Filed pursuant to Rule 424(b)(5)
Registration No. 333-127913
Subject to Completion
Preliminary Prospectus Supplement dated June 7, 2006
The information in this prospectus supplement and the accompanying prospectus is
not complete and may be changed. This prospectus supplement and the accompanying
prospectus are not an offer to sell these securities and are not soliciting an
offer to buy these securities in any state where the offer and sale is not
permitted.
PROSPECTUS SUPPLEMENT
(To prospectus dated September 12, 2005)
$
OHIO POWER COMPANY
% SENIOR NOTES, SERIES K, DUE 2016
----------------------
Interest on the Series K Notes (the "Senior Notes") is payable
semi-annually on June 1 and December 1 of each year, beginning December 1, 2006.
The Senior Notes will mature on June 1, 2016. We may redeem the Senior Notes at
our option at any time either as a whole or in part at a redemption price equal
to 100% of the principal amount of the Senior Notes being redeemed plus a
make-whole premium, together with accrued and unpaid interest to the redemption
date. The Senior Notes do not have the benefit of any sinking fund.
The Senior Notes are unsecured and rank equally with all of our other
unsecured and unsubordinated indebtedness from time to time outstanding and will
be effectively subordinated to all of our secured debt from time to time
outstanding, if any. We will issue the Senior Notes only in registered form in
multiples of $1,000.
----------------------
PER NOTE TOTAL
-------- -----
Public offering price(1)................. ...................... % $
Underwriting discount................. ......................... % $
Proceeds, before expenses, to Ohio Power Company................ % $
(1) Plus accrued interest, if any, from June , 2006.
INVESTING IN THESE NOTES INVOLVES RISKS. SEE THE SECTION ENTITLED "RISK FACTORS"
BEGINNING ON PAGE S-3 OF THIS PROSPECTUS SUPPLEMENT FOR MORE INFORMATION.
Neither the U.S. Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the Senior Notes or
determined that this prospectus supplement or the accompanying prospectus is
accurate or complete. Any representation to the contrary is a criminal offense.
The Senior Notes will be ready for delivery in book-entry form only
through The Depository Trust Company on or about June , 2006.
----------------------
Joint Book-Running Managers
CITIGROUP JPMORGAN
----------------------
Co-Managers
HUNTINGTON CAPITAL CORP. NATCITY INVESTMENTS, INC.
The date of this prospectus supplement is June , 2006.
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS
SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THE
DOCUMENT.
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
RISK FACTORS..............................................................................................S-3
USE OF PROCEEDS...........................................................................................S-3
SUPPLEMENTAL DESCRIPTION OF THE SENIOR NOTES..............................................................S-3
Principal Amount, Maturity and Interest..............................................................S-3
Optional Redemption..................................................................................S-4
Limitation on Liens..................................................................................S-5
Additional Information...............................................................................S-6
UNDERWRITING..............................................................................................S-6
EXPERTS...................................................................................................S-7
PROSPECTUS
THE COMPANY.................................................................................................2
PROSPECTUS SUPPLEMENTS......................................................................................2
RISK FACTORS................................................................................................2
WHERE YOU CAN FIND MORE INFORMATION ........................................................................2
RATIO OF EARNINGS TO FIXED CHARGES..........................................................................3
USE OF PROCEEDS ............................................................................................3
DESCRIPTION OF THE NOTES ...................................................................................4
General ..............................................................................................4
Redemptions ...........................................................................................5
Remarketed Notes.......................................................................................5
Book-Entry Notes - Registration, Transfer, and Payment of Interest and Principal ......................5
Note Certificates - Registration, Transfer, and Payment of Interest and Principal .....................7
Interest Rate .........................................................................................7
Fixed Rate Notes ...............................................................................8
Floating Rate Notes ............................................................................8
Events of Default......................................................................................8
Modification of Indenture..............................................................................9
Consolidation, Merger or Sale..........................................................................9
Legal Defeasance.......................................................................................9
Covenant Defeasance...................................................................................10
Governing Law.........................................................................................10
Concerning the Trustee................................................................................10
PLAN OF DISTRIBUTION.......................................................................................10
By Agents.............................................................................................10
By Underwriters.......................................................................................10
Direct Sales..........................................................................................11
General Information...................................................................................11
LEGAL OPINIONS.............................................................................................11
EXPERTS....................................................................................................11
S-2
RISK FACTORS
Investing in our securities involves risk. Please see the risk factors
described in our Annual Report on Form 10-K for the fiscal year ended December
31, 2005, along with certain amended and restated risk factors contained in our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, which are
incorporated by reference in this prospectus supplement and the accompanying
prospectus. Before making an investment decision, you should carefully consider
these risks as well as other information contained or incorporated by reference
in this prospectus. The risks and uncertainties described are those presently
known to us. Additional risks and uncertainties not presently known to us or
that we currently deem immaterial may also impair our business operations, our
financial results and the value of our securities.
USE OF PROCEEDS
The net proceeds from the sale of the notes will be used for general
corporate purposes relating to our utility business. These purposes may include
funding our construction program, redeeming or repurchasing outstanding debt
(including the repayment of advances from affiliates) or preferred stock and
replenishing working capital. If we do not use the net proceeds immediately, we
temporarily invest them in short-term, interest-bearing obligations. As of June
2, 2006, advances from affiliates totaled approximately $292 million. We
estimate that our construction costs in 2006 will be approximately $1 billion.
SUPPLEMENTAL DESCRIPTION OF THE SENIOR NOTES
The following description of the particular terms of the Senior Notes
supplements and in certain instances replaces the description of the general
terms and provisions of the Senior Notes under "Description of the Notes" in the
accompanying prospectus. We will issue the Senior Notes under an Indenture,
dated as of September 1, 1997, between us and Deutsche Bank Trust Company
Americas, as Trustee, as supplemented and amended and as to be further
supplemented and amended.
PRINCIPAL AMOUNT, MATURITY AND INTEREST
The Senior Notes will initially be issued in an aggregate principal
amount of $ . We may, without consent of the holders of the Senior Notes, issue
additional notes having the same ranking, interest rate, maturity and other
terms as the Senior Notes. These notes, together with the Senior Notes, will be
a single series of notes under the Indenture.
The Senior Notes will mature and become due and payable, together with
any accrued and unpaid interest, on June 1, 2016 and will bear interest at the
rate of % per year from June , 2006 until June 1, 2016. The Senior Notes
are not subject to any sinking fund provision.
Interest on each Senior Note will be payable semi-annually in arrears
on each June 1 and December 1 and at redemption, if any, or maturity. The
initial interest payment date is June 1,
S-3
2006. Each payment of interest shall include interest accrued through the day
before such interest payment date. Interest on the Senior Notes will be computed
on the basis of a 360-day year consisting of twelve 30-day months.
We will pay interest on the Senior Notes (other than interest payable
at redemption, if any, or maturity) in immediately available funds to the owners
of the Senior Notes as of the Regular Record Date (as defined below) for each
interest payment date.
We will pay the principal of the Senior Notes and any premium and
interest payable at redemption, if any, or at maturity in immediately available
funds at the office of Deutsche Bank Trust Company Americas, 60 Wall Street, New
York, New York.
If any interest payment date, redemption date or the maturity is not a
Business Day (as defined below), we will pay all amounts due on the next
succeeding Business Day and no additional interest will be paid.
"Business Day" means any day that is not a day on which banking
institutions in New York City are authorized or required by law or regulation to
close.
The "Regular Record Date" will be the May 15 or November 15 prior to
the relevant interest payment date.
OPTIONAL REDEMPTION
We may redeem the Senior Notes at our option at any time, upon no more
than 60 and not less than 30 days' notice by mail. We may redeem the Senior
Notes either as a whole or in part at a redemption price equal to the greater of
(1) 100% of the principal amount of the Senior Notes being redeemed and (2) the
sum of the present values of the remaining scheduled payments of principal and
interest on the Senior Notes being redeemed (excluding the portion of any such
interest accrued to the date of redemption) discounted (for purposes of
determining present value) to the redemption date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Treasury
Rate (as defined below) plus basis points, plus accrued interest thereon to the
date of redemption.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Senior Notes that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the Senior Notes.
"Comparable Treasury Price" means, with respect to any redemption date,
(1) the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (2) if we obtain fewer than four such Reference Treasury Dealer
Quotations, the average of all such quotations.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by us and reasonably acceptable to the Trustee.
S-4
"Reference Treasury Dealer" means a primary U.S. Government Securities
Dealer selected by us and reasonably acceptable to the Trustee.
"Reference Treasury Dealer Quotation" means, with respect to the
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at or before 5:00 p.m.,
New York City time, on the third Business Day preceding such redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate
per year equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
LIMITATIONS ON LIENS
So long as any of our Senior Notes issued pursuant to this prospectus
supplement are outstanding, we will not create or suffer to be created or to
exist any additional mortgage, pledge, security interest, or other lien
(collectively "Liens") on any of our utility properties or tangible assets now
owned or hereafter acquired to secure any indebtedness for borrowed money
("Secured Debt"), without providing that such Senior Notes will be similarly
secured. This restriction does not apply to our subsidiaries, nor will it
prevent any of them from creating or permitting to exist Liens on their property
or assets to secure any Secured Debt. In addition, this restriction does not
prevent the creation or existence of:
o Liens on property existing at the time of acquisition or
construction of such property (or created within one year
after completion of such acquisition or construction), whether
by purchase, merger, construction or otherwise, or to secure
the payment of all or any part of the purchase price or
construction cost thereof, including the extension of any
Liens to repairs, renewals, replacements, substitutions,
betterments, additions, extensions and improvements then or
thereafter made on the property subject thereto;
o Financing of our accounts receivable for electric service;
o Any extensions, renewals or replacements (or successive
extensions, renewals or replacements), in whole or in part, of
liens permitted by the foregoing clauses; and
o The pledge of any bonds or other securities at any time issued
under any of the Secured Debt permitted by the above clauses.
In addition to the permitted issuances above, Secured Debt not
otherwise so permitted may be issued in an amount that does not exceed 15% of
Net Tangible Assets as defined below.
S-5
"Net Tangible Assets" means the total of all assets (including
revaluations thereof as a result of commercial appraisals, price level
restatement or otherwise) appearing on our balance sheet, net of applicable
reserves and deductions, but excluding goodwill, trade names, trademarks,
patents, unamortized debt discount and all other like intangible assets (which
term shall not be construed to include such revaluations), less the aggregate of
our current liabilities appearing on such balance sheet. For purposes of this
definition, our balance sheet does not include assets and liabilities of our
subsidiaries.
This restriction also will not apply to or prevent the creation or
existence of leases made, or existing on property acquired, in the ordinary
course of business.
Additional Information
For additional important information about the Senior Notes, see
"Description of the Notes" in the accompanying prospectus, including: (i)
additional information about the terms of the Senior Notes, (ii) general
information about the Indenture and the trustee, and (iii) a description of
events of default under the Indenture.
UNDERWRITING
Citigroup Global Markets Inc. and J.P. Morgan Securities Inc. are
acting as representatives of the underwriters named below with respect to the
Senior Notes. Subject to the terms and conditions of the underwriting agreement,
we have agreed to sell to each of the underwriters named below and each of the
underwriters has severally and not jointly agreed to purchase from us the
respective principal amount of Senior Notes set forth opposite its name below:
<Table>
<Caption>
Underwriter Principal Amount
Citigroup Global Markets Inc. $
J.P. Morgan Securities Inc.
Huntington Capital Corp.
NatCity Investments, Inc.
-------------
$
=============
</Table>
In the underwriting agreement, the underwriters have agreed to the
terms and conditions to purchase all of the Senior Notes offered if any of the
Senior Notes are purchased.
The expenses associated with the offer and sale of the Senior Notes are
expected to be approximately $ .
The underwriters propose to offer the Senior Notes to the public at the
initial public offering prices set forth on the cover page of this prospectus
supplement and to certain dealers at such price less a concession not in excess
of 0. % per Senior Note. The underwriters may allow, and such dealers may
reallow, a discount not in excess of 0. % per Senior Note to
S-6
certain other dealers. After the initial public offering, the public offering
price, concession and discount may be changed.
Prior to this offering, there has been no public market for the Senior
Notes. The Senior Notes will not be listed on any securities exchange. Certain
of the underwriters have advised us that they intend to make a market in the
Senior Notes. The underwriters will have no obligation to make a market in the
Senior Notes, however, and may cease market making activities, if commenced, at
any time. There can be no assurance of a secondary market for the Senior Notes,
or that the Senior Notes may be resold.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or contribute to payments that each underwriter may be required to make in
respect thereof.
In connection with the offering, the underwriters may purchase and sell
the Senior Notes in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the offering. Stabilizing
transactions consist of certain bids or purchases for the purposes of preventing
or retarding a decline in the market price of the Senior Notes and syndicate
short positions involve the sale by the underwriters of a greater number of
Senior Notes than they are required to purchase from us in the offering. The
underwriters also may impose a penalty bid, whereby selling concessions allowed
to syndicate members or other broker dealers in respect of the securities sold
in the offering for their account may be reclaimed by the syndicate if such
Senior Notes are repurchased by the syndicate in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the Senior Notes, which may be higher than the price that might
otherwise prevail in the open market, and these activities, if commenced, may be
discontinued at any time. These transactions may be effected in the
over-the-counter market or otherwise.
Some of the underwriters or their affiliates engage in transactions
with, and have performed services for, us and our affiliates in the ordinary
course of business and have, from time to time, performed, and may in the future
perform, various financial advisory, commercial and investment banking services
for us, for which they received, or will receive, customary fees and expenses.
EXPERTS
The consolidated financial statements and the related consolidated
financial statement schedule incorporated in this prospectus supplement by
reference from the Ohio Power Company Consolidated Annual Report on Form 10-K
for the year ended December 31, 2005 have been audited by Deloitte & Touche LLP,
an independent registered public accounting firm, as stated in their reports
(which reports express an unqualified opinion and, as to the report related to
the financial statements, includes an explanatory paragraph concerning the
adoption of new accounting pronouncements in 2003, 2004 and 2005), which are
incorporated herein by reference, and have been so incorporated in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.
S-7
(This Page Intentionally Left Blank)
S-8
PROSPECTUS
OHIO POWER Company
1 RIVERSIDE PLAZA
COLUMBUS, OHIO 43215
(614) 716-1000
$850,000,000
UNSECURED NOTES
TERMS OF SALE
The following terms may apply to the notes that we may sell at one or
more times. A prospectus supplement or pricing supplement will include the final
terms for each note. If we decide to list upon issuance any note or notes on a
securities exchange, a prospectus supplement or pricing supplement will identify
the exchange and state when we expect trading could begin.
- - Mature 9 months to 50 years
- - Fixed or floating interest rate
- - Remarketing features
- - Certificate or book-entry form
- - Subject to redemption
- - Not convertible, amortized or subject to a sinking fund
- - Interest paid on fixed rate notes quarterly or semi-annually
- - Interest paid on floating rate notes monthly, quarterly, semi-annually,
or annually
- - Issued in multiples of a minimum denomination
INVESTING IN THESE NOTES INVOLVES RISKS. SEE THE SECTION ENTITLED "RISK
FACTORS" BEGINNING ON PAGE 2 FOR MORE INFORMATION.
THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAVE THESE
ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is September 12, 2005.
THE COMPANY
We generate, sell, purchase, transmit and distribute electric power. We serve
approximately 707,000 retail customers in Ohio. We also sell and transmit power
at wholesale to other electric utilities, municipalities and other market
participants. Our principal executive offices are located at 1 Riverside Plaza,
Columbus, Ohio 43215 (telephone number 614-716-1000). We are a subsidiary of
American Electric Power Company, Inc., ("AEP") a public utility holding company,
and we are a part of the American Electric Power integrated utility system. The
executive offices of American Electric Power Company, Inc. are located at 1
Riverside Plaza, Columbus, Ohio 43215 (telephone number 614-716-1000).
PROSPECTUS SUPPLEMENTS
We may provide information to you about the notes in up to three separate
documents that progressively provide more detail: (a) this prospectus provides
general information some of which may not apply to your notes; (b) the
accompanying prospectus supplement provides more specific terms of your notes;
and (c) if not included in the accompanying prospectus supplement, a pricing
supplement will provide the final terms of your notes. It is important for you
to consider the information contained in this prospectus, the prospectus
supplement and any pricing supplement in making your investment decision.
RISK FACTORS
Investing in our securities involves risk. Please see the risk factors described
in our Annual Report on Form 10-K for the fiscal year ended December 31, 2004,
as amended by Form 10-K/A, along with disclosure related to the risk factors
contained in our Quarterly Reports on Form 10-Q for the quarters ended March 31,
2005 and June 30, 2005, which are incorporated by reference in this prospectus.
Before making an investment decision, you should carefully consider these risks
as well as other information contained or incorporated by reference in this
prospectus. The risks and uncertainties described are those presently known to
us. Additional risks and uncertainties not presently known to us or that we
currently deem immaterial may also impair our business operations, our financial
results and the value of our securities.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement we filed with the SEC. We
also file annual, quarterly and special reports and other information with the
SEC. You may read and copy any document we file at the SEC's Public Reference
Room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms. You
may also examine our SEC filings through the SEC's web site at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and later information that we file with the SEC
will automatically update and supersede this information.
2
We incorporate by reference the documents listed below and any future filings
made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 (including any documents filed after the date of the
initial registration statement and prior to its effectiveness) until we sell all
the notes.
o Annual Report on Form 10-K for the year ended December 31,
2004, as amended by the Company's Form 10-K/A;
o Quarterly Reports on Form 10-Q for the quarters ended March
31, 2005 and June 30, 2005; and
o Current Reports on Form 8-K dated February 22, 2005 and April
26, 2005.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address:
Ms. R. Buonavolonte
American Electric Power Service Corporation
1 Riverside Plaza
Columbus, Ohio 43215
614-716-1000
You should rely only on the information incorporated by reference or provided in
this prospectus or any supplement. We have not authorized anyone else to provide
you with different information. We are not making an offer of these notes in any
state where the offer is not permitted. You should not assume that the
information in this prospectus or any supplement is accurate as of any date
other than the date on the front of those documents.
RATIO OF EARNINGS TO FIXED CHARGES
The Ratio of Earnings to Fixed Charges for each of the periods indicated is as
follows:
Twelve Months Period Ended Ratio
- -------------------------- -----
December 31, 2000 2.75
December 31, 2001 2.77
December 31, 2002 3.89
December 31, 2003 4.08
December 31, 2004 3.34
June 30, 2005 4.06
For current information on the Ratio of Earnings to Fixed Charges, please see
our most recent Form 10-K and 10-Q. See Where You Can Find More Information on
page 2.
USE OF PROCEEDS
Unless otherwise stated in a prospectus supplement, the net proceeds from the
sale of the notes will be used for funding our construction program and for
other general corporate purposes
3
relating to our utility business. These purposes may include redeeming or
repurchasing outstanding debt (including the repayment of advances from
affiliates) or preferred stock and replenishing working capital. If we do not
use the net proceeds immediately, we temporarily invest them in short-term,
interest-bearing obligations. We estimate that our construction costs in 2005
will approximate $772 million.
DESCRIPTION OF THE NOTES
GENERAL
We will issue the notes under the Indenture dated September 1, 1997 (as
previously supplemented and amended) between us and the Trustee, Deutsche Bank
Trust Company Americas. This prospectus briefly outlines some provisions of the
Indenture. If you would like more information on these provisions, you should
review the Indenture and any supplemental indentures or company orders that we
have filed or will file with the SEC. See Where You Can Find More Information on
how to locate these documents. You may also review these documents at the
Trustee's offices at 60 Wall Street, New York, New York.
The Indenture does not limit the amount of notes that may be issued. The
Indenture permits us to issue notes in one or more series or tranches upon the
approval of our board of directors and as described in one or more company
orders or supplemental indentures. Each series of notes may differ as to their
terms. The Indenture also gives us the ability to reopen a previous issue of a
series of notes and issue additional notes of such series.
The notes are unsecured and will rank equally with all our unsecured
unsubordinated debt. For current information on our debt outstanding see our
most recent Form 10-K and 10-Q. See Where You Can Find More Information.
The notes will be denominated in U.S. dollars and we will pay principal and
interest in U.S. dollars. Unless an applicable pricing or prospectus supplement
states otherwise, the notes will not be subject to any conversion, amortization,
or sinking fund. We expect that the notes will be "book-entry," represented by a
permanent global note registered in the name of The Depository Trust Company, or
its nominee. We reserve the right, however, to issue note certificates
registered in the name of the noteholders.
In the discussion that follows, whenever we talk about paying principal on the
notes, we mean at maturity or redemption. Also, in discussing the time for
notices and how the different interest rates are calculated, all times are New
York City time and all references to New York mean the City of New York, unless
otherwise noted.
The following terms may apply to each note as specified in the applicable
pricing or prospectus supplement and the note.
4
REDEMPTIONS
If we issue redeemable notes, we may redeem such notes at our option unless an
applicable pricing or prospectus supplement states otherwise. The pricing or
prospectus supplement will state the terms of redemption. We may redeem notes in
whole or in part by delivering written notice to the noteholders no more than
60, and not less than 30, days prior to redemption. If we do not redeem all the
notes of a series at one time, the Trustee selects the notes to be redeemed in a
manner it determines to be fair.
REMARKETED NOTES
If we issue notes with remarketing features, an applicable pricing or prospectus
supplement will describe the terms for the notes including: interest rate,
remarketing provisions, our right to redeem notes, the holders' right to tender
notes, and any other provisions.
BOOK-ENTRY NOTES - REGISTRATION, TRANSFER, AND PAYMENT OF INTEREST AND PRINCIPAL
Unless otherwise stated in a prospectus supplement, the Depository Trust Company
("DTC"), New York, New York, will act as securities depository for the notes.
The notes will be issued as fully-registered notes registered in the name of
Cede & Co. (DTC's partnership nominee) or such other name as may be requested by
an authorized representative of DTC. One fully-registered note certificate will
be issued for each issue of the notes, each in the aggregate principal amount of
such issue, and will be deposited with DTC.
DTC, the world's largest depository, is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934. DTC holds and provides asset
servicing for over 2.2 million issues of U.S. and non-U.S. equity issues,
corporate and municipal debt issues, and money market instruments from over 100
countries that DTC's participants ("Direct Participants") deposit with DTC. DTC
also facilitates the post-trade settlement among Direct Participants of sales
and other securities transactions in deposited securities, through electronic
computerized book-entry transfers and pledges between Direct Participants'
accounts. This eliminates the need for physical movement of securities
certificates. Direct Participants include both U.S. and non-U.S. securities
brokers and dealers, banks, trust companies, clearing corporations, and certain
other organizations. DTC is a wholly-owned subsidiary of The Depository Trust &
Clearing Corporation ("DTCC"). DTCC , in turn, is owned by a number of Direct
Participants of DTC and Members of the National Securities Clearing Corporation,
Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation,
(NSCC, FICC and EMCC, also subsidiaries of DTCC), as well as by the New York
Stock Exchange, Inc., the American Stock Exchange LLC and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as both U.S. and non-U.S. securities brokers and
dealers, banks, trust companies and clearing corporations that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating:
AAA. The DTC
5
Rules applicable to its Participants are on file with the Securities and
Exchange Commission. More information about DTC can be found at www.dtcc.com and
www.dtc.org.
Purchases of notes under the DTC system must be made by or through Direct
Participants, which will receive a credit for the notes on DTC's records. The
ownership interest of each actual purchaser of each note ("Beneficial Owner") is
in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their
purchase. Beneficial Owners are, however, expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the notes are to be accomplished by entries made on the books of
Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in notes, except in the event that use of the book-entry system for
the notes is discontinued.
To facilitate subsequent transfers, all notes deposited by Direct Participants
with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or
such other name as may be requested by an authorized representative of DTC. The
deposit of notes with DTC and their registration in the name of Cede & Co. or
such other DTC nominee do not effect any change in beneficial ownership. DTC has
no knowledge of the actual Beneficial Owners of the notes; DTC's records reflect
only the identity of the Direct Participants to whose accounts such notes are
credited, which may or may not be the Beneficial Owners. The Direct and Indirect
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by
Direct Participants to Indirect Participants, and by Direct Participants and
Indirect Participants to Beneficial Owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time. Beneficial Owners of notes may wish to take certain
steps to augment the transmission to them of notices of significant events with
respect to the notes, such as redemptions, tenders, defaults and proposed
amendments to the notes documents. For example, Beneficial Owners of notes may
wish to ascertain that the nominee holding the notes for their benefit has
agreed to obtain and transmit notices to Beneficial Owners. In the alternative,
Beneficial Owners may wish to provide their names and addresses to the registrar
and request that copies of notices by provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the notes within an
issue are being redeemed, DTC's practice is to determine by lot the amount of
the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with
respect to the notes unless authorized by a Direct Participant in accordance
with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to
us as soon as possible after the record date. The Omnibus Proxy assigns Cede &
Co.'s consenting or voting rights to those Direct Participants to whose accounts
the notes are credited on the record date (identified in a listing attached to
the Omnibus Proxy).
6
Principal and interest payments on the notes will be made to Cede & Co., or such
other nominee as may be requested by an authorized representative of DTC. DTC's
practice is to credit Direct Participants' accounts upon DTC's receipt of funds
and corresponding detail information from us or the Trustee on the payable date
in accordance with their respective holdings shown on DTC's records. Payments by
Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with notes held for the accounts of
customers in bearer form or registered in "street name", and will be the
responsibility of such Participant and not of DTC, the Trustee or us, subject to
any statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and interest payments to Cede & Co. (or such other nominee
as may be requested by an authorized representative of DTC) is our or the
Trustee's responsibility, disbursement of such payments to Direct Participants
will be the responsibility of DTC, and disbursement of such payments to the
Beneficial Owners will be the responsibility of Direct and Indirect
Participants.
A Beneficial Owner shall give notice to elect to have its notes purchased or
tendered, through its Participant, to the Tender/Remarketing Agent, and shall
effect delivery of such notes by causing the Direct Participant to transfer the
Participant's interest in the notes, on DTC's records, to the Tender/Remarketing
Agent. The requirement for physical delivery of the notes in connection with an
optional tender or a mandatory purchase will be deemed satisfied when the
ownership rights in the notes are transferred by Direct Participants on DTC's
records and followed by a book-entry credit of tendered notes to the
Tender/Remarketing Agent's DTC account.
DTC may discontinue providing its services as depository with respect to the
notes at any time by giving reasonable notice to us. Under such circumstances,
in the event that a successor depository is not obtained, note certificates are
required to be printed and delivered.
We may decide to discontinue use of the system of book-entry transfers through
DTC (or a successor securities depository). In that event, note certificates
will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system has
been obtained from sources that we believe to be reliable, but we take no
responsibility for the accuracy thereof.
NOTE CERTIFICATES-REGISTRATION, TRANSFER, AND PAYMENT OF INTEREST AND PRINCIPAL
If we issue note certificates, they will be registered in the name of the
noteholder. The notes may be transferred or exchanged, pursuant to
administrative procedures in the indenture, without the payment of any service
charge (other than any tax or other governmental charge) by contacting the
paying agent. Payments on note certificates will be made by check.
INTEREST RATE
The interest rate on the notes will either be fixed or floating. The interest
paid will include interest accrued to, but excluding, the date of maturity or
redemption. Interest is generally payable to the person in whose name the note
is registered at the close of business on the record
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date before each interest payment date. Interest payable at maturity or
redemption, however, will be payable to the person to whom principal is payable.
Unless an applicable pricing or prospectus supplement states otherwise, if we
issue a note after a record date but on or prior to the related interest payment
date, we will pay the first interest payment on the interest payment date after
the next record date. We will pay interest payments by check or wire transfer,
at our option.
Fixed Rate Notes
A pricing or prospectus supplement will designate the record dates, payment
dates and the fixed rate of interest payable on a note. We will pay interest
monthly, quarterly or semi-annually, and upon maturity or redemption. Unless an
applicable pricing or prospectus supplement states otherwise, if any payment
date falls on a day that is not a business day, we will pay interest on the next
business day and no additional interest will be paid. Interest payments will be
the amount of interest accrued to, but excluding, each payment date. Interest
will be computed using a 360-day year of twelve 30-day months.
Floating Rate Notes
Each floating rate note will have an interest rate formula. The applicable
pricing supplement will state the initial interest rate or interest rate formula
on each note effective until the first interest reset date. The applicable
pricing or prospectus supplement will state the method and dates on which the
interest rate will be determined, reset and paid.
EVENTS OF DEFAULT
"Event of Default" means any of the following:
- failure to pay for three business days the principal of (or premium,
if any, on) any note of a series when due and payable;
- failure to pay for 30 days any interest on any note of any series
when due and payable;
- failure to perform any other requirements in such notes, or in the
Indenture in regard to such notes, for 90 days after notice;
- certain events of bankruptcy or insolvency; or any other event of
default specified in a series of notes.
An Event of Default for a particular series of notes does not necessarily mean
that an Event of Default has occurred for any other series of notes issued under
the Indenture. If an Event of Default occurs and continues, the Trustee or the
holders of at least 33% of the principal amount of the notes of the series
affected may require us to repay the entire principal of the notes of such
series immediately ("Repayment Acceleration"). In most instances, the holders of
at least a majority in aggregate principal amount of the notes of the affected
series may rescind a
8
previously triggered Repayment Acceleration. However, if we cause an Event of
Default because we have failed to pay (unaccelerated) principal, premium, if
any, or interest, Repayment Acceleration may be rescinded only if we have first
cured our default by depositing with the Trustee enough money to pay all
(unaccelerated) past due amounts and penalties, if any.
The Trustee must within 90 days after a default occurs, notify the holders of
the notes of the series of default unless such default has been cured or waived.
We are required to file an annual certificate with the Trustee, signed by an
officer, concerning any default by us under any provisions of the Indenture.
Subject to the provisions of the Indenture relating to its duties in case of
default, the Trustee shall be under no obligation to exercise any of its rights
or powers under the Indenture at the request, order or direction of any holders
unless such holders offer the Trustee reasonable indemnity. Subject to the
provisions for indemnification, the holders of a majority in principal amount of
the notes of any series may direct the time, method and place of conducting any
proceedings for any remedy available to, or exercising any trust or power
conferred on, the Trustee with respect to such notes.
MODIFICATION OF INDENTURE
Under the Indenture, our rights and obligations and the rights of the holders of
any notes may be changed. Any change affecting the rights of the holders of any
series of notes requires the consent of the holders of not less than a majority
in aggregate principal amount of the outstanding notes of all series affected by
the change, voting as one class. However, we cannot change the terms of payment
of principal or interest, or a reduction in the percentage required for changes
or a waiver of default, unless the holder consents. We may issue additional
series of notes and take other action that does not affect the rights of holders
of any series by executing supplemental indentures without the consent of any
noteholders.
CONSOLIDATION, MERGER OR SALE
We may merge or consolidate with any corporation or sell substantially all of
our assets as an entirety as long as the successor or purchaser expressly
assumes the payment of principal, and premium, if any, and interest on the
notes.
LEGAL DEFEASANCE
We will be discharged from our obligations on the notes of any series at any
time if:
o we deposit with the Trustee sufficient cash or government
securities to pay the principal, interest, any premium and any
other sums due to the stated maturity date or a redemption
date of the note of the series, and
o we deliver to the Trustee an opinion of counsel stating that
the federal income tax obligations of noteholders of that
series will not change as a result of our performing the
action described above.
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If this happens, the noteholders of the series will not be entitled to the
benefits of the Indenture except for registration of transfer and exchange of
notes and replacement of lost, stolen or mutilated notes.
COVENANT DEFEASANCE
We will be discharged from our obligations under any restrictive covenant
applicable to the notes of a particular series if we perform both actions
described above. See Legal Defeasance. If this happens, any later breach of that
particular restrictive covenant will not result in Repayment Acceleration. If we
cause an Event of Default apart from breaching that restrictive covenant, there
may not be sufficient money or government obligations on deposit with the
Trustee to pay all amounts due on the notes of that series. In that instance, we
would remain liable for such amounts.
GOVERNING LAW
The Indenture and notes of all series will be governed by the laws of the State
of New York.
CONCERNING THE TRUSTEE
We and our affiliates use or will use some of the banking services of the
Trustee and other services of its affiliates in the normal course of business.
PLAN OF DISTRIBUTION
We may sell the notes (a) through agents; (b) through underwriters or dealers;
or (c) directly to one or more purchasers.
BY AGENTS
Notes may be sold on a continuing basis through agents designated by us. The
agents will agree to use their reasonable efforts to solicit purchases for the
period of their appointment.
The Agents will not be obligated to make a market in the notes. We cannot
predict the amount of trading or liquidity of the notes.
BY UNDERWRITERS
If underwriters are used in the sale, the underwriters will acquire the notes
for their own account. The underwriters may resell the notes 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 obligations of
the underwriters to purchase the notes will be subject to certain conditions.
The underwriters will be obligated to purchase all the notes of the series
offered if any of the notes are purchased. Any initial public offering price and
any discounts or concessions allowed or re-allowed or paid to dealers may be
changed from time to time.
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DIRECT SALES
We may also sell notes directly. In this case, no underwriters or agents would
be involved.
GENERAL INFORMATION
Underwriters, dealers, and agents that participate in the distribution of the
notes may be underwriters as defined in the Securities Act of 1933 (the "Act"),
and any discounts or commissions received by them from us and any profit on the
resale of the notes by them may be treated as underwriting discounts and
commissions under the Act.
We may have agreements with the underwriters, dealers and agents to indemnify
them against certain civil liabilities, including liabilities under the Act or
to contribute to payments that each underwriter, dealer or agent may be required
to make in respect thereto.
Underwriters, dealers and agents and their respective affiliates may engage in
transactions with, or perform services for, us or our affiliates in the ordinary
course of their businesses.
LEGAL OPINIONS
Jeffrey D. Cross or Thomas G. Berkemeyer, Deputy General Counsel and Associate
General Counsel, respectively, of American Electric Power Service Corporation,
our service company affiliate, will issue an opinion about the legality of the
notes for us. Dewey Ballantine LLP, New York, NY will issue an opinion for the
agents or underwriters. From time to time, Dewey Ballantine LLP acts as counsel
to our affiliates for some matters.
EXPERTS
The consolidated financial statements and the related consolidated financial
statement schedule incorporated in this prospectus by reference from the Ohio
Power Company Consolidated Annual Report on Form 10-K for the year ended
December 31, 2004 have been audited by Deloitte & Touche LLP, an independent
registered public accounting firm, as stated in their reports (which reports
express an unqualified opinion and, as to the report related to the financial
statements, includes an explanatory paragraph concerning the adoption of new
accounting pronouncements in 2003 and 2004), which are incorporated herein by
reference, and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in accounting and auditing.
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$
OHIO POWER COMPANY
% SENIOR NOTES, SERIES K, DUE 2016
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PROSPECTUS SUPPLEMENT
June , 2006
---------------------------
Joint Book-Running Managers
CITIGROUP
JPMORGAN
Co-Managers
HUNTINGTON CAPITAL CORP.
NATCITY INVESTMENTS, INC.
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