20140325Report, New Credit Support Arrangements.pdf

ROCKY MOUNTAIN
Hgm*"
March 25,2014
VA OWRNIGHT DELIWRY
Idaho Public Utilities Commission
472 W est Washington Street
Boise,Idaho 83720
201 South Main, Suite 2300
Salt Lake City, utah 8,llll
Attn: Ms. Jean Jewell
Commission Secretary
Re: Case No. PAC-E-03-1 Order No.29201
Informational Notice of Removal of Credit Support and Interest Rate Mode Change
Dear Commissioners:
On March 19,2014, two series of pollution control revenue bonds were remarketed in a weekly
interest mode after the termination of letters of credit that had supported the bonds and an
interest mode change for the Sweetwater 19884 series. For informational pu{poses, PacifiCorp
(the "Company") submits to the Commission an original and 3 verified copies of each of the
following documents:
l. Reof[ering Circular dated March 17,2014
Because PacifiCorp has not issued any new securities in connection with the referenced
transactions, no Report of Securities Issued is enclosed.
Under penalty of perjury, I declare that I know the contents of the enclosed documents, and they
are true, correct and complete.
Please contact me at [phone] or Ted Weston, Idaho Regulatory Manager, at (801) 220-
2963 if yotthave any questions about this letter or the enclosed documents.
Sincerely,
rqI r,j
ab**N*
Tanya Sacks
Assistant Treasurer
Enclosures
Cc: Terri Carlock
COMPOSITE REOFFERING - NOT NEW ISSUES
SUPPLEMENT, DATED MARCH 17,2OI4,TO OFFICIAL STATEMENT, DATED JANUARY 13, I9EE
The opinions of Chapman and Cutler delivered on January 14, 1988, stated that, subject to compliance by PacifiCorp and the
Issuer ofeach issue ofBonds with certain covenants, under then-existing law (a) interest on each issue ofBonds will not be includible in
gross income of the Owners thereof for federal income tax purposes, except for interest on any Bond for any period during which such
Bond is owned by a person who is a substantial user ofthe related Project or any person considered to be related to such person (within the
meaning ofSection 103(bX13) ofthe Intemal Revenue Code of 1954, as amended) and (b) interest on the Bonds will not be treated as an
item of tax preference in computing the altemative minimum tax for individuals and corporations. Such interest will be taken into account,
however, in computing an adjustment used in determining the altemative minimum tax. Such opinions of Bond Counsel were also to the
effect that under then-existing law the State of Wyoming imposed no income taxes which would be applicable to the Bonds. Such opinions
have not been updated as of the date hereof. In the opinions of Bond Counsel to be delivered in connection with the conversion of the
interest rate determination method for the Sweetwater Bonds and the terminations of the Existing Letters of Credit, such conversion and
such terminations will not, in and of themselves, cause the interest on the Sweetwater Bonds or the Gillette Bonds, as the case may be, to
become includible in the gross income of the owners thereof for purposes of federal income taxation. See "TAX EXEMPTION" herein for
a more complete discussion.
COMPOSITE REOFFERING
$9r,200,000r
CUSTOMIZED PURCHASE POLLUTION CONTROL
REVENUE REFTJNDING BONDS
(PacifiCorp Projects)
$41,200,0001
City of Gillette, Campbell County, Wyoming
Series I 988
Due: January l,2018
(cusrP 375902 AG82)
s50,000,000r
Sweefwater County, Wyoming
Series 1988A
Due: January l,2017
(cusrP 870487 CL72)
PURCIIASE DATE: MARCH 19,2014
The Bonds ofeach issue are limited obligations ofthe applicable Issuer payable solely from and secured by a pledge ofpayments to be made
under a separate Loan Agreement for each issue between such lssuer and
PACIFICORP
The Bonds of each issue are currently supported by separate Letters of Credit issued by The Royal Bank of Scotland plc, acting through its
Connecticut branch (each, an "Existing Letter of Credit"). On March 20, 2014, each Existing Letter of Credit will be terminated (collectively, the
"Terminations") and thereafter the Bonds will not have the benefit ofthe Existing Letters ofCredit or any other third party credit or liquidity facility.
Effective March 19, 2014,the interest rate delermination method for the Sweetwater Bonds is being converted from a CP Rate to a Weekly
lnterest Rate (the "Conversion"). The Gillette Bonds bear and will continue to bear interest at a Weekly Interest Rate. On March 19,2014, the Bonds of
each issue will be remarketed and will bear interest at a Weekly Interest Rate payable the first Business Day ofeach month commencing April 1, 2014.
The initial Weekly Interest Rate and each subsequent Weekly lnterest Rate to be bome by the Bonds of each issue will be daermined by the Remarketng
Agent. Thereafter, the interest rate on the Bonds of each issue may be changed from time to time to CP, Daily, Weekly, Monthly, Tender or Fixed Interest
Rates, designated and determined in accordance with the separate Indentures entered into betwe€n the applicable Issuer and The Bank ofNew York Mellon
Trust Company,N.A., as Trustee. The Bonds of each issue are subject to purchase at the option of the omers thereof in the manner and at the times
described herein. The Bonds are subject to optional and mandatory redemption prior to maturity as described herein.
The Bonds are issuable as fully registered Bonds without coupons, initially in the denomination of $100,000 and integral multiples of $ 100,000
in excess thereof. Interest on Bonds ofeach issue will be payable on the Interest Payment Date applicable to such issue ofBonds. The Depository Trust
Company, New York, New York ('DTC'), will continue to act as a securities depository for the Bonds. The Bonds are registered in the name of
Cede & Co., as registered oumer and nominee of DTC, and, except for the limited circumstrances described herein, beneficial owners of interests in the
Bonds will not receive certificates representing their interests in the Bonds. Payments of principal of, and premium, if any, and interest on the Bonds will
be made through DTC and its Participants and disbursements ofsuch payments to purchasers will be the responsibility of such Participants.
Certain legal matters related to the Conversion and the Terminahons will be passed upon by Chapman and Cutler LLP, Bond Counsel to
PacifiCorp. Certain legal matters will be passed upon for PacifiCorp by Paul J. Leighton, Esq., counsel to PacifiCorp.
Price 100%
The Bonds are reoffered, subject to prior sale and cenain other conditions.
BARCLAYS
as Remarketing Agenl
I' The Bonds were rssued in rhe aggregate principal amount of $91,200.000. all of which remain outstanding. This Supplement relates to the remaketing, rn a secondary
markettransaation,of$4l,200,000aggregateprincipal amountoftheGilletteBondsdeliveredbytheoMersther@fformmdatorypurchoeonMarchl9,20l4. Theomers
of the entire 550,000.000 aggregate principal amount of the Sweetwater Bonds have elected to retain such Bonds pursuat to the corresponding lndenture, and such Bonds ue
not reoffered.2 Copyright, Amerim Bakqs As$ciation CUSIP data herein is provided by Stadard and Poor's, CUSIP Global Services, a division of McGraw-Hill Finmcial. lnc. This data
isnotintendedtocreateadatabreoddoesnolssveinmywayasasubstitutefortheCUSIPseruie CUSIPnumbersueprovidedforconyenienceofrefeenceonly. Noreof
the applicable lssuer, PacifiCorp or the Remarketing Agent Ekes ay responsibility for the accuracy of such numbers
No broker, dealer, salesman or other person has been authorized to give any information or to make any representations other than
those contained in this Supplemant to Official Statement in connection with the reoffering rnade hereby, and, ifgiven or made, such information
or representations must not be relied upon as having been authorized by the Issuers, PacifiCorp or the Remarketing Agent. Neither the delivery
of this Supplement to Official Statement nor any sale hereunder shall under any circumstances create any implication that there has been no
change in the affairs of the Issuers or PacifiCorp since the date hereof. The Issuers have not and will not assume any responsibility as ro the
accuacy or completeness ofthe information in this Supplement to Ofticial Statement. The Bonds are not registered under the United States
Securities Act of 1933, as amended. Neither the United States Securities and Exchange Commission nor any other federal, state or other
govemmental entity has passed upon the accuracy or adequacy ofthis Supplement to OIficial Statement
In connection with this offering, the Remarketing Agent may overallot or effect transactions which stabilize or maintain the market
price of the securities offered hereby at a level above that which might otherwise prevail in the open markel Such stabilizing, if commenced,
may be discontinued at any time.
The Remarketing Agent has provided the following sentence for inclusion in this Supplement to Official Satement: The Remarketing
Agent has reviewed the information in the Supplement to Official Statement in accordance with, and as part of its responsibilities to investors
under the federal securities laws as applied to the facts and oircumstances ofthe transaction, but the Remarketing Agenl does not guarantee the
accuracy or completeness of such information.
TABLE OF CONTENTS
Page
APPENDIX A
APPENDIX B
APPENDIX C
PACIFICORP
OFFICIAL STATEMENT DATED JANUARY 13, 1988
PROPOSED FORMS OF OPINIONS OF BOND COUNSEL
$91,200,000
CusrourzBo PuRcrusp Por,lurroN CoNrRol
RrvrNun RrruxurNc BoNDs
@acifiCorp Projects)
GENERAL INFORMATION
THE OFFICIAL STATEMENT DATED JANUARY 13, 1988, A COPY OF WHICH IS ATTACHED
HERETO AS APPENDIX B (THE "OR]GINAL OFFICIAL STATEMENT" AND, TOGETHER WITH THIS
SUPPLEMENT TO OFFICIAL STATEMENT, THE "OFFICIAL STATEMENT"), WAS PREPARED IN
CONNECTION WITH THE OFFERJNG OF FIVE SEPARATE ISSUES OF BONDS RELATING TO
PACIFICORP. THIS SUPPLEMENT TO OFFICIAL STATEMENT RELATES ONLY TO THE TWO ISSUES
OF BONDS DESCRJBED ON THE COVER PAGE OF THIS SUPPLEMENT TO OFFICIAL STATEMENT.
THIS SUPPLEMENT TO OFFICIAL STATEMENT DOES NOT CONTAIN COMPLETE
DESCRIPTIONS OF DOCUMENTS AND OTHER INFORMATION WHICH IS SET FORTH IN THE
ORIGINAL OFFICIAL STATEMENT, EXCEPT WHERE THERE IIAS BEEN A CHANGE IN THE
DOCUMENTS OR MORE RECENT INFORMATION SINCE THE DATT OF THE ORIGINAL OFFICIAL
STATEMENT. THIS SUPPLEMENT TO OFFICIAL STATEMENT SHOULD THEREFORE BE READ
ONLY IN CONJT]NCTION WITH THE ORIGINAL OFFICIAL STATEMENT.
This Supplement to Official Statement is provided to furnish certain information with
respect to the reoffering of two separate issues of revenue refunding bonds (collectively, the
"Bonds") in the ag$egate principal amount of $91,200,000, issued by the respective issuers
(individually, the "Issuer," and collectively, the "Issuers"), as follows:
(i) $41,200,000 aggegate principal amount of City of Gillette, Campbell
County, Wyoming Customized Purchase Pollution Control Revenue Refunding Bonds
(PacifiCorp Project), Series 1988 (the "Gillette Bonds"); and
(ii) $50,000,000 aggegate principal amount of Sweetwater County, Wyoming
Customized Purchase Pollution Control Revenue Refunding Bonds (PacifiCorp Project),
Series 1988,{ (the "Sweetwater Bonds").
Each issue ofthe Bonds was issued pursuant to a Trust Indenture, dated as ofJanuary l,
1988 (individually, an "lndenture," and collectively, the "Indentures"), between the respective
Issuer and The Bank of New York Mellon Trust Company, N.A. (successor in interest to The
First National Bank of Chicago), as Trustee (the "Trustee"). The proceeds from the sale of the
Bonds were loaned to PacifiCorp (the "Company") pursuant to the terms of a separate Loan
Agreement for each issue of the Bonds, each dated as of January l, 1988 (individually, an
"Agreement," and collectively, the "Agreements"), each between the respective Issuer and the
Company. Under the Agreement, the Company is unconditionally obligated to pay amounts
sufficient to provide for payment of the principal of, premium, if any, and interest on the Bonds
(the "Loan Payments") and for payment of the purchase price of the Bonds. The proceeds of the
Bonds, together with certain other moneys of the Company, were used for the purposes set forth
in the Original Offrcial Statement.
The Bonds of each issue contain substantially the same terms and provisions as, but will
be entirely separate from, the Bonds of any other issue. The Bonds of one issue will not be
payable from or entitled to any revenues delivered to the Trustee in respect of Bonds of any other
issue. The mechanism for determining the interest rate may result in a rate for the Bonds of one
issue different from that of the Bonds of any other issue. Redemption of the Bonds of one issue
may be made in the manner described in the Official Statement without redemption of any other
issue, and a default in respect of the Bonds of one issue will not of itself constitute a default in
respect of the Bonds of any other issue; however, the same occunence may constitute a default
with respect to the Bonds of both issues.
The Bonds of each issue, together with premium, if any, and interest thereon, are
limited and not general, obligations of the applicable Issuer not constituting or giving rise
to a pecuniary liability of the applicable Issuer nor any charge against its general credit or
taxing powers nor an indebtedness of or a loan of credit thereof, shall be payable solely
from the applicable Revenues (as defined in the applicable Indenture) and other moneys
pledged therefor under the applicable Indenture, and shall be a valid claim of the
respective holders thereof only against the applicable Bond Fund (as defined in the
applicable Indenture), Revenues and other moneys held by the Trustee as part of the
applicable Trust Estate (as defined in the applicable Indenture). The Issuers shall not be
obligated to pay the purchase price ofany ofthe Bonds from any source.
No recourse shall be had for the payment of the principal of, or premium, if any, or
interest on any of the Bonds or for any claim based thereon or upon any obligation,
covenant or agreement contained in any Indenture, against any past, present or future
officer or employee of any Issuer, or any incorporator, officer, director or member of any
successor corporation, as such, either directly, or through any Issuer or any successor
corporation, under any rule of law or equity, statute or constitution or by the enforcement
of any assessment or penalty or otherwise, and all such liability of any such incorporator,
officer, director or member as such was expressly waived and released as a condition of
and in consideration for the execution of each Indenture and the issuance of anv of the
Bonds.
The Company has exercised its right under the Agreements and the Indentures to
terminate the two separate Letters of Credit, each dated March 26, 2013 (individually, an
"Existing Letter of Credit" and collectively, the "Existing Letters of Credit") and issued by The
Royal Bank of Scotland plc, a bank organized under the laws of Scotland, acting through its
Connecticut branch. Pursuant to the Indentures, the Company has elected to terminate each
Existing Letter of Credit on March 20,2014 (collectively, the "Terminations") and, after such
date, none of the Bonds will have the benefit of a Letter of Credit or any otherthird party credit
or liquidity facility.
Pursuant to the applicable provisions of the Indenture for the Sweetwater Bonds, the
interest rate determination method for the Sweetwater Bonds is being converted from the CP
Rate to the Weekly Interest Rate (the "Conversion") effective March 19,2014.
Prior to the Conversion with regard to the Sweetwater Bonds and the Terminations, the
Sweetwater Bonds were bearing interest at a CP Rate and the Gillette Bonds were bearing
interest at a Weekly Interest Rate. Following the Conversion and the Termination with respect to
the Sweetwater Bonds, the Sweetwater Bonds will bear interest at a Weekly Interest Rate and,
following the Termination with respect to the Gillette Bonds, the Gillette Bonds will continue to
bear interest at a Weekly Interest Rate, subject, in each case, to the right of the Company to
cause the interest rate on the corresponding issue ofBonds to be converted to other interest rate
determination methods as described in the Official Statement.
Reference is hereby made to the Bonds in their entirety for the detailed provisions
thereof.
Brief descriptions of the Issuers, the Bonds, the Agreements and the Indentures are
included in this Supplement to Official Statement, including the Original Official Statement
attached as Appendix B hereto. Information regarding the business, properties and financial
condition of the Company is included in Appendix A attached hereto. The descriptions herein of
the Agreements and the Indentures are qualified in their entirety by reference to such documents,
and the descriptions herein of the Bonds are qualified in their entirety by reference to the forms
thereof and the information with respect thereto included in the aforesaid documents. All such
descriptions are further qualified in their entirety by reference to laws and principles of equity
relating to or affecting the enforcement of creditors' rights generally. Copies of such documents
may be obtained from the principal corporate trust office of the Trustee in Chicago, Illinois and
at the principal offices of the Remarketing Agent in New York, New York. The letters of credit
described in the Original Official Statement are no longer in effect and the information in the
Original Official Statement with respect thereto should be disregarded.
REMARKETING AGENT
General. Barclays Capital Inc. (the "Remarketing Agent"), will continue as remarketing
agent for the Bonds. Subject to certain conditions, the Remarketing Agent has agreed under a
separate Remarketing Agreement for each issue of the Bonds, each dated January 14, 1988
(collectively, as assigned to and assumed by the Remarketing Agent on September 24, 2008, the
"Remarketing Agreements"), and each between the Company and the Remarketing Agent's
predecessor as remarketing agent, to determine the rates of interest on the Bonds and use its best
efifons to remarket all tendered Bonds.
In the ordinary course of its business, the Remarketing Agent has engaged, and may in
the future engage, in investment banking and/or commercial banking transactions with the
Company, its subsidiaries and its other affiliates, for which it has received and will receive
customary compensation.
Special Considerations. The Remarketing Agent is Paid by the Company. The
Remarketing Agent's responsibilities include determining the interest rate from time to time and
remarketing Bonds that are optionally or mandatorily tendered by the owners thereof (subject, in
each case, to the terms of the Indentures and the Remarketing Agreements), all as further
described in this Supplement. The Remarketing Agent is appointed by the Company and paid by
the Company for its services. As a result, the interests of the Remarketing Agent may differ
from those of existing Holders and potential purchasers of Bonds.
Ihe Remarketing Agent Moy Purchase Bonds for lts Own Accounl. The Remarketing
Agent acts as remarketing agent for a variety of variable rate demand obligations and, in its sole
discretion, may purchase such obligations for its own account. The Remarketing Agent is
permitted, but not obligated, to purchase tendered Bonds for its own account and, in its sole
discretion, may acquire such tendered Bonds in order to achieve a successful remarketing of the
Bonds (i.e., because there otherwise are not enough buyers to purchase the Bonds) or for other
reasons. However, the Remarketing Agent is not obligated to purchase Bonds, and may cease
doing so at any time without notice. The Remarketing Agent may also make a market in the
Bonds by purchasing and selling Bonds other than in connection with an optional or mandatory
tender and remarketing. Such purchases and sales may be at or below par. However, the
Remarketing Agent is not required to make a market in the Bonds. The Remarketing Agent may
also sell any Bonds it has purchased to one or more affiliated investment vehicles for collective
ownership or enter into derivative arangements with affiliates or others in order to reduce its
exposure to the Bonds. The purchase of Bonds by the Remarketing Agent may create the
appearance that there is greater third party demand for the Bonds in the market than is actually
the case. The practices described above also may result in fewer Bonds being tendered in a
remarketing.
Bonds May Be Offered at Dffirent Prices on Any Date Including an Interest Rate
Determination Date. Pursuant to the Indenture and the Remarketing Agreement for each issue of
Bonds, the Remarketing Agent is required to determine the applicable rate of interest that, in its
judgment, is the lowest rate that would permit the sale of the Bonds bearing interest at the
applicable interest rate at par plus accrued interest, ifany, on and as ofthe applicable interest rate
determination date. The interest rate will reflect, among other factors, the level of market
demand for the applicable Bonds (including whether the Remarketing Agent is willing to
purchase Bonds for its own accounts). There may or may not be Bonds tendered and remarketed
on an interest rate determination date, the Remarketing Agent may or may not be able to
remarket any Bonds tendered for purchase on such date at par and the Remarketing Agent may
sell Bonds at varying prices to different investors on such date or any other date. The
Remarketing Agent is not obligated to advise purchasers in a remarketing if it does not have third
party buyers for all of the Bonds at the remarketing price. In the event the Remarketing Agent
owns any Bonds for its own account, it may, in its sole discretion in a secondary market
transaction outside the tender process, offer such Bonds on any date, including the interest rate
determination date, at a discount to par to some investors.
The Ability to Sell the Bonds Other Than Through the Tender Process May Be Limited.
The Remarketing Agent may buy and sell Bonds other than through the tender process.
However, it is not obligated to do so and may cease doing so at any time without notice and may
require Holders that wish to tender their Bonds to do so through the Trustee with appropriate
notice. Thus, investors who purchase the Bonds, whether in a remarketing or otherwise, should
not assume that they will be able to sell their Bonds other than by tendering the Bonds in
accordance with the tender process.
The Remarketing Agent May Resign, be Removed or Cease Remarketing the Bonds,
Without a Successor Being Named. Under certain circumstances, the Remarketing Agent may be
removed or have the ability to resigrr or cease its remarketing efforts without a successor having
been named, subject to the terms of each Indenture and the Remarketing Agreement.
TAX EXEMPTION
The opinions of Chapman and Cutler delivered on January 14, 1988 stated that, subject to
compliance by the Company and the applicable Issuer with certain covenants made to satisfy
pertinent requirements of the United States Internal Revenue Code of 1986, under then-existing
law, interest on the Bonds will not be includible in gross income of the owners thereof for federal
income tax purposes, except for interest on any Bond for any period during which such Bond is
owned by a person who is a substantial user of the related project or facilities or any person
considered to be related to such person (within the meaning of Section 103(bxl3) of the United
States lntemal Revenue Code of 1954), and the interest on the Bonds will not be treated as an
item of tax preference in computing the alternative minimum tax for individuals and corporations
(because the Prior Bonds were issued prior to August 8, 1986). Such interest will be taken into
account, however, in computing an adjustment used in determining the alternative minimum tax
for certain corporations. As indicated in such opinions, the failure to comply with certain of such
covenants of the applicable Issuer and the Company could cause the interest on the Bonds to be
included in gross income retroactive to the date of issuance of the Bonds. Chapman and
Cutler LLP ("Bond Counsel") has made no independent investigation to confirm that such
covenants have been complied with.
Bond Counsel will deliver an opinion for the Sweetwater Bonds in connection with the
Conversion and Termination with regard to the Sweetwater Bonds, in substantially the form
attached hereto as AppendixC-l, to the effect that (a)the Conversion (i)is authorized or
permitted by the Indenture for the Sweetwater Bonds, (ii) will not, in and of itself, cause the
interest on the Sweetwater Bonds to become includible in the gross income of the Owners
thereof for purposes of federal income taxation and (iii) will not violate the provisions of the Act
(as defined by the applicable Indenture) or other applicable State of Wyoming law, and (bXi) the
Termination is authorized under the Agreement for the Sweetwater Bonds and complies with the
terms thereof, and (ii) will not impair the validity under the Act of the Sweetwater Bonds or, in
and of itself, cause the interest on the Sweetwater Bonds to become includible in the gross
income of the owners thereof for federal income tax purposes. Bond Counsel will deliver an
opinion for the Gillette Bonds in connection with the Termination with regard to the Gillette
Bonds, in substantially the form attached hereto as AppendixC-2, to the effect that the
Termination (x) is authorized under the Agreement for the Gillette Bonds and complies with the
terms thereof, and (y) will not impair the validity under the Act of the Gillette Bonds or, in and
of itself, cause the interest on the Gillette Bonds to become includible in the gross income of the
owners thereof for federal income tax purposes. Except as necessary to render the foregoing
opinions, Bond Counsel has not reviewed any factual or legal matters relating to its opinions
dated January 14, 1988 subsequent to their issuance other than with respect to the Company in
connection with (a) with regard to the Sweetwater Bonds, the issuance and delivery of an
Altemate Credit Facility, described in its opinion dated Apil24,2002, (b)with regard to the
Gillette Bonds, the conversion of the interest rate on the Gillette Bonds from a CP Rate to a
Weekly Interest Rate and the delivery of an Altemate Credit Facility, described in its opinion
dated May 26, 1999 and its opinions dated June 7, 1999, (c) with regard to each issue of Bonds,
(i) the delivery of earlier Alternate Credit Facilities described in its two opinions, each dated
September 15, 2004, (ii) the delivery of amendments to such earlier Alternate Credit Facilities,
described in its two opinions, each dated November 30, 2005, (iii) the delivery of earlier Letters
of Credit, described in its two opinions, each dated May 16, 2012 and (iv)the delivery of the
Existing Letters of Credit, described in its two opinions, each dated March 26, 2013, (d) with
regard to the Sweetwater Bonds, the corresponding Termination and the Conversion and (e) with
regard to the Gillette Bonds, the corresponding Termination. The opinions delivered in
connection with the Conversion and the Terminations are not to be interpreted as a reissuance of
any of the original approving opinions as of the date of this Supplement to Official Statement.
Ownership of the Bonds may result in collateral federal income tax consequences to
certain taxpayers, including, without limitation, corporations subject to either the environmental
tax or the branch profits tax, financial institutions, certain insurance companies, certain
S Corporations, individual recipients of Social Security or Railroad Retirement benefits and
taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry
tax-exempt obligations. Prospective purchasers of the Bonds should consult their tax advisors as
to applicability ofany such collateral consequences.
MISCELLANEOUS
This Supplement to Official Statement has been approved by the Company for
distribution by the Remarketing Agent to current Bondholders and potential purchasers of the
Bonds. THE ISSUERS MAKE NO REPRESENTATION WITH RESPECT TO AND
HAVE NOT PARTICIPATED IN THE PREPARATION OF ANY PORTION OF THIS
SUPPLEMENT TO OF'F'ICIAL STATEMENT.
APPENDIX A
PACIFICORP
The following information concerning PacifiCorp (the "Company") has been provided
by representatives of the Company and has not been independently confirmed or verified by the
Remarketing Agent, the Issuer or any other party. No representation is made herein as to the
accuracy, completeness or adequacy of such information or as to the absence of material
adverse changes in the condition of the Company or in such information after the date hereof, or
that the information contained or incorporated herein by reference is correct as of any time after
the date hereof.
The Company, which includes PacifiCorp and its subsidiaries, is a United States
regulated, vertically integrated electric utility company serving 1.8 million retail customers,
including residential, commercial, industrial, irrigation and other customers in portions of the
states of Utah, Oregon, Wyoming, Washington, Idaho and California. PacifiCorp owns, or has
interests in,74 thermal, hydroelectric, wind-powered and geothermal generating facilities, with a
net owned capacity of 10,595 megawatts. PacifiCorp also owns, or has interests in, electric
transmission and distribution assets, and transmits electricity through approximately
16,300miles of transmission lines. PacifiCorp also buys and sells electricity on the wholesale
market with other utilities, enerry marketing companies, financial institutions and other market
participants to balance and optimize the economic benefits of electricity generation, retail loads
and existing wholesale transactions. The Company is subject to comprehensive state and federal
regulation. The Company's subsidiaries support its electric utility operations by providing coal
mining services. The Company is an indirect subsidiary of MidAmerican Energy Holdings
Company ("MEHC"), a holding company based in Des Moines, Iowa, that owns subsidiaries
principally engaged in energy businesses. MEHC is a consolidated subsidiary of Berkshire
Hathaway Inc. MEHC controls substantially all of the Company's voting securities, which
include both common and preferred stock.
The Company's operations are exposed to risks, including general economic, political
and business conditions, as well as changes in, and compliance with, laws and regulations,
including reliability and safety standards, affecting the Company's operations or related
industries; changes in, and compliance with, environmental laws, regulations, decisions and
policies that could, among other items, increase operating and capital costs, reduce generating
facility output, accelerate generating facility retirements or delay generating facility construction
or acquisition; the outcome of rate cases and other proceedings conducted by regulatory
commissions or other governmental and legal bodies and the Company's ability to recover costs
in rates in a timely manner; changes in economic, industry or weather conditions, as well as
demographic trends, new technologies and various conservation, energy efficiency and
distributed generation measures and programs, that could affect customer growth and usage,
electricity supply or the Company's ability to obtain long-term contracts with customers and
suppliers; a high degree ofvariance between actual and forecasted load or generation that could
impact the Company's hedging strategy and the cost of balancing its generation resources with
its retail load obligations; performance and availability of the Company's generating facilities,
including the impacts of outages and repairs, transmission constraints, weather, including wind
and hydroelectric conditions, and operating conditions; changes in prices, availability and
demand for both wholesale electricity, coal, natural gas, other fuel sources and fuel
transportation that could have a significant impact on generating capacity and energy costs;
hydroelectric conditions and the cost, feasibility and eventual outcome of hydroelectric
relicensing proceedings that could have a significant impact on generating capacity and cost and
the Company's ability to generate electricity; the effects of catastrophic and other unforeseen
events, which may be caused by factors beyond the Company's control or by a breakdown or
failure of the Company's operating assets, including storms, floods, fires, earthquakes,
explosions, landslides, mining accidents, litigation, wars, terrorism and embargoes; the financial
condition and creditworthiness of the Company's sigrrificant customers and suppliers; changes in
business strategy or development plans; availability, terms and deployment of capital, including
reductions in demand for investment-grade commercial paper, debt securities and other sources
of debt financing and volatility in the London Interbank Offered Rate, the base interest rate for
the Company's credit facilities; changes in the Company's credit ratings; the impact of certain
contracts used to mitigate or manage volume, price and interest rate risk, including increased
collateral requirements, and changes in commodity prices, interest rates and other conditions that
affect the fair value of certain contracts; the impact of inflation on costs and the Company's
ability to recover such costs in rates; increases in employee healthcare costs, including the
implementation of the Affordable Care Act; the impact of investment performance and changes
in interest rates, legislation, healthcare cost trends, mortality and morbidity on the Company's
pension and other postretirement benefits expense and funding requirements; unanticipated
construction delays, changes in costs, receipt of required permits and authorizations, ability to
fund capital projects and other factors that could affect future generating facilities and
infrastructure additions; the impact of new accounting guidance or changes in current accounting
estimates and assumptions on consolidated financial results; and other business or investment
considerations that may be disclosed from time to time in the Company's filings with the
United States Securities and Exchange Commission (the "Commission") or in other publicly
disseminated written documents. See the Incorporated Documents under "Incorporation of
Certain Documents by Reference."
The principal executive offices of the Company are located at 825 N.E. Multnomah
Street, Portland, Oregon 97232; the telephone number is [phone]. The Company was
initially incorporated in 1910 under the laws of the state of Maine under the name Pacific
Power& Light Company. In 1984, Pacific Power& Light Company changed its name to
PacifiCorp. In 1989, it merged with Utah Power and Light Company, a Utah corporation, in a
transaction wherein both corporations merged into a newly formed Oregon corporation. The
resulting Oregon corporation was re-named PacifiCorp, which is the operating entity today.
AvAILABLE INronn,mnoN
The Company is subject to the informational reqqirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports and other
information with the Commission. Such reports and other information filed by the Company
may be inspected and copied at public reference rooms maintained by the Commission in
Washington, D.C. Please call the Commission at 1-800-SEC-0330 for further information on the
A-2
public reference rooms. The Company's filings with the Commission are also available to the
public at the website maintained by the Commission at http://www.sec.gov.
INconroRaTION OF Crnr.trN DOCuurrNrs BY REFERENCE
The following documents filed by the Company with the Commission pursuant to the
Exchange Act are incorporated herein by reference:
1 . Annual Report on Form lO-K for the fiscal year ended December 3l , 2073.
2. All other documents filed by the Company pursuant to Sections l3(a), 13(c), 14 or 15(d)
of the Exchange Act after the date hereof.
All documents filed by the Company pursuant to Sections l3(a), 13(c), 14 or 15(d) of the
Exchange Act after the filing of the Annual Report on Form l0-K for the fiscal year ended
December 31, 2013 and before the termination of the reoffering made by this Supplement to
Official Statement (the "Supplement") shall be deemed to be incorporated by reference in this
Supplement and to be a part hereof from the date of filing such documents (such documents and
the documents enumerated above, being hereinafter referred to as the "Incorporated
Documents"), provided, however, that the documents enumerated above and the documents
subsequently filed by the Company pursuant to Sections 13(a), l3(c), 14 or 15(d) of the
Exchange Act in each year during which the reoffering made by this Supplement is in effect
before the filing of the Company's Annual Report on Form 10-K covering such year shall not be
Incorporated Documents or be incorporated by reference in this Supplement or be a part hereof
from and after such filing of such Annual Report on Form 10-K.
Any statement contained in an Incorporated Document shall be deemed to be modified or
superseded for purposes hereof to the extent that a statement contained herein or in any other
subsequently filed Incorporated Document modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part hereof.
The Incorporated Documents are not presented in this Supplement or delivered herewith.
The Company hereby undertakes to provide without charge to each person to whom a copy of
this Supplement has been delivered, on the written or oral request of any such person, a copy of
any or all of the Incorporated Documents, other than exhibits to such documents, unless such
exhibits are specifically incorporated by reference therein. Requests for such copies should be
directed to PacifiCorp, 825 N.E. Multnomah Street, Portland, Oregon 97232, telephone number
[phone]. The information relating to the Company contained in this Supplement does not
purport to be comprehensive and should be read together with the information contained in the
Incorporated Documents.
A-3
APPENDIX B
OFFICIAL STATEMENT DATED JAI\UARY 13,1988
FIVE NEW ISSUES
Customized Purchase Bondsil*
CP Bondsrr*
Sublect to compliance by the Company and the lssuer of each issue of Bonds with certain
covenants, in the opinion of Chapman and Cutler, Bond Counsel, under present law (i) interest
on each issue of Bonds wil: not be includible in gross income of the owners thereol for lederal
income tax purposes, except for interest on any Bond for any period during which such Bond is
owned by a person who is a substantial user of the related Proiect or any person considered to
be related to such person (within the meaning of Section 103(bX13) of the lnternal Revenue
Code of 1954, as amended) and (ii) interest on the Bonds will not be treated as an item of tax
preference in computing the alternative minimum tax for individuals and corporations. Such
interest will be taken into account, however, in computing the corporate alternative minimum
tax, as more fully discussed under the heading "TAX EXEMPTION." Bond Counsel is also of
the opinion that such interest is exempt from certain Montana and Wyoming taxes, as the case
may be, as more fully disgussed under the heading "TAX EXEMPTION" herein.
$45,000,000
City of Forsyth, Rosebud
County, Montana
Series 1988
Due: January 1,2018
$11,500,000Wyoming Sweetwater County, Wyoming
Series 19888
Due: January 1,2014
$41,200,000
City of Gillette, Campbell
County, Wyoming
Series 1988
Due: January 1,2018
$164,700,000
Customized Purchase Pollution Control Revenue Refunding Bonds
(PacifiCorp Projects)
$17,000,000 '
Converse County, Wyoming
Series 1988
Due: January 1,2014
$50,000,000
Sweetwater County,
Series 1988ADuq January 1,2017
Dated: January 1,1988
Due: As stated above
Price: 100Y"
(Plus accrued interest, if any)
The Bonds of each issue will be limited obligations ol the respective lssuer, payable solely from and secured by a pledge ofpayments to be made under a separate Loan Agreement between the respectave lssuer and
PacifiCorp
From the date of initial authentication and delivery of the Bonds through January 14, 1993, unless earlier terminated as described herein,
the Bonds of each issue will be payable trom funds drawn under irrevocable Letters of Credit issued, with respect to the Converse Bonds,
by the Seattle Branch of
The Sumitomo Bank, Limited
with respect to the'Forsyth Bonds, by the Los Angeles Agency of
The lndustrial Bank of Japan, Limited
with respect to the Gillette Bonds, by the New York Branch of
Deutsche Bank AG
and, with respect to both issues of Sweetwater Bonds, by the San Francisco Overseas Branch of
National Westminster Bank PLC
Under each Letter of Credit, the Trustee will be entitled to draw up to an amount sulllcient to pay the principal of and, initially, up to
294 days'accrued interest on the related issue of Bonds to.be used (a) to pay the principal of and interest on the Bonds when due and(b) to pay the purchase price of Bonds tendered by the Owners thereof as provided in the related lndenture.
Upon the terms and conditions described herein, the Bonds of each issue will be purchased on the demand of the Owners thereof andwill be sub.iect to redemption prior to maturity.
lnitially, each Bond will bear interest from the date of actual authentication and delivery thereot at the CP Rate, determined by the
Remarketing Agent, for the CP Period selected by the Owner thereof, as described herein.
The Bonds of each issue are sublect to conversion to interest rates olher than the CP Rate as more fully described herein under thecaption "CONVERSION OF RATE." Atter such conversion, such Bonds may cease to be subject to purchase as described herein.
The Bonds of each issug are issuable as lully registered Bonds without coupons, initially in the denomination of $'100,000 each or integral
multiples thereof. lnterest on the Bonds while the Bonds bear interest at a CP Rate will be payable on the CP Date with respect to each
Bond by check mailed to the persons in whose names such Bond is registered at the close of business on the record date, which is the
lourth day preceding the CP Date for CP Periods longer than three days and the first day of a CP Period in all other cases. lnterest may,
at the option of any Owner of Bonds in an aggregate principal amounl of at least $1,000,000, be transmitted by wire transfer to such
Owner. Principal of and premium, if any, on all Bonds will be payable at the ofiice of The First National Bank of Chicago, as Trustee, in
Chicago, lllinois.
The Bonds of each issue are oftered when, as and il issued by the respective lssuers and accepted by the Underwriter,.subject to prior
sale, to withdrawal or modification of the offer without notice and to the approval of legality by Chapman and Cutler, as Bond Counsel, the
approval of certain matters by Stoel Rives Boley Jones & Grey, Counsel ,or the Company, and by Kutak Rock & Campbell, counsel for
the UndeMriter, and certain other conditions. lt is expected that delivery of the Bonds will be made on or about January 14, 1988 in NewYork, New York against payment therefor.
E.F. Hutton & Company lnc.
Dated: January 13,1988
' "Customized Purchase Bonds" and "CP Bonds" are trademarks of E. F. Hutton & Company lnc.
No broker, dealer, salesman or other person has been authorized to give any information or
to make any representations other than those contained in this Official Statement in connection
with the ofrering made hereby and, if given or made, such information or representations must
not be relied upon as having been authorized by the Issuers, PacifiCorp, The Sumitomo Bank,
Limited, The Industrial Bank of Japan, Limited, Deutsche Bank AG, National Westminster Bank
PLC or the Underwriter. Neither the delivery of this Official Statement nor any sale hereunder
shall under any circumstances create any implication that there has been no change in the affairs
of the Issuers, The Sumitomo Bank, Limited, The Industrial Bank of Japan, Limited, Deutsche
Bank AG, National Westminster Bank PLC or PacifiCorp since the date hereof. None of the Issuers
has or will assume any responsibility as to the aceuracy or completeness of the information in
this Official Statement, other than that relating to itself under the caption "THE IssunRS," all of
which has been furnished by others. Upon issuance, the Bonds of each issue will not be registered
under the Securities Act of 1933, as amended, and will not be listed on any stock or other securities
exchange. Neither the Securities and Exchange Commission nor any other federal, state,
municipal or other governmental entity will have passed upon the accuracy or adequacy of this
Official Statement or, other than the respective Issuers, approved the Bonds of each issue for sale.
TABLE OF CONTENTS
Introductory
The Issuers
The Bonds
The Letters of Credit
Conversion of Rate.
The Agreements
The Indentures
Underwriting
Tax Exemption ..
Certain Legal Matters
Miscellaneous
Arpprqpx A-PacifiCorp
Appnxnx B-The Sumitomo Bank, Limited
ArpsNox G-The Industrial Bank of Japan, Limited
AppoNpIx D-Deutsche Bank AG
Appuwnx F-National Westminster Bank PLC
Apppxox F-Alternative Interest Rates
IN CONNECTION WITH THE OFFERING, THE UNDERWRITER MAY OVERALLOT OR
EFFECT TBANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OT THE
SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MA.RKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINT]ED AT ANY TIME.
Statement
Page
3
5
5
14
17
18
21
26
27
28
28
$164,700,000
Customized Purchase Pollution Control
Revenue Refunding Bonds
(PacifiCorp Projects)
INTRODUCTORY STATEMENT
This Official Statement is provided to furnish certain information with respect to the offer by the
respective issuers named below (individually, the "Issuer," and collectively, the "Issuers") of five
separate issues of revenue refunding bonds (collectively, the "Bonds") in the aggregate principal
amount of $164,?00,000, as follows:
(i) $17,000,000 Converse County, Wyoming Customized Purchase Pollution Control Revenue
Refunding Bonds (PacifiCorp Project) Series 1988 (the "Converse Bonds");
(ii) $45,000,000 City of Forsyth, Rosebud Oounty, Montana Customized Purchase Pollution
Control Revenue Refunding Bonds (PacifiCorp Project) Series 1988 (the "Forsyth Bonds");
(iii) $41,200,000 City of Gillette, Campbell County, Wyoming Customized Purchase Pollution
Control Revenue Refunding Bonds (PacifiCorp Project) Series 1988 (the "Gillette Bonds");
(iv) $50,000,000 Sweetwater County, Wyoming Customized Purchase Pollution Control
Revenue Refunding Bonds (PacifiCorp Project) Series 1988A (the "Sweetwater Series A Bonds");
and
(v) $11,500,000 Sweetwater County, Wyoming Customized Purchase Pollution Control
Revenue Refunding Bonds (PacifiCorp Project) Series 19888 (the "Sweetwater Series B Bonds,"
and, together with the Sweetwater Series A Bonds, the "Sweetwater Bonds").
Each issue of Bonds is being issued pursuant to a separate Trust Indenture dated as ofJanuary 1,
1988 (individually, an "lndenture," and col]ectively, the "Indentures") between the respective lssuer
and The First National Bank of Chicago, as Trustee (the "Trustee"). The proeeeds from the sale of
the Bonds will be loaned to PacifiCorp (formerly Pacific Power & Light Company) (the "Company")
pursuant to the terms of a separate Loan Agteement for eaeh issue of Bonds dated as of January 1,
1988 (individually, an "Agreement" and collectively, the 'lAgreements") and used, together with
certain other moneys, to provide for the refunding (the "Refunding") of the outstanding bonds
(collectively, the "Prior Bonds") of each of the following issues of bonds: (a) in the case of the Converse
Bonds, the $1?,000,000 Converse County,'Wyoming, Floating Rate Monthly Demand Pollution Control
Refunding Revenue Bonds (PacifiCorp Project) Series 1984, previously issued to refund eertain bonds
of Converse County, Wyoming ("Converse"), the proceeds of which were used to finance a portion
of the costs of the acquisition, construction, improvement and installation of certain air and water
pollution control facilities located at the Dave Johnston coal-fired, steam electric generating plant in
Converse County, Wyoming; (b) in the case of the Forsyth Bonds, the $45,000,000 CiW of Forsybh,
Rosebud County, Montana, Floating Rate Monthly Demand Pollution Control Revenue Bonds (Pacific
Power & Light Company Colstrip Project) Series 1981, the proceeds of which were used to finance
a portion of the cost of the Company's undivided interest in the acquisition and improvement of eertain
air and water pollution control and solid waste disposal facilities at the Colstrip coal-fued, steam
electric generating plant located near the City of Forsyth ("Forsyth") in Rosebud County, Montana;
(c) in the case of the Gillette Bonds, the $41,295,000 outstanding principal amount of the City of Gillette,
Campbell County, Wyoming, Pollution Control Revenue Bonds (Pacific Power & Light Company
Project) Series 1984, the proceeds of which were used to finance a portion of the cost of the Company's
undivided interest in the acquisition and improvement of certain air and water pollution control
facilities at the Wyodak coal-fired, steam eiectric generating plant located near the City of Gillette
("Gillette") in Campbell County, Wyoming; and (d) in the case of the Sweetwater Series A Bonds and
the Sweetwater Series B Bonds, respectively, the $50,000,000 Sweetwater County, Wyoming, Floating
Rate Monthly Demand Pollution Control Revenue Bonds (Pacific Power & Light Company Project)
Series 1983 and the $11,500,000 Sweetwater County, Wyoming, Floating Rate Monthly Demand
Pollution Control Refunding Revenue Bonds (PacifiCorp Project) Series 1984, the proceeds of which
were used, respectively, to finance a portion of the Company's undivided interest (the "Sweetwater
Pmject") in the acquisition and improvement of certain air and water pollution control facilities at
the Jim Bridger coal-fired, steam electric generating plant located near Rock Springs in Sweetwater
County, Wyoming ("Sweetwater"), and to refund certain prior bond issues of Sweetwater, the proceeds
of which were used to finance a portion of the Sweetwater Project.
The Bonds of each issue will be limited, and not general, obligations of the Issuer thereof as
described under the caption "THE BONDS-Limited Obligations." Under the Agreements, the
Company is unconditionally obligated to pay amounts sufficient to provide for payment of the principal
of, premium, if any, and interest on the Bonds (the "Loan Payments") and for payment of the purchase
price of the Bonds.
The Bonds of each issue will be secured under a separate irrevocable Letter of Credit (individually,
the "l,etter of Credit," and, collectively, the "Letters of Credit'). The Converse Bonds will be secured
by an irrevocable Letter of Credit to be issued by The Sumitomo Bank, Limited, a bank organized
under the laws of Japan, acting through its Seattle Branch. The Forsyth Bonds will be secured by
an irrevocable Lctter of Credit to be issued by The Industrial Bank of Japan, Limited, a bank organized
under the laws of Japan, acting through its Los Angeles Agency. The Gillette Bonds will be secured
by an irrevocable l,etter of Credit to be issued by Deutsehe Bank AG, a bank organized under the
laws of the Federal Republic of Germany, acting through its New York Branch, and the two issues
of Sweetwater Bonds will be respeetively secured by separate irrevocable Letters of Credit to be issued
by National Westminster Bank PLC, a bank organized under the laws of England, aeting through
its San Franciseo Overseas Branch. The Sumitomo Bank, Limited, The Industrial Bank of Japan,
Limited, Deutsche Bank AG and National Westminster Bank PLC are hereafter referred to
individually as the "Bank" and collectively, as the "Banks." With respeet to the Bonds of each issue,
the Trustee will be entitled to draw under the related Letter of Credit up to (a) an amount equal to
the principal amount of such Bonds to be used (i) to pay the principal of such Bonds, (ii) to enable
E. F. Hutton & Company Inc., as Remarketing Agent (the "Remarketing Agenf,'), to pay the portion
of the purchase price equal to the principal amount of such Bonds delivered or deemed delivered to
it for purchase and not remarketed, (iiil to enable the Trustee to pay the portion of the purchase price
equal to the principal amount of such Bonds delivered or deemed delivered to it for purchase, (iv) to
enable the Trustee to pay the purchase price of Bonds not retained by an Owner on a CP Date (as
hereafter defined)or (v) to enable the Company to purchase such Bonds in lieu of redemption under
certain circumstances, plus (b) an amount equal to 294 days' accrued interest on such Bonds (calculated
at an assumed maximum rate of 72% per annum), (i) to pay interest on such Bonds or (ii) to enable
the Trustee or the Remarketing Agent to pay the portion of the purchase price of such Bonds properly
delivered for purchase equal to the accrued interest, if any, on such Bonds. The Company is permitted
under the Agreements and the Indentures to provide a letter of credit (the "Substitute Letter of
Credit") issued by the same Bank which issued the Letter of Credit in substitution for which the
Substitute Letter of Credit is to be provided and which is identical to such Letter of Credit except
for (i) an increase or decrease in the Interest Coverage Rate (as hereafter defined), (ii) an increase
or decrease in the Interest Coverage Period (as hereafter defined) or (iii) any combination of (i) and
(ii). As used hereafter, "Letter of Credit" shall, unless the context otherwise requires, mean such
Substitute Letter of Credit from and after the issuance date thereof. The Company also is permitted
under the Agreements and Indentures to provide for the delivery of an alternate credit faeility,
including a letter of credit of a commercial bank or a credit facility from a financial institution, or
any other credit support agreement or mechanism arranged by the Company (which may involve a
letter of credit or other credit facility or first mortgage bonds of the Company or an insurance policy),
the administration provisions of which are acceptable to the Trustee (an "Alternate Credit Facility"),
to replace a Letter of Credit or provide for the termination of a Letter of Credit or any Alternate
Credit Facility then in effect. The entity (other than the Company) obligated to make payments under
an Alternate Credit Facility shall be referred to hereafter as the "Obligor on the Alternate Credit
Facility." See "THE Lrmsns oF CREDIT" and "THE BoNos-Purchase of Bonds."
The Bonds of each issue contain substantially the same terms and provisions as, but will be
entirely separate from, the Bonds of the other issues. The Bonds of one issue will not be payable from
or entitled to any revenues delivered to the Trustee in respect of Bonds of the other issues. The
mechanisrn for determining the interest rate may result in a rate for the Bonds of one issue different
from that of the Bonds of the other issues. Redemption of the Bonds of one issue may be made in
the manner described below without redemption of the other issues, and a default in respect of the
Bonds of one issue will not of itself constitute a default in respect of the Bonds of the other issues;
however, the same oceurrence may constitute a default with respect to the Bonds of more than one
issue.
Brief descriptions of the Issuers, the Bonds, the Letters of Credit, the method by which the interest
rate on the Bonds is changed, the Agreements and the Indentures are included in this Official
Statement including Appendix F hereto. Information regarding the business, properties and financial
condition of the Company is included in Appendix A attached hereto. Brief descriptions of The
Sumitomo Bank, Limited, The Industrial Bank of Japan, Limited, Deutsche Bank AG and National
Westminster Bank PLC are included as Appendices B, C, D and E, respectively, hereto. The
descriptions herein of the Agreements, the Indentures and the l,etters of Credit are qualified in their
entirety by reference to such documents, and the descriptions herein of the Bonds are qualified in
their entirety by reference to the forms thereof and the information with respect thereto included
in the aforesaid doeuments. AIl such deseriptions are further qualified in their entirety by reference
to laws and principles of equity relating to or affecting the enforcement of creditors' rights generally.
Copies of such documents may be obtained from the principal corporate trust office of the Trustee
in Chicago, Illinois and, during the initial offering period, at the principal offices of E. F. Hutton &
Company Inc. and of Shearson Lehman Brothers Inc. in New York, New York.
TIIE ISSUERS
Forsyth is a municipal corporation and political subdivision duly organized and existing under
the Constitution and laws of the State of Montana. Forsyth is authorized by Sections 90-5-101 through
90-S114, inclusive, of the Montana Code Annotated, as amended (the "Montana Act"), to issue the
Forsyth Bonds for the purpose of refunding all of the related Prior Bonds, to enter into the related
Indenture and the related Agreement and to secure such Bonds by an assignment to the Tlustee of
the payments to be made by the Company under the related Agreement and a pledge of other moneys
deposited with the Trustee under the related Indenture.
Gillette is a municipal corporation and political subdivision, and Converse and Sweetwater are
political subdivisions, duly organized and existing under the Constitution and laws of the State of
Wyoming. Pursuant to Sections 15-1-701 to 1S1-710, inclusive, of the Wyoming Statutes (1977), as
amended (the "Wyoming Act''), Gillette, Converse and Sweetwater are authorized to issue their
respective Bonds for the purpose of refunding all or a portion of the related Prior Bonds, to enter
into the related Indenture and the related Agreement and to secure such Bonds by an assignment
to the Trustee of the payments to be made by the Company under the related Agreement and a pledge
of other moneys deposited with the Trustee under the related Indenture.
The Montana Act and the Wyoming Act are hereafter referred to collectively as the "Act."
The Bonds will be limited obligations of the respective Issuers as described under the caption
"Ttm Bouos-Limited Obligations."
THE BONDS
The Bonds of each issue will be independent of the others, and a default in respect of one issue
will not of itself constitute a default in respect of the other issues; however, the same occurrence
may constitute a default with respect to more than one issue. The five issues of Bonds contain
substantially the same terms and provisions, and the following is a summary of certain provisions
common to the Bonds of the five issues. Reference is hereby made to the Bonds in their entirety for
the detailed provisions thereof. AII references in this description are to the documents or the Letters
of Credit (or Alternate Credit Facilities) corresponding to the respective issues of Bonds.
General
The Bonds will be dated January 1, 1988 and will mature as set forth on the cover page hereof.
Bonds authenticated prior to the first Interest Payment Date (as hereafter deseribed) shall bear
interest from the date of the first authentieation and delivery of Bonds. Bonds authenticated on or
after the first Interest Payment Date thereon shall bear interest from the Interest Payment Date
next preceding the date of authentication thereof (except that if the Bonds bear interest at a Daily
Interest Rate, as hereafter described, the Bonds shall bear interest from the day next succeeding the
Interest Accrual Date, as hereafter described, next preceding such date of authentication), unless such
date of authentication shall be an Interest Payment Date to which interest on the Bonds has been
paid in full or duly provided for, in which case they shall bear interest from such date of authentication
(or, if the Bonds bear interest at a Daily Interest Rate, from the day next succeeding the Interest
Accrual Date next preceding sueh date of authentication); provided that if, as shown by the records
of the Registrar (as hereinafter defined) interest on the Bonds shall be in default, Bonds issued in
exchange for or upon the registration of transfer of Bonds shall bear interest from the date to which
interest has been paid in full on the Bonds or, if no interest has been paid on the Bonds, the date of
the fust authentication and delivery of fully executed and authenticated Bonds under the Indenture.
Each Bond shall bear interest on overdue principal and, to the extent permitted by law, on overdue
premium, if any, and interest at the rates of interest borne by the Bonds during such time.
The First National Bank of Chicago is Trustee and Registrar under the Indenture and has its
corporate trust office in Chicago, Illinois. First Chicago Trust Company of New York has been
appointed agent of the Registrar under the Indenture. The Registrar may be removed or replaced
by the lssuer at the direction of the Company.
Principal of, premium, if any, and interest on the Bonds are payable at the place or places and
in the manner specified on the cover page of this Official Statement. Bonds may be transferred or
exchanged for Bonds of authorized denominations at the corporate trust office in New York, New
York of First Chicago Trust Company of New York, as agent of the Registrar, without cost, except
for any tax or other governmental charge.
E. F. Hutton & Company Inc. has, at the direction of the Company, been appointed Remarketing
Agent under the Indenture. The principal office of E. F. Hutton & Company Inc. is located in New
York, New York. The Remarketing Agent may be removed or replaced by the Issuer at the direction
of the Company and with the written consent of the Bank (or the Obligor on the Alternate Credit
Facility, as the case may be) and the Issuer. For a description of the proposed acquisition of
E. F. Hutton & Company Inc. by Shearson Lehman Brothers Inc. and of Shearson Lehman Brothers
lnc. as successor Remarketing Agent, see the caption "UNDEnwnITINc, herein.
Interest on the Bonds
CP Rata The Bonds shall initially bear interest at a CP Rate not exceeding 12% per annum,
which is, with respect to each Bond for a CP Period, an interest rate on such Bond established as
hereafter described. Such interest will be payable on the CP Date for such Bond. "CP Date" means,
with respect to each Bond, the day next succeeding the last day of a CP Period. "CP Period" means,
with respect to each Bond, eaeh consecutive period (one to no more than 2?0 days, or one to 365 or
366 days, as applicable to a particular year, as determined by the Company, as described under the
caption "THE LETTERS oF CREDIT-Substitute Letter of Credit") established pursuant to the Indenture
during which such Bond shall bear interest at a particular CP Rate. "CP Date Parameters" means
the parameters stated in Exhibit E to the Indenture regarding allowable CP Periods. On the date
interest starts to accrue on the Bonds at a CP Rate and on each CP Date thereafter, except any CP
Date that is a Conversion Date, the Remarketing Agent shall determine for each CP Period allowable
under the CP Date Parameters the interest rate which, in the judgment of the Remarketing Agent,
when borne by a Bond having such a CP Period would be the minimum interest rate necessary to
enable the Remarketing Agent to sell such Bond on such date at a price equal to the principal
amount thereof.
Each Bond shall bear interest during the CP Period selected for such Bond at arate per annum
equal to the interest rate determined as described above for such CP Period, or, in the event such
Bond is not remarketed, the CP Rate shall be the CP Rate equal to the interest rate for the shortest
allowable CP Period under the CP Date Parameters. If for any reason a CP Rate is not established
by the Remarketing Agent or the rate established by the Remarketing Agent is held to be invalid
or unenforceable by a court of law with respeet to any CP Period, the CP Rate for such CP Period
shall equal the Floating Interest Index (as defined in the Indenture) determined by the Indexing Agent
(as defined in the Indenture) as of the date such CP Rate was to have peen determined.
Conaersion to Alternatiae Rates. The method of determining interest payable on the Bonds
may be converted from a CP Rate to another Floating Interest Rate (a Daiiy Interest Rate, a Weekly
Interest Rate or a Monthly Interest Rate), a Tender Interest Rate or a Fixed Interest Rate (as each
of those terms is described in Appendix F hereto) or from any such method of determination to any
other method of determination under the conditions described below under the caption "CotwERSIoN
oF RATE." The date on which the method of determining the interest on the Bonds is converted to
another rnethod is a "Conversion Date." Certain terms applicable to the Bonds at such time as the
Bonds are not bearing interest at a CP Rate are deseribed in Appendix F hereto.
Payrnent and Accrual of Interest The Bonds shall bear interest from and including the date
of first authentication and delivery thereof until payment of the principal or redemption price thereof
shall have been made or provided for in accordance with the provisions of the Indenture, whether
at maturity, upon redemption, acceleration or otherwise, at the lesser of (i) the Maximum Rate (as
hereafter defined) or (ii) the rate determined as described under the caption "THE BoNDs-Interest
on the Bonds" and in Appendix F hereto. "Maximum Rate" means (i) while a Letter of Credit (or an
Alternate Credit Facility, if applicable) is outstanding, the lesser of 2A% per annum or the Interest
Coverage Rate and (ii) at all other times, 20% per annum. "Interest Coverage Rate" means the rate
specified in the Letter of Credit (or an Alternate Credit Faciiity, if applicable), initially 12%, which
is used to determine the maximum amount that can be drawn to pay interest on the Bonds (or the
portion of the purchase price eorresponding to accrued interest) (the "Interest Component") for the
number of days specified in the Letter of Credit (the "Interest Coverage Period"), initialiy 294 days.
Interest accrued on the Bonds during each Interest Period (as hereafter described) shall be paid
to the Owner as of the Record Date (as hereafter described) on the next succeeding Interest Payment
Date and, while the Bonds bear a Floating Interest Rate, computed on the basis of a year of 365 or
366 days, as applicable to a particular year, for the actual number of days elapsed and, while the Bonds
bear a Fixed Interest Rate or a Tender Interest Rate, computed on the basis of a year of 360 days
consisting of twelve 30-day months.
"Authorized Denomination" means (i) $100,000 while the Bonds bear interest at a Floating Interest
Rate and (ii) $5,000 while the Bonds bear interest at a Tender Interest Rate or a Fixed Interest Rate
and, in all cases, integral multiples thereof.
"Business Day" means a day on which banks located in the city in which the principal office of
the Bank (or of the Obligor on the Alternate Credit Facility, as the case may be) is iocated and banks
located in the city in which the principal office of the Trustee is located are not required or authorized
by law to remain closed and are not closed, and on which The New York Stock Exchange and the
principal office of the Remarketing Agent are not closed.
"Interest Acerual Date" means, with respect to any Interest Period (i) during which interest on
the Bonds accrues at a CP Rate, the last day of the applicable CP Period, (ii) during which interest
on the Bonds accrues at a Daily Interest Rate, the last day of the calendar month, (iii) during whieh
interest on the Bonds accrues at the Weekly Interest Rate or the Monthly Interest Rate (as hereafter
described), the day next preceding the first Business Day of the next succeeding calendar month and
(iv) during which interest on the Bonds aecrues at a Tender Interest Rate or at a Fixed Interest Rate,
the day next preceding January 1 and July 1 of each year.
"Interest Payment Date" means (a) during such time as the Bonds bear a Daily Interest Rate,
the fifth day after the Interest Accrual Date, (b) during such time as the Bonds bear interest
determined by any other method, the day next sueceeding the Interest Accrual Date and (e) any
Conversion Date.
"Interest Period" means the period from and including the date interest starts to accrue on the
Bonds pursuant to a particular method of calculating interest to and including the next succeeding
Interest Accrual Date and each suceeeding period from the day next succeeding such Interest Accrual
Date to and including (i) the next succeeding Interest Accrual Date or (ii) if earlier, the day next
preceding a Conversion Date.
"Owner" means the person or persons in whose name any Bond is registered on the books of
the Issuer maintained by the Registrar.
"Record Date" means (a) when a Bond bears interest at a CP Rate, the third day next preceding
the Interest Accrual Date, except for a Bond with a CP Period of less than four days, in which case
the Record Date means the first day of such CP Period; (b) when the Bonds bear interest at a Daily
Interest Rate, the Interest Accrual Date; (c) when the Bonds bear interest at a Weekly Interest Rate,
the day on which the Weekly Interest Rate applicabie to the Interest Accrual Date is determined;
(d) when the Bonds bear interest at a Monthly Interest Rate, the third day next preceding the Interest
Accrual Date; and (e) when the Bonds bear a Tender Interest Rate or a Fixed Interest Rate, the
fifteenth day of the calendar month next preceding any Interest Payment Date.
Purchase of Bonds
Purchase While Bonds Bear CP Rate. On the CP Date with respect to a Bond, such Bond shall
be purchased at a purchase price equal to the principal amount thereof upon delivery of the Bond
(with all necessary endorsements) to the Remarketing Agent. If the Owner elects not to have his Bond
purchased on such CP Date, the Owner shall give telephonic or written notice to the Remarketing
Agent not later than 10:00 a.m., New York, New York time, on the Business Day next preceding the
CP Date stating that the Owner elects not to have his Bond purchased on such CP Date and stating
the next CP Period (which shall be within the CP Date Parameters) for such Bond, in which event
and upon receipt of appropriate information confirmed in writing from the Remarketing Agent, the
Trustee shall issue a new Bond to such Owner reflecting the next CP Period in exchange for the Bond
then held by such Owner. Bonds to be purchased which are not delivered by the Owner thereof shall
be deemed to have been delivered by the Owner thereof for purchase and to have been purchased,
provided that there have been irrevocably deposited with the Trustee moneys in accordance with the
Indenture in an amount sufficient to pay the purchase price of such Bonds. Moneys deposited with
the Trustee for such purchase of Bonds shall be held in trust in a separate escrow account without
liabiiity for interest thereon and shall be paid to the Owners of such Bonds upon presentation thereof.
The Trustee shall on the last day of each month give written notice to the Company whether Bonds
have not been delivered, and upon direction to do so by the Company, the Trustee shall give notice
by mail to each Owner whose Bonds are deemed to have been purchased that such moneys are on
deposit at the principal office of the Trustee and that interest on such Bonds ceased to accrue on the
applicable CP Date.
While Bonds Bear Alternatirse Rates. While a Bond bears a Daily Interest Rate, a Weekly
Interest Rate, a Monthly Interest Rate or a Tender Interest Rate, such Bond will be purchased on
the demand of the Owner thereof, as described in Appendix F hereto.
Fundsfor Purchase of Bonds. On the date on which Bonds delivered to the Remarketing Agent
or the Trustee for purchase as specified above under "THE Boxos-Purchase of Bonds-Purchase
While Bonds Bear CP Rate" or as described in Appendix F hereto are to be purchased, such Bonds
shall be purchased with immediately available funds at a purchase price equal to the principal amount
thereof, plus accrued interest, if any. Funds for the payment of such purchase price shall be derived
solely from the following sources in the order of priority indicated, neither the Trustee nor the
Remarketing Agent being obligated to use funds from any other source:
(a) Available Moneys (as hereinafter defined) directed by the Company to be used to purchase
Bonds as described in the Indenture;
(b) proceeds of the sale of such Bonds by the Remarketing Agen!
(c) Available Moneys or moneys drawn under the Letter of Credit or Alternate Credit Facility,
as the case may be, for the purchase of defeased Bonds;
(d) proceeds of a drawing under the Letter of Credit or an Alternate Credit Facility, as the
case may be, for such purchase; and
(e) any other moneys furnished by the Company for purchase of the Bonds;
provided, however, that funds for the payment of the purchase price of defeased Bonds shall be derived
only from the sources described in (b) and (e) above, in such order of priority.
"Avaiiable Moneys" means (a) during such time as a Letter of Credit or an Alternate Credit
Facility which does not consist of first mortgage bonds of the Company is outstanding, (i) moneys
on deposit in trust with the Trustee for a period of. 123 days prior to and during which no petition
in bankruptcy or similar insolveney proceeding has been filed by or againstthe Company or the Issuer
or is pending, (ii) proceeds of the issuance of refunding bonds if, in the written opinion of nationally
recognized counsel experienced in bankruptcy matters and acceptable to the Issuer and the Tlustee
(which opinion shall be delivered to the Trustee at or prior to the time of the deposit of such proceeds
with the Trustee), the deposit and use of such proceeds will not constitute a voidable preference under
Section 547 of. the United States Bankruptcy Code in the event the Issuer or the Company were to
become debtors under the United States Bankruptcy Code and (iii) any other money (x) approved in
writing by Moody's Investors Service ("Moody's"), if the Bonds are then rated by Moody's, and
Standard and Poor's Corporation ("S&P"), if the Bonds are then rated by S&P and (y) the application
of which will not in the written opinion of nationally recognized counsel experienced in bankruptcy
matters and aeeeptable to the Issuer and the Trustee (which opinion shall be delivered to the Tlustee
at or prior to the time of such application), constitute a voidable preference under Section 544 or 547
of the United States Bankruptey Code in the event the Issuer or the Company were to become debtors
under the United States Bankruptcy Code, and (b) at any time that a Letter of Credit or an Alternate
Credit Facility is not outstanding, or if an Alternate Credit Facility consisting of first mortgage bonds
of the Company is outstanding, any moneys on deposit with the Trustee and proceeds from the
investment thereof.
Remarketing of Bonds
While the Bonds bear interest at a CP Rate, the Remarketing Agent shall offer for sale and use
its best efforts to remarket any Bond to be purchased on a CP Date on such CP Date, any such
remarketing to be made at a price equal to the principal amount thereof and for such CP Periods
as are available within the CP Date Parameters. In the event more than one prospective purchaser
has offered to purchase a Bond on a CP Date, the Remarketing Agent shall remarket the Bond to
the purehaser from among such prospective purchasers who has selected the next CP Period for such
Bond which will, in the Remarketing Agent's judgment, taking into consideration the overall yield
eurve determined as of such CP Date and projected market conditions during the 270 days or 365 or
366 days, as applicable to a particular year (depending on the maximum length of the then current
Interest Coverage Period), next suceeeding such CP Date, be the most beneficial for the financing
program while the Bonds bear interest at a CP Rate. If a Bond cannot be remarketed, the CP Date
for such Bond shall be the next Business Day. While Bonds bear a Daily Interest Rate, a Weekly
Interest Rate, a Monthly Interest Rate or a Tender Interest Rate, the Remarketing Agent will offer
for sale and use its best efforts to remarket Bonds to be purchased on the dates and at the purchase
prices as described in this Official Statement.
No Purchases or Sales After Certain Defoults. Anything in the Indenture to the contrary
notwithstanding, (i) at any time when neither the Letter of Credit nor an Alternate Credit Facility,
as the case may be, is outstanding, there shall be no purchases or sales of Bonds as described above,
and (ii) at any time during which the Letter of Credit or an Alternate Credit Facility, as the case may
be, is outstanding, there shall be no sales of Bonds, if, in either case, there shall have occurred and
not have been cured or waived an Event of Default described in paragraph (a), (b), (c), (d) or (e) under
the caption "THE INDENTURES-Defaults" of which the Remarketing Agent and the Trustee have
actual knowledge.
Limited Obligations
The Bonds, together with the premium, if any, and interest thereon, are limited, and not general,
obligations of the Issuer not constituting or giving rise to a pecuniary liability of the Issuer or any
charge against its general credit or taxing powers nor an indebtedness of or a loan of credit thereof
and shall be payable solely from the revenues to be received by the Issuer under the Agreement and
from any other moneys made available tn the Issuer for such purpose, inciuding moneys drawn under
the Letter of Credit or an Alternate Credit Facility, as the case may be. The Issuer shall not be obligated
to pay the purchase price of the Bonds from any source.
Mandatory Redemption of Bonds
While the Bonds bear interest at a Tender Interest Rate or at a Fixed Interest Rate, the Bonds
are subject to mandatory redemption in whole or in part at the prineipal amount thereof plus accrued
interest to the date of redemption within 180 days following a "Determination of Taxability" as
described below. The Bonds shall be redeemed either in whole or in part in such principal amount
that the interest payable on the Bonds remaining outstanding after such redemption would not be
included in the gross income of any Owner thereof, other than an Owner of a Bond who is a "substantial
user" of the Facilities (as hereafter defined) or a "related person" within the meaning of Section
103(bX13) of the Internal Revenue Code of 19&1, as amended (the "1954 Code").
A "Determination of Taxability" shall be deemed to have occurred if, as a result of an Eyent of
Taxability (as defined below), a final decree or judgment of any federal court or a final action of the
Internal Revenue Service determines that interest paid or payable on any Bond is or was includible
in the gross income of an Owner of the Bonds for federal income tax purposes under the Internal
Revenue Code of 1986 (the "Code") (other than an Owner who is a "substantial user" or "related
person" within the meaning of Section 103(bX13) of the 1954 Code). However, no such decree or action
will be considered final for this purpose unless the Company has been given written notice and, if
it is so desired and is legally allowed, has been afforded the opportunity to contest the same, either
directly or in tfte name of any Owner of a Bond, and until conclusion of any appellate review, if sought.
If the Trustee receives written notice from any Owner stating (i) that the Owner has been notified
in writing by the Internal Revenue Service that it proposes to include the interest on any Bond in
the gross income of such Owner for the reasons described therein or any other proceeding has been
instituted against such Owner which may lead to a final decree or action as described in the Agreement,
and (ii) that such Owner will afford the Company the opportunity to contest the same, either directly
or in the name of the Owner, until a conclusion of any appellate review, if sought, then the Trustee
shall promptly give notice thereof to the Company, the Bank (or the Obligor on the Alternate Credit
Facility, as the ease may be), the Issuer and the Owner of each Bond then outstanding. If a final decree
or aetion as described above thereafter occurs and the Trustee has received written notice thereof
at least 45 days prior to the redemption date, the Trustee shall make the required demand for
prepayment of the amounts payable under the Agreement and prepayment of the Bonds and give
notice of the redemption of the Bonds at the earliest practical date, but not later than the date specified
in the Agreement and in the manner provided by the Indenture.
An "Event of Taxability" means the failure of the Company to observe any covenant, agreement
or representation in the Agreement, which failure results in a Determination of Taxability.
A DETERMINATION OF TAXABILITY MAY NOT OCCUR FOR A SUBSTANTIAL PERIOD
OF TIME AEIER INTEREST FIRST BECOMES INCLUDIBLE IN THE GROSS INCOME OF
OWNERS OF THE BONDS. IN SUCH EVENT, THE TAX LIABILITY OF OWNERS OF'THE
BONDS MAY EXTEND TO YEARS FOR WHICH INTEREST WAS RECEIVED ON THE BONDS
AND FOR WHICH THE RELEVANT STATUTE OF LIMITATIONS HAS NOT YET RUN.
MOREOVER, OWNERS OF BONDS WILL NOT RECEIYE ANY ADDITIONAL INTEREST,
PREMIUM OR OTHER PAYMENT TO COMPENSATE THEM FOR FEDERAI INCOME TAXES,
INTEREST AND PENALTIES WHICH MAY BE ASSESSED WITH RESPECT TO SUCH
INTEREST.
Optional Redemption of Bonds
(a) During any CP Period, the Bonds shall be subject to optional redemption on any Business
Day by the Issuer, in whole or in part (and if in part, in an Authorized Denomination), at the direction
of the Company (but only with the timely written consent of the Bank or of the Obligor on the Alternate
Credit Facility, as the case may be), at the principal amount thereof plus accrued interest, if any, on
30 days' prior notice from the Company to the Issuer and the Trustee.
(b) While the Bonds bear interest at a Daily lnterest Rate, a Weekly Interest Rate or a Monthly
Interest Rate, the Bonds shall be subject to optional redemption on any Interest Payment Date by
the Issuer, in whole or in part (and if in part, in an Authorized Denomination), at the direction of the
Company (but only with the timely written consent of the Bank or of the Obligor on the Alternate
10
Credit Facility, as the case may be), at the principal amount thereof plus accrued interest, if any, with
30 days'prior notice from the Company to the Issuer and the Trustee.
(c) While the Bonds bear interest at a Fixed Interest Rate or at a Tender Interest Rate, the Bonds
shall be subject to optional redemption on any Interest Payment Date by the Issuer, in whole or in
part (and if in part, in an Authorized Denomination), at the direction of the Company (but only with
the timely written consent of the Bank or of the Obligor on the Alternate Credit Facility, as the case
may be), with 30 days'prior notice from the Company to the Issuer and the Trustee;provided, however,
that the Bonds shall not be redeemable during the No-Call Period shown below, which shall begin
on the first day of the Fixed Rate Period or Tender Period. On and during the six months after the
Interest Payment Date that ends the No-Call Period (or the next succeeding Interest Payment Date,
if the No-Call Period does not end on an Interest Payment Date), the Bonds shall be redeemable at
the percentage of their principal amount shown in the Initial Redemption Price column plus interest
accrued to the redemption date. The redemption price shall decline semiannually by the amount shown
in the SemiAnnual Reduction in Redemption Price column until the Bonds shall be redeemable without
premium in the year or portion of a year indicated in the No Premium column and in any later years
or periods in the Fixed Rate Period or Tender Period.
Fixed Rate Periodor Tender Period
Equal toor Greater But LessThan Than
18 Years N/A
12 Years 18 Years
9 Years 12 Years
7 Years 9 Years
5 Years 7 Years
3 Years 5 Years
2 Years 3 Years
1 Year 2 Years
6 Months 1 Year
If the Fixed Rate Period or Tender Period is less than six months, the Bonds will not be redeemable
pursuant to this subparagraph. While a Letter of Credit or an Alternate Credit Facility is outstanding,
the Company may only cause a redemption of Bonds pursuant to this subparagraph which would
require a payment of a premium if on the date of the giving of notice of redemption the Trustee has
Available Moneys in the Bond Fund or can draw under the Letter of Credit or an Alternate Credit
Facility, as the case may be, in an amount sufficient to pay such premium due on the date of redemption.
The initial Letter of Credit does not provide for drawings in respect of the amount of any such
redemption premium.
If the interest rate borne by the Bonds is converted pursuant to the Indenture, and if in connection
with such conversion the Company directs in writing to the Trustee and the Remarketing Agent
pursuant to the Indenture that the foregoing schedule of premiums and No-Call Periods be revised
and specifies the new premiums and No-Call Periods, the foregoing schedule of premiums and No-Call
Periods shall be revised in accordance with such direction of the Company.
(d) At any time, the Bonds shall be subject to redemption by the Issuer in whole or in part (and
if in part, in an Authorized Denomination), at the direction of the Company (but only with the timely
written consent of the Bank if required by the Letter of Credit or, if applieable, of the Obligor on
the Alternate Credit Facility if required by such Alternate Credit Facility), with 30 days' prior notice
from the Company to the Issuer and the Trustee, at the principal amount thereof plus accrued interest
to the redemption date, but without premium, if the Company shail deliver a certificate stating that
one of the following events has occurred:
(i) the Company shall have determined that the continued operation of the Project (as defined
in the Indenture) is impracticable, uneconomical or undesirable for any reason; or
(ii) the Company shall have determined that the continued operation of the pollution control
facilities or the solid waste disposal facilities, as the case may be (the "Facilities"), at the steam
rnitiar ffil*XfllNo-Call Redemption RedemptionPeriod Price Price No Premium
5 Years 103 % yz% 9th Year
5 Years 103 y, 9th Year
5 Years 102 1/z Sth Year
5 Years 101 1/z 7th Year
3 Years 101 1/z 5th Year
2 Years 700y2 % 4th Year
1 Year 1001/+ 1/e, 18th Month
6 Months 1007e 7/e 12th Month
6 Months 100 N/A N/A
11
electric generating plant of which the Project is a part is impracticable, uneconomical or
undesirable due to (A) the imposition of taxes, other than ad valorem taxes currently levied upon
privately owned property used for the same general purpose as the Facilities, or other liabilities
or burdens with respect to the Facilities or the operation thereof, (B) changes in technology, in
environmental standards or legal requirements or in the economic availability of materials,
supplies, equipment or labor or (C) destruction of or damage to all or part of the Facilities; or
(iii) all or substantially all of the Facilities or the Project shall have been condemned or taken
by eminent domain; or
(iv) the operation of the Facilities or the Project shall have been enjoined or shall have
otherwise been prohibited by, or shall conflict with, any order, decree, rule or regulation of any
court or of any federal, state or local regulatory body, administrative agency or other
governmental body.
Redemption Upon Expiration or Termination
of Letter of Credit or Alternate Credit F acility
Except for Bonds redeemed as described under "THE Boxos-Redemption Upon Conversion,"
the Bonds are subject to mandatory redemption by the Issuer, in whole, at a price equal to the principal
amount thereof, plus accrued interest, if any, on the earlier of (i) the Interest Payrnent Date next
preceding the date of the expiration of the term of the Letter of Credit or the term of the Alternate
Credit Facility except as provided in the following clause (ii), or (ii) a Business Day not less than five
days next preceding the Business Day next preceding the termination date of the Letter of Credit
or Alternate Credit Facility specified by the Company in a notice given by the Company as described
herein in the second paragraph under the caption "THE LETTERS oF Cnuprr-Alternate Credit
Facility," or in the second paragraph under the caption "Tun LETTERS oF CREDTT-Termination of
Letter of Credit or Alternate Credit Facility," provided that there shall not be so redeemed (a) Bonds
delivered to the Remarketing Agent or the Trustee for purchase on sueh Interest Payment Date or
on such Business Day or on any Business Day from the date of notice of such redemption through
the date of such redemption, (b) Bonds with respect to which the Trustee shall have received written
directions not to so redeem the same from the Owners thereof, (c) Bonds purchased or deemed to
have been purehased pursuant to the Indenture as described below under "TIIE BoNDs-Purehase
by Company in Lieu of Redemption," and (d) Bonds issued in exchange for or upon the registration
of transfer of Bonds referred to in the preceding clauses (a) and (b).
An Owner of Bonds may direct the Issuer not to redeem any Bond or Bonds owned by it by
delivering to the Trustee at its principal office on or before the third Business Day preceding the date
fixed for such redemption an instrument or instruments in writing executed by such Owner which,
among other things, (i) specifies the numbers and denominations of the Bonds held by such Owner,
(ii) specifically acknowledges each of the matters set forth in a notice given by the Trustee, and (iii)
directs the Issuer not to redeem such Bonds. Any such instrument delivered to the Trustee shall be
irrevocable with respeet to the redemption for which such instrument was delivered and shall be
binding upon subsequent Owners of such Bonds, including Bonds issued in exchange therefor or upon
the registration of the transfer thereof.
Redemption Upon Conversion
The Bonds shall be subject to mandatory redemption by the Issuer, in whole, on a Conversion
Date, at the principal amount thereof or, in the case of Bonds to be redeemed upon conversion from
a Tender Interest Rate or a Fixed Interest Rate, at the percentage of their principal amount at which
they wouid be redeemed as described above under paragraph (e) of "THE BoNns-Optional
Redemption of Bonds" on the Conversion Date plus accrued interest, if any; provided that there shall
not be so redeemed (a) Bonds delivered to the Remarketing Agent or the Trustee for purchase on
such Conversion Date or on any Business Day from the date notice of such redemption is given through
the date of such redemption, (b) Bonds with respect to which the Trustee shall have received written
directions not to so redeem the same from the Owners thereof, (c) Bonds purchased or deemed to
have been purchased pursuant to the Indenture as described below under "THE BoNDs-Purchase
by Company in Lieu of Redemption," and (d) Bonds issued in exchange for or upon the registration
t2
of transfer of Bonds referred to in clauses (a) and (b) above. While a Letter of Credit or an Alternate
Credit Facility is outstanding, the Company may only cause a redemption of Bonds pursuant to this
paragraph which would require a payment of a premium if on the date of the giving of notice of
redemption the Trustee can draw under the Letter of Credit or an Alternate Credit Facility, as the
case may be, in an amount sufficient to pay such premium due on the date of redemption. The initial
Letter of Credit does not provide for drawings in respect of the amount of any such redemption
premium.
An Owner may direct the Issuer not to redeem any Bond or Bonds owned by it by delivering
to the Trustee at its principal office on or before the third Business Day (sixth Business Day if the
Bonds are to be converted to a Tender Interest Rate or a Fixed Interest Rate) preceding the date
fixed for such redemption an instrument or instruments in writing executed by such Owner which,
among other things, (i) specifies the numbers and denominations of the Bonds held by such Owner,
(ii) specifically acknowledges each of the matters set forth in a notice given by the Trustee, and (iii)
directs the Issuer not to redeem such Bonds. Any such instrument delivered to the Trustee shall be
irrevocable with respect to the redemption for which such instrument is delivered and shall be binding
upon subsequent Owners of such Bonds, including Bonds issued in exchange therefor or upon the
registration of the transfer thereof.
Denomination Redemption
The Bonds or portions thereof are subject to mandatory redemption by the Issuer on the Interest
Payment Date upon which the Bonds begin to accrue interest at a Floating Interest Rate following
conversion from a Tender Interest Rate or a Fixed Interest Rate in sueh amounts so that all
outstanding Bonds are in Authorized Denominations.
Purchase by Company in Lieu of Redemption
The Company shall have the right to purchase or cause to be purchased Bonds to be redeemed
as described above under "THE Bouns-Redemption Upon Expiration or Termination of Letter of
Credit or Alternate Credit Facility," "THE BoNDs-Redemption Upon Conversion" and "THE
Bouns-Denomination Redemption" at a purchase price equal to the principal amount of the Bonds
to be so purchased plus accrued interest, if any, or in the case of a purchase on conversion from a
Fixed Interest Rate or a Tender Interest Rate, the redemption price for redemption of sueh Bonds
on the Conversion Date as described above under (c) of "Tnn Bouos-Optional Redemption of Bonds."
Moneys for the payment of the purchase price shall be derived, in the following order of priority, from:
(i) Available Moneys furnished by the Company for such pu{pose, (ii) proceeds of the sale of such
Bonds, (iii) Available Moneys or moneys drawn under the Letter of Credit or Alternate Credit Facility,
as the case may be, for the purchase of defeased Bonds, (iv) moneys drawn under the Letter of Credit
or an Alternate Credit Facility, as the case may be, for such purpose and (v) any other moneys
furnished by the Company for such purpose; provided, however, that funds for the payment of the
purchase price of defeased Bonds shall be derived only from the sources described in (ii) and (iii) above,
in such order of priority; and provided further that if in connection with such redemption, the Letter
of Credit or an Alternate Credit Facility which does not consist of first mortgage bonds of the Company
is replaced with an Alternate Credit Facility consisting of first mortgage bonds of the Company or
is not being replaced by any other Alternate Credit Facility, moneys for the payment of the purchase
price of the Bonds may not be derived from (ii) above. Bonds to be so purchased pursuant to the
Indenture on the date fixed for redemption of sueh Bonds which are not delivered on such date will
nonetheless be deemed to have been delivered for purchase by the Owners thereof and to have been
purchased pursuant to the Indenture. The Trustee shall hold moneys for such purchase of Bonds,
without liability for interest thereon, for the benefit of the former Owner of the Bond on such date
of purchase, who shall thereafter be restricted exclusively to such moneys for any claim of whatever
nature on such Owner's part under the Indenture or on, or with respect to, such Bond. Any moneys
so deposited with and held by the Trustee not so applied to the payment of Bonds within six months
after such date of purchase shall be paid by the Trustee to the Bank (or the Obligor on the Alternate
Credit Facility, as the case may be) to the extent of any amount payable under the Reimbursement
Agreement (as defined below) and the balance to the Company upon the written direetion of the
Company, and thereafter the former Owners shall be entitled to look only to the Company for pa;rment,
13
and then oniy to the extent of the amount so repaid, and the Company shall not be liable for any interest
thereon and shall not be regarded as a trustee of such money.
Procedure for and Notice of Redemption
If less than all of the Bonds shall be called for redemption, the particular Bonds or portions thereof
to be redeemed shall be selected by the Trustee, in such manner as the Trustee in its sole discretion
may deem proper, in the principal amount designated by the Company or otherwise as required by
the Indenture. In selecting Bonds for redemption, the Trustee shall treat each Bond as representing
that number of Bonds which is obtained by dividing the principal amount of each Bond by the minimum
denomination in which Bonds are then authorized to be issued at the time of such redemption. Any
Bonds selected for redemption which are deemed to be paid in accordance with the provisions of the
Indenture will cease to bear interest on the date fixed for redemption. Upon presentation and surrender
of such Bonds at the place or places of payment such Bonds shall be paid and redeemed. Notice of
redemption shall be given by mail as provided in the Indenture, at least 10 days prior to the redemption
date, provided that the failure to duly give notice by mailing to any Owner, or any defect therein,
shall not affect the validity of any proceedings for the redemption of any other of the Bonds.
\4rith respect to notice of any optional redemption of the Bonds, as described above, unless upon
the giving of such notice, such Bonds shall be deemed to have been paid within the meaning of the
Indenture, such notice shall state that such redemption shall be conditional upon the receipt by the
Trustee, on or prior to the date fixed for such redemption, of moneys sufficient to pay the principal
of, premium, if any, and interest on such Bonds to be redeemed. If such moneys are not so received,
the Issuer will not redeem such Bonds and the Trustee shall give notice, in the manner in which the
notice of redemption was given, that such redemption will not take place.
THE LETTERS OF CREDIT
The following is a brief description of each Letter of Credit and certain of the terms common
to the Letters of Credit and the agreements dated as of January 1, 1988 between the Company and
the Banks pursuant to which such Letters of Credit are issued (individually, a "Reimbursement
Agreement" and, collectively, the "Reimbursement Agreements," which term shall also include the
document pursuant to which an Alternate Credit Facility is issued). AII references in this description
are to the documents or the LetLers of Credit (or Alternate Credit Facilities) corresponding to the
respective issues of Bonds.
The Letter of Credit will be an irrevoeable obligation of the Bank which will expire at the close
of the Bank's business on January 14, 1998, unless earlier terminated or otherwise extended, to pay
to the Trustee, upon request and in accordance with the terms thereof, up to (a) an amount equal
to the outstanding principal amount of the Bonds to be used (i) to pay the principal of the Bonds, (ii)
to enable the Remarketing Agent to pay the portion of the purchase price equal to the principal amount
of Bonds delivered to it for purchase and not remarketed, (iii) to enable the Trustee to pay the portion
of the purchase price equal to the principal amount of Bonds delivered to it for purchase, (iv) to enable
the Trustee to pay the purchase price of Bonds not retained by an Owner on a CP Date or (v) to enable
the Company to purehase Bonds in lieu of redemption under certain circumstances, plus (b) an amount
equal to 294 days'accrued interest on the Bonds (calculated at a rate of.72% per annum and on the
basis of a year of 365 days), to be used (i) to pay interest on the Bonds or (ii) to enable the Trustee
or the Remarketing Agent to pay the portion of the purchase price of the Bonds properly delivered
for purchase equal to the accrued interest, if any, on such Bonds. The Company is permitted under
the Agreement and the Indenture to secure an extension of the Letter of Credit beyond the expiration
date of the then current Letter of Credit, but the Bank is under no obligation to agree to such an
extension.
The Bank's obligation under the l,etter of Credit will be reduced to the extent of any drawings
thereunder. However, with respect to a drawing by the Trustee to enable the Remarketing Agent
or the Trustee to pay the purchase price of Bonds delivered for purchase and not remarketed, such
amounts shall be immediately reinstated upon reimbursement. With respect to a drawing by the
Trustee for the payment of interest on the Bonds, the amount that may be drawn under the Letter
of Credit will be automatically reinstated to the extent of sueh drawing as of the close of business
t4
on the ninth Business Day following such drawing unless the Bank shall have notified the Trustee
within nine Business Days after such drawing that the Company has failed to reimburse the Bank
or to cause it to be reimbursed for such drawing.
Upon an acceleration of the maturity of the Bonds due to an event of default under the Indenture,
the Trustee will be entitled to draw on the Letter of Credit, if it is then in effect, to the extent of the
aggregate principal amountofthe Bonds outstanding, plus up to 294 days'interestaccrued and unpaid
on the Bonds, less amounts paid in respect of principal or interest for which the Letter of Credit has
not been reinstated as described above.
Upon the earliest of (i) the close of business on January 14, 1993, unless otherwise extended
pursuant to an agreement between the Bank and the Company, (ii) the making of a final drawing under
the Letter of Credit, or (iii) the date the Trustee surrenders the Letter of Credit to the Bank for
cancellation, the Letter of Credit shall expire (the "Expiration Date"). The Trustee agrees to surrender
the Letter of Credit to th€ Bank, and not to make any drawing, after (i) 4:00 p.m. Iocal time in the
city of the office of the Bank that will issue the Letter of Credit on the Expiration Date, (ii) there are
no Bonds outstanding under the Indenture, (iii) the first Business Day after the conversion of the
interest rate on the Bonds to a Fixed Interest Rate, or (iv) a Substitute Letter of Credit or Alternate
Credit Facility, as the case may be, has been delivered to the Trustee.
Alternate Credit Faciliff
At any time (with notice to the Bank or the Obligor on the Alternate Credit Facility, as the case
may be) the Company may, at its option, provide for the delivery to the Trustee of an Alternate Credit
Facility to replace the Letter of Credit or the Alternate Credit Facility then in effect, as the case may
be. An Alternate Credit Facility may have an expiration date earlier than the maturity of the Bonds,
but in no event shall such Alternate Credit Facility have an expiration date earlier than one year from
the date of its delivery. The Company must furnish to the Trustee (i) an opinion of nationally recognized
Bond Counsel ("Bond Counsel") stating that the delivery of such Alternate Credit Facility rs authorized
under the Agreement and complies with the terms thereof and will not cause the interest on the Bonds
to become includible in the gross income of the Owners thereof for federal income tax purposes and
(ii) written evidence from Moody's, if the Bonds are then rated by Moody's, or S&P, if the Bonds are
then rated by S&P, in each case to the efiect that such rating agency has reviewed the proposed
Alternate Credit Faeility and that the delivery of the proposed Alternate Credit Facility will not, by
itself, result in a reduction or withdrawal of its rating or ratings of the Bonds.
The Company may, however, at any time, provide for the delivery on any Business Day to the
Trustee of an Alternate Credit Facility where the above-described evidence from Moody's or S&P's
is not reeeived, provided that the Company shall deliver to the Trustee, the Remarketing Agent the
Indexing Agent and the Bank (or the Obligor on the Alternate Credit Facility, as the case may be)
a notice which (A) states (x) the effective date of the Alternate Credit Facility to be so provided and
(y) the termination date of the Letter of Credit or Alternate Credit F acility which is to terminate (which
termination date shall not be prior to the effective date of the Alternate Credit Facility to be so
provided), (B) describes the terms of the Alternate Credit Facility, (C) directs the Tlustee to give notice
of the call of the Bonds for redemption, in whole, on the Business Day next preceding the termination
date of the Letter of Credit or Alternate Credit Facility which is to terminate (which Business Day
shall be not less than 30 days from the date of receipt by the Trustee of the notice from the Company
specified above), in accordance with the Indenture and (D) directs the Trustee, after taking such actions
as are required to be taken to provide moneys due under the Indenture in respect of the Bonds or
the purchase thereof, to surrender the Letter of Credit or Alternate Credit Facility, as the case may
be, which is to terminate, to the Obligor thereon on the next Business Day after the later of the effective
date of the Alternate Credit Facility to be provided and the termination date of the Letter of Credit
or Alternate Credit Facility which is to terminate and to thereupon deliver any and all instruments
which may be reasonably requested by such Obligor. The Company shall furnish to the Ttustee an
opinion of Bond Counsel satisfying the requirement of the next preceding paragraph in connection
with such delivery.
After the Interest Payment Date on which Bonds are to be redeemed as described in clause (i)
in the first paragraph under "THE Boltos-Redemption Upon Expiration or Termination of Letter
15
of Credit or Alternate Credit Facility," the Company may, but is not obligated to, provide for delivery
of an Alternate Credit Facility for payment of the principal of and interest on the Bonds. The Company
shall furnish to the Trustee an opinion of Bond Counsel satisfying the requirement of the second
preceding paragraph in connection with such delivery.
Substitute Letter of Credit
The Company may, at its option, at any time provide for the delivery to the Trustee of a Substitute
Letter of Credit. No Substitute Letter of Credit may be delivered which:
(il so long as the interest rate borne by the Bonds is a CP Rate, reduees the Interest
Coverage Period to a period shorter than 294 days (during such time as CP Periods can be from
one to not more than270 days) or 389 or 390 days, as applicable to a particular year (during such
time as CP Periods can be from one to 365 or 366 days, as applicable to a particular year);
(ii) so long as the interest rate borne by the Bonds is a Daiiy Interest Rate, a Weekly Interest
Rate or a Monthly Interest Rate, reduces the Interest Coverage Period to a period shorter than
65 days;
(iii) so long as the interest rate borne by the Bonds is a Tender Interest Rate or a Fixed
Interest Rate, reduces the Interest Coverage Period to a period shorter than 208 days;
(iv) decreases the Interest Coverage Rate below 12%; or
(v) increases the Interest Coverage Rate above the Maximum Rate.
The Company may, at its option, at zny time direct in writing the Trustee and the Remarketing
Agent to allow the selection of CP Periods of from one to no more than 365 or 366 days, as applieable
to a particular year, or from one to no more than 2?0 days, but only if (for such time as CP Periods
can be from one to 365 or 366 days, as applicable to a particular year) the Company provides for the
delivery to the Trustee of a Substitute Letter of Credit which increases the Interest Coverage Period
to 389 or 390 days, as applicable to a particular year.
Termination of Letter of Credit or Alternate Credit Facility
At any time, the Company may, at its option, provide for the termination on any Business Day
of the Letter of Credit or any Alternate Credit Facility then in effect. The Company must furnish to
the Trustee (i) an opinion of Bond Counsel stating that the termination of the Letter of Credit or
Alternate Credit Facility is authorized under the Agreement and complies with the terms thereof and
will not cause the interest on the Bonds to become includible in the gross income of the Owners thereof
for purposes of federal income taxation and (ii) written evidence from Moody's, if the Bonds are then
rated by Moody's, or S&P, if the Bonds are then rated by S&P, in each case to the effect that such
rating agency has reviewed the proposed termination of the Letter of Credit or Alternate Credit
Facility and that such termination will not, by itself, result in a reduction or withdrawal of its rating
or ratings of the Bonds.
The Company may, however, at any time, at its option, provide for the termination on any Business
Day of the Letter of Credit or any Alternate Credit Facility then in effect when the above-described
evidence from Moody's or S&P is not received, provided that the Company shall deliver to the Trustee,
the Rernarketing Agent, the Indexing Agent and the Bank (or the Obligor on the Alternate Credit
Facility, as the case may be) a notice which (A) states the termination date of the Letter of Credit
or Alternate Credit Facility which is to terminate, (B) directs the Trustee to give notice of the call
of the Bonds for redemption, in whole, no later than the fifth day next preceding the Business Day
next preceding the termination date of the Letter of Credit or Alternate Credit Facility which is to
terminate (which Business Day shall be not less than 30 days from the date of receipt by the Trustee
of the notice from the Company specified above), in accordance with the Indenture and (C) directs
the Trustee, after taking such actions as are required to be taken to provide moneys due under the
Indenture in respect of the Bonds or the purchase thereof, to surrender the Letter of Credit or
Alternate Credit Facility, as the case may be, which is to terminate to the Obligor thereon on the next
Business Day after the termination date of the Letter of Credit or Alternate Credit Facility to be
16
terminated and to thereupon deliver any and all instruments which may be reasonably requested by
such Obligor.
CONVERSION OF RATE
The Bonds of each issue will be independent of the others and a conversion to an Alternative
Rate with respect to one issue will not necessarily result in a conversion with respect to the other
issues; however, a conversion may occur with respect to more than one issue at the same time. The
Bonds of each issue contain substantially the same terms and provisions, and the following is a
summary of certain provisions common to the five issues. All references in this deseription are to the
documents, the Bonds or the Letter of Credit relating to each issue of Bonds.
Conaersion to Fired Interest Rate, Tender Interest Rate or Floating Interest Rates. The
interest rate borne by the Bonds (the type of interest rate in effect immediately prior to a conversion
being herein called the "Existing Rate") shall be converted to a Fixed Interest Rate, a Tender Interest
Rate, a Tender Interest Rate with a Tender Period of different length than the then current Tender
Period or any of the Floating Interest Rates upon receipt by the Trustee of a written direction from
the Company specifying the specific method of interest accrual on the Bonds and the effective date
(which, if a Letter of Credit or an Alternate Credit Facility is outstanding, shall be a date at ieast
11 days prior to the Interest Payment Date next preceding the scheduled expiration date of the Letter
of Credit or Alternate Credit Facility, as the case may be) of the conversion to such method of accrual,
specifying changes, if any, to the Bond redemption prices and No-Call Periods and, if applicable,
specifying the length of the Tender Period (which must be a period of six months or an integral multipie
thereof, provided that the first Tender Period may be less than such period but must end on the day
next preceding a January 1 or July 1). The Conversion Date must be (a) if the Existing Rate is a Floating
Interest Rate other than a CP Rate, a Business Day not less than 30 days from the date of receipt
by the Trustee of the written direction from the Company specified above or (b) if the Existing Rate
is a CP Rate, a Business Day not less than 30 days from the date of receipt by the Trustee of the
written direction from the Company specified above or (c) if the Existing Rate is a Tender Interest
Rate, a January 1 or July 1 not less than 20 days after the receipt by the Trustee of the written notice
specified above and not prior to the end of the No-Call Period for such Tender Period or (d) if the
Bonds then bear a Fixed Interest Rate, a January 1 or July 1 not Iess than 20 days after the receipt
by the Trustee of the written notice specified above and not prior to the end of the No-Call Period
for such Fixed Rate Period. The written direction shall be accompanied by a written opinion, addressed
to the Trustee, the Issuer, the Company, the Bank (or the Obligor on an Alternate Credit Facility,
as the case may be) and the Remarketing Agent, of Bond Counsel selected by the Company and
acceptable to the Trustee and acceptable to the Remarketing Agent stating that such conversion (i)
is authorized or permitted by the Indenture, (ii) will not cause interest on the Bonds to become
includible in the gross income of the Owners thereof for purposes of federal income taxation and (iii)
will not violate the provisions of the Act or other applicable state law. The conversion of the interest
rate borne by the Bonds shall not become effective unless on the Conversion Date the Trustee shall
have received an opinion of such Bond Counsel dated the Conversion Date reaffirming the conclusions
of the opinion accompanying the written direction of the Company initiating the conversion.
Inability To Conaert. If for any reason a ehange in method of calculation of interest on the
Bonds cannot proceed, the Bonds shall continue to bear interest caleulated in the method applicable
prior to the proposed change.
Notice to Owners of Conaersion. The Trustee shall give notice by first-class mail to the Owners
of Bonds not less than 10 days and not more than 15 days prior to the Conversion Date. Such notice
shall state (i) that the method of determining the interest rate on the Bonds will be converted to an
alternate method of determining the rate, (ii) the effective date of the alternate method of determining
the rate, (iii) the procedures and dates involved in determining the rate and the procedure for notifying
Owners of the interest rate, (iv) when interest on the Bonds will be payable after the effective date,
(v) if the Trustee has been so notified by the Company, whether a Letter of Credit or an Alternate
Credit Faeility, as the case may be, will be in effect after such effective date and, if so, the issuer,
the expiration terms and the interest coverage of the Letter of Credit or Alternate Credit Facility,
t7
as the case may be, (vi) whether subsequent to such effective date the Owners of Bonds will no longer
have the right to deliver Bonds to the Remarketing Agent or the Trustee for purchase, (vii) that the
rating on the Bonds by Moody's, if the Bonds are then rated by Moody's, or S&P, if the Bonds are
then rated by S&P, may be reduced or withdrawn, and (viii) that all outstanding Bonds not repurchased
on or prior to the effective date will be redeemed on such effective date except Bonds with respect
to which the Owner has directed the Issuer not to redeem the same in accordance with the Indenture.
THE AGREEMENTS
Each Agreement will operate independently of the others, and a default under one Agreement
will not necessarily constitute a default under the other Agreements. The Agreements contain
substantially identical terms, and the following is a summary of certain provisions common to the
five Agreements. All references in this summary are to the documents, the Bonds or the Letters of
Credit (or Alternate Credit Facilities) relating to each Agreement.
Loan Payments
As Loan Payments, the Company will pay to the Trustee, for the account of the Issuer, an amount
equal to the principal of, premium, if any, and interest on the Bonds when due on the dates, in the
amounts and in the manner provided in the Indenture for the payment of the principal of, premium,
if any, and interest on the Bonds, whether at maturity, upon redemption, acceleration or otherwise;
provided, however, thatthe obligation of the Company to make any sueh l,oan Paymentwill be deemed
to be satisfied and discharged to the extent of the corresponding payment made (i) by the Bank to
the Trustee under the Letter of Credit or (ii) by the Obligor on the Alternate Credit Facility to the
Trustee under the Alternate Credit Faciiity.
From the date of the original issuance of the Bonds to and including the Interest Payment Date
next preceding the date of expiration or earlier termination of the Letter of Credit (or the Alternate
Credit Facility, as the case may be), the Company will provide for the payment of the principal of
the Bonds, upon redemption or acceleration, and interest on the Bonds when due, by the delivery of
the Letter of Credit (or the Alternate Credit Facility, as the case may be) to the Trustee. The Trustee
will be directed to draw moneys under the l,etter of Credit (or the Alternate Credit Facility, as the
case may be), in accordance with the provisions of the Indenture and the Letter of Credit (or the
Alternate Credit Facility, as the case may be), to the extent necessary to pay the prineipal of, premium,
if any, and interest on the Bonds if and when due. The initial Letter of Credit does not provide for
drawings in respect of amounts of such redemption premium.
Payments to Remarketing Agent and Trustee
The Company will pay to the Remarketing Agent and the Trustee amounts equal to the amounts
to be paid by the Remarketing Agent and the Trustee pursuant to the Indenture for the purchase
of outstanding Bonds, such arnounts to be paid by the Company to the Remarketing Agent and the
Trustee, as the case may be, on the dates such payments are to be made; provided, however, that
the obligation of the Company to make any such payment under the Agreement shall be redueed by
the amount of any moneys available for such payments, including proceeds from the remarketing
of the Bonds or moneys drawn under the Letter of Credit (or the Alternate Credit Facility, as the
case may be).
From the date of the original issuance of the Bonds to and including the Interest Payment Date
next preceding the date of the expiration or earlier termination of the Letter of Credit (or the Alternate
Credit Facility, as the case may be), the Company will provide for the payment of the amounts to
be paid by the Remarketing Agent or the Trustee for the purchase of Bonds by the delivery of the
Letter of Credit (or the Alternate Credit Facility, as the case may be) to the Trustee. The Trustee
will be directed to draw moneys under the Letter of Credit (or the Alternate Credit Facility, as the
case may be), in accordance with the provisions of the Indenture and the Letter of Credit (or the
Alternate Credit Facility, as the case may be), to the extent necessary for the purchase of Bonds.
Obligation Absolute
The Company's obligation to make Loan Payments and payments to the Remarketing Agent and
the Trustee for the purchase of Bonds is absolute, irrevocable and unconditional and will not be subject
18
to any defense other than payment or to any right of setoff, counterclaim or recoupment arising out
of any breach by the Issuer, the Bank (or Obligor on an Alternate Credit Facility), the Trustee or
the Remarketing Agent of any obligation to the Company.
Expenses
The Company is obligated to pay reasonabie compensation and to reimburse certain expenses
and advanees of the Issuer, the Trustee, the Registrar, the Remarketing Agent, Moody's, S&P and
the Indexing Agent directly to such entity.
Tax Covenants; Tax-Exempt Status of Bonds
The Company covenants that the Bond proceeds, the earnings thereon and other moneys on
deposit with respect to the Bonds will not be used in such a manner as to cause the Bonds to be
arbitrage bonds within the meaning of the Code.
The Company covenants that it will not take, or permit to be taken on its behalf, any action which
would cause the interest on the Bonds to become includible in the gross income of Owners of the Bonds
for purposes of federal income taxation and will take, or require to be taken, such action as may, from
time to time, be required under applicable law or regulation to continue to cause the interest on the
Bonds not to be includible in the gross income of the Owners thereof for purposes of federal income
taxation. See "TAx EXEMPTIoN."
Assignment; Merger
With the consent of the Bank (or the Obligor on the Alternate Credit Facility, as the case may
be), the Company's interest in the Agreement may be assigned in whole or in part by the Company
to another entity, subject, however, to the conditions that no assignment shall (a) cause the interest
payable on the Bonds (other than Bonds held by a "substantial user" or "related person" within the
meaning of Section 103(b)(13) of the 1954 Code) to become includible in the gross income of the Owners
thereof for purposes of federal income taxation or (b) relieve (other than as described in the next
succeeding paragraph) the Company from primary liability for its obligations to make the Loan
Payments or to make payments to the Remarketing Agent or the Trustee with respect to the purchase
of the Bonds or for any other of its obligations under the Agreement; and subject further to the
condition that the Company shall have delivered to the Tlustee and the Bank (or the Obligor on the
Alternate Credit Facility, as the case may be) an opinion of counsel to the Company that such
assignment complies with the provisions of this paragraph. The Company shall, within 30 days after
the delivery thereof, furnish to the Issuer, the Bank (or Obligor on the Alternate Credit Facility, as
the case may be) and the Trustee a true and complete copy of the agreements or other documents
effectuating any such assignment.
The Company may enter into the transactions described in the Joint Proxy Statement/Prospectus
of PacifiCorp and Utah Power & Light Company dated October 29, 1987 (the "Prospectus") filed as
a part of a Registration Statement on Form S-4 with the Securities and Exchange Commission,
Registration No. 33-18164, effective October 29, 1987, resulting in a Merger (as defined in the
Prospectus) or Reincorporation (as defined in the Prospectus) and the Merger of the Company into
PC/UP&L Merging Corp., an Oregon eorporation (to be renamed "PacifiCorp"). After the effectiveness
of the Merger or Reincorporation, PC/UP&L Merging Corp. will assume (either by operation of law
or in writing) all of the obiigations of the Company under the Agreement and all references to the
Company in the Agreement shall mean PC/UP&L Merging Corp.. (renamed "PacifiCorp").
The Company also may (a) consolidate with or merge into another domestic corporation (i.e., a
corporation (i) incorporated and existing under the laws of one of the states of the United States or
of ihe District of Columbia and qualified to do business in the State of Montana or the State of
Wyoming, as the ease may be, as a foreign corporation or (ii) incorporated and existing under the
laws of the State of Montana or the State of \{yoming, as the ease may be), or sell or otherwise transfer
to another domestic corporation all or substantially all of its assets as an entirety and thereafter
dissolve, provided the resulting, surviving or transferee corporation, as the case may be, shall be the
Company or as a result of the transaetion shall assume (either by operation of law or in writing) all
of the obligations of the Company under the Agreement; or (b) convey all or substantially all of its
r9
assets to one or more wholly owned subsidiaries of the Company so long as the Company shall remain
in existence and primarily liable on all of its obligations under the Agreement and the subsidiary or
subsidiaries to which such assets shall be so eonveyed shall guarantee in writing the performance
of all of the Company's obligations under the Agreement,
Defaults
Each of the following events will constitute an "Event of Default" under the Agreement:
(a) a failure by the Company to make when due any Loan Payment or any payment required
to be made to the Remarketing Agent or the Trustee for the purchase of Bonds, which failure
shall have resulted in an "Event of Default" as described herein in paragraph (a), (b) or (c) under
"THE INDENTT.TRES-Def aults " ;
(b) a failure by the Company to pay when due any other amount required to be paid under
the Agreement or to observe and perform any other covenant, condition or agreement under the
Agreement (other than a failure described in clause (a) above), which failure continues for a period
of 60 days (or such longer period as the Trustee and the Bank (or the Obligor on the Alternate
Credit Facility, as the case may be) may agree to in writing) after written notice given to the
Company and the Bank (or the Obligor on the Alternate Credit Facility, as the case may be) by
the Trustee or to the Company, the Trustee and the Bank (or the Obligor on the Alternate Credit
Facility, as the ease may be) by the Issuer; provided, however, that if such failure is other than
for the payment of money and cannot be corected within the applicable period, such failure shall
not constitute an Event of Default so long as the Company institutes corrective action within
the applicable period and such action is being diligently pursued; or
(c) certain events of bankruptcy, dissolution, liquidation or reorgahization of the Company.
The Agreement provides that, with respect to any Event of Default described in clause O) above,
if, by reason of acts of God, strikes, orders of political bodies, certain natural disasters, civil
disturbances and certain other events, or any cause or event not reasonably within the control of the
Company, the Company is unable in whole or in part to carry out one or more of its agreements or
obligations contained in the Agreement (other than its obligations to make when due Loan Payments
and payments to the Remarketing Agent or the Trustee for the purchase of Bonds and its obligation
to maintain its existence), the Company shall not be deemed in default by reason of not carrying out
such agreement or performing such obligation during the continuance of such inability.
Remedies
Upon the oecurrence and eontinuance of any Event of Default described in (a) or (c) in the second
preceding paragraph, and further upon the condition that, in accordance with the terms of the
Indenture, the Bonds shall have been declared to be immediately due and payable pursuant to any
provision of the Indenture, the Loan Payments shall, without further action, become and be
immediately due and payable. Any waiver of any "Event of Default" under the Indenture and a
rescission and annulment of its consequences will constitute a waiver of the corresponding Event or
Events of Default under the Agreement and a rescission and annulment of the consequences thereof.
See the caption "Tlm lNneNTunns-Defaults."
Upon the oceurrence and continuance of any Event of Default under the Agreement, the Issuer
may take any action at law or in equity to collect any payments then due and thereafter to become
due, or to enforce performance and observance of any obligation, agreement or covenant of the
Cornpany under the Agreement.
Any amounts collected upon an Event of Default under the Agreement will be applied in
accordance with the Indenture.
Amendments
The Agreement may be amended subject to the limitations contained in the Agreement and in
the Indenture. See the caption "THE INoENTURES-Amendment of the Agreement."
20
THE TNDENTURES
Each Indenture will operate independently of the others, and a default under one Indenture will
not necessarily constitute a default under the others. The Indentures contain substantially identical
terms, and the following is a summary of certain provisions common to the five Indentures. AII
referenees in this summary are to the documents, the Bonds or the Bond Fund relating to each
Indenture.
Pledge and Security
Pursuant to the Indenture, the Loan Payments will be pledged by the Issuer to secure the payment
of the principal of, and premium, if any, and interest on, the Bonds and all other amounts payable
under the Indenture. The lssuer wi]l also pledge and assign to the Trustee all its rights and interests
under the Agreement (other than its rights to indemnifieation and reimbursement of expenses and
certain other rights), and has pledged to the Trustee all moneys and obligations deposited or to be
deposited in the Bond Fund established with the Trustee; provided that the Trustee will have a prior
claim on the Bond Fund for the payment of its compensation and expenses and for the repayment
of any advances (plus interest thereon) made by it to effect performance of certain covenants in the
Indenture and the Agreement (except that the Trustee will not have such priority with respect to
amounts deposited in the Bond Fund from amounts drawn under the Letter of Credit or Alternate
Credit Facility).
Application of Proceeds
Proceeds from the sale of the Bonds will be deposited with the trustee for the Prior Bonds and
used for the Refunding.
Application of the Bond Fund
There is created under the Indenture a Bond Fund and therein established a Principal Account
and an Interest Account. Loan Payments, amounts drawn by the Trustee under the Letter of Credit
(or Alternate Credit Facility, as the case may be) for payment of the principal of, and interest on,
the Bonds when due, and certain other amounts specified in the Indenture are to be deposited in the
appropriate account in the Bond Fund. While any Bonds are outstanding and except as provided in
an arbitrage regulation agreement for each issue of Bonds among the Trustee, the related Issuer
and the Company, moneys in the Bond Fund will be used solely for the payment of the principal of,
and premium, if any, and interest on, the Bonds when due, or, in some circumstances, for payment
of the purchase price of the Bonds, subject to the prior claim of the Trustee to the extent described
in "THE hsopxrunos-Pledge and Security."
Funds for the payment of the principal oi and premium, if any, and interest on, the Bonds shall
be derived from the following sources in the order of priority indicated:
(a) Available Moneys;
(b) moneys drawn under the Letter of Credit or an Alternate Credit Facility, as the case may
be; and
(c) any other moneys paid by the Company pursuant to the Agreement or any other moneys
in the Bond Fund.
Investment of Funds
Moneys in the Bond Fund will, at the direction of the Company, be invested in securities or
obligations specified in the Indenture, provided, however, that during the term of the Letter of Credit
(or an Alternate Credit Faeility, as the case may be) moneys drawn under the Letter of Credit (or
an Alternate Credit Facility, as the case may be) shall be invested by the Trustee only in Government
Obligations (as defined in the Indenture) with a term not exceeding 30 days. All income or other gain
from such investments will be credited, and any loss will be charged, to the particular fund or account
from which the investments were made.
27
Defaults
Each of the following events will constitute an "Event of Default",under the Indenture:
(a) a failure to pay the principal of, or premium, if any, on, any of the Bonds (other than
Bonds pledged to the Bank (the "Pledged Bonds")) when the same becomes due and payable at
maturity, upon redemption or otherwise;
(b) a failure to pay an installment of interest on any of the Bonds (other than Pledged Bonds)
for a period of five days after such interest has become due and payable;
(c) a failure to pay amounts due to Owners of the Bonds who have delivered Bonds to the
Remarketing Agent or the Trustee for purchase for a period of flve days after such payment
has become due and payable;
(d) the Trustee's receipt of notice from the Bank not later than the ninth Business Day
following a drawing under the Letter of Credit that the Bank has not been reimbursed for such
drawing;
(e) the Trustee's receipt of notiee from the Bank (or the Obligor on the Alternate Credit
Facility, as the case may be) of an "Event of Default" under and as deflned in the Reimbursement
Agreement (which may be caused by the failure of the Company to comply with any of its
covenants and obligations thereunder);
(f) a failure by the Issuer to observe and perform any other covenant, condition or agreement
contained in the Bonds or the Indenture (other than a failure described in clause (a), (b) or (c)
above), which failure shall continue for a period of 90 days after written notice given to the Issuer
and the Company by the Trustee, which notice may be given at the discretion of the Trustee and
must be given at the written request of the Owners of not less than 25% in principal amount of
Bonds then outstanding, unless such period is extended by the Tbustee, or by the Trustee and
the Owners of a principal amount of Bonds not less than the principal amount of Bonds the Owners
of which requested such notice, as the case may be; provided, however, that the Trustee, or the
Trustee and the Owners of such prineipal amount of Bonds, as the case may be, will be deemed
to have agreed to an extension of such period if corrective action is initiated by the Issuer, or
the Company on behalf of the Issuer, within such period and is being diligently pursued; and
(g) an "Event of Default" under the Agreement.
Remedies
(i) Upon the occurrence (without waiver or cure) of an Event of Default described in clause (a),
(b) or (c) of the preceding paragraph or an Event of Default desmibed in clause (g) of the preceding
paragraph resulting from an "Event of Default" under the Agreement as described under clause (a)
or (c) of "THE AcREEMENT-Defaults" herein, the Trustee may (and upon the written request of the
Owners of not less than 25% in principai amount of the Bonds then outstanding the Trustee must),
or (ii) upon the occurrence (without waiver or cure) of an Event of Default described in clause (d)
or (e) of the preceding paragraph, the Trustee must by written notice to the Issuer, the Company
and the Bank (or the Obligor on the Alternate Credit Facility, as the case may be), declare the Bonds
to be immediately due and payable, whereupon they shall, without further action, beeome and be
immediately due and payable and, during the period the Letter of Credit (or Alternate Credit Facility,
as the case may be) is in effeet, with interest on the Bonds accruing to the Bond Payment Date (as
defined in the Indenture) established by the Trustee pursuant to the Indenture, anything in the
Indenture or in the Bonds to the contrary notwithstanding, and the Trustee shall give notice thereof
to the Issuer, the Company and the Bank (or the Obiigor on the Alternate Credit Facility, as the case
may be) and shall give notice by first-class mail thereof to Owners of the Bonds, and the Trustee shall
as promptly as practicable draw moneys under the Letter of Credit or an Alternate Credit Facility,
as the case may be, to the extent available thereunder, in an amount sufficient to pay principal of
and accrued interest on the Bonds to the Bond Payment Date.
The provisions described in the preceding paragraph are subject to the condition that if, so long
as no Letter of Credit or Alternate Credit Facility is outstanding, after the principal of the Bonds
22
shall have been so declared to be due and payable, and before anyjudgment or decree for the payment
of the moneys due shall have been obtained or entered as hereinafter provided, the Issuer shall cause
to be deposited with the Trustee a sum sufficient to pay all matured installments of interest upon
all Bonds and the principal of any and all Bonds which shall have beeome due otherwise than by reason
of such declaration (with interest upon such principal and, to the extent permissible by law, on overdue
installments of interest, at the rate per annum specified in the Bonds) and such amount as shall be
sufrcient to cover reasonable compensation and reimbursement of expenses payable to the Trustee,
and all Events of Default under the Indenture (other than nonpayment of the principal of Bonds which
shall have become due by said declaration) shall have been remedied, then, in every such case, sueh
Event of Default shall be deemed waived and such declaration and its consequenees rescinded and
annulled, and the Trustee shall promptly give written notice of such waiver, rescission or annulment
to the Issuer and the Company and shall give notice thereof to Owners of the Bonds by first-class
mail; but no such waiver, rescission or annulment shall extend to or afect any subsequent Event of
Default or impair any right or remedy consequent thereon.
The provisions of the second preceding paragraph are, further, subject to the condition that, if
an Event of Default described in clause (d) or (e) of "THE INonNruno-Defaults" shall have occurred
and if the Trustee shall thereafter have received notice from the Bank (or the Obligor on the Alternate
Credit Facility, as the case may be) (x) that the notice which caused such Event of Default to occur
has been withdrawn and (y) that the amounts available to be drawn on the Letter of Credit (or the
Alternate Credit Facility, as the case may be) to pay (i) the prineipal of the Bonds or the portion of
purchase price equal to principal and (ii) interest on the Bonds and the portion of purchase price equal
to accrued interest have been reinstated to an amount equal to the principal amount of the Bonds
outstanding plus accrued interest thereon for the applicable Interest Coverage Period at the Interest
Coverage Rate, then, in every such case, such Event of Default shall be deemed waived and its
consequences rescinded and annulled, and the Trustee shall promptly give written notice of such
waiver, rescission and annulment to the Issuer, the Bank (or the Obligor on the Alternate Credit
Facility, as the case may be), the Company and, prior to conversion to a Fixed Interest Rate, the
Remarketing Agent and shall give notice thereof to all Owners of the outstanding Bonds (if sueh
Owners were notified of the acceleration) by fust-class mail; but no such waiver, reseission and
annulment shall extend to or affect any subsequent Event of Default or impair any right or remedy
consequent thereon.
Upon the occurrence and continuance of any Event of Default under the Indenture, the Trustee
may, and upon the written request of the Owners of not less than?l% in principal amount of the Bonds
outstanding and receipt of indemnity to its satisfaction shall, pursue any available remedy to enforce
the rights of the Owners of the Bonds and require the Company, the Issuer or the Bank (or the Obligor
on the Alternate Credit Facility, as the case may be) to carry out its agreements, bring suit upon the
Bonds, require the Issuer to aeeount as if it were the trustee of an express trust for the Owners of
the Bonds or enjoin any acts or things which may be unlawful, or in violation of the rights of the
Owners of the Bonds. The Trustee is not required to take any action in respect of an Event of Default
(other than, in certain circumstances, to declare the Bonds to be immediately due and payable) or to
enforce the trusts created by the Indenture except upon the written request of the Owners of not
less than 25% in principal amount of the Bonds then outstanding and receipt of indemnity satisfactory
to it.
The Owners of a majority in principal amount of Bonds then outstanding will have the right to
direct the time, method and place of conducting all remedial proceedings under the Indenture or
exercising any trust or power conferred on the Trustee upon furnishing satisfactory indemnrff to
the Trustee and provided that such direction shall not result in any personal liability of the Ttustee.
No Owner of any Bond will have bny right to institute suit to execute any trust or power of the
Trustee unless such Owner has previously given the Tlustee written notice of an Event of Default
and unless the Owners of not less than 25% in prineipal amount of the Bonds then outstanding have
made written request of the Trustee so to do, and unless satisfactory indemnity has been offered to
the Trustee and the Trustee has not complied with such request within a reasonable time.
23
Notwithstanding any other provision in the Indenture, the right of the Owner of any Bond to
receive payment of the principal of, prernium, if any, and intereston his Bond on or'afterthe respective
due dates expressed therein, or to institute suit for the enforcement of any such payment on or after
such respective date, will not be impaired or affected without the eonsent of such Owner of the Bonds.
Defeasanee
All or any portions of Bonds (in Authorized Denominations) shall, prior to the maturity or
redemption date thereof, be deemed to have been paid for all purposes of the Indenture when:
(a) in the event said Bonds or portions thereof have been selected for redemption, the
Trustee shall have given, or the Company shall have given to the Trustee in form satisfactory
to it irrevocable instructions to give, notice of redemption of such Bonds or portions thereof;
(b) there shall have been deposited with the Trustee moneys (which constitute Available
Moneys or moneys drawn under the Letter of Credit or an Alternate Credit Faciliff) in an amount
as shall be sufficient to pay when due the principal of, premium, if any, and interest due and to
become due (which amount of interest to become due shall be calculated at the Maximum Rate)
on said Bonds or portions thereof on and prior to the redemption date or maturity date thereof,
as the case may be;
(c) in the event said Bonds or portions thereof do not mature and are not to be redeemed
within the next succeeding 30 days, the Issuer at the direction of the Company shall have given
the Trustee in form satisfactory to it irrevocable instructions to give, as soon as practicable in
the same manner as a notice of redemption is given pursuant to the Indenture, a notice to the
Owners of said Bonds or portions thereof that the deposit required by clause O) above has been
made with the Trustee and that said Bonds or portions thereof are deemed to have been paid
and stating the maturity or redemption date upon which moneys are to be available for the
payment of the principal of and interest on said Bonds or portions thereof; and
(d) the Trustee shall have received written evedence from Moody's, if the Bonds are then
rated by Moody's, and S&P, if the Bonds are then rated by S&P, that such action, if it applies
to less than all of the Bonds then Outstanding, will not result in a reduction or withdrawal of
the rating on the Bonds by Moody's or S&P, as the case may be.
Moneys deposited with the Trustee as described above shall not be withdrawn or used for any
purpose other than, and shall be held in trust for, the payment of the principal of and interest on said
Bonds or portions thereof, or for the payment of the purchase price of Bonds in accordance with the
Indenture; provided that such moneys, if not then rieeded for such purpose, shall, to the extent
practicable, be invested and reinvested in Government Obligations maturing on or prior to the earlier
of (a) the date moneys may be required for the purchase of Bonds or (b) the Interest Payment Date
next succeeding the date of investment or reinvestment, and interest earned from such investments
shall be paid over to the Company, as received by the Trustee, free and clear of any trust, lien or
pledge.
The provisions of the Indenture relating to (i) the registration and exchange of Bonds, (ii) the
delivery of Bonds to the Remarketing Agent or the Trustee for purchase and the related obligations
of the Remarketing Agent and the Trustee with respect thereto, (iii) the mandatory redemption of
the Bonds in connection with the expiration of the term of the Letter of Credit (or the Alternate Credit
Facility, as the ease may be) and (iv) payment of the Bonds from such moneys, shall remain in full
force and effect with respect to all Bonds until the maturity date of the Bonds or the last date fixed
for redemption of all Bonds prior to maturity, notwithstanding that all or any portion of the Bonds
are deemed to be paid; provided, further, that the provisions with respect to registration and exchange
of Bonds shall continue to be effeetive until the maturity or the last date fixed for redemption of all
Bonds.
In the event the requirements of the next to the last sentence of the next succeeding paragraph
can be satisfied, the preeeding three paragraphs shall not apply and the following two paragraphs
shall be applicable.
24
Any Bond shall be deemed to be paid within the meaning of the Indenture when (a) payment of
the principal of and premium, if any, on such Bond, plus interest thereon to the due date thereof
(whether such due date is by reason of maturity, acceleration or upon redemption as provided in the
Indenture), either (i) shall have been made or caused to be made in accordance with the terms thereof,
or (ii) shall have been provided for by irrevocably depositing with the Trustee in trust and irrevocably
set aside exciusively for such payment, (1) Available Moneys or moneys drawn under the Letter of
Credit or an Alternate Credit Facility, as the case may be, sufficient to make such payment and/or
(2) Government Obiigations purehased with Available Moneys or moneys drawn under the Letter of
Credit or an Alternate Credit Facility, as the case may be, maturing as to principal and interest in
such amount and at such time as will insure, without reinvestment, the availability of sufficient moneys
to make such payment, and (b) all necessary and proper fees, compensation and expenses ofthe Tlustee
and the Registrar perbaining to the Bonds with respect to which such deposit is made shall have been
paid or the payment thereof provided for to the satisfaction of the Trustee. The provisions of clause
(2) of this paragraph shall apply only if (x) the Bond with respect to which such deposit is made is
to mature or be called for redemption prior to the next succeeding date on which such Bond is subject
to purchase as described herein under the caption "THE BoNDs-Purchase of Bonds" and (y) the
Company waives, to the satisfaction of the Trustee, its right to convert the interest rate borne by
such Bond. At such times as a Bond shall be deemed to be paid thereunder, as aforesaid, such Bond
shall no longer be secured by or entitled to the benefits of the Indenture, except for the purposes
of any such payment from such moneys or Government Obligations.
Notwithstanding the foregoing paragraph, no deposit under clause (aXii) of the immediately
preceding paragraph shall be deemed a payment of such Bonds as aforesaid until: (a) proper notice
of redemption of such Bonds shall have been previously given in aceordance with the Indenture, or
in the event said Bonds are not to be redeemed within the next succeeding 60 days, until the Company
shall have given the Trustee on behalf of the Issuer, in form satisfactory to the Trustee, irrevocable
instruetions to notify, as soon as praeticable, the Owners of the Bonds, in accordance with the
Indenture, that the deposit required by clause (aXii) above has been made with the Trustee and that
said Bonds are deemed to have been paid in accordance with the Indenture and stating the maturity
or redemption date upon which moneys are to be available for the payment of the principal of and
the applicable redemption premium, if any, on said Bonds, plus interestthereon to the due date thereof;
or (b) the maturity of such Bonds.
Removal of Trustee
The Trustee may be removed, and a successor Trustee appointed, (i) by the Issuer, under certain
circumstances, and (ii) with the prior written consent of the Bank (which consent, if unreasonably
withheld, shall not be required), by the Owners of not less than a majority in principal amount of Bonds
at the time outstanding.
Modifications and Amendments
The Indenture may be modified or amended by supplemental indentures without the consent of
or notice to the Owners of the Bonds for any of the following purposes: (a) to cure any formal defect,
omission, inconsistency or ambiguity in the Indenture; (b) to add to the covenants and agreements
of the Issuer under the Indenture or to surrender any right or power reserved or conferred upon the
Issuer which shall not adversely affect the interests of Owners of the Bonds; (c) to confirm, as further
assurance, any pledge of or lien on any property subjected or to be subjected to the lien of the
Indenture; (d) to comply with the Trust Indenture Act of 1939, as amended; (e) to modify, alter, amend
or supplement the Indenture in any other respect which, in the judgment of the Trustee, is not adverse
to the Owners of the Bonds; (f) to change the method for determining the Floating Interest Index
or the F ixed Interest Index, to implement a conversion of an interest rate or to evidence or give effect
to or facilitate the delivery and administration under the Indenture of an Alternate Credit Facility
or a Substitute Letter of Credit; (g) to provide for a depositary to accept tendered Bonds in lieu of
the Remarketing Agent; (h) to provide for uncertificated Bonds or for the issuance of coupons and
bearer Bonds or Bonds registered only as to principal, but only to the extent that such would not
cause interest on the Bonds to become includible in the gross income of the Owners thereof for
purposes of federal income taxation; (i) to secure or maintain a rating for the Bonds in both the highest
25
short-term or commercial paper debt Rating Category (as defined in the Indenture) and in either of
the two highest long-term debt Rating Categories; and (1') to provide demand purchase obligations
to cause the Bonds to be authorized purehases for Investment Companies. Notwithstanding the
foregoing, notice shall be given to the Owners of the Bonds of any supplemental indenture changing
the method of determining the Floating Interest Index or the Fixed lnterest Index.
Except for supplemental indentures entered into for the purposes described in the preceding
paragraph, the lndenture wi]l not be modified or amended without the eonsent of the Owners of not
less than 60% in aggregate principal amount of Bonds outstanding, who shall have the right to consent
to and approve any supplemental indenture; provided that, unless approved in writing by the Owners
of all the Bonds then afiected thereby, there will not be permitted (a) a change in the times, amounts
or currency of payment of the principal of, premium, if any, or interest on any Bond, a change in the
terms of the purchase thereof by the Remarketing Agent or the Trustee, or a reduction in the prineipal
amount or redemption price thereof or the rate of interest thereon, (b) the creation of a claim or lien
on or a pledge of the receipts and revenues of the Issuer under the Agreement ranking prior to or
on a parity with the lien or pledge created by the Indenture, or (c) a reduetion in the aggregate principal
amount of Bonds the eonsent of the Owners of which is required to approve any such supplemental
indenture or which is required to approve any amendment to the Agreement. No amendment of the
Indenture shall be effective without the prior written consent of the Company and the Bank (or the
Obligor on the Alternate Credit Facility, as the case may be).
Amendment of the Agreement
Without the consent of or notice to the Owners of the Bonds, the Issuer may amend the
Agreement, and the Trustee may consent thereto, as may be required (a) by the provisions of the
Agreement and the Indenture, (b) for the purpose of curing any formal defect, omission, inconsistency
or ambiguity, (c) in connection with any other change therein which is not materially adverse to the
Owners of the Bonds or (d) to segure or maintain a rating for the Bonds in both the highest short-term
or commercial paper debt Rating Category and in either of the two highest long-term debt Rating
Categories. The Issuer and the Trustee will not consent to any other amendment of the Agreement
without the written approval or consent of the Owners of not less than 60% in aggregate principal
amount of the Bonds at the time outstanding; provided, however, that, unless approved in writing
by the Owners of all Bonds affected thereby, nothing shall permit, or be construed as permitting, a
change in the obligations of the Company to make Loan Payments or payments to the Trustee or
Remarketing Agent for the purchase of Bonds. No amendment of the Agreement will become effective
without the prior written consent of the Bank (or the Obligor on the Alternate Credit Facility, as the
case may be) and the Company.
UNDERWRITING
E.F. Hutton & Company Inc., as Underwriter, has agreed to purchase the Bonds of each issue
from the Issuer thereof at a purchase price of.l00% of the principai amount thereof. The Underwriter
is committed to purchase all of the Bonds of an issue if any are purchased.
The Company has agreed to pay the Underwriter an aggregate fee of $576,450 and indemnify
the Underwriter against certain liabilities, including liabilities under the federal securities ]aws. The
Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing Bonds into
investment trusts) and others at prices lower than the offering price stated on the cover page hereof.
After the initial public offering, the public offering price may be changed from time to time by the
Undervtrriter.
On December2,\987, Shearson Lehman Brothers Holdings Inc. ("Holdings"), the parent company
of Shearson Lehman Brothers Inc. ("shearson Lehman") and The E.F. Hutton Group Inc. ("E.F. Hutton
Group"), the parent company of E.F. Hutton & Company Inc. ("E.F. Hutton"), entered into an
agreement, amended as of December 28, 198? (the "Agreement"), pursuant to which Holdings agreed
to acquire all the outstanding shares of E.F. Hutton Group common stock. Pursuant to a tender offer
for certain of the outstanding shares of E.F. Hutton Group common stock which expired January 12,
1988,32,144,465 shares were tendered and Holdings has agreed to purchase 29,610,000 shares org0%
26
of E.F. Hutton Group's common stock outstanding and available for tender. As permitted by the terms
of the Agreement, Holdings intends to assign its right to purchase the shares to Shearson Lehman.
Following the initial merger of a newly-formed, wholly-owned subsidiary of Shearson Lehman into
E.F. Hutton Group, E.F. Hutton Group will merge into Shearson Lehman as soon as practicable. The
proposed acquisition and merger of E. F. Hutton Group with and into Shearson Lehman is expected
to occur within the first three-quarters of 1988. Upon the effectiveness of the merger of E.F. Hutton
Group with and into Shearson Lehman, the surviving corporation will assume all of the obligations
of E.F. Hutton as Underwriter, as Remarketing Agent and as Indexing Agent with respect to the
Bonds of each issue.
TAX EXEMPTION
The Code contains a number of requirements and restrictions which apply to each issue of Bonds,
including investment restrictions, periodic payments of arbitrage profits to the United States,
requirements regarding the proper use of bond proceeds and the facilities financed therewith, and
certain other matters. The Company and each of the Issuers have covenanted to comply with all
requirements of the Code that must be satisfied in order for the interest on each issue of Bonds to
be excludible from gross income. Failure to comply with certain of such requirements may cause
interest on the related issue or issues of Bonds to become subject to federal income taxation retroactive
to the date of issuance of such Bonds.
Subject to the condition that the Company and the related Issuer comply with the above-
refereneed covenants, under present law, in the opinion of Bond Counsel, interest on each issue of
Bonds will not be includible in the gross income of the owners thereof for federal income tax purposes,
except for interest on any Bond for any period during which such Bond is owned by a person who
is a substantial user of the related Project or any person considered to be related to such person (within
the meaning of Section 103(bX13) of the 1954 Code) and the interest on each issue of Bonds will not
be treated as an item of tax preference in computing the alternative minimum tax for individuals and
corporations (since the Prior Bonds were issued prior to August 8, 1986). Such interest will be taken
into account, however, in computing an adjustment used in determining the alternative minimum tax
for certain corporations.
The Code includes provisions for an alternative minimum tax ("AMT") for corporations. The AMT
is levied for taxable years beginning after December 31, 1986 in addition to the regular corporate tax
in certain cases. The AMT, if any, depends upon the corporation's alternative minimum taxable income
("AMTI"), which is the corporation's taxable income with certain adjustments. One of the adjustment
items used in computing AMTI of a corporation (excluding S corporations, Regulated Investment
Companies, Real Estate Investment Trusts and REMICs) is an amount equal to 507o of. the excess
of such corporation's "adjusted net book income" over an amount equal to its AMTI (before such
adjustment item and the alternative tax net operating loss deduction). For taxable years beginning
after 1989, such adjustment item will be 75% of. the excess of such corporation's "adjusted current
earnings" over an amount equal to its AMTI (before such adjustment item and the alternative tax
net operating loss deduction). Both "adjusted net book income" and "adjusted current earnings" would
include all tax-exempt interest, including interest on each issue of Bonds.
In rendering its opinion with respect to each issue of Bonds, Bond Counsel will rely upon
certifications of the Company with respect to certain material facts solely within the Company's
knowledge about the Project relating to such issue of Bonds and to the application of the proceeds
of such issue of Bonds and the proceeds of the related issue of Prior Bonds.
Ownership of the Bonds may result in collateral federal income tax eonsequences to certain
taxpayers, including, without limitation, corporations subject to either the environmental tax or the
branch profits tax, financial institutions, certain insurance companies, certain S corporations, individual
recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to
have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. Prospective
purchasers of Bonds should consult their tax advisors as to applicability of any such collateral
consequences.
In the opinion of Chapman and Cutler, Bond Counsel, under present Montana law, interest on
the Forsyth Bonds is exempt from individual income taxes imposed by the State of Montana.
27
In the opinion of Chapman and Cutler, Bond Counsel, under present Wyoming law, the State of
Wyoming imposes no income taxes which would be applicable to the Converse Bonds, the Gillette
Bonds or the two issues of the Sweetwater Bonds.
Except as described above, Bond Counsel expresses no opinion as to whether the Bonds will be
subject to any state or local taxes under applicable state or local law. Prospeetive purchasers of Bonds
should consult their tax advisors regarding the applicability of any such state or local taxes.
CERTAIN LEGAL MATTERS
The validity of the Bonds will be passed upon by Chapman and Cutler, Bond Counsel, and the
I-Inderwriter's obligation to purchase any issue of the Bonds is subject to the issuance of Bond
Counsel's opinion with respect thereto. Certain legal matters will be passed upon for the Company
by Stoel Rives Boley Jones & Grey, as Counsel for the Company, and for the Underwriter by Kutak
Rock & Campbell, as Counsel to the Underwriter. The validity of the Letter of Credit relating to the
Converse Bonds will be passed upon for The Sumitomo Bank, Limited, by its United States counsel,
Preston, Thorgrimson, Ellis & Holman, and by its Japanese counsel, Nishi, Tanaka & Takahashi. The
validity of the Letter of Credit for the Forsyth Bonds will be passed upon for The Industrial Bank
of Japan, Limited, by its United States counsel, Lillick McHose & Charles, and by its Japanese counsel,
Tokyo Kokusai Law Offices. The validity of the Letter of Credit for the Gillette Bonds will be passed
upon for Deutsche Bank AG by its United States counsel, White & Case, and by its Central Legal
Department. The validity of the Letters of Credit for the Sweetwater Bonds will be passed upon for
National Westminster Bank PLC by its United States counsel, Lillick McHose & Charles, and by its
English counsel, Wilde Sapte.
Chapman and Cutler has represented other parties in matters involving subsidiaries of the
Company where legal fees of Chapman and Cutler have been paid by such subsidiaries.
MISCELLANEOUS
The attached Appendices are an integral part of this Official Statement and must be read together
with all of the balance of this Official Statement.
The distribution of this Official Statement has been duly consented to by each Issuer. Each Issuer,
however, has not reviewed and is not responsible for any information set forth herein except that
information under the heading "THE ISSUERS" insofar as it relates to each such Issuer.
28
APPENDIX A
PACIFICORP
PacifiCorp is a diversified enterprise which conducts four separate businesses: electric operations;
telecommunications; mining and resource development; and financial services. To give recognition to
its diversification into areas other than those relating to a regulated utility, the Company's name was
changed to PacifiCorp from Pacific Power & Light Company at its annual meeting of stockholders
on June 13, 1984. The Company conducts its electric operations under the name of Pacific Power &
Light Company ("Pacific Power"). Pacific Power furnishes electric service in six western states. A
subsidiary of the Company, Pacific Telecom, Inc., provides telecommunications serviees in Alaska, six
other western states and Wisconsin and is engaged in other nonregulated activities through its
subsidiaries and equity investees. Another subsidiary, NERCO, Inc., is engaged in surface coai and
precious metals mining, minerals and precious metals exploration, and oil and gas exploration and
development in several regions of the United States. Another subsidiary, PacifiCorp Financial Services
Inc., is primarily engaged in the leasing of equipment, secured lending and general investment activity.
The principal executive offices of the Company are located at 1600 Pacific First Federal Center,
8SL Southwest Sixth Avenue, Portland, Oregon 97204; the telephone number is [phone].
PENDING MERGER
The shareholders of PacifiCorp and Utah Power & Light ("UP&L") approved on December 15,
1987 a merger of both companies into PC/UP&L Merging Corp., an Oregon corporation (to be renamed
"PacifiCorp"). The merger is described in the Joint Proxy Statement/Prospectus of PacifiCorp and
Utah Power & Light Company dated October Zg,IWT,rlterrasaTart of a Registration Statement
on Form S-4 with the -Securities and Exchange Commission, Registration No. 33-18164, effective
October 29, 198?. PacifiCorp and UP&L'are cuirently seekingrthe reguiatory aptrirovals required to
effect the merger. UP&L is an eleetric utility with its principal executive offices located in Salt Lake
City, Utah and eonducts its electric utility operations in the States of Utah, Idaho and Wyoming.
AYAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities Exchange Act of 1934
and in accordance therewith files reports, proxy statements and other information with the Securities
and Exchange Commission. Such reports, proxy statements and other information may be inspected
and copied at the offices of the Commission at 450 Fifth Street, N.\[., Washington, D.C. 20549; Room
1L02, Jacob K. Javits Building, 26 Federal Plaza, New York, New York 10007; Suite 500F, 15?57
Wilshire Boulevard, Los Angeles, California 90036; and Room 1204, Everett McKinley Dirksen
Building, 219 South Dearborn Street, Chicago, Illinois 60604. Copies of such material may be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at preseribed rates. Reports, proxy material and other information concerning the Company
may also be inspected at the New York and Pacifie Stock Exchanges.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Securities and Exchange Commission
are incorporated in this Appendix by reference:
(a) Annual Report on Form 10-K for the year ended December 31, 1986.
(b) Quarterly Report on Form 10-Q for the quarter ended March 31, 1987.
(c) Quarterly Reporb on Form 10-Q for the quarter ended June 30, 1987.
(d) Quarterly Report on Form 10-Q for the quarter ended September 30, 1987.
(e) Proxy statement dated June 4, 1987 relating to the Company's annual meeting of
stockholders held on July 1, 1987.
(f) Current Reports on Form 8-K dated May ?, 1987 and June 4, 1987.
(g) Registration Statement on Form S-4, effective October 29,1987.
A-1
All reports filed pursuant to Section 13, 14 or 15(d) of the Securities Exehange Act of 1934 after
the date of this Official Statement and prior to the termination of the ofering made by this Official
Statement shall be deemed to be incorporated by reference in this Appendix A and to be a part hereof
from the date of filing such documents.
The Company hereby undertakes to provide without charge to each person to whom a copy of
this Official Statement has been delivered, on the request of any such person, a copy of any or all
of the documents referred to above which have been or may be incorporated herein by reference, other
than exhibits to such documents. Requests for such copies should be directed to Robert F. Lanz, Vice
President and Treasurer, PacifiCorp, 1600 Pacific First Federal Center, 851, Southwest Sixth Avenue,
Portland, Oregon W204. The telephone number is [phone].
The information contained and incorporated by referenee in this Appendix A to the Official
Statement has been obtained from the Company. The Issuers and the Underwriter make no
representation as to the aecuracy or completeness of such information.
A-2
APPENDIX B
THE SUMITOMO BANK, LIMITED
The Sumitomo Bank, Limited ("Sumitomo") is a Japanese banking corporation organized under
the banking law of Japan. Sumitomo was formally established in 1895, although its earliest beginnings
date back about 400 years to the early 17th eentury when Masatomo Sumitomo started certain
businesses in the old capital of Kyoto.
The main business of Sumitomo is providing financial services to individuals, corporations and
governments. Such services include accepting deposits, processing short- and medium-term loans,
effecting money transfers and underwriting Japanese government bonds, national and local, as well
as a wide variety of other services in both domestic and international financial markets. With the
growth of the multinational eorporation, Sumitomo has expanded its international services well beyond
the traditional areas of foreign trade and exehange.
Sumitomo is the second largest bank in the world as well as in Japan in terms of assets. As of
March 31, 1987, Sumitomo had total assets of approximately U.S. $265 billion, deposits of
approximately U.S. $179 billion, loans and bills discounted outstanding of approximately U.S. $136
billion and total stockholders' equity of approximately U.S. $5 billion on a consolidated basis.
Sumitomo took its first step into international banking by concluding a correspondent agreement
with an overseas bank to handle remittance from Japanese citizens living in Hawaii. Shortly thereafter,
Sumitomo was among the first Japanese commercial banks to establish an international network. In
1916, Sumitomo established its first overseas branch in San Francisco. Since that time, Sumitomo has
expanded its international network to 16 branches located in New York, London, Hong Kong,
Dusseldorf, Madrid, Singapore, Brussels, Chicago, Seattle, Panama, Seoul, Milan, Barcelona, Houston,
Cayman and San tr'rancisco;23 representative offices located in Toronto, Vienna, Jakarta, Mexico City,
Tehran, Cairo, Bahrain, Sydney, Buenos Aires, Bangkok, Paris, Beijing, Kuala Lumpur, Melbourne,
Caracas, Zunch, Guangzhou, Atlanta, Stockholm, Frankfurt, Birmingham, Shanghai and Dailian; eight
subsidiaries, The Sumitomo Bank of California, Banco Sumitomo Brasileiro S.A., Sumitomo
International Finance A.G., Sumitomo Finance Overseas, S.A., Sumitomo Finance (Asia) Limited,
Sumitomo Perpetual Australia Limited, Gotthard Bank and Sumitomo Finance (Middle East) E.C.; and
seven principal affiliates. This network is supplemented by correspondent banking relationships with
over 1,500 institutions.
Sumitomo will provide without charge to each person to whom this Official Statement is delivered,
upon the request of any such person, a copy of its Annual Report. Written requests should be directed
to: The Sumitomo Bank, Limited, Seattle Branch, Suite 4600, 1001 Fourth Avenue Plaza, Seattle,
Washington 98154, Attention: Loan Department.
B-1
APPENDIX C
THE INDUSTRIAL BANK OF JAPAN, LIMITED
The Industrial Bank of Japan, Limited (IBJ) was incorporated as a quasi-governmental financial
institution on March n,1902, underJapanese law. After World War II, IBJ's legal status was changed
to that of a private corporation operating under the Long-Term Credit Bank Law, enacted in 1952.
The Long-Term Credit Bank Law provides for the establishment of banks whose specific purpose
is to provide long-term funds for Japanese industry, defined to include loans having maturities of more
than six months. This law further provides that long-term credit banks finance their operations
primarily by the sale of their own debentures. IBJ is also engaged in various securities aetivities and
provides international banking services, including foreign exchange trading.
IBJ is the oldest and largest of Japan's long-term credit banks and, in terms of deposits and
debentures, is also one of the largest banks in Japan. According to the July 1987 issue of "Institutional
Investor," IBJ was the eighth largest bank in the world in terms of assets. On Mareh 31, 1987, on
a nonconsolidated basis, IBJ had total assets of approximately US$194 billion, total loans and bills
discounted outstanding of approximateiy US$106 billion, total debentures and deposits of approxi-
mately US$154 billion, and totai shareholders' equity of approximately US$3 billion.
In addition to its 24 domestic branches, IBJ has overseas branches in New York, Chicago, London,
Singapore, Paris and Hong Kong; an agency in Los Angeles; representative offices in Atlanta, Houston,
San Francisco, Washington, D.C., Bahrain, Bangkok, Beijing, Dalian, Dusseldorf, Frankfurt/Main,
Guangzhou, Jakarta, Kuala Lumpur, Madrid, Melbourne, Mexico City, Panama, Rio de Janeiro, Sao
Paulo, Shanghai, Sydney and Toronto; and overseas subsidiaries in New York, London, Frank-
furt/Main, Luxembourg, Zrttich, Hong Kong, Toronto, Jakarta, Perth and Curacao. IBJ is publicly
owned, and its'shares are listed on the Tokyo Stock Exchange and the Osaka Securities Exchange.
IBJ will provide without charge to each person to whom this Official Statement is delivered, upon
the request of any sueh person, a copy of its latest Annual Report, prepared in accordance with
Japanese law and aceounting principles. Written requests should be directed to: The Industrial Bank
of Japan, Limited, Los Angeles Agency, 800 West Sixth Street, Los Angeles, California 90017,
Attention: PacifiCorp Account Manager.
c-1
APPENDIX D
DEUTSCHE BANK AG
Deutsche Bank AG, New York Branch, is a New York State-licensed branch of Deutsche Bank
AG (the "Bank"). The Bank is West Germany's largest banking institution. It is the parent company
of a group consisting of commercial banks, mortgage banks, investment banking companies and
specialized institutions. The Bank is represented in over 500 towns and cities in the Federal Republic
of Germany through a network of more than 1,100 branches and through a subsidiary in each of Beriin
and the Saarland. The foreign network of the group, which is worldwide, consists of 15 branches, 17
representative offices and 12 wholly-owned subsidiaries of the Bank, including Deutsche Bank (Asia)
AG with 16 branches and subsidiaries, and Banca d'America e d'Italia S.p.A., Milan, of which the Bank
holds 98.3% of the voting shares, with 2 subsidiaries and 99 branches.
As of December 31, 1986, the group had total assets of.DM257.2 billion (US$133.8 billion), total
loans of DM179.8 billion (US$93.5 billion), total funds from outside sources of DM233.8 billion (US$121.6
billion) and capital and reserves of DM10.0 billion (US$5.2 billion).
Upon request therefor, the Bank will provide without charge to each person to whom this Official
Statement is delivered a copy of the Annual Report of the Bank, which contains the consolidated
statements of the Bank for the fiscal year ended December 31, 1986. Written requests should be
directed to: Deutsche Bank AG, New York Branch, Post Office Box 890, New York, New York 10101,
Attention: Management.
D-1
APPENDIX E
NATIONAL WESTMINSTER BANK PLC
National Westminster Bank PLC (the "Bank"), together with its subsidiaries (the "Group"), is
engaged in a wide range of banking, financial and related activities in the United Kingdom and
throughout the world.
Based on eonsolidated total assets and deposits, the Group was the largest banking group in the
United Kingdom at December 31, 1986 and is among the larger international banking groups in the
world. At Deeember 31, 1986 the Group reported consolidated total assets of €83.3 billion, consolidated
total deposits of €69.3 billion and consolidated ordinary shareholders' equity of €4.6 billion. The Group's
audited financial statements for the fiscal year ended December 31, 1986 have been filed on Form 20-F
with the Securities and Exchange Commission.
On July 28,1987 the Group reported interim pre-tax profits of €251 million after a charge for
debt provisions of f,564 million. The charge for bad and doubtful debts mainly reflects sovereign debt
provisions of €496 million. This brings the Group's total sovereign debt cover to €886 million, which
is 29.5% of its €3 billion outstandings to 35 problem countries.
The Group currentiy employs approximately 96,000 people worldwide. Its United Kingdom
operations are conducted directly through the Bank, which is one of the four major Iondon Clearing
Banks, and through three additional banking subsidiaries and other subsidiary companies. Interna-
tional operations are conducted by the Bank and affiliated companies in the United Kingdom and in
36 other countries. The Group's international business has concentrated on OECD countries and its
exposure to eountries with liquidity difficulties is small relative to its total assets.
The Bank announced on August 5, 1987 that it had agreed to a cash purchase of First Jersey
National Corporation, an American banking group in New Jersey, for a purchase price of US$820
million. First Jersey National Corporation is the fourth largest banking group in New Jersey with
114 branches and is a leading institution with state-wide operations. The transaction is expected to
be completed shortly afber January 1, 1988 subject to, inter alia, approval by the relevant regulatory
authorities and of the terms of the offer by First Jersey National Corporation shareholders.
On November 27, L987 the Bank announced that it had postponed for the time being its proposals
to undertake a public offering in Japan and to list its ordinary shares on the Tokyo Stock Exchange.
This deeision has been taken in view of the significant changes which have taken place in the world
equity markets since the middle of October. The position will be kept under review.
In the United Kingdom the Group is supervised by the Bank of England with which periodic
reports are filed, together with other information as required. The Bank's San Francisco Overseas
Branch is licensed by the State of California Banking Department and is subject to periodic
examination by the Department. By virtue of its orvnership of National Westminster Bank USA, the
Bank is also subject to federal reporting requirements as a bank holding company.
E-1
APPENDIX F
. ALTERNATIVE INTEREST RATES
The following is a description of the interest rate and purchase provisions of the Bonds while
the Bonds bear a Daily Interest Rate, \feekly Interest Rate, a Monthly Interest Rate, a Tender Rate
or a Fixed Interest Rate. The method by which the interest rate on the Bonds is determined can be
changed as described in the Official Statement under "CoNvERSIoN oF RATE."
Interest Provisions
Daily Interest Rate. With respect to each day the Bonds are to bear a Daily Interest Rate, the
Daily Interest Rate shall be determined by the Remarketing Agent to be the interest rate which, in
the judgment of the Remarketing Agent, when borne by the Bonds, would be the minimum interest
rate necessary to enable the Remarketing Agent to sell the Bonds on such date at the principal amount
thereof plus accrued interest, if any; provided, however, that (A) with respect to any day that is not
a Business Day, the Daily Interest Rate shall be the same rate as the Daily Interest Rate established
for the immediately preceding Business Day unless the Remarketing Agent is open for business on
such non-Business Day and determines a rate for such non-Business Day, in which case the Bonds
shall bear interest at the rate so determined, and (B) if for any reason a Daily Interest Rate is not
established by the Remarketing Agent or the rate established by the Remarketing Agent is held to
be invalid or unenforceabie by a court of law with respect to any day, the Daily Interest Rate for
such day shall equal the Floating lnterest Index determined by the Indexing Agent as of such day.
On the basis of such Daily Interest Rates, the Trustee shall calculate the amount of interest payable
during each Interest Period on the Bonds bearing interest at a Daily Interest Rate.
Weekly Interest Rate. With respect to each week the Bonds are to bear interest at a Weekly
Interest Rate, the Weekly Interest Rate on the Bonds shall be determined by the Remarketing Agent
by 12:00 noon, New York, New York time, on Wednesday of each week to be the interest rate which,
in the judgment of the Remarketing Agent, when borne by the Bonds would be the minimum interest
rate necessary to enable the Remarketing Agent to sell the Bonds on such date at the principal amount
thereof plus accrued interest, if any. While the Bonds bear interest at the Weekly Interest Rate, the
Remarketing Agent shall on the next to the last Business Day of each Interest Period provide in
writing to the Bank (or the Obligor on the Alternate Credit Facility, as the case may be) and the Trustee
the Weekly Interest Rates in effect during such Interest Period. In the determination of the Weekly
Interest Rate, the following special provisions shall apply:
(1) In the event the Remarketing Agent shall fail or refuse for any week to determine the
'ffeekly Interest Rate, the Weekly Interest Rate shall be the same as for the next preceding week.
(2) If for any reason (i) a Weekly Interest Rate is not established by the Remarketing Agent
for any two successive weeks or (ii) the rate established by the Remarketing Agent is held to
be invalid or unenforceable by a court of law, the Weekly Interest Rate for such week (or the
second of such successive weeks, in the case of (i) above) shall equal the Floating Interest Index
(as described in the Indenture) determined by the Indexing Agent (initially E.F. Hutton &
Company Inc.) for such week.
Monthly Interest Rate. W'ith respect to each Interest Period the Bonds are to bear interest at
a Monthly Interest Rate, the Monthly Interest Rate shall be determined on the first Business Day
of such Interest Period by the Remarketing Agent to be that rate whieh would be the minimum interest
rate necessary to enable the Remarketing Agent to sell the Bonds on the first day of such Interest
Period at the prineipal amount thereof. If for any reason a Monthly Interest Rate is not established
by the Remarketing Agent or the rate established by the Remarketing Agent is held to be invalid
or unenforceable by a court of law with respect to any Interest Period, the Monthly Interest Rate
for such Interest Period shall equal the Floating Interest Index determined by the Indexing Agent
for such Interest Period.
F-1
Tender Interest Rate. With respect to each Tender Period the Bonds are to bear interest at
a Tender Interest Rate, the Tender Interest Rate shall be determined by the Remarketing Agent as
follows. On the Business Day next preceding the first day of a Tender Period, the Remarketing Agent
shall determine the Tender Interest Rate, which shall be the rate which would be the minimum interest
rate necessary to enable the Remarketing Agent to sell all of the Bonds on the first day of such Tender
Period at the principal amount thereof.
If for any reason a Tender Interest Rate is not established by the Remarketing Agent or the
rate established by the Remarketing Agent is held to be invalid or unenforceable by a court of law
with respect to any Tender Period, the Tender Interest Rate for such Tender Period shall equal the
Floating Interest Index determined by the Indexing Agent as of the first day of such Tender Period.
Promptly after the determination of each Tender Interest Rate, the Trustee shall mail a notice
by first-class mail to each Owner of a Bond, at the address shown on the registration books of the
Issuer maintained by the Registrar, advising such Owner of such Tender Interest Rate and of the
Tender Period for which such Tender Interest Rate will be in efiect. Failure by the Trustee to give
any such notice by mailing, or any defeet therein, shall not affect the Tender Interest Rate to be borne
by the Bonds in any Tender Period.
Fined Interest Rate. The Fixed Interest Rate shall be determined by the Remarketing Agent
as follows. On the Business Day next preceding the eftective date of the Fixed Interest Rate, the
Remarketing Agent shall determine the Fixed Interest Rate, which shall be the rate which would be
the minimum interest rate necessary to enable the Remarketing Agent to sell all of the Bonds on
the effective date of the Fixed Interest Rate at the principal amount thereof.
If for any reason the Fixed Interest Rate is not established by the Remarketing Agent or the
rate established by the Remarketing Agent is held to be invalid or unenforceable by a court of law,
the Fixed Interest Rate shall equal the Fixed Interest Index (as defined in the Indenture) determined
by the Indexing Agent as of the effective date of the Fixed Interest Rate.
Promptly after the determination of the Fixed Interest Rate, the Trustee shall mail a notice by
first-class mail to each Owner of a Bond, at the address shown on the registration books of the Issuer
maintained by the Registrar, advising such Owner of such Fixed Interest Rate. Failure by the Trustee
to give any such notice by mailing, or any defect therein, shall not affect the Fixed Interest Rate to
be borne by the Bonds.
Conclusiueness of Determination. The eomputation of the Floating Interest Index and the
Fixed Interest Index by the Indexing Agent, and the determination of any interest rate by the
Remarketing Agent or the Indexing Agent, shall be conclusive and binding upon the Issuer, the
Trustee, the Bank (or the Obligor on the Alternate Credit Faeility, as the case may be), the Company,
the Registrar, the Remarketing Agent and the Owners of the Bonds.
Purchase Provisions
Purchase on Demand of Owner While Bonds Bear Daily Interest Rate. While the Bonds bear
interest at a Daily Interest Rate, any Bond shall be purchased on the demand of the Owner thereof,
on any Business Day, at a purchase price equal to the principal amount thereof plus accrued interest,
if any, to the date of purchase (provided that if such Business Day occurs prior to the Interest Payment
Date for any Interest Period and after the Record Date in respect thereto, the purchase price will
equal the principal amount thereof plus accrued interest, if any, only from such Record Date to the
date of purchase), upon (A) delivery to the Remarketing Agent (and at the option of an Owner which
is an Investment Company, with a copy to the Trustee) at its Principal Office, by no later than 9:30
a.m., New York, New York time, on such Business Day, of a written notice or a telephonic notice,
promptly conflrmed by tested telex, which states the principal amount of such Bond to be purchased
and the date on which the same shall be purchased pursuant to this paragraph, and (B) delivery of
such Bond (with all necessary endorsements) to the Remarketing Agent at its Principal Offiee, at or
prior to 9:30 a.m., New York, New York time, on the date specified in such notice.
Purchase on Demand of Owner While Bonds Bear Weekly Interest Rate.
(a) Except as provided in the next sentence, while the Bonds bear interest at a Weekly
Interest Rate, any Bond shall be purchased, on the demand of the Owner thereof, on any
F-2
Wednesday at a purchase price equal to the principal amount thereof plus accrued interest, if
any, to the date of purchase, upon: (i) delivery to the Principal Office of the Remarketing Agent
of a telephonic notice (unless the Trustee shall be serving as Rema,rketing Agent, in which case
written notice deiivered to the Principal Ofrce of the Trustee shall be required) by 10:00 a.m.,
New York, New York time, on the Tuesday preceding such Wednesday, which states the
aggregate principal amount thereof; (ii) delivery of such Bond (with all necessary endorsements)
and, in the case of a Bond to be purchased prior to the Interest Payment Date for any Interest
Period and after the Record Date in respeet thereto, a due-bill, in form satisfactory to the
Remarketing Agent, at the Principal Office of the Remarketing Agent at or prior to 10:00 a.m.,
New York, New York time, on such Wednesday; provided, however, that such Bond shall be so
purchased only if the Bond so delivered to the Remarketing Agent shall conform in all respects
to the description thereof in the aforesaid notice. In the event that in any week both Monday and
Tuesday are not Business Days, or both Tuesday and Wednesday are not Business Days, there
shall be no purchase pursuant to this paragraph for such week; in all other events, the procedures
described in this paragraph to occur on either Tuesday or Wednesday, should either day not be
a Business Day, shall occur on the next succeeding Business Day. An Owner who gives the notice
set forth in clause (i) above may repurchase the Bonds so tendered with such notice on such
Wednesday if the Remarketing Agent agrees to sell the Bonds so tendered to such Owner. If
such Owner decides to repurchase such Bonds and the Remarketing Agent agrees to sell the
specified Bonds to such Owner prior to delivery of such Bonds as set forth in elause (ii)
hereinabove, the delivery requirement set forth in such clause (ii) shall be waived.
(b) While the Bonds bear interest at a Weekly Interest Rate, any Bond shall be purchased,
on the demand of the Owner thereof, on any Business Day at a purchase price equal to the principal
amount thereof plus accrued interest, if any, to the date of purchase, upon: (1) delivery to the
Principal Office of the Remarketing Agent of a written notice (and at the option of an Owner
which is an Investment Company, with a copy to the Trustee) which (i) states the aggregate
principal amount of such Bond and (ii) states the date on which such Bond shall be purehased
pursuant to this subparagraph (b), which date shall be a Business Day not prior to the seventh
day next succeeding the date of the delivery of such notice to the Remarketing Agen! and (2)
delivery of such Bond (with all necessary endorsements) and, in the case of a Bond to be purchased
prior to the Interest Payment Date for any Interest Period and after the Record Date in respect
thereto, a due-bill, in form satisfactory to the Remarketing Agent, at the Principal Office of the
Remarketing Agent at or prior to 10:00 a.m., New York, New York time, on the date specified
in the aforesaid notice; provided, however, that such Bond shall be so purchased pursuant to this
subparagraph (b) only if the Bond so delivered to the Remarketing Agent shall conform in all
respects to the description thereof in the aforesaid notice.
Purchase on Demand of Oumer While Bonds Bear Monthly Interest Rate.
(a) rffhile the Bonds bear interest at a Monthly Interest Rate, any Bond shall be purchased,
on the demand of the Owner thereof, on any Interest Payment Date at a purchase price equal
to the principal amount thereof, upon (1) delivery to the Principal Office of the Remarketing Agent
at or prior to 4:00 p.m., New York, New York time, on the third Business Day prior to such Interest
Payment Date of a telephonic notice (unless the Trustee shall be serving as Remarketing Agent,
in which case written notice delivered to the Principal Office of the Trustee shall be required)
which (i) states the aggregate principal amount of such Bond and (ii) states that such Bond shall
be purchased on such Interest Payment Date pursuant to this subparagraph (a); and (2) the
delivery of such Bond (with all necessary endorsements) atthe Principal Office of the Remarketing
Agent at or prior to 10:00 a.m., New York, New York time, on such Interest Payment Date;
provided, however, that such Bond shall be so purchased pursuant to this subparagraph (a) only
if the Bond so delivered to the Remarketing Agent shall conform in all respects to the description
thereof in the aforesaid notice. An Owner who gives the notice set forth in clause (1) hereinabove
may repurchase the Bonds so tendered on such Interest Payment Date if the Remarketing Agent
agrees to sell the Bonds so tendered to such Owner. If such Owner decides to repurchase such
Bonds and the Remarketing Agent agrees to sell the specified Bonds to such Owner prior to
F-3
delivery of such Bonds as set forth in clause (2) hereinabove, the delivery requirement set forth
in such clause (2) shall be waived.
(b) While the Bonds bear interest at a Monthly Interest Rate, any Bond shall be purchased,
on the demand of the Owner thereof, on any Business Day at a purchase price equal to the principal
amount thereof plus accrued interest, if any, to the date of purchase, upon: (1) delivery to the
Principal Office of the Remarketing Agent (and at the option of an Owner which is an Investment
Company, with a copy to the Trustee) of a written notice which (i) states the aggregate principal
amount of such Bond and (ii) states the date on which sueh Bond shall be purchased pursuant
to this subparagraph (b), which date shall be a Business Day not prior to the seventh day next
succeeding the date of the delivery of such notice to the Remarketing Agent; and (2) delivery
of such Bond (with all necessary endorsements) and, in the case of a Bond to be purehased prior
to the Interest Payment Date for any Interest Period and after the Record Date in respect thereto,
a due-bill, in form satisfactory to the Remarketing Agent at the Principal Office of the
Remarketing Agent at or prior to 10:00 a.m., New York, New York time, on the date specified
in the aforesaid notice; provided, however, that such Bond shall be so purchased pursuant to this
subparagraph ft) only if the Bond so delivered to the Remarketing Agent shall conform in all
respects to the description thereof in the aforesaid notice.
Purchase While Bonds Bear Tender Interest Rate.
(a) While the Bonds bear interest at a Tender Interest Rate, any Bond shall be purchased
on the day (which is not a Conversion Date) next succeeding the last day of any Tender Period
(a "Purchase Date") at a purchase price equal to the principal amount thereof unless the Owner
of the Bond delivers a completed Bondholder Election Notice (as defined in the Indenture) to the
Principal Office of the Trustee (as deflned in the Indenture) or any office designated by the Trustee
between the opening of business on the twenty-first day next preceding the Purchase Date and
the close of business on the seventh day next preceding the Purehase Date (or if such twenty-first
or seventh day is not a Business Day, the nexb succeeding Business Day). The delivery of a
Bondholder Election Notice by an Owner to retain his Bond is irrevocable and binding on such
Owner and cannot be withdrawn. The Trustee shall give the Remarketing Agent telephonic notice,
promptly confumed in writing, specifying the principal amount of Bonds for which Bondholder
Election Notices have been received. Not later than the fifteenth day next preceding the Purchase
Date, the Tlustee shall give notice by first-class mail to the Owners of the Bonds stating (i) the
last day of the Tender Period, (ii) that the Bonds will be purchased on the Purchase Date unless
the Owner of the Bond delivers a completed Bondholder Election Notice (a copy of which shall
accompany the notice from the Trustee) to the Trustee as provided in the Indenture between the
opening of business on the twenty-fust day and the close of business on the seventh day next
preceding the Purchase Date (or if such seventh day is not a Business Day, the next succeeding
Business Day) and (iii) that after the Purchase Date the Bonds will bear interest at a Tender
Interest Rate for a Tender Period of the same length as the then current Tender Period.
If during any Tender Period the Company fails to deliver to the Trustee a notice of conversion
as described under the caption "ColwEBsIoN or Rarn-Conversion to Fixed Interest Rate, Tender
Interest Rate or Floating Interest Rates," from and after the Purchase Date the Bonds shall bear
interest at a Tender Interest Rate for a Tender Period of the same length as that ending on the
day immediately preceding such Purchase Date.
Any Owner of a Bond who does not deliver a completed Bondholder Election Notice as
described above must deliver such Bond (with any necessary endorsements) to the Principal Office
of the Trustee, not later than 10:00 a.m., New York, New York time, on the Purchase Date.
Any Owner who delivers a completed Bondholder Election Notice as described above in order
to retain a portion of a Bond must deliver such Bond (with any necessary endorsements) to the
Principal Office of the Trustee at the same time as the delivery of such Bondholder Election Notiee.If an Owner so elects to retain a portion of a Bond, the Trustee shall, in accordance with the
provisions of the Indenture, deliver to such Owner a principal amount of Bonds in Authorized
Denominations equai to the portion of the Bond so retained.
F4
(b) Bonds or portions thereof to be purchased as provided in paragraph (a) above which are
not delivered by the Owners thereof to the Trustee as above provided shall nonetheless be deemed
to have been delivered by the Owner thereof for purchase and to have been purchased; provided
that there have been irrevocably deposited with the T?ustee moneys in accordance with the
Indenture in an amount sufficient to pay the purchase price of such Bonds. Thereafter, the Trustee
shall authenticate a new Bond as provided in the Indenture. Moneys deposited with the Trustee
for purchase of Bonds pursuant to the Indenture shall be held in trust in aieparate escrow account
(without liability for interest thereon) and shall be paid to the Owners of such Bonds upon
presentation thereof. The Trustee shall within five days after the Purchase Date give written
notice to the Company whether Bonds have not been delivered, and upon direction to do so by
the Cornpany, the Trustee shall give notice by mail to each Owner whose Bonds are deemed to
have been purchased pursuant to the Indenture, which notice shall state that interest on such
Bonds ceased to accrue on the Purchase Date.and that moneys representing the purchase price
of such Bonds are available against delivery thereof at the Principal Office of the Trustee. The
Trustee shall hold moneys deposited by the Company or drawn by the Tlustee under the Letter
of Credit or an Alternate Credit Facility, as the case may be, for the purchase of Bonds as provided
in the Indenture, without liability for interest thereon, for the benefit of the former Owner of
the Bond on such Purchase Date, who shall thereafter be restricted exclusively to such moneys
for any claim of whatever nature on his part under the Indenture or on, or with respect to, such
Bond. Any moneys so deposited with and held by the Trustee not so applied to the payment of
Bonds, if any, within six months after such Purehase Date shall be paid by the T?ustee to the
Bank (or the Obligor on the Alternate Credit Facility, as the case may be) to the extent of any
amount payable under the Reimbursement Agreement, and the balance shall be paid by the
Trustee to the Company upon the written direction of the Authorized Company Representative
eonsented to in writing by the Bank (or the Obligor on the Alternate Credit Facility, as the case
may be), and thereafter the former owners shall be entitled to look only to the Company for
paymenf and then only to the extent of the amount so repaid to the Bank (or the Obligor on the
Alternate Credit Facility, as the case may be) and/or the Company, and the Company shall not
be liable for any interest thereon and shall not be regarded as a trustee of such money.
F-5
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ArprNorx C
PRoposED Fomrs or OprNroNs oF BoND CouNsu
ArprNorx C-l
[LrrrEnneao or CuepruaN aNo Curlrn nr]
[To nr Darpo rHE EFFECTTvE DATE]
The Bank ofNew York Mellon
Trust Company, N.A.,
as successor Trustee
2 North LaSalle Street, Suite 1020
Chicago, Illinois 60602
Sweetwater County, Wyoming
County Courthouse
Green River, Wyoming 82935
PacifiCorp
825 N.E. Multnomah Street,
Suite 1900
Portland, Oregon 97232-4116
Re:$50,000,000
Sweetwater County, Wyoming
Customized Purchase Pollution Control Revenue Refunding Bonds
(PacifiCorp Project) Series 1988A (the "Bonds")
Ladies and Gentlemen:
This opinion is being fumished in accordance with Section 4.03(b) of that certain Loan
Agreement, dated as of January l, 1988 (the "Loan Agreement"), between Sweetwater County,
Wyoming (the "Issuer") and PacifiCorp (the "Company") and Section 4.01 of the Trust
Indenture, dated as of January l, 1988 (the "Indenture"), between the Issuer and The Bank of
New York Mellon Trust Company, N.A., as successor trustee (the "Trustee"). On the date
hereof the Company desires to (i) terminate the existing Letter of Credit (the "Letter of Credit")
issued by The Royal Bank of Scotland plc, Connecticut branch (the "Bank"), for the benefit of
the Trustee and (ii) convert the interest rate on the Bonds from a CP Rate to a Weekly Interest
Rate.
We have examined the law and such documents and matters as we have deemed
necessary to provide this opinion letter. As to questions of fact material to the opinions
expressed herein, we have relied upon the provisions of the Indenture and related documents, and
upon representations, including regarding the consent of the Owners, made to us without
undertaking to veriff the same by independent investigation.
The terms used herein denoted by initial capitals and not otherwise defined shall have the
meanings specified in the Indenture.
c-1
Based upon the foregoing and as of the date hereof, we are of the opinion that:
l. The termination of the Letter of Credit is authorized under the Loan
Agreement and complies with the terms of the Loan Agreement.
2. The termination of the Letter of Credit will not impair the validity under
the Act of the Bonds and will not cause interest on the Bonds to become includible in the
gross income of the owners thereof for federal income tax purposes.
3. The conversion of the interest rate on the Bonds is authorized or permitted
under the Indenture.
4. The conversion of the interest rate on the Bonds on the Effective Date,
will not, in and of itself, cause interest on the Bonds to become includable in gross
income of the owners thereof for purposes of federal income taxation.
5. The conversion of the interest rate on the Bonds will not violate the
provisions of the Act or the State law.
At the time of the issuance of the Bonds, we rendered our approving opinion relating to,
among other things, the validity of the Bonds and the exclusion from federal income taxation of
interest on the Bonds. We have not been requested, nor have we undertaken, to make an
independent investigation to confirm that the Company and the Issuer have complied with the
provisions of the Indenture, the Loan Agreement, the Tax Certificate (as defined in the
Indenture) and other documents relating to the Bonds, or to review any other events that may
have occurred since such approving opinion was rendered other than with respect to the
Company in connection with (a) the issuance and delivery of an Altemate Credit Facility,
described in our opinion dated April 24, 2002, (b) the delivery of an Altemate Credit Facility,
described in our opinion dated September 15, 2004, (c) the delivery of the amendment to an
earlier Alternate Credit Facility, described in our opinion dated November 30, 2005, (d) the
delivery of an earlier Letter of Credit, described in our opinion dated May 16, 2012 and (f) the
delivery of the Letter of Credit described in our opinion dated March 26, 2013 and (g) the
termination of the Letter of Credit and the conversion of the interest rate on the Bonds described
herein. Accordingly, we do not express any opinion with respect to the Bonds, except as
described above.
Our opinion represents our legal judgment based upon our review of the law and the facts
that we deem relevant to render such opinion and is not a guarantee of a result. This opinion is
given as of the date hereof and we assume no obligation to review or supplement this opinion to
reflect any facts or circumstances that may hereafter come to our attention or any changes in law
that may hereafter occur.
c-2
In rendering this opinion as Bond Counsel, we are passing only upon those matters set
forth in this opinion and are not passing upon the adequacy, accuracy or completeness of any
information furnished to any person in connection with any offer or sale of the Bonds.
Respectfully submitted,
c-3
ApprNox C-2
[LrrrcnHrao or CnapuaN AND Curr-rn u-r]
[To nr DarBo rue Eprpcrrvr Darr]
The Bank of New York Mellon
Trust Company, N.A.,
as successor Trustee
2 North LaSalle Street, Suite 1020
Chicago, Illinois 60602
City of Gillette, Campbell County, Wyoming
City Hall
201 East Fifth Street
Gillette, Wyoming 82716
PacifiCorp
825 N.E. Multnomah Street,
Suite 1900
Portland, Oregon 97 232-41 I 6
Re: $41,200,000
City of Gillette, Campbell County, Wyoming
Customized Purchase Pollution Control Revenue Refunding Bonds
(PacifiCorp Project) Series 1988 (the "Bonds")
Ladies and Gentlemen:
This opinion is being furnished in accordance with Section 4.03(b) of that certain Loan
Agreement, dated as of January 1, 1988 (the "Loan Agreement"), between City of Gillette,
Campbell County, Wyoming (the "Issuer") and PacifiCorp (the "Company"). On the date
hereof, the Company desires to terminate the existing Letter of Credit (the "Letter of Credit")
issued by The Royal Bank of Scotland plc, Connecticut branch (the "Bank"), for the benefit of
the Trustee (defined below).
We have examined the law and such documents and matters as we have deemed
necessary to provide this opinion letter. As to questions of fact material to the opinions
expressed herein, we have relied upon the provisions ofthe Trust Indenture, dated as ofJanuaryl, 1988 (the "Indenture"), between the Issuer and The Bank of New York Mellon Trust
Company, N.A., as successor trustee (the "Trustee") and related documents, and upon
representations, including regarding the consent of the Owners, made to us without undertaking
to verify the same by independent investigation.
The terms used herein denoted by initial capitals and not otherwise defined shall have the
meanings specified in the Indenture.
c-4
Based upon the foregoing and as of the date hereof, we are of the opinion that:
1. The termination of the Letter of Credit is authorized under the Loan
Agreement and complies with the terms of the Loan Agreement.
2. The termination of the Letter of Credit will not impair the validity under
the Act of the Bonds and will not cause interest on the Bonds to become includible in the
gross income of the owners thereof for federal income tix purposes.
At the time of the issuance of the Bonds, we rendered our approving opinion relating to,
among other things, the validity of the Bonds and the exclusion from federal income taxation of
interest on the Bonds. We have not been requested, nor have we undertaken, to make an
independent investigation to confirm that the Company and the Issuer have complied with the
provisions of the Indenture, the Loan Agreement, the Tax Certificate (as defined in the
Indenture) and other documents relating to the Bonds, or to review any other events that may
have occurred since such approving opinion was rendered other than with respect to the
Company in connection with (a) the conversion of the interest rate on the Bonds from a CP Rate
to a Weekly Interest Rate and the delivery of an Altemate Credit Facility, described in our
opinion dated May 26,1999 and our opinions dated June 7, 1999, (b) the delivery of an Altemate
Credit Facility, described in our opinion dated September 15, 2004, (c) the delivery of the
amendment to an earlier Alternate Credit Facility, described in our opinion dated November 30,
2005, (d) the delivery of an earlier Letter of Credit, described in our opinion dated May 16,2012,
(e) the delivery of the Letter of Credit, described in our opinion dated March 26,2013 and (f) the
termination of the Letter of Credit described herein. Accordingly, we do not express any opinion
with respect to the Bonds, except as described above.
Our opinion represents our legal judgment based upon our review of the law and the facts
that we deem relevant to render such opinion and is not a guarantee of a result. This opinion is
given as of the date hereof and we assume no obligation to review or supplement this opinion to
reflect any facts or circumstances that may hereafter come to our attention or any changes in law
that may hereafter occur.
In rendering this opinion as Bond Counsel, we are passing only upon those matters set
forth in this opinion and are not passing upon the adequacy, accuracy or completeness of any
information furnished to any person in connection with any offer or sale of the Bonds.
Respectfu lly submitted,
c-5