date of sale or maturity and
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a portion of the deductions otherwise allowable to the
U.S. Holder for interest on borrowings allocable to the Short-Term Note will
be deferred until a corresponding amount of income is realized.
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U.S. Holders who report
income for United States federal income tax purposes under the accrual method,
and certain other holders including banks and dealers in securities, are
required to accrue original issue discount on a Short-Term Note on a
straight-line basis unless an election is made to accrue the original issue
discount under a constant yield method (based on daily compounding).
Market Discount
If a U.S. Holder purchases a note, other than a
Discount Note, for an amount that is less than its stated redemption price at
maturity or, in the case of a Discount Note, for an amount that is less than
its adjusted issue price as of the purchase date, such U.S. Holder will be
treated as having purchased the note at a "market discount," unless such market
discount is less than a specified de minimis amount.
Under the market discount rules, a U.S. Holder
will be required to treat any partial principal payment on, or any gain
realized on the sale, exchange, retirement or other disposition of, a note as
ordinary income to the extent of the lesser of:
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the amount of such payment or realized gain or
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the market discount which has not previously been
included in the income of the holder and is treated as having accrued on the
note while held by the holder through the time of such payment or
disposition.
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Market discount will be considered to accrue
ratably during the period from the date of acquisition to the maturity date of
the note, unless the U.S. Holder elects to accrue market discount on the basis
of semiannual compounding.
S-20
A U.S. Holder may be required to defer the
deduction of all or a portion of the interest paid or accrued on any
indebtedness incurred or maintained to purchase or carry a note with market
discount until the maturity of the note or certain earlier dispositions,
because a current deduction is allowed only to the extent the interest expense
exceeds an allocable portion of market discount.
A U.S. Holder may elect to include market
discount in income currently as it accrues (on either a ratable or semiannual
compounding basis), in which case the rules described above regarding the
treatment as ordinary income of gain realized upon the disposition of the note
and upon the receipt of certain cash payments and regarding the deferral of
interest deductions will not apply. Generally, such currently included market
discount is treated as ordinary interest for United States federal income tax
purposes. Such an election will apply to all debt instruments acquired by the
U.S. Holder on or after the first day of the taxable year to which such
election applies and may be revoked only with the consent of the IRS.
Premium
If a U.S. Holder purchases a note for an amount
that is greater than the sum of all amounts payable on the note after the
purchase date other than payments of qualified stated interest, the U.S. Holder
will be considered to have purchased the note with "amortizable bond premium"
equal in amount to such excess. A U.S. Holder that purchases a Discount Note
with "amortizable bond premium" will not include any original issue discount in
income. A U.S. Holder may elect to amortize such premium using a constant
yield method over the remaining term of the note and may offset interest
otherwise required to be included in respect of the note during any taxable
year by the amortized amount of such excess for the taxable year. However, if
the note may be optionally redeemed after the U.S. Holder acquires it at a
price in excess of its stated redemption price at maturity, special rules would
apply which could result in a deferral of the amortization of some bond premium
until later in the term of the note. Any election to amortize bond premium
applies to all taxable debt obligations then owned and thereafter acquired by
the U.S. Holder and may be revoked only with the consent of the IRS.
Disposition of a Note
Except as discussed above, upon the sale,
exchange or retirement of a note, a U.S. Holder generally will recognize
taxable gain or loss equal to the difference between the amount realized on the
sale, exchange or retirement (other than amounts representing accrued and
unpaid interest) and the U.S. Holder's adjusted tax basis in the note. The
portion of the amount realized representing accrued and unpaid interest will be
interest income to the U.S. Holder. A U.S. Holder's adjusted tax basis in a
note generally will equal the U.S. Holder's initial investment in the note
increased by any original issue discount included in income (and accrued market
discount, if any, if the U.S. Holder has included such market discount in
income) and decreased by the amount of any payments, other than qualified
stated interest payments, received and amortizable bond premium taken with
respect to the note. Such gain or loss generally will be long-term capital
gain or loss if the note is held for more than one year. Long-term capital
gains of individuals are subject to reduced capital gain rates while short-term
capital gains are subject to ordinary income rates. The deductibility of
capital losses is subject to certain limitations. Prospective investors should
consult their own tax advisors concerning these tax law provisions.
Non-U.S. Holders
Principal, interest, and disposition proceeds
received by a non-U.S. Holder with respect to a note will be exempt from United
States federal income and withholding tax provided that
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the non-U.S. Holder does not own, actually, indirectly
or constructively, 10% or more of the total combined voting power of all
classes of Cleco Corporation's stock entitled to vote,
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the non-U.S. Holder is not a controlled foreign
corporation related directly, or indirectly, to Cleco Corporation through
stock ownership,
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the non-U.S. Holder is not a bank receiving interest
described in section 881(c)(3)(A) of the Internal Revenue Code,
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S-21
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the non-U.S. Holder is not an individual who is deemed
to be present in the United States for 183 days or more in the taxable year
in which a payment is received, and
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the payments on the note are not effectively connected
with the conduct by the non-U.S. Holder of a trade or business in the United
States.
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To qualify for the
exemption from taxation, the last United States payor (or non-U.S. payor who is
a qualified intermediary, United States branch of a foreign person, or
withholding foreign partnership) in the chain of payment prior to payment to a
non-U.S. Holder (the "Withholding Agent") must have received prior to the
payment of principal or interest a statement that
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was signed in the current or any of the three
immediately preceding calendar years by the beneficial owner of the note
under penalties of perjury,
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certifies that such owner is not a U.S. Holder and
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provides the name and address of the beneficial owner.
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The statement may be
made on an IRS Form W-8BEN or a substantially similar form, and the
beneficial owner must inform the Withholding Agent of any change in the
information on the statement within 30 days of such change. If a note is held through
a securities clearing organization or certain other financial institutions, the
organization or institution may provide a signed statement to the Withholding
Agent. However, in such case, the signed statement must be accompanied by a
copy of the IRS Form W-8BEN or the substitute form provided by the
beneficial owner to the organization or institution.
Payments on the note that are effectively
connected with the conduct by the non-U.S. Holder of a trade or business in the
United States will be subject to tax in the same manner as if received by a
U.S. Holder. In addition, if a non-U.S. Holder is a foreign corporation, it
will be subject to a branch profits tax equal to 30% (or lower applicable
treaty rate) of its earnings and profits for the taxable year, including
earnings and profits from an investment in the notes, that are effectively
connected with the conduct by it of a trade or business in the United States.
The notes will not be includable in the estate
of a non-U.S. Holder unless the individual is a direct or indirect 10% or
greater member of ours or, at the time of such individual's death, payments in
respect of the notes would have been effectively connected with the conduct by
such individual of a trade or business in the United States.
Backup Withholding
Backup withholding of United States federal
income tax at a rate of 28% may apply to payments made in respect of the notes
to registered owners who are not "exempt recipients" and who fail to provide
certain identifying information, such as the registered owner's taxpayer
identification number, in the required manner. Generally, individuals are not
exempt recipients, whereas corporations and certain other entities generally
are exempt recipients. Payments made in respect of the notes to a U.S. Holder
must be reported to the IRS, unless the U.S. Holder is an exempt recipient or
establishes an exemption. Compliance with the identification procedures
described in the preceding section would establish an exemption from backup
withholding for those non-U.S. Holders who are not exempt recipients.
In addition,
upon the sale of a note to (or through) a broker, the broker must withhold 28%
of the entire purchase price, unless either:
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the broker determines that the seller is a corporation
or other exempt recipient or
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the seller provides, in the required manner, certain
identifying information and, in the case of a non-U.S. Holder, certifies that
such seller is a non-U.S. Holder (and certain other conditions are met).
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S-22
Such a sale must also
be reported by the broker to the IRS, unless either:
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the broker determines that the seller is an exempt
recipient or
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the seller certifies its non-U.S. status (and certain
other conditions are met).
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Certification of the
registered owner's non-U.S. status would be made normally on an IRS Form W-8BEN
under penalties of perjury, although in certain cases it may be possible to
submit other documentary evidence.
Any amounts withheld under the backup
withholding rules from a payment to a beneficial owner would be allowed as a
refund or a credit against such beneficial owner's United States federal income
tax provided the required information is furnished to the IRS.
Plan of Distribution
We are offering the notes on a continuing basis
for sale to or through Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Banc One Capital Markets, Inc., Citigroup Inc. and other agents. The agents,
individually or in a syndicate, may from time to time purchase notes, as
principal, from us for resale to investors and other purchasers at varying
prices relating to prevailing market prices at the time of resale as determined
by the applicable agent or, if so specified in the applicable pricing
supplement, for resale at a fixed offering price. However, we may agree with
an agent for that agent to utilize its reasonable efforts on an agency basis on
our behalf to solicit offers to purchase notes at 100% of the principal amount
of the notes, unless otherwise specified in the applicable pricing supplement.
We will pay a commission to an agent, ranging from .125% to .750% of the
principal amount of each note, depending upon its stated maturity, sold through
that agent. We will negotiate commissions with respect to notes with stated
maturities in excess of 30 years that are sold through an agent at the time of
the related sale. We estimate our expenses incurred in connection with the
offering and sale of the notes, including reimbursement of certain of the
agents' expenses, will total approximately $225,000.
Unless otherwise specified in the applicable
pricing supplement, any note sold to an agent as principal will be purchased by
that agent at a price equal to 100% of the principal amount of the note less a
percentage of the principal amount equal to the commission applicable to an
agency sale of a note of identical maturity. An agent may sell notes it has
purchased from us as principal to certain dealers less a concession equal to
all or any portion of the discount received in connection with that purchase.
An agent may allow, and dealers may reallow, a discount to certain other
dealers. After the initial offering of notes, the offering price (in the case
of notes to be resold on a fixed offering price basis), the concession and the
reallowance may be changed.
We reserve the right to withdraw, cancel or
modify the offer made in this prospectus supplement without notice and may
reject offers in whole or in part, whether placed directly by us or through an
agent. Each agent will have the right, in its discretion reasonably exercised,
to reject in whole or in part any offer to purchase notes received by it on an
agency basis.
Unless otherwise specified in the applicable
pricing supplement, you will be required to pay the purchase price of your
notes in immediately available funds in United States dollars in The City of
New York on the date of settlement. See "Description of the Notes-General."
Upon issuance, the notes will not have an
established trading market. Unless otherwise specified in the applicable
pricing supplement, the notes will not be listed on any securities exchange.
The agents may from time to time purchase and sell notes in the secondary
market, but the agents are not obligated to do so, and there can be no
assurance that a secondary market for the notes will develop or that there will
be liquidity in the secondary market if one develops. From time to time, the
agents may make a market in the notes, but the agents are not obligated to do
so and may discontinue any market‑making activity at any time.
S-23
In connection with an offering of notes
purchased by one or more agents as principal on a fixed offering price basis,
the applicable agents will be permitted to engage in certain transactions that
stabilize the price of notes. These transactions may consist of bids or
purchases for the purpose of pegging, fixing or maintaining the price of
notes. If those agents create a "short position" in notes, that is, if they
sell notes in an amount exceeding the amount referred to in the applicable
pricing supplement, they may reduce that short position by purchasing notes in
the open market. In general, purchases of notes for the purpose of
stabilization or to reduce a short position could cause the price of notes to
be higher than it might be in the absence of these type of purchases.
Neither we nor any agent makes any representation
or prediction as to the direction or magnitude of any effect that the
transactions described in the immediately preceding paragraph may have on the
price of notes. In addition, neither we nor any agent makes any representation
that the agents will engage in any of these transactions or that these
transactions, once commenced, will not be discontinued without notice.
The agents may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933. We have agreed to indemnify
the agents against certain liabilities, including liabilities under the
Securities Act of 1933, or to contribute to payments the agents may be required
to make in that respect.
In the ordinary course of their business, the
agents and their affiliates have engaged, and may in the future engage, in
investment and commercial banking transactions with us and our affiliates.
Validity
of the Notes
The validity of the notes offered by this
prospectus supplement will be passed upon for us by Baker Botts L.L.P., Houston,
Texas, and for the agents by Sidley, Austin, Brown & Wood LLP, New York, New York. R. O'Neal Chadwick,
Jr., our Senior Vice President and General Counsel, will pass upon all matters
of Louisiana law in this connection.
S-24
The information in this prospectus is not complete and may
be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective.
This prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
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Subject to completion, dated December 18,
2003.
Prospectus
Cleco Power LLC
2030 Donahue Ferry Road
Pineville, Louisiana 71360-5226
(318) 484-7400
$150,000,000
Debt Securities
We may offer and sell up to $150,000,000 of our
debt securities in one or more series by using this prospectus. We will
establish the terms for our debt securities at the time we sell them and we
will describe them in one or more supplements to this prospectus. You should
read this prospectus and the related supplement carefully before you invest
in our debt securities. This prospectus may not be used to offer and sell
our debt securities unless accompanied by a prospectus supplement.
Investing in our debt securities involves
risks. See "Risk Factors" beginning on page 6.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this prospectus is
,2003.
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Table
of Contents
About This
Prospectus..................................................................................................................
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1
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Cautionary Statement Regarding Forward-Looking
Statements......................................................
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2
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The
Company...............................................................................................................................
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4
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Ratio of Earnings to
Fixed
Charges................................................................................................
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4
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Selected Financial
Data.................................................................................................................
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5
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Use of
Proceeds...........................................................................................................................
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5
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Risk
Factors.................................................................................................................................
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6
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Description of the Debt
Securities.................................................................................................
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8
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Plan of
Distribution.......................................................................................................................
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16
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Where You Can Find More
Information.......................................................................................
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17
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Validity of
Securities....................................................................................................................
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18
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Experts........................................................................................................................................
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18
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This prospectus is part of a registration
statement we have filed with the Securities and Exchange Commission, or "SEC,"
using a "shelf" registration process. By using this process, we may offer up
to $150 million of our debt securities in one or more offerings. This
prospectus provides you with a description of the debt securities we may
offer. Each time we offer debt securities, we will provide a supplement to
this prospectus. The prospectus supplement will describe the specific terms of
the offering. The prospectus supplement may also add, update or change the
information contained in this prospectus. Please carefully read this
prospectus, the applicable prospectus supplement and the information contained
in the documents we refer to in the "Where You Can Find More Information"
section of this prospectus.
References in this prospectus to "the Company,"
"we," "us" or other similar terms mean Cleco Power LLC, unless the context
clearly indicates otherwise. We are the successor to Cleco Utility Group,
Inc., a Louisiana corporation, as the result of a merger of Cleco Utility Group
with and into us on December 31, 2000. Accordingly, references in this
prospectus to "the Company," "we," "us" or other similar terms mean and include
Cleco Utility Group, if the references are to events or facts occurring or
existing prior to the merger.
You should rely only on the information
contained or incorporated by reference in this prospectus and any accompanying
prospectus supplement. We have not authorized anyone else to provide you with
any additional or different information. If anyone provides you with different
or inconsistent information, you should not rely on it. We are not making an
offer to sell debt securities in any jurisdiction where the offer or sale is
not permitted. The information contained in this prospectus is current only as
of the date of this prospectus, and any information incorporated by reference is
current only as of the date of the document incorporated by reference. Our
business, financial condition, results of operations and prospects may have
changed since those dates.
1
This prospectus, including the information
incorporated by reference into this prospectus, contains forward-looking
statements. These statements relate to future events, our future financial
performance, future legislative and regulatory changes affecting our business and
other matters. These forward-looking statements are based on management's
beliefs as well as assumptions made by and information currently available to
management. Although we believe the expectations reflected in these
forward-looking statements are reasonable, these forward-looking statements are
based on numerous assumptions (some of which may prove to be incorrect) and are
subject to risks and uncertainties that could cause the actual results to
differ materially from our expectations.
When used, the words "anticipate," "estimate,"
"expect," "objective," "projection," "forecast," "goal" and similar expressions
are intended to identify forward-looking statements. In addition to any
assumptions and other factors referred to specifically in connection with these
forward-looking statements, the following list identifies some of the factors
that could cause our actual results to differ materially from those expressed
or implied by our forward-looking statements:
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unusual weather conditions or other natural phenomena,
catastrophic weather-related damage, unscheduled generation outages, unusual
maintenance or repairs, unanticipated changes to fuel costs, gas supply costs
or availability constraints due to higher demand, shortages, transportation
problems or other developments, environmental incidents, or power
transmission or gas pipeline system constraints;
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increased competition in the electric industry,
including effects of industry restructuring or deregulation, transmission
system operation or administration, retail wheeling or cogeneration;
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unanticipated changes in rate-setting policies or
procedures, recovery of investments made under traditional regulation, the
frequency and timing of rate increases, the results of periodic fuel audits,
and the formation of regional transmission organizations (RTOs) and the
implementation of standard market design (SMD);
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financial or regulatory accounting principles or
policies imposed by the Financial Accounting Standards Board, the SEC, the
Public Company Accounting Oversight Board, the Federal Energy Regulatory
Commission, or "FERC," the Louisiana Public Service Commission, or "LPSC," or
similar entities with regulatory or accounting oversight;
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economic conditions, including inflation rates and
monetary fluctuations;
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changing market conditions and a variety of other
factors associated with physical energy and financial trading activities,
including, but not limited to, price, basis, credit, liquidity, volatility,
capacity, transmission, interest rate and warranty risks;
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availability or cost of capital resulting from changes
in our credit rating, business or financial condition, interest rates, and
securities ratings or market perceptions of the electric utility industry and
energy-related industries,
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employee work force factors, including changes in key
executives and work stoppages;
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cost and other effects of legal and administrative
proceedings, settlements, investigations, claims and other matters;
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changes in federal, state or local legislative
requirements, such as changes in tax laws or rates, regulating policies or
environmental laws and regulations; and
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2
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other factors we discuss in this prospectus, the
accompanying prospectus supplement and our other filings with the SEC.
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We undertake no obligation to update or revise any
forward-looking statements, whether as a result of changes in actual results,
changes in assumptions or other factors affecting such statements.
3
We are a Louisiana limited liability company and a wholly owned subsidiary of Cleco
Corporation, a diversified regional energy service holding company. We are an
electric utility that conducts generation, transmission and distribution
electric utility operations subject to the jurisdiction of the Louisiana Public
Service Commission (LPSC) and the Federal Energy Regulatory Commission (FERC).
We provide electric utility services to approximately 260,000 retail and
wholesale customers in 104 communities and rural areas in a 14,000-square-mile
region in Central and Southeastern
Louisiana. Cleco Corporation,
subject to certain limited exceptions, is exempt from regulation as a public
utility holding company pursuant to Section 3(a)(1) of the Public Utility
Company Holding Act of 1935 and Rule 2 thereunder. Our principal executive
offices are located at 2030 Donahue
Ferry Road, Pineville, Louisiana 71360-5226, and our phone number at this address is (318)
484-7400.
Our parent company's homepage on the Internet's
World Wide Web is located at http://www.cleco.com. Our Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other
filings with the SEC are available, free of charge, through this website, as
soon as reasonably practicable after those reports or filings are
electronically filed with or furnished to the SEC. Information on this website
or any other website is not incorporated by reference into this prospectus or
the accompanying prospectus supplement and does not constitute a part of this
prospectus or the accompany prospectus supplement. For additional information
regarding reports and other information we file with or to the SEC and
obtaining other information about us, please read "Where You Can Find More
Information" beginning on page 17 of the prospectus.
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Nine Months Ended
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Ratio of Earnings to
Fixed
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Charges
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4.04x
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4.17x
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4.05x
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3.89x
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3.80x
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4.10x
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4.51x
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(1) Our ratio of earnings to fixed charges
for periods prior to July 1, 1999 include the results of former
subsidiaries that were transferred to Cleco Corporation in connection with our
reorganization into a holding company structure on July 1, 1999.
(2) We believe that the ratios for the
nine-month periods are not necessarily indicative of the ratios for the
twelve-month periods due to the seasonal nature of our business.
4
The following table presents our selected financial data. The data set
forth below should be read together with our historical financial statements,
the notes to those statements and other financial information we have
incorporated by reference into this prospectus. Our selected income statement
data and balance sheet data for the years ended December 31, 1998,
1999, 2000, 2001 and 2002 are derived from our audited financial statements.
Our selected income statement data and balance sheet data for the nine months
ended September 30, 2002 and 2003 have been derived from our unaudited interim
financial statements, and include, in the opinion of management, all
adjustments (consisting only of normal recurring accruals) necessary to present
fairly the data for such periods. Our financial information for periods
prior to July 1, 1999 includes the results of former subsidiaries that were
transferred to Cleco Corporation, the owner of all of our membership interests,
in connection with our reorganization into a holding company structure on July 1, 1999.
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Nine Months Ended
September 30,
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(in thousands)
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Summary of Operations:
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Operating revenues
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$ 595,489
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$ 628,733
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$ 632,046
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$ 521,828
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$ 487,852
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$ 542,679
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$ 455,175
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Operating expenses
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$ 477,860
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$ 518,596
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$ 510,221
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$ 408,905
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$ 380,887
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$ 452,595
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$ 360,237
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Operating income
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$ 117,629
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$ 110,137
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$ 121,825
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$ 112,923
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$ 106,965
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$ 90,084
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$ 94,938
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Net income applicable to member's equity
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$ 59,574
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$ 59,138
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$ 59,857
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$ 55,636
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$ 51,664
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$ 45,100
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$ 49,198
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(in thousands)
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Balance Sheet Data:
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Total assets
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$ 1,338,495
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$ 1,190,076
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$ 1,211,191
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$ 1,414,579
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$ 1,383,648
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$ 1,365,770
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$ 1,226,982
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Long-term debt, net
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$ 335,517
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$ 310,458
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$ 335,282
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$ 360,339
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$ 343,042
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$ 410,561
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$ 336,260
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(1) Certain
reclassifications have been made to conform operating revenue and operating
expenses for 1998, 1999, 2000 and 2001 to the presentation used in our 2002
financial statements. These reclassifications had no effect on net income
applicable to member's equity.
(2) Certain
reclassifications have been made to conform total assets for the period from
1998 to 2001 to the presentation used in our 2002 financial statements. These
reclassifications had no effect on net income applicable to member's equity.
Unless we
inform you otherwise in the prospectus supplement, we anticipate using net
proceeds from the sale of debt securities offered by this prospectus for
general corporate purposes. The purposes may include, but are not limited to:
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working capital,
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capital expenditures,
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equity investments in existing and future projects,
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acquisitions,
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the payment of distributions to Cleco Corporation, and
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the repayment or refinancing of our indebtedness,
including intercompany indebtedness.
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5
There are many risks that may affect your
investment in our debt securities. You should carefully consider these risks
as well as the other information we have provided in this prospectus, the
accompanying prospectus supplement and the documents we incorporate by
reference, before reaching a decision regarding an investment in our debt
securities.
The outcome of the LPSC's audit of our
recovery of fuel and purchased power expenses could require us to make a
substantial refund of previously recorded revenue.
Generally, the fuel and purchased power
expenses as well as certain related expenses we incur to provide power to our
customers are recovered through fuel adjustment clauses that enable us to pass
on to our customers substantially all of those expenses. The fuel adjustment
clauses, one for retail service and the other for wholesale service, are
regulated by the LPSC (representing approximately 93% of our total fuel costs)
and the FERC, respectively. In the first quarter of 2003, the staff of LPSC
commenced a periodic audit of fuel and purchased power expenses recovered under
the retail service fuel adjustment clause during 2001 and 2002. Although an
LPSC order issued in November 1997 requires this type of periodic audit to be performed
at least every other year, this is our first fuel adjustment clause audit since
the order. For the two-year period ended December 31, 2002, we recovered approximately $567.1 million in LPSC-jurisdictional revenue under the fuel
adjustment clause relating to fuel and purchased power expenses. We are unable
to predict the results of the fuel audit, which could require us to make a
substantial refund of previously recovered revenue. The LPSC staff expects to
issue its findings and recommendations related to the fuel audit by the first
quarter of 2004.
Adverse findings or determinations in
regulatory and investigatory proceedings to which we are subject could require
the refunding of revenues and could result in the imposition of additional
penalties and restrictions on us.
In 2002, we identified certain energy trading
activities and other transactions between us and certain subsidiaries of Cleco
Corporation, our parent company. These activities consist primarily of
indirect sales of test power by Cleco Evangeline LLC to us, other indirect
acquisitions of purchased power by us from Cleco Marketing & Trading LLC,
our indirect sales of power to Cleco Marketing & Trading LLC, and other
transactions between us and Cleco Marketing & Trading LLC. We determined
that certain of these activities and transactions may have violated the Public
Utility Holding Company Act of 1935 as well as various statutes and regulations
administered by the LPSC and the FERC. In July 2003, Cleco Corporation entered
into the Stipulation and Consent Agreement with the FERC Staff with respect to
these activities and transactions. Under the Stipulation and Consent
Agreement, Cleco Corporation agreed to a one-year revocation of Cleco Marketing
& Trading LLC's market-based rate authority, to make refunds of $2.1
million to us for profits obtained through various affiliate energy marketing
and trading transactions, between 1999 and 2002, and to make payment of a $0.8
million civil penalty to the FERC, as well as to abide by other restrictions
and mandatory plans.
The LPSC has initiated formal proceedings to
investigate these activities and transactions and we are cooperating fully with
them. This LPSC investigation has become part of our fuel audit. We are
unable to predict what action the LPSC will take with regard to these
activities and transactions. The LPSC could require the refunding of revenues
relating to the activities and transactions and could impose penalties and
restrictions on us as a result of their findings with respect to these
activities and transactions. Moreover, the continuing LPSC investigation may
result in determinations of violations in addition to those described above.
The expiration of our current rate
stabilization plan in September 2004 could result in a reduction in our
regulated rate of return which is the primary basis for our earnings.
Our retail power rates for residential,
commercial and industrial customers and other retail sales are regulated by the
LPSC. Under a rate stabilization plan approved by the LPSC, we are allowed to
realize a regulatory return on equity of up to 12.625%, with returns above that
level being refunded to customers in the form of billing credits. Our rate
stabilization plan expires in September 2004, at which time the LPSC may order
a new plan or extend the
6
existing plan with or without modification. The LPSC
could reduce our regulated rate of return in establishing a new plan or
modifying its existing plan, which would reduce our revenue and profitability.
The expiration of, or the nonperformance by
counterparties under, agreements by which we obtain a significant portion of
our purchased power could result in an increase in the price at which we
provide that power, and the LPSC may not allow us to recover part or all of any
additional amounts we may pay to obtain replacement power.
We do not supply all of our customers' power
requirements from the generation facilities we own and must purchase additional
power from the wholesale power market. During 2002, we obtained approximately
40% of our capacity and energy needs under three long-term power purchase
agreements with Williams Energy Marketing & Trading Company (Williams
Energy), a subsidiary of Williams Companies, Inc., and Dynegy Power Marketing,
Inc. (Dynegy Power), a subsidiary of Dynegy Inc. Substantially all of the
obligations under these agreements expire on December 31, 2004. If either Williams Energy or Dynegy Power fails to provide power to us in accordance with
the power purchase agreements, we would likely have to obtain replacement
power at then-prevailing market prices to meet our customers' demands. The
power market can be volatile, and the prices at which we would obtain
replacement power could be higher than the prices we currently pay under the
power purchase agreements. The LPSC may not allow us to recover, through an
increase in rates or through our fuel adjustment clause, part or all of any
additional amounts we may pay in order to obtain replacement power.
In March 2003, we made an informational filing
with the LPSC requesting approval to issue a request for proposals for either
purchased power or the purchase of generation facilities for up to 750 MW of
power beginning January 1, 2005. We may not be able to obtain purchased power
or generation facilities on terms comparable to those in our power purchase
agreements with Williams Energy and Dynegy Power or at all. The LPSC may not
allow us to recover part or all of any additional amounts we may pay under new
power purchase agreements, in order to obtain new generation facilities or
otherwise as a result of the expiration of our existing power purchase
agreements, which could have a material adverse effect on our financial
condition and results of operations.
Our costs of compliance with environmental
laws are significant and the cost of compliance with new environmental laws
could reduce our profitability.
Our businesses are subject to extensive
environmental regulation by federal, state and local authorities. We are
required to comply with numerous environmental laws and regulations, and to
obtain numerous governmental permits, in operating our facilities. In
addition, existing environmental regulations could be revised or reinterpreted,
new laws and regulations could be adopted or become applicable to us or our
facilities, and future changes in environmental laws and regulations could
occur, including potential regulatory and enforcement developments related to
air emissions. We may incur significant additional costs to comply with these
requirements. If we fail to comply with these requirements, we could be
subject to civil or criminal liability and fines.
A downgrade in our credit rating could
increase our borrowing costs and our potential pool of investors and funding
sources could decrease.
On March 26, 2003, Standard & Poor's
Ratings Services affirmed our BBB senior unsecured debt ratings. Our senior
unsecured debt ratings were taken off CreditWatch, but Standard & Poor's
stated that "the outlook for the ratings is negative due to continued uncertainties
surrounding the company's [Cleco Corporation's] unregulated merchant energy
activities." On March 24, 2003, Moody's Investor Services downgraded our
senior unsecured debt ratings to Baa1 from A3. Moody's noted our ratings
outlook is stable. Moody's stated that "the downgrades reflect deterioration
in the credit quality of Cleco's [Cleco Corporation's] unregulated power plants
and the adverse underlying market conditions for merchant generation in the
SERC [Southeastern Electric Reliability Council] region." We cannot assure you
that these ratings will remain in effect for any given period of time or that
one or more of these ratings will not be lowered or withdrawn entirely by a
rating agency. We note that these credit ratings are not recommendations to
buy, sell or hold securities. Each rating should be evaluated independently of
any other rating. If Moody's or Standard & Poor's were to downgrade our
long-term rating, particularly below investment grade, the value of any debt
securities would likely be adversely affected and our borrowing costs would
increase, which would diminish our financial results. In addition, we would
likely be required to pay a higher interest rates in future financings, and our
potential pool of investors and funding sources could decrease.
7
We may from time to time offer debt securities
consisting of our unsecured debentures, notes (including notes commonly known
as medium-term notes) or other evidences of indebtedness in one or more series
at an aggregate initial offering price not to exceed $150 million pursuant to
this prospectus. We refer to these debentures, notes or other evidences of
indebtedness as the "debt securities." The following description highlights the general terms and
provisions of the debt securities. When we offer debt securities in the
future, the prospectus supplement will explain the particular terms of those
securities and the extent to which these general provisions may apply.
The debt securities will be issued under an
indenture, dated as of October 1, 1988, between us (as successor to Cleco
Utility Group Inc.) and Bankers Trust Company, as supplemented and amended.
The Bank of New York is the current trustee under the indenture. Copies of the
indenture and the Agreement of Resignation, Appointment and Acceptance under
which The Bank of New York succeeded Bankers Trust Company as trustee under the
indenture are included among the exhibits to the registration statement of
which this prospectus is a part.
We have summarized selected provisions of the
indenture below. You should read the indenture filed as an exhibit to the
registration statement of which this prospectus is a part for any provisions
that may be important to you. In the summary below, we have included
references to section numbers of the indenture so that you can easily locate
these provisions. In describing the provisions of the indenture, we use the
term "corporation" as it is defined in the indenture. The indenture defines
"corporation" to include corporations, associations, companies, including
limited liability companies, and business trusts.
General
The indenture does not limit the principal
amount of unsecured debentures, notes or other obligations that we may issue
under it from time to time in one or more series. The term "indenture
securities," as used in this prospectus, refers to all of these obligations
issued and issuable under the indenture from time to time and includes the debt
securities. We may issue additional indenture securities, in addition to the
debt securities, in the future under the indenture. At September 30, 2003, we had approximately $290 million principal amount of indenture securities issued
and outstanding under the indenture.
A prospectus
supplement relating to any series of debt securities being offered by this
prospectus will include specific terms relating to the offering. These terms
will include some or all of the following:
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the title and series of the
debt securities;
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the total principal amount of
the debt securities;
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any limit on the aggregate
principal amount of a series of debt securities;
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the date on which the
principal of the debt securities is payable;
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the interest rate that the
debt securities will bear, if any, including any method or formula to
determine such rate, and the interest payment dates for the debt securities;
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the place where the
principal, premium, if any, and/or interest, if any, on the debt securities
will be payable;
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any optional redemption
periods and the terms of that option;
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any sinking fund or other
provisions that would obligate us to repurchase or otherwise redeem the debt
securities;
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8
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the manner in which payments
of principal, premium, if any, and/or interest, if any, on the debt
securities will be determined, if these amounts will be based on an index,
formula or other method;
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whether we will sell the debt
securities, including original issue discount debt securities, at a
substantial discount below their stated principal amount;
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the currency in which payment
of principal, premium, if any, and interest, if any, on the debt securities
will be payable, if other than U.S. currency; and
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any other terms of the debt
securities. (Section 301)
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We may sell the debt securities, including
original issue discount securities, at a substantial discount below their
stated principal amount. If there are any special United States federal income
tax considerations applicable to debt securities we sell at an original
discount, we will describe them in the prospectus supplement. In addition, we will
describe in the prospectus supplement any special United States federal income
tax considerations and any other special considerations for any debt securities
we sell which are denominated in a currency or currency unit other than $US.
Ranking; Limitations on Mortgages and Liens
The debt securities will rank equally with all
of our other unsecured and unsubordinated indebtedness. At September 30, 2003, we had outstanding $60 million aggregate principal amount of first mortgage
bonds issued under and secured by an Indenture of Mortgage, dated as of July 1, 1950, between us and Bank One, Louisiana, N.A., formerly The National Bank of
Commerce in New Orleans, as trustee. In this prospectus, we sometimes refer to
this Indenture of Mortgage as the "mortgage indenture." Holders of the first
mortgage bonds issued under the mortgage indenture would have a prior claim on
certain of our material assets upon our dissolution, winding up, liquidation or
reorganization. We may issue mortgage bonds under the mortgage indenture in
addition to the first mortgage bonds currently issued and outstanding.
So long as any indenture securities remain
outstanding, the indenture prohibits us from creating or permitting any
mortgage, lien or similar encumbrance, which we call a "mortgage," on any of
our properties, unless we secure the indenture securities equally and ratably
with the mortgage being created or permitted. This prohibition does not apply
to:
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mortgages to secure first mortgage bonds issued under
the mortgage indenture;
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"permitted liens" as defined in the Twenty-Fifth
Supplemental Indenture to the mortgage indenture;
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the following mortgages, provided that the mortgages
do not apply to property owned by us or one of our subsidiaries, other than
unimproved real property on which the construction or improvement is located:
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mortgages to secure or provide for the payment of the
purchase price or cost of property acquired, constructed or improved after
the date of the indenture that are created or assumed
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within 120 days after the acquisition or completion
of construction or improvement, or
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within six months of the 120-day period, if pursuant
to a firm commitment for financing arrangements, or
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mortgages on any property existing at the time the
property is acquired;
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existing mortgages of a corporation merged with or
into us or one of our subsidiaries;
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9
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mortgages of any corporation existing at the time it
becomes one of our subsidiaries;
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mortgages securing debt owed by one of our
subsidiaries to us or to another one of our subsidiaries;
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mortgages in favor of governmental bodies to secure
advances or other payments under any contract or statute or to secure
indebtedness incurred to finance the purchase price or cost of constructing
or improving the property subject to these mortgages, including mortgages to
secure pollution control or industrial revenue bonds;
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mortgages to secure loans to us or one of our
subsidiaries maturing within 12 months and made in the ordinary course of
business;
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mortgages on any property, including any natural gas,
oil or other mineral property, to secure all or part of the cost of
exploration, drilling or development of the property or to secure debt
incurred to provide funds for any of these costs;
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mortgages existing on the date of the indenture;
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certain mortgages typically incurred in the ordinary
course of business, including mortgages resulting from legal proceedings
contested in good faith;
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mortgages for extending, renewing or replacing
indebtedness secured by any of the mortgages described in the bullet point
items above, so long as
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the principal amount of the indebtedness secured by
these mortgages is not more than the principal amount of indebtedness secured
at the time of the extension, renewal or replacement plus any premiums
incurred in retiring the indebtedness, and
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the mortgage for the extension, renewal or
replacement is limited to the original property or indebtedness (plus
improvements on such property);
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mortgages on any property of our subsidiaries, unless
the property of the subsidiary is being used to secure any of our
indebtedness; or
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the issuance, assumption or guarantee by us or one of
our subsidiaries of indebtedness secured by a mortgage up to an amount that,
together with all other of our secured indebtedness that does not fall under
one of the above exceptions, is less than 5% of our "consolidated net
tangible assets," which consists of:
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the total amount of assets appearing on our balance
sheet or consolidated balance sheet, minus certain amounts for depreciation,
intangible assets and other items. (Section 1009)
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Modification of the Indenture
We and the trustee may modify the indenture
without the consent of holders of indenture securities to do certain things,
such as to establish the form and terms of a series of indenture securities or
to add to our covenants under the indenture for the benefit of holders.
(Section 901) Additionally, with certain exceptions, we and the trustee may
modify the indenture or the rights of the holders of indenture securities if we
obtain the consent of the holders of at least 50% in principal amount of all
outstanding indenture securities affected by the modification. However,
modifications of provisions of the indenture involving the following items will
not be effective against any holder without the holder's consent:
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the principal,
premium or interest payment terms of any indenture security;
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10
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waivers of past
defaults or certain requirements for quorum and voting; and
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with certain
exceptions, percentage requirements for modification or waiver of provisions
of the indenture. (Section 902)
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Events Of Default
With respect to
indenture securities of a particular series, the following are events of
default under the indenture:
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failure for three
"business days" (as defined in the indenture) after payment is due to pay
principal and/or premium, if any, on any indenture security of the particular
series;
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failure for 30 days
after payment is due to pay interest on any indenture security of the
particular series;
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failure for three
business days after payment is due to make any sinking fund installment
required by the terms of the particular series;
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with certain
exceptions, violation of any covenant or warranty made by us in the indenture
that persists for at least 60 days after we have been notified of the violation
in the manner provided in the indenture by the trustee or by the holders of
10% of the particular series;
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default under other
mortgages or instruments or under other series of indenture securities
resulting in acceleration of indebtedness of over $5 million, unless the
default is rescinded or discharged within 90 days after we are given notice
in the manner provided in the indenture regarding the default from the
trustee or from the holders of 25% of the particular series;
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certain events of
bankruptcy, insolvency or reorganization; and
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any other event of
default provided with respect to the particular series. (Section 501)
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An event of default for a particular series of
indenture securities does not necessarily constitute an event of default for any
other series of indenture securities issued under the indenture.
If an event of default occurs and continues,
either the trustee or the holders of at least 25% of the series may declare
those indenture securities due and payable. Holders of a majority of a series
of indenture securities may waive past defaults for that series under certain
circumstances. (Section 502) We must furnish annually to the trustee a
statement regarding performance by us of certain of our obligations under the
indenture and any related defaults. (Section 1005)
Satisfaction and Discharge of Indenture
With certain
exceptions, we will be discharged from our obligations under the indenture with
respect to any series of indenture securities by
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delivering all
outstanding indenture securities (other than indenture securities to which
specified conditions apply) to the trustee for cancellation and paying all
other amounts payable by us under the indenture, or
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paying the principal,
premium, if any, interest, if any, and any other amounts payable by us under
the indenture when
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11
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all outstanding
indenture securities (other than indenture securities to which specified
conditions apply) have become due and payable or will become due and payable
within one year, or
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for indenture
securities redeemable at our option, such indenture securities are to be
called for redemption within one year under arrangements satisfactory to the
trustee.
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In addition to the
requirements described above, we must also deliver an officers' certificate and
opinion of counsel to the trustee stating that all conditions precedent
relating to the satisfaction and discharge of the indenture have been
fulfilled. (Section 401)
Consolidation, Merger, Sale or Conveyance
The indenture
allows us to consolidate or merge with another corporation or sell, lease or
convey all or substantially all of our assets to another corporation only if
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we will be the
surviving corporation, or the successor corporation is incorporated in the United
States and assumes all of our obligations under the indenture securities
and the indenture in a manner satisfactory to the trustee, and
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no default exists
immediately after the transaction. (Section 801)
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Covenants
We will describe any restrictive covenants for
any series of debt securities, other than those described above under
"-Ranking; Limitations on Mortgages and Liens," in the prospectus supplement.
Absence of Event Risk Protections
Unless we inform you otherwise in the
prospectus supplement, the covenants contained in the indenture and the debt
securities will not contain provisions permitting the holders of debt
securities to require prepayment in the event of a change in control of us or
our parent company, Cleco Corporation, or in the event we or Cleco Corporation
enter into one or more highly leveraged or other transactions, regardless of
whether a rating decline results therefrom, nor will any such events deemed to
be Events of Default under the terms of the indenture or the debt securities.
Form, Denomination and Registration; Book-Entry System
Unless otherwise indicated in a prospectus
supplement, the debt securities will be issued only in fully registered form,
without coupons, in denominations of $1,000 or integral multiples of $1,000.
(Section 302) You will not have to pay a service charge to transfer or
exchange debt securities, but we may require you to pay taxes or other
governmental charges for exchanges involving transfers under the terms of the
indenture. (Section 305)
Unless otherwise indicated in a prospectus
supplement, each series of debt securities will be represented by one or more
fully registered global notes, which we call the "Global Notes." Each Global
Note will be deposited with, or on behalf of, The Depository Trust Company, as
depository, and registered in the name of the depository or a nominee of the
depository. Unless and until it is exchanged in whole or in part for debt
securities in certificated form, no Global Note may be transferred except as a
whole by the depository or by a nominee of the depository.
So long as the depository or its nominee is the
registered owner of a Global Note, the depository or its nominee, as the case
may be, will be considered the sole owner or holder of the debt securities
represented by the Global Note for all purposes under the indenture. Except as
provided below, beneficial owners of a Global Note representing debt securities
will not be entitled to have the debt securities registered in their names,
will not receive or be entitled to receive physical delivery of the debt
securities in definitive form and will not be considered the registered holders
of the debt securities under the indenture. Furthermore, no Global Note
representing debt securities will be exchangeable or transferable.
Accordingly, each beneficial owner must rely on the procedures of
12
the
depository and, if that beneficial owner is not a "participant," as described
below, on the procedures of the participant through which the beneficial owner
owns its interest, to exercise any rights of a holder under the indenture. We
understand that under existing industry practices, if we were to request any
action of holders or if an owner of a beneficial interest in a Global Note
representing debt securities were to desire to take any action that a holder is
entitled to take under the indenture,
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the depository would
authorize the participants holding the relevant beneficial interests to give
or take the desired action, and
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the participants
would authorize beneficial owners owning through the participants to give or
take the desired action or would otherwise act upon the instructions of
beneficial owners.
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Each Global Note
will be exchangeable for debt securities in certificated form only if:
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the depository is at any time
unwilling or unable to continue as depository and a successor depository is
not appointed by us within 60 days, or
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we, in our sole discretion,
determine that the Global Notes will be exchangeable for certificated notes.
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If one of the above events
occurs, the Global Note or Global Notes will be exchangeable for debt securities
in certificated form of like tenor and of an equal aggregate principal amount.
The certificated debt securities will be registered in the name or names of the
beneficial owners of the Global Note or Notes as the depository instructs the
trustee. It is expected that instructions may be based upon directions
received by the depository from participants with respect to ownership of
beneficial interests in Global Notes.
The laws of some states may require that
certain purchasers of securities take physical delivery of securities in
definitive form. These laws may impair your ability to own, transfer or pledge
beneficial interests in Global Notes.
The following is
based on information furnished by the depository:
The depository will act as securities depository
for the debt securities. The debt securities will be issued as fully
registered securities registered in the name of Cede & Co., the
depository's partnership nominee. One fully registered Global Note will be
issued for each issue of debt securities, each in the aggregate principal
amount of the issue, and will be deposited with the depository.
The depository 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 Securities Exchange Act of 1934. The depository holds
securities that its "participants" deposit with the depository. The depository
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 of the
depository include securities brokers and dealers, including the agents, banks,
trust companies, clearing corporations and certain other organizations.
The depository is owned by a number of its
direct participants and by the New York Stock Exchange, Inc., the American
Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access
to the depository's system is also available to others such as securities
brokers and dealers, banks and trust companies that clear through or maintain a
custodial relationship with a direct participant, either directly or
indirectly. The rules applicable to the depository and its participants are on
file with the SEC.
Purchases of debt securities under the
depository's system must be made by or through direct participants, which will
receive a credit for those debt securities on the depository's records. The
ownership interest of each beneficial owner of each debt security represented
by a Global Note is, in turn, to be recorded on the records of
13
direct
participants and indirect participants. Beneficial owners of debt securities
will not receive written confirmation from the depository of their purchase,
but beneficial owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the direct participants or indirect participants through which the
beneficial owners entered into the transaction. Transfers of ownership
interests in a Global Note representing debt securities are to be accomplished
by entries made on the books of participants acting on behalf of beneficial
owners. Beneficial owners of a Global Note representing debt securities will
not receive debt securities in certificated form representing their ownership
interests in the debt securities, except in the event that use of the
book-entry system for those debt securities is discontinued.
To facilitate subsequent transfers, all Global
Notes representing debt securities that are deposited with, or on behalf of,
the depository are registered in the name of the depository's nominee, Cede
& Co. The deposit of Global Notes with or on behalf of the depository and
their registration in the name of Cede & Co. effect no change in beneficial
ownership. The depository has no knowledge of the actual beneficial owners of
the Global Notes representing the debt securities. Instead, the depository's
records reflect only the identity of the direct participants to whose accounts
the debt 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 the depository to direct participants, by direct participants to indirect
participants, and by direct participants and indirect participants to
beneficial owners, will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Neither the depository nor Cede & Co. will
consent or vote with respect to the Global Notes representing the debt securities.
Under its usual procedures, the depository mails an omnibus proxy to us as soon
as possible after the applicable record date. The omnibus proxy assigns Cede
& Co.'s consenting or voting rights to those direct participants,
identified in a listing attached to the omnibus proxy, to whose accounts the
debt securities are credited on the applicable record date.
We will make principal, premium, if any, and/or
interest, if any, payments on the Global Notes representing the debt securities
in immediately available funds to the depository. The depository's practice is
to credit direct participants' accounts on the applicable payable date in
accordance with their respective holdings shown on the depository's records
unless the depository has reason to believe that it will not receive payment on
the applicable payable 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 accounts of customers in bearer form or
registered in "street name," and will be the responsibility of the applicable
participant and not of the depository, the trustee, any agent or us, subject to
any statutory or regulatory requirements as may be in effect from time to
time. Payment of principal, premium, if any, and/or interest, if any, to the
depository will be our responsibility and that of the trustee. Disbursement of
payments to direct participants will be the responsibility of the depository,
and disbursement of payments to the beneficial owners will be the
responsibility of direct participants and indirect participants.
If applicable, redemption notices must be sent
to Cede & Co. If less than all of the debt securities of like tenor and
terms are being redeemed, the depository's practice is to determine by lot the
amount of the interest of each direct participant in the issue to be redeemed.
A beneficial owner must give notice of any
option to elect to have its debt securities repaid by us, through its
participant, to the trustee, and will effect delivery of the applicable debt
securities by causing the direct participant to transfer the participant's
interest in the Global Note representing the debt securities, on the
depository's records, to the trustee. The requirement for physical delivery of
debt securities in connection with a demand for repayment will be deemed
satisfied when the ownership rights in the Global Note or Notes representing
the debt securities are transferred by direct participants on the depository's
records.
The depository may discontinue providing its
services as securities depository with respect to the debt securities at any
time by giving reasonable notice to the trustee or us. Neither we, the trustee
nor any underwriter or agent will have any responsibility for the performance
by the depository or its participants or indirect participants of their
obligations. In the event that a successor securities depository is not
obtained, debt securities in certificated form are required to be printed and
delivered. Similarly, we may decide to discontinue use of the system of
book-entry
14
transfers through the depository or a successor securities
depository. In that event, debt securities in certificated form will be
printed and delivered.
The information in this section concerning the
depository and the depository's system has been obtained from sources that we
believe to be reliable.
Concerning the Trustee
The Bank of New York is the trustee under the
indenture. The trustee also may act as a depository of funds for, make loans
to, and perform other services for us in the normal course of business,
including acting as trustee under other indentures of ours. The corporate
trust office of the trustee is located at 101 Barclay Street, New York, New
York 10286.
The trustee generally will be under no
obligation to exercise any of its rights or powers under the indenture at the
request or direction of any of the holders, unless the holders offer a
reasonable indemnity to the trustee against any costs or liabilities it might
incur in compliance with such request. (Section 603) The holders of a
majority of a series of indenture securities generally may direct the time,
method and place of conducting any proceedings for any remedy available to the
trustee, or exercising any trust or power conferred on the trustee with respect
to the indenture securities. (Section 512) The right of a holder to institute
a proceeding under the indenture is subject to certain conditions, but each
holder has an absolute right to receive payment of principal, premium, if any,
and interest, if any, when due and to institute suit for the enforcement of
payment of these amounts. This right is subject to certain limited exceptions
in the case of interest. (Section 508) Within 90 days after a default with
respect to any series of indenture securities, the trustee is required to give
the holders notice of the default, unless the default has been cured or
waived. The trustee may withhold this notice if it determines that it is in
the best interest of the holders to do so, but the trustee may not withhold
notice in this manner with respect to a default in the payment of principal,
premium, if any, and/or interest, if any, or sinking fund installment on any
indenture security. (Section 602)
The trustee may resign from its duties with
respect to the indenture at any time. We may remove the trustee in certain
circumstances, and the holders of a majority of a series of indenture
securities may remove the trustee with respect to that series. If the trustee
resigns, is removed or becomes incapable of acting as trustee or a vacancy
occurs in the office of the trustee for any reason, a successor trustee will be
appointed in accordance with the provisions of the indenture.
(Section 610)
The indenture contains the provisions required
by the Trust Indenture Act of 1939 with reference to the disqualification of
the trustee if the trustee has or acquires any "conflicting interest," as that
term is defined in the indenture. (Section 608) In the event the trustee
becomes a creditor of ours within four months prior to a default, or subsequent
to such a default, the indenture also contains certain limitations on the right
of the trustee to obtain payment of claims in certain cases, or to realize on
certain property held by it as security for such claim. (Section 613)
15
We may sell debt
securities in and outside the United States:
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through an underwriter or underwriters,
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through dealers,
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through agents, or
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through a combination of any of these methods.
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We will describe
the terms of any offering of debt securities in the prospectus supplement,
including:
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the method of distribution,
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the name or names of any underwriters, dealers or
agents, and any managing underwriter or underwriters,
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the purchase price of the debt securities and the
proceeds we receive from the sale,
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any underwriting discounts, agency fees or other form
of underwriters' compensation,
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any discounts and concessions allowed, reallowed or
paid to dealers or agents, and
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the expected time of delivery of the offered debt
securities.
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We may change the initial public offering price
and any discount or concessions allowed or reallowed to dealers from time to
time.
If we use underwriters to sell our debt
securities, the underwriting agreement will provide that the obligations of the
underwriters are subject to certain conditions precedent and that the
underwriters will be obligated to purchase all of the offered debt securities
if any are purchased. In connection with the sale of debt securities,
underwriters may receive compensation from us or from purchasers of debt
securities for whom they may act as agents in the form of discounts,
concessions or commissions. Underwriters may sell debt securities to or
through dealers, and dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriters and/or commissions from the
purchasers for whom they may act as agents.
If we use a dealer to sell debt securities, we
will sell the debt securities to the dealer as principal. The dealer may then
resell the debt securities to the public at varying prices to be determined by
the dealer at the time of resale. These dealers may be deemed underwriters, as
such term is defined in the Securities Act of 1933, of the debt securities they
offer and sell. If we elect to use a dealer to sell debt securities, we will
provide the name of the dealer and the terms of the transaction in the
prospectus supplement.
Debt securities may also be offered and sold in
connection with a remarketing upon their purchase, in accordance with a
redemption or repayment by their terms or otherwise by one or more remarketing
firms acting as principals for their own accounts or as our agents. We will
identify any remarketing firm, the terms of any remarketing agreement and the
compensation to be paid to a remarketing firm in the prospectus supplement.
Remarketing firms may be deemed underwriters under the Securities Act of 1933.
Underwriters, agents and dealers participating
in the distribution of debt securities may be deemed to be underwriters, and
any discounts and commissions received by them and any profit realized by them
on resale of debt securities may be deemed to be underwriting discounts and
commissions under the Securities Act of 1933.
16
We may enter into agreements with the
underwriters, agents, purchasers, dealers or remarketing firms who participate
in the distribution of our debt securities that will require us to indemnify
them against specified liabilities, including liabilities under the Securities
Act of 1933, or to contribute to payments that they or any person controlling
them may be required to make for those liabilities. Underwriters, agents or
dealers may be our customers. They may also engage in transactions with us or
perform services for us or for our affiliates in the ordinary course of
business.
Each series of debt securities will be a new
issue with no established trading market. We may elect to list any series of
debt securities on an exchange. However, we are not obligated to do so. It is
possible that one or more underwriters may make a market in a series of debt
securities. However, they will not be obligated to do so and may discontinue
market making at any time without notice. We cannot assure you that a liquid
trading market for the debt securities will develop.
In connection with an offering, the
underwriters or agents may purchase and sell debt securities in the open
market. These transactions may include over-allotment and stabilizing
transactions and purchases to cover syndicate short positions created in
connection with the offering. Stabilizing transactions consist of bids or
purchases for the purpose of preventing or retarding a decline in the market
price of the debt securities. Syndicate short positions involve the sale by
the underwriters or agents of a greater number of debt securities than they are
required to purchase from us in the offering. The underwriters also may impose
a penalty bid, in which selling concessions allowed to syndicate members or
other broker dealers in respect of the debt securities sold in the offering for
their account may be reclaimed by the syndicate if the debt securities are
repurchased by the syndicate in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
debt securities, which may be higher than the price that might otherwise
prevail in the open market, and these activities, if commenced, may be
discontinued at any time. These transactions may be effected on the NYSE, in
the over-the-counter market or otherwise.
We file annual, quarterly and current reports
and other information with the SEC. You may read and copy any document we file
with the SEC at the SEC's Public Reference Rooms in Washington, D.C., New York,
New York and Chicago, Illinois. You may obtain further information regarding
the operation of the SEC's Public Reference Rooms by calling the SEC at
1-800-SEC-0330. Our filings are also available to the public over the Internet
at the SEC's web site located at http://www.sec.gov. and the web site of
our parent company, Cleco Corporation, at http.//www.cleco.com.
The SEC allows us to "incorporate by reference"
into this prospectus information we file with the SEC. This means we can
disclose important information to you by referring you to the documents
containing the information. The information we incorporate by reference is
considered to be part of this prospectus, unless we update or supersede that
information by the information contained in this prospectus, the related
prospectus supplement, a pricing supplement or information that we file
subsequently that is incorporated by reference into this prospectus. We are
incorporating by reference into this prospectus the following documents that we
have filed with the SEC, and our future filings with the SEC under Section
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 (excluding
information deemed to be furnished and not filed with the SEC) until the
offering of the debt securities is completed:
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Our Annual Report on Form 10-K for the year ended December 31, 2002 filed with the SEC on March 18, 2003 (File No. 1-05663),
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Our Current Report on Form 8-K filed with the SEC on April 28, 2 003 (File No. 1-05663),
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Our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2003 filed with the SEC on May 8, 2003 (File No.
1-05663),
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Our Quarterly Report on Form 10-Q for the quarter
ended June 30, 2003 filed with the SEC on August 11, 2003 (File No. 1-05663), and
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Our Quarterly Report on Form 10-Q for the quarter
ended September 30, 2003 filed with the SEC on November 6, 2003 (File No. 1-05663)
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17
This prospectus is part of a registration
statement we have filed with the SEC relating to the debt securities. As
permitted by SEC rules, this prospectus does not contain all of the information
included in the registration statement and the accompanying exhibits and
schedules we file with the SEC. You should read the registration statement and
the exhibits and schedules for more information about us and the debt
securities. The registration statement, exhibits and schedules are also
available at the SEC's Public Reference Rooms or through its web site.
You may also
obtain a copy of our filings with the SEC at no cost by writing to or
telephoning us at:
Cleco Power LLC
2030 Donahue Ferry Road
Pineville, Louisiana 71360‑5226
Attn: Corporate Secretary
(318) 484‑7400
The
validity of the debt securities will be passed upon for us by Baker Botts
L.L.P., Houston, Texas. R. O'Neal Chadwick, Jr., our Senior Vice
President and General Counsel, will pass upon all matters of Louisiana law in this connection. Any underwriters or agents will be advised
about the validity of the debt securities by their own counsel, which counsel
will be named in the applicable prospectus supplement.
The financial statements incorporated in this
prospectus by reference to our Annual Report on Form 10-K for the year ended
December 31, 2002, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in accounting and auditing.
18
[LOGO]
$100,000,000
Cleco Power LLC
Medium-Term Notes, Series C
Due One Year or More
From Date of Issue
PROSPECTUS SUPPLEMENT
Merrill Lynch & Co.
Banc One Capital Markets, Inc.
Citigroup
,
2003
PART II
Item 14. Other Expenses of Issuance and
Distribution.
We estimate that expenses in connection with
the offering described in this registration statement will be as follows:
Securities and Exchange Commission registration fee
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$12,135 *
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Blue sky fees and expenses
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$ 10,000
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Fees and expenses of Trustees
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$ 10,000
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Fees and expenses of Trustees' counsel
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$ 10,000
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Fees and expenses of Company counsel
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$ 90,000
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Public accountants' fees and expenses
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$ 20,000
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Printing expenses
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$ 5,000
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Rating agency fees
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$ 50,000
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Miscellaneous expenses
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$ 17,865
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Total Expenses
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$ 225,000
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* Actual; all other expenses are estimated.
Item 15. Indemnification of Managers and Officers
Article IV of our Articles of Organization and
Section 7 of our Operating Agreement provide that the management of our company
is vested in our managers.
Section 1315A of the Louisiana Limited
Liability Company Law ("LLLCL") provides that, subject to specified
limitations, the articles of organization or a written operating agreement of a
limited liability company ("LLC") may eliminate or limit the personal liability
of a member or members, if management is reserved to the members, or a manager
or managers, if management is vested in one or more managers, for monetary
damages for breach of any duty provided for in Section 1314 of the LLLCL.
Section 1314 of the LLLCL provides that a member, if management is reserved to
the members, or a manager, if management is vested in one or more managers,
shall be deemed to stand in a fiduciary relationship to the LLC and its members
and shall discharge his duties in good faith, with the diligence, care,
judgment and skill that an ordinary prudent person in a like position would
exercise under similar circumstances. Section 1314 also provides that such a
member or manager
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is protected in discharging
his duties in relying in good faith upon specified records, opinions and
other information, unless he has knowledge that makes such reliance
unwarranted;
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will not be liable for any action taken on behalf of the
LLC if he performed the duties of his office in compliance with Section 1314;
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will not be personally liable to the LLC or its members
for monetary damages unless he engaged in grossly negligent conduct or
conduct that demonstrates a greater disregard of the duty of care than gross
negligence; and
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in making business judgements, fulfills his duty by making
such judgments in good faith, if he does not have a conflict of interest with
respect to the business judgment, is reasonably informed with respect to the
judgment and rationally believes that the judgment is in the best interests
of the LLC and its members.
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Section 1314 further provides
that a person alleging a breach of the duty owed by a member or manager to an
LLC has the burden of proving the alleged breach of duty, including the
inapplicability of specified provisions of Section 1314 as to the fulfillment
of the duty, and, in a damage action, the burden of proving that the breach was
the legal cause of damage suffered by the LLC.
II-1
Article V of our Articles of Organization
provides that no member or manager will be personally liable for any monetary
damages for breach of any duty provided for in Section 1314 of the LLLCL,
except as otherwise provided in Section 1315B of the LLLCL. Under Section
1315B, no provision of an LLC's articles of organization or operating agreement
limiting or eliminating liability may limit or eliminate the liability of a
member or manager for the amount of a financial benefit received by a member or
manager to which he is not entitled or for an intentional violation of criminal
law. Article V of our Articles of Organization also provides that if the LLLCL
is amended to authorize any further elimination or limitation of the personal
liability of our member or any manager, the liability of such member or
managers will be eliminated or limited to the fullest extent provided by the
LLLCL, as amended. Article V further provides that any repeal or modification
of Article V will not adversely affect any right or protection of any member or
any manager with respect to any events occurring prior to the time of the
repeal or modification.
Section 1315A of the LLLCL allows the articles
of organization or a written operating agreement of an LLC to provide for the
indemnification of a member or members, or a manager or managers, for
judgements, settlements, penalties, fines or expenses incurred because he is or
was a member or manager. Section 1315B provides that the indemnification
provisions of Section 1315A may not limit or eliminate the liability of a
member or manager for the amount of a financial benefit received by a member or
manager to which he is not entitled or for an intentional violation of criminal
law.
Section 13 of our Operating Agreement provides
that we will indemnify any person who was or is, or is threatened to be made, a
party to or otherwise involved in any pending or completed action, suit,
arbitration, alternate dispute resolution mechanism, investigation,
administrative hearing or other proceeding, whether civil, criminal,
administrative or investigative (we refer to any such threatened, pending or
completed proceeding as a "Proceeding") by reason of the fact that he is or was
one of our managers, officers, employees or agents or is or was serving at our
request as a director, manager, officer, employee or agent of another business,
foreign or nonprofit corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise (whether the basis of his involvement in such
Proceeding is alleged action in an official capacity or in any other capacity
while serving as such), to the fullest extent permitted by applicable law in
effect from time to time, and to such greater extent as applicable law may from
time to time permit, from and against expenses, including attorney's fees,
judgments, fines, amounts paid or to be paid in settlement, liability and loss,
ERISA excise taxes, actually and reasonably incurred by him or on his behalf or
suffered in connection with such Proceeding or any claim, issue or matter
therein. However, subject to certain exceptions set forth in Section 13,
we will indemnify any such person claiming indemnity in connection with a
Proceeding initiated by such person only if such Proceeding was authorized by
our board of managers.
Section 13 of
our Operating Agreement further provides that:
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we will from time to time pay, in advance of final
disposition, all Expenses (as defined in Section 13) incurred by or on
behalf of any person claiming indemnity thereunder in respect of any
Proceeding;
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the right to indemnification provided therein is a
contract right and no amendment, alteration or repeal of Section 13 will
restrict the indemnification rights granted by Section 13 as to any
person claiming indemnification with respect to acts, events and
circumstances that occurred, in whole or in part, before such amendment,
alteration or repeal;
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any such indemnification may continue as to any person
who has ceased to be a manager, officer, employee or agent and will inure to
the benefit of the heirs, executors and legal representative of such person;
and
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the rights to indemnification and to receive
advancement of Expenses contemplated by Section 13 are not exclusive of
any other rights to which any person may at any time be otherwise entitled,
provided that such other indemnification may not apply to a person's willful
or intentional misconduct.
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II-2
Section 13 also sets forth certain procedural and
evidentiary standards applicable to the enforcement of a claim thereunder.
Section 13
also provides that we:
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may procure or maintain insurance or other similar
arrangement, at our expense, to protect ourselves and any manager, officer,
employee or agent of ours or any other corporation, partnership, joint
venture, trust or other enterprise against any expense, liability or loss
asserted against or incurred by such person, whether or not we would have the
power to indemnify such person against such expense or liability; and
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shall indemnify our managers and officers to the
extent they are not covered by the insurance, whether or not such persons
would otherwise be entitled to indemnification under Section 13, to the
extent (i) of deductibles payable under such policies, (ii) of
amounts exceeding payments required to be made by an insurer or
(iii) that prior policies of manager's and officer's liability insurance
would have provided for payment to such officer or manager (but no person
will be entitled to indemnification for willful or intentional misconduct).
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Item
16. Exhibits.
See Index to Exhibits at page II-7.
Item
17. Undertakings.
The undersigned
registrant hereby undertakes:
(1) To file, during any period in
which offers or sales are being made, a post-effective amendment to this
registration statement
(i) To include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the
prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
provided, however, that the registrant need not file a
post-effective amendment to include the information required to be included by
subsection (i) or (ii) above if such information is contained in periodic
reports filed by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement;
(2) That, for the purpose of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof, and
II-3
(3) To remove from registration by
means of a post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
The undersigned registrant hereby undertakes
that, for purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to managers, 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 Securities Act of 1933 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 manager, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
manager, 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 of whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-4
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 Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Pineville,
State of Louisiana, on December 12, 2003.
CLECO POWER LLC
(Registrant)
By: /s/ DAVID M. EPPLER
David M. Eppler
President and
Chief Executive Officer
Pursuant to the requirements of the Securities
Act of 1933, this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature
|
Title
|
Date
|
/s/ DAVID M. EPPLER
David M. Eppler
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President,
Chief Executive Officer and Manager (Principal Executive Officer)
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December 12, 2003
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/s/ DILEK SAMIL
Dilek Samil
|
Chief Financial
Officer and
Senior Vice President of Finance
(Principal Financial Officer)
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December 12, 2003
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/s/ R. RUSSELL DAVIS
R. Russell Davis
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Vice President and
Controller
(Principal Accounting Officer)
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December 12, 2003
|
*
Sherian G.
Cadoria
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Manager
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December 12, 2003
|
*
Richard B.
Crowell
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Manager
|
December 12, 2003
|
II-5
|
*
J. Patrick
Garrett
|
Manager
|
December 12, 2003
|
*
F. Ben James, Jr.
|
Manager
|
December 12, 2003
|
*
Elton R. King
|
Manager
|
December 12, 2003
|
*
William L. Marks
|
Manager
|
December 12, 2003
|
*
Ray B. Nesbitt
|
Manager
|
December 12, 2003
|
*
Robert T. Ratcliff
|
Manager
|
December 12, 2003
|
*
William H.
Walker, Jr.
|
Manager
|
December 12, 2003
|
*By: /s/
KATHLEEN F. NOLEN
Attorney-in-Fact
|
The Registrant reasonably believes that the
security ratings to be assigned to the securities registered hereunder will
make the securities "investment grade securities" pursuant to Transaction
Requirement B.2 of Form S-3, prior to the sale of such securities.
II-6
INDEX TO
EXHIBITS
|
|
SEC File or
Registration
Number
|
Registration
Statement
or Report
|
Exhibit
Number
|
1(a)(1)**
|
Selling Agency
Agreement by and among Cleco Power LLC (the "Company") and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Salomon Smith Barney Inc. and Banc One
Capital Markets, Inc.
|
1-5663
|
8-K
(4/26/01)
|
1
|
1(a)(2)*
|
Form of Underwriting Agreement
|
|
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1(a)(3)*
|
Form of Selling Agency
Agreement
|
|
|
|
2**
|
Joint Agreement of Merger of
Cleco Utility Group Inc. with and into Cleco Power LLC dated December 15, 2000
|
333-52540
|
S-3/A
(1/26/01)
|
2
|
3(a)**
|
Articles of Organization and
Initial Report of the Company, dated December 11, 2000
|
333-52540
|
S-3/A
(1/26/01)
|
3(a)
|
3(b)**
|
Operating Agreement of the
Company amended as of April 26, 2002
|
1-5663
|
10-Q
(3/31/02)
|
3(b)
|
4(a)(1)**
|
Indenture dated as of October 1, 1988 between the Company and Bankers Trust Company, as Trustee
|
33-24896
|
S-3
(10/11/88)
|
4(b)
|
4(a)(2)**
|
First Supplemental Indenture,
dated as of December 1, 2000, between Cleco Utility Group Inc. and The
Bank of New York
|
333-52540
|
S-3/A
(1/26/01)
|
4(a)(2)
|
4(a)(3)**
|
Second Supplemental Indenture,
dated as of January 1, 2001, between Cleco Power LLC and The Bank of New York
|
333-52540
|
S-3/A
(1/26/01)
|
4(a)(3)
|
4(a)(4)**
|
Third Supplemental Indenture,
dated as of April 26, 2001, between Cleco Power LLC and the Bank of New York
|
1-5663
|
8-K
(4/26/01)
|
4(a)
|
4(a)(5)**
|
Fourth Supplemental Indenture,
dated as of February 1, 2002, between Cleco Power LLC and the Bank of New
York
|
1-5663
|
8-K
(2/06/02)
|
4.1
|
4(a)(6)**
|
Fifth Supplemental Indenture,
dated as of May 1, 2002, between Cleco Power LLC and the Bank of New York
|
1-5663
|
8-K
(5/8/02)
|
4.1
|
4(a)(7)**
|
Sixth Supplemental Indenture,
dated as of April 28, 2003, between Cleco Power LLC and the Bank of New York
|
1-5663
|
8-K
(4/28/03)
|
4.1
|
4(b)**
|
Agreement of Resignation,
Appointment and Acceptance (appointing successor Trustee) dated as of April 1, 1996 by and among Central Louisiana Electric Company, Inc., Bankers Trust Company
and The Bank of New York
|
333-02895
|
S-3
(4/29/96)
|
4(a)(2)
|
4(c)**
|
Form of Medium-Term Note
(included in the agreement filed as Exhibit 4(a)(4))
|
|
|
|
4(d)**
|
Form of Note (included in
Exhibit 4(a)(1))
|
|
|
|
5(a)
|
Opinion of Baker Botts L.L.P.
|
|
|
|
II-7
|
12(a)**
|
Statement of Computation of
Ratio of Earnings to Fixed Charges for the twelve-month periods ended December 31, 2002, 2001, 2000, 1999 and 1998
|
1-5663
|
10-K
(12/31/02)
|
12(b)
|
12(b)**
|
Statement of Computation of
Ratio of Earnings to Fixed Charges for the nine-month period ended September 30, 2003
|
1-5663
|
10-Q
(9/30/03)
|
12(b)
|
12(c)**
|
Statement of Computation of
Ratio of Earnings to Fixed Charges for the nine-month period ended September 30, 2002
|
1-5663
|
10-Q
(9/30/02)
|
12(b)
|
23(a)
|
Consent of
PricewaterhouseCoopers LLP
|
|
|
|
23(b)
|
Consent of Baker Botts L.L.P.
(included in the opinion filed as Exhibit 5(a))
|
|
|
|
24†
|
Power of Attorney
|
|
|
|
25(a)
|
Statement of Eligibility on
Form T-1 of the Bank of New York, as Trustee under the Indenture
|
|
|
|
*To be filed by amendment or by
a report on Form 8-K pursuant to Regulation S-K, Item 601(b).
**Incorporated herein by
reference as indicated.
†Previously filed.
II-8