This
prospectus supplement and the accompanying prospectus relate to
an effective registration statement under the Securities Act of
1933, but are not complete and may be changed. This prospectus
supplement and the accompanying prospectus are not an offer to
sell these securities and are not soliciting an offer to buy
these securities in any state where the offer or sale is not
permitted.
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Filed
Pursuant to Rule 424(b)(3)
Registration No. 333-169315-03
SUBJECT TO COMPLETION, DATED
OCTOBER 4, 2010
PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated September 20, 2010)
$
Entergy Arkansas,
Inc.
First Mortgage Bonds,
%
Series due November 1, 2040
We are offering $ million of
our First Mortgage Bonds, % Series
due November 1, 2040. We will pay interest on the bonds on
February 1, May 1, August 1 and November 1
of each year. The first interest payment on the bonds will be
made on February 1, 2011. We may redeem the bonds prior to
maturity, in whole or in part, at any time on or after
November 1, 2015, at a redemption price equal to 100% of
the principal amount being redeemed plus accrued and unpaid
interest thereon to the redemption date. The bonds will be
issued in denominations of $25 and integral multiples of $25.
We intend to apply to have the bonds listed on the New York
Stock Exchange. If approved for listing, trading on the New York
Stock Exchange is expected to commence within 30 days after
the bonds are first issued.
As described in the accompanying prospectus, the bonds are a
series of first mortgage bonds issued under our mortgage and
deed of trust, which has the benefit of a first mortgage lien on
substantially all of our property.
Investing in the bonds involves risks. See Risk
Factors on page 2 of the prospectus accompanying this
prospectus supplement.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus supplement or the
accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
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Underwriting
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Proceeds to
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Price to
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Discounts and
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Entergy Arkansas
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Public
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Commissions
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(Before Expenses)
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Per bond
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%
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%
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%
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Total
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$
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$
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$
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The price to public will also include any interest that has
accrued on the bonds since their issue date if delivered after
that date.
The underwriters expect to deliver the bonds to purchasers
through the book-entry facilities of The Depository
Trust Company in New York, New York on or about
October , 2010.
Joint Book-Running Managers
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Citi
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Wells Fargo Securities
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Joint Lead Manager
Stephens Inc.
October , 2010
You should rely only on the information contained or
incorporated by reference in this prospectus supplement, the
accompanying prospectus and any related free writing prospectus
required to be filed with the Securities and Exchange
Commission, or SEC. We have not, and the underwriters have not,
authorized anyone else to provide you with different
information. You should not assume that the information
contained in this prospectus supplement, the accompanying
prospectus or the documents incorporated by reference is
accurate as of any date other than as of the dates of these
documents or the dates these documents were filed with the SEC.
If the information in this prospectus supplement is different
from, or inconsistent with, the information in the accompanying
prospectus, you should rely on the information contained in this
prospectus supplement. We are not, and the underwriters are not,
making an offer or sale of the bonds in any jurisdiction where
the offer or sale is not permitted.
TABLE OF
CONTENTS
Prospectus
Supplement
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S-1
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S-2
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S-2
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S-4
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2
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2
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2
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3
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4
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4
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4
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11
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12
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12
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SELECTED
FINANCIAL INFORMATION
You should read our selected financial information set forth
below in conjunction with the financial statements and other
financial information contained in the documents incorporated by
reference in this prospectus supplement and the accompanying
prospectus. The selected financial information set forth below
has been derived from (1) our annual financial statements
for the three-year period ended December 31, 2009, which
have been audited by Deloitte & Touche LLP, our
independent registered public accounting firm, and incorporated
by reference in this prospectus supplement and the accompanying
prospectus from our Annual Report on
Form 10-K
for the year ended December 31, 2009, and (2) our
unaudited financial statements as of and for the six months
ended June 30, 2010, incorporated by reference in this
prospectus supplement and the accompanying prospectus from our
Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2010. The following
material, which is presented in this prospectus supplement
solely to furnish summary information, is qualified by, and
should be considered in conjunction with, the more detailed
information appearing in the documents incorporated by reference
herein.
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For the Twelve Months Ended
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June 30,
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December 31,
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2010
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2009
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2008
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2007
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(Dollars in thousands)
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Income Statement Data:
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Operating Revenues
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$
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2,229,689
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$
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2,211,263
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$
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2,328,349
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$
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2,032,965
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Operating Income
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260,150
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216,841
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205,494
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284,415
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Interest Expense and Other Charges
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89,794
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89,181
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84,421
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86,662
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Net Income
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105,036
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66,875
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47,152
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139,111
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Ratio of Earnings to Fixed Charges(1)(2)
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2.85
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2.39
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2.33
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3.19
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As of June 30, 2010
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Actual
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Amount
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Percent
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Balance Sheet Data:
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Preferred Stock (without sinking fund)
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$
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116,350
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3.6
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%
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Common Equity:
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Common Stock and Paid-in Capital
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588,914
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18.2
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Retained Earnings
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836,464
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25.9
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Total Common Equity
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$
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1,425,378
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44.1
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Notes Payable
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31,289
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1.0
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First Mortgage Bonds(3)
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1,100,000
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34.1
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Other Long-Term Debt
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553,746
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17.2
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Total Capitalization
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$
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3,226,763
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100.0
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%
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(1)
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As defined by Item 503(d) of
Regulation S-K
of the SEC, Earnings represents the aggregate of
(a) income before the cumulative effect of an accounting
change, (b) taxes based on income, (c) investment tax
credit adjustments net and (d) fixed charges,
and Fixed Charges include interest (whether expensed
or capitalized), related amortization and estimated interest
applicable to rentals charged to operating expenses. We accrue
interest expense related to unrecognized tax benefits in income
tax expense and do not include it in fixed charges.
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(2)
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The Ratio of Earnings to Fixed Charges for the six months ended
June 30, 2010 was 3.33.
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(3)
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We intend to use the proceeds we receive from this offering to
redeem prior to maturity $200 million in aggregate
principal amount of our outstanding first mortgage bonds; as a
result, this offering will not have a material effect on our
capitalization. See Use of Proceeds.
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S-1
USE OF
PROCEEDS
We anticipate our net proceeds from the sale of the bonds will
be approximately $ million
after deducting underwriting discounts and commissions and
estimated offering expenses. We intend to use the net proceeds
we receive from the issuance and sale of the bonds, together
with other available funds, (i) to repay prior to maturity
certain of our outstanding debt with interest rates ranging from
6% 6.7% per year maturing in 2032, and (ii) for
general corporate purposes. Pending the application of the net
proceeds, we will invest them in short-term, highly liquid,
high-rated money market instruments
and/or
the
Entergy System money pool.
DESCRIPTION
OF THE BONDS
Interest,
Maturity and Payment
We are offering $ million of
First Mortgage Bonds, % Series due
November 1, 2040. We will pay interest on the bonds on
February 1, May 1, August 1 and November 1
of each year, beginning on February 1, 2011. Interest will
accrue at the rate of % per year
and will start to accrue from the date that the bonds are
issued. As long as the bonds are registered in the name of The
Depository Trust Company (DTC) or its nominee,
the record date for interest payable on any interest payment
date shall be the close of business on the Business Day
immediately preceding such interest payment date. We have agreed
to pay interest on any overdue principal and, if such payment is
enforceable under applicable law, on any overdue installment of
interest on the bonds at a rate of 6% per annum to holders of
record at the close of business on the Business Day immediately
preceding our payment of such interest.
Interest on the bonds will be computed on the basis of a
360-day
year
of twelve
30-day
months. If any interest payment date or the maturity date falls
on a day that is not a Business Day, the payment due on that
interest payment date or the maturity date will be made on the
next Business Day, and without any interest or other payment in
respect of such delay.
Business Day
means any day other than a
Saturday or a Sunday or a day on which banking institutions in
The City of New York are authorized or required by law or
executive order to remain closed or a day on which the corporate
trust office of the corporate trustee is closed for business.
Form and
Denomination
The bonds will be issued in denominations of $25 and integral
multiples thereof. The bonds will be represented by a global
certificate without coupons registered in the name of a nominee
of DTC. As long as the bonds are registered in the name of DTC
or its nominee, we will pay principal and interest due on the
bonds to DTC. DTC will then make payment to its participants for
disbursement to the beneficial owners of the bonds as described
in the accompanying prospectus under the heading
Description of the New Bonds Book-Entry
Only Securities.
Optional
Redemption
We may redeem the bonds prior to maturity, in whole or in part,
at our option, on not less than 30 days nor more than
60 days notice, at any time on or after
November 1, 2015, at a redemption price equal to 100% of
the principal amount of the bonds being redeemed, plus accrued
and unpaid interest thereon to the redemption date.
If, at the time notice of redemption is given, the redemption
monies are not held by the corporate trustee, the redemption may
be made subject to receipt of such monies before the date fixed
for redemption, and such notice shall be of no effect unless
such monies are so received.
We may apply cash we deposit under any provision of the
mortgage, with certain exceptions, to the redemption or
purchase, including the purchase from us, of first mortgage
bonds of any series under our mortgage including the bonds.
S-2
Dividend
Covenant
We will not enter into a dividend covenant with respect to the
bonds; however, so long as certain of the first mortgage bonds
we have issued prior to the date hereof are outstanding, holders
of the bonds will indirectly benefit from our covenant relating
to those outstanding first mortgage bonds to restrict our
payment of cash dividends on our common stock in certain
circumstances.
Issuance
of First Mortgage Bonds
The bonds will be issued on the basis of property additions. See
Description of the New Bonds Issuance of
Additional Bonds in the accompanying prospectus.
Amendment
to Mortgage
Before the issuance of the bonds, we will effect the amendment
to the mortgage described in the accompanying prospectus under
Description of the New Bonds Redemption and
Retirement Special Retirement Provisions. This
amendment will be effective before the original issuance of the
bonds.
Trading
Characteristics
We intend to apply to list the bonds on the New York Stock
Exchange. The bonds are expected to trade at a price that takes
into account the value, if any, of accrued but unpaid interest.
This means that purchasers will not pay, and sellers will not
receive, accrued and unpaid interest on the bonds except as
included in the trading price thereof. Any portion of the
trading price of a bond that is attributable to accrued but
unpaid interest will be treated as ordinary interest income for
federal income tax purposes and will not be treated as part of
the amount realized for purposes of determining gain or loss on
the disposition of the bonds.
Trustees
Deutsche Bank Trust Company Americas is the corporate
trustee under the mortgage, and, as to property in Missouri, The
Bank of New York Mellon Trust Company, N.A. is the
co-trustee. Effective October 1, 2010, the other co-trustee
under our mortgage, as referenced in the accompanying prospectus
under Description of the New Bonds
General, resigned. The corporate trustee is not required
to, but under certain circumstances may appoint co-trustees in
accordance with our mortgage.
Additional
Information
For additional information about the bonds, see
Description of the New Bonds in the accompanying
prospectus, including:
1. additional information about the terms of the bonds,
including security,
2. general information about our mortgage and the trustees,
3. a description of certain restrictions contained in our
mortgage,
4. a description of events of default under our
mortgage, and
5. a description of reservations of rights to amend certain
provisions of our mortgage without your consent.
S-3
UNDERWRITING
Under the terms and conditions set forth in the underwriting
agreement, dated the date of this prospectus supplement, we have
agreed to sell each of the underwriters named below, and each of
the underwriters has severally agreed to purchase, the principal
amounts of bonds set forth opposite its name below:
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Principal
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Name
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Amount of Bonds
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Citigroup Global Markets Inc.
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$
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Wells Fargo Securities, LLC
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Stephens Inc.
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Total
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$
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Under the terms and conditions set forth in the underwriting
agreement, the underwriters have committed, subject to the terms
and conditions set forth therein, to take and pay for all of the
bonds if any are taken, provided, that under certain
circumstances involving a default of an underwriter, less than
all of the bonds may be purchased. The underwriters reserve the
right to withdraw, cancel or modify offers to the public and to
reject orders in whole or in part.
The underwriters initially propose to offer the bonds directly
to the public at the price to public set forth on the cover page
hereof and may offer the bonds to certain securities dealers at
such price less a concession not in excess of
$ per bond. The underwriters
may allow, and such dealers may reallow certain brokers and
dealers, a concession not in excess of
$ per bond. After the initial
offering of the bonds, the offering price and other selling
terms may from time to time be varied by the underwriters.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of
1933.
We estimate that our total expenses for this offering will be
$250,000, excluding underwriting discounts and commissions.
The bonds will constitute a new class of securities with no
established trading market. We intend to apply to list the bonds
on the New York Stock Exchange, and trading of the bonds is
expected to commence within the
30-day
period after the bonds are first issued. The underwriters have
advised us that they intend to make a market in the bonds prior
to the commencement of trading on the New York Stock Exchange
but are not obligated to do so and may discontinue such
market-making activities at any time without notice. If such a
market develops, the bonds could trade at prices that may be
higher or lower than their principal amount or purchase price,
depending on many factors, including prevailing interest rates,
the market for similar debt securities and our business, results
of operations, financial condition or prospects. We cannot give
any assurance as to the maintenance of the trading market for,
or the liquidity of, the bonds.
In order to facilitate the offering of the bonds, the
underwriters may engage in transactions that stabilize, maintain
or otherwise affect the price of the bonds. Specifically, they
may over-allot in connection with the offering, creating a short
position in the bonds for their own accounts. In addition, to
cover over-allotments or to stabilize the price of the bonds,
the underwriters may bid for, and purchase, the bonds in the
open market. Finally, the underwriters may reclaim selling
concessions allowed to dealers for distributing the bonds in the
offering, if they repurchase previously distributed bonds in
transactions to cover short positions established by them, in
stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the bonds above
independent market levels. The underwriters are not required to
engage in these activities and may end any of these activities
at any time.
In the ordinary course of their respective businesses, the
underwriters and certain of their affiliates have in the past
and may in the future engage in investment banking, commercial
banking or other transactions of a financial nature with us and
our affiliates, for which they have received, or may receive,
customary compensation. Certain of the underwriters, either
directly or through affiliates, are lenders under certain
Entergy System credit facilities.
S-4
FIRST
MORTGAGE BONDS
ENTERGY ARKANSAS, INC.
425 West Capitol Avenue
Little Rock, Arkansas 72201
(501) 377-4000
We
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may periodically offer our first mortgage bonds in one or more
series; and
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will determine the price and other terms of each series of first
mortgage bonds when sold, including whether any series will be
subject to redemption prior to maturity.
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The First
Mortgage Bonds
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will be secured by a mortgage that constitutes a first mortgage
lien on substantially all of our property; and
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will not be listed on a national securities exchange unless
otherwise indicated in the accompanying prospectus supplement.
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You
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will receive interest payments in the amounts and on the dates
specified in an accompanying prospectus supplement.
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This prospectus may be used to offer and sell series of first
mortgage bonds only if accompanied by the prospectus supplement
for that series. We will provide the specific information for
those offerings and the specific terms of these first mortgage
bonds, including their offering prices, interest rates and
maturities, in supplements to this prospectus. The supplements
may also add, update or change the information in this
prospectus. You should read this prospectus and any supplements
carefully before you invest.
Investing in the first mortgage bonds offered by this
prospectus involves risks. See Risk Factors on
page 2.
Neither the Securities and Exchange Commission nor any
state securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
We may offer the first mortgage bonds directly or through
underwriters, agents or dealers. Each prospectus supplement will
provide the terms of the plan of distribution for the related
series of first mortgage bonds.
The date of this prospectus is September 20, 2010.
RISK
FACTORS
Investing in the first mortgage bonds involves certain risks. In
considering whether to purchase the first mortgage bonds being
offered (the New Bonds), you should carefully
consider the information we have included or incorporated by
reference in this prospectus. In particular, you should
carefully consider the information under the heading Risk
Factors as well as the factors listed under the heading
Forward-Looking Information, in each case, contained
in our Annual Report on
Form 10-K
for the year ended December 31, 2009, and our Quarterly
Reports on
Form 10-Q
for the quarters ended March 31, 2010 and June 30,
2010, each of which is incorporated by reference herein.
ABOUT
THIS PROSPECTUS
This prospectus is part of an automatic shelf registration
statement that we filed with the United States Securities and
Exchange Commission (the SEC) as a majority-owned
subsidiary of Entergy Corporation, which is a well-known
seasoned issuer, as defined in Rule 405 under the
Securities Act of 1933 (the Securities Act). By
utilizing a shelf registration statement, we may sell, at any
time and from time to time, in one or more offerings, the New
Bonds described in this prospectus. This prospectus provides a
general description of the New Bonds being offered. Each time we
sell a series of New Bonds we will provide a prospectus
supplement containing specific information about the terms of
that series of New Bonds and the related offering. It is
important for you to consider the information contained in this
prospectus, the related prospectus supplement and the exhibits
to the registration statement, together with the additional
information referenced under the heading Where You Can
Find More Information in making your investment decision.
For more detailed information about the New Bonds, you can read
the exhibits to the registration statement. Those exhibits have
been either filed with the registration statement or
incorporated by reference to earlier SEC filings listed in the
registration statement.
ENTERGY
ARKANSAS, INC.
We are a corporation organized under the laws of the State of
Arkansas. Our principal executive offices are located at
425 West Capitol Avenue, Little Rock, Arkansas 72201. Our
telephone number is 1-501-377-4000. We are an electric public
utility company providing service to approximately 689,000
customers in the State of Arkansas. We also provide retail
electric service to a small number of customers in Tennessee.
We are owned by Entergy Corporation. The other major public
utilities owned, directly or indirectly, by Entergy Corporation
are Entergy Gulf States Louisiana, L.L.C., Entergy Louisiana,
LLC, Entergy Mississippi, Inc., Entergy New Orleans, Inc. and
Entergy Texas, Inc. Entergy Corporation also owns all of the
common stock of System Energy Resources, Inc., the principal
asset of which is its interest in the Grand Gulf Electric
Generating Station (Grand Gulf), and Entergy
Operations, Inc., a nuclear management services company.
Capacity and energy from Grand Gulf are allocated among Entergy
Louisiana, LLC, Entergy Mississippi, Inc., Entergy New Orleans,
Inc. and us under a unit power sales agreement. Our allocated
share of Grand Gulfs capacity and energy, together with
related costs is 36%. Payments we make under the unit power
sales agreement are generally recovered through rates set by the
Arkansas Public Service Commission and the Tennessee Regulatory
Authority, which regulate our electric service, rates and
charges. We are also subject to regulation by the Federal Energy
Regulatory Commission.
Together with Entergy Louisiana Properties, LLC, Entergy
Mississippi, Inc., and Entergy New Orleans, Inc., we own all of
the capital stock of System Fuels, Inc. System Fuels, Inc. is a
special purpose company which implements and maintains certain
programs for the purchase, delivery and storage of fuel supplies
for Entergy Corporations utility subsidiaries.
The information above is only a summary and is not complete. You
should read the incorporated documents listed under the heading
Where You Can Find More Information for more
specific information concerning our business and affairs,
including significant contingencies, significant factors and
known trends,
2
our general capital requirements, our financing plans and
capabilities, and pending legal and regulatory proceedings,
including the status of industry restructuring in our service
areas.
WHERE YOU
CAN FIND MORE INFORMATION
We are subject to the informational requirements of the
Securities Exchange Act of 1934 (the Exchange Act),
and therefore are required to file annual, quarterly and current
reports, proxy statements and other information with the SEC.
Our filings are available to the public on the Internet at the
SECs website located at
(
http://www.sec.gov
).
You may read and copy any document that we file with the SEC at
the SEC public reference room located at:
100 F Street, N.E.
Room 1580
Washington, D.C.
20549-1004.
Call the SEC at
1-800-732-0330
for more information about the public reference room and how to
request documents.
The SEC allows us to incorporate by reference the
information filed by us with the SEC, which means we can refer
you to important information without restating it in this
prospectus. The information incorporated by reference is an
important part of this prospectus, and information that we file
later with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed
below, along with any future filings that we make with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act after the date of this prospectus and until the offerings
contemplated by this prospectus are completed or terminated:
1. our annual report on
Form 10-K
for the year ended December 31, 2009;
2. our quarterly reports on
Form 10-Q
for the quarters ended March 31, 2010 and June 30,
2010; and
3. our current reports on
Form 8-K
dated June 14, 2010 (filed June 18, 2010),
August 18, 2010 (filed August 18, 2010) and
August 18, 2010 (filed August 24, 2010).
You may access a copy of any or all of these filings, free of
charge, at our web site, which is located at
http://
www.entergy.com
, or by writing or calling us at the
following address:
Ms. Dawn A. Abuso
Assistant Secretary
Entergy Arkansas, Inc.
639 Loyola Avenue
New Orleans, Louisiana 70113
(504) 576-6755
You may also direct your requests via
e-mail
to
dabuso@entergy.com. We do not intend our Internet address to be
an active link or to otherwise incorporate the contents of the
website into this prospectus or any accompanying prospectus
supplement.
You should rely only on the information incorporated by
reference or provided in this prospectus or any accompanying
prospectus supplement. We have not, nor have any underwriters,
dealers or agents, authorized anyone else to provide you with
different information about us or the New Bonds. We are not, nor
are any underwriters, dealers or agents, making an offer of the
New Bonds in any jurisdiction where the offer is not permitted.
You should not assume that the information in this prospectus or
any accompanying prospectus supplement is accurate as of any
date other than the date on the front of those documents or that
the documents incorporated by reference in this prospectus or
any accompanying prospectus supplement are accurate as of any
date other than the date those documents were filed with the
SEC. Our business, financial condition, results of operations
and prospects may have changed since these dates.
3
RATIO OF
EARNINGS TO FIXED CHARGES
We have calculated ratios of earnings to fixed charges pursuant
to Item 503 of
Regulation S-K
of the SEC as follows:
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Six Months Ended
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Twelve Months Ended December 31,
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June 30, 2010
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June 30, 2009
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2009
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2008
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2007
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2006
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2005
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3.33
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2.39
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2.39
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2.33
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3.19
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3.37
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3.75
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Earnings
represent the aggregate of
(1) income before the cumulative effect of an accounting
change, (2) taxes based on income, (3) investment tax
credit
adjustments-net
and (4) fixed charges. Fixed Charges include
interest (whether expensed or capitalized), related amortization
and estimated interest applicable to rentals charged to
operating expenses. We accrue interest expense related to
unrecognized tax benefits in income tax expense and do not
include it in fixed charges.
USE OF
PROCEEDS
Except as otherwise described in a prospectus supplement, the
net proceeds from the offering of the New Bonds will be used
either (a) to repurchase or redeem one or more series of
our outstanding securities on their stated due dates or in some
cases prior to their stated due dates or (b) for other
general corporate purposes. The specific purposes for the
proceeds of a particular series of New Bonds or the specific
securities, if any, to be acquired or redeemed with the proceeds
of a particular series of New Bonds will be described in the
prospectus supplement relating to that series.
DESCRIPTION
OF THE NEW BONDS
General
We will issue the New Bonds offered by this prospectus from time
to time in one or more series under one or more separate
supplemental indentures to the Mortgage and Deed of Trust dated
as of October 1, 1944, with Deutsche Bank
Trust Company Americas, successor corporate trustee,
Stanley Burg, successor co-trustee, and, as to property in
Missouri, The Bank of New York Mellon Trust Company, N.A.,
successor co-trustee, and together referred to in this
prospectus as trustees. This Mortgage and Deed of
Trust, as amended and supplemented, is referred to in this
prospectus as the mortgage. All first mortgage bonds
issued or to be issued under the mortgage, including the New
Bonds offered by this prospectus, are referred to herein as
bonds.
The statements in this prospectus and any accompanying
prospectus supplement concerning the New Bonds and the mortgage
are not comprehensive and are subject to the detailed provisions
of the mortgage. The mortgage and a form of supplemental
indenture are filed as exhibits to the registration statement of
which this prospectus forms a part. You should read these
documents for provisions that may be important to you. The
mortgage has been qualified under the Trust Indenture Act
of 1939. You should refer to the Trust Indenture Act of
1939 for provisions that apply to the New Bonds. Wherever
particular provisions or defined terms in the mortgage are
referred to under this heading Description of the New
Bonds, those provisions or defined terms are incorporated
by reference in this prospectus.
Terms of
Specific Series of the New Bonds
The prospectus supplement relating to each series of New Bonds
offered by this prospectus will include a description of the
specific terms relating to the offering of that series. These
terms will include any of the following terms that apply to that
series:
1. the designation, or name, of the series of New Bonds;
2. the aggregate principal amount of the series;
3. the offering price of the series;
4
4. the date on which the series will mature;
5. the rate or method for determining the rate at which the
series will bear interest;
6. the date from which interest on the series accrues;
7. the dates on which interest on the series will be
payable;
8. the prices and the other terms and conditions, if any,
upon which we may redeem the series prior to maturity;
9. the applicability of the dividend covenant described
below to the series;
10. the terms of an insurance policy, if any, that will be
provided for the payment of the principal of
and/or
interest on the series;
11. the rights, if any, of a holder to elect
repayment; and
12. any other terms of the series not inconsistent with the
provisions of the mortgage.
As of June 30, 2010, we had approximately
$1,100 million principal amount of bonds outstanding.
Payment
The New Bonds and interest thereon will be paid in any coin or
currency of the United States of America that at the time of
payment is legal tender at the corporate trust office of the
corporate trustee in the Borough of Manhattan, City and State of
New York. See -Book-Entry Only Securities for
additional information relating to payment on the New Bonds.
Sinking
or Improvement Fund
The mortgage provides that each series of bonds may be subject
to annual sinking or improvement fund payments. This amount is
stated as 1% per year of the greatest amount for each of these
series outstanding prior to the beginning of the year, less
certain retired bonds. Any series of New Bonds that we issue
under this prospectus will not be entitled to these sinking or
improvement fund requirements.
Redemption
and Retirement
General
The prospectus supplement for a particular series of New Bonds
offered by this prospectus will contain the prices and other
terms and conditions, if any, for redemption of that series
prior to maturity.
Special
Retirement Provisions
If, during any
12-month
period, we dispose of mortgaged property by order of or to any
governmental authority, resulting in the receipt of $10,000,000
or more as proceeds, we, subject to certain conditions, must
apply such proceeds, less certain deductions, to the retirement
of outstanding bonds. If this occurs, we may redeem the
outstanding bonds of any series that are redeemable before
maturity by the application of cash deposited for this purpose
at the redemption prices applicable to those bonds.
We have reserved the right to amend the mortgage without any
consent or other action of the holders of any series of bonds
created after January 31, 1979 to eliminate these special
redemption provisions. Since all of the bonds issued on or prior
to January 31, 1979 have matured or have been redeemed and
are no longer outstanding under the mortgage, we may exercise
this right to so amend the mortgage at any time.
Form and
Exchange
The New Bonds will be fully-registered bonds without coupons.
See -Book-Entry Only Securities. The New Bonds will
be exchangeable for other New Bonds of the same series in equal
aggregate principal amounts.
5
Security
The New Bonds, together with all other bonds outstanding now or
in the future under the mortgage, will be secured, equally and
ratably, by the mortgage. The mortgage constitutes a first
mortgage lien on substantially all of our property subject to
bankruptcy law and:
1. leases of minor portions of our property to others for
uses which do not interfere with our business;
2. leases of certain of our property that we do not use in
our business; and
3. excepted encumbrances.
The mortgage does not create a lien on the following
excepted property:
1. cash and securities;
2. certain equipment, materials and supplies;
3. automobiles and other vehicles and aircraft, timber,
minerals, mineral rights and royalties;
4. receivables, contracts, leases and operating
agreements; and
5. certain unimproved lands sold or to be sold.
The mortgage contains provisions that impose the lien of the
mortgage on property that we acquire after the date of the
mortgage, other than the excepted property, subject to
pre-existing liens. However, if we consolidate or merge with, or
sell substantially all of our mortgaged property to, a
successor, the lien created by the mortgage will generally not
cover the property of the successor, other than the property it
acquires from us and improvements, replacements and additions to
that property.
We have reserved the right to amend the mortgage without the
consent or other action of the holders of any of the bonds
created after February 29, 1996, to provide that, if we
sell substantially all of our mortgaged property to a successor,
the successor will assume all of our obligations and covenants
under the mortgage and the outstanding bonds and we may be
released and discharged from such obligations and covenants.
The mortgage also provides that the trustees have a lien on the
mortgaged property to ensure the payment of their reasonable
compensation, expenses and disbursements and for indemnity
against certain liabilities. This lien takes priority over the
lien securing the New Bonds.
The mortgage also contains restrictions on the issuance of debt
secured by a prior lien on the mortgaged property
(qualified lien bonds).
Issuance
of Additional Bonds
The maximum principal amount of bonds that may be issued under
the mortgage is unlimited, subject to property additions,
earnings and other limitations of the mortgage. Bonds of any
series may be issued from time to time on the following bases:
1. 60% of the cost or fair value, whichever is less, of
unfunded property additions after adjustments to offset
retirements;
2. retirements of bonds or qualified lien bonds; or
3. deposit of cash with the trustees.
Property additions generally include, among other things,
electric, gas, steam or hot water property acquired after
June 30, 1944. Securities, automobiles or other vehicles or
aircraft, or property used principally for the production or
gathering of natural gas, are not included as property additions.
As of June 30, 2010, we could have issued approximately
$608 million principal amount of additional bonds on the
basis of property additions and approximately $796 million
principal amount of bonds on the basis of retired bonds.
6
When bonds are issued on the basis of property additions as
described in clause (1) above, cash as described in
clause (3) above or, with certain exceptions, retired bonds
as described in clause (2) above, the issuance must meet an
earnings test. The adjusted net earnings, before
interest and income taxes, for 12 consecutive months of the
preceding 15 months must be at least twice the annual
interest requirements on all bonds outstanding at the time, plus
the bonds to be issued, plus all indebtedness, if any, of prior
rank. The adjusted net earnings are calculated with a deduction
of $5,800,000 plus 2% of net additions to mortgaged property in
lieu of actual retirements of mortgaged property. Based upon the
results of our operations for the twelve months ended
June 30, 2010, if we were to make an application for
authentication and delivery of bonds as of the date of this
prospectus, solely based on the earnings coverage test (and,
therefore, not taking into account the property additions and
retired bond issuance limitations), we could issue approximately
$2,017 million in principal amount of bonds, in addition to
the amount of bonds then outstanding (assuming an interest rate
of 4% for additional bonds). Such amount will be affected by the
issuance of the New Bonds and the retirement of existing bonds
with the proceeds of the New Bonds and by subsequent net
earnings. New Bonds in a greater amount may also be issued for
the refunding of outstanding bonds.
We have reserved the right to amend the mortgage without the
consent or other action of the holders of any of the bonds
created after February 29, 1996, and the provisions
discussed in the foregoing paragraphs describing the issuance of
bonds on the basis of property additions as follows:
1. to permit the issuance of bonds on the basis of 80% of
the cost or fair value, whichever is less, of unfunded property
additions after adjustments to offset retirements; and
2. to modify the net earnings test
a. to provide that the period over which we will calculate
net earnings will be 12 consecutive months of the preceding
18 months;
b. to specifically permit the inclusion in net earnings of
revenues collected subject to possible refund and allowances for
funds used during construction; and
c. to provide for no deduction for non-recurring charges.
We have also reserved the right to amend the mortgage without
any consent or other action of the holders of any of the bonds
created after June 30, 1978 to make any form of space
satellites including solar power satellites, space stations and
other analogous facilities available as property additions.
Since all of the bonds issued on or prior to June 30, 1978
have matured or have been redeemed and are no longer outstanding
under the mortgage, we may exercise this right to amend the
mortgage at any time.
Other than the security afforded by the lien of the mortgage and
restrictions on the issuance of additional bonds described
above, there are no provisions of the mortgage that grant the
holders of the bonds protection in the event of a highly
leveraged transaction involving us.
Release
and Substitution of Property
We may release property from the lien of the mortgage, without
applying an earnings test, on the following bases:
1. the deposit of cash or, to a limited extent, purchase
money mortgages;
2. property additions, after adjustments in certain cases
to offset retirements and after making adjustments for qualified
lien bonds, if any, outstanding against property
additions; and
3. a waiver of the right to issue bonds on the basis of
retired bonds.
We can withdraw cash upon the bases stated in clause (2)
and/or (3) above without applying an earnings test.
The mortgage also contains special provisions with respect to
qualified lien bonds pledged and the disposition of moneys
received on pledged prior lien bonds.
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We have reserved the right to amend the mortgage without the
consent or other action of the holders of any of the bonds
created after February 29, 1996 to permit release or
substitution of property from the lien of the mortgage on the
following bases:
1. mortgaged property may be released in an amount equal to
the principal amount of all the retired bonds we elected to use
for the release times the bonding ratio in effect at the time
the bonds were issued;
2. unfunded property may be released so long as we have at
least one dollar in unfunded property additions;
3. existing limitations on the amount of obligations
secured by purchase money mortgages upon property released will
be eliminated such that the property can be released; and
4.
Funded Property
shall mean property
specified by us with a fair value determined by an independent
expert not less than 10/8ths of the sum of the amount of the
outstanding bonds and retired bonds.
Dividend
Covenant
The terms of certain of our outstanding series of bonds include
our covenant to restrict our payment of cash dividends on our
common stock in certain circumstances. Any dividend covenant
applicable to a series of New Bonds will be described in the
prospectus supplement relating to that series of New Bonds.
There is no assurance that the terms of future dividend
covenants, if any, will be the same as those applicable to our
outstanding bonds.
Modification
Your rights as a bondholder may be modified with the consent of
the holders of
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2
/
3
%
of the outstanding bonds, and, if less than all series of bonds
are affected, the consent also of holders of
66
2
/
3
%
of the outstanding bonds of each series affected. In general, no
modification of the terms:
1. of payment of principal or interest;
2. of obligations for special retirement due to the order
of a governmental authority (see however,
Redemption and Retirement Special
Retirement Provisions above relating to a reservation of
the right to amend this provision);
3. affecting the lien of the mortgage; or
4. reducing the percentage required for modification,
is effective against any bondholder without that
bondholders consent.
We have reserved the right to amend the mortgage without the
consent or action of any of the holders of bonds created after
February 29, 1996:
1. to reduce the percentage vote required to modify certain
rights of the holders of the bonds to a majority of the holders
of all outstanding bonds, considered as one class;
2. to provide that if a proposed change affects less than
all series of outstanding bonds, then only the consent of a
majority of the bonds of each series affected, considered as one
class, is required to make this change; and
3. to permit us to amend the mortgage without the consent
of the holders of bonds to make changes which do not adversely
affect the interests of the holders in any material respect.
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Defaults
Defaults under the mortgage include:
1. default in the payment of principal;
2. default for 60 days in the payment of interest or
installments of funds for the retirement of bonds;
3. certain events of bankruptcy, insolvency or
reorganization;
4. defaults with respect to qualified lien bonds; and
5. default in other covenants for 90 days after notice.
The trustees may withhold notice of default, except in payment
of principal, interest or funds for purchase or redemption of
bonds, if they in good faith determine it is in the interests of
the holders of the bonds.
The corporate trustee or the holders of 25% of the bonds may
declare the principal and interest due and payable on default.
However, a majority of the holders may annul such declaration if
the default has been cured. No holder of bonds may enforce the
lien of the mortgage without giving the trustees written notice
of a default and unless
1. the holders of 25% of the bonds have requested the
trustees in writing to act and offered them reasonable
opportunity to act and indemnity satisfactory to them against
the costs, expenses and liabilities to be incurred
thereby; and
2. the trustees shall have failed to act.
The holders of a majority of the bonds may direct the time,
method and place of conducting any proceedings for any remedy
available to the trustees or exercising any trust or power
conferred upon the trustees.
We are required to file an annual certificate with the trustees
as to compliance with the provisions of the mortgage and as to
the absence of a default with respect to any of the covenants in
the mortgage.
Satisfaction
and Discharge of Mortgage
The mortgage may be satisfied and discharged if and when we
provide for the payment of all of the bonds and all other sums
due under the mortgage.
Book-Entry
Only Securities
Unless otherwise specified in the applicable prospectus
supplement, the New Bonds will trade through The Depository
Trust Company (DTC). Each series of New Bonds
will be represented by one or more global certificates and
registered in the name of Cede & Co., DTCs
nominee. Upon issuance of the global certificates, DTC or its
nominee will credit, on its book-entry registration and transfer
system, the principal amount of the New Bonds represented by
such global certificates to the accounts of institutions that
have an account with DTC or its participants. The accounts to be
credited shall be designated by the underwriters. Ownership of
beneficial interests in the global certificates will be limited
to participants or persons that may hold interests through
participants. The global certificates will be deposited with the
trustee as custodian for DTC.
DTC is a New York clearing corporation and a clearing agency
registered under Section 17A of the Exchange Act. DTC holds
securities for its participants. DTC also facilitates the
post-trade settlement of securities transactions among its
participants through electronic computerized book-entry
transfers and pledges in the participants accounts. This
eliminates the need for physical movement of securities
certificates. The participants include securities brokers and
dealers, banks, trust companies, clearing corporations and
certain other organizations. DTC is a wholly-owned subsidiary of
The Depository Trust & Clearing Corporation
(DTCC). DTCC is the holding company for DTC,
National Securities Clearing Corporation and Fixed Income
Clearing Corporation, all of which are registered clearing
agencies. DTCC is owned by the users of its
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regulated subsidiaries. Others who maintain a custodial
relationship with a participant can use the DTC system. The
rules that apply to DTC and those using its systems are on file
with the SEC.
Purchases of the New Bonds within the DTC system must be made
through participants, who will receive a credit for the New
Bonds on DTCs records. The beneficial ownership interest
of each purchaser will be recorded on the appropriate
participants records. Beneficial owners will not receive
written confirmation from DTC of their purchases, but beneficial
owners should receive written confirmations of the transactions,
as well as periodic statements of their holdings, from the
participants through whom they purchased New Bonds. Transfers of
ownership in the New Bonds are to be accomplished by entries
made on the books of the participants acting on behalf of
beneficial owners. Beneficial owners will not receive
certificates for their New Bonds of a series, except if use of
the book-entry system for the New Bonds of that series is
discontinued.
To facilitate subsequent transfers, all New Bonds deposited by
participants with DTC are registered in the name of DTCs
nominee, Cede & Co. The deposit of the New Bonds with
DTC and their registration in the name of Cede & Co.
effects no change in beneficial ownership. DTC has no knowledge
of the actual beneficial owners of the New Bonds. DTCs
records reflect only the identity of the participants to whose
accounts such New Bonds are credited. These participants may or
may not be the beneficial owners. Participants will remain
responsible for keeping account of their holdings on behalf of
their customers.
Conveyance of notices and other communications by DTC to
participants, and by participants to beneficial owners, will be
governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Beneficial owners of New Bonds may wish to take certain steps to
augment transmission to them of notices of significant events
with respect to the New Bonds, such as redemptions, tenders,
defaults and proposed amendments to the mortgage. Beneficial
owners of the New Bonds may wish to ascertain that the nominee
holding the New Bonds has agreed to obtain and transmit notices
to the beneficial owners.
Redemption notices will be sent to Cede & Co., as
registered holder of the New Bonds. If less than all of the New
Bonds of a series are being redeemed, DTCs practice is to
determine by lot the amount of New Bonds of such series held by
each participant to be redeemed.
Neither DTC nor Cede & Co. will itself consent or vote
with respect to New Bonds, unless authorized by a participant in
accordance with DTCs procedures. Under its usual
procedures, DTC would mail an omnibus proxy to us as soon as
possible after the record date. The omnibus proxy assigns the
consenting or voting rights of Cede & Co. to those
participants to whose accounts the New Bonds are credited on the
record date. We believe that these arrangements will enable the
beneficial owners to exercise rights equivalent in substance to
the rights that can be directly exercised by a registered holder
of the New Bonds.
Payments of redemption proceeds, principal of, and interest on
the New Bonds will be made to Cede & Co., or such
other nominee as may be requested by DTC. DTCs practice is
to credit participants accounts upon DTCs receipt of
funds and corresponding detail information from us or our agent,
on the payable date in accordance with their respective holdings
shown on DTCs records. Payments by participants to
beneficial owners will be governed by standing instructions and
customary practices. Payments will be the responsibility of
participants and not of DTC, the trustee, or us, subject to any
statutory or regulatory requirements as may be in effect from
time to time. Payment of redemption proceeds, principal and
interest to Cede & Co. (or such other nominee as may
be requested by DTC) is our responsibility. Disbursement of
payments to participants is the responsibility of DTC, and
disbursement of payments to the beneficial owners is the
responsibility of participants.
Except as provided in the applicable prospectus supplement, a
beneficial owner will not be entitled to receive physical
delivery of the New Bonds. Accordingly, each beneficial owner
must rely on the procedures of DTC to exercise any rights under
the New Bonds.
DTC may discontinue providing its services as securities
depositary with respect to the New Bonds at any time by giving
us reasonable notice. In the event no successor securities
depositary is obtained, certificates for the New Bonds will be
printed and delivered. We may decide to replace DTC or any
successor depositary. Additionally, subject to the procedures of
DTC, we may decide to discontinue use of the system of
book-entry
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transfers through DTC (or a successor depositary) with respect
to some or all of the New Bonds. In that event or if an event of
default with respect to a series of New Bonds has occurred and
is continuing, certificates for the New Bonds of such series
will be printed and delivered. If certificates for such series
of New Bonds are printed and delivered,
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those New Bonds will be issued in fully registered form without
coupons;
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a holder of certificated New Bonds would be able to exchange
those New Bonds, without charge, for an equal aggregate
principal amount of New Bonds of the same series, having the
same issue date and with identical terms and provisions; and
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a holder of certificated New Bonds would be able to transfer
those New Bonds without cost to another holder, other than for
applicable stamp taxes or other governmental charges.
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The information in this section concerning DTC and DTCs
book-entry system has been obtained from sources that we believe
to be reliable, but we do not take any responsibility for the
accuracy of this information.
PLAN OF
DISTRIBUTION
Methods
and Terms of Sale
We may use a variety of methods to sell the New Bonds including:
1. through one or more underwriters or dealers;
2. directly to one or more purchasers;
3. through one or more agents; or
4. through a combination of any such methods of sale.
The prospectus supplement relating to a particular series of the
New Bonds will set forth the terms of the offering of the New
Bonds, including:
1. the name or names of any underwriters, dealers or agents
and any syndicate of underwriters;
2. the initial public offering price;
3. any underwriting discounts and other items constituting
underwriters compensation;
4. the proceeds we receive from that sale; and
5. any discounts or concessions allowed or reallowed or
paid by any underwriters to dealers.
Underwriters
If we sell the New Bonds through underwriters, they will acquire
the New Bonds for their own account and may resell them from
time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying
prices determined at the time of sale. The underwriters for a
particular underwritten offering of New Bonds will be named in
the applicable prospectus supplement and, if an underwriting
syndicate is used, the managing underwriter or underwriters will
be named on the cover page of the applicable prospectus
supplement. In connection with the sale of New Bonds, the
underwriters may receive compensation from us or from purchasers
in the form of discounts, concessions or commissions. The
obligations of the underwriters to purchase New Bonds will be
subject to certain conditions. The underwriters will be
obligated to purchase all of the New Bonds of a particular
series if any are purchased. However, the underwriters may
purchase less than all of the New Bonds of a particular series
should certain circumstances involving a default of one or more
underwriters occur.
The initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers by any
underwriters may be changed from time to time.
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Stabilizing
Transactions
Underwriters may engage in stabilizing transactions and
syndicate covering transactions in accordance with Rule 104
under the Exchange Act. Stabilizing transactions permit bids to
purchase the underlying New Bond so long as the stabilizing bids
do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the New Bonds in the open
market after the distribution has been completed in order to
cover syndicate short positions. These stabilizing transactions
and syndicate covering transactions may cause the price of the
New Bonds to be higher than it would otherwise be if such
transactions had not occurred.
Agents
If we sell the New Bonds through agents, the applicable
prospectus supplement will set forth the name of any agent
involved in the offer or sale of the New Bonds as well as any
commissions we will pay to them. Unless otherwise indicated in
the applicable prospectus supplement, any agent will be acting
on a best efforts basis for the period of its appointment.
Related
Transactions
Underwriters, dealers and agents (or their affiliates) may
engage in transactions with, or perform services for, us or our
affiliates in the ordinary course of business.
Indemnification
We will agree to indemnify any underwriters, dealers, agents or
purchasers and their controlling persons against certain civil
liabilities, including liabilities under the Securities Act.
Listing
Unless otherwise specified in the applicable prospectus
supplement, the New Bonds will not be listed on a national
securities exchange or the Nasdaq Stock Market. No assurance can
be given that any broker-dealer will make a market in any series
of the New Bonds and, in any event, no assurance can be given as
to the liquidity of the trading market for any of the New Bonds.
EXPERTS
The financial statements, and the related financial statement
schedule, incorporated in this prospectus by reference from
Entergy Arkansas, Inc.s Annual Report on
Form 10-K
for the year ended December 31, 2009, and the effectiveness
of Entergy Arkansas, Inc.s internal control over financial
reporting have been audited by Deloitte & Touche LLP,
an independent registered public accounting firm, as stated in
their reports, which are incorporated herein by reference. Such
financial statements and financial statement schedule have been
so incorporated in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
LEGALITY
The legality of the New Bonds will be passed upon for us by
Morgan, Lewis & Bockius LLP, New York, New York, and
Friday, Eldredge & Clark, LLP, Little Rock, Arkansas.
Certain legal matters with respect to the offering of the New
Bonds will be passed upon for the underwriters by Pillsbury
Winthrop Shaw Pittman LLP, New York, New York. Pillsbury
Winthrop Shaw Pittman LLP regularly represents us and our
affiliates in connection with various matters. Morgan,
Lewis & Bockius LLP may rely on the opinion of Friday,
Eldredge & Clark, LLP, as to matters of Arkansas law
relevant to its opinion. Matters pertaining to New York law will
be passed upon by Morgan, Lewis & Bockius LLP, our New
York counsel.
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