Registration No.AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 21, 2000
REGISTRATION STATEMENT NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
Registration Statement Under The Securities Act ofREGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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MINNESOTA POWER, INC. MINNESOTA 41-0418150
(Exact name of registrant as (State or other jurisdiction of (I.R.S. Employer
specified in its charter) ----------------------
Minnesota 41-0418150
(Stateincorporation or other jurisdiction (IRS Employerorganization) Identification No.)
of incorporation or organization)----------------
30 West Superior Street
Duluth, Minnesota 5580255802-2093
(218) 722-2641
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
----------------------
DAVID G. GARTZKE JAMES K. VIZANKO
Senior Vice President-Finance Treasurer
and Chief Financial Officer 30 West Superior Street
30 West Superior Street Duluth, Minnesota 55802
Duluth, Minnesota 55802----------------
David G. Gartzke Philip R. Halverson, Esq. Robert J. Reger, Jr., Esq.
Senior Vice President-Finance Vice President, General Counsel Thelen Reid & Priest LLP
and Chief Financial Officer and Secretary 40 West 57th Street
30 West Superior Street 30 West Superior Street New York, New York 10019-4097
Duluth, Minnesota 55802-2093 Duluth, Minnesota 55802-2093 (212) 603-2000
(218) 722-2641 (218) 722-2641
PHILIP R. HALVERSON, Esq. ROBERT J. REGER, JR., Esq.
Vice President, General Counsel Thelen Reid & Priest LLP
(Names and Secretary 40 West 57th Street
30 West Superior Street New York, New York 10019
Duluth, Minnesota 55802 (212) 603-2000
(218) 722-2641
(Names, addresses, including zip codes, and telephone numbers,
including area codes, of agents for service)
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It is respectfully requested that the Commission also send copies of all
notices, orders and communications to:
Michael Connolly, Esq.
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, New York 10022-1200
(212) 735-8600
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicableFrom time
to time after the effective date of this registration statement becomes effective.as determined by
market conditions and other factors.
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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/[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. / /[ ]
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Maximum Maximum
Title of Each Class Offering Aggregate Amount of
of Securities to Amount to be Price Offering Registration
be Registered Registered Per Unit (1) Price (1) Fee
- --------------------------------------------------------------------------------
Common Stock, without
par value 12,987 Shares $40.03125 $519,886 $154
Preferred Share
Purchase Rights 12,987 Rights (2) --- --- --- (3)
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========================================= =========================== =============================
TITLE OF EACH CLASS OF SECURITIES PROPOSED MAXIMUM AGGREGATE AMOUNT OF REGISTRATION FEE
TO BE REGISTERED OFFERING PRICE (1)
- ----------------------------------------- --------------------------- -----------------------------
First Mortgage Bonds and Debt Securities $400,000,000 $105,600
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(1) Estimated solely for the purposepurposes of calculating the registration fee pursuant
to Rule 457(c), on the basis of the average of the high and low
prices of the registrant's Common Stock on the New York Stock Exchange
composite tape on July 10, 1998.
(2) The Preferred Share Purchase Rights (Rights) are attached to and will
trade with the Common Stock. The value attributable to the Rights, if any,
is reflected in the market price of the Common Stock.
(3) Since no separate consideration is paid for the Rights, the registration
fee for such securities is included in the fee for the Common Stock.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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SUBJECT TO COMPLETION
DATED JULY 13, 1998
PROSPECTUS
MINNESOTA POWER, INC.
12,987 Shares of Common Stock
(Without Par Value)
The shares of common stock, without par value (Common Stock) and the
preferred share purchase rights attached thereto (Rights) of Minnesota Power,
Inc. (Company or Minnesota Power) offered hereby (collectively, the Shares) will
be sold from time to time by the selling shareholders described herein (Selling
Shareholders) in brokers' transactions at prices prevailing at the time of sale
or as otherwise described in "Plan of Distribution". The Company will not
receive any of the proceeds from the sale of the Shares. Expenses in connection
with the registration of the Shares457(o) under the Securities Act of 1933, as amended
(1933 Act)amended.
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 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), including legalMAY
DETERMINE.
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The information in this prospectus is not complete and accounting feesmay be changed. Minnesota
Power, Inc. 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 jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JULY 20, 2000
PROSPECTUS
$400,000,000
MINNESOTA POWER, INC.
FIRST MORTGAGE BONDS
AND
DEBT SECURITIES
--------------------
Minnesota Power, Inc. intends to offer from time to time not to exceed
$400,000,000 aggregate principal amount of its first mortgage bonds and debt
securities. The first mortgage bonds will be secured by a mortgage that
constitutes a first mortgage lien on substantially all of the Company,property of
Minnesota Power, Inc. The debt securities will be paid by
the Company.
The Shares were acquired from the Company by the Selling Shareholders in a
private placement transaction. This Prospectus has been prepared for the purposeunsecured and will consist of
registering the Shares under the 1933 Act to allow future sales by the
Selling Shareholdersdebentures, notes or other unsecured evidence of indebtedness. Minnesota Power,
Inc. will refer to the public without restriction. Tofirst mortgage bonds and the knowledgedebt securities in this
prospectus collectively as the "Securities."
The Securities will be offered on terms to be decided at the time of sale.
Minnesota Power, Inc. will provide specific terms of the Company,Securities, including
their offering prices, interest rates and maturities, in supplements to this
prospectus. The supplements may also add, update or change information contained
in this prospectus. You should read this prospectus and any supplement carefully
before you invest.
Minnesota Power, Inc. may offer these Securities directly or through
underwriters, agents or dealers. The supplements to this prospectus will
describe the Selling Shareholders have made no arrangement with any brokerage
firm for the sale of the Shares. The Selling Shareholders may be deemed to be
"underwriters" within the meaning of the 1933 Act. Any commissions received by a
broker or dealer in connection with resales of the Shares may be deemed to be
underwriting commissions or discounts under the 1933 Act.
The Shares have not been registered for sale under the securities lawsterms of any state or jurisdiction asparticular plan of the datedistribution, including any
underwriting arrangements. The "Plan of Distribution" section on page 17 of this
Prospectus. Brokers or dealers
effecting transactions in the Shares should confirm the registration thereof
under the securities laws of the states or jurisdictions in which such
transactions occur, or the existence of any exemption from registration.
The Common Stock of the Company is listedprospectus also provides more information on the New York Stock Exchange.
The last reported sale price on the New York Stock Exchange on July 10, 1998 was
$39.8125.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BYthis topic.
Minnesota Power, Inc.'s principal executive offices are located at 30 West
Superior Street, Duluth, Minnesota 55802-2093, telephone number (218) 722-2641.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION ORNOR ANY STATE SECURITIES
COMMISSION NOR
HAS THEAPPROVED OR DISAPPROVED OF THESE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACYDETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR ADEQUACY OF THIS PROSPECTUS.COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is , 1998.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities2000
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TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION............................................1
INCORPORATION BY REFERENCE.....................................................1
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995....................................................................1
MINNESOTA POWER, INC...........................................................3
USE OF PROCEEDS................................................................5
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES................................5
DESCRIPTION OF FIRST MORTGAGE BONDS............................................6
DESCRIPTION OF DEBT SECURITIES................................................10
PLAN OF DISTRIBUTION..........................................................17
EXPERTS.......................................................................18
LEGAL OPINIONS................................................................19
WHERE YOU CAN FIND MORE INFORMATION
Minnesota Power, Inc. ("Minnesota Power") files annual, quarterly and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
jurisdiction.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (1934 Act) and, in accordance therewith, filesother
reports proxy statements and other information with the Securities and Exchange Commission
(Commission)("SEC"). Such reports, proxy statementsYou can read and othercopy any information filed by Minnesota Power with the
Company may be inspected and copiedSEC at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the following Regional Offices of the Commission:
New York Regional Office, 7 World Trade Center, 13th Floor, New York, New York
10048; and Chicago Regional Office, Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material may also be
obtained at prescribed rates from theSEC's Public Reference Section of the CommissionRoom at 450 Fifth Street, N.W., Washington,
D.C. 20549. The CommissionYou can obtain additional information about the Public Reference
Room by calling the SEC at 1-800-SEC-0330.
In addition, the SEC maintains a
Weban Internet site (http://www.sec.gov) that
contains reports, proxy and information statements, and other information
filedregarding issuers that file electronically bywith the Company. The Common Stock and the Rights
are listedSEC, including Minnesota
Power. Minnesota Power also maintains an Internet site (http://www.mnpower.com).
Information contained on the New York Stock Exchange. Reports and other information
concerning the Company may be inspected and copied at the officeMinnesota Power's Internet site does not constitute
part of such
Exchange at 20 Broad Street, New York, New York. In addition, the Company's 5%
Preferred Stock, $100 par value, is listed on the American Stock Exchange.
Reports and other information concerning the Company may also be inspected and
copied at the office of such Exchange at 86 Trinity Place, New York, New York.
------------------------this prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filedSEC allows Minnesota Power to "incorporate by reference" the
Companyinformation that Minnesota Power files with the Commission pursuantSEC, which means that Minnesota
Power may, in this prospectus, disclose important information to the 1934 Act, are herebyyou by
referring you to those documents. The information incorporated by reference:
1. The Company'sreference is
an important part of this prospectus. Minnesota Power is incorporating by
reference the documents listed below and any future filings Minnesota Power
makes with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, until Minnesota Power sells all of the Securities
described in this prospectus. Information that Minnesota Power files in the
future with the SEC will automatically update and supersede this information.
(1) Minnesota Power's Annual Report on Form 10-K for the year ended
December 31, 1997 (1997 Form 10-K).
2. The Company's1999.
(2) Minnesota Power's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998.
3. The Company's2000.
(3) Minnesota Power's Current Reports on Form 8-K dated May 15 and
June 3, 1998.
Each document filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the 1934 Act prior to the termination of
the offering made by this Prospectus shall be deemed to be incorporated by
reference in this Prospectus and shall be a part hereof from the date of filing
of such document; provided, however, that the documents enumerated above or
subsequently filed by the Company pursuant to Section 13 or 15(d) of the 1934
Act prior to the filing with the Commission of the Company's most recent Annual
ReportSEC on
Form 10-K shall not be incorporated by reference in this Prospectus or
be a part hereof fromJune 20, 2000, June 28, 2000 and after the filing of such most recent Annual Report on
Form 10-K.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whomJuly 19, 2000.
You may request a copy of this Prospectus is delivered, upon the
writtenthese documents, at no cost to you, by writing or
oral request of any such person, a copy of any document referred to
above which has been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests for such copies should
be directed to:calling Shareholder Services, Minnesota Power, Inc., 30 West Superior Street,
Duluth, Minnesota 55802,55802-2093, telephone number (218) 723-3974 or (800) 535-3056.
-2-You should rely only on the information contained in, or incorporated by
reference in, this prospectus and the prospectus supplement. Minnesota Power has
not, and any underwriters, agents or dealers have not, authorized anyone else to
provide you with different information. Minnesota Power is not, and any
underwriters, agents or dealers are not, making an offer of these Securities in
any state where the offer is not permitted. You should not assume that the
information contained in this prospectus and the prospectus supplement is
accurate as of any date other than the date on the front of those documents.
SAFE HARBOR STATEMENT UNDER
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, Minnesota Power is hereby filing cautionary
statements identifying important factors that could cause Minnesota Power's
actual results to differ materially from those projected in forward-looking
statements (as that term is defined in the Private Securities Litigation Reform
Act of 1995) made by or on behalf of Minnesota Power which are made in this
prospectus or any supplement to this prospectus, in presentations, in response
to questions or otherwise. Any statements that express, or involve discussions
THE COMPANYas to, expectations, beliefs, plans, objectives, assumptions or future events or
performance (often, but not always, through the use of words or phrases such as
"anticipates," "believes," "estimates," "expects," "intends," "plans,"
"projects," "will likely," "result," "will continue" or similar expressions) are
not statements of historical facts and may be forward-looking.
Forward-looking statements involve estimates, assumptions and uncertainties
and are qualified in their entirety by reference to, and are accompanied by, the
following important factors, which are difficult to predict, contain
uncertainties, are beyond the control of Minnesota Power and may cause actual
results to differ materially from those contained in those forward-looking
statements:
o prevailing governmental policies and regulatory actions, including
those of Congress, state legislatures, the Federal Energy Regulatory
Commission, the Minnesota Public Utilities Commission, the Florida
Public Service Commission, the North Carolina Utilities Commission and
the Public Service Commission of Wisconsin, with respect to allowed
rates of return, industry and rate structure, acquisition and disposal
of assets and facilities, operation and construction of plant
facilities, recovery of purchased power, and present or prospective
wholesale and retail competition (including but not limited to retail
wheeling and transmission costs);
o economic and geographic factors including political and economic
risks;
o changes in and compliance with environmental and safety laws and
policies;
o weather conditions;
o population growth rates and demographic patterns;
o competition for retail and wholesale customers;
o pricing and transportation of commodities;
o market demand, including structural market changes;
o changes in tax rates or policies or in rates of inflation;
o changes in project costs;
o unanticipated changes in operating expenses and capital expenditures;
o capital market conditions;
o competition for new energy development opportunities; and
o legal and administrative proceedings (whether civil or criminal) and
settlements that influence the business and profitability of Minnesota
Power.
Any forward-looking statement speaks only as of the date on which that
statement is made, and Minnesota Power undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which that statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time and it is not possible for
management to predict all of those factors, nor can it assess the impact of each
of those factors on the business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statement.
2
MINNESOTA POWER, INC.
Minnesota Power, a broadly diversified servicemulti-services company incorporated under the laws of
the State of Minnesota in 1906, has operations in four business segments:
(1) Electric Operations,Services, which include electric and gas services, coal
mining and coal mining;telecommunications;
(2) Water Services, which include water and wastewater services;
(3) Automotive Services, which include a network of vehicle auctions, a
finance company, and an auto transport company;company, a vehicle remarketing
company and a company that provides field information services;
(3) Water Services, which include water and wastewater services; and
(4) Investments, which include a securities portfolio, a 21 percent equity investment in a financial guaranty
reinsurance and insurance companyintermediate-term
investments and real estate operations.
Corporate Charges
represent general corporate expenses, including interest, not specifically
allocated to any one business segment. As of March 31, 1998 the Company and its
subsidiaries had approximately 6,900 employees. The principal executive offices
of the Company are located at 30 West Superior Street, Duluth, Minnesota 55802,
telephone number (218) 722-2641.
(Unaudited)
Three Months Ended
Year Ended December(UNAUDITED)
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, March 31
----------------------------------- ----------------------JUNE 30,
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1997 1996 1995 1998 1997
- ----------------------------------------------------------------------------------------------------------1999 1999 2000
---- ---- ---- ---- ----
BASIC AND DILUTED EARNINGS PER SHARE OF
COMMON STOCK
Millions
Operating RevenueBefore Capital Re and IncomeACE Transactions $ 1.24 $ 1.35 $ 1.49 $ 0.67 $ 0.91
Capital Re and ACE Transactions (a). - - (0.52) (0.35) 0.44
---------- --------- --------- ---------- ----------
Total............................ $ 1.24 $ 1.35 $ 0.97 $ 0.32 $ 1.35
========== ========= ========= ========== ==========
NET INCOME
Electric Operations $ 541.9 $ 529.2 $ 503.5 $ 134.0 $ 131.5
Water Services 95.5 85.2 66.1 20.8 20.6
Automotive Services 255.5 183.9 61.6 76.7 60.5
Investments 60.9 49.9 43.7 15.2 9.5
Corporate Charges (0.2) (1.3) (2.0) (0.1) 0.0
-------- -------- -------- ------- -------
Total $ 953.6 $ 846.9 $ 672.9 $ 246.6 $ 222.1
======== ======== ======== ======= =======
Net Income
Electric OperationsServices................... $ 43.1 $ 39.447.4 $ 41.045.0 $ 9.519.6 $ 12.320.0
Automotive Services................. 14.0 25.5 39.9 21.6 26.6
Water ServicesServices...................... 8.2 5.4 (1.0) 0.7 0.4
Automotive Services 14.0 3.7 - 5.4 3.2
Investments7.5 12.2 5.7 6.5
Investments......................... 32.1 38.1 41.3 8.3 5.629.6 26.8 9.3 21.7
Corporate ChargesCharges................... (19.8) (17.4) (19.4) (5.4) (5.4)
-------- -------- -------- ------- -------(21.5) (19.7) (9.3) (10.6)
---------- --------- --------- ---------- ----------
Net Income before Capital Re and ACE 77.6 69.2 61.9 18.5 16.1
Discontinued Operations 88.5 104.2 46.9 64.2
Transactions.....................
Capital Re and ACE Transactions (a). - - 2.8 - -
-------- -------- -------- ------- -------
Total(36.2) (24.1) 30.4
---------- --------- --------- ---------- ----------
$ 77.6 $ 69.288.5 $ 64.768.0 $ 18.522.8 $ 16.1
======== ======== ======== ======= =======
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Basic and Diluted
Earnings Per Share of Common Stock
Continuing Operations $ 2.47 $ 2.28 $ 2.06 $.58 $.52
Discontinued Operations - - .10 - -
------ ------ ------ ---- ----
$ 2.47 $ 2.28 $ 2.16 $.58 $.52
====== ====== ====== ==== ====
Average Shares of Common Stock - Millions 30.6 29.3 28.5 31.1 30.3
- ----------------------------------------------------------------------------------------------------------
The Company purchased 80 percent of ADESA, including AFC and Great Rigs, on
July 1, 1995, another 3 percent in January 1996 and the remaining 17
percent in August 1996.
On June 30, 1995 Minnesota Power sold its interest in a paper and pulp
business to Consolidated Papers, Inc.
94.6
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-3-
(a) In May 2000 Minnesota Power sold its investment in ACE Limited ("ACE")
common stock, which resulted in an after-tax gain of $30.4 million, or
$0.44 per share. The ACE shares were received in December 1999 upon
completion of ACE's merger with Capital Re Corporation ("Capital Re").
During 1999 Minnesota Power recorded an aggregate $36.2 million, or $0.52
per share after-tax non-cash charge in connection with the valuation and
exchange of its investment in Capital Re stock for the ACE shares,
including a $24.1 million, or $0.35 per share charge in the second quarter.
ELECTRIC OPERATIONSSERVICES
Electric OperationsServices generate, transmit, distribute and market electricity. In
addition, Electric Services include coal mining, telecommunications,
engineering, operating and maintenance services, and economic development
projects in and near Minnesota Power's service area. As of June 30, 2000,
Minnesota Power provides electricitywas supplying retail electric service to 123,000130,000 customers in
153 cities, towns and communities, and outlying rural areas of northeastern
Minnesota. MPEX, a division of Minnesota Power, is an expansion of the Company's
inter-utility marketing group which has been a buyer and seller of capacity and
energy for over 25 years in the wholesale power market. The customers of MPEX
are other power suppliers in the Midwest and Canada. MPEX also contracts with
its customers to provide hourly energy scheduling and power trading services.
The Company'sPower's wholly owned subsidiary, Superior Water, Light and
Power Company, sells electricitywas providing electric, natural gas, and water services to 14,000
electric customers, 11,000 natural gas customers and natural gas to 11,000 customers, and
provides10,000 water to 10,000 customers in
northwestern Wisconsin.Wisconsin as of June 30, 2000.
BNI Coal, Ltd.
(BNI Coal), another wholly owned subsidiary of the Company,Minnesota Power, owns
and operates a lignite mine in North Dakota. Two electric generating
cooperatives, Minnkota Power Cooperative, Inc. and Square Butte Electric
Cooperative, (Square Butte),
presently consume virtually all of BNI Coal's production of lignite
coal under cost-plus coal supply agreements extending to 2027. Under an
agreement with Square Butte, Minnesota Power currently purchases aboutapproximately 71 percent
3
of the output from the Square Butte unit which is capable of generating up to
455 megawatts (MW). Upon
a two-year advance notice to Square Butte and the Company, beginning in 2006MW. Minnkota Power Cooperative,has an option to extend its coal supply agreement to
2042.
Other wholly owned subsidiaries of Minnesota Power within the Electric
Services business segment include:
o Electric Outlet, Inc., operator ofdoing business as Electric Odyssey, which is a
retail, catalog and e-commerce merchandiser that sells unique products
for the Square Buttehome, office and travel;
o Minnesota Power Telecom, Inc., which provides high capacity fiber
optic based communication services to businesses and communities
across Minnesota and in Wisconsin;
o Rainy River Energy Corporation, which holds ownership and power
purchase positions in merchant generation, as well as provides
engineering, operating and maintenance services to new and existing
generating unit,facilities; and
o Upper Minnesota Properties, Inc., which has the option to reduce the Company's entitlement by approximately 5 percent
annually, to a minimum of 50 percent.
In 1997 industrial customers contributed about half of the Company's
electric operating revenue. The Companyinvested in affordable
housing projects located in Minnesota Power's service territory.
Minnesota Power has large power contracts to sell power to eleven
industrial customers (five taconite producers, four paper and pulp mills, and
two pipeline companies) each requiring 10 MWmegawatts or more of power.generating
capacity. These contracts which have termination dates ranging from April 2001 to October 2008,
require the Company to have a certain amountpayment of generating capacity available.
In turn each customer is required to pay a minimum monthly demand chargecharges
that coverscover the fixed costs associated with having capacity available to serve
the
customer,each of these customers, including a return on common equity. Under the contracts, industrial
customers pay demand charges for the base portion of their capacity needs on a
take-or-pay basis for the entire term ofEach contract
continues past the contract while most customers are
permitted bi-annually (coincident with each power pool season) to establish
their capacity needs above this base, thereby committing to additional demand
charges. In addition totermination date unless the demand charge, each customer is billed an energy
charge for each kilowatthour used that recovers the variable costs incurred in
generating electricity.
WATER SERVICES
Water Services include regulated and non-regulated wholly owned
subsidiariesrequired four-year
advance notice of the Company. Florida Water Services Corporation, which is the
largest investor owned water supplier in Florida, provides water to 119,000
customers and wastewater treatment services to 53,000 customers in Florida.
Heater Utilities, Inc. provides water to 29,000 customers and wastewater
treatment services to 2,000 customers in North Carolina. Instrumentation
Services, Inc. (ISI) provides predictive maintenance and instrumentation
consulting services to water and wastewater utility companies, and other
industrial operations throughout the southeastern part of the United States as
well as Texas and Minnesota. U.S. Maintenance and Management Services
Corporation (USM&M) was incorporated in 1997 to complement ISI's operations.
USM&M provides maintenance services to water and wastewater utilities, and other
industrial operations primarily in Florida. Americas' Water Services
Corporation, which is headquartered near Chicago, Illinois, offers contract
management, operations and maintenance services to governments and industries in
the Americas.
-4-
cancellation has been given.
AUTOMOTIVE SERVICES
Automotive Services include wholly ownedincludes several subsidiaries operating aswhich are integral parts
of the vehicle auction business:redistribution business. ADESA Corporation, (ADESA), a networkwholly owned
subsidiary of vehicle auctions; Automotive Finance Corporation (AFC), a finance company; and
Great Rigs Incorporated (Great Rigs), an auto transport company. ADESAMinnesota Power, is the thirdsecond largest vehicle auction network in
the United States.North America. Headquartered in Indianapolis, Indiana, ADESA owns, or leases,
and operates 2845 vehicle auction facilities in the United States and Canada
through which used cars and other vehicles are
purchased and sold to franchised automobile
dealers and licensed used car dealers. Sellers at ADESA's auctions include
domestic and foreign auto manufacturers, car dealers, automobile fleet/lease
companies, banks and finance companies.
AFCOther subsidiaries of Minnesota Power within the Automotive Services
business segment include:
o Automotive Finance Corporation, which provides inventory financing for
wholesale and retail automobile dealers who purchase vehicles from
ADESA auctions, independent auctions, other auction chains and other
auction
chains. AFC is headquartered in Indianapolis, Indiana, and has 63 loan
production offices located at most ADESA auctions, as well as at or near
independently owned auto auctions. From these offices car dealers obtain credit
to purchase vehicles at any of the over 300 auctions approved by AFC.outside sources;
o Great Rigs Incorporated, which is one of the nation's largest independent used
automobile transport carriers with 153 leasedover 150 automotive carriers. Headquarteredcarriers, the
majority of which are leased;
o PAR, Inc., which provides customized remarketing services to various
fleet operations; and
o AutoVIN, Inc., 90 percent owned, which provides professional field
information service to the automotive industry, including vehicle
condition reporting, inventory verification auditing, program
compliance auditing and facility inspection.
WATER SERVICES
Water Services include Florida Water Services Corporation, Heater
Utilities, Inc., Instrumentation Services, Inc., Vibration Correction Services,
Inc., and Americas' Water Service Corporation, each a wholly owned subsidiary of
Minnesota Power. Florida Water, the largest investor owned water supplier in
Moody, Alabama, Great RigsFlorida, owns and operates water and wastewater treatment facilities within that
state. As of June 30, 2000, Florida Water served 148,000 water customers and
4
72,000 wastewater customers, and maintained 151 water and wastewater facilities
throughout Florida. As of June 30, 2000, Heater Utilities, which provides water
and wastewater treatment services in North Carolina, served 43,000 water
customers and 5,000 wastewater treatment customers. Instrumentation Services and
Vibration Correction Services provide predictive maintenance and instrumentation
consulting services to water and wastewater utilities throughout the
southeastern part of the United States as well as Texas and Minnesota. Americas'
Water Service offers customers pick upcontract management, operations and delivery service through 12 strategically located
transportation hubs. Customersmaintenance services
for water and wastewater treatment facilities to governments and industries.
INVESTMENTS
Investments consist of Great Rigs include ADESA auctions, car
dealerships, vehicle manufacturers, leasing companies, finance companies and
other auctions.
INVESTMENTS
Minnesota Power'san actively traded securities portfolio,
is managed by selected outsideintermediate-term investments and inside managers and is intended to provide stable earnings and liquidity.
The Company's objective is to maintain corporate liquidity between 7 percent
and 10 percentreal estate operations. As of total assets ($150June 30, 2000,
Minnesota Power had approximately $113.7 million to $200 million). The Company plans
to continue to concentrate in market-neutral investment strategies designed to
provide stable and acceptable returns without sacrificing needed liquidity.
The securities portfolio is structured to perform so as to provide an after-tax
return of between 7 percent and 9 percent. While these returns may seem modest
compared to broader market indices over the past three years, the Company
believes its investment strategy is a wise courseinvested in a volatile economic
environment. Returns will continuetrading and
available-for-sale securities portfolio. Since 1985 Minnesota Power has invested
$27.9 million in venture capital funds that seek long-term capital appreciation
by making investments in companies developing advanced technologies to be partially dependent on general market
conditions. The Company's investment inused
by the securities portfolio at March 31,
1998 was approximately $190 million.electric utility industry. In addition, through subsidiaries, Minnesota
Power owns 6.5 million shares of Capital Re Corporation (Capital
Re), a specialty insuranceCape Coral Holdings, Inc. and reinsurance business. Capital Re's product lines
currently include financial guaranty, mortgage, title, financial, credit and
specialty reinsurance, and specialty insurance through its participation in
Lloyds of London. Capital Re trades on the New York Stock Exchange under the
symbol KRE. Minnesota Power's ownership represents 21 percent of the 32 million
total outstanding shares of Capital Re. The market value of the Company's
investment in Capital Re was $210 million at March 31, 1998 based on a Capital
Re share price of $32.125. The Company accounts for its investment in Capital Re
under the equity method and the carrying value was $123 million at March 31,
1998.
The Company owns 80 percent of Lehigh Acquisition
Corporation, (Lehigh), a
real estate companycompanies that own various real estate properties and
operations in Florida.
Lehigh owns 2,500 acres of land and
approximately 4,000 home sites near Fort Myers, Florida; 1,000 home sitesUSE OF PROCEEDS
Unless otherwise stated in Citrus County, Florida; and 2,700 home sites and 12,000 acres of residential,
commercial and industrial land at Palm Coast, Florida.
-5-
SELLING SHAREHOLDERS
The following table lists the Selling Shareholders,prospectus supplement, Minnesota Power will
add the number of shares of
Common Stocknet proceeds from sales of the Company beneficially owned by the Selling Shareholders as of
the date of this Prospectus, the number of sharesSecurities to be offered and the number
of outstanding shares to be owned after the sale.its general funds.
Minnesota Power contributed
the shares to MP Water Resources Group, Inc. (MP Water Resources), a wholly
owned subsidiaryuses its general funds for general corporate purposes,
including, without limitation, acquisitions made by or on behalf of Minnesota
Power or its subsidiaries, to repay short-term borrowings and to redeem or
repurchase outstanding long-term debt obligations. Minnesota Power will
temporarily invest any proceeds that it does not need to use immediately in
short-term instruments.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
Minnesota Power has calculated ratios of earnings to fixed charges as
follows:
YEAR ENDED DECEMBER 31,
------------------------------------------
SIX MONTHS ENDED
----------------
1995 1996 1997 1998 1999 JUNE 30, 2000
---- ---- ---- ---- ---- -------------
1.90 2.12 2.46 2.65 2.76 4.89
Minnesota Power has calculated supplemental ratios of earnings to fixed
charges as follows:
YEAR ENDED DECEMBER 31,
------------------------------------------
SIX MONTHS ENDED
----------------
1995 1996 1997 1998 1999 JUNE 30, 2000
---- ---- ---- ---- ---- -------------
1.73 1.93 2.26 2.39 2.45 4.28
The supplemental ratio of earnings to fixed charges includes Minnesota
Power's obligation under a contract with Square Butte which exchanged the Shares for 100extends through
2027, pursuant to which Minnesota Power is entitled to approximately 71 percent
of the outstanding sharesoutput of common stocka 455-megawatt coal-fired generating unit. Minnesota Power is
obligated to pay its pro rata share of Vibration Correction Services, Inc.
ownedSquare Butte's costs based on output
entitlement from the unit. Minnesota Power's payment obligation is suspended if
Square Butte fails to deliver any power, whether produced or purchased, for a
period of one year. Square Butte's fixed costs consist primarily of debt
5
service. Variable operating costs include the price of coal purchased from BNI
Coal under a long-term contract.
DESCRIPTION OF FIRST MORTGAGE BONDS
General. The first mortgage bonds are to be issued under Minnesota Power's
Mortgage and Deed of Trust, dated as of September 1, 1945, with Irving Trust
Company (now The Bank of New York) and Richard H. West (Douglas J. MacInnes,
successor), as mortgage trustees ("Mortgage Trustee" or "Mortgage Trustees"), as
supplemented by twenty supplemental indentures (herein collectively referred to
as the Selling Shareholders. The Shares were issued by the Company and
delivered by MP Water Resources"Mortgage"), all of which are exhibits to the Selling Shareholders in a private
placement transaction that has been accounted for as a pooling of interest.
Shares to be
Shares Owned Shares to be Owned After
Selling Shareholders (1) Prior to Offering (2) Offered Hereby (3) Offering (4)
- ----------------------- -------------------- ----------------- -----------
George M. Winkler and
Kathleen E. Winkler,
Joint Tenants 12,987 12,987 0
- ---------------
(1) MP Water Resources owns 100 percent of Vibration Correction Services, Inc.
George M. Winkler is General Manager of Vibration Correction Services, Inc.
and Kathleen E. Winkler is Office Manager of Vibration Correction Services,
Inc.
(2) As of July 10, 1998 the Selling Shareholders held less than one percent
of the Company's then outstanding Common Stock.
(3) As of June 17, 1998 the Selling Shareholders representedregistration statement. The
statements herein with respect to the Company
that they (i) were acquiring the Shares for their own account for
investment and not with a view toward resale or distribution and (ii) did
not at that time have any reason to anticipate any change in their
circumstances or other particular occasion or event which would cause them
to desire to sell or otherwise transfer the Shares.
(4) Assumes the sale of all of the Shares coveredfirst mortgage bonds offered by this
Prospectus and that
no additional shares are acquired by the Selling Shareholders.
DIVIDENDS AND PRICE RANGE
The following table sets forth the high and low sales prices per share of
the Common Stock reported on the New York Stock Exchange composite tape as
published in The Wall Street Journalprospectus and the dividends paid for the indicated
periods.
Price Range Dividends
----------- ---------
High Low Per Share
---- --- ---------
1996 First Quarter $ 29 3/4 $ 26 1/8 $ 0.510
Second Quarter 29 26 0.510
Third Quarter 28 3/4 26 0.510
Fourth Quarter 28 7/8 26 3/8 0.510
1997 First Quarter $ 29 $ 27 1/4 $ 0.510
Second Quarter 30 5/8 27 0.510
Third Quarter 36 5/16 30 1/4 0.510
Fourth Quarter 44 35 3/16 0.510
1998 First Quarter $ 43 7/16 $ 39 1/8 $ 0.510
Second Quarter 43 38 1/16 0.510
Third Quarter
(through July 10, 1998) 40 11/16 39 3/4
The last reported sale price of the Common Stock on the New York Stock
Exchange composite tape on July 10, 1998 was $39.8125 per share.
The Company has paid dividends without interruption on its Common Stock
since 1948, the date of the initial distribution of the Common Stock by American
Power & Light Company, the former holder of all such stock.
-6-
The Company has a Dividend Reinvestment and Stock Purchase Plan (Plan). The
Plan provides investors (Participants) with a convenient method of acquiring
shares of Common Stock through (i) the reinvestment in Common Stock of all or a
portion of the cash dividends payable on the Participant's holdings of Common
Stock and Preferred Stocks, and/or (ii) the investment of optional cash payments
pursuant to the terms of the Plan. The Company reserves the right to suspend,
modify, amend or terminate the Plan at any time and to interpret and regulate
the Plan as it deems necessary or desirable in connection with the operation of
the Plan. Shares of Common Stock are offered for sale under the Plan only by
means of a separate prospectus available upon request from the Company.
DESCRIPTION OF COMMON STOCK
General. The following statements relating to the Common StockMortgage are merely an outline and do not purport to be
complete. They make use of terms defined in the Mortgage and are qualified in
their entirety by express reference to the Company's Articlescited articles and sections of Incorporation (Articles of
Incorporation) andthe
Mortgage. All first mortgage bonds issued or to be issued under the Mortgage,
and Deedincluding the first mortgage bonds offered by this prospectus, are referred to
herein as "First Mortgage Bonds."
Reference is made to a prospectus supplement relating to each series of
TrustFirst Mortgage Bonds offered by this prospectus for the following specific terms
of that series, among others:
o the designation of the Company. Reference is
also made to the lawsseries of First Mortgage Bonds and aggregate
principal amount of the StateFirst Mortgage Bonds;
o the percentage or percentages of Minnesota.their principal amount at which the
series will be issued;
o the date or dates on which the series will mature;
o the rate or rates at which the series will bear interest;
o the times at which such interest will be payable; and
o redemption terms or other specific terms.
Form and Exchanges. The Company's authorized capital stock consistsFirst Mortgage Bonds offered by this prospectus
will be issued in definitive fully registered form without coupons in
denominations of 130,000,000 shares$1,000 and multiples thereof and will be transferable and
exchangeable without charge (except for stamp taxes, if any, or other
governmental charges) at The Bank of
Common Stock, without par value, 116,000 shares of 5% Preferred Stock, $100 par
value, 1,000,000 shares of Serial Preferred Stock, without par value, and
2,500,000 shares of Serial Preferred Stock A, without par value.
Dividend Rights. The Common Stock is entitled to all dividends after full
provision for dividends on the issued and outstanding Preferred Stocks and the
sinking fund requirements of the Serial Preferred Stock A, $7.125 Series and
$6.70 Series.
The Articles of Incorporation provide that so long as any shares of the
Company's Preferred Stocks are outstanding, cash dividends on Common Stock are
restricted to 75 percent of available net income when Common Stock equity is or
would become less than 25 percent but more than 20 percent of total
capitalization. This restriction becomes 50 percent when such equity is or would
become less than 20 percent. See Note 10 to Consolidated Financial Statements
incorporated by reference in the Company's 1997 Form 10-K.
Voting Rights (Non-Cumulative Voting). Holders of Common Stock are entitled
to notice of and to vote at any meeting of shareholders. Each share of the
Common Stock, as well as each share of the issued and outstanding Preferred
Stocks, is entitled to one vote. Since the holders of such shares do not have
cumulative voting rights, the holders of more than 50 percent of the shares
voting can elect all the Company's directors, and in such event the holders of
the remaining shares voting (less than 50 percent) cannot elect any directors.
In addition, the Preferred Stocks are expressly entitled, as one class, to elect
a majority of the directors (the Common Stock, as one class, electing the
minority) whenever dividends on any of such Preferred Stocks shall be in default
in the amount of four quarterly payments and thereafter until all such dividends
in default shall have been paid. The Articles of Incorporation include detailed
procedures and other provisions relating to these rights and their termination,
such as quorums, terms of directors elected, vacancies, class voting as between
Preferred Stocks and Common Stock, meetings, adjournments and other matters.
The Articles of Incorporation contain certain provisions which make it
difficult to obtain control of the Company through transactions not having the
approval of the Board of Directors, including:
(1) A provision requiring the affirmative vote of 75 percent of the
outstanding shares of all classes of capital stock of the Company,
present and entitled to vote, in order to authorize certain "Business
Combinations." Any such Business Combination is required to meet
certain "fair price" and procedural requirements. Neither a 75 percent
stockholder vote nor "fair price" is required for any Business
Combination which has been approved by a majority of the "Disinterested
Directors."
(2) A provision permitting a majority of the Disinterested Directors to
determine whether the above requirements have been satisfied.
(3) A provision providing that certain of the Articles of Incorporation
cannot be altered unless approved by 75 percent of the outstanding
shares of all classes of capital stock, present and
-7-
entitled to vote, unless such alteration is recommended to the
shareholders by a majority of the Disinterested Directors.
Liquidation Rights. After satisfaction of creditors and of the preferential
liquidation rights of the outstanding Preferred Stocks ($100 per share plus
unpaid accumulated dividends), the holders of the Common Stock are entitled to
share ratably in the distribution of all remaining assets.
Miscellaneous. Holders of Common Stock have no preemptive or conversion
rights.
The Common Stock is listed on the New York, Stock Exchange.in The transfer agentsCity of New York.
Interest, Maturity and registrars for the Common Stock are Norwest Bank
Minnesota, N.A. and the Company.
DESCRIPTION OF PREFERRED SHARE PURCHASE RIGHTSPayment. Reference is made to the Rights Agreement, datedprospectus
supplement for the interest rate or rates of the First Mortgage Bonds offered by
this prospectus and the dates on which such interest is payable. Principal and
interest are payable at The Bank of New York, in The City of New York.
Redemption and Purchase of First Mortgage Bonds. The First Mortgage Bonds
may be redeemable mandatorily or at the option of Minnesota Power upon 30 days
notice at predetermined prices. If the First Mortgage Bonds are redeemable,
Minnesota Power may use certain deposited cash and/or proceeds of released
property to effect the redemption. Reference is made to the prospectus
supplement for the redemption terms of the First Mortgage Bonds offered by this
prospectus.
If at the time notice of redemption is given the redemption moneys are not
on deposit with The Bank of New York, as Mortgage Trustee, the redemption may be
made subject to their receipt before the date fixed for redemption.
Cash deposited under any provisions of the Mortgage (with certain
exceptions) may generally be applied to the purchase of First Mortgage Bonds of
any series. (See Mortgage, Article X.)
6
Sinking or Improvement Fund. Reference is made to the prospectus supplement
concerning whether or not the First Mortgage Bonds offered by this prospectus
are entitled to the benefit of a sinking or improvement fund or other provision
for amortization prior to maturity. None of the currently outstanding First
Mortgage Bonds has sinking fund or improvement fund provisions.
Replacement Fund. The First Mortgage Bonds offered by this prospectus are
not entitled to the benefit of any replacement fund.
Special Provisions for Retirement of First Mortgage Bonds. If, during any
12 month period, mortgaged property is disposed of by order of or to any
governmental authority resulting in the receipt of $5 million or more as
proceeds, Minnesota Power (subject to certain conditions) must apply such
proceeds, less certain deductions, to the retirement of First Mortgage Bonds.
(See Mortgage, Section 64.) Reference is made to the prospectus supplement for
information concerning whether the First Mortgage Bonds offered by this
prospectus are redeemable for this purpose and, if so, at what redemption
prices.
Security. The First Mortgage Bonds offered by this prospectus and any other
First Mortgage Bonds now or hereafter issued under the Mortgage will be secured
by the Mortgage, which constitutes, in the opinion of General Counsel for
Minnesota Power, a first lien on all of the electric generating plants and other
materially important physical properties of Minnesota Power and substantially
all other properties described in the Mortgage as owned by Minnesota Power,
subject to
o leases of minor portions of Minnesota Power's property to others for
uses which, in the opinion of such counsel, do not interfere with
Minnesota Power's business,
o leases of certain property of Minnesota Power not used in its electric
utility business, and
o excepted encumbrances, minor defects and irregularities,
but such counsel has not examined title to or passed upon title to reservoir
lands, easements or rights of way, any property not costing in excess of
$25,000, or lands or rights held for flowage, flooding or seepage purposes, or
riparian rights. There are excepted from the lien:
o cash and securities;
o merchandise, equipment, materials or supplies held for sale or other
disposition;
o aircraft, automobiles and other vehicles, and materials and supplies
for repairing and replacing the same;
o timber, minerals, mineral rights and royalties; and
o receivables, contracts, leases and operating agreements.
The Mortgage contains provisions that impose the lien of the Mortgage on
property acquired by Minnesota Power after the date of the Mortgage, other than
the excepted property, subject to pre-existing liens. However, if Minnesota
Power consolidates or merges with or conveys or transfers all or substantially
all of the mortgaged property to another corporation, the lien created by the
Mortgage will generally not cover the property of the successor company, other
than the property it acquires from Minnesota Power and improvements,
replacements and additions to that property. (See Mortgage, Section 87.)
The Mortgage provides that the Mortgage Trustees shall have a lien upon the
mortgaged property, prior to the First Mortgage Bonds, for the payment of their
reasonable compensation, expenses and disbursements and for indemnity against
certain liabilities. (See Mortgage, Section 96.)
7
No stocks or properties of subsidiaries are subject to the Mortgage.
Issuance of Additional First Mortgage Bonds. The maximum principal amount
of First Mortgage Bonds which may be issued under the Mortgage is not limited.
First Mortgage Bonds of any series may be issued from time to time on the basis
of:
(1) 60 percent of property additions after adjustments to offset
retirements;
(2) retirement of First Mortgage Bonds or qualified lien bonds; and
(3) deposit of cash.
With certain exceptions in the case of (2) above, the issuance of First
Mortgage Bonds requires adjusted net earnings before income taxes for 12 out of
the preceding 15 months of at least twice the annual interest requirements on
all First Mortgage Bonds at the time outstanding, including the additional
issue, and on all indebtedness of prior rank. Such adjusted net earnings are
computed after provision for retirement and depreciation of property equal to
$750,000 plus, for each of the 12 calendar months selected for the net earnings
test, 1/12th of 2 percent of the net additions to depreciable mortgaged property
made after June 30, 1945 and prior to the beginning of the calendar year within
which that calendar month is included. It is expected that the First Mortgage
Bonds offered by this prospectus will be issued upon the basis of the retirement
of First Mortgage Bonds or property additions.
Property additions generally include electric, gas, steam or hot water
property acquired after June 30, 1945, but may not include securities, aircraft,
automobiles or other vehicles, or property used principally for the production
or gathering of natural gas. There was available, as of July 24, 1996
(Rights Plan) betweenJune 30, 2000, unfunded
net property additions of approximately $77 million.
Minnesota Power has the Companyright to amend the Mortgage without any consent or
other action by holders of any series of First Mortgage Bonds, including the
holders of First Mortgage Bonds offered by this prospectus, so as to include
nuclear fuel as well as similar or analogous devices or substances as property
additions.
The Mortgage contains certain restrictions upon the issuance of First
Mortgage Bonds against property subject to liens and upon the increase of the
amount of such liens. (See Mortgage, Sections 4-8, 20-30, and 46; Fifth
Supplemental, Section 2.)
Release and Substitution of Property. Property may be released upon the
basis of:
(1) deposit of cash or, to a limited extent, purchase money mortgages;
(2) property additions, after adjustments in certain cases to offset
retirement and after making adjustments for qualified lien bonds
outstanding against property additions; and/or
(3) waiver of the right to issue First Mortgage Bonds without applying any
earnings test.
Cash may be withdrawn upon the bases stated in (2) and (3) above.
When property released is not funded property, property additions used to
effect the release may again, in certain cases, become available as credits
under the Mortgage, and the Corporate Secretarywaiver of the Company,right to issue First Mortgage Bonds to
effect the release may, in certain cases, cease to be effective as Rights Agent.such a
waiver. Similar provisions are in effect as to cash proceeds of such property.
The descriptionMortgage contains special provisions with respect to qualified lien bonds
pledged, and disposition of moneys received on pledged prior lien bonds. (See
Mortgage, Sections 5, 31, 32, 37, 46-50, 59-63, 100 and 118.)
Dividend Covenant. Minnesota Power covenants that it will not declare or
pay dividends, other than dividends payable in common stock, on or make any
other distributions on or acquire, unless without cost to it, any of its common
stock unless
8
o the provisions for depreciation and retirement of property during the
period beginning September 1, 1945 to the date of the Rights set forth below does not purportproposed
payment, distribution or acquisition, plus
o earned surplus of Minnesota Power, including current net income
available to be completetransferred to earned surplus, remaining:
(1) after such payment, distribution or acquisition; and
(2) after deducting any remainder of the amount of earned surplus of
Minnesota Power as of August 31, 1945, after deducting from such
amount the charges to earned surplus subsequent to August 31,
1945, other than charges occasioned by dividends (other than
dividends payable in common stock) on its common stock or
occasioned by other distributions on or acquisitions of its
common stock and other than charges to earned surplus with
corresponding credits to reserve for depreciation and retirement
of property;
shall be at least equal to
o $1,000,000 plus, for each calendar year 1947 through 1996, $750,000
plus 2 percent of net additions to depreciable mortgaged property made
after June 30, 1945 through that calendar year. (See Mortgage, Section
39.) None of Minnesota Power's retained earnings as of June 30, 2000
were restricted as a result of such provisions.
Modification of the Mortgage. The rights of bondholders may be modified
with the consent of the holders of 70 percent of the First Mortgage Bonds and,
if less than all series of First Mortgage Bonds are affected, the consent also
of the holders of 70 percent of the First Mortgage Bonds of each series
affected. Minnesota Power has reserved the right without any consent or other
action by the holders of any series of First Mortgage Bonds, including the
holders of First Mortgage Bonds offered by this prospectus, to amend the
Mortgage so as to substitute 66-2/3 percent for 70 percent in the foregoing
provisions. In general, no modification of the terms of payment of principal and
interest, no modification of the obligations of Minnesota Power under Section 64
and no modification affecting the lien or reducing the percentage required for
modification, is effective against any bondholder without his consent. (See
Mortgage, Article XIX; Fifth Supplemental, Section 3.)
Defaults and Notice Thereof. Defaults are defined as being:
o default in payment of principal;
o default for 60 days in payment of interest or of installments of funds
for retirement of First Mortgage Bonds;
o certain defaults with respect to qualified lien bonds and certain
events in its entiretybankruptcy, insolvency or reorganization; and
o default of 90 days after notice in other covenants. (See Mortgage,
Section 65.)
The Mortgage Trustees may withhold notice of default, except in payment of
principal, interest or funds for retirement of First Mortgage Bonds, if they
think it is in the interest of the bondholders. (See Mortgage, Section 66.)
Under the Trust Indenture Act of 1939, Minnesota Power is required to provide to
the Mortgage Trustees an annual statement by an appropriate officer as to
Minnesota Power's compliance with all conditions and covenants under the
Mortgage.
The Bank of New York, as Mortgage Trustee, or the holders of 25 percent of
the First Mortgage Bonds may declare the principal and interest due on default,
but a majority may annul such declaration if the default has been cured. (See
Mortgage, Section 67.) No holder of First Mortgage Bonds may enforce the lien of
the Mortgage without giving the Mortgage Trustees written notice of a default
and unless holders of 25 percent of the First Mortgage Bonds have requested the
Trustees to act and offered them reasonable opportunity to act and indemnity
9
satisfactory to the Mortgage Trustees and they shall have failed to act. (See
Mortgage, Section 80.) The holders of a majority of the First Mortgage Bonds may
direct the time, method and place of conducting any proceedings for any remedy
available to the Mortgage Trustees, or exercising any trust or power conferred
upon the Mortgage Trustees, but the Mortgage Trustees are not required to follow
such direction if not sufficiently indemnified for expenditures. (See Mortgage,
Section 71.)
DESCRIPTION OF DEBT SECURITIES
General. The following description sets forth certain general terms and
provisions of Minnesota Power's unsecured debt securities that Minnesota Power
may offer by this prospectus ("Debt Security" or "Debt Securities"). Minnesota
Power will describe the particular terms of the Debt Securities, and provisions
that vary from those described below, in one or more prospectus supplements.
The Debt Securities will be Minnesota Power's direct unsecured general
obligations. The Debt Securities will be senior debt securities. Minnesota Power
may issue the Debt Securities from time to time in one or more series. Minnesota
Power will issue the Debt Securities under one or more separate Indentures
("Indenture") between Minnesota Power and a trustee ("Indenture Trustee") to be
specified in the prospectus supplement.
The following descriptions of the Debt Securities and the Indenture are
summaries and are qualified by reference to the Rights Plan.
ReferenceIndenture. The form of the
Indenture is alsobeing filed as an exhibit to the registration statement, and you
should read the Indenture for provisions that may be important to you.
References to certain sections of the Indenture are included in parentheses.
Whenever particular provisions or defined terms in the Indenture are referred to
under this "Description of Debt Securities," such provisions or defined terms
are incorporated by reference herein. The Indenture will be qualified under the
Trust Indenture Act of 1939. You should refer to the Trust Indenture Act of 1939
for provisions that apply to the Debt Securities.
The Debt Securities will rank equally with all of Minnesota Power's other
senior, unsecured and unsubordinated debt.
The prospectus supplement relating to any series of Debt Securities being
offered will include specific terms relating to that offering. These terms will
include any of the following terms that apply to that series:
o the title of the Debt Securities;
o the total principal amount of the Debt Securities;
o the date or dates on which the principal of the Debt Securities will
be payable and how it will be paid;
o the rate or rates at which the Debt Securities will bear interest, or
how such rate or rates will be determined;
o the date or dates from which interest on the Debt Securities will
accrue, the interest payment dates on which interest will be paid, and
the record dates for interest payments;
o the percentage, if less than 100 percent, of the principal amount of
the Debt Securities that will be payable if the maturity of the Debt
Securities is accelerated;
o any date or dates on which, and the price or prices at which, the Debt
Securities may be redeemed at the option of Minnesota Power and any
restrictions on such redemptions;
o any sinking fund or other provisions or options held by holders of
Debt Securities that would obligate Minnesota Power to repurchase or
otherwise redeem the Debt Securities;
10
o any changes or additions to the Events of Default under the Indenture
or changes or additions to the covenants of Minnesota Power under the
Indenture;
o if the Debt Securities will be issued in denominations other than
$1,000;
o if payments on the Debt Securities may be made in a currency or
currencies other than United States dollars;
o any convertible feature or options regarding the Debt Securities;
o any rights or duties of another person to assume the obligations of
Minnesota Power with respect to the Debt Securities;
o any collateral, security, assurance or guarantee for the Debt
Securities;
o any rights to change or eliminate any provision of the Indenture or to
add any new provision to the Indenture without the consent of the
holders of the securities of such series; and
o any other terms of the Debt Securities not inconsistent with the terms
of the Indenture.
(See Indenture, Section 301.)
The Indenture does not limit the principal amount of Debt Securities that
may be issued. The Indenture allows Debt Securities to be issued up to the
principal amount that may be authorized by Minnesota Power.
Debt Securities may be sold at a discount below their principal amount.
United States federal income tax considerations applicable to Debt Securities
sold at an original issue discount may be described in the prospectus
supplement. In addition, certain United States federal income tax or other
considerations applicable to any Debt Securities which are denominated or
payable in a currency or currency unit other than United States dollars may be
described in the prospectus supplement.
Except as may otherwise be described in the prospectus supplement, the
covenants contained in the Indenture will not afford holders of Debt Securities
protection in the event of a highly-leveraged or similar transaction involving
Minnesota Power or in the event of a change in control.
Payment and Paying Agents. Except as may be provided in the prospectus
supplement, interest, if any, on each Debt Security payable on each interest
payment date will be paid to the person in whose name such Debt Security is
registered as of the close of business on the regular record date for the
interest payment date. However, interest payable at maturity will be paid to the
person to whom the principal is paid. If there has been a default in the payment
of interest on any Debt Security, the defaulted interest may be paid to the
holder of such Debt Security as of the close of business on a date to be fixed
by the Indenture Trustee, which will be between 10 and 15 days prior to the date
proposed by Minnesota Power for payment of such defaulted interest or in any
other manner permitted by any securities exchange on which such Debt Security
may be listed, if the Indenture Trustee finds it practicable. (See Indenture,
Section 307.)
Unless otherwise specified in the prospectus supplement, principal of, and
premium, if any, and interest, if any, on the Debt Securities at maturity will
be payable upon presentation of the Debt Securities at the corporate trust
office of the Indenture Trustee, in The City of New York, as Paying Agent for
Minnesota Power. Minnesota Power may change the place of payment on the Debt
Securities, may appoint one or more additional Paying Agents, including
Minnesota Power, and may remove any Paying Agent, all at the discretion of
Minnesota Power. (See Indenture, Section 602.)
Registration and Transfer. Unless otherwise specified in the prospectus
supplement, the transfer of Debt Securities may be registered, and Debt
Securities may be exchanged for other Debt Securities of the same series of
authorized denominations and with the same terms and principal amount, at the
corporate trust office of the Indenture Trustee in The City of New York.
11
Minnesota Power may change the place for registration of transfer and exchange
of the Debt Securities and may designate additional places for such registration
and exchange. Unless otherwise provided in the prospectus supplement, no service
charge will be made for any transfer or exchange of the Debt Securities.
However, Minnesota Power may require payment to cover any tax or other
governmental charge that may be imposed. Minnesota Power will not be required to
execute or to provide for the registration of transfer of, or the exchange of,
(a) any Debt Security during a period of 15 days prior to giving any notice of
redemption or (b) any Debt Security selected for redemption except the
unredeemed portion of any Debt Security being redeemed in part. (See Indenture,
Section 305.)
Satisfaction and Discharge. Minnesota Power will be discharged from its
obligations on the Debt Securities of a particular series, or any portion of the
principal amount of the Debt Securities of such series, if it irrevocably
deposits with the Indenture Trustee sufficient cash or government securities to
pay the principal, or portion of principal, interest, any premium and any other
sums when due on the Debt Securities of such series at their maturity, stated
maturity date, or redemption. (See Indenture, Section 701.)
The Indenture will be deemed satisfied and discharged when no Debt
Securities remain outstanding and when Minnesota Power has paid all other sums
payable by Minnesota Power under the Indenture. (See Indenture, Section 702.)
All moneys Minnesota Power pays to the Indenture Trustee or any Paying
Agent on Debt Securities which remain unclaimed at the end of two years after
payments have become due will be paid to or upon the order of Minnesota Power.
Thereafter, the holder of such Debt Security may look only to Minnesota Power
for payment thereof. (See Indenture, Section 603.)
Limitation on Liens. Unless otherwise specified in a prospectus supplement
with respect to a particular series of Debt Securities, Minnesota Power will not
create or allow any liens, other than permitted liens, to be created on any of
its property, other than excepted property, without making effective provision
whereby:
o the outstanding Debt Securities shall be equally and ratably secured;
or
o secured obligations shall be delivered to the Indenture Trustee in an
amount equal to the outstanding Debt Securities.
The term permitted liens includes, among others:
o non-delinquent or contested tax or construction liens;
o judgment liens in an aggregate amount less than $10 million or subject
to appeal;
o easements, leases, title defects that do not impair Minnesota Power's
intended use of property;
o governmental rights, mineral, timber or production rights, joint
ownership rights;
o liens fully secured by deposited money or investment securities,
purchase money liens and liens on property at the time of acquisition;
o liens securing tax-exempt financing, non-recourse liens related to the
acquisition or construction of additional property;
o the lien of the Mortgage or any successor indenture secured by First
Mortgage Bonds; and
o any other liens in an aggregate amount not exceeding 2.5 percent of
Minnesota Power's consolidated assets.
The term excepted property includes, among others:
12
o cash, shares of stock, interests in partnerships, bonds, notes,
evidence of indebtedness and other securities, including investments
in its subsidiaries;
o contracts, leases, accounts receivable, patents, trademarks,
intangibles, vehicles, rolling stock, aircraft, inventory;
o fuel and other consumables, minerals, timber, natural gas production
and gathering assets, hydroelectric assets; and
o leaseholds.
(See Indenture, Section 608.)
Consolidation, Merger, and Sale of Assets. Under the terms of the
Indenture, Minnesota Power may not consolidate with or merge into any other
entity or convey, transfer or lease its properties and assets substantially as
an entirety to any entity, unless:
o the surviving or successor entity is organized and validly existing
under the laws of any domestic jurisdiction and it expressly assumes
Minnesota Power's obligations on all Debt Securities and under the
StateIndenture;
o immediately after giving effect to the transaction, no Event of
Minnesota.
On July 24, 1996,Default and no event which, after notice or lapse of time or both,
would become an Event of Default shall have occurred and be
continuing; and
o Minnesota Power shall have delivered to the BoardIndenture Trustee an
officer's certificate and an opinion of Directorscounsel as to compliance with
the foregoing.
The terms of the Company declaredIndenture do not restrict Minnesota Power in a dividend
distributionmerger in
which Minnesota Power is the surviving entity. (See Indenture, Section 1101.)
Events of Default. "Event of Default" when used in the Indenture with
respect to any series of Debt Securities, means any of the following:
o failure to pay interest, if any, on any Debt Security of the
applicable series for 30 days after it is due;
o failure to pay the principal of or premium, if any, on any Debt
Security of the applicable series when due, whether at maturity or
upon earlier redemption;
o failure to perform any other covenant in the Indenture, other than a
covenant that does not relate to that series of Debt Securities, that
continues for 90 days after Minnesota Power receives written notice
from the Indenture Trustee, or Minnesota Power and the Indenture
Trustee receive a written notice from 33 percent of the holders of the
Debt Securities of such series; however, the Indenture Trustee or the
Indenture Trustee and the holders of such principal amount of Debt
Securities of this series can agree to an extension of the 90 day
period and such an agreement to extend will be automatically deemed to
occur if Minnesota Power is diligently pursuing action to correct the
default;
o certain events in bankruptcy, insolvency or reorganization of
Minnesota Power; or
o any other event of default included in any supplemental indenture or
officer's certificate for a specific series of Debt Securities.
(See Indenture, Section 801.)
13
The Indenture Trustee may withhold notice to the holders of Debt Securities
of any default, except default in the payment of principal, premium or interest,
if it considers such withholding of notice to be in the interests of the
holders. An Event of Default for a particular series of Debt Securities does not
necessarily constitute an Event of Default for any other series of Debt
Securities issued under the Indenture.
Remedies
Acceleration of Maturity. If an Event of Default with respect to fewer than
all the series of Debt Securities occurs and continues, either the Indenture
Trustee or the holders of at least 33 percent in principal amount of the Debt
Securities of any such series may declare the entire principal amount of all the
Debt Securities of such series, together with accrued interest, to be due and
payable immediately. However, if the Event of Default is applicable to all
outstanding Debt Securities under the Indenture, only the Indenture Trustee or
holders of at least 33 percent in principal amount of all outstanding Debt
Securities of all series, voting as one class, and not the holders of any one
series, may make such a declaration of acceleration.
At any time after a declaration of acceleration with respect to the Debt
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained, the Event of Default giving rise to
such declaration of acceleration will be considered waived, and such declaration
and its consequences will be considered rescinded and annulled, if:
o Minnesota Power has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(1) all overdue interest, if any, on all Debt Securities of the
series;
(2) the principal of and premium, if any, on any Debt Securities of
the series which have otherwise become due and interest, if any,
that is currently due;
(3) interest, if any, on overdue interest; and
(4) all amounts due to the Indenture Trustee under the Indenture; or
o any other Event of Default with respect to the Debt Securities of that
series has been cured or waived as provided in the Indenture.
There is no automatic acceleration, even in the event of bankruptcy,
insolvency or reorganization of Minnesota Power. (See Indenture, Section 802.)
Right to Direct Proceedings. Other than its duties in case of an Event of
Default, the Indenture Trustee is not obligated to exercise any of its rights or
powers under the Indenture at the request, order or direction of any of the
holders, unless the holders offer the Indenture Trustee a reasonable indemnity.
(See Indenture, Section 903.) If they provide a reasonable indemnity, the
holders of a majority in principal amount of any series of Debt Securities will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Indenture Trustee, or exercising any power
conferred upon the Indenture Trustee. However, if the Event of Default relates
to more than one series, only the holders of a majority in aggregate principal
amount of all affected series will have the right to give this direction. (See
Indenture, Section 812). The Indenture Trustee is not obligated to comply with
directions that conflict with law or other provisions of the Indenture.
Limitation on Right to Institute Proceedings. No holder of Debt Securities
of any series will have any right to institute any proceeding under the
Indenture, or to exercise any remedy under the Indenture, unless:
o the holder has previously given to the Indenture Trustee written
notice of a continuing Event of Default;
o the holders of a majority in aggregate principal amount of the
outstanding Debt Securities of all series in respect of which an Event
of Default shall have occurred and be continuing have made a written
14
request to the Indenture Trustee, and have offered reasonable
indemnity to the Indenture Trustee to institute proceedings; and
o the Indenture Trustee has failed to institute any proceeding for 60
days after notice and has not received any direction inconsistent with
the written request of holders during such period.
(See Indenture, Section 807.)
No Impairment of Right to Receive Payment. However, the limitations
described in the preceding paragraph do not apply to a suit by a holder of a
Debt Security for payment of the principal of or premium, if any, or interest,
if any, on a Debt Security on or after the applicable due date. (See Indenture,
Section 808.)
Annual Notice to Indenture Trustee. Minnesota Power will provide to the
Indenture Trustee an annual statement by an appropriate officer as to Minnesota
Power's compliance with all conditions and covenants under the Indenture. (See
Indenture, Section 606.)
Modification and Waiver. Minnesota Power and the Indenture Trustee may
enter into one or more supplemental indentures without the consent of any holder
of Debt Securities for any of the following purposes:
o to evidence the assumption by any permitted successor of the covenants
of Minnesota Power in the Indenture and in the Debt Securities;
o to add additional covenants of Minnesota Power or to surrender any
right or power of Minnesota Power under the Indenture;
o to add additional Events of Default;
o to change, eliminate, or add any provision to the Indenture; provided,
however, if the change, elimination, or addition will adversely affect
the interests of the holders of Debt Securities of any series, other
than any series the terms of which permit such change, elimination or
addition, in any material respect, such change, elimination, or
addition will become effective only as to such series:
(1) when the consent of the holders of Debt Securities of such series
has been obtained in accordance with the Indenture; or
(2) when no Debt Securities of such series remain outstanding under
the Indenture;
o to provide collateral security for all or part of the Debt Securities;
o to establish the form or terms of Debt Securities of any other series
as permitted by the Indenture;
o to provide for the authentication and delivery of bearer securities
and coupons attached thereto;
o to evidence and provide for the acceptance of appointment of a
successor Indenture Trustee;
o to provide for the procedures required for use of a noncertificated
system of registration for the Debt Securities of all or any series;
o to change any place where principal, premium, if any, and interest
shall be payable, Debt Securities may be surrendered for registration
of transfer or exchange and notices to Minnesota Power may be served;
or
o to cure any ambiguity or inconsistency or to make any other provisions
with respect to matters and questions arising under the Indenture;
provided that such action shall not adversely affect the interests of
the holders of Debt Securities of any series in any material respect.
15
(See Indenture, Section 1201.)
The holders of at least a majority in aggregate principal amount of the
Debt Securities of all series then outstanding may waive compliance by Minnesota
Power with certain restrictive provisions of the Indenture. (See Indenture,
Section 607.) The holders of not less than a majority in principal amount of the
outstanding Debt Securities of any series may waive any past default under the
Indenture with respect to that series, except a default in the payment of
principal, premium, if any, or interest and certain covenants and provisions of
the Indenture that cannot be modified or be amended without the consent of the
holder of each outstanding Debt Security of the series affected. (See Indenture,
Section 813.)
If the Trust Indenture Act of 1939 is amended after the date of the
Indenture in such a way as to require changes to the Indenture, the Indenture
will be deemed to be amended so as to conform to such amendment of the Trust
Indenture Act of 1939. Minnesota Power and the Indenture Trustee may, without
the consent of any holders, enter into one or more supplemental indentures to
evidence such an amendment. (See Indenture, Section 1201.)
The consent of the holders of a majority in aggregate principal amount of
the Debt Securities of all series then outstanding is required for all other
modifications to the Indenture. However, if less than all of the series of Debt
Securities outstanding are directly affected by a proposed supplemental
indenture, then the consent only of the holders of a majority in aggregate
principal amount of all series that are directly affected will be required. No
such amendment or modification may:
o change the stated maturity of the principal of, or any installment of
principal of or interest on, any Debt Security, or reduce the
principal amount of any Debt Security or its rate of interest or
change the method of calculating such interest rate or reduce any
premium payable upon redemption, or change the currency in which
payments are made, or impair the right to institute suit for the
enforcement of any payment on or after the stated maturity of any Debt
Security, without the consent of the holder;
o reduce the percentage in principal amount of the outstanding Debt
Securities of any series whose consent is required for any
supplemental indenture or any waiver of compliance with a provision of
the Indenture or any default thereunder and its consequences, or
reduce the requirements for quorum or voting, without the consent of
all the holders of the series; or
o modify certain of the provisions of the Indenture relating to
supplemental indentures, waivers of certain covenants and waivers of
past defaults with respect to the Debt Securities of any series,
without the consent of the holder of each outstanding Debt Security
affected thereby.
A supplemental indenture which changes the Indenture solely for the benefit
of one Right for eachor more particular series of Debt Securities, or modifies the rights of
the holders of Debt Securities of one or more series, will not affect the rights
under the Indenture of the holders of the Debt Securities of any other series.
(See Indenture, Section 1202.)
The Indenture provides that Debt Securities owned by Minnesota Power or
anyone else required to make payment on the Debt Securities shall be disregarded
and considered not to be outstanding sharein determining whether the required holders
have given a request or consent. (See Indenture, Section 101.)
Minnesota Power may fix in advance a record date to determine the required
number of Common Stockholders entitled to shareholdersgive any request, demand, authorization,
direction, notice, consent, waiver or other such act of the holders, but
Minnesota Power shall have no obligation to do so. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other act of the holders may be given before or after such record date, but
only the holders of record at the close of business on July 24, 1996 (Record Date)
and authorized the issuance of one Right with respect to each share of Common
Stock that becomes outstanding between the Record Date and July 23, 2006 or such
earlier time as the Rights are redeemed. Except as described below, each Right,
when exercisable, entitles the registered holder to purchase from the Company
one one-hundredth of a share of Junior Serial Preferred Stock A, without par
value (Serial Preferred), at a price of $90 per one one-hundredth share (the
Purchase Price), subject to adjustment.
No separate Right Certificatesrecord date will be
distributed. The Rights will be
evidenced byconsidered holders for the Common Stock certificates together with a copypurposes of determining whether holders of the
Summary
of Rights Plan and not by separate certificates until the earlier to occur of
(i) 10 days following a public announcement that a person or group of affiliated
or associated persons (an Acquiring Person) has acquired, or obtained the right
to acquire, beneficial ownership of 15 percent or morerequired percentage of the outstanding shares
of Common Stock (the Stock Acquisition Date)Debt Securities have authorized or (ii) 15 business days (oragreed
or consented to such later date as may be determined by actionrequest, demand, authorization, direction, notice, consent,
waiver or other act of the Board of Directors prior toholders. For that purpose, the time that any person becomes an Acquiring Person) following the commencement of
(or a public announcement of an intention to make) a tender or exchange offer
if, upon consummation thereof, such person or group wouldoutstanding Debt
Securities shall be the beneficial
owner of 15 percent or more of such outstanding shares of Common Stock (the
earlier of such dates being called the Distribution Date).
Until the Distribution Date, the Rights will be transferred with and only
with the Common Stock. Until the Distribution Date (or earlier redemption,
expiration or termination of the Rights), the transfer of any certificates for
Common Stock, with or without a copy of the Summary of Rights Plan, will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights (Right
Certificates) will be mailed to holders of record of the Common Stockcomputed as of the closerecord date. Any request, demand,
authorization, direction, notice, consent, election, waiver or other act of business ona
holder shall bind every future holder of the Distribution Datesame Debt Securities and thereafter,the holder
of every Debt Security issued upon the registration of transfer of or in
exchange of such separate Right
Certificates alone will evidence the Rights.
Each whole share of Serial Preferred will have a minimum preferential
quarterly dividend rate equal to the greater of $51 per share or, subject to
anti-dilution adjustment, 100 times the dividend declared on the Common Stock.
In the event of liquidation, no distributionDebt Securities. A transferee will be made to the holders of
Common Stock unless, prior thereto, the holdersbound by acts of the
Serial Preferred have
received a liquidation preference16
Indenture Trustee or Minnesota Power taken in reliance thereon, whether or not
notation of $100 per share, plus accrued and unpaid
dividends. Holderssuch action is made upon such Debt Security. (See Indenture, Section
104.)
Resignation of the Serial Preferred will be entitled to notice of and to
vote at any meeting of the Company's shareholders. Each whole share of Serial
Preferred is entitled to one vote. Such shares do not have cumulative voting
rights.Indenture Trustee. The Serial Preferred, together with the issued and outstanding shares of
the other Preferred Stocks of the Company, will be expressly entitled, as one
class, to elect a majority of directors (the Common Stock electing the minority)
whenever dividends on any
-8-
of the Preferred Stocks shall be in default in the amount of four quarterly
payments and thereafter until all such dividends in default shall have been
paid. In the event of any merger, consolidation or other transaction in which
shares of Common Stock are exchanged for or converted into other securities
and/or property, each whole share of Serial Preferred will be entitled to
receive, subject to anti-dilution adjustment, 100 times the amount into which or
for which each share of Common Stock is so exchanged or converted. The shares of
Serial Preferred are not redeemable by the Company.
The Rights are not exercisable until the Distribution Date and will expire
at the earliest of (i) July 23, 2006 (Final Expiration Date), (ii) the
redemption of the Rights by the Company as described below, and (iii) the
exchange of all Rights for Common Stock as described below.
In the event that any person (other than the Company, its affiliates or any
person receiving newly-issued shares of Common Stock directly from the Company)
becomes the beneficial owner of 15 percent or more of the then outstanding
shares of Common Stock, each holder of a Right will thereafter have a right to
receive, upon exercise at the then current exercise price of the Right, Common
Stock (or, in certain circumstances, cash, property or other securities of the
Company) having a value equal to two times the exercise price of the Right. The
Rights Plan contains an exemption for any issuance of Common Stock by the
Company directly to any person (for example, in a private placement or an
acquisition by the Company in which Common Stock is used as consideration), even
if that person would become the beneficial owner of 15 percent or more of the
Common Stock, provided that such person does not acquire any additional shares
of Common Stock.
In the event that,Indenture Trustee may resign at
any time following the Stock Acquisition Date, the
Company is acquired in a mergerby giving written notice to Minnesota Power or other business combination transaction or 50
percent or more of the Company's assets or earning power are sold, proper
provision willmay be made so that each holder of a Right will thereafter have the
right to receive, upon exerciseremoved at the then current exercise price of the Right,
common stock of the acquiring or surviving company having a value equal to two
times the exercise price of the Right.
Notwithstanding the foregoing, following the occurrence of any of the
events set forth in the preceding two paragraphs (the Triggering Events), any
Rights that are, or (under certain circumstances specified in the Rights Plan)
were, beneficially owned by any Acquiring Person will immediately become null
and void.
The Purchase Price payable, and the number of shares of Serial Preferred or
other securities or property issuable, upon exercise of the Rights, are subject
to adjustment from time to time to prevent dilution, among other circumstances,
in the event of a stock dividend on, or a subdivision, split, combination,
consolidation or reclassification of, the Serial Preferred or the Common Stock,
or a reverse split of the outstanding shares of Serial Preferred or the Common
Stock.
At any
time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 15 percent or more of the
outstanding Common Stock and prior to the acquisition by such person or group of
50 percent or more of the outstanding Common Stock, the Board of Directors may
exchange the Rights (other than Rights owned by such person or group, which have
become void), in whole or in part, at an exchange ratio of one share of Common
Stock per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least one
percent in the Purchase Price. The Company will not be required to issue
fractional shares of Serial Preferred or Common Stock (other than fractions in
multiples of one one-hundredths of a share of Serial Preferred) and, in lieu
thereof, an adjustment in cash may be made based on the market price of the
Serial Preferred or Common Stock on the last trading date prior to the date of
exercise.
At any time after the date of the Rights Plan until the time that a person
becomes an Acquiring Person, the Board of Directors may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (Redemption Price), which
may (at the option of the Company) be paid in cash, shares of Common Stock or
other consideration deemed appropriate by the Board of Directors. Upon the
effectiveness of any action of the Board of Directors ordering redemption of the
Rights, the Rights will terminate and the only rightact of the holders of Rightsa majority in principal amount of all series of
Debt Securities then outstanding delivered to the Indenture Trustee and
Minnesota Power. No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee will be effective until the
acceptance of appointment by a successor Indenture Trustee. So long as no Event
of Default or event which, after notice or lapse of time, or both, would become
an Event of Default has occurred and is continuing and except with respect to
receive the Redemption Price.
-9-
Issuance of Serial Preferred or Common Stock upon exerciseIndenture Trustee appointed by act of the Rightsholders, if Minnesota Power has
delivered to the Indenture Trustee a resolution of its Board of Directors
appointing a successor Indenture trustee and such successor has accepted such
appointment in accordance with the terms of the respective Indenture, the
Indenture Trustee will be deemed to have resigned and the successor will be
deemed to have been appointed as Indenture trustee in accordance with such
Indenture. (See Indenture, Section 910.)
Notices. Notices to holders of Debt Securities will be given by mail to the
addresses of such holders as they may appear in the security register therefor.
(See Indenture, Section 106.)
Title. Minnesota Power, the Indenture Trustee, and any agent of Minnesota
Power or the Indenture Trustee, may treat the person in whose name Debt
Securities are registered as the absolute owner thereof, whether or not such
Debt Securities may be overdue, for the purpose of making payments and for all
other purposes irrespective of notice to the contrary. (See Indenture, Section
308.)
Governing Law. Each Indenture and the Debt Securities will be governed by,
and construed in accordance with, the laws of the State of New York. (See
Indenture, Section 112.)
Regarding the Indenture Trustee. The Indenture Trustee will be specified in
the prospectus supplement. In addition to acting as Indenture Trustee, the
Indenture Trustee may act as trustee under various indentures and trusts of
Minnesota Power and its affiliates.
PLAN OF DISTRIBUTION
Minnesota Power may sell the Securities:
o through underwriters or dealers;
o through agents; or
o directly to one or more purchasers.
Through Underwriters or Dealers. If Minnesota Power uses underwriters in
the sale, the underwriters will acquire the Securities for their own account.
The underwriters may resell the Securities in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. The underwriters may sell the
Securities directly or through underwriting syndicates represented by managing
underwriters. Unless otherwise stated in the prospectus supplement relating to
any series of Securities, the obligations of the underwriters to purchase the
Securities will be subject to any necessary regulatory approvals. Until a Right is
exercised,certain conditions, and the holder thereof, as such,underwriters will have no rights as a shareholderbe
obligated to purchase all of the Company, including, without limitation, the right to vote or to receive
dividends. One million sharesSecurities if they purchase any of Serial Preferred were reserved for issuancethem. If
Minnesota Power uses a dealer in the eventsale, Minnesota Power will sell the
Securities to the dealer as principal. The dealer may then resell those
Securities at varying prices determined at the time of exerciseresale.
Any initial public offering price and any discounts or concessions allowed
or reallowed or paid to dealers may be changed from time to time.
17
Through Agents. Minnesota Power may designate one or more agents to sell
the Securities. Unless stated in a prospectus supplement, the agents will agree
to use their best efforts to solicit purchases for the period of their
appointment.
Directly. Minnesota Power may sell the Securities directly to one or more
purchasers. In this case, no underwriters or agents would be involved.
General Information. A prospectus supplement will state the name of any
underwriter, dealer or agent and the amount of any compensation, underwriting
discounts or concessions paid, allowed or reallowed to them. A prospectus
supplement will also state the proceeds to Minnesota Power from the sale of the
Rights.
The provisionsSecurities, any initial public offering price and other terms of the Rights Plan may be amended by the Company, except
that any amendment adopted after the time that a person becomes an Acquiring
Person may not adversely affect the interests of holders of Rights.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
without conditioning the offer on the Rights being redeemed or a substantial
number of Rights being acquired, and under certain circumstances the Rights
beneficially owned by such a person or group may become void. The Rights should
not interfere with any merger or other business combination approved by the
Board of Directors because, if the Rights would become exercisable as a result
of such merger of business combination, the Board of Directors may, at its
option, at any time prior to the time that any person becomes an Acquiring
Person, redeem all (but not less than all)offering of
the then outstanding RightsSecurities.
Minnesota Power may authorize agents, underwriters or dealers to solicit
offers by certain institutions to purchase the Securities from Minnesota Power
at the Redemption Price.public offering price and on terms described in the related prospectus
supplement pursuant to delayed delivery contracts providing for payment and
delivery on a specified date in the future.
Minnesota Power may have agreements to indemnify agents, underwriters and
dealers against certain civil liabilities, including liabilities under the
Securities Act of 1933.
EXPERTS
The Company's consolidated financial statements incorporated in this Prospectusprospectus by
reference to the Company's 1997Minnesota Power's Annual Report on Form 10-K for the year
ended December 31, 1999 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The statements asLegal conclusions and opinions specifically attributed to matters of law and legal conclusionsGeneral Counsel
herein under "Description of Common Stock" and "Description of Preferred Share Purchase
Rights" in this ProspectusFirst Mortgage Bonds" and in the Incorporated Documentsdocuments
incorporated in this prospectus by reference have been reviewed by Philip R.
Halverson, Esq., Duluth, Minnesota, Vice President, General Counsel and
Secretary forof Minnesota Power, and are set forth or incorporated herein by reference
herein in reliance upon his opinion given upon his authority as an expert.
As of July 1, 1998,2000, Mr. Halverson owned 7,08421,978 shares of common stock of
Minnesota Power
Common Stock.Power. Mr. Halverson is acquiring additional shares of Minnesota Power
Common Stockcommon stock at regular intervals as a participant in the Company's Employee Stock
Ownership Plan Employee Stock Purchase Plan,and Supplemental Retirement Plan
and Dividend Reinvestment and Stock Purchase Plan. Pursuant toUnder the Company's Executive Long-Term
Incentive Compensation Plan, Mr. Halverson has:
(i)o been granted options to purchase 10,20238,467 shares of Minnesota Power
Common Stock,common stock, of which 5,60624,652 options are fully vested, the remainder
of which shall vest over the next two years, and all of which will
expire ten years from the date of grant;
(ii)o earned approximately 2,000874 performance shares;shares that have not yet been
paid out under the terms of this Plan; and
(iii)o an award opportunity for up to 2,5167,538 additional performance shares
contingent upon the attainment of certain performance goals of
the CompanyMinnesota Power for the period January 1, 19982000 through December 31,
1999.2001.
18
LEGAL OPINIONS
The legality of the Shares offered herebySecurities will be passed upon for the
CompanyMinnesota Power by
Mr. Halverson and by Thelen Reid & Priest LLP, New York, New York, counsel for
the Company.Minnesota Power, and for any underwriter, dealer or agent by Morrison Cohen
Singer & Weinstein, LLP, New York, New York. Thelen Reid & Priest LLP and
Morrison Cohen Singer & Weinstein, LLP may rely as to all matters of Minnesota
law upon the opinion of Mr. Halverson.
PLAN-------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. MINNESOTA POWER HAS
NOT AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. MINNESOTA
POWER IS NOT MAKING AN OFFER OF DISTRIBUTION
The Shares to be offered pursuant to this Prospectus are fully paid and
nonassessable. The Company will not receive any of the proceeds from sales of
the Shares.
The Selling Shareholders may sell or distribute some or all of the Shares
from time to time through underwriters or dealers or brokers or other agents or
directly through one or more purchasers, including pledgees, in transactions
(which may involve crosses and block transactions) on the New York Stock
Exchange or in privately negotiated transactions (including sales pursuant to
pledges) or in a combination of such transactions. Such transactions may be
effected by the Selling Shareholders at market prices
-10-
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices, or at fixed prices, which may be changed. Brokers,
dealers, agents or underwriters participating in such transactions as agent may
receive compensation in the form of discounts, concessions or commissions from
the Selling Shareholders (and, if they act as agent for the purchaser of such
Shares, from such purchaser). Such discounts, concessions or commissions as to a
particular broker, dealer, agent or underwriter might be in excess of those
customary in the type of transaction involved. This Prospectus also may be used,
with the Company's consent, by donees of the Selling Shareholders, or by other
persons acquiring Shares and who wish to offer and sell such Shares under
circumstances requiring or making desirable its use.
When required, this Prospectus will be supplemented to set forth the number
of Shares offered for sale and, if such offering is to be made by or through
underwriters, dealers, brokers or other agents, the names of such persons and
the principal terms of the arrangements between such persons and the Selling
Shareholders.
The Selling Shareholders and any underwriters, brokers, dealers or agents
acting in connection with the sale or distribution of the Shares hereunder may
be deemed to be "underwriters" within the meaning of Section 2(11) of the 1933
Act, and any commissions received by them and any profit realized by them on the
resale of Shares as principals may be deemed underwriting compensation under the
1933 Act.
Expenses in connection with the registration of the Shares under the 1933
Act, including legal and accounting fees of the Company, will be paid by the
Company.
------------------------
No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus and, if given or made, such other information and
representations must not be relied upon as having been authorized by the
Company. Neither the delivery of this Prospectus nor any such sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company since the date hereof or that the
information contained herein is correct as of any time subsequent to its date.
This Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any securities other than the registered securities to which it
relates. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy such securities in any circumstances in which such offer or
solicitation is unlawful.
-11-THESE SECURITIES IN ANY JURISDICTION WHERE THE
OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN
THE DATE ON THE FRONT OF THOSE DOCUMENTS.
19
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securitiesSecurities being registered, other than underwriting and/or agents compensation,
are:
Filing Fee - Securitiesfor Registration Statement.......................... $ 105,600
Minnesota Mortgage Registration Tax............................ 920,000*
Legal and Exchange Commission $ 154
Stock exchange listing fee 1,500Accounting Fees...................................... 200,000*
Printing (Form S-3, prospectus, prospectus supplement, etc.)... 25,000*
Fees of Company's legal counsel * 7,500
Independent accountants' fees * 1,500
Miscellaneous expenses * 2,346
---------
* Total $ 13,000
=========
- -------------the Trustees........................................... 30,000*
Rating agencies' fees.......................................... 100,000*
Miscellaneous.................................................. 29,400*
--------------
Total.......................................................... $1,410,000*
==============
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 302A.521 of the Minnesota Business Corporation Act generally
provides for the indemnification of directors, officers or employees of a
corporation made or threatened to be made a party to a proceeding by reason of
the former or present official capacity of the person against judgments,
penalties and fines (including attorneys' fees and disbursements) where such
person, among other things, has not been indemnified by another organization,
acted in good faith, received no improper personal benefit and with respect to
any criminal proceeding, had no reasonable cause to believe his conduct was
unlawful.
Article IX of the Articles of Incorporation of Minnesota Power contains the
following provision:
"No director of this Corporation shall be personally liable to this
Corporation or its stockholders for monetary damages for breach of
fiduciary duty by that director as a director; provided, however, that this
Article IX shall not eliminate or limit the liability of a director: (a)
for any breach of the director's duty of loyalty to this Corporation or its
stockholders; (b) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of the law; (c) under
Minnesota Statutes Section 302A.559 or 80A.23; (d) for any transaction from
which the director derived an improper personal benefit; or (e) for any act
or omission occurring prior to the date when this Article IX becomes
effective. If, after the stockholders approve this provision, the Minnesota
Business Corporation Act, Minnesota Statutes Chapter 302A, is amended to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of this
Corporation shall be deemed eliminated or limited to the fullest extent
permitted by the Minnesota Business Corporation Act, as so amended. No
amendment to or repeal of this Article IX shall apply to or have any affect
on the liability or alleged liability of any director of this Corporation
for or with respect to any acts or omissions of such director occurring
prior to that amendment or repeal."
Section 13 of the Bylaws of the CompanyMinnesota Power contains the following
provisions relative to indemnification of directors and officers:
"The CompanyCorporation shall reimburse or indemnify each present and future
directorDirector and officer of the CompanyCorporation (and his or her heirs, executors
and administrators) for or against all expenses reasonably incurred by such
directorDirector or officer in connection with or arising out of any action, suit
or proceeding in which such directorDirector or officer may be involved by reason
of being or having been a directorDirector or officer of the Company.Corporation. Such
indemnification for reasonable expenses is to be to the fullest extent
permitted by the Minnesota Business Corporation Act, Minnesota Statutes
Chapter 302A. By affirmative vote of the Board of Directors or with written
approval of the Chairman and Chief Executive Officer, such indemnification
may be extended to include agents and employees who are not directorsDirectors or
II-1
officers of the Company,Corporation, but who would otherwise be indemnified for
acts and omissions under Chapter 302A of the Minnesota Business Corporation
Act, if such agent or employee were an officer of the Company.Corporation."
"Reasonable expenses may include reimbursement of attorney'sattorneys' fees and
disbursements, including those incurred by a person in connection with an
appearance as a witness."
"Upon written request to the CompanyCorporation and approval by the Chairman and
Chief Executive Officer, an agent or employee for whom indemnification has
been extended, or an officer or directorDirector may receive an advance for
reasonable expenses if such agent, employee, officer or directorDirector is made or
threatened to be made a party to a proceeding involving a matter for which
indemnification is believed to be available under Minnesota Statutes
Chapter 302A."
"The foregoing rights shall not be exclusive of other rights to which any
directorDirector or officer may otherwise be entitled and shall be available
whether or not the directorDirector or officer continues to be a directorDirector or
officer at the time of incurring such expenses and liabilities."
The CompanyMinnesota Power has insurance covering its expenditures which might arise
in connection with the lawful indemnification of its directors and officers for
their liabilities and expenses, and insuring officers and directors of the
CompanyMinnesota
Power against certain other liabilities and expenses.
II-1
ITEM 16. EXHIBITSEXHIBITS.
Exhibit
Number Description of Exhibit
- ------- ----------------------
1 - Form of Underwriting Agreement.
*4(a)1 - Articles of Incorporation, as amended and restated as of May 27,
1998 (filed as Exhibit 4(a) to Form 8-K datedthe June 3, 1998 Form 8-K, File
No. 1-3548).
*4(a)2 - Certificate Fixing Terms of Serial Preferred Stock A, $7.125
Series (filed as Exhibit 3(a)2, File No. 33-50143).
*4(a)3 - Certificate Fixing Terms of Serial Preferred Stock A, $6.70
Series (filed as Exhibit 3(a)3, File No. 33-50143).
*4(b) - Bylaws, as amended effective May 27, 1998 (filed as Exhibit
4(b), to Form 8-K datedthe June 3, 1998 Form 8-K, File No. 1-3548).
*4(c)1 - Mortgage and Deed of Trust, dated as of September 1, 1945,
between theMinnesota Power & Light Company (now Minnesota Power,
Inc.) and Irving Trust Company (now The Bank of New York) and
Richard H. West (W.T. Cunningham,(Douglas J. MacInnes, successor), as Trustees
(filed as Exhibit 7(c), File No. 2-5865).
*4(c)2 - Supplemental Indentures to Minnesota Power, Inc.'s Mortgage and
Deed of Trust:
Number Dated as of Reference File Exhibit
------ ----------- -------------- -------------------------- ------------------- ----------
First March 1, 1949 2-7826 7(b)
Second July 1, 1951 2-9036 7(c)
Third March 1, 1957 2-13075 2(c)
Fourth January 1, 1968 2-27794 2(c)
Fifth April 1, 1971 2-39537 2(c)
Sixth August 1, 1975 2-54116 2(c)
Seventh September 1, 1976 2-57014 2(c)
Eighth September 1, 1977 2-59690 2(c)
II-2
Number Dated as of Reference File Exhibit
-------------- ------------------- ------------------- ----------
Ninth April 1, 1978 2-60866 2(c)
Tenth August 1, 1978 2-62852 2(d)2
Eleventh December 1, 1982 2-56649 4(a)3
Twelfth April 1, 1987 33-30224 4(a)3
Thirteenth March 1, 1992 33-47438 4(b)
Fourteenth June 1, 1992 33-55240 4(b)
Fifteenth July 1, 1992 33-55240 4(c)
Sixteenth July 1, 1992 33-55240 4(d)
Seventeenth February 1, 1993 33-50143 4(b)
Eighteenth July 1, 1993 33-50143 4(c)
Nineteenth February 1, 1997 1-3548 (1996 Form 10-K) 4(a)3
10-K)
Twentieth November 1, 1997 1-3548 (1997 Form 10-K) 4(a)3
II-2
Exhibit
Number10-K)
4(c)3 - -------
*4(d)Form of Supplemental Indenture relating to the First Mortgage
Bonds.
4(d)1 - Form of Indenture (For Unsecured Debt Securities).
4(d)2 - Form of Officer's Certificate relating to Debt Securities, with
form of Debt Security attached.
*4(e)1 - Mortgage and Deed of Trust, dated as of March 1, 1943, between
Superior Water, Light and Power Company and Chemical Bank & Trust
Company and Howard B. Smith, as Trustees, both succeeded by First
Bank N.A.(now U.S.U. S.
Bank Trust National Association)N.A., as Trustee (filed as Exhibit 7(c), File No.
2-8668),.
*4(e)2 - Supplemental Indentures to Superior Water, Light and Power
Company's Mortgage and Deed of Trust:
Number Dated as supplemented and
modified byof Reference File Exhibit
-------------- ------------------- ------------------- ----------
First Supplemental Indenture thereto dated as of March 1, 1951 (filed as Exhibit2-59690 2(d)(1), File No. 2-59690),
Second Supplemental Indenture thereto dated as of March 1, 1962 (filed as Exhibit2-27794 2(d)1, File No. 2-27794),(1)
Third Supplemental
Indenture thereto dated July 1, 1976 (filed as Exhibit2-57478 2(e)1
File No. 2-57478), Fourth Supplemental Indenture thereto dated
as of MarchJanuary 1, 1985 (filed as Exhibit2-78641 4(b), File No. 2-78641),
Fifth Supplemental Indenture thereto dated as of December 1, 1992 (filed as Exhibit1-3548 (1992 Form 4(b)1
to Form 10-K for the year ended
December 31, 1992, File No. 1-3548),10-K)
Sixth Supplemental
Indenture, dated as of March 24, 1994 (filed as Exhibit1-3548 (1996 Form 4(b)1
to
Form 10-K for the year ended December 31, 1996, File No. 1-3548),10-K)
Seventh Supplemental Indenture, dated as of November 1, 1994 (filed as Exhibit1-3548 (1996 Form 4(b)2
to Form 10-K for the year ended December
31, 1996, File No. 1-3548) and Eighth Supplemental Indenture,
dated as of January 10-K)
*4(f)1 1997 (filed as Exhibit 4(b)3 to Form 10-K
for the year ended December 31, 1996, File No. 1-3548).
*4(e) - Indenture, dated as of March 1, 1993, between Southern States
Utilities, Inc. (now Florida Water Services Corporation) and
Nationsbank of Georgia, National Association (now SunTrust Bank,
Central Florida, N.A.), as Trustee (filed as Exhibit 4(d) to the
1992 Form 10-K, for the year ended December 31, 1992, File No. 1-3548), as
supplemented and modified by First Supplemental Indenture, dated
as of March 1, 1993 (filed as Exhibit 4(c)1 to Form 10-K for the
year ended December 31, 1996, File No. 1-3548), Second
Supplemental Indenture, dated as of March 31, 1997 (filed as
Exhibit 4 to Form 10-Q for the quarter ended March 31, 1997, File
No. 1-3548) and Third Supplemental Indenture, dated as of May 28,
1997 (filed as Exhibit 4 to Form 10-Q for the quarter ended June
30, 1997, File No. 1-3548).
*4(f)2 - Supplemental Indentures to Florida Water Services Corporation's
Indenture:
Number Dated as of Reference File Exhibit
-------------- ------------------- ------------------- ----------
First March 1, 1993 1-3548 (1996 Form 4(c)1
10-K)
Second March 31, 1997 1-3548 (March 31, 4
1997 Form 10-Q)
Third May 28, 1997 1-3548 (June 30, 4
1997 Form 10-Q)
*4(g) - Amended and Restated Trust Agreement, dated as of March 1,
1996, relating to MP&L Capital I's 8.05% Cumulative Quarterly
Income Preferred Securities, between theMinnesota Power & Light
Company (now Minnesota Power, Inc.), as Depositor, and The Bank
of New York, The Bank of New York (Delaware), Philip R.
Halverson, David G. Gartzke and James K. Vizanko, as Trustees
(filed as Exhibit 4(a) to Form 10-Q for the quarter ended March 31, 1996 Form 10-Q, File No.
1-3548).
*4(g) -, as modified by Amendment No. 1, dated April 11, 1996
to Amended and Restated
Trust Agreement, dated as of March 1, 1996, relating to MP&L
Capital I's 8.05% Cumulative Quarterly Income Preferred SecuritiesII-3
(filed as Exhibit 4(b) to Form 10-Q for the quarter ended March 31, 1996 Form 10-Q, File No.
1-3548).
*4(h) - Indenture, dated as of March 1, 1996, relating to the Company'sMinnesota
Power's 8.05% Junior Subordinated Debentures, Series A, Due 2015,
between theMinnesota Power & Light Company (now Minnesota Power,
Inc.) and The Bank of New York, as Trustee (filed as Exhibit 4(c)
to Form 10-Q for the quarter ended March 31, 1996 Form 10-Q, File No. 1-3548).
*4(i) - Guarantee Agreement, dated as of March 1, 1996, relating to
MP&L Capital I's 8.05% Cumulative Quarterly Income Preferred
Securities, between theMinnesota Power & Light Company (now
Minnesota Power, Inc.), as Guarantor, and The Bank of New York,
as Trustee (filed as Exhibit 4(d) to Form 10-Q for the
quarter ended March 31, 1996 Form
10-Q, File No. 1-3548).
*4(j) - Agreement as to Expenses and Liabilities, dated as of March 20,
1996, relating to MP&L Capital I's 8.05% Cumulative Quarterly
Income Preferred Securities, between theMinnesota Power & Light
Company (now Minnesota Power, Inc.) and MP&L Capital I (filed as
Exhibit 4(e) to Form 10-Q for the quarter ended March 31, 1996 Form 10-Q, File No. 1-3548).
II-3
Exhibit
Number
- -------
*4(k) - Officer's Certificate, dated March 20, 1996, establishing the
terms of the 8.05% Junior Subordinated Debentures, Series A, Due
2015 issued in connection with the 8.05% Cumulative Quarterly
Income Preferred Securities of MP&L Capital I (filed as Exhibit
4(i) to the 1996 Form 10-K, for the year ended December 31, 1996, File No. 1-3548).
*4(l) - Rights Agreement dated as of July 24, 1996, between theMinnesota
Power & Light Company (now Minnesota Power, Inc.) and the
Corporate Secretary of theMinnesota Power & Light Company (now
Minnesota Power, Inc.), as Rights Agent (filed as Exhibit 4 to
Form 8-K datedthe August 2, 1996 Form 8-K, File No. 1-3548).
*4(m) - Indenture (for Unsecured Debt Securities), dated as of May 15,
1996, between ADESA Corporation and The Bank of New York, as
Trustee relating to the ADESA Corporation's 7.70% Senior Notes,
Series A, Due 2006, between
ADESA Corporation and The Bank of New York, as Trusteeits 8.10% Senior Notes, Series B, Due
2010 (filed as Exhibit 4(k) to the 1996 Form 10-K, for the year ended December 31, 1996, File No.
1-3548).
*4(n) - Guarantee of theMinnesota Power & Light Company (now Minnesota
Power, Inc.), dated as of May 30, 1996, relating to the ADESA
Corporation's 7.70% Senior Notes, Series A, Due 2006 (filed as
Exhibit 4(l) to the 1996 Form 10-K, for the year ended December
31, 1996, File No. 1-3548).
*4(o) - ADESA Corporation Officer's Certificate 1-D-1, dated May 30,
1996, relating to the ADESA Corporation's 7.70% Senior Notes,
Series A, Due 2006 (filed as Exhibit 4(m) to the 1996 Form 10-K,
forFile No. 1-3548).
*4(p) - Guarantee of Minnesota Power, Inc., dated as of March 30, 2000,
relating to ADESA Corporation's 8.10% Senior Notes, Series B, Due
2010 (filed as Exhibit 4(a) to the year ended DecemberMarch 31, 1996,2000 Form 10-Q, File
No. 1-3548).
*4(q) - ADESA Corporation Officer's Certificate 2-D-2, dated as of
March 30, 2000, relating to ADESA Corporation's 8.10% Senior
Notes, Series B, Due 2010 (filed as Exhibit 4(b) to the March 31,
2000 Form 10-Q, File No. 1-3548).
5(a) - Opinion and Consent of Philip R. Halverson, Esq., Vice
President, General Counsel and Secretary of the Company.Minnesota Power, Inc.
5(b) - Opinion and Consent of Thelen Reid & Priest LLP.
II-4
12 - Computation of Ratios of Earnings to Fixed Charges and
Supplemental Ratios of Earnings to Fixed Charges.
23(a) - Independent Auditors' Consent of PricewaterhouseCoopers LLP.
23(b) - ConsentsConsent of Philip R. Halverson, Esq., and (included in opinion,
attached hereto as Exhibit 5(a)).
23(c) - Consent of Thelen Reid & Priest LLP are contained(included in Exhibits 5(a) andopinion,
attached hereto as Exhibit 5(b), respectively.).
24 - PowerPowers of Attorney (see page II-6)(included on the signature pages of this
registration statement).
25(a) - ----------------------Statement of Eligibility on Form T-1 of The Bank of New York
(as Mortgage Trustee).
25(b) - Statement of Eligibility on Form T-2 of Douglas J. MacInnes (as
Mortgage Trustee).
**25(c) - Statement of Eligibility on Form T-1 of Indenture Trustee.
* Incorporated herein by reference as indicated.
II-4
** To be filed by amendment or pursuant to Trust Indenture Act Section
305(b)(2).
ITEM 17. UNDERTAKINGS.
a. 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:statement
(i) To include any prospectus required by sectionSection 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 CommissionSEC 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,statement,
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the CommissionSEC
by the registrant pursuant to sectionSection 13 or sectionSection 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.
(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.
II-5
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual reportAnnual Report pursuant to
sectionSection 13(a) or sectionSection 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,herein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(5)b. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing
provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities and Exchange CommissionSEC 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 director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-5II-6
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes any agent for
service named in this registration statement to execute in the name of each such
person, and to file with the Securities and Exchange Commission,SEC, any and all amendments, including
post-effective amendments, to thethis registration statement, and appoints any such
agent for service as attorney-in-fact to sign in each such person's behalf
individually and in each capacity stated below and file any such amendments to
thethis registration statement and the registrant hereby also appoints each such
agent for service as its attorney-in-fact with like authority to sign and file
any such amendments in its name and behalf.
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 Duluth, State of Minnesota, on July 13, 1998.20, 2000.
MINNESOTA POWER, INC.
(Registrant)
By /s/ Edwin L. Russell
--------------------------------------------------------------
Edwin L. Russell
Chairman, 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 DateSIGNATURE TITLE DATE
--------- ----- ----
Edwin L. Russell July 13, 1998
-------------------------------/s/ Edwin L. Russell Chairman, President, Chairman, President, Chief Chief Executive OfficerJuly 20, 2000
- ----------------------------- Executive Officer and
Edwin L. Russell Director and Director
D.G. Gartzke July 13, 1998
-------------------------------
D.G.(Principal
Executive Officer)
/s/ David G. Gartzke Senior Vice President-
Senior Vice President-FinancePresident-- July 20, 2000
- ----------------------------- Finance and and Chief Financial
David G. Gartzke Officer Chief(Principal Financial
Officer
Mark A. Schober July 13, 1998
-------------------------------Officer)
/s/ Mark A. Schober Controller Controller
II-6July 20, 2000
- ----------------------------- (Principal Accounting
Mark A. Schober Officer)
II-7
Signature Title Date
--------- ----- ----/s/ Kathleen A. Brekken Director July 13, 1998
-------------------------------20, 2000
- -----------------------------
Kathleen A. Brekken
/s/ Merrill K. Cragun Director July 13, 1998
-------------------------------20, 2000
- -----------------------------
Merrill K. Cragun
/s/ Dennis E. Evans Director July 13, 1998
-------------------------------20, 2000
- -----------------------------
Dennis E. Evans
- ----------------------------- Director
Glenda E. Hood
/s/ Peter J. Johnson Director July 13, 1998
-------------------------------20, 2000
- -----------------------------
Peter J. Johnson
/s/ George L. Mayer Director July 13, 1998
-------------------------------20, 2000
- -----------------------------
George L. Mayer
Paula F. McQueen Director July 13, 1998
-------------------------------
Paula F. McQueen/s/ Jack I. Rajala Director July 13, 1998
-------------------------------20, 2000
- -----------------------------
Jack I. Rajala
/s/ Arend J. Sandbulte Director July 13, 1998
-------------------------------20, 2000
- -----------------------------
Arend J. Sandbulte
/s/ Nick Smith Director July 13, 1998
-------------------------------20, 2000
- -----------------------------
Nick Smith
/s/ Bruce W. Stender Director July 13, 1998
-------------------------------20, 2000
- -----------------------------
Bruce W. Stender
/s/ Donald C. Wegmiller Director July 13, 1998
-------------------------------20, 2000
- -----------------------------
Donald C. Wegmiller
II-7II-8
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------1 Form of Underwriting Agreement.
4(c)3 Form of Supplemental Indenture relating to the First Mortgage Bonds.
4(d)1 Form of Indenture (For Unsecured Debt Securities).
4(d)2 Form of Officer's Certificate relating to Debt Securities, with form
of Debt Security attached.
5(a) - Opinion and Consent of Philip R. Halverson, Esq., Vice President,
General Counsel and Secretary of the Company.Minnesota Power, Inc.
5(b) - Opinion and Consent of Thelen Reid & Priest LLP.
12 Computation of Ratios of Earnings to Fixed Charges and Supplemental
Ratios of Earnings to Fixed Charges.
23(a) -Independent Auditors' Consent of PricewaterhouseCoopers LLP.
23(b) - ConsentsConsent of Philip R. Halverson, Esq., and (included in opinion, attached
hereto as Exhibit 5(a)).
23(c) Consent of Thelen Reid & Priest LLP are contained(included in Exhibits 5(a) andopinion, attached
hereto as Exhibit 5(b), respectively.).
24 - PowerPowers of Attorney (see page II-6)(included on the signature pages of this
registration statement).
25(a) Statement of Eligibility on Form T-1 of The Bank of New York (as
Mortgage Trustee).
25(b) Statement of Eligibility on Form T-2 of Douglas J. MacInnes (as
Mortgage Trustee).