SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN CONSENT STATEMENT
SCHEDULE 14A INFORMATION
CONSENT STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by party other than the registrant [_]
Check the appropriate box:
[X][_] Preliminary Consent Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[_][X] Definitive Consent Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SIERRA PACIFIC POWER COMPANY
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Consent Statement,
if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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P.O. BOX 10100 (6100 NEIL ROAD), RENO, NEVADA 89520-0400
[LOGO][SIERRA PACIFIC LOGO APPEARS HERE]
SIERRA PACIFIC POWER COMPANY
P.O. Box 10100 (6100 Neil Road)
Reno, Nevada 89520
January ,23, 2001
Dear Shareholder:
Please find enclosed important information relating to the consent that
Sierra Pacific Power Company (the "Company") is seeking from holders of its
preferred stock to increase the amount of unsecured indebtedness the Company
may issue. Under section 4.04(B)(i) of its Restated Articles of Incorporation,
the Company cannot, without the consent of the holders of a majority of the
total number of shares of the Company's preferred stock, issue unsecured debt
securities with maturities of greater than 12 months for any purpose (other
than refunding outstanding unsecured debt or retiring outstanding shares of
preferred stock) if such unsecured indebtedness would exceed 20% of the
aggregate of (a) the total principal amount of all bonds and other securities
representing secured indebtedness then outstanding and (b) the total capital
and surplus of the Company then stated on its books. As of September 30, 2000,
this restriction would entitle the Company to have outstanding approximately
$263.9 million in long-term unsecured indebtedness, of which $13.9 million is
currently available. The Company is seeking the consent of the holders of the
preferred stock to issue up to $400 million in long-term unsecured indebtedness
in excess of the present limitation. In particular, the Company anticipates
that the ability to use unsecured indebtedness will increase the Company's
flexibility in planning and financing its business activities. We would greatly
appreciate your giving prompt attention to the enclosed material which you are
urged to read in its entirety.
If the necessary number of shares of preferred stock grant consents, the
Company will make a special participation premium payment in the amount of $$.50
per share consented, to each holder of shares of preferred stock of record on
December 22, 2000 whose duly executed and valid non-revoked consent is received
on or before ,February 15, 2001 (the "Return Date"). Information and
instructions relating to the special participation premium are included with
the enclosed material.
It is important that all preferred shareholders, regardless of the number of
shares owned, grant a consent. WE URGE YOU TO GRANT YOUR CONSENT BY MARKING,
SIGNING AND DATING THE ENCLOSED CONSENT CARD, WHICH IS INCLUDED WITHIN, AND
RETURN IT AS SOON AS POSSIBLE. Shareholders are requested to return their
consent by ,February 15, 2001. Brokers, dealers, commercial banks, trust
companies and other nominees, only, may return consents and Notices of Solicited Consentsconsent letters by facsimile to
Alpine Fiduciary Services, Inc., c/o CIC/Georgeson Shareholder Communications
at (201) 804-8693 (fax).
If you have any questions regarding the proposed consent, please call the
Information Agent, CIC/Georgeson Shareholder Communications, at (800) 809-5937
(toll-free), the Solicitation Agent, Georgeson Shareholder Securities
Corporation, at (800) 445-1790 (toll-free), Richard K. Atkinson, Treasurer and
Investor Relations Officer of the Company at (775) 834-4358,834-5300, or your broker,
dealer, commercial bank, trust company or other nominee.
Sincerely,
/s/ _____________________________________William E. Peterson
William E. Peterson
Senior Vice President, General
Counsel and Corporate Secretary
SIERRA PACIFIC POWER COMPANY
CONSENT STATEMENT
WITH RESPECT TO ITS PREFERRED STOCK
INTRODUCTION
This Consent Statement is first being mailed on or about January ,23, 2001 to
the holders of the Class A, Series 1 Preferred Stock of Sierra Pacific Power
Company, a Nevada corporation (the "Company"), in connection with the
solicitation of consents by the Board of Directors (the "Board") of the Company
to the Proposal described below. Under section 4.04(B)(i)/1/ of its Restated
Articles of Incorporation, the Company cannot, without the consent of the
holders of a majority of the total number of shares of the Company's preferred
stock, issue unsecured debt securities with maturities of greater than 12
months for any purpose (other than refunding outstanding unsecured debt or
retiring outstanding shares of preferred stock) if such unsecured indebtedness
would exceed 20% of the aggregate of (a) the total principal amount of all
bonds and other securities representing secured indebtedness then outstanding
and (b) the total capital and surplus of the Company then stated on its books
(the "Charter Limitation"). As of September 30, 2000, this restriction would
entitle the Company to have outstanding approximately $263.9 million in long-
term unsecured indebtedness, of which $13.9 million is currently available. The
Company is seeking the consent of the holders of the Class A, Series 1
Preferred Stock, which is the only series of preferred stock of the Company
outstanding, to issue up to $400 million in unsecured indebtedness in excess of
the present limitation (the "Proposal"). The ability to use unsecured
indebtedness will increase the Company's flexibility in planning and financing
its business activities.
If the proposal is approved, the Company will make a special participation
premium payment in the amount of $$.50 per share consented to each holder of
record on the record date whose duly executed and valid non-revoked consent is
received on or before the return date (the "Participation Premium").
SHAREHOLDERS ARE REQUESTED TO RETURN THEIR CONSENTS BY THE RETURN DATE OF
,FEBRUARY 15, 2001.
YOUR CONSENT AND PROMPT ACTION ARE IMPORTANT. YOU ARE URGED TO GRANT YOUR
CONSENT BY MARKING, SIGNING, DATING AND RETURNING THE ENCLOSED CONSENT LETTER
AS SOON AS POSSIBLE.
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/1/Section 4.04(B)--So long as any Preferred Stock is outstanding, the
Corporation shall not, without the consent (given in writing without a
meeting or by vote in person or by proxy at a meeting called for the
purpose) of the holders of a majority of the aggregate number of shares of
all series of Preferred Stock then outstanding--
(i) Issue, create or assume any unsecured notes, debentures or other
evidences of indebtedness maturing more than one year from the date of
issuance, creation or assumption thereof (hereinafter in this clause
(i) called "unsecured debt securities") for any purpose, except for the
purpose of refunding outstanding unsecured debt securities or effecting the
retirement, by redemption or otherwise, of outstanding shares of the
Preferred Stock or of a class of stock ranking prior thereto, if
immediately after such issue, creation or assumption the total principal
amount of all such unsecured debt securities issued, created or assumed and
then outstanding (including the unsecured debt securities then to be
issued) would exceed twenty percent (20%) of the aggregate of (a) the total
principal amount of all bonds and other securities representing secured
indebtedness issued, created or assumed by the Corporation and then to be
outstanding, and (b) the total of the capital and surplus (including
premiums on capital stock) of the Corporation as then to be stated on its
books; provided that any unsecured debt securities issued under any consent
of holders of Preferred Stock (and any securities issued to refund the
same) shall be excluded from the computation of the amount of unsecured
debt securities which may be issued, created or assumed within the
aforesaid twenty percent (20%) limitation . . . YOUR CONSENT AND PROMPT ACTION ARE IMPORTANT. YOU ARE URGED TO GRANT YOUR
CONSENT BY MARKING, SIGNING, DATING AND RETURNING THE ENCLOSED CONSENT LETTER
AS SOON AS POSSIBLE..
1
CONSENT PROCEDURES
RECORD DATE, VOTING SECURITIES, REQUIRED ACTION
The Board of Directors of the Company has set December 22, 2000 as the
record date for determining shareholders entitled to grant a consent with
respect to this solicitation (the "Record Date"). Only holders of record of the
Company's Class A, Series 1 Preferred Stock (the "Preferred Stock") at the
close of business on the Record Date will be entitled to grant consents. The
record holders of the Preferred Stock act together as one class with respect to
the Proposal. As of the Record Date, there were 2,000,000 shares of Preferred
Stock outstanding.
The consent by the holders of a majority of the outstanding shares of
Preferred Stock is required to approve the Proposal.
CONSENT PROCEDURES GENERALLY; EFFECTIVENESS OF CONSENTS
The Company is a Nevada corporation and is, therefore, subject to Nevada law
regarding its corporate actions. Nevada law permits action by less than
unanimous written consent of stockholders provided a corporation's articles of
incorporation does not provide otherwise. Section 4.04(B) of the Company's
Restated Articles of Incorporation specifically provides that a majority of the
total number of votes which may be cast by the holders of all outstanding
series of preferred stock may consent in writing to the Company's issuance of
unsecured debt in excess of the Charter Limitation.
The Proposal will become effective when properly completed, unrevoked and
effective consent letters (or other forms of consent) indicating consent to the
Proposal, signed by the holders of record on the Record Date of a majority of
the outstanding shares of the Preferred Stock, are delivered to the Company.
The Company reserves the right to extend the consent solicitation period at any
time and from time to time, whether or not the requisite consents have been
received.
Because the Proposal will become effective only if executed consentsconsent letters
are returned by holders of record on the Record Date of a majority of the
outstanding shares of the Preferred Stock, the following actions will have the
same effect as withholding consent to the Proposal: (a) failing to execute,
date and return a consent letter or (b) executing, dating and returning a
consent marked "WITHHOLDS CONSENT" or "ABSTAINS" as to the Proposal. If
returned consent cardsletters are executed and dated but not marked with respect to
the Proposal, the shareholder will be deemed to have consented to the Proposal.
PROCEDURAL INSTRUCTIONS
If a shareholder is a record holder of shares of Preferred Stock as of the
close of business on the Record Date, such shareholder may consent to, withhold
consent to or abstain with respect to the Proposal by marking the "CONSENTS",
"WITHHOLDS CONSENT" or "ABSTAINS" box, as applicable, on the accompanying
consent letter and signing, dating and returning it promptly in the enclosed
postage-paid envelope. Any beneficial owner of shares who is not the registered
holder of such shares as of the Record Date (as would be the case for any
beneficial owner whose shares are registered in the name of such owner's
broker, dealer, commercial bank, trust company or other nominee) must arrange
with the record holder to execute and deliver a consent letter on such
beneficial owner's behalf.
UNDER NEVADA LAW, ONLY SHAREHOLDERS OF RECORD ON THE RECORD DATE ARE
ELIGIBLE TO GIVE THEIR CONSENT TO THE PROPOSALS. THEREFORE, EACH SHAREHOLDER IS
URGED, EVEN IF SUCH SHAREHOLDER HAS SOLD ITS SHARES SUBSEQUENT TO THE RECORD
DATE, TO GRANT ITS CONSENT PURSUANT TO THE ENCLOSED CONSENT LETTER WITH RESPECT
TO ALL SHARES HELD AS OF THE RECORD DATE. IF THE PARTICIPATION PREMIUM IS MADE,
IT WILL BE MADE TO EACH HOLDER OF RECORD ON THE RECORD DATE WHOSE DULY EXECUTED
AND VALID NON-REVOKED CONSENT IS RECEIVED ON OR BEFORE THE
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RETURN DATE. IN ADDITION, ANY SHAREHOLDER OWNING SHARES BENEFICIALLY (BUT NOT
2
OF RECORD), SUCH AS A PERSON WHOSE OWNERSHIP OF SHARES IS THROUGH A BROKER,
DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE, SHOULD CONTACT THAT
NOMINEE WITH INSTRUCTIONS TO EXECUTE THE CONSENT LETTER ON SUCH SHAREHOLDER'S
BEHALF OR TO HAVE THAT NOMINEE EXECUTE THE CONSENT. EACH SHAREHOLDER IS URGED
TO ENSURE THAT THE RECORD HOLDER OF SUCH SHAREHOLDER'S SHARES MARKS, SIGNS,
DATES AND RETURNS THE ENCLOSED CONSENT LETTER AS SOON AS POSSIBLE.
Instructions and additional information regarding the consent and the
Participation Premium are included in the attached consent letter.
REVOCATION OF CONSENTS
Executed consents may be revoked at any time, provided that a written, dated
revocation which clearly identifies the consent being revoked is executed and
delivered to ,Alpine Fudiciary Services, Inc at the address set forth below,
prior to the time that the Proposal becomes effective. A revocation may be in
any written form validly signed by the record holder as of the Record Date as
long as it clearly states that the consent previously given is no longer
effective.
CONSEQUENCES TO NON-CONSENTING SHAREHOLDERS
Shareholders of record on the Record Date who do not timely and validly
consent to the Proposal on or before the Return Date will not be eligible to
receive any Participation Premium even though the Proposal will be binding upon
them if the Proposal becomes effective as described above.
APPRAISAL RIGHTS
No appraisal rights are or will be available under Nevada law in connection
with the Proposal.
PARTICIPATION PREMIUM
Subject to the terms and conditions set forth in this Consent Statement, if
(but only if) the Proposal is approved, the Company will pay a Participation
Premium of $.50 for each share consented, to each preferred shareholder of
record on the Record Date whose duly executed and valid non-revoked consent is
received on or before the Return Date. If the Proposal is approved, the
Participation Premiums will be paid out of the Company's general funds,
promptly after the Proposal is approved. However, no accrued interest will be
paid on the Participation Premiums regardless of any delay in making payments.
Only preferred shareholders on the Record Date (or their legal
representatives or attorneys-in-fact) are eligible to receive Participation
Premiums. Any beneficial owner of shares who is not the registered holder of
such shares as of the Record Date must arrange with the record holder to
receive his proportionate interest in the Participation Premiums made to such
record holder. The Company will have no responsibility or liability for any
aspect of the records relating to or payments made on account of any beneficial
owner's interest in the Participation Premium made to a record holder of
Preferred Stock.
Instructions and additional information regarding the Participation Premium
are included in the attached consent letter.
OWNERSHIP OF PREFERRED STOCK
The holders of the Preferred Stock are the only class of securities holders
entitled to act on the Proposal. There were approximately 25 holders of record
of shares of Preferred Stock as of December 22, 2000.
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The following table indicates the number of shares of Preferred Stock
beneficially owned by any person or group known by the Company to be the holder
of more than 5% of the shares entitled to vote on the Proposal.
Amount and
Percentage
of Beneficial
Ownership
as of December 22,
Name and Address of Beneficial Owner 2000
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John Hancock Advisers........................................ 389,586 shares
101 Huntington Ave (19.48%)
Boston, Massachusetts 02199
Associates Corporation of North America...................... 210,041 shares
250 East Carpenter Freeway (10.5%)
Irving, Texas 75062
Guardian Life Insurance Co. ................................. 160,000 shares
7 Hanover Square (8%)
New York, New York 10004
To the knowledge of the Company, as of the Record Date, none of the
Company's directors or executive officers own any shares of Preferred Stock.
REASONS FOR THE PROPOSAL
The Proposal would permit the Company to issue $400 million in long-term
unsecured debt securities in excess of the Charter Limitation. At present, the
Company has outstanding approximately $825.9 million in long-term debt, of
which $250 million is unsecured, and would be permitted to issue only an
additional $13.9 million of unsecured long-term debt under the terms of the
Charter Limitation. For purposes of the Charter Limitation, "long-term" debt
securities isare defined as debt securities maturing more than one year after the
date of their issuance, creation or assumption.
The Company believes that regulatory, legislative and market developments
have resulted in and will continue to generate a highly competitive environment
in the electric and gas utility industries. Given the current and anticipated
competitive climate, flexibility and cost leadership are even more crucial to
the Company's future success. Because the electric and gas industries are
extremely capital intensive, controlling and minimizing financing costs are
essential to operating effectively in the new competitive environment. It is,
therefore, for flexibility and its related cost benefits, that you are being
asked to consent to the Proposal.
The Company believes that adoption of the Proposal would further its
objectives of financial flexibility and capital cost reduction. Historically,
the Company's debt financing generally has been accomplished through the
issuance of long-term first mortgage bonds, medium-term notes and tax-exempt
bonds secured by first mortgage bonds, and a modest amount of unsecured short-
term and long-term debt. Because the First Mortgage Indenture, under which the
first mortgage bonds are issued, places a first priority lien on substantially
all of the Company's assets, first mortgage bonds (or other securities
collateralized with first mortgage bonds) are essentially the only kind of
secured financing available to the Company. The First Mortgage Indenture
contains certain restrictive covenants with respect to, among other things, the
disposition of assets and the ability to issue additional first mortgage bonds.
These restrictive covenants have become more problematic in light of the order
by the Public Utilities Commission of Nevada (the "PUCN") which requires the
Company to sell its electric generation assets. The Company is in the process
of complying with this order and expects to complete the sale of all of its
electric generation assets during 2001. In addition, the Company has announced
its intentionentered
into an agreement to sell its water business to the Truckee Meadows Water
Authority so that itthe Company may focus its attention on its core businesses of electric, gas
and gas transmission and distribution.telecommunications businesses. As a result of these asset divestitures, the
Company will have less unfunded property to use as a basis for issuing
additional first mortgage bonds under the terms of its First Mortgage
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Indenture. Because of this decreased capacity to issue first mortgage
4
bonds, the Company has, with the encouragement of the PUCN, decreased its use
of first mortgage bonds as a financing vehicle and instead utilized unsecured
debt to a greater degree than in the past.
In addition to the decreased capacity to issue first mortgage bonds
resulting from the Company's asset divestitures, the Company's First Mortgage
Indenture contains a separate provision which may make it impossible to issue
additional first mortgage bonds during certain periods. This provision requires
that a net earnings coverage test be satisfied before any additional first
mortgage bonds may be issued. Other utilities have been unable to issue
mortgage bonds during certain periods because of similar restrictive covenants
in their mortgage indentures.
These restrictions on the Company's ability to utilize secured debt have
made the use of unsecured debt more attractive. The Charter Limitation,
however, restricts the Company's ability to continue the trend away from
secured financings and limits its flexibility in planning and financing its
business activities. The Company believes it will be at a competitive
disadvantage if the proposalProposal is not adopted. The industry's new competitors
(for example, power marketers, independent power producers and cogenerating
facilities) generally are not subject to this type of financing restriction.
Recently, a number of other utilities with the same or similar charter
restrictions have successfully eliminated such provisions by soliciting their
shareholders for similar waivers or eliminations of their unsecured debt
limitations. Therefore, many potential utility competitors, and even the
Company's affiliate, Nevada Power Company, have no comparable provision
restricting the use of unsecured debt. The Company believes that the adoption
of the Proposal will be in the best long-term competitive interests of
shareholders by enhancing its ability to meet the objectives described below.
FINANCIAL FLEXIBILITY
With the Company's ability to issue secured debt (in the form of first
mortgage bonds) subject to the serious limitations described above, and its
ability to issue long-term unsecured debt constrained by the Charter
Limitation, the Company will have little choice but to rely almost exclusively
on short-term debt to finance its capital needs. Such reliance on short-term
debt will leave the Company vulnerable to fluctuations in interest rates which
in turn could affect the net income of the Company and its ability to pay
dividends on its preferred and common stock.
The Company believes that the prudent use of both short-term and long-term
debt as capital markets dictate is vital to effective financial management of
theits business.
The Proposal does not call for an unlimited waiver of the Charter
Limitation. Instead, the Proposal would permit the Company to issue up tono more
than $400 million of unsecured long-term debt in addition to the amount which
it would otherwise be permitted itto issue under the Charter Limitation
(currently approximately $263.9 million). Issuances of unsecured long-term debt
in excess of this amount would continue to be prohibited by the Charter
Limitation without the consent of the holders of a majority of the Preferred
Stock. The Company believes that this limited waiver when combined with an anticipated
paydownwill be sufficient to meet
the Company's long-term financing needs until it begins to receive the cash
payments resulting from the sales of certain of its assets described below.
The Company has entered into a definitive agreement to sell its water
business to the Truckee Meadows Water Authority ("TMWA") for $350 million. TMWA
is a newly-established governmental entity formed by the cities of Reno and
Sparks, Nevada and Washoe County, Nevada. This sale is subject to PUCN approval
and is expected to close during the second quarter of 2001.
In addition, the Company has entered into definitive agreements to sell the
following electric generation plants for the net consideration indicated:
5
Estimated Net
General Plant Consideration Purchaser
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Tracy/Pinon Power Station $125,045,000(2) WPS Power Development, Inc.
Clark Mtn. Power Station
Valmy Power Station $261,610,000(2) NRG Energy
Battle Mountain Plant
Winnemuca Plant
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(2) In the above table, the consideration for each sale is indicated net of
payments to be made by the Company in return for three-year transitional
power purchase contracts capped at 1998 rate levels. The exact amount of
adjustment for these transitional power purchase contracts will be
determined at the time of closing. Because each of these asset sale
agreements is subject to review and approval by the PUCN and by the Federal
Energy Regulatory Commission, the closings of these transactions are not
expected to occur until later this yearyear. However, for purposes of existing unsecured long-term debt withthe above
table, it has been assumed that each of the transactions will close on June
1, 2001. The actual adjustments (and therefore the net consideration to be
received by the Company) may be higher or lower than the above estimates
depending on the actual closing dates of the transactions.
In addition, the Company is continuing to auction its remaining generation
assets. Recent legislation enacted by the State of California (A.B. No. 6 (1st
Ex. Sess.)) places a five-year moratorium on sales of electric generation
facilities owned by public utilities. Although the generation facilities of the
Company listed in the above table and the remaining generation assets being
auctioned by the Company are all located in Nevada, a small portion of the
Company's service area is located in the Lake Tahoe region of California, thus
making the Company a "public utility" within the meaning of the California
statute. As a result, the recent California legislation, as drafted, would
apply to the Company's sale of its Nevada generation plants. The Company
intends to seek an amendment to the legislation exempting the Company's
generation facilities from the moratorium. The Company cannot at this time
predict whether its efforts will be successful.
The Company intends to use a portion of the proceeds from the assetabove sales,
described above,after payment of applicable taxes and fees, to pay down existing long-term
unsecured debt. However, the closings of these various sales transactions are
likely to be spread over much of the year 2001, and their precise timing cannot
be predicted. Until such closings occur and the sale proceeds are received, the
Company will provide it with
sufficient flexibilityhave very limited ability to cover itsissue long-term debt needs.
As a regulated public utility,unless the
Proposal is approved.
The Proposal will not affect the fact that the Company must obtain the prior
approval of the PUCN before it may issue any securities, including either
short-term or long-term debt. Before the PUCN approves any issuance of any additional securities
(including long-term unsecured debt)debt,
the Company is required to justify the need for such issuance and to
demonstrate that its overall capitalization ratios after such issuance will
remain within the PUCN's guidelines. In addition, the Company recently entered
into a stipulation with the PUCN in which it agreed that it would achieve a
ratio of equity capital to total capital by the end of 2001 of at least 42% and
that, thereafter, no distributions will be made by the Company will continue to be subjectits parent,
Sierra Pacific Resources, if the Company's equity capital to total capital
ratio is less than 42% without the prior approval of the PUCN. With these benefits in mind,In the same
stipulation, Sierra Pacific Resources agreed to use its best good faith efforts
to achieve a corporate credit rating for the Company has applied to the PUCN for
approval to issue an additional $400 million of unsecured long-term debt, someat least "A" from
Standard & Poor's Rating Services, A division of which may be used to refund existing unsecured long-term debt. However,
because of the Charter Limitation,The McGraw-Hill Companies,
Inc. Thus, the Company had only approximately $13.9
millionwill continue to have significant regulatory constraints
on the amount of unsecured debt capacity available, based on capitalization as of
September 30, 2000.total indebtedness it may incur.
FOR THE ABOVE REASONS, THE COMPANY'S BOARD BELIEVES THE BEST LONG-TERM
INTERESTS OF SHAREHOLDERS ARE SERVED BY, AND ENCOURAGES SHAREHOLDERS TO GRANT
CONSENTS FOR, THE ADOPTION OF THE PROPOSAL
5PROPOSAL.
6
CERTAIN EFFECTS OF THE PROPOSAL
At present, the Company cannot incur more than approximately $13.9 million
of long-term unsecured indebtedness without the consent of the preferred
shareholders, but can incur secured indebtedness without the consentand its issuance of the
preferred shareholders (although secured indebtedness is subject to the
limitations of the First Mortgage Indenture that are described above).
Accordingly, to the extentabove.
Theoretically, the Proposal allowswould allow the Company to incur a greater amount
of total indebtedness than it could without approval of the Proposal. To the
extent that the total indebtedness of the Company increases, the preferred
shareholders' relative position in the Company's capital structure could be
perceived to decline, which in turn could adversely affect the market price and
credit rating of the Preferred Stock. Since a holder of any debt, whether
secured or unsecured, would rank ahead of holders of Preferred Stock in a
bankruptcy or other liquidation of the Company, the issuance of a greater
amount of unsecured debt may pose additional risks to holders of Preferred
Stock under certain circumstances, including circumstances relating to a
default by the Company in the repayment of such unsecured debt.
In this regard,As noted above, however, it should be noted that neither the
Charter Limitation nor the First Mortgage Indenture imposes any restriction on
the issuance of short-term unsecured debt and that the Company is subject to significant regulatory
constraints on how much total indebtedness it may currently
issue an unlimited amount of such short-term debt (subject to PUCN approval and
market conditions).incur. Therefore, the
practical effect of the Proposal doeswould not be to increase the amount of total
indebtedness that can be incurred but instead would be to provide the Company
with the flexibility to issue up to $400 million of additional debt (i) as
unsecured rather than secured debt and (ii) as long-term rather than short-term
debt.
CERTAIN INFORMATION RELATING TO THE COMPANY; INCORPORATION BY REFERENCE
General
The Company is a public utility primarily engaged in the distribution,
transmission, generation, purchase and sale of electric energy. It provides
electricity to approximately 302,000 customers in a 50,000 square mile service
area including western, central and northeastern Nevada, including the cities
of Reno, Sparks, Carson City, Elko, and a portion of eastern California,
including the Lake Tahoe area. The Company also provides natural gas service in
Nevada to approximately 110,000 customers and supplies water service to about
70,600 customers in the Reno/Sparks area and environs.
All of the Company's Common Stock is owned by Sierra Pacific Resources
("Resources"). In 1999, Resources merged with Nevada Power Company, the
electric utility serving Las Vegas and the surrounding area of southern Nevada,
and Nevada Power Company is now a separate, wholly-owned subsidiary of
Resources. As a condition to the approval of that merger, the PUCN required
both the Company and Nevada Power Company to sell their electric generation
assets. The Company began an auction process for its generation assets in 2000,
and the Company anticipates completing the sale of all of its generation assets
during 2001. In addition, in September 2000, the Company announced its
intentionhas entered into a definitive agreement
to sell its water utility business as part of a strategy to concentrate on its
core electric, gas and telecommunications businesses. The water assets sale is
expected to close in the first halfsecond quarter of 2001.
The financial statements of the Company and related information included in
its Annual Report on Form 10-K for the year ended December 31, 1999, its
Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30 and
September 30, 2000 (as amended by Form 10-Q/A dated November 20, 2000) as filed
with the SEC,, and its
Current Report on Form 8-K dated January 22, 2001 are hereby incorporated by
reference. The Company will provide without charge, upon the written or oral
request of any person (including any beneficial owner) to whom this Consent
Statement is delivered, a copy of such information (excluding certain
exhibits). Such requests for information should be directed to Shareholder
Relations Department, Sierra Pacific Power Company, P.O. Box 10100, 6100 Neil
Road, Reno, Nevada 89520-0400, telephone (775) 834-
3611.834-3611.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of certain of the United States
federal income tax consequences of the receipt of the Participation Premium.
This discussion is based on the relevant provisions of the Internal Revenue
Code of 1986, as amended, the Treasury Regulations promulgated thereunder,
Internal Revenue 6
Service ("IRS") rulings, and judicial decisions, all in effect
as of the date hereof, and all of which are subject to change, possibly with
retroactive effect. No ruling on the tax treatment of the receipt of the
Participation Premium has been or will be sought from the IRS.
7
This discussion does not address all of the federal income tax consequences
that may be relevant to a preferred shareholder in light of such shareholder's
particular tax situation or to certain classes of shareholders subject to
special treatment under the federal income tax laws (for example, dealers in
securities, banks, insurance companies, S corporations, nonresident aliens,
foreign corporations, and tax-exempt entities), nor does it address any aspects
of gift, estate, state, local, or foreign taxation. THE FOLLOWING DISCUSSION IS
INTENDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE TAX ADVICE.
PREFERRED SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS IN LIGHT OF THEIR
PARTICULAR CIRCUMSTANCES AS TO THE APPLICATION OF UNITED STATES FEDERAL INCOME
TAX LAWS, AS WELL AS THE EFFECT OF ANY GIFT, ESTATE, STATE, LOCAL, OR FOREIGN
TAX LAWS.
As used herein, the term "United States Holder" means a preferred
shareholder that is for United States federal income tax purposes, (i) a
citizen or resident of the United States, (ii) a corporation or partnership
organized in or under the laws of the United States or any state thereof or the
District of Columbia, or (iii) an estate or trust specified as being a "United
States Person" in the Code.
PARTICIPATION PREMIUMS TO UNITED STATES HOLDERSParticipation Premiums to United States Holders
Though not entirely free from doubt, it is believed that any Participation
Premium paid to United States Holders will be treated as ordinary non-dividend
income to such holders, and the Company will treat such payments accordingly.
BACKUP WITHHOLDINGBackup Withholding
The amount of the any Participation Premium paid to a United States Holder
will be subject to backup withholding at a rate of 31%, unless such holder (i)
is a corporation or is otherwise exempt and, when required, demonstrates this
fact, or (ii) provides a correct taxpayer identification number, certifies as
to no loss of exemption from backup withholding, and otherwise complies with
the applicable requirements of the backup withholding rules.
WITHHOLDING ON PAYMENT OF PARTICIPATION PREMIUM TO HOLDERS THAT ARE NOT UNITED
STATES HOLDERSWithholding on Payment of Participation Premium to Holders that are Not United
States Holders
Though not entirely free from doubt, the Company will treat any payment of
the Participation Premium to a preferred shareholder that is not a United
States Holder (a "Non-U.S. Holder") as subject to United States federal
withholding tax. This tax will be withheld by the Company from any
Participation Premium paid to a Non-U.S. Holder at a rate of 30% unless (i)
such Non-U.S. Person is engaged in the conduct of a trade or business in the
United States to which the Participation Premium is effectively connected and
provides a properly executed Form W-8ECI, or (ii) a tax treaty between the
United States and the country of residence of the Non-U.S. Holder eliminates or
reduces the withholding on the Participation Premium and such Non-U.S. Holder
provides a properly executed From W-8BEN, W-8EXP, or W-8IMY. NON-U.S. HOLDERS
SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE AVAILABILITY OF A REFUND OF
ANY UNITED STATES FEDERAL WITHHOLDING TAX.
SOLICITATION OF CONSENTS
Consents will be solicited by mail, telephone, telegraph, telex, telecopier
and in person. Solicitation may be made by directors, officers, shareholder
relations personnel and other regular employees of the Company. No such
employees will receive additional compensation for such solicitation.
7
Brokers, dealers, commercial banks, trust companies and other nominees will
be requested to forward the solicitation materials to the beneficial owners of
Preferred Stock for which they hold of record and the Company will reimburse
them for their reasonable out-of-pocket expenses.
8
The Company has retained CIC/Georgeson Shareholder Communications
("CIC/Georgeson") to assist in connection with this consent solicitation for
which CIC/Georgeson will be paid a fee estimated to be $$4,500 and will be
reimbursed for reasonable out-of-pocket expenses. The Company will indemnify
CIC/Georgeson against certain liabilities and expenses in connection with the
consent solicitation, including liabilities under the federal securities laws.
Georgeson Shareholder Securities Corporation ("Georgeson") has been retained
as Solicitation Agent. The Company has agreed to pay Georgeson reasonable and
customary fees in connection with the solicitation. The Company has also agreed
to reimburse Georgeson for its reasonable out-of-pocket expenses. The Company
will indemnify CIC/Georgeson against certain liabilities and expenses in
connection with the consent solicitation, including liabilities under the
federal securities laws.
The expenses related directly to the consent solicitation will be borne by
the Company.
YOUR CONSENT AND PROMPT ACTION ARE IMPORTANT. YOU ARE URGED TO GRANT YOUR
CONSENT BY MARKING, SIGNING, DATING AND RETURNING THE ENCLOSED CONSENT LETTER
AS SOON AS POSSIBLE.
DELIVERY OF CONSENTS
Properly executed consents should be received by mail as soon as possible.
The Return Date is ,February 15, 2001. If sufficient consents are not received
on or prior to the Return Date, the Company presently intends to continue to
solicit consents. Such consents should be mailed or delivered to Alpine
Fiduciary Services, Inc. at the address set forth below. If you have any
questions concerning the procedures to be followed to execute and deliver a
consent or need additional copies of documents, please contact CIC/Georgeson at
the address or phone number specified below. For other questions regarding this
consent solicitation, please contact the Solicitation Agent at (800) 445-1790
(toll-free), or Richard K. Atkinson, Treasurer and Investor Relations Officer
of the Company at (775) 834-4358.834-5300.
By Order of the Board of
Directors
-------------------------------------/s/ William E. Peterson
William E. Peterson
Senior Vice President, General
Counsel and Corporate Secretary
Dated: January ,23, 2001
89
For questions concerning procedures or to obtain additional copies of this
Consent Statement, please contact the Information Agent:
CIC/Georgeson Shareholder Communications
111 Commerce Road
Carlstadt, New Jersey 07072-2586
(800) 809-5937 (toll-free)
(201) 896-2633 (banks and brokers only)[CORPORATE INVESTOR COMMUNICATIONS, INC. LOGO]
Questions regarding the consent should be directed to:
the Solicitation Agent:
Georgeson Shareholder Securities Corporation
17 State Street
New York, New York 10004
(800) 445-1790 (toll-free)
(212) 440-9800[GEORGESON SHAREHOLDER LOGO]
or
the Company:
Richard K. Atkinson
Treasurer and Investor Relations Officer
Sierra Pacific Power Company
P.O. Box 10100 (6100 Neil Road)
Reno, Nevada 89520
(775) 834-4358834-5300
Consent letters should be mailed or delivered to the Tabulation Agent:
Alpine Fiduciary Services, Inc.
111 Commerce Road
Carlstadt, New Jersey 07072-2586
(201) 896-5679 (for confirmation)
Brokers, dealers, commercial banks, trust companies and other nominees, only,
may return consent letters by facsimile to Alpine Fiduciary Services, Inc., c/o
CIC/Georgeson Shareholder Communications at (201) 804-8693 (fax).
SIERRA PACIFIC POWER COMPANY
CONSENT SOLICITED BY SIERRA PACIFIC POWER COMPANY
TO ACTION OF PREFERRED SHAREHOLDERS WITHOUT A MEETING
CONSENT LETTER
Sierra Pacific Power Company (the "Company") is soliciting (the
"Solicitation") consents from holders of its Class A, Series 1 Preferred Stock,
as more fully set forth in the accompanying consent solicitation statement
dated January ,23, 2001 (as the same may be supplemented, modified or amended
from time to time, the "Consent Statement") to issue up to $400 million in
unsecured indebtedness in excess of the present limitation set forth in the
Company's Restated Articles of Incorporation. Under its charter, the Company
cannot, without the consent of a majority of the total number of votes which
may be cast by the holders of the Company's preferred stock, issue unsecured
debt securities with maturities of greater than 12 months for any purpose
(other than refunding outstanding unsecured debt or retiring outstanding shares
of preferred stock) if such unsecured indebtedness would exceed 20% of the
aggregate of (a) the total principal amount of all bonds and other securities
representing secured indebtedness then outstanding and (b) the total capital
and surplus of the Company then stated on its books (the "Charter Limitation").
The Company is seeking the consent of the holders of its Preferred Stock, to
issue up to $400 million in unsecured indebtedness in excess of the present
limitation (the "Proposal"). The reasons for and the effects of the Proposal
are more fully described in the Consent Statement. The terms of the
Solicitation set forth in the Consent Statement as well as the instructions in
this form of consent letter are hereby incorporated herein by reference and
form a part of the terms and conditions of this form of consent letter.
Capitalized terms used herein and not defined shall have the meaning ascribed
to them in the Consent Statement.
CONSENTS SHOULD NOT BE DELIVERED TO ANY PERSON OTHER THAN THE TABULATION
AGENT. THE TERMS OF THE CONSENT STATEMENT AS WELL AS THE INSTRUCTIONS IN THIS
CONSENT LETTER SHOULD BE READ CAREFULLY BEFORE THE CONSENT LETTER IS COMPLETED.
Beneficial owners of Preferred Stock (e.g., beneficial owners whose shares
of Preferred Stock (the "Shares)"Shares")) are recorded in the name of a nominee such
as a brokerage firm who want to consent to the Proposal and receive a
Participation Premium must either:
(1) Arrange for the holders of their Shares to execute a consent and deliver
that consent to the Tabulation Agent on such beneficial owner's behalf; or
(2) Obtain a proxy duly executed by the shareholder authorizing the
beneficial owner to execute and deliver to the Tabulation Agent the consent
with respect to the Shares on behalf of such holder.
The Depository Trust Company ("DTC"), as the registered shareholder, is
expected to grant authority to the banks and brokers holding the Shares to
execute the consent letter as if they were the registered holder. See
Instruction 4 in this consent letter.
By execution hereof, the undersigned acknowledges receipt of the Consent
Statement and understands the transaction contemplated thereby. Following the
receipt of properly completed, unrevoked and effective consent letters (or
other forms of consent) indicating consent to the Proposal, signed by the
holders of record on the Record Date of a majority of the outstanding shares of
the Preferred Stock, the Proposal will become effective and binding upon each
holder of Preferred Stock regardless of whether or not such shareholder
delivered its consent. For a description of the Participation Premium payment,
refer to "Participation Premium" in the Consent Statement.
The undersigned hereby agrees that it will not revoke any consent it grants
hereby on or after the Return Date and that until such time it will not revoke
such consent except in accordance with the procedures set forth in the Consent
Statement.
1
THIS SOLICITATION IS NOT BEING MADE TO (NOR WILL THE DELIVERY OF CONSENT
LETTERS BE ACCEPTED FROM OR ON BEHALF OF) SHAREHOLDERS IN ANY JURISDICTION IN
WHICH THE MAKING OR ACCEPTANCE OF THE SOLICITATION WOULD NOT BE IN COMPLIANCE
WITH THE LAWS OF SUCH JURISDICTION.
TO BE COMPLETED BY SHAREHOLDERS
Proposal: Consent to the incurrence of $400 million in unsecured debt in
excess of the Charter Limitation applicable to the Company as set forth in the
Consent Statement.
The undersigned, a holder of record of shares of preferred stock of Sierra
Pacific Power Company on the record date, December 22, 2000, for this consent
solicitation, hereby acknowledges receipt of the Consent Statement dated
January ,23, 2001, and:
/ /[_] Consents / /[_] Withholds Consent / /[_] Abstains
pursuant to the Company's Restated Articles of Incorporation, with respect to
all of the shares of preferred stock held by the undersigned, to the adoption
of the Proposal without a meeting of the shareholders of the Company.
The undersigned hereby irrevocably constitutes and appoints the Tabulation
Agent as the agent and attorney-in-fact of the holder with respect to the
consent given hereby with full power of substitution to deliver this consent
letter to the Company. The Power of Attorney granted in this paragraph shall be
deemed irrevocable and coupled with an interest.
The undersigned understands that consent letters delivered pursuant to the
procedures described in the Consent Statement and in the instructions hereto
will constitute a binding agreement between the undersigned and the Company
upon the terms and subject to the conditions of the Solicitation.
IF RETURNED CONSENT LETTERS ARE EXECUTED AND DATED BUT NOT MARKED WITH
RESPECT TO THE PROPOSAL, THE UNDERSIGNED WILL BE DEEMED TO HAVE CONSENTED TO
THE PROPOSAL.
PLEASE COMPLETE THE FOLLOWING TABLE:
Name(s) and
Address(es) Number of Number of
of Certificate Number(s) or Shares Shares
Holder(s) DTC Participant Number Held Consenting
- ----------- ------------------------ --------- ----------
If the space provided above is inadequate, list the information specified
above on a separate signed schedule and affix the list to this form of consent
letter.
THE UNDERSIGNED AUTHORIZES THE TABULATION AGENT TO DELIVER THIS CONSENT
LETTER TO THE COMPANY AS EVIDENCE OF THE UNDERSIGNED'S CONSENT TO THE PROPOSAL.
Unless otherwise indicated under "Participation Premium Instructions,"
please issue the payment of the Participation Premium in the name(s) of the
undersigned. Similarly, unless otherwise indicated under "Special Delivery
Instructions," please send the payment of the Participation Premium to the
undersigned at the address shown below the undersigned's signature(s). In the
event that both "Participation Premium Instructions" and "Special Delivery
Instructions" are completed, please issue the payment in the amount of the
Participation Premium payment in the name(s) indicated under "Participation
Premium Instructions," and send the payment to the person(s) indicated under
"Special Delivery Instructions."
2
- --------------------------------------------------------------------------------
PARTICIPATION PREMIUM INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
See Instruction 6 See Instruction 6
To be completed ONLY if the To be completed ONLY if the
payment of the Participation Premium payment of the Participation Premium
is to be issued in the name of is to be mailed to someone other than
someone other than the shareholder. the undersigned or to the undersigned
at an address other than that shown
below the undersigned's signature(s).
Issue payment in the name of:
Name ___________________________________________________________________________________________________________ Deliver payment to:
(Please Print)
Name__________________________________
Address ________________________________________________________________________
_____________________________________________________________________________________________________________ (Please Print)
_____________________________________ Address ______________________________
(Include Zip Code)
______________________________________________________________________________________________________________________
_____________________________________ (Include Zip Code)
(Tax Identification or Social
Security Number)
A correct taxpayer identification
number must also be provided on the
Substitute Form W-9 included herein.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
See Instruction 6
To be completed ONLY if the payment of the Participation Premium is to be
mailed to someone other than the undersigned or to the undersigned at an
address other than that shown below the undersigned's signature(s).
Deliver payment to:
Name____________________________________________________________________________
(Please Print)
Address ________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGN HERE
X ______________________________________________________________________________
X ______________________________________________________________________________
(Signature(s) of Shareholder(s) or Authorized Signatory)
Dated ______________________________,____________________________________________________________________, 2001
Name(s) ________________________________________________________________________
(Please Print)
________________________________________________________________________________
Capacity (full title) __________________________________________________________
Address ________________________________________________________________________
3
________________________________________________________________________________
(Include Zip Code)
Area Code and Telephone No. ____________________________________________________
Must be signed by registered shareholder(s) exactly as name(s) appear(s) on
stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other person acting in
a fiduciary or representative capacity, please set forth full title and unless
waived by the Company, submit evidence satisfactory to the Company of such
person's authority to so act.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
Your signature need not be guaranteed if this consent is signed by you as
the shareholder and you have not designated that payment is to be made in the
name of any person other than yourself. In all other cases, all signatures on
this consent must be guaranteed by an Eligible Institution (as defined herein).
In the event that signatures on this consent (or other document) are required
to be guaranteed, such guarantee must be made below by an institution that is a
participant in an approved Signature Guarantee Program recognized by the
Tabulation Agent (i.e., the Securities Transfer Agents Medallion Program
(STAMP), the Stock Exchange Medallion Program (SEMP) and the New York Stock
Exchanges Medallion Signature Program (MSP)) (each of the foregoing being an
"Eligible Institution").
Signatures guaranteed by an Eligible Institution:
Name of Firm ___________________________________________________________________
Authorized Signature ___________________________________________________________
Dated ______________________________,____________________________________________________________________, 2001
- --------------------------------------------------------------------------------
4
INSTRUCTIONS FOR SHAREHOLDERS
FORMING PART OF THE TERMS AND CONDITIONS OF THIS CONSENT
1. Return Date. The "Return Date" is 5:00 p.m., New York time, on ,February
15, 2001, as such time and date may be extended by the Company in the Company's
sole discretion. Consents may be revoked at any time prior to the effectiveness
of the Proposal as set forth in the Consent Statement. The Company reserves the
right to extend the consent solicitation period at any time and from time to
time, whether or not the requisite consents have been received, by giving oral
or written notice to the Tabulation Agent no later than 9:12:00 a.m.p.m. New York
time, on the next business day after the previously announced Return Date. The
Company reserves the right (i) to delay accepting any consents, to extend the
consent solicitation period or to terminate the consent solicitation, and to
accept consents not previously accepted by giving oral or written notice of
such delay, extension, termination or acceptance to the Tabulation Agent, or
(ii) to amend or modify the terms of the Consent Statement in any manner.
2. Delivery of this Consent. Shareholders (or such duly designated proxies
of the shareholders) who desire to consent to the Proposal should mark the
CONSENTCONSENTS box on the form of consent and complete, sign and date the form of
this consent letter and mail, hand deliver or send by overnight courier or
facsimile (confirmed by physical delivery) their properly completed and
executed consent, a Substitute Form W-9 (or facsimile thereof) and any other
documents required by the form of this consent letter, to the Tabulation Agent
at its address listed below, all in accordance with the instructions contained
herein and in the Consent Statement. If onenone of the boxes on the form of this
consent letter are checked but the form of this consent letter is otherwise
properly completed and executed, the shareholderShareholder will be deemed to have
consented to the Proposal. The method of delivery of the form of this consent
letter and all other required documents to the Tabulation Agent is at the
election and risk of the shareholders and, except as otherwise provided in the
form of this consent letter, delivery will be deemed made only when actually
received by the Tabulation Agent. If such delivery is by mail, it is
recommended that the shareholder use registered mail with return receipt
requested. In all cases, sufficient time should be allowed to assure timely
delivery. Forms of the consent letter should be delivered to the Tabulation
Agent, not to the Company, the Information Agent, or the Solicitation Agent.
However, the Company reserves the right to accept any consent received by the
Company, the Solicitation Agent or the Information Agent.
3. Questions Regarding Validity, Form Legality, etc. All questions as to the
validity, form and eligibility (including time of receipt) for Participation
Premium payments, and acceptance or revocation of consents, will be determined
by the Company in its sole discretion, which determination will be conclusive
and binding. The Company reserves the absolute right to reject any or all
consents or revocations that are not in proper form or the acceptance of which
could, in the opinion of the Company or its counsel, be unlawful. The Company
also reserves the right to waive any defects or irregularities in connection
with deliveries of consents or revocations. Unless waived, any defects or
irregularities in connection with deliveries of consents or revocations must be
cured within such time as the Company shall determine. None of the Company, any
of its affiliates, the Solicitation Agent, the Information Agent, the
Tabulation Agent or any other person shall be under any duty to give
notification of any such defects or irregularities, or waiver, nor shall any of
them incur any liability for failure to give such notification. The Company's
interpretation of the terms and conditions of the consent solicitation shall be
conclusive and binding.
4. Shareholders Entitled to Consent. Only Shareholders of record on the
Record Date (or their duly designated proxies) may execute and deliver a
consent letter. A beneficial owner of Shares who is not the holder of such
Shares (e.g., a beneficial owner whose Shares are recorded in the name of a
nominee such a brokerage firm) and who wants to consent to the Proposal must
either (i) arrange for the Shareholder to execute
the consent letter and deliver it to the Tabulation Agent on such beneficial
owner's behalf, or (ii) obtain a proxy duly executed by the shareholderShareholder
authorizing the beneficial owner to execute and deliver to the Tabulation Agent
a consent letter with respect to the Shares on behalf of such shareholder.Shareholder.
"DTC Participants" (i.e., brokers, banks and other financial institutions
that participate through DTC), rather than DTC or its nominee, must execute
this consent letter. The Company anticipates that DTC or its nominee will
execute an omnibus proxy in favor of DTC Participants holding such Shares,
which will authorize each such DTC Participant to consent to the Proposal with
respect to the principal amount of Shares shown as beneficially owned by such
DTC Participant on the books of DTC on the Record Date.
Any beneficial owner of Shares held of record on the Record Date by DTC or
its nominee, through authority granted by DTC, may direct the DTC Participant
through which such beneficial owner's Shares are held by DTC on the Record Date
to execute, on such beneficial owner's behalf, or may obtain a proxy from such
DTC Participant and execute directly as if such owner were a shareholder,Shareholder, the
consent letter with respect to Shares beneficially owned by such beneficial
owner on the date of execution.
5. Signature on this Consent Letter; Proxies; Guarantees of Signatures. A
consent letter must be executed in exactly the same manner as the shareholder'sShareholder's
name appears on its stock certificate or on a security position listing as the
owner of the Shares. If Shares to which a consent letter relates are held of
record by two or more joint holders, all such holders must sign the form of
consent letter. If a form of consent letter is signed by a trustee, partner,
executor, administrator, guardian, attorney-in-fact, officer of a corporation,
or other person acting in a fiduciary or representative capacity, such person
must so indicate by signing and must submit with the consent letter appropriate
evidence of authority to execute the consent letter. In addition, if a consent
letter relates to less than the total principal amount of Shares recorded in
the name of such shareholder, the shareholder must list the certificate numbers
(or other information sufficient to enable the Tabulation Agent to identify
such Shares) and the amount of Shares recorded in the name of such shareholderShareholder
to which the consent letter relates. If Shares are recorded in different names,
separate forms of consent letter must be executed by each such shareholder.Shareholder. If
a consent letter is executed by a person other than the shareholder, then it
must be accompanied by a proxy or an appropriate power of attorney in a form
satisfactory to the Company and the Tabulation Agent, in each case duly
executed by the shareholder. Except as otherwise provided below, all signatures
on this consent letter must be guaranteed by an Eligible Institution (as
defined herein). In the event that signatures on this consent letter (or other
documents) are required to be guaranteed, such guarantee must be by an
institution that is a member of a Signature Guarantee Program recognized by the
Trustee (i.e., the Securities Transfer Agents Medallion Program (STAMP), the
Stock Exchanges Medallion Program (SEMP) and the New York Stock Exchanges
Medallion Signature Program (MSP)) (each of the foregoing being an "Eligible
Institution")). Signatures on this consent letter need not be guaranteed if this
consent letter is signed by the holder(s) of the Shares and such shareholder(s)Shareholder(s)
has/have not designated that payment is to be made in the name of the any
person other than the shareholder(s)Shareholder(s).
6. Participation Premium Payment Instructions. In the event that certain
conditions described below are satisfied, the Company will make a Participation
Premium payment to each shareholder (or a duly designated proxy of such
shareholder), as further described below, so long as the requisite consents are
(i) received by the Tabulation Agent prior to the Return Date and (ii) not duly
revoked (by delivery of a notice of revocation) prior to the effectiveness of
the Proposal. The Participation Premium fee payment will be in cash in an
amount equal to $$.50 per share consented to each holder of shares of preferred
stock of record on December 22, 2000 whose duly executed and valid non-revoked
consent is received on or before ,February 15, 2001. No interest will accrue or
be payable on the Participation Premium payments.
The Company's obligation to make the Participation Premium payment is
contingent upon, among other things, the (i) receipt of the requisite consents
by the Company prior to the Return Date and such requisite consents not being
duly revoked and (ii) the effectiveness of the Proposal. The Participation
Premium payment
will be made promptly after the satisfaction of such conditions by check issued
in the name of the beneficial owner of the Shares mailed to the respective
address of the shareholder entitled to receive the Participation Premium
payment as such name and address appears as of the Record Date or to such other
person or address designated in the Special Payment Instructions box or the
Special Delivery Instructions box in the consent letter. Participation Premium
payments will not be made through DTC.
7. Revocation of Consent. Each properly completed and executed consent
letter received by the Tabulation Agent prior to the Return Date will be
counted, notwithstanding any transfer of the Shares to which 2
it relates, unless
the procedure for revoking consents described below has been followed. A form
of consent letter delivered by a shareholderShareholder or duly designated proxy before
the Return Date shall be deemed to supersede any earlier revocation of consent
relating to the Shares.
A consent may be revoked by the shareholderShareholder granting such consent (or a duly
designated proxy of such shareholder) if the Tabulation Agent receives a
properly completed and executed written notice of revocation at any time prior
to the Return Date. Except as provided in the Consent Statement, a consent
becomes irrevocable upon the Return Date. The notice of revocation must
indicate the certificate numbers of the Shares to which such revocation related
(or other information sufficient to enable the Tabulation Agent to identify
such Shares), as well as the aggregate principal amount of Shares. The fact and
date of the execution of any such revocation must be proved in such manner as
the Company deems sufficient. A transferee of Shares may revoke a consent given
by a shareholder in respect of such Shares only if such transferee is a duly
designated proxy. In such case, the transferee must deliver to the Tabulation
Agent a revocation of consent accompanied by a proxy duly executed by such
shareholder in accordance with the procedures set forth above.
The revocation must be executed by shareholdera Shareholder in exactly the same manner
as such shareholder'sShareholder's name appears on the consent letter to which the
revocation relates or be accompanied by evidence satisfactory to the Company
and the Tabulation Agent that the shareholderShareholder revoking such consentsconsent has
succeeded to registered ownership of the Shares to which such consent relates
or otherwise has the power to revoke such consent pursuant to a duly executed
proxy. If a revocation is signed by a trustee, partner, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, such person must so
indicate when signing and must submit with the revocation appropriate evidence
of authority to execute the revocation. A revocation of the consent shall be
effective only as to the Shares listed on the revocation and only if such
revocation complies with the provision of this consent letter and the Consent
Statement. Only a holder of Shares as reflected on the Record Date or its duly
designated proxy is entitled to revoke a consent previously given with respect
to such Shares. A beneficial owner of Shares who is not the holder of such
Shares, desiring to revoke a consent given with respect to such Shares, must
either (i) arrange with the shareholder to execute and deliver, either to the
Tabulation Agent on such beneficial owner's behalf or to such beneficial owner
for forwarding to the Tabulation Agent by such beneficial owner, a revocation
of any consent already given with respect to such Shares, or (ii) obtain a
proxy duly executed by the shareholder authorizing such beneficial owner to act
on behalf of the shareholder as to such consent.
A revocation of a consent may only be rescinded by the execution and
delivery of a new consent letter. A shareholder or duly designated proxy who
has delivered a revocation may thereafter deliver a new consent letter by
following one of the prescribed procedures at any time prior to the Return
Date.
The Company reserves the right to contest the validity of any revocation and
all questions as to the validity (including time of receipt) of any revocation
will be determined by the Company in its sole discretion, which determination
will be conclusive and binding. None of the Company, any of its affiliates, the
Information Agent, the Solicitation Agent or any other person will be under any
duty to give notification of any defect or irregularity with respect to any
revocation nor shall any of them incur any liability for failure to give such
notification.
8. Waiver of Conditions. The Company reserves the absolute right to amend,
waive or modify the terms and conditions of the Solicitation and the Proposal,
as more fully described in the Consent Statement.
9. Requests orfor Assistance foror Additional Copies. Questions relating to the
procedure for consenting as well as requests for assistance or for additional
copies of the Consent Statement and this form of consent letter may be directed
to the Information Agent at the address and telephone and facsimile number
indicated in the Consent Statement. Questions regarding terms of the
Solicitation should be directed to the Solicitation Agent at the address and
telephone and facsimile number indicated in the Consent Statement.
3
IMPORTANT TAX INFORMATION
Under current federal income tax law, a shareholder who is a U.S. person
(including a resident alien) and who receives a Participation Premium from the
Company is required to provide the Company with such shareholder's correct
taxpayer identification number ("TIN") on Substitute Form W-9 below. If such
shareholder is an individual, the TIN is his or her social security number. If
the Company is not provided with the correct TIN, the shareholder may be
subject to a penalty imposed by the Internal Revenue Service (the "IRS"). In
addition, any Participation Premium payments that are made to such shareholder
may be subject to backup withholding at a 31% rate.
To prevent backup withholding on payments that are made to a shareholder
that is a U.S. person, such shareholder is required to notify the Company of
the shareholder's correct TIN (and the TIN of any other payees, in the case of
shares held in a joint account) by completing the Substitute Form W-9 provided
below certifying that the TIN provided is correct (or that such payee is
awaiting a TIN), that the shareholder is a U.S. person, and to certify that (1)
such shareholder has not been notified by the IRS that the shareholder is
subject to backup withholding as a result of failure to report all interest and
dividends or (2) the IRS has notified such shareholder that the shareholder is
no longer subject to backup withholding (see Part 2 of Substitute Form W-9) or
(3) such shareholder is otherwise exempt from backup withholding.
Certain shareholders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. In order for a foreign person to qualify for an exemption from or
a reduction in the rate of withholding, that person must submit a statement,
signed under penalties of perjury, attesting to his exempt status. A form of
such statement can be obtained from the Company.
If backup withholding applies, the Company is required to withhold 31% of
any payment made to the shareholder or other payee. Backup withholding is not
an additional federal income tax. Rather, the federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained by filing a Federal income tax return.
Shareholders are urged to consult their own tax advisors to determine the
application of these backup withholding and reporting requirements to them.
What Number to Give the Company
The shareholder is required to give the Company its social security number
or employer identification number.
4
The Information Agent for the Solicitation is:
[CORPORATE INVESTOR COMMUNICATIONS, INC. LOGO]
The Solicitation Agent for the Solicitation is:
[GEORGESON SHAREHOLDER LOGO]
The Tabulation Agent for the solicitation is:
Alpine Fiduciary Services, Inc.
111 Commerce Road
Carlstadt, New Jersey 07072-2586
(201) 896-5679 (for confirmation)
Brokers, dealers, commercial banks, trust companies and other nominees, only,
may return consents and Notices of Solicited Consents by facsimile to Alpine
Fiduciary Services, Inc., c/o CIC/Georgeson Shareholder Communications at (201)
804-8693 (fax).
SIERRA PACIFIC POWER CORPORATION
CONSENT SOLICITATION
WITH RESPECT TO ITS PREFERRED STOCK
---------------------
SHAREHOLDERS ARE REQUESTED TO RETURN CONSENTS
BY THE RETURN DATE OF FEBRUARY 15, 2001.
---------------------
January 23, 2001
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by Sierra Pacific Power Corporation, a Nevada
corporation (the "Company"), to act as Solicitation Agent and in connection
therewith are enclosing the following: a letter to preferred shareholders,
consent statement and consent letter. If the Proposal described in the consent
statement is approved by the Company's preferred shareholders, the Company
will make a special cash payment in the amount of $.50 for each share
consented to each registered holder of preferred stock.
We are asking you to contact your clients for whom you hold shares registered
in your name (or in the name of your nominee) or who hold shares registered in
their own names. PLEASE BRING THE SOLICITATION TO THEIR ATTENTION AS PROMPTLY
AS POSSIBLE. The Company will reimburse you for your reasonable out-of-pocket
expenses.
No broker, dealer, commercial bank, trust company or other nominee shall be
deemed to be the agent of the Company, the Solicitation Agent or CIC/Georgeson
Shareholder Communications.
Any inquiries you may have with respect to the consents should be directed to
Georgeson Shareholder Securities Corporation at (800) 445-1790 (toll-free).
Georgeson Shareholder Securities Corporation
Substitute Form W-9 Request for Taxpayer Identification Number and
Certification
PAYOR'S NAME: Alpine Fiduciary Services, Inc.
Name as shown on account (if joint, list first and circle name of the
person or entity whose number you enter below)
Name: _________________________________________________________________
Address: ______________________________________________________________
City, State and Zip Code:______________________________________________
Social Security Number
TAXPAYER IDENTIFICATION NO.
SUBSTITUTE FOR ALL ACCOUNTS
----------------------
Form W-9 -------------------------
Department of Enter your taxpayer Employer Identification
theTreasury identification number in Number
Internal Revenue the appropriate box. For
Service most individuals this is
your social security
number. If you do not have
a number, see the enclosed
Guidelines. If awaiting TIN
write "Applied For."
----------------------
- -------------------------------------------------------------------------------
Payor's Request
for Taxpayer
Identification
Number (TIN)
For Payees Exempt from Backup Withholding, see the attached Guidelines
and complete as provided therein.
Certification - Under penalties of perjury, I certify that:
(1) the number shown on this form is my correct Taxpayer Identification
Number (or a Taxpayer Identification Number has not been issued to
me and either (a) I have mailed or delivered an application to
receive a Taxpayer Identification Number to the appropriate Internal
Revenue Service ("IRS") or Social Security Administration office, or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a Taxpayer Identification Number
within sixty (60) days, 31% of all reportable payments made to me
thereafter will be withheld until I provide a number) and
Note: If the account is
held under more than one
name, see the enclosed
Guidelines on which number
to give the payor.
(2) I am not subject to backup withholding either because (a) I am
exempt from backup withholding, (b) I have not been notified by the
IRS that I am subject to backup withholding as a result of a failure
to report all interest or dividends or (c) the IRS has notified me
that I am no longer subject to backup withholding.
Certification Instructions: You must cross out item (2) above if you
have been notified by the IRS that you are subject to backup
withholding because of underreporting interest or dividends on your
tax return. However, if after being notified by the IRS that you were
subject to backup withholding you received another notification from
the IRS that you are no longer subject to backup withholding, do not
cross out item (2). (Also see instructions in the enclosed
Guidelines).
SIGNATURE _______________________ DATE ____________________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW THE
ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN THE
SPACE FOR THE "TIN" ON SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
- -------------------------------------------------------------------------------
I certify under penalties of perjury that a Taxpayer Identification
Number has not been issued to me, and either (a) I have mailed or
delivered an application to receive a Taxpayer Identification Number to
the appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver an application
in the near future. I understand that if I do not provide a Taxpayer
Identification Number by the time of payment, 31% of all reportable
payments made to me will be withheld but that such amounts will be
refunded to me if I then provide a Taxpayer Identification Number within
sixty (60) days.
_________________________________ _________________________________
Signature Date
EXHIBIT (a)(1)(F)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for determining the Proper Identification Number to Give the
Payer.-- Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00- 0000000. The table below will help determine the
number to give the payer.
- --------------------------------------------
Give the
SOCIAL SECURITY
For this type of account: NUMBER of--
- --------------------------------------------
1. Individual The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, the first
individual on
the account(1)
3. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
4.a. The usual revocable The grantor-
savings trust (grantor trustee(1)
is also trustee)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under state
law
5. Sole proprietorship The owner(3)
-
Give the
EMPLOYER
IDENTIFICATION
For this type of account: NUMBER of--
-
6. A valid trust, estate The legal entity
or pension trust (Do not furnish
the identifying
number of the
personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)(4)
7. Corporate The corporation
8. Association, club, The organization
religious, charitable
or educational or
other tax-exempt
organization
9. Partnership The partnership
10. A broker or registered The broker or
nominee nominee
11. Account with the The public
Department of entity
Agriculture in the
name of a public
entity (such as a
state or local
government, school
district, or prison)
that receives
agricultural program
payments
- -----------------------------------
-----------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's Social Security number.
(3) Show the name of the owner. Either the Social Security number or the
Employer Identification number may be furnished.
(4) List first and circle the name of the legal trust, estate or pension trust.
Note: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
(continued)
Obtaining a number
If you do not have a taxpayer identification number obtain Form SS-5,
Application for a Social Security Card (for resident individuals), Form SS-4,
Application for Employer Identification Number (for businesses and all other
entities), or Form W-7, Application for IRS Individual Taxpayer Identification
Number (for alien individuals required to file U.S. tax returns), at an office
of the Social Security Administration or the Internal Revenue Service.
To complete the Substitute Form W-9, if you do not have a taxpayer
identification number, check the appropriate box in Part 1(b), sign and date
the Form, and give it to the requester. Generally, you will then have 60 days
to obtain a taxpayer identification number and furnish it to the requester. If
the requester does not receive your taxpayer identification number within 60
days, backup withholding, if applicable, will begin and will continue until
you furnish your taxpayer identification number to the requester.
Payees and Payments Exempt from Backup Withholding
Set forth below is a list of payees that are exempt from backup withholding
with respect to all or certain types of payments. For interest and dividends,
all listed payees are exempt except the payee in item (9). For broker
transactions, all payees listed in items (1) through (13) and any person
registered under the Investment Advisors Act of 1940 who regularly acts as a
broker is exempt. For payments subject to reporting under Sections 6041 and
6041A, the payees listed in items (1) through (7) are generally exempt. For
barter exchange transactions and patronage dividends, the payees listed in
items (1) through (5) are exempt.
(1) A corporation.
(2) An organization exempt from tax under Section 501(a), an IRA, or a
custodial account under Section 403(b)(7) if the account satisfies the
requirements of Section 401(f)(2).
(3) The United States or any agency or instrumentality thereof.
(4) A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
(5) A foreign government, or a political subdivision, agency or
instrumentality thereof.
(6) An international organization or any agency or instrumentality thereof.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times under the Investment Company Act of
1940.
(12) A common trust fund operated by a bank under Section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or
custodian.
(15) A trust exempt from tax under Section 664 or described in Section 4947.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
. Payments to nonresident aliens subject to withholding under Section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
. Section 404(k) distributions made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and is
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
Section 852).
. Payments described in Section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under Section 1451.
. Payments made by certain foreign organizations.
. Mortgage or student loan interest paid to you.
Exempt payees described above should file a Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART 2 OF THE FORM,
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends
that are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041A, 6042, 6044, 6045, 6049,
6050A and 6050N and the regulations promulgated thereunder.
Privacy Act Notice.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of your tax return.
The IRS may also provide this information to the Department of Justice for
civil and criminal litigation, and to cities, states, and the District of
Columbia to carry out their tax laws. Payers must be given the numbers whether
or not recipients are required to file tax returns. Payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
Penalties
(1) Penalty for failure to Furnish Taxpayer Identification Number.--If you
fail to furnish your taxpayer identification number to a requester, you are
subject to a penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information AgentWith Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for the Solicitation is:
CIC/Georgeson Shareholder Communications
111 Commerce Road
Carlstadt, New Jersey 07072-2586
(800) 809-5937 (toll-free)
(201) 896-2633 (banks and brokers only)
The Solicitation Agent for the Solicitation is:
Georgeson Shareholder Securities Corporation
17 State Street
New York, New York 10004
(800) 445-1790 (toll-free)
(212) 440-9800Falsifying Information.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONSULT YOUR TAX ADVISOR OR THE INTERNAL REVENUE
SERVICE