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