AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 3, 2002.
REGISTRATION NO. 333-83958
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
AMENDMENT NO. 2
TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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TECO ENERGY, INC. FLORIDA 59-2052286
TECO CAPITAL TRUST III DELAWARE 13-4164845
TECO FUNDING COMPANY III, LLC DELAWARE 51-0404791
(Exact name of each registrant as (State or other jurisdiction (I.R.S. Employer Identification Number)
specified in its charter) of incorporation or
organization)
------------------------
TECO ENERGY, INC. TECO CAPITAL TRUST III TECO FUNDING COMPANY III, LLC
702 NORTH FRANKLIN STREET C/O THE BANK OF NEW YORK 300 DELAWARE AVENUE, SUITE 900
TAMPA, FLORIDA 33602 101 BARCLAY STREET, 21ST FLOOR WEST WILMINGTON, DELAWARE 19801
(813) 228-4111 NEW YORK, NEW YORK 10286 (302) 552-3137
(212) 896-7171
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
DAVID E. SCHWARTZ, ESQ.
Secretary
TECO Energy, Inc.
702 North Franklin Street
Tampa, Florida 33602
(813) 228-4111
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
with copies to:
DAVID R. POKROSS, JR., ESQ.
Palmer & Dodge LLP
111 Huntington Avenue
Boston, Massachusetts 02199-7613
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Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES OFFERING REGISTRATION
TO BE REGISTERED PRICE(2)(3)(4) FEE(4)
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Debt Securities of TECO Energy, Inc.(1)
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Preferred Stock, $1.00 par value per share, of TECO Energy,
Inc.(1)
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Common Stock, $1.00 par value per share, of TECO Energy,
Inc.(1)(5)(6)
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Warrants of TECO Energy, Inc.(1)
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Stock Purchase Contracts and Stock Purchase Units(1)
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Preferred Securities of TECO Capital Trust III (1)
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Preferred Securities of TECO Funding Company III, LLC (1)(7)
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Guarantee of Preferred Securities of TECO Funding Company
III, LLC by TECO Energy, Inc.(1)(7)
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Total $1,368,906,250(8)(9) $83,713(8)(10)
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(1) Subject to note (9) below, registered hereunder is an indeterminate
principal amount and number of (i) securities of TECO Energy, Inc., (ii)
trust preferred securities of TECO Capital Trust III, and (iii) preferred
securities of TECO Funding Company III, LLC, as may from time to time be
issued at indeterminate prices. Trust preferred notes may be issued and
sold to TECO Funding Company III, LLC, and the trust preferred notes may be
later distributed to the holders of the limited liability company preferred
securities upon a dissolution of TECO Funding Company III, LLC, and the
distribution of the assets thereof. Securities of TECO Energy, Inc. may be
sold pursuant to stock purchase contracts providing for payment and
delivery on a specified future date. The securities registered hereunder
may be sold separately, together or as units with other securities
registered hereunder and may include hybrid securities involving a
combination of features of certain of the securities listed above.
(2) In United States dollars or the equivalent thereof in any other currency as
shall result in an aggregate initial offering price for all securities not
in excess of $1,368,906,250.
(3) Exclusive of accrued interest and distributions, if any.
(4) The proposed maximum aggregate offering price of the securities being
registered for the account of the Registrants has been estimated solely for
the purpose of calculating the registration fee pursuant to Rule 457(o)
under the Securities Act of 1933. Rule 457(o) permits the registration fee
to be calculated on the basis of the maximum offering price of all of the
securities listed and, therefore, the table does not specify by each class
information as to the amount to be registered, the maximum offering price
per unit or the proposed maximum aggregate offering price. If any debt
securities are issued at an original issue discount, then the offering
price shall be in such greater principal amount as shall result in an
aggregate initial offering price, together with that of the preferred
securities, if any, not in excess of $1,368,906,250.
(5) Includes associated common stock purchase rights which, prior to the
occurrence of certain events, will not be exercisable or evidenced
separately from the common stock.
(6) The aggregate amount of TECO Energy common stock registered hereunder that
may be sold in an "at the market" offering for the account of TECO Energy
is limited to that which is permissible under Rule 415(a)(4) under the
Securities Act of 1933.
(7) Includes the obligations of TECO Energy, Inc. under (i) the Amended and
Restated Limited Liability Company Agreement, (ii) the guarantee issued
with respect to the preferred securities issued by TECO Funding Company
III, LLC, and (iii) the trust preferred notes purchased by TECO Funding
Company III, LLC, all as described in the prospectuses included in this
Registration Statement. No separate consideration will be received from
purchasers of trust preferred securities with respect to the limited
liability company preferred securities or the guarantee and, therefore, no
registration fee is attributable to the limited liability company preferred
securities or the guarantee of the limited liability company preferred
securities.
(8) Pursuant to Rule 457(p) under the Securities Act of 1933, $168,906,250 of
securities are being carried forward from TECO Energy, Inc.'s Registration
Statement on Form S-3 (No. 333-61758) filed with the Commission on May 25,
2001 for inclusion in the prospectuses filed herewith. The registration fee
that is being paid in connection with this Registration Statement is
$83,713, which fee represents the total fee for registering the aggregate
offering price of the securities registered hereunder less the fee of
$42,227 already paid for unsold securities registered under the prior
Registration Statement.
(9) In no event will the aggregate offering price of all securities issued from
time to time by the registrants under this registration statement exceed
$1,368,906,250.
(10) Fee previously paid with initial filing of this Registration Statement
filed on March 7, 2002.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THE PROSPECTUSES FILED AS
PART OF THIS REGISTRATION STATEMENT RELATE TO THE $1,200,000,000 AGGREGATE
AMOUNT OF SECURITIES REGISTERED HEREBY AS WELL AS TO THE $168,906,250 AGGREGATE
AMOUNT OF SECURITIES REMAINING UNSOLD FROM REGISTRATION STATEMENT NO. 333-61758
PREVIOUSLY FILED BY TECO ENERGY, INC.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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EXPLANATORY NOTE
This registration statement contains two prospectuses. One is a prospectus
relating to debt securities, preferred stock, common stock, stock purchase
contracts, stock purchase units and warrants of TECO Energy, Inc. The other is a
prospectus relating to the trust preferred securities of TECO Capital Trust III.
Each offering of securities made under this registration statement will be made
with one or the other or both of these two prospectuses, along with an
appropriate prospectus supplement or term sheet.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED MAY 3, 2002
TECO ENERGY, INC.
DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK,
STOCK PURCHASE CONTRACTS, STOCK PURCHASE UNITS AND WARRANTS
------------------------
We plan to offer to the public from time to time:
- debt securities consisting of debentures, notes or other evidences of
indebtedness,
- preferred stock,
- common stock,
- stock purchase contracts,
- stock purchase units, and
- warrants or other rights to purchase common stock, preferred stock or
debt securities.
Our common stock trades on the New York Stock Exchange under the symbol
"TE".
This prospectus provides you with a general description of the securities
we may offer. We may offer the securities as separate series, in amounts, prices
and on terms determined at the time of the sale. When we offer securities, we
will provide a prospectus supplement or a term sheet describing the terms of the
specific issue, including the offering price of the securities. YOU SHOULD READ
BOTH THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT OR TERM SHEET, TOGETHER WITH
THE ADDITIONAL INFORMATION DESCRIBED UNDER THE HEADING "WHERE YOU CAN FIND MORE
INFORMATION" BEGINNING ON PAGE 14 OF THIS PROSPECTUS, BEFORE YOU MAKE YOUR
INVESTMENT DECISION.
We will sell the securities to underwriters or dealers, through agents, or
directly to investors.
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NEITHER THE SEC 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.
THIS PROSPECTUS MAY NOT BE USED TO SELL SECURITIES UNLESS ACCOMPANIED BY A
PROSPECTUS SUPPLEMENT.
------------------------
The date of this prospectus is May , 2002
TECO Energy, Inc. - 702 North Franklin Street - Tampa, Florida
33602 - (813) 228-4111
TABLE OF CONTENTS
PAGE
----
About This Prospectus....................................... 1
Risk Factors................................................ 1
Forward-Looking Statements.................................. 1
TECO Energy................................................. 2
Ratios of Earnings To Fixed Charges and Preferred Stock
Dividends................................................. 2
Description of Debt Securities.............................. 3
Description of Preferred Stock.............................. 8
Description of Common Stock................................. 9
Anti-Takeover Effects of Our Articles of Incorporation and
Bylaws, Florida Law and Our Rights Plan................... 10
Description of Stock Purchase Contracts and Stock Purchase
Units..................................................... 11
Description of Warrants and Other Purchase Rights........... 11
Use of Proceeds............................................. 13
Plan of Distribution........................................ 13
Legal Matters............................................... 14
Experts..................................................... 14
Where You Can Find More Information......................... 15
i
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC using a "shelf" registration process. The registration statement registered
both the securities described in this prospectus as well as other securities
issuable by us, TECO Capital Trust III and TECO Funding Company III, LLC. Under
the shelf process, we, TECO Capital Trust III, and TECO Funding Company III, LLC
may, from time to time, issue and sell to the public any combination of the
securities described in the registration statement in one or more offerings up
to a total dollar amount of $1,368,906,250.
RISK FACTORS
In deciding whether to purchase our securities, in addition to the other
information contained in this prospectus, you should consider carefully any risk
factors we may include, if appropriate, in the applicable prospectus supplement
or term sheet. You should also consider the "Investment Considerations" included
in our Annual Report on Form 10-K for the fiscal year ended December 31, 2001,
which is incorporated by reference in this prospectus, as the same may be
amended, supplemented or superseded from time to time by our future filings
under the Securities Exchange Act of 1934.
FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement or term sheet, and the documents
we have incorporated by reference may contain forward-looking statements. Such
statements relate to future events or our future financial performance. We use
words such as "anticipate," "believe," "expect," "intend," "may," "project,"
"will" or other similar words to identify forward-looking statements.
Without limiting the foregoing, any statements relating to our
- anticipated capital expenditures;
- future cash flows and borrowings;
- potential future merger opportunities; and
- sources of funding
are forward-looking statements. These forward-looking statements are based on
numerous assumptions that we believe are reasonable, but they are open to a wide
range of uncertainties and business risks and actual results may differ
materially from those discussed in these statements.
Among the factors that could cause actual results to differ materially are:
- general economic conditions, particularly those affecting energy sales in
our service area;
- variations in weather conditions affecting energy sales and operating
costs;
- potential competitive changes in the electric and gas industries,
particularly in the area of retail competition;
- federal and state regulatory initiatives that increase competition or
costs, threaten investment recovery, or impact rate structure;
- commodity price changes, including the price of energy affecting our
merchant plants;
- any adverse changes in nonconventional fuel tax credit laws, regulations
or administration, or in our ability to generate sufficient taxable
income to utilize those credits;
- a greater decline in gas production levels at TECO Coalbed Methane than
are currently projected;
- our ability to find and successfully implement attractive investments in
unregulated businesses;
- our ability to successfully develop, construct, finance and operate our
projects on schedule and within budget;
- any costs incurred if we must replace NEPCO, an Enron subsidiary, as the
construction contractor on our TECO Power Services merchant power
projects;
- the degree to which we are able to successfully develop and operate our
diversified businesses, particularly our merchant power plants which have
no guaranteed rate of return;
- interest rates and other factors that could impact our ability to obtain
access to sufficient capital on satisfactory terms;
- restrictive covenants in or changes to the credit ratings on our current
or future debt that could increase our financing costs or affect our
ability to borrow, make payments on subordinated debt or pay dividends;
- changes in environmental regulation that may impose additional costs or
curtail some of our activities; and
- adverse economic or political developments in the foreign countries in
which our shipping business or TECO Power Services have operations.
When considering forward-looking statements, you should keep in mind the
cautionary statements in this prospectus, any prospectus supplement or term
sheet and the documents incorporated by reference, including the Investment
Considerations included in our filings with the SEC.
TECO ENERGY
We are an electric and gas utility holding company, exempt from
registration under the Public Utility Holding Company Act of 1935, with
important unregulated activities. We have a balance of regulated utility
companies in the growing Florida market and profitable unregulated companies.
Our unregulated businesses include independent power generation and
distribution, marine transportation, coal mining, coalbed methane gas
production, the marketing of natural gas, energy and engineering services and,
indirectly, the sale of propane gas. You can find a more complete description of
our business and recent activities in the documents listed under "WHERE YOU CAN
FIND MORE INFORMATION." The address of our principal executive office is 702
North Franklin Street, Tampa, Florida 33602, and the telephone number is (813)
228-4111.
RATIOS OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth our consolidated ratios of earnings to fixed
charges and preferred stock dividends for the periods shown. If any series of
debt or preferred stock securities should be used to repay our outstanding debt
or retire other securities, we will present a pro forma ratio in the applicable
prospectus supplement or term sheet if the change in a ratio would be ten
percent or greater.
YEAR ENDED DECEMBER 31,
----------------------------------------------------
2001 2000 1999 1998 1997
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Ratio of Earnings to Fixed Charges.......................... 2.60x 2.51x 3.22x(1) 3.64x(2) 3.74x(3)
Ratio of Earnings to Fixed Charges and Preferred Stock
Dividends................................................. 2.60x 2.51x 3.22x(1) 3.64x(2) 3.74x(3)
---------------
For the purposes of calculating these ratios, earnings consist of income from
continuing operations before income taxes, income or loss from equity investees
and fixed charges. Fixed charges consist of interest on indebtedness,
amortization of debt premium, the interest component of rentals and preferred
stock dividend requirements.
(1) Includes the effect of other non-recurring pretax items totaling $21.0
million recorded at Tampa Electric Company, TECO Investments, Inc. and TECO
Energy. The effect of these items was to
2
reduce the ratio of earnings to fixed charges. Had these items been excluded
from the calculation, the ratio of earnings to fixed charges would have been
3.58x for the year ended December 31, 1999.
(2) Includes the effect of other non-operating pretax items totaling $30.5
million associated with write-offs at TECO Coal Corporation and Tampa
Electric, and $0.6 million pretax of merger-related costs. The effect of
these items was to reduce the ratio of earnings to fixed charges. Had these
items been excluded from the calculation, the ratio of earnings to fixed
charges would have been 3.93x for the year ended December 31, 1998.
(3) Includes a $2.6-million pretax charge for all transactions associated with
the mergers completed in June 1997. The effect of this charge was to reduce
the ratio of earnings to fixed charges. Had this charge been excluded from
the calculation, the ratio of earnings to fixed charges would have been
3.76x for the year ended December 31, 1997.
DESCRIPTION OF DEBT SECURITIES
The debt securities will be unsecured and, unless indicated otherwise in
the applicable prospectus supplement or term sheet, will rank on parity with all
our other unsecured and unsubordinated indebtedness. We will issue debt
securities in one or more series under an indenture dated as of August 17, 1998
between us and The Bank of New York, as trustee. We filed the indenture as an
exhibit to the registration statement on Form S-3 dated August 24, 1998. The
following description of the terms of the debt securities summarizes only the
material terms of the debt securities. The description is not complete, and we
refer you to the indenture, which we incorporate by reference.
GENERAL
The indenture does not limit the aggregate principal amount of the debt
securities or of any particular series of debt securities that we may issue
under it. We are not required to issue debt securities of any series at the same
time nor must the debt securities within any series bear interest at the same
rate or mature on the same date.
Each time that we issue a new series of debt securities, the prospectus
supplement or term sheet relating to that new series will describe the
particular amount, price and other terms of those debt securities. These terms
may include:
- the title of the debt securities;
- any limit on the total principal amount of the debt securities;
- the date or dates on which the principal of the debt securities will be
payable or the method by which such date or dates will be determined;
- the rate or rates at which the debt securities will bear interest, if
any, or the method by which such rate or rates will be determined, and
the date or dates from which any such interest will accrue;
- the date or dates on which any such interest will be payable and the
record dates, if any, for any such interest payments;
- if applicable, whether we may extend the interest payment periods and, if
so, the permitted duration of any such extensions;
- the place or places where the principal of and interest on the debt
securities will be payable;
- any obligation we may have to redeem or purchase the debt securities
pursuant to any sinking fund, purchase fund or analogous provision or at
the option of the holder and the terms and conditions on which the debt
securities may be redeemed or purchased pursuant to an obligation;
- the denominations in which we will issue the debt securities, if other
than denominations of $1,000;
- the terms and conditions, if any, on which we may redeem the debt
securities;
3
- the currency, currencies or currency units in which we will pay the
principal of and any premium and interest on the debt securities, if
other than U.S. dollars, and the manner of determining the equivalent in
U.S. dollars;
- whether we will issue any debt securities in whole or in part in the form
of one or more global securities and, if so, the identity of the
depositary for the global security and any provisions regarding the
transfer, exchange or legending of any such global security if different
from those described below under the caption "Global Securities";
- any addition to, change in or deletion from the events of default or
covenants described in this prospectus with respect to the debt
securities and any change in the right of the trustee or the holders to
declare the principal amount of the debt securities due and payable;
- any index or formula used to determine the amount of principal of or any
premium or interest on the debt securities and the manner of determining
any such amounts;
- any terms relating to the conversion of the debt security into our common
stock, preferred stock or other security issuable by us;
- any subordination of the debt securities to any of our other
indebtedness; and
- other material terms of the debt securities.
Unless the prospectus supplement or term sheet relating to the issuance of
a series of debt securities indicates otherwise, the debt securities will have
the following characteristics:
We will issue debt securities only in fully registered form, without
coupons and, generally, in denominations of $1,000 or multiples of $1,000. We
will not charge a service fee for the registration, transfer or exchange of debt
securities, but we may require a payment sufficient to cover any tax or other
governmental charge payable in connection with registration, transfer or
exchange.
The principal of, and any premium and interest on, any debt securities will
be payable at the corporate trust office of The Bank of New York in New York,
New York. Debt securities will be exchangeable and transfers thereof will be
registrable at this corporate trust office. Payment of any interest due on any
debt security will be made to the person in whose name the debt security is
registered at the close of business on the regular record date for interest.
We will have the right to redeem the debt securities only upon written
notice mailed between 30 and 60 days prior to the redemption date.
If we plan to redeem the debt securities, before the redemption occurs, we
are not required to:
- issue, register the transfer of, or exchange any debt security of that
series during the period beginning 15 days before we mail the notice of
redemption and ending on the day we mail the notice; or
- after we mail the notice of redemption, register the transfer of or
exchange any debt security selected for redemption, except, if we are
only redeeming a part of a debt security, we are required to register the
transfer of or exchange the unredeemed portion of the debt security if
the holder so requests.
We may offer and sell debt securities at a substantial discount below their
principal amount. We will describe any applicable special federal income tax and
other considerations, if any, in the relevant prospectus supplement or term
sheet. We may also describe certain special federal income tax or other
considerations, if any, applicable to any debt securities that are denominated
in a currency or currency unit other than U.S. dollars in the relevant
prospectus supplement or term sheet.
The debt securities do not provide special protection in the event we are
involved in a highly leveraged transaction.
4
The debt securities are obligations exclusively of TECO Energy, Inc.,
which, as a holding company, has no material assets other than its ownership of
the common stock of its subsidiaries, including Tampa Electric Company. We will
rely entirely upon distributions from our subsidiaries to meet the payment
obligations under the debt securities. Our subsidiaries are separate and
distinct legal entities and have no obligation, contingent or otherwise, to pay
amounts due under the debt securities or otherwise to make any funds available
to us including the payment of dividends or other distributions or the extension
of loans or advances. Furthermore, the ability of our subsidiaries to make any
payments to us would be dependent upon the terms of any credit facilities of the
subsidiaries and upon the subsidiaries' earnings, which are subject to various
business risks. In a bankruptcy or insolvency proceeding, claims of holders of
the debt securities would be satisfied solely from our equity interests in our
subsidiaries remaining after the satisfaction of claims of creditors of the
subsidiaries. Accordingly, the debt securities are effectively subordinated to
existing and future liabilities of our subsidiaries to their respective
creditors.
GLOBAL SECURITIES
If we decide to issue debt securities in the form of one or more global
securities, then we will register the global securities in the name of the
depositary for the global securities or the nominee of the depositary and the
global securities will be delivered by the trustee to the depositary for credit
to the accounts of the holders of beneficial interests in the debt securities.
The prospectus supplement or term sheet will describe the specific terms of
the depositary arrangement for debt securities of a series that are issued in
global form. None of our company, the trustee, any payment agent or the security
registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in a global debt security or for maintaining, supervising or reviewing
any records relating to these beneficial ownership interests.
CONSOLIDATION, MERGER, ETC.
We will not consolidate or merge with or into any other corporation or
other organization, or sell, convey or transfer all or substantially all of our
assets to any individual or organization, unless:
- the successor is an individual or organization organized under the laws
of the United States or any state thereof or the District of Columbia or,
upon the effectiveness of the currently proposed amendment to the
indenture, under the laws of a foreign jurisdiction and such successor
consents to the jurisdiction of the courts of the United States or any
state thereof;
- the successor or transferee expressly assumes our obligations under the
indenture; and
- the consolidation, merger, sale or transfer does not cause the occurrence
of a default under the indenture.
Upon the assumption by the successor of our obligations under the indenture
and the debt securities issued thereunder, and the satisfaction of any other
conditions required by the indenture, the successor will succeed to and be
substituted for us under the indenture.
MODIFICATION OF THE INDENTURE
The indenture provides that we or the trustee may modify or amend its terms
with the consent of (i) the holders of not less than a majority in aggregate
principal amount of the outstanding debt securities of each affected series and
(ii) 66 2/3% in aggregate principal amount of the outstanding debt securities of
all affected series. However, without the consent of each holder of all of the
outstanding debt securities affected by that modification, we may not:
- change the date stated on the debt security on which any payment of
principal or interest is stated to be due;
5
- reduce the principal amount or any premium or interest on, any debt
security, including in the case of a discounted debt security, the amount
payable upon acceleration of the maturity thereof;
- change the place of payment or currency of payment of principal of, or
premium, if any, or interest on, any debt security;
- impair the right to institute suit for the enforcement of any payment on
or with respect to any debt security after the stated maturity (or, in
the case of redemption, on or after the redemption date); or
- reduce the percentage in principal amount of outstanding debt securities
of any series, the consent of the holders of which is required for
modification or amendment of the indenture, for waiver of compliance with
some provisions of the indenture or for waiver of some defaults.
Under limited circumstances and only upon the fulfillment of conditions, we
and the trustee may make modifications and amendments of the indenture without
the consent of any holders of the debt securities.
The holders of not less than a majority in aggregate principal amount of
the outstanding debt securities of any series may waive any past default under
the indenture with respect to that series except:
- a default in the payment of principal of, or any premium or interest on,
any debt security of that series;
- in respect of a covenant or provision under the indenture which cannot be
modified or amended without the consent of the holder of each outstanding
debt security of the affected series.
EVENTS OF DEFAULT
An event of default with respect to debt securities of any series issued
under the indenture is any one of the following events (unless inapplicable to
the particular series, specifically modified or deleted as a term of such series
or otherwise modified or deleted in an indenture supplemental to the indenture):
- we fail to pay any interest on any debt security of that series when due,
and such failure has continued for 30 days;
- we fail to pay principal of or premium, if any, on any debt security of
that series when due;
- we fail to deposit any sinking fund payment in respect of any debt
security of that series when due, and such failure has continued for 30
days;
- we fail to perform any other covenant in the indenture (other than a
covenant included in the indenture solely for the benefit of a series of
debt securities other than that series), and such failure has continued
for 90 days after we receive written notice as provided in the indenture;
- events of bankruptcy, insolvency or reorganization; and
- any other event defined as an event of default with respect to debt
securities of a particular series.
If an event of default with respect to any series of debt securities occurs
and is continuing, the trustee or the holders of not less than 25% in principal
amount of the outstanding debt securities of that series may declare the
principal amount (or, if any debt securities of that series are discounted debt
securities, a portion of the principal amount that the terms of the series may
specify) of all debt securities of that series to be immediately due and
payable. Under some circumstances, the holders of a majority in principal amount
of the outstanding debt securities of that series may rescind and annul that
declaration and its consequences. The prospectus supplement or term sheet
relating to any series of debt securities which are discounted debt securities
will specify the particular provisions relating to acceleration of a portion of
the principal amount of the discounted debt securities upon the occurrence of an
event of default and the continuation of the event of default.
6
Subject to the provisions of the indenture relating to the duties of the
trustee in case an event of default occurs and is continuing, the trustee is not
obligated to exercise any of its rights or powers under the indenture at the
request or direction of any of the holders unless the holders have offered to
the trustee reasonable security or indemnity. Subject to such provisions for
security and indemnification of the trustee and other rights of the trustee, the
holders of a majority in principal amount of the outstanding debt securities of
any series have the right to direct the time, method and place of conducting any
proceedings for any remedy available to the trustee or exercising any trust or
power conferred on the trustee with respect to the debt securities of that
series.
The holder of any debt security will have an absolute and unconditional
right to receive payment of the principal of and any premium and, subject to
limitations specified in the indenture, interest on such debt security on its
stated maturity date (or, in the case of redemption, on the redemption date) and
to institute suit for the enforcement of any of these payments.
We must furnish to the trustee an annual statement that to the best of our
knowledge we are not in default in the performance and observance of any terms,
provisions or conditions of the indenture or, if there has been such a default,
specifying each default and its status.
SATISFACTION AND DISCHARGE OF THE INDENTURE
We will have satisfied and discharged the indenture and it will cease to be
in effect (except as to our obligations to compensate, reimburse and indemnify
the trustee pursuant to the indenture and some other obligations) when we
deposit or cause to be deposited with the trustee, in trust, an amount
sufficient to pay and discharge the entire indebtedness on the debt securities
not previously delivered to the trustee for cancellation, for the principal (and
premium, if any) and interest to the date of the deposit (or to the stated
maturity date or earlier redemption date for debt securities that have been
called for redemption).
DEFEASANCE OF DEBT SECURITIES
Unless otherwise provided in the prospectus supplement or term sheet for a
series of debt securities, we may cause ourself (subject to the terms of the
indenture) to be discharged from any and all obligations with respect to any
debt securities or series of debt securities (except for certain obligations to
register the transfer or exchange of such debt securities, to replace such debt
securities if stolen, lost or mutilated, to maintain paying agencies and to hold
money for payment in trust) on and after the date the conditions set forth in
the indenture are satisfied. Such conditions include the deposit with the
trustee, in trust for such purpose, of money and/or U.S. government obligations,
which through the scheduled payment of principal and interest in respect thereof
in accordance with their terms will provide money in an amount sufficient to pay
the principal of and any premium and interest on such debt securities on the
stated maturity date of such payments or upon redemption, as the case may be, in
accordance with the terms of the indenture and such debt securities.
Under current Federal income tax law, the defeasance of the debt securities
would be treated as a taxable exchange of the relevant debt securities in which
holders of debt securities would recognize gain or loss. In addition,
thereafter, the amount, timing and character of amounts that holders would be
required to include in income might be different from that which would be
includable in the absence of such defeasance. Prospective investors are urged to
consult their own tax advisors as to the specific consequences of a defeasance,
including the applicability and effect of tax laws other than the Federal income
tax law.
THE TRUSTEE
The trustee is The Bank of New York, which maintains banking relationships
with us in the ordinary course of business and serves as trustee under other
indentures with us and some of our affiliates.
7
GOVERNING LAW
The indenture and the debt securities will be governed by and construed in
accordance with the laws of the State of New York.
DESCRIPTION OF PREFERRED STOCK
We currently have authorized 10,000,000 shares of undesignated preferred
stock, $1.00 par value per share, none of which were issued and outstanding as
of the date of this prospectus. Under Florida law and our charter, our board is
authorized to issue shares of preferred stock from time to time in one or more
series without shareholder approval.
Subject to limitations prescribed by Florida law and our charter and
by-laws, our board can determine the number of shares constituting each series
of preferred stock and the designation, preferences, voting powers,
qualifications, and special or relative rights or privileges of that series.
These may include provisions as may be desired concerning voting, redemption,
dividends, dissolution, or the distribution of assets, conversion or exchange,
and other subjects or matters as may be fixed by resolution of the board or an
authorized committee of the board.
Our board is authorized to determine the voting rights of any series of
preferred stock, subject to the following restrictions in our charter:
- holders of shares of our preferred stock are not entitled to more than
the lesser of (i) one vote per $100 of liquidation value and (ii) one
vote per share, when voting as a class with the holders of shares of our
common stock; and
- holders of shares of our preferred stock are not entitled to vote on any
matter separately as a class, other than (i) as required by Florida law,
or (ii) as specified in the terms of the preferred stock, if the matter
to be voted upon would affect the powers, preferences or special rights
of the series or with respect to the election of directors in the event
of our failure to pay dividends on the series.
If we offer a specific series of preferred stock under this prospectus, we
will describe the terms of the preferred stock in the prospectus supplement for
such offering and will file a copy of the charter amendment establishing the
terms of the preferred stock with the SEC. This description will include:
- the title and stated value;
- the number of shares offered, the liquidation preference per share and
the purchase price;
- the dividend rate(s), period(s) and/or payment date(s), or method(s) of
calculation for dividends;
- whether dividends will be cumulative, partially cumulative or
non-cumulative and, if cumulative or partially cumulative, the date from
which the dividends will accumulate;
- the procedures for any auction or remarketing, if any;
- the provisions for a sinking fund, if any;
- the provisions for redemption, if applicable;
- any listing of the preferred stock on any securities exchange or market;
- whether the preferred stock will be convertible into any series of our
common stock, and, if applicable, the conversion price (or how it will be
calculated) and exchange period;
- voting rights, if any, of the preferred stock;
- whether interests in the preferred stock will be represented by
depositary shares;
- a discussion of any material and/or special U.S. federal income tax
considerations applicable to the preferred stock;
8
- the relative ranking and preferences of the preferred stock as to
dividend rights and rights upon liquidation, dissolution or winding up of
our affairs;
- any limitations on issuance of any class or series of preferred stock
ranking senior to or on parity with the series of preferred stock as to
dividend rights and rights upon our liquidation, dissolution or winding
up;
- any other specific terms, preferences, rights, limitations or
restrictions of the preferred stock.
The preferred stock offered by this prospectus will, when issued, be fully
paid and nonassessable and will not have, or be subject to, any preemptive or
similar rights.
Unless we specify otherwise in the applicable prospectus supplement, the
preferred stock will, with respect to dividend rights and rights upon our
liquidation, dissolution or winding up, rank as follows:
- senior to all classes or series of our common stock, and to all equity
securities issued by us, the terms of which specifically provide that
they rank junior to the preferred stock with respect to those rights;
- on a parity with all equity securities we issue that do not rank senior
or junior to the preferred stock with respect to those rights; and
- junior to all equity securities we issue, the terms of which do not
specifically provide that they rank on a parity with or junior to the
preferred stock with respect to these rights.
As used for these purposes, the term "equity securities" does not include
convertible debt securities.
DESCRIPTION OF COMMON STOCK
Our authorized common stock consists of 400,000,000 shares, $1.00 par value
per share. At April 1, 2002, there were 139,831,589 shares of common stock
issued and outstanding. The approximate number of shareholders of record of our
common stock as of April 1, 2002 was 23,053.
Each share of our common stock is entitled to one vote on all matters
requiring a vote of shareholders and, subject to the rights of the holders of
any outstanding shares of preferred stock, are entitled to receive any
dividends, in cash, securities or property, as our board may declare. We may not
pay cash dividends on our common stock at any time when we have deferred
interest payments on our 8.50% Junior Subordinated Notes Due 2041 issued in
connection with the issuance of the 8.50% Trust Preferred Securities of TECO
Capital Trust I or our 5.11% Junior Subordinated Notes Due January 15, 2007
issued in connection with the issuance of the 5.11% Trust Preferred Securities
of TECO Capital Trust II issued as part of our 9.50% Equity Security Units.
In the event of our liquidation, dissolution or winding up, either
voluntary or involuntary, subject to the rights of the holders of any
outstanding shares of preferred stock, holders of common stock are entitled to
share pro-rata in all of our remaining assets available for distribution.
The common stock issued by this prospectus will, when issued, be fully paid
and nonassessable and will not have, or be subject to, any preemptive or similar
rights.
EquiServe, L.P. is the transfer agent and registrar for our common stock.
Its phone number is 800-650-9222.
9
ANTI-TAKEOVER EFFECTS OF OUR ARTICLES OF INCORPORATION AND
BYLAWS, FLORIDA LAW AND OUR RIGHTS PLAN
REQUIRED VOTE FOR AUTHORIZATION OF CERTAIN ACTIONS
Our Articles require the vote of the holders of at least 80% of the
combined voting power of the then outstanding shares of stock of all classes and
series entitled to vote generally in the election of directors for approval of
certain business combinations, including certain mergers, asset sales, security
issuances, recapitalizations and liquidations, involving us or our subsidiaries
and certain acquiring persons (namely a person, entity or specified group which
beneficially owns more than 10% of the voting power of the then outstanding
shares of our capital stock entitled to vote generally in an election of
directors), unless such business combination has been approved by a majority of
disinterested directors, or the fair market value and other procedural
requirements of our Articles are met.
ELECTION AND REMOVAL OF DIRECTORS
Our board of directors is divided into three classes. The directors in each
class serve for a three year term, one class being elected each year by our
stockholders. A vote of a majority of the board or 80% of the combined voting
power of the then outstanding shares of stock, voting together as a single
class, is required to remove a director, with or without cause. This system of
electing and removing directors may discourage a third party from making a
tender offer or otherwise attempting to obtain control of us because it
generally makes it more difficult for stockholders to replace a majority of the
directors. Under the terms of our bylaws and Articles, these provisions cannot
be changed without a supermajority vote of our stockholders.
UNDER FLORIDA LAW
Florida has enacted legislation that may deter or frustrate takeovers of
Florida corporations. The "Control Share Acquisitions" section of the Florida
Business Corporation Act, or FBCA, generally provides that shares acquired in
excess of certain specified thresholds, beginning at 20% of a corporation's
outstanding voting shares, will not possess any voting rights unless such voting
rights are approved by a majority vote of the corporation's disinterested
shareholders. We have provided in our bylaws that the Control Share Acquisition
Act shall not apply to us.
The "Affiliated Transactions" section of the FBCA generally requires
majority approval by disinterested directors or supermajority approval of
disinterested shareholders of certain specified transactions (such as a merger,
consolidation, sale of assets, issuance or transfer of shares or
reclassifications of securities) between a corporation and a holder of more than
10% of the outstanding shares of the corporation, or any affiliate of such
shareholder.
RIGHTS PLAN
We have a shareholder rights plan. Under the plan, each outstanding share
of our common stock carries with it a right, currently unexercisable, that if
triggered permits the holder to purchase large amounts of our or any successor
entity's securities at a discount and/or trade those purchase rights separately
from the common stock. The rights are triggered when a person acquires, or makes
a tender or exchange offer to acquire, 10% of our common stock. The plan,
however, prohibits the 10%-acquiror, or its affiliates, from exercising our
shares' purchase rights. As a result the acquiror's interest in TECO Energy is
substantially diluted. The rights expire in May 2009, subject to extension. We
may also redeem the rights at a nominal price per right until 10 business days
after a triggering event.
These and other provisions of our Articles, bylaws and rights plan could
discourage potential acquisition proposals and could delay or prevent a change
in control.
10
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
We may issue stock purchase contracts, including contracts obligating
holders to purchase from us, and us to sell to the holders, a specified number
of shares of common stock or preferred stock at a future date or dates (which we
refer to as stock purchase contracts). The price per share of common stock or
preferred stock and the number of shares of common stock or preferred stock may
be fixed at the time the stock purchase contracts are issued or may be
determined by reference to a specific formula set forth in the stock purchase
contracts. The stock purchase contracts may be issued separately or as part of
units consisting of a stock purchase contract and debt securities, preferred
stock, trust preferred securities or debt obligations of third parties,
including U.S. Treasury securities, securing the holders' obligations to
purchase the common stock or preferred stock under the stock purchase contracts
(which we refer to as stock purchase units). The stock purchase contracts may
require us to make periodic payments to the holders of the stock purchase units
or vice versa, and such payments may be unsecured or prefunded on some basis.
The stock purchase contracts may require holders to secure their obligations
thereunder in a specified manner and in certain circumstances we may deliver
newly issued prepaid stock purchase contracts, often known as prepaid
securities, upon release to a holder of any collateral securing such holder's
obligation under the original stock purchase contract.
The applicable prospectus supplement will describe the material terms of
the stock purchase contracts or stock purchase units and, if applicable, prepaid
securities. Material United States federal income tax considerations applicable
to the stock purchase units and the stock purchase contracts will also be
discussed in the applicable prospectus supplement.
DESCRIPTION OF WARRANTS AND OTHER PURCHASE RIGHTS
GENERAL
We may issue warrants and/or other rights to purchase debt securities
(which we refer to as debt warrants), preferred stock (which we refer to as
preferred stock warrants) or common stock (which we refer to as common stock
warrants). We may issue any of these warrants or purchase rights (which we refer
to generally as warrants) independently or together with other securities
offered by this prospectus and attached to or separate from the other
securities. If we issue warrants, we will issue them under warrant agreements
between us and a bank or trust company, as agent, all of which will be described
in the prospectus supplement relating to the warrants we are offering.
DEBT WARRANTS
We will describe the terms of debt warrants offered in the applicable
prospectus supplement, the warrant agreement relating to the debt warrants and
the debt warrant certificates representing the debt warrants, including the
following:
- the title;
- the aggregate number offered;
- their issue price or prices;
- the designation, aggregate principal amount and terms of the debt
securities purchasable upon exercise, and the procedures and conditions
relating to exercise;
- the designation and terms of any related debt securities and the number
of debt warrants issued with each security;
- if applicable, the date, if any, on and after which the debt warrants and
the related debt securities will be separately transferable;
11
- the principal amount of debt securities purchasable upon exercise, and
the price at which that principal amount of debt securities may be
purchased upon exercise;
- the commencement and expiration dates of the right to exercise;
- the maximum or minimum number which may be exercised at any time;
- if applicable, a discussion of the material United States income tax
considerations applicable to exercise;
- and any other terms, including terms, procedures and limitations relating
to exercise.
Debt warrant certificates will be exchangeable for new debt warrant
certificates of different denominations, and debt warrants may be exercised at
the corporate trust office of the warrant agent or any other office indicated in
the applicable prospectus supplement. Before exercising their debt warrants,
holders will not have any of the rights of holders of the securities purchasable
upon exercise and will not be entitled to payments of principal of, premium, if
any, or interest, if any, on the securities purchasable upon exercise.
OTHER WARRANTS
The applicable prospectus supplement will describe the following terms of
preferred stock warrants or common stock warrants offered under this prospectus:
- the title;
- the securities issuable upon exercise;
- the issue price or prices;
- the number of warrants issued with each share of preferred stock or
common stock;
- any provisions for adjustment of (i) the number or amount of shares of
preferred stock or common stock issuable upon exercise of the warrants or
(ii) the exercise price;
- if applicable, the date on and after which the warrants and the related
preferred stock or common stock will be separately transferable;
- if applicable, a discussion of the material United States federal income
tax considerations applicable to the exercise of the warrants;
- the commencement and expiration dates of the right to exercise;
- the maximum and minimum number that may be exercised at any time; and
- any other terms, including terms, procedures, and limitations relating to
exchange or exercise.
EXERCISE OF WARRANTS
Each warrant will entitle the holder to purchase for cash the principal
amount of debt securities or shares of preferred stock or common stock at the
applicable exercise price set forth in, or determined as described in, the
applicable prospectus supplement. Warrants may be exercised at any time up to
the close of business on the expiration date set forth in the applicable
prospectus supplement. After the close of business on the expiration date,
unexercised warrants will become void.
Warrants may be exercised by delivering to the corporate trust office of
the warrant agent or any other officer indicated in the applicable prospectus
supplement (a) the warrant certificate properly completed and duly executed and
(b) payment of the amount due upon exercise. As soon as practicable following
exercise, we will forward the debt securities or shares of preferred stock or
common stock purchasable upon exercise. If less than all of the warrants
represented by a warrant certificate are exercised, a new warrant certificate
will be issued for the remaining warrants.
12
USE OF PROCEEDS
We intend to add the net proceeds from the sale of the securities to our
general funds to be used for general corporate purposes, which may include
investment in subsidiaries, working capital, capital expenditures, repayment of
debt and other business opportunities.
PLAN OF DISTRIBUTION
We may sell the securities through one or more of the following ways:
- directly to purchasers;
- to or through one or more underwriters or dealers; or
- through agents.
A prospectus supplement or term sheet with respect to a particular series
of securities will set forth the terms of the offering of those securities,
including the following:
- name or names of any underwriters, dealers or agents;
- the purchase price of such securities and our proceeds from the sale;
- underwriting discounts and commissions; and
- any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers.
If we use underwriters in the sale, the underwriters will acquire the
securities for their own account and they 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. Underwriting
syndicates represented by one or more managing underwriters or one or more
independent firms acting as underwriters may offer the securities to the public.
In connection with the sale of securities, we may compensate the underwriters in
the form of underwriting discounts or commissions. The purchasers of the
securities for whom the underwriters may act as agent may also pay them
commissions. Underwriters may sell the securities to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Unless otherwise set forth in the applicable
prospectus supplement or term sheet, the obligations of any underwriters to
purchase the securities will be subject to conditions precedent, and the
underwriters will be obligated to purchase all such securities if any are
purchased.
If we use dealers in the sale of the securities, we will sell the
securities to the dealers as principals. The dealers may then resell the
securities to the public at varying prices to be determined by the dealer at the
time of resale. The applicable prospectus supplement or term sheet will name any
dealer, who may be deemed to be an underwriter, as that term is defined in the
Securities Act of 1933, involved in the offer or sale of securities, and set
forth any commissions or discounts we grant to the dealer.
If we use agents in the sales of the securities, the agents may solicit
offers to purchase the securities from time to time. Any such agent, who may be
deemed to be an underwriter, as that term is defined in the Securities Act,
involved in the offer or sale of the securities will be named, and any
commissions payable by us to such agent set forth, in the applicable prospectus
supplement or term sheet. Any agent will be acting on a reasonable effort basis
for the period of its appointment or, if indicated in the applicable prospectus
supplement or term sheet, on a firm commitment basis.
We may also sell securities directly to institutional investors or others
who may be deemed to be underwriters within the meaning of the Securities Act
with respect to resales. The terms of those sales would be described in the
prospectus supplement or term sheet.
If the prospectus supplement or term sheet so indicates, we will authorize
agents, underwriters or dealers to solicit offers from institutions to purchase
securities from us at the public offering price set forth
13
in the prospectus supplement or term sheet pursuant to stock purchase or delayed
delivery contracts providing for payment and delivery on a specified date in the
future. The contracts will be subject only to those conditions set forth in the
prospectus supplement or term sheet, and the prospectus supplement or term sheet
will set forth the commission payable for solicitation of the contracts.
We may engage in at the market offerings of our common stock. An "at the
market" offering is an offering of our common stock at other than a fixed price
on or through the facilities of the NYSE. Under Rule 415(a)(4) of the Securities
Act, the total value of at the market offerings made under this prospectus may
not exceed 10% of the aggregate market value of our common stock held by
non-affiliates on a date within 60 days prior to filing the registration
statement containing this prospectus. Accordingly, we may not sell under this
prospectus more than approximately $359,708,910 of our common stock in at the
market offerings. Any underwriter that we engage for an at the market offering
will be named in a post-effective amendment to the registration statement
containing this prospectus. Additional details of our arrangement with the
underwriter, including commissions or fees paid by us and whether the
underwriter is acting as principal or agent, will be described in the related
prospectus supplement.
Agents, dealers and underwriters may be entitled under agreements with us
to indemnification against some civil liabilities, including liabilities under
the Securities Act, or to contribution with respect to payments which the
agents, dealers or underwriters may be required to make. Agents, dealers and
underwriters may engage in transactions with, or perform services for, us or our
subsidiaries for customary compensation.
If indicated in the applicable prospectus supplement or term sheet, one or
more firms may offer and sell securities in connection with a remarketing upon
their purchase, in accordance with their terms, acting as principals for their
own accounts or as our agents. Any remarketing firm will be identified and the
terms of its agreement, if any, with us will be described in the applicable
prospectus supplement or term sheet. We may be obligated to indemnify the
remarketing firm against some liabilities, including liabilities under the
Securities Act, and the remarketing firm may engage in transactions with or
perform services for us or our subsidiaries for customary compensation.
Any underwriter may engage in over-allotment, stabilizing and syndicate
short covering transactions and penalty bids in accordance with Regulation M of
the Securities Exchange Act of 1934. Over-allotment involves sales in excess of
the offering size, which creates a short position. Stabilizing transactions
involve bids to purchase the underlying security so long as the stabilizing bids
do not exceed a specified maximum. Syndicate short covering transactions involve
purchases of securities in the open market after the distribution has been
completed in order to cover syndicate short positions. Penalty bids permit the
underwriters to reclaim selling concessions from dealers when the securities
originally sold by the dealers are purchased in covering transactions to cover
syndicate short positions. These transactions may cause the price of the
securities sold in an offering to be higher than it would otherwise be. These
transactions, if commenced, may be discontinued by the underwriters at any time.
Any securities, other than our common stock, will be a new issue of
securities with no established trading market. We cannot assure you that there
will be a market for the securities of any particular security, or that if a
market does develop, that it will continue to provide holders of those
securities with liquidity for their investment or will continue for the duration
the securities are outstanding.
The prospectus supplement or term sheet relating to each offering will set
forth the anticipated date of delivery of the securities.
LEGAL MATTERS
Palmer & Dodge LLP, Boston, Massachusetts will pass upon the validity of
the securities for us.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K of TECO Energy for the year ended
December 31, 2001 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent certified public accountants, given on
the authority of said firm as experts in auditing and accounting.
14
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any of these documents at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference room. Our SEC filings are also available to the public on the SEC's
website at http://www.sec.gov. Copies of certain information filed by us with
the SEC are also available on our website at http://www.tecoenergy.com. Our
website is not part of this prospectus.
We filed a registration statement on Form S-3 with the SEC covering the
securities. For further information on us and the securities, you should refer
to the registration statement and its exhibits. This prospectus discusses
material provisions of our indenture dated August 17, 1998 entered into with The
Bank of New York as trustee. Because the prospectus may not contain all the
information that you may find important, you should review the full text of the
indenture and other documents we have incorporated by reference into the
registration statement.
The SEC allows us to "incorporate by reference" information that we file
with the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 until all of the securities are sold:
- our Annual Report on Form 10-K for the fiscal year ended December 31,
2001;
- the description of our common stock contained in our Registration
Statement on Form 8-B, filed on July 13, 1981 (File No. 1-8180),
including any amendment or reports filed for the purpose of updating such
description; and
- our Current Reports on Form 8-K filed April 22, 2002, January 24, 2002,
January 15, 2002, January 11, 2002 and January 9, 2002.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Director of Investor Relations
TECO Energy, Inc.
702 North Franklin Street
Tampa, Florida 33602
(813) 228-4111
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement or term sheet. We have not
authorized anyone to provide you with different information. We are not making
an offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any supplement or
term sheet is accurate as of any date other than the date on the front of these
documents.
15
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SEC IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS
NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
Subject to Completion, dated May 3, 2002
TECO CAPITAL TRUST III
Trust Preferred Securities
representing a corresponding amount of
Company Preferred Securities
of
TECO FUNDING COMPANY III, LLC
fully and unconditionally guaranteed
by
TECO ENERGY, INC.
------------------------
This prospectus provides you with a general description of the securities
we may offer. We may offer the trust preferred securities separately or as part
of units consisting of the trust preferred securities and contracts to purchase
common stock of TECO Energy, Inc. We will offer them in amounts, at prices and
on terms determined at the time of sale. When we offer trust preferred
securities, we will provide a prospectus supplement describing the terms of the
specific issue, including the offering price of the securities. YOU SHOULD READ
BOTH THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT TOGETHER WITH THE ADDITIONAL
INFORMATION DESCRIBED UNDER THE HEADING "WHERE YOU CAN FIND MORE INFORMATION"
BEGINNING ON PAGE 36 OF THIS PROSPECTUS, BEFORE YOU MAKE YOUR INVESTMENT
DECISIONS.
We will sell the securities to underwriters or dealers, through agents, or
directly to investors.
------------------------
NEITHER THE SEC 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.
THIS PROSPECTUS MAY NOT BE USED TO SELL SECURITIES UNLESS ACCOMPANIED BY A
PROSPECTUS SUPPLEMENT.
------------------------
The date of this prospectus is May , 2002
TECO Capital Trust III - c/o The Bank of New York - 101 Barclay Street, 21st
Floor West, New York, New York 10286 - (212) 896-7171
TABLE OF CONTENTS
PAGE
----
About This Prospectus....................................... 1
Summary..................................................... 1
Risk Factors................................................ 3
Forward-Looking Statements.................................. 6
TECO Energy................................................. 7
TECO Funding Company III, LLC............................... 7
TECO Capital Trust III...................................... 9
Ratio Of Earnings To Fixed Charges.......................... 10
Description of the Trust Preferred Securities............... 11
Description of the Company Preferred Securities............. 16
Description of the Trust Preferred Notes.................... 23
Description of the Guarantee................................ 32
Relationship Among the Trust Preferred Securities, the
Company Preferred Securities,
the Trust Preferred Notes and the Guarantee............... 35
Book-Entry Issuance......................................... 36
Use of Proceeds............................................. 38
Plan of Distribution........................................ 38
Legal Matters............................................... 39
Experts..................................................... 40
Where You Can Find More Information......................... 41
i
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC using a "shelf" registration process. That registration statement registered
both the securities described in this prospectus as well as other securities
issuable by TECO Energy, Inc. Under the shelf process, TECO Energy, TECO Funding
Company III, LLC and TECO Capital Trust III may issue and sell to the public any
combination of the securities described in the registration statement in one or
more offerings up to a total dollar amount of $1,368,906,250.
In this prospectus, "we" and "TECO Energy" refer to TECO Energy, Inc.,
"limited liability company" refers to TECO Funding Company III, LLC, a Delaware
limited liability company that we have formed to issue the company preferred
securities, and the "trust" refers to TECO Capital Trust III, a Delaware
statutory business trust that we have formed to issue the trust preferred
securities.
This prospectus provides you with only a general description of the
securities of TECO Funding Company III, LLC and the trust preferred notes of
TECO Energy. Each time we, the limited liability company or the trust issue and
sell those securities, we will provide a prospectus supplement that will contain
specific information about the particular securities and terms of that offering.
In the prospectus supplement, we will describe the interest rate, payment dates,
maturity, ranking in right of payment and other terms of any trust preferred
notes that we issue and sell, and the rights to periodic cash distributions,
payments on liquidation and other terms of the limited liability company's and
trust's securities. The prospectus supplement will also describe the proceeds
and uses of proceeds from the securities, together with the names and
compensation of any underwriters through whom the securities are being issued
and sold, and other important considerations for investors. It may also add to,
update or change information contained in this prospectus.
SUMMARY
General. We will issue and sell to the public the trust preferred
securities of TECO Capital Trust III. Each trust preferred security will entitle
its holder to receive periodic cumulative cash distributions on the dates and at
a rate established at the time the securities are initially issued. The
distributions will continue until the trust preferred securities are redeemed on
a redemption date also established at the time the securities are initially
issued. The trust preferred securities may be redeemed on an earlier date if
specified events occur. Upon redemption, each holder will receive the stated
liquidation amount for each trust preferred security held.
Structure of the Security. Each trust preferred security will represent an
undivided beneficial interest in the assets of TECO Capital Trust III. The only
assets of the trust will be company preferred securities of TECO Funding Company
III, LLC, which will represent an undivided beneficial interest in the assets of
the limited liability company. The only assets of the limited liability company
will be debt securities (or trust preferred notes) of TECO Energy, which will
rank senior to, on a parity with, or subordinate to TECO Energy's other
indebtedness as described in the applicable prospectus supplement. This
structure will be constructed in the following manner:
- TECO Capital Trust III will issue and sell its trust preferred securities
to the public;
- TECO Capital Trust III will then use the proceeds from the sale to
purchase a corresponding amount of company preferred securities of TECO
Funding Company III, LLC;
- TECO Funding Company III, LLC will in turn use the proceeds from the sale
of its company preferred securities to the trust, plus the proceeds from a
concurrent sale of its company common securities to TECO Energy, to
purchase corresponding amounts of trust preferred notes of TECO Energy;
and
- TECO Energy, in addition to issuing its trust preferred notes, will fully
and unconditionally guarantee the distribution, redemption and liquidation
payment obligations under the company preferred securities on a basis
ranking equally with the trust preferred notes.
The following diagram depicts the structure:
(STRUCTURE DIAGRAM)
Payments on the Securities. The cumulative cash distributions made on the
trust preferred securities will be paid out of the corresponding cash
distributions paid on the company preferred securities held by the trust, which,
in turn, correspond to the cumulative interest payments paid by TECO Energy on
the trust preferred notes held by the limited liability company. Payments made
on the three sets of securities will be paid at the same annual rate and
substantially at the same times. Essentially, payments made by TECO Energy on
its notes will be paid to the noteholder (i.e., the limited liability company),
passed through to the holder of the company preferred securities (i.e., the
trust), and then finally paid as distributions to the holders of the trust
preferred securities.
The final redemption date of the trust preferred securities will correspond
to that of the company preferred securities and to the final maturity date of
the trust preferred notes. At final redemption, or at any earlier time that TECO
Energy exercises its right to redeem all of the trust preferred notes because of
an adverse tax or investment company event, TECO Energy will pay the principal
amount of the notes, plus any accrued and unpaid interest, to the limited
liability company as noteholder. The limited liability company will use the note
redemption proceeds to redeem its company preferred securities, which will, in
turn, be used by the trust to pay the stated liquidation amount upon redemption
of its trust preferred securities.
Additional Features of the Security. Any additional features of any
offering of trust preferred securities will be described in the applicable
prospectus supplement and may include the following:
- The right of TECO Energy to defer payments on the trust preferred notes,
from time to time, with a corresponding deferral of distributions on the
company preferred securities and trust preferred securities; and
- The right of TECO Energy to redeem the trust preferred notes in whole or
part after a specified date prior to maturity, with a corresponding
redemption of the company preferred securities and trust preferred
securities.
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RISK FACTORS
In deciding whether to purchase our securities, in addition to the other
information contained in this prospectus, you should consider carefully the
following risk factors, and any additional risk factors we may include, if
appropriate, in the applicable prospectus supplement or term sheet. You should
also consider the "Investment Considerations" included in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2001, which is incorporated by
reference in this prospectus, as the same may be amended, supplemented or
superseded from time to time by our future filings under the Securities Exchange
Act of 1934.
RISKS RELATED TO THE TRUST PREFERRED SECURITIES
OUR OBLIGATIONS UNDER THE TRUST PREFERRED NOTES AND THE GUARANTEE ARE
SUBORDINATED.
Our obligations under the trust preferred notes will rank junior in
priority of payment to all of our senior debt. In addition, although an event of
default under our senior debt would not necessarily constitute a default under
the indenture, we will not be permitted to make any payments on the trust
preferred notes:
- if we default on a payment of senior debt and the default is not cured or
waived within the applicable grace period; or
- until the senior or subordinated indebtedness is paid in full if the
maturity of the indebtedness has been accelerated because of a default.
The trust preferred notes are obligations exclusively of TECO Energy,
which, as a holding company, has no material assets other than our ownership of
the common stock of our subsidiaries. Dividends and other distributions from
subsidiaries are our only ongoing source of revenues from which to repay the
trust preferred notes. Although the default provisions described above do not
apply to a default by one of our subsidiaries, a subsidiary may be prohibited
from paying dividends or making other distributions to us when it is in default.
At December 31, 2001, our senior debt totaled approximately $1.2 billion and the
aggregate senior debt of all of our subsidiaries equaled approximately $2.1
billion.
Our obligations under the guarantee will rank subordinate and junior in
right of payment to all of our senior debt and all of the debt of our
subsidiaries. As a result, we will be prohibited from making any payments under
the guarantee if we default on a payment on any of our senior liabilities. In
addition, in the event of the bankruptcy, liquidation or dissolution of TECO
Energy, our assets would be available to pay obligations under the guarantee
only after we made all payments on our senior liabilities.
Neither the trust preferred securities, the company preferred securities,
the trust preferred notes nor the guarantee limit our ability or the ability of
our subsidiaries to incur additional debt, including debt that ranks senior in
priority of payment to the trust preferred notes and the guarantee. See
"DESCRIPTION OF THE TRUST PREFERRED NOTES -- General," and "DESCRIPTION OF THE
GUARANTEE -- Status of the Guarantee."
THE TRUST WILL PAY SCHEDULED DISTRIBUTIONS ON THE TRUST PREFERRED SECURITIES
ONLY IF THE TRUST RECEIVES DISTRIBUTIONS FROM THE LIMITED LIABILITY COMPANY,
WHICH WILL MAKE CASH PAYMENTS ONLY IF IT RECEIVES CASH PAYMENTS FROM US.
The ability of the trust to pay scheduled distributions on the trust
preferred securities, the redemption price of the trust preferred securities and
the liquidation amount of each trust preferred security is dependent upon TECO
Energy making the related payments to the limited liability company on the trust
preferred notes when due or making payments on the company preferred securities
under the related guarantee.
If we default on our obligations to pay principal or interest to the
limited liability company on the trust preferred notes, then the limited
liability company will not have sufficient funds to pay distributions, the
redemption price or the liquidation amount of each company preferred security
held by the trust. If
3
the trust has not received funds from the limited liability company, it will be
unable to pay distributions, the redemption price or the liquidation preference
of the trust preferred securities held by you.
Instead you:
- may sue TECO Energy directly or seek other remedies to collect your pro
rata share of payments owed; or
- may rely on the property trustee to enforce the trust's rights under the
company preferred securities and, indirectly, the trust preferred notes.
DEFERRAL OF DISTRIBUTIONS WILL HAVE TAX CONSEQUENCES FOR YOU AND MAY AFFECT THE
TRADING PRICE OF THE TRUST PREFERRED SECURITIES.
If no event of default under the trust preferred notes has occurred and is
continuing, we can defer on one or more occasions, interest payments on the
trust preferred notes for up to 20 consecutive quarterly periods. If we defer
interest payments on the trust preferred notes, the limited liability company
will defer distributions on the company preferred securities and the trust will
defer distributions on the trust preferred securities during any deferral
period. However, distributions would still accumulate on each of the company
preferred securities and the trust preferred securities and the deferred
distributions would themselves accrue interest, compounded quarterly (to the
extent permitted by law).
If we defer interest payments on the trust preferred notes, you generally
will be required to recognize interest income for United States federal income
tax purposes (based on your pro rata share of the trust's share of the accrued
interest on the trust preferred notes held by the limited liability company)
before you receive any cash relating to that interest. In addition, you will not
receive the cash if you sell the trust preferred securities before the end of
any deferral period or before the record date relating to distributions which
are paid.
We have no current intention of deferring interest payments on the trust
preferred securities. However, if we exercise our right in the future, the trust
preferred securities may trade at a price that does not fully reflect the value
of accrued but unpaid interest on the trust preferred notes. If you sell the
trust preferred securities during an interest deferral period, you may not
receive the same return on investment as someone who continues to hold the trust
preferred securities. In addition, the existence of our right to defer payments
of interest on the trust preferred notes may mean that the market price for the
trust preferred securities (which ultimately represent an undivided beneficial
interest in the trust preferred notes) may be more volatile than other
securities that do not have these rights.
WE MAY DISSOLVE THE LIMITED LIABILITY COMPANY, OR THE LIMITED LIABILITY COMPANY
MAY DIRECT THE TRUST TO DISTRIBUTE ALL OF ITS ASSETS, WHICH MAY RESULT IN
ADVERSE TAX CONSEQUENCES FOR YOU.
As the holder of the company common securities, we have the right to
dissolve the limited liability company at any time. Upon such dissolution, the
limited liability company will liquidate (after satisfaction of any liabilities
to creditors of the limited liability company as provided by applicable law) by
distributing the trust preferred notes held by it, first, to the holders of the
company preferred securities, including the trust, until they have received
their liquidation preference in full plus accrued but unpaid distributions and,
second, to the holders of the common securities.
If the limited liability company is characterized for United States federal
income tax purposes as an association taxable as a corporation at the time it
distributes all of its assets, or if there is a change in law, the distribution
of trust preferred notes may be a taxable event to holders of the company
preferred securities. Under current United States federal income tax law, so
long as the limited liability company is not taxable as a corporation, a
distribution of trust preferred notes should not be a taxable event.
In addition, if a tax event or an Investment Company Act event occurs with
respect to the trust or the limited liability company, we or the limited
liability company, as the case may be, have the right to direct the property
trustee to distribute all assets of the trust, consisting of company preferred
securities or trust preferred notes (if the limited liability company has
previously dissolved), to the holders of the trust
4
preferred securities on a pro rata basis. If the company preferred securities
are distributed, the holders of the company preferred securities, or their
nominees, will become subject to Schedule K-1 reporting requirements and if the
notes are distributed, the holders of the notes, or their nominees, will become
subject to Form 1099 reporting requirements under the Internal Revenue Code of
1986, as amended.
If the trust is characterized for United States federal income tax purposes
as an association taxable as a corporation at the time it distributes all of its
assets, or if there is a change in law, the distribution to you of trust
preferred notes or company preferred securities, as the case may be, may be a
taxable event to you. Under current United States federal income tax law, as
long as the trust is not taxable as a corporation, a distribution to you of
trust preferred notes or company preferred securities should not be a taxable
event to you.
TECO Energy and the limited liability company will likely exercise these
rights if unfavorable changes in tax law or investment company law occur. See
"DESCRIPTION OF THE TRUST PREFERRED NOTES -- Redemption" and "DESCRIPTION OF THE
COMPANY PREFERRED SECURITIES -- Redemption or Exchange." in this prospectus.
YOUR VOTING RIGHTS UNDER THE TRUST PREFERRED SECURITIES WILL BE LIMITED.
You will not be entitled to appoint, remove, replace or change the number
of the trustees of the trust, and generally will have no voting rights, except
in the limited circumstances described under "DESCRIPTION OF THE TRUST PREFERRED
SECURITIES -- General" and "-- Voting Rights; Amendment of the Trust Agreement"
in this prospectus.
HOLDERS OF TRUST PREFERRED SECURITIES WILL HAVE LIMITED RIGHTS UNDER THE TRUST
PREFERRED NOTES.
Except as described below, you, as a holder of trust preferred securities,
will not be able to exercise directly any other rights with respect to the trust
preferred notes.
If an event of default under the limited liability agreement of TECO
Funding Company III, LLC were to occur and be continuing, holders of a majority
of the aggregate stated liquidation preference of the trust preferred securities
would have the right, by virtue of their beneficial interest in the limited
liability company, to appoint a special representative to enforce the limited
liability company's rights under the trust preferred notes and indenture.
The indenture provides that the indenture trustee must give holders of
trust preferred notes notice of all defaults or events of default within 90 days
after occurrence. However, except in the cases of a default or an event of
default in payment on the trust preferred notes, the indenture trustee will be
protected in withholding the notice if its responsible officers determine that
withholding of the notice is in the interest of such holders.
If the property trustee were to fail to enforce its rights under the trust
preferred notes in respect of an indenture event of default after a holder of
record of trust preferred securities had made a written request, such holder of
record of trust preferred securities may, to the extent permitted by applicable
law, institute a legal proceeding against us to enforce the property trustee's
rights under the trust preferred notes. In addition, if we were to fail to pay
interest or principal on the trust preferred notes on the date that interest or
principal is otherwise payable, except for deferrals permitted by the
declaration of trust and the indenture, and this failure to pay were continuing,
holders of trust preferred securities could directly institute a proceeding for
enforcement of payment of the principal of or interest on the trust preferred
notes having a principal amount equal to the aggregate stated liquidation amount
of their trust preferred securities (a direct action) after the respective due
dates specified in the trust preferred notes. You may not exercise directly any
other remedy available to holders of trust preferred notes. In connection with a
direct action, we would have the right under the indenture to set off any
payment made to that holder by us.
5
TECO FUNDING COMPANY III, LLC, AS HOLDER OF THE TRUST PREFERRED NOTES, WILL
HAVE ONLY LIMITED RIGHTS OF ACCELERATION.
TECO Funding Company III, LLC, as holder of the trust preferred notes, may
accelerate payment of the principal and accrued and unpaid interest on the trust
preferred notes only upon the occurrence and continuation of an indenture event
of default. An indenture event of default is generally limited to payment
defaults, breaches of specific covenants and specific events of bankruptcy,
insolvency and reorganization relating to us.
THE TRUST PREFERRED NOTES WILL BE TREATED AS CONTINGENT PAYMENT DEBT
INSTRUMENTS.
For United States federal income tax purposes, we intend to treat the trust
preferred notes as contingent payment debt instruments. As a result, they will
be considered to be issued with original issue discount, which you will be
required to include in income during your ownership of the trust preferred
securities, subject to some adjustments. Additionally, you will generally be
required to recognize ordinary income on the gain, if any, realized on a sale,
upon maturity, or other disposition of the trust preferred securities.
A TAX EVENT OR INVESTMENT COMPANY ACT EVENT MAY RESULT IN A TAXABLE EVENT TO
YOU.
We may redeem the trust preferred notes (and thereby cause the redemption
of the company preferred securities and the trust preferred securities) in whole
at any time upon the occurrence and continuation of a tax event or an Investment
Company Act event. See "DESCRIPTION OF THE TRUST PREFERRED NOTES -- Redemption."
A tax event redemption or Investment Company Act event redemption will be a
taxable event to the beneficial owners of trust preferred securities.
FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement or term sheet, and the documents
we have incorporated by reference may contain forward-looking statements. Such
statements relate to future events or our future financial performance. We use
words such as "anticipate," "believe," "expect," "intend," "may," "project,"
"will" or other similar words to identify forward-looking statements.
Without limiting the foregoing, any statements relating to our:
- anticipated capital expenditures;
- future cash flows and borrowings;
- potential future merger opportunities; and
- sources of funding
are forward-looking statements. These forward-looking statements are based on
numerous assumptions that we believe are reasonable, but they are open to a wide
range of uncertainties and business risks and actual results may differ
materially from those discussed in these statements.
Among the factors that could cause actual results to differ materially are:
- general economic conditions, particularly those affecting energy sales in
our service area;
- variations in weather conditions affecting energy sales and operating
costs;
- potential competitive changes in the electric and gas industries,
particularly in the area of retail competition;
- federal and state regulatory initiatives that increase competition or
costs, threaten investment recovery, or impact rate structure;
- commodity price changes, including the price of energy affecting our
merchant plants;
- any adverse changes in nonconventional fuel tax credit laws, regulations
or administration, or in our ability to generate sufficient taxable
income to utilize those credits;
6
- a greater decline in gas production levels at TECO Coalbed Methane than
are currently projected;
- our ability to find and successfully implement attractive investments in
unregulated businesses;
- our ability to successfully develop, construct, finance and operate our
projects on schedule and within budget;
- any costs incurred if we must replace NEPCO, an Enron subsidiary, as the
construction contractor on our TECO Power Services merchant power
projects;
- the degree to which we are able to successfully develop and operate our
diversified businesses, particularly our merchant power plants which have
no guaranteed rate of return;
- interest rates and other factors that could impact our ability to obtain
access to sufficient capital on satisfactory terms;
- restrictive covenants in or changes to the credit ratings on our current
or future debt that could increase our financing costs or affect our
ability to borrow, make payments on subordinated debt or pay dividends;
- changes in environmental regulation that may impose additional costs or
curtail some of our activities; and
- adverse economic or political developments in the foreign countries in
which our shipping business or TECO Power Services have operations.
When considering forward-looking statements, you should keep in mind the
cautionary statements in this prospectus, any prospectus supplement or term
sheet and the documents incorporated by reference, including the Investment
Considerations included in our filings with the SEC.
TECO ENERGY
We are an electric and gas utility holding company, exempt from
registration under the Public Utility Holding Company Act of 1935, with
important unregulated activities. We have a balance of regulated utility
companies in the growing Florida market and profitable unregulated companies.
Our unregulated businesses include independent power generation and
distribution, marine transportation, coal mining, coalbed methane gas
production, the marketing of natural gas, energy and engineering services and,
indirectly, the sale of propane gas. You can find a more complete description of
our business and recent activities in the documents listed under "WHERE YOU CAN
FIND MORE INFORMATION." The address of our principal executive office is 702
North Franklin Street, Tampa, Florida 33602, and the telephone number is (813)
228-4111.
TECO FUNDING COMPANY III, LLC
TECO Funding Company III, LLC is a limited liability company that we have
formed under Delaware law. For the limited liability company there is a limited
liability company agreement signed by us as the sole initial member. For the
limited liability company there is also a certificate of formation filed with
the Delaware Secretary of State. When we are ready to issue and sell securities
through the limited liability company, its limited liability company agreement
will be amended to read substantially like the form of amended and restated
limited liability agreement filed as an exhibit to the registration statement of
which this prospectus is a part. TECO Funding Company III, LLC will be treated
as a partnership for U.S. federal income tax purposes. The principal executive
office of TECO Funding Company III, LLC is 300 Delaware Avenue, Suite 900,
Delaware 19801 and its telephone number is (302) 552-3137.
7
THE ISSUANCE AND SALE OF THE COMPANY SECURITIES
We have created TECO Funding Company III, LLC solely to:
- issue and sell its company preferred securities and common securities,
which represent proportionate beneficial ownership interests in the
limited liability company and its assets, subject to the preferential
rights of the company preferred securities;
- use the proceeds from the sale of the company preferred securities and
common securities to buy from us a series of our trust preferred notes;
- maintain its status as a partnership for federal income tax purposes; and
- engage in only those other activities necessary or convenient to
accomplish these purposes.
Because the sole assets of TECO Funding Company III, LLC will be the trust
preferred notes that we issue to it and the related rights under the TECO Energy
guarantee, our payments on those trust preferred notes and the guarantee will be
the only source of funds to be paid to purchasers or owners of the limited
liability company's securities. TECO Funding Company III, LLC will be obligated
to pass through any payment on the trust preferred notes to the holders of the
company preferred securities and common securities. If TECO Funding Company III,
LLC fails to make a payment on its company preferred securities after having
received payments on the trust preferred notes held by it, holders of the
company preferred securities may enforce their rights under the TECO Energy
guarantee agreement. See "DESCRIPTION OF THE GUARANTEE."
We will acquire and own all of the common securities of TECO Funding
Company III, LLC, which, unless an event of default has occurred and is
continuing with respect to the trust preferred notes, represent 100% of the
voting rights in TECO Funding Company III, LLC. The common securities of TECO
Funding Company III, LLC will have an aggregate liquidation preference of at
least 3% of the total capital of the limited liability company. The company
preferred securities of TECO Funding Company III, LLC, which will be sold to
TECO Capital Trust III, will represent up to 97% of the ownership interests in
the company. The company preferred securities will have preferential rights to
payments in respect of distributions and payments upon redemption, liquidation
or otherwise.
TECO Funding Company III, LLC will be managed by a board of directors
having not less than one member. The directors will be designated as "managers"
of TECO Funding Company III, LLC within the meaning of Delaware law. The
directors will serve until their successors are duly elected and qualified. The
directors may appoint officers of the limited liability company from time to
time to manage the day-to-day affairs of the limited liability company. It is
currently expected that each of the initial directors and officers of TECO
Funding Company III, LLC will be an individual who is an officer or employee of
TECO Energy. All voting rights in TECO Funding Company III, LLC will be vested
in TECO Energy, as the sole holder of the common securities, including the right
to elect the board of directors. The holders of the company preferred securities
will have no voting rights, unless an event of default has occurred and is
continuing with respect to the trust preferred notes.
We will agree with TECO Funding Company III, LLC in its limited liability
company agreement that, as long as any company preferred securities are
outstanding, we will continue to own, directly or indirectly, 100% of the
outstanding common securities.
Under Delaware law, TECO Funding Company III, LLC may not pay dividends or
other distributions on company preferred securities or common securities if,
after making the distributions, TECO Funding Company III, LLC's liabilities
would exceed the fair value of its assets. However, TECO Funding Company III,
LLC does not expect to have any material liabilities, so TECO Funding Company
III, LLC does not anticipate that this restriction will affect its ability to
pay distributions on the company preferred securities.
Before issuing the company preferred securities, TECO Funding Company III,
LLC will enter into an administration agreement with TECO Energy under which
TECO Energy will provide (or cause others to provide) accounting, legal, tax and
other support services to the limited liability company, assist the
8
limited liability company in complying with pertinent U.S. local, state and
federal laws, and provide administrative, recordkeeping and secretarial services
to the limited liability company.
Unless we say otherwise in the applicable prospectus supplement, TECO
Funding Company III, LLC will have a term of approximately 50 years. However,
TECO Funding Company III, LLC may dissolve earlier than its full term as
provided in its limited liability company agreement and described in the
prospectus supplement.
Under the trust preferred note indenture and the limited liability company
agreement, we promise to pay all fees and expenses related to TECO Funding
Company III, LLC and the offering of the company preferred securities and common
securities and will pay, directly or indirectly, all ongoing costs, expenses and
liabilities of TECO Funding Company III, LLC, except obligations under the
company preferred securities and the common securities.
TECO Funding Company III, LLC has no separate financial statements.
Separate financial statements would not be material to holders of the trust
preferred securities because TECO Funding Company III, LLC has no independent
operations. It exists solely for the limited functions summarized above.
TECO CAPITAL TRUST III
TECO Capital Trust III is a statutory business trust that we have formed
under Delaware law. For the trust there is a trust agreement signed by TECO
Funding Company III, LLC, as depositor, by The Bank of New York, as property
trustee, and by The Bank of New York (Delaware), as Delaware trustee. There is
also a certificate of trust filed with the Delaware Secretary of State. When we
are ready to issue and sell securities through the trust, the trust agreement
will be amended to read substantially like the form of amended and restated
trust agreement that has been filed with the SEC as an exhibit to the
registration statement of which this prospectus is a part. The trust agreement
will be qualified as an indenture under the Trust Indenture Act of 1939. The
principal executive offices of TECO Capital Trust III is c/o The Bank of New
York, 101 Barclay Street, 21st Floor West, New York, New York 10286 and its
telephone number is (212) 896-7171.
THE ISSUANCE AND SALE OF THE TRUST SECURITIES
We have created TECO Capital Trust III solely to:
- issue and sell its trust preferred securities, which represent
proportionate beneficial ownership interests in TECO Capital Trust III
and its assets;
- use the proceeds from the sale of the trust preferred securities to buy
company preferred securities from TECO Funding Company III, LLC;
- maintain its status as a grantor trust for federal income tax purposes;
and
- engage in only those other activities necessary or convenient to
accomplish these purposes.
Because TECO Capital Trust III's only assets will be the company preferred
securities that TECO Funding Company III, LLC issues to it and the related
rights under the TECO Energy guarantee, payments on the company preferred
securities and the guarantee will be the only source of funds to be paid to
purchasers or owners of the trust preferred securities. TECO Capital Trust III
is required to pass the payments it receives on the company preferred securities
through to you as payments on the trust preferred securities. TECO Capital Trust
III cannot engage in other activities.
Unless we say otherwise in the prospectus supplement, TECO Capital Trust
III will have a term of approximately 50 years. However, TECO Capital Trust III
may dissolve earlier than its full term as provided in its trust agreement and
described in the prospectus supplement.
9
In accordance with the trust agreement of TECO Capital Trust III, we will
appoint the trustees for the trust, who will conduct the trust's business and
affairs. The initial trustees will be:
- The Bank of New York, as the property trustee; and
- The Bank of New York (Delaware), as Delaware trustee.
We refer to these trustees collectively as the "issuer trustees." The Bank
of New York will act as sole indenture trustee under the trust agreement for
purposes of compliance with the Trust Indenture Act. It will also act as trustee
under our guarantee agreement relating to the company preferred securities. See
"DESCRIPTION OF THE GUARANTEE."
Under the trust agreement, TECO Funding Company III, LLC, as depositor of
the trust, ordinarily will have the right to appoint, remove or replace the
property trustee or the Delaware trustee for the trust. However, if we are in
default with respect to the trust preferred notes issued to TECO Funding Company
III, LLC, which has issued company preferred securities to TECO Capital Trust
III (and we have not cured that default within the time specified in the trust
preferred note indenture), then the holders of a majority in liquidation amount
of TECO Capital Trust III's outstanding trust preferred securities will be
entitled to appoint, remove or replace the property trustee and/or the Delaware
trustee. The duties and obligations of the property trustee and the Delaware
trustee are governed by the trust agreement.
Under the governing trust preferred note indenture and the trust agreement,
we promise to pay all fees and expenses related to TECO Capital Trust III, and
the offering of the trust preferred securities and will pay, directly or
indirectly, all ongoing costs, expenses and liabilities of TECO Capital Trust
III, except obligations under the trust preferred securities.
TECO Capital Trust III has no separate financial statements. Separate
financial statements would not be material to holders of the trust preferred
securities because TECO Capital Trust III has no independent operations. It
exists solely for the limited functions summarized above.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratios of earnings to fixed
charges for the periods shown. If any series of debt securities should be used
to repay our outstanding debt or retire other securities, we will present a pro
forma ratio in the prospectus supplement if the change in a ratio would be ten
percent or greater.
YEAR ENDED DECEMBER 31,
----------------------------------------------
2001 2000 1999 1998 1997
----- ----- -------- -------- --------
Ratio of Earnings to Fixed Charges........................ 2.60x 2.51x 3.22x(1) 3.64x(2) 3.74x(3)
---------------
For the purposes of calculating these ratios, earnings consist of income from
continuing operations before income taxes, income or loss from equity investees
and fixed charges. Fixed charges consist of interest on indebtedness,
amortization of debt premium, the interest component of rentals and preferred
stock dividend requirements.
(1) Includes the effect of other non-recurring pretax items totaling $21.0
million recorded at Tampa Electric Company, TECO Investments, Inc. and TECO
Energy. The effect of these items was to reduce the ratio of earnings to
fixed charges. Had these items been excluded from the calculation, the ratio
of earnings to fixed charges would have been 3.58x for the year ended
December 31, 1999.
(2) Includes the effect of other non-operating pretax items totaling $30.5
million associated with write-offs at TECO Coal Corporation and Tampa
Electric, and $0.6 million pretax of merger-related costs. The effect of
these items was to reduce the ratio of earnings to fixed charges. Had these
items been excluded from the calculation, the ratio of earnings to fixed
charges would have been 3.93x for the year ended December 31, 1998.
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(3) Includes a $2.6-million pretax charge for all transactions associated with
the mergers completed in June 1997. The effect of this charge was to reduce
the ratio of earnings to fixed charges. Had this charge been excluded from
the calculation, the ratio of earnings to fixed charges would have been
3.76x for the year ended December 31, 1997.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The following describes the general terms and provisions of the trust
preferred securities. The particular terms of the trust preferred securities and
the extent to which any of these general provisions do not apply to the trust
preferred securities will be described in the related prospectus supplement.
The trust preferred securities will represent beneficial ownership
interests in the assets of TECO Capital Trust III, namely a corresponding amount
of the company preferred securities together with related rights under the TECO
Energy guarantee. Holders of trust preferred securities will also have other
benefits as described in the trust agreement.
We have summarized selected provisions of the trust preferred securities
and the trust agreement below. This summary is not complete. The form of trust
agreement has been filed as an exhibit to the registration statement of which
this prospectus forms a part. You should read the form of trust agreement for
provisions that may be important to you. You should also consider applicable
provisions of the Trust Indenture Act and the Delaware Business Trust Act.
GENERAL
Legal title to the company preferred securities will generally be held by
the property trustee in trust for the benefit of the holders of the trust
preferred securities. The amended and restated trust agreement will provide
that, to the fullest extent permitted by law, without the need for any other
action of any person, including the issuer trustees or any other holder of trust
preferred securities, each holder of trust preferred securities will be entitled
to enforce, in the name of TECO Capital Trust III, the rights of the trust under
the company preferred securities and the TECO Energy guarantee represented by
the trust preferred securities held by such holder. A holder of trust preferred
securities, as the holder of a beneficial interest in the company preferred
securities, may institute a legal proceeding directly against us to enforce
rights to payment of distributions and amounts in redemption or liquidation. A
holder of trust preferred securities may at any time upon written notice
withdraw and hold directly the underlying company preferred securities
represented by such trust preferred securities, in which case such holder will
be entitled to directly enforce its rights under the company preferred
securities and TECO Energy guarantee.
DISTRIBUTIONS
Distributions on the company preferred securities will be passed on to you
as a holder of the trust preferred securities. TECO Capital Trust III is
required to make distributions on the trust preferred securities concurrently
with, and in the same amount as, the distributions on the company preferred
securities. Except as specified in the applicable prospectus supplement, in the
event that a date on which distributions are payable on the trust preferred
securities is not a business day, payment of the distribution will be made on
the next succeeding business day (without any interest or other payment in
respect to the delay), with the same force and effect as if made on the
originally specified date. However, if the next business day is in the next
calendar year, payment of distributions will be made on the preceding business
day. Each date on which distributions are payable is referred to in this
prospectus as a distribution date.
The revenue of TECO Capital Trust III available for distribution to holders
of its trust preferred securities will be limited to payments under the company
preferred securities it owns. TECO Capital Trust III will invest the proceeds
from the issuance and sale of its trust preferred securities in the company
preferred securities. It will have no other assets. See "DESCRIPTION OF THE
COMPANY PREFERRED SECURITIES." If we do not make interest payments on the trust
preferred notes and as a result the limited liability company is unable to make
distributions on the company preferred securities,
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the property trustee will not have funds available to pay distributions on the
related trust preferred securities. We have guaranteed the payment of
distributions as set forth below under "DESCRIPTION OF THE GUARANTEE."
Distributions on the trust preferred securities will be payable to the
holders as they appear on the register of TECO Capital Trust III on the record
date, which will be the fifteenth day (whether or not a business day) prior to
the relevant distribution date unless otherwise specified in the related
prospectus supplement. Subject to any applicable laws and regulations and to the
provisions of the trust agreement, each distribution payment will be made as
described in the section of the related prospectus supplement addressing the
treatment of book-entry and global securities.
PAYMENT OF EXPENSES
We will agree to pay all debts and obligations (other than distributions on
the trust preferred securities) and all costs and expenses of TECO Capital Trust
III and to pay any and all taxes, duties, assessments or other governmental
charges (other than United States withholding taxes) imposed by the United
States or any other taxing authority. This includes, but is not limited to, all
costs and expenses relating to the organization of TECO Capital Trust III, the
fees and expenses of the property trustee and the Delaware trustee and all costs
and expenses relating to the operation of TECO Capital Trust III. As a result,
the net amounts received and retained by TECO Capital Trust III after paying
these fees, expenses, debts and obligations will be equal to the amounts TECO
Capital Trust III would have received and retained had no fees, expenses, debts
and obligations been incurred by or imposed on it. Our promise to pay these
obligations is for the benefit of, and shall be enforceable by, any creditor to
whom the fees, expenses, debts and obligations are owed, whether or not the
creditor has received notice of the promise. Any creditor may enforce these
obligations directly against us. We have agreed to irrevocably waive any right
or remedy that would otherwise require that any creditor take any action against
TECO Capital Trust III or any other person before proceeding against us. We will
execute any additional agreements as may be necessary to give full effect to
these promises.
REDEMPTION
The trust preferred securities can be redeemed only upon redemption of the
company preferred securities and trust preferred notes. If TECO Funding Company
III, LLC redeems the company preferred securities in accordance with its limited
liability company agreement, then TECO Funding Company III, LLC must give the
property trustee at least 35 days and not more than 60 days' prior notice before
doing so. The property trustee will mail the notice of redemption not less than
25 days prior to the date fixed for redemption of the company preferred
securities to the holders of trust preferred securities.
If TECO Capital Trust III gives notice of the redemption of its trust
preferred securities, then, by 12:00 noon, New York City time on the redemption
date, to the extent funds are available, the property trustee will deposit
irrevocably with the depositary or other appropriate agent funds sufficient to
pay the redemption price and will give that depositary or agent irrevocable
instructions and authority to pay the redemption price to the holders of the
trust preferred securities. If the trust preferred securities are no longer in
book-entry form, the property trustee, to the extent funds are available, will
irrevocably deposit with the paying agent for the trust preferred securities
funds sufficient to pay the redemption price and will give the paying agent
irrevocable instructions and authority to pay the redemption price to the
holders upon surrender of their certificates evidencing the trust preferred
securities.
Nevertheless, distributions payable on or prior to the redemption date for
trust preferred securities called for redemption shall be payable to the holders
of those trust preferred securities on the relevant record dates for the related
distribution dates. If notice of redemption has been given and funds deposited
as required, then on the date that the funds are deposited, all rights of the
holders of the trust preferred securities called for redemption will cease,
except their right to receive the redemption price, without interest and the
trust preferred securities will no longer be deemed outstanding.
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Except as specified in the applicable prospectus supplement, if a date
fixed for redemption of trust preferred securities is not a business day, then
payment of the redemption price will be made on the next business day (and
without any interest or other payment for that delay). However, if that next
business day falls in the next calendar year, the redemption price will be
payable on the preceding business day.
Subject to applicable law (including, without limitation, United States
federal securities law), we or our subsidiaries may at any time and from time to
time purchase outstanding trust preferred securities by tender, in the open
market or by private agreement.
Payment of the redemption price on the trust preferred securities will be
made to the record holders as they appear on the register for the trust
preferred securities. The record date will be the fifteenth day (whether or not
a business day) prior to the redemption date or liquidation date, as applicable
unless otherwise specified in the applicable prospectus supplement.
If less than all of the trust preferred securities issued by TECO Capital
Trust III are to be redeemed on a redemption date, then the particular trust
preferred securities to be redeemed shall be selected on a pro rata basis not
more than 60 days prior to the redemption date by the property trustee from the
outstanding trust preferred securities not previously called for redemption. The
property trustee shall promptly notify the trust registrar in writing of the
trust preferred securities selected for redemption and, in the case of any trust
preferred securities selected for partial redemption, the liquidation amount to
be redeemed. For all purposes of the trust agreement, unless the context
otherwise requires, all provisions relating to the redemption of trust preferred
securities shall relate, in the case of any trust preferred securities redeemed
or to be redeemed only in part, to the portion of the aggregate liquidation
amount of trust preferred securities which has been or is to be redeemed.
WITHDRAWAL OF THE COMPANY PREFERRED SECURITIES
Any beneficial owner of the trust preferred securities may withdraw all,
but not less than all, of the company preferred securities represented by such
trust preferred securities by providing a written notice to the property
trustee, with evidence of beneficial ownership in form satisfactory to the
property trustee, and providing to TECO Funding Company III, LLC such documents
or information as TECO Funding Company III, LLC may request for tax reporting
purposes. The holder's notice will also be deemed to be such beneficial owner's
agreement to be subject to the terms of the limited liability company agreement
of TECO Funding Company III, LLC applicable to the rights of the holders of the
company preferred securities.
Within a reasonable period after such a request has been properly made, the
property trustee must instruct the depositary to reduce the trust preferred
securities represented by the global certificate held by the depositary by the
corresponding amount of the company preferred securities to be so withdrawn by
the withdrawing owner. TECO Funding Company III, LLC will issue to the
withdrawing owner a certificate representing the amount of the company preferred
securities withdrawn, and the property trustee will reduce the amount of the
company preferred securities represented by the global certificate held by the
trust accordingly. The company preferred securities initially will be issued
only in certificated fully-registered form. If TECO Capital Trust III is
dissolved, the company preferred securities will be issued in the form of one or
more global securities that will be registered in the name of the depositary for
the global securities or a nominee of the depositary. The global securities will
be delivered by the limited liability company to the depositary for credit to
the accounts of the holders of beneficial interests in the company preferred
securities. Under U.S. tax reporting rules, holders of company preferred
securities will thereafter receive an annual Form K-1 instead of the Form 1099
that holders of trust preferred securities will receive.
Any holder of company preferred securities may redeposit withdrawn company
preferred securities by delivering to the property trustee the certificates for
the company preferred securities to be deposited, which are (i) if required by
the property trustee, properly endorsed or accompanied by a properly executed
instrument of transfer or endorsement in form satisfactory to the property
trustee and in compliance with the terms of the limited liability company
agreement of TECO Funding Company III, LLC and
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(ii) accompanied by all such certifications as may be required by the property
trustee in its sole discretion and in accordance with the provisions of the
amended and restated trust agreement. Within a reasonable period after such
deposit is properly made, the property trustee will instruct the depositary to
increase the amount of the trust preferred securities represented by the global
certificate held by the depositary accordingly.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
If at any time the holders of the company preferred securities are entitled
to vote under the limited liability company agreement of TECO Funding Company
III, LLC, the property trustee will:
- notify the holders of trust preferred securities of such right;
- request specific direction from each holder of trust preferred securities
as to the vote with respect to the company preferred securities
represented by such trust preferred securities; and
- vote the relevant company preferred securities only in accordance with
such specific directions.
The circumstances under which the holders of company preferred securities may be
entitled to vote are described under "DESCRIPTION OF THE COMPANY PREFERRED
SECURITIES -- Voting Rights; Amendment of Limited Liability Company Agreement."
Upon receiving notice of any meeting at which the holders of company
preferred securities are entitled to vote, the property trustee will, as soon as
practicable, mail to the holders of trust preferred securities a notice. TECO
Funding Company III, LLC will provide the form of notice to the trustee to be
forwarded to the holders of trust preferred securities. The notice will contain:
- all the information that is contained in the notice announcing the
meeting of the company preferred securities;
- a statement that the holders of trust preferred securities will be
entitled, subject to any applicable provision of law, to direct the
property trustee specifically as to the exercise of the voting rights
pertaining to the number of the company preferred securities represented
by their respective trust preferred securities; and
- a brief description of the manner in which the holders may give such
specific directions.
If the property trustee receives a written direction from a holder of trust
preferred securities, the property trustee will vote, or cause to be voted, the
amount of the company preferred securities represented by such trust preferred
securities in accordance with the instructions set forth in the direction. If
the property trustee does not receive specific instructions from the holder of
any trust preferred securities, the property trustee will abstain from voting
the company preferred securities represented by those trust preferred
securities.
TECO Funding Company III, LLC and the property trustee may amend the trust
agreement from time to time, without the consent of the holders of the trust
preferred securities:
- to cure any ambiguity, correct or supplement any provisions in the trust
agreement that may be inconsistent with any other provision, or to
address matters or questions arising under the trust agreement in a way
which is consistent with the agreement's other provisions; or
- to modify, eliminate or add to any provisions of the trust agreement if
necessary to ensure that TECO Capital Trust III will be classified for
United States federal income tax purposes as a grantor trust or to ensure
that TECO Capital Trust III will not be required to register as an
"investment company" under the Investment Company Act.
However, in the case of the first clause, the action must not adversely
affect in any material respect the interests of any holder of trust preferred
securities. Any amendment becomes effective when the property trustee gives
notice of the amendment to the holders of the trust preferred securities.
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TECO Funding Company III, LLC and the property trustee may amend the trust
agreement:
- with the consent of holders representing not less than a majority (based
upon liquidation amounts) of the outstanding trust preferred securities;
and
- upon receipt by the property trustee of an opinion of counsel experienced
in such matters to the effect that the amendment or the exercise of any
power granted to the property trustee in accordance with the amendment
will not affect the status of TECO Capital Trust III as a grantor trust
for United States federal income tax purposes or require TECO Capital
Trust III to be registered as an "investment company" under the
Investment Company Act.
However, without the consent of each holder of trust securities, no
amendment may:
- change the amount or timing of any distribution on the trust preferred
securities or otherwise adversely affect the amount of any distribution
required to be made in respect of the trust preferred securities as of a
specified date; or
- restrict the right of a holder of trust preferred securities to sue for
the enforcement of any distribution payment.
Any required approval of holders of trust preferred securities may be given
either at a meeting of holders of trust preferred securities or by written
consent. The property trustee must notify record holders of trust preferred
securities of any meeting in the manner described in the trust agreement.
No vote or consent of the holders of trust preferred securities will be
required for TECO Capital Trust III to redeem and cancel its trust preferred
securities in accordance with the trust agreement.
Whenever holders of trust preferred securities are entitled to vote or
consent under any of the circumstances described above, neither we nor the
issuer trustees will be permitted to vote. For purposes of any vote or consent,
any of the trust preferred securities that we own (or that are owned by the
issuer trustees or our affiliates) will be treated as if they were not
outstanding.
TERMINATION OF TRUST AGREEMENT
The trust agreement will terminate upon the earliest to occur of the
redemption of all of the trust preferred securities, the delivery of a final
distribution in respect of the company preferred securities to the holders of
trust preferred securities, withdrawal of all the company preferred securities
from TECO Funding Company III, LLC, the entry of an order for dissolution of
TECO Capital Trust III by a court of competent jurisdiction or as described in
the following paragraph.
In case of either a Tax Event as to TECO Capital Trust III or an Investment
Company Event as to TECO Capital Trust III, as each is defined under
"DESCRIPTION OF THE TRUST PREFERRED NOTES -- Redemption," TECO Funding Company
III, LLC may instruct the property trustee to distribute the company preferred
securities on a pro rata basis to the holders of trust preferred securities,
which distribution will permit dissolution of the trust.
REMOVAL OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
Unless an event of default with respect to the trust preferred notes has
occurred, TECO Funding Company III, LLC may remove the property trustee or the
Delaware trustee at any time. Upon an event of default with respect to the trust
preferred notes, the holders of a majority in aggregate liquidation amount of
the trust preferred securities may remove the property trustee or the Delaware
trustee. No resignation or removal of an issuer trustee and no appointment of a
successor trustee will be effective until the successor trustee accepts its
appointment in accordance with the provisions of the trust agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
For the purpose of meeting the legal requirements of the Trust Indenture
Act or of any jurisdiction in which any part of the trust property may at the
time be located, TECO Funding Company III, LLC shall have power to appoint one
or more persons either to act as a co-trustee, jointly with the property
trustee,
15
of all or any part of the trust property, or to act as separate trustee of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of the trust agreement.
PAYMENT AND PAYING AGENCY
The depositary for the trust preferred securities will make payments in
respect of the trust preferred securities by crediting the relevant accounts at
the depositary on the applicable distribution dates. If any of the trust
preferred securities of TECO Capital Trust III are not held by the depositary,
then the paying agent will mail checks to registered holders of those trust
preferred securities to the addresses appearing on its register. Unless
otherwise specified in the applicable prospectus supplement, the paying agent
will initially be the property trustee and any co-paying agent chosen by the
property trustee and acceptable to TECO Funding Company III, LLC. The paying
agent can resign upon 30 days' written notice to the property trustee and to
TECO Funding Company III, LLC. If the property trustee resigns as paying agent,
TECO Funding Company III, LLC will appoint a bank or trust company acceptable to
it to act as paying agent.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the prospectus supplement, the property
trustee will act as registrar and transfer agent for the trust preferred
securities.
TECO Capital Trust III will register transfers of trust preferred
securities without charge, but will require payment of any tax or other
governmental charges imposed in connection with any transfer or exchange. TECO
Capital Trust III will not register transfers of trust preferred securities that
are called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee undertakes to perform only the duties specifically
provided for in the trust agreement. The property trustee has no obligation to
exercise any of its powers under the trust agreement at the request of any
holder of trust preferred securities unless it is offered indemnity satisfactory
to it against the costs, expenses and liabilities that it might incur by doing
so. If the property trustee is required to decide between alternative courses of
action, construe ambiguous provisions in the trust agreement or is unsure of the
application of any provision of the trust agreement, then the property trustee
may request instructions as to the action to be taken from TECO Funding Company
III, LLC unless the matter is one on which holders of trust preferred securities
are entitled to vote. If TECO Funding Company III, LLC does not provide any
directions, the property trustee will take whatever action it deems advisable
and in the best interests of the holders of the trust preferred securities. The
property trustee will have no liability except for its own bad faith, gross
negligence or willful misconduct.
MISCELLANEOUS
Holders of the trust preferred securities have no preemptive or similar
rights.
TECO Capital Trust III may not borrow money or issue debt or mortgage or
pledge any of its assets.
DESCRIPTION OF THE COMPANY PREFERRED SECURITIES
The following describes the general terms and provisions of the company
preferred securities to which any prospectus supplement may relate. The
particular terms of the company preferred securities offered by TECO Funding
Company III, LLC and the extent to which any of these general provisions do not
apply to its company preferred securities will be described in the prospectus
supplement relating to TECO Funding Company III, LLC and its company preferred
securities.
16
Under the terms of the limited liability company agreement for TECO Funding
Company III, LLC, the board of directors is authorized to issue the company
preferred securities and the common securities on behalf of TECO Funding Company
III, LLC. The company preferred securities are preferred limited liability
company interests in TECO Funding Company III, LLC, the terms of which are set
forth in the limited liability company agreement. The company preferred
securities will have preferential rights relative to the common securities to
payments in respect of distributions and payments upon redemption, liquidation
or otherwise. Any payments in respect of distributions or in respect of
redemption, liquidation or otherwise shall be made to the holders of company
preferred securities prior to any payments being made to the holders of common
securities. Holders of company preferred securities shall share ratably in any
such payments. After payment of the full amount to which the holders of the
company preferred securities are entitled, the holders of the common securities
shall share ratably in any amount left available for payment. Holders of company
preferred securities will also have other benefits as described in the limited
liability company agreement.
We have summarized selected provisions of the company preferred securities
and the limited liability company agreement below. This summary is not complete.
The form of limited liability company agreement has been filed as an exhibit to
the registration statement of which this prospectus forms a part. You should
read the form of limited liability company agreement for provisions that may be
important to you. You should also consider applicable provisions of the Trust
Indenture Act and the Delaware Limited Liability Company Act.
GENERAL
Legal title to the trust preferred notes will be held by TECO Funding
Company III, LLC. The guarantee agreement we execute for the benefit of the
holders of company preferred securities will be a guarantee with respect to the
company preferred securities. See "DESCRIPTION OF THE GUARANTEE" below. TECO
Funding Company III, LLC is required to pass on all payments it receives on the
trust preferred notes through to the holders of the company preferred securities
and common securities on a pro rata basis, subject to the preference of the
company preferred securities. If TECO Funding Company III, LLC fails to make a
payment on its company preferred securities after having received payment on the
trust preferred notes held by it, holders of the company preferred securities
may enforce their rights under the TECO Energy guarantee agreement.
DISTRIBUTIONS
Distributions on the company preferred securities will be cumulative. They
will accumulate from the date of original issuance and will be payable on the
dates specified in the applicable prospectus supplement. Except as specified in
the applicable prospectus supplement, in the event that a date on which
distributions are payable on the company preferred securities is not a business
day, payment of the distribution will be made on the next succeeding business
day (without any interest or other payment in respect to the delay), with the
same force and effect as if made on the originally specified date. However, if
the next business day is in the next calendar year, payment of distributions
will be made on the preceding business day. Each date on which distributions are
payable is referred to in this prospectus as a distribution date.
The distributions on each company preferred security will be payable at a
rate specified in the prospectus supplement for that company preferred security.
The amount of distributions payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months unless otherwise specified in the
applicable prospectus supplement. Distributions on company preferred securities
as used in this prospectus includes any additional distributions on accumulated
unpaid distributions, compounded quarterly or semi-annually at the rate per year
specified in the applicable prospectus supplement, unless otherwise stated.
The revenue of TECO Funding Company III, LLC available for distribution to
holders of its company preferred securities will be limited to payments under
the trust preferred notes it owns. TECO
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Funding Company III, LLC will invest the proceeds from the issuance and sale of
its securities in the trust preferred notes. It will have no other assets. See
"DESCRIPTION OF THE TRUST PREFERRED NOTES." If we do not make interest payments
on the trust preferred notes, the limited liability company will not have funds
available to pay distributions on the related company preferred securities.
Distributions on the company preferred securities will be payable to the
holders as they appear on the register of TECO Funding Company III, LLC on the
record date, which will be the fifteenth day (whether or not a business day)
prior to the relevant distribution date, unless otherwise specified in the
applicable prospectus supplement. Subject to any applicable laws and regulations
and to the provisions of the limited liability company agreement, each
distribution payment will be made directly to the property trustee under the
trust agreement or to a holder of trust preferred securities who has exchanged
such securities for company preferred securities.
PAYMENT OF EXPENSES
Under the trust preferred note indenture and the limited liability company
agreement, we will agree to pay all debts and obligations (other than
distributions on the limited liability company securities) and all costs and
expenses of TECO Funding Company III, LLC and to pay any and all taxes, duties,
assessments or other governmental charges (other than United States withholding
taxes) imposed by the United States or any other taxing authority. This
includes, but is not limited to, all costs and expenses relating to the
organization of TECO Funding Company III, LLC, the fees and expenses of the
board of directors and officers, if any, and all costs and expenses relating to
the operation of TECO Funding Company III, LLC. As a result, the net amounts
received and retained by TECO Funding Company III, LLC after paying these fees,
expenses, debts and obligations will be equal to the amounts TECO Funding
Company III, LLC would have received and retained had no fees, expenses, debts
and obligations been incurred by or imposed on it. Our promise to pay these
obligations is for the benefit of, and shall be enforceable by, any creditor to
whom the fees, expenses, debts and obligations are owed, whether or not the
creditor has received notice of the promise. Any creditor may enforce these
obligations directly against us. We have agreed to irrevocably waive any right
or remedy that would otherwise require that any creditor take any action against
TECO Funding Company III, LLC or any other person before proceeding against us.
We will execute any additional agreements as may be necessary to give full
effect to these promises.
REDEMPTION OR EXCHANGE
If we repay or redeem, in whole or in part, any trust preferred notes that
have been issued to TECO Funding Company III, LLC, whether at maturity or
earlier, the proceeds from the repayment or redemption will be applied to redeem
a like amount of the limited liability company's securities, subject to the
preferential rights of the company preferred securities. The limited liability
company must give at least 35 and no more than 60 days' notice, and the
redemption price will equal the sum of:
- the aggregate liquidation amount of the limited liability company
securities being redeemed; plus
- accumulated but unpaid distributions on the redeemed limited liability
company securities to the date of redemption; plus
- the related amount of the premium, if any, that we pay upon the
concurrent redemption of trust preferred notes.
See "DESCRIPTION OF THE TRUST PREFERRED NOTES -- Redemption."
If we are repaying or redeeming less than all of any series of trust
preferred notes on a redemption date, then the proceeds from that repayment or
redemption will be allocated to redeem the company preferred securities pro rata
based upon their respective liquidation preferences. The amount of premium, if
any, that we pay to redeem all or any part of any series of any trust preferred
notes will also be allocated to the redemption pro rata of the limited liability
company securities, subject to the preferential rights of the company preferred
securities.
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We will have the right to redeem any series of trust preferred notes:
- subject to the conditions described under "DESCRIPTION OF THE TRUST
PREFERRED NOTES -- Redemption"; or
- as may be otherwise specified in the applicable prospectus supplement.
We have the right to dissolve TECO Funding Company III, LLC at any time
and, after satisfaction of any liabilities to creditors of TECO Funding Company
III, LLC as provided by applicable law, to cause the trust preferred notes owned
by TECO Funding Company III, LLC to be distributed to TECO Capital Trust III or
the holders of the company preferred securities.
If provided in the applicable prospectus supplement, we will have the right
to extend or shorten the maturity of any series of trust preferred notes at the
time that we elect to dissolve TECO Funding Company III, LLC and cause the trust
preferred notes to be distributed to the holders of the company preferred
securities and common securities in liquidation of TECO Funding Company III,
LLC. However, we can extend the maturity only if the conditions specified in the
applicable prospectus supplement are met at the time the election is made and at
the time of the extension.
After the liquidation date fixed for any distribution of trust preferred
notes to the holders of any series of company preferred securities:
- that series of company preferred securities will no longer be deemed to
be outstanding; and
- the limited liability company will receive a registered global
certificate or certificates representing the trust preferred notes to be
delivered in the distribution.
REDEMPTION AND EXCHANGE PROCEDURES
Any company preferred securities that are redeemed will receive the
redemption price from the simultaneous redemption of the trust preferred notes.
Redemptions of the company preferred securities will be made and the redemption
price will be payable on each redemption date only to the extent that TECO
Funding Company III, LLC has funds on hand available to pay that redemption
price. See "Subordination of Common Securities."
If TECO Funding Company III, LLC gives notice of the redemption of its
company preferred securities, then, by 12:00 noon, New York City time on the
redemption date, to the extent funds are available, the limited liability
company will deposit irrevocably with the property trustee funds sufficient to
pay the redemption price with respect to the company preferred securities. If
the company preferred securities are no longer in book-entry form, TECO Funding
Company III, LLC, to the extent funds are available, will irrevocably deposit
with the paying agent for the company preferred securities funds sufficient to
pay the redemption price and will give the paying agent irrevocable instructions
and authority to pay the redemption price to the holders upon surrender of their
certificates evidencing the company preferred securities.
Nevertheless, distributions payable on or prior to the redemption date for
company preferred securities called for redemption shall be payable to the
holders of those company preferred securities on the relevant record dates for
the related distribution dates. If notice of redemption has been given and funds
paid as required, then on the date that the funds are paid, all rights of the
holders of the company preferred securities called for redemption will cease,
except their right to receive the redemption price, without interest and the
company preferred securities will no longer be deemed outstanding.
Except as specified in the applicable prospectus supplement, if a date
fixed for redemption of company preferred securities is not a business day, then
payment of the redemption price will be made on the next business day (and
without any interest or other payment for that delay). However, if that next
business day falls in the next calendar year, the redemption price will be
payable on the preceding business
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day. If payment of the redemption price for company preferred securities called
for redemption is improperly withheld or refused and not paid by TECO Funding
Company III, LLC then:
- distributions on those company preferred securities will continue to
accrue at the then applicable rate, from the redemption date originally
established by TECO Funding Company III, LLC to the date on which the
redemption price is actually paid; and
- in calculating the redemption price, the actual payment date will be
treated as the date fixed for redemption.
Payment of the redemption price on the company preferred securities and any
distribution of trust preferred notes to holders of company preferred securities
will be made to the record holders as they appear on the register for the
company preferred securities. The record date will be the fifteenth day (whether
or not a business day) prior to the redemption date or liquidation date, as
applicable, unless otherwise specified in the prospectus supplement.
If less than all of the company preferred securities and common securities
issued by TECO Funding Company III, LLC are to be redeemed on a redemption date,
then the company preferred securities shall be redeemed prior to any redemption
of the common securities. The particular company preferred securities to be
redeemed shall be selected on a pro rata basis not more than 60 days prior to
the redemption date by the board of directors from the outstanding company
preferred securities not previously called for redemption. The limited liability
company shall promptly notify the property trustee in writing of the company
preferred securities selected for redemption and, in the case of any company
preferred securities selected for partial redemption, the liquidation amount to
be redeemed. For all purposes of the limited liability company agreement, unless
the context otherwise requires, all provisions relating to the redemption of
company preferred securities shall relate, in the case of any company preferred
securities redeemed or to be redeemed only in part, to the portion of the
aggregate liquidation amount of company preferred securities which has been or
is to be redeemed.
Notice of any redemption will be mailed within 35 to 60 days before the
redemption date to each holder of limited liability company securities to be
redeemed at the holder's registered address. Unless we default in payment of the
redemption price on the trust preferred notes, on and after the redemption date
interest ceases to accrue on the trust preferred notes or portions of those
trust preferred notes (and distributions cease to accrue on the related company
preferred securities or portions of those securities) called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the redemption price of the company
preferred securities and common securities of TECO Funding Company III, LLC, as
applicable, generally shall be made pro rata based on the liquidation amount of
the company preferred securities and of the common securities, subject to the
preferential rights of the company preferred securities.
Neither we nor TECO Funding Company III, LLC will pay any distribution on,
or redemption price of, any of the common securities of TECO Funding Company
III, LLC, and neither we nor TECO Funding Company III, LLC will make any other
payment relating to the redemption, liquidation or other acquisition of those
common securities, unless:
- all accumulated and unpaid distributions on all of the outstanding
company preferred securities of TECO Funding Company III, LLC are paid in
cash for distribution periods ending on or before any payment on the
common securities, and
- in the case of a payment of the redemption price, the full amount of the
redemption price on all of the outstanding company preferred securities
of TECO Funding Company III, LLC then called for redemption has been paid
or provided for; and
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- all funds available to TECO Funding Company III, LLC shall be applied
first to the payment in full in cash of all distributions on, or
redemption price of, the company preferred securities of TECO Funding
Company III, LLC then due and payable.
In the case of any event of default relating to any trust preferred notes,
we (as the holder of the common securities of TECO Funding Company III, LLC)
will be deemed to have waived any right to act with respect to the event of
default until the effect of all events of default with respect to the company
preferred securities has been cured, waived or otherwise eliminated. Until any
events of default relating to any trust preferred notes with respect to the
company preferred securities have been cured, waived or otherwise eliminated, a
holder of any company preferred security or trust preferred security, as the
holder of a beneficial interest in the corresponding company preferred security,
may institute a legal proceeding directly against us to enforce rights to
payment of distributions and amounts in redemption or liquidation, and the board
of directors must act solely on behalf of the holders of the company preferred
securities and not on our behalf as holder of the common securities of TECO
Funding Company III, LLC. Likewise, only the holders of those company preferred
securities will have the right to direct the board of directors to act on their
behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Under the limited liability company agreement, TECO Funding Company III,
LLC will automatically dissolve when its term expires. Also, it will dissolve on
the first to occur of:
- the liquidation of TECO Energy;
- our written direction, as holder of the common securities, to the board
of directors to dissolve TECO Funding Company III, LLC and distribute the
trust preferred notes to the holders of the company preferred securities
in exchange for the company preferred securities (which direction is
optional and wholly within our discretion);
- the redemption of all of the limited liability company securities of TECO
Funding Company III, LLC;
- specified events relating to the bankruptcy or insolvency of TECO Funding
Company III, LLC; and
- the entry of a decree of judicial dissolution under the Delaware Limited
Liability Company Act.
If an early dissolution occurs in any manner except by the redemption of
all of the limited liability company securities, then TECO Funding Company III,
LLC will be liquidated by the board of directors as expeditiously as they
determine possible. The board of directors will distribute (after satisfying any
liabilities to the creditors of TECO Funding Company III, LLC as provided by
applicable law) to the holders of the limited liability company securities a
like amount of the trust preferred notes. However, if that distribution is
determined to be impractical by the board of directors, the holders of the
limited liability company securities will be entitled to receive out of the
assets of TECO Funding Company III, LLC available for distribution to holders
(after satisfying any liabilities to the creditors of TECO Funding Company III,
LLC as provided by applicable law) a liquidation distribution in an amount equal
to, in the case of holders of company preferred securities, the aggregate of the
liquidation amount plus accrued and unpaid distributions to the date of payment.
If the liquidation distribution can be paid only in part because TECO Funding
Company III, LLC has insufficient assets available to pay in full the aggregate
liquidation distribution, then the amounts payable directly by TECO Funding
Company III, LLC on its company preferred securities will be paid on a pro rata
basis.
As the holder of the common securities of TECO Funding Company III, LLC, we
will be entitled to receive distributions upon any liquidation pro rata with the
holders of its company preferred securities, subject to the preferential rights
of the company preferred securities.
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VOTING RIGHTS; AMENDMENT OF LIMITED LIABILITY COMPANY AGREEMENT
All voting rights of holders of the company preferred securities will be
exercised by the holders of the trust preferred securities of the trust. Such
holders will have only the voting rights described below and under "DESCRIPTION
OF THE GUARANTEE -- Amendments and Assignment," plus any voting rights required
by law.
We may amend the limited liability company agreement from time to time,
without the consent of the holders of the company preferred securities:
- to cure any ambiguity, correct or supplement any provisions in the
limited liability company agreement that may be inconsistent with any
other provision, or to address matters or questions arising under the
limited liability company agreement in a way which is consistent with the
agreement's other provisions; or
- to modify, eliminate or add to any provisions of the limited liability
company agreement if necessary to ensure that TECO Funding Company III,
LLC will be classified for United States federal income tax purposes as a
partnership or to ensure that TECO Funding Company III, LLC will not be
required to register as an "investment company" under the Investment
Company Act.
However, in the case of the first clause, the action must not adversely
affect in any material respect the interests of any holder of company preferred
securities. Any amendment becomes effective when we give notice of the amendment
to the holders of the company preferred securities.
We may amend the limited liability company agreement:
- with the consent of holders representing not less than a majority (based
upon liquidation amounts) of the outstanding company preferred
securities; and
- upon receipt of an opinion of counsel experienced in such matters to the
effect that the amendment or the exercise of any power granted in
accordance with the amendment will not affect the status of TECO Funding
Company III, LLC as a partnership for United States federal income tax
purposes or the exemption of TECO Funding Company III, LLC from status as
an "investment company" under the Investment Company Act.
However, without the consent of each holder of company preferred
securities, no amendment may:
- change the amount or timing of any distribution on the limited liability
company securities or otherwise adversely affect the amount of any
distribution required to be made in respect of the limited liability
company securities as of a specified date; or
- restrict the right of a holder of company preferred securities to sue for
the enforcement of any distribution payment.
The limited liability company is required to notify each holder of company
preferred securities whenever it is notified of a default with respect to the
trust preferred notes.
If an event of default has occurred and is continuing under the trust
preferred note indenture or if TECO Energy is in default on any of its payment
or other obligations under the guarantee, the holders of a majority of the
aggregate liquidation preference of the outstanding company preferred securities
may appoint a special representative of TECO Funding Company III, LLC and the
holders of company preferred securities to enforce the rights of TECO Funding
Company III, LLC under the trust preferred notes. If a special representative
has been appointed, the special representative shall have the exclusive right to
enforce, or direct the enforcement of, the rights of TECO Funding Company III,
LLC under the trust preferred notes.
No vote or consent of the holders of company preferred securities will be
required for TECO Funding Company III, LLC to redeem and cancel its company
preferred securities in accordance with the limited liability company agreement.
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Whenever holders of company preferred securities are entitled to vote or
consent under any of the circumstances described above, we will not be permitted
to vote.
REMOVAL OF DIRECTORS
As the holder of the common securities of TECO Funding Company III, LLC, we
may remove the limited liability company's directors at any time. In no event
will holders of the company preferred securities have the right to vote to
appoint, remove or replace the directors; that right belongs exclusively to us
as the holder of the common securities.
PAYMENT
The limited liability company will make payments in respect of the company
preferred securities by check or by crediting the account of the property
trustee and the other holders of the company preferred securities on the
applicable distribution dates.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable prospectus supplement, the
limited liability company or a third party appointed by the limited liability
company will act as registrar and transfer agent for the company preferred
securities.
TECO Funding Company III, LLC or a third party registrar and transfer agent
will register transfers of company preferred securities without charge, but will
require payment of any tax or other governmental charges imposed in connection
with any transfer or exchange. TECO Funding Company III, LLC will not register
transfers of company preferred securities that are called for redemption.
MISCELLANEOUS
The board of directors of TECO Funding Company III, LLC is authorized and
directed to operate TECO Funding Company III, LLC in such a way that:
- TECO Funding Company III, LLC will not be:
- deemed to be an "investment company" required to be registered under
the Investment Company Act; or
- classified as an association taxable as a corporation for United
States federal income tax purposes; and
- the trust preferred notes will be treated as our indebtedness for United
States federal income tax purposes.
We and the board of directors are authorized to take any lawful action
(consistent with the certificate of formation and limited liability company
agreement of TECO Funding Company III, LLC) that we and they deem to be
necessary or desirable for these purposes, as long as the action does not
materially and adversely affect the interests of the holders of the trust
preferred securities.
Holders of the company preferred securities have no preemptive or similar
rights.
TECO Funding Company III, LLC may not borrow money or issue debt or
mortgage or pledge any of its assets.
DESCRIPTION OF THE TRUST PREFERRED NOTES
The trust preferred notes will be issued by us in one or more series under
an indenture dated August 17, 1998 between us and The Bank of New York, as
trustee, as supplemented by a supplemental indenture relating to that series. We
have summarized below the terms applying generally to a series of our trust
preferred notes. The summary is not complete. The indenture is filed as an
exhibit to the
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registration statement on Form S-3 dated August 24, 1998, and a general form of
supplemental indenture for a series of trust preferred notes is filed as an
exhibit to the registration statement of which this prospectus is a part.
The particular supplemental indenture for each series will be filed or
incorporated by reference as an exhibit to the registration statement. You
should read the indenture and the relevant supplemental indenture for provisions
that may be important to you. We will also describe in the applicable prospectus
supplement the particular terms of the trust preferred notes then to be issued,
including any modifications of or additions to the discussion below of the
general terms of the trust preferred notes. Therefore, for a description of the
terms of a particular series of trust preferred notes relevant to you, you
should also review both the prospectus supplement relating to that series and
the description of the trust preferred notes in this prospectus before making an
investment decision.
GENERAL
The trust preferred notes will be issued by us to TECO Funding Company III,
LLC in one or more series. The governing indenture does not limit the amount or
number of trust preferred notes or other types of debt securities that we can
issue from time to time under the indenture.
The terms of the trust preferred notes will correspond to the terms of a
series of company preferred securities issued by TECO Funding Company III, LLC
and to the terms of a series of trust preferred securities issued by TECO
Capital Trust III. When TECO Funding Company III, LLC issues and sells its
company preferred securities, the limited liability company will use the
proceeds from the sale and from the consideration we pay for the limited
liability company's common securities to purchase the corresponding series of
trust preferred notes.
Each series of trust preferred notes will:
- be unsecured; and
- be in the principal amount equal to the aggregate stated liquidation
amount of the company preferred securities and the common securities of
TECO Funding Company III, LLC, which holds such series of trust preferred
notes.
The prospectus supplement will describe specific terms of the trust
preferred notes that correspond to the trust preferred securities being offered.
The terms will include some or all of the following:
- the designation, aggregate principal amount, currency or composite
currency and denominations of the trust preferred notes;
- the price at which the trust preferred notes will be issued and sold to
TECO Funding Company III, LLC;
- the maturity date and other dates, if any, on which the principal of the
trust preferred notes will be payable;
- the interest rate or rates, if any, or method of calculating the interest
rate or rates which the trust preferred notes will bear;
- the date or dates from which interest will accrue and on which interest
will be payable, and the record dates for the payment of interest;
- the terms of any mandatory or optional redemption of the trust preferred
notes by us;
- if payments of principal or interest may be made in a currency other than
U.S. Dollars, the manner for determining such payments;
- whether and upon what terms the trust preferred notes may be defeased
(which means that we would be discharged from our obligations by
depositing sufficient cash or government securities to
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pay the principal, interest, any premiums and other sums due to the
stated maturity date or a redemption date of the trust preferred notes);
- whether any events of default or covenants in addition to or instead of
those found in the indenture or described in this prospectus apply;
- provisions relating to the relative priority and terms of subordination,
if any, of the trust preferred notes;
- any provisions relating to extending or shortening the date on which the
principal and premium, if any, of the trust preferred notes of the series
is payable;
- any provisions relating to the deferral of payment of any interest;
- the form of the limited liability company agreement with TECO Funding
Company III, LLC, the trust agreement with TECO Capital Trust III and the
guarantee agreement;
- the additions or changes, if any, to the indenture with respect to that
series of trust preferred notes to permit or facilitate the issuance of
that series of the trust preferred notes to TECO Funding Company III,
LLC; and
- any other terms not inconsistent with the provisions of the indenture,
including any covenants or other terms that may be required or advisable
under United States or other applicable laws or regulations, or advisable
in connection with the issuance of the trust preferred notes.
Unless otherwise specified in the prospectus supplement, we will covenant,
as to each series of the trust preferred notes:
- to maintain, directly or indirectly, 100% ownership of the common
securities of TECO Funding Company III, LLC to which the trust preferred
notes have been issued (provided that successors which are permitted
under the indenture may succeed to our ownership of the common
securities); and
- to use our reasonable efforts, consistent with the terms and provisions
of the limited liability company agreement, to cause TECO Funding Company
III, LLC to remain classified as a partnership for United States federal
income tax purposes and to use our reasonable efforts, consistent with
the terms and provisions of the related trust agreement, to cause TECO
Capital Trust III to remain classified as a grantor trust and not as an
association taxable as a corporation for United States federal income tax
purposes.
Additional covenants, relating to payment of the expenses of TECO Capital
Trust III and TECO Funding Company III, LLC, are described above under
"DESCRIPTION OF THE TRUST PREFERRED SECURITIES -- Payment of Expenses" and
"DESCRIPTION OF THE COMPANY PREFERRED SECURITIES -- Payment of Expenses."
OPTION TO EXTEND INTEREST PAYMENT DATE
We will have the right at any time and from time to time during the term of
any series of trust preferred notes to defer payments of interest for a
specified number of consecutive interest payment, or extension, periods. No
extension period may extend beyond the maturity date of that series of trust
preferred notes at any time. We may pay at any time all or any portion of the
interest accrued to that point during a deferral period. At the end of the
deferral period or at a redemption date, we will be obligated to pay all
interest accrued and unpaid (together with interest on the unpaid interest to
the extent permitted by applicable law). United States federal income tax
consequences and special considerations applicable to any trust preferred notes
for which an extension period has been elected will be described in the
applicable prospectus supplement. During any extension period, or while we are
in default, we will be restricted in our ability to make payments or incur
obligations related to our stock or debt securities ranking equal to or below
the trust preferred notes.
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Before the end of any extension period, we may further extend the interest
payment period. However, the deferral period, together with all prior and
further extensions, cannot exceed 20 consecutive quarters or ten semi-annual
periods or extend beyond the maturity date of the trust preferred notes. After
the termination of any deferral period and the payment of all amounts due, we
may decide to begin a new deferral period, subject to the same requirements
described above.
If the property trustee is the sole holder of the company preferred
securities, we will give the property trustee and the indenture trustee notice
of our selection of any deferral period one business day prior to the earlier
of:
- the next date distributions on the preferred securities are payable; or
- the date TECO Capital Trust III is required to give notice to the New
York Stock Exchange (or other applicable self-regulatory organization) or
to holders of the trust preferred securities of the record date or the
date any distribution is payable.
If the property trustee is not the sole holder, we will give the holders of
the company preferred securities and the indenture trustee notice of our
selection of any deferral period ten business days prior to the earlier of:
- the next interest payment date; or
- the date we are required to give notice to the New York Stock Exchange
(or other applicable self-regulatory organization) or to holders of the
trust preferred notes of the record or payment date of any related
interest payment.
REDEMPTION
The trust preferred notes and the applicable supplemental indenture will
provide the terms under which we can redeem the trust preferred notes at our
option. They will specify a date prior to which we cannot redeem the trust
preferred notes, and after which we will have the right to redeem the trust
preferred notes, in whole or in part, upon 35 to 60 days notice to the holder of
the trust preferred notes at a redemption price or prices stated in this
prospectus supplement.
If the trust preferred notes are redeemed only in part, they will be
redeemed pro rata, by lot or other method selected by the trustee. If a partial
redemption would result, however, in the delisting of the corresponding trust
preferred securities of TECO Capital Trust III from the national securities
exchange or other self-regulatory organization on which the securities are
listed, or if the corresponding company preferred securities of TECO Funding
Company III, LLC are then listed on a national securities exchange or other
self-regulatory organization and such partial redemption would result in the
delisting of the corresponding company preferred securities from such national
securities exchange or self-regulatory organization, we will not be permitted to
effect the partial redemption and may redeem the trust preferred notes only as a
whole.
Unless otherwise specified in the prospectus supplement and subject to the
provisions of the prospectus supplement, if a Tax Event (as defined below) or an
Investment Company Event (as defined below) in respect of TECO Capital Trust III
or TECO Funding Company III, LLC occurs and is continuing, we can redeem the
trust preferred notes, in whole but not in part, at any time within the next 90
days.
"Tax Event" means that TECO Capital Trust III or TECO Funding Company III,
LLC has received an opinion of counsel (which may be counsel to us or an
affiliate) experienced in such matters to the effect that, as a result of any
- amendment to, or change (including any announced proposed change) in, the
laws or regulations of the United States, any political subdivision or
taxing authority, or
- official administrative written decision, pronouncement or action or
judicial decision interpreting or applying those laws or regulations,
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in each case which amendment or change is effective or which proposed change,
pronouncement, action or decision is announced on or after the date of issuance
of the series of trust preferred notes, there is more than an insubstantial risk
that:
- TECO Capital Trust III or TECO Funding Company III, LLC is, or will be
within 90 days of the date of the opinion, subject to United States
federal income tax with respect to income received or accrued on the
trust preferred notes or company preferred securities;
- interest we pay on the trust preferred notes is not, or will not be
within 90 days of the date of the opinion, deductible, in whole or in
part, for United States federal income tax purposes; or
- TECO Capital Trust III or TECO Funding Company III, LLC is, or will be
within 90 days of the date of the opinion, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
"Investment Company Event" means that TECO Capital Trust III or TECO
Funding Company III, LLC will have received an opinion of counsel (which may be
counsel to us or an affiliate) experienced in such matters to the effect that,
as a result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority on or after the date of
issuance of the series of trust preferred notes, there is more than an
insubstantial risk that the trust or limited liability company is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act.
RESTRICTIONS ON CERTAIN PAYMENTS
If:
- we have actual knowledge that an event has occurred that (a) with the
giving of notice or the lapse of time, or both, would constitute an event
of default under the indenture with respect to the trust preferred notes
of that series and (b) we have not taken reasonable steps to cure the
event;
- we are in default with respect to payment of any obligations under the
guarantee relating to related trust preferred securities; or
- we have given notice of our selection of a deferral of interest extension
period as provided under the supplemental indenture with respect to the
trust preferred notes and have not rescinded the notice, or the extension
period shall be continuing;
then, unless otherwise provided in the applicable prospectus supplement, we will
promise, as to each series of trust preferred notes issued, that we and our
subsidiaries will not:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of our stock;
- make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any of our debt securities (including other trust
preferred notes) that rank equally with or junior in interest to the
trust preferred notes;
- make any guarantee payments with respect to any of the debt securities of
any of our subsidiaries if the guarantee ranks equally with or junior in
interest to the trust preferred notes
other than:
- as a result of a reclassification of our capital stock or the exchange or
conversion of one class or series of our capital stock for another class
or series;
- dividends or distributions payable in our common stock;
- redemptions or purchases of any rights pursuant to our shareholder rights
plan, or any successor rights agreement, and the declaration of a
dividend of rights or the issuance of stock under a rights agreement in
the future;
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- payments under any guarantee relating to the trust preferred securities
of TECO Capital Trust III;
- purchases of common stock related to the issuance of common stock under
any benefit plans for our or our subsidiaries' directors, officers or
employees;
- obligations under any dividend reinvestment plan or stock purchase plan;
and
- purchases of fractional interests in shares of our stock pursuant to the
conversion or exchange provisions of a security being converted or
exchanged for our stock.
RANKING OF THE TRUST PREFERRED NOTES
The trust preferred notes will rank senior to, on a parity with, or
subordinate to our other indebtedness as described in the applicable prospectus
supplement.
The indenture under which we will issue the trust preferred notes does not
restrict the total amount of debt that we or our subsidiaries may incur or
contain any covenant or other provision that is specifically intended to afford
any holder of the trust preferred notes or other debt securities special
protection in the event of highly leveraged transactions or any other
transactions resulting in a decline in our ratings or credit quality.
Our default or event of default under any other indebtedness would not
necessarily constitute an event of default under the indenture. Our failure to
make required payments on any series of trust preferred notes would constitute
an event of default. However, the rights of the holders of trust preferred notes
would be limited if there is a default or event of default under other
indebtedness or under the trust preferred notes to the extent provided in any
subordination provision of the applicable supplemental indenture as described in
the applicable prospectus supplement.
The trust preferred notes are obligations exclusively of TECO Energy,
which, as a holding company, has no material assets other than its ownership of
the common stock of its subsidiaries, including Tampa Electric Company. We will
rely entirely upon distributions from our subsidiaries to meet the payment
obligations under the trust preferred notes. Our subsidiaries are separate and
distinct legal entities and have no obligation, contingent or otherwise, to pay
amounts due under the trust preferred notes or otherwise to make any funds
available to us including the payment of dividends or other distributions or the
extension of loans or advances. Furthermore, the ability of our subsidiaries to
make any payments to us would be dependent upon the terms of any credit
facilities of the subsidiaries and upon the subsidiaries' earnings, which are
subject to various business risks. In a bankruptcy or insolvency proceeding,
claims of holders of the trust preferred notes would be satisfied solely from
our equity interests in our subsidiaries remaining after the satisfaction of
claims of creditors of the subsidiaries. Thus, the trust preferred notes are
effectively subordinated to existing and future liabilities of our subsidiaries
to their respective creditors.
CONSOLIDATION, MERGER, ETC.
We will not consolidate or merge with or into any other corporation or
other organization, or sell, convey or transfer all or substantially all of our
assets to any individual or organization, unless:
- the successor is an individual or organization organized under the laws
of the United States or any state thereof or the District of Columbia or,
upon the effectiveness of the currently proposed amendment to the
indenture, under the laws of a foreign jurisdiction and such successor
consents to the jurisdiction of the courts of the United States or any
state thereof;
- the successor or transferee expressly assumes our obligations under the
indenture; and
- the consolidation, merger, sale or transfer does not cause the occurrence
of a default under the indenture.
Upon the assumption by the successor of our obligations under the indenture
and the debt securities issued thereunder, and the satisfaction of any other
conditions required by the indenture, the successor will succeed to and be
substituted for us under the indenture.
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DENOMINATIONS, REGISTRATION AND TRANSFER OF TRUST PREFERRED NOTES
The trust preferred notes will be denominated in U.S. dollars in registered
form without coupons, unless otherwise indicated in the applicable prospectus
supplement and except as otherwise indicated under the heading "Book-Entry
Issuance" below.
A holder of registered trust preferred notes may request registration of a
transfer upon surrender of the trust preferred note being transferred at any
agency we maintain for that purpose and upon fulfillment of all other
requirements of the agent.
EXCHANGE OF TRUST PREFERRED NOTES
In the event a person other than the property trustee or the limited
liability company holds any registered trust preferred notes, those trust
preferred notes may be exchanged for an equal principal amount of registered
trust preferred notes of the same series and date of maturity in the
denominations requested by the holders upon surrender of the registered trust
preferred notes at an agency we maintain for that purpose and upon fulfillment
of all other requirements of the agent.
DEFAULTS AND REMEDIES
Unless the supplemental indenture establishing the series provides for
different events of default, in which event the prospectus supplement will
describe the change, an event of default with respect to a series of trust
preferred notes will occur if:
- we fail to pay any interest on any trust preferred note of that series
when due, and such failure has continued for 30 days;
- we fail to pay principal of or premium, if any, on any trust preferred
note of that series when due;
- we fail to perform any other covenant in the indenture (other than a
covenant included in the indenture solely for the benefit of a series of
trust preferred notes other than that series), and that failure has
continued for 90 days after we receive written notice as provided in the
indenture;
- events of bankruptcy, insolvency or reorganization; and
- any other event defined as an event of default with respect to trust
preferred notes of that series.
If an event of default occurs and is continuing on a series of trust
preferred notes, the trustee by notice to us, or, to the extent permitted by
applicable law, the holders of at least 25% in principal amount of the series by
notice both to us and to the trustee, may declare the principal of and accrued
interest on all the trust preferred notes of the series to be due and payable
immediately. If, upon an event of default, the trustee or the holders of not
less than 25% in aggregate principal amount of the series fail to declare the
principal of all the trust preferred notes of that series to be immediately due
and payable, then the holders of 25% in aggregate liquidation amount of the
related trust preferred securities then outstanding shall have the right to do
so by notice to us and to the trustee.
Except as provided in the next sentence, the holders of a majority in
principal amount of a series of trust preferred notes, by notice to the trustee,
may rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing events of default on
the series have been cured or waived except nonpayment of principal or interest
that has become due solely because of the acceleration. However, so long as any
of the related trust preferred securities are still outstanding, then the
holders of a majority in aggregate liquidation amount of those trust preferred
securities shall have the sole right to rescind the acceleration and its
consequences with respect to that series, subject to the same conditions set
forth above.
If an event of default occurs and is continuing on a series, the trustee
may pursue any available remedy to collect principal or interest then due on the
series, to enforce the performance of any provision applicable to the series, or
otherwise to protect the rights of the trustee and holders of the series.
Any holder of the related trust preferred securities of TECO Capital Trust
III shall have the right, upon the occurrence and continuance of an event of
default with respect to the series following our failure to pay timely interest,
principal or premium as described above, to sue us directly. In that lawsuit the
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holder of the related trust preferred securities can force us to pay to the
holder the principal of, and premium, if any, and interest on, the trust
preferred notes having a principal amount equal to the aggregate liquidation
amount of the trust preferred securities held by that holder.
Subject to the provisions of the indenture relating to the duties of the
indenture trustee in case an event of default occurs and is continuing, the
indenture trustee is not obligated to exercise any of its rights or powers under
the indenture at the request or direction of any of the holders of the trust
preferred notes, whether it be the property trustee or otherwise, unless the
holders have offered to the trustee reasonable security or indemnity. Subject to
such provisions for security and indemnification of the trustee and other rights
of the trustee, the holders of a majority in principal amount of the outstanding
trust preferred notes of any series have the right to direct the time, method
and place of conducting any proceedings for any remedy available to the trustee
or exercising any trust or power conferred on the trustee with respect to the
trust preferred notes of that series.
The holder of any trust preferred note, whether it be the property trustee
or otherwise, will have an absolute and unconditional right to receive payment
of the principal of and any premium and, subject to limitations specified in the
indenture, interest on that note on its stated maturity date (or, in the case of
redemption, on the redemption date) and to institute suit for the enforcement of
any of these payments.
Annually, we must furnish to the indenture trustee a statement that to the
best of our knowledge we are not in default in the performance and observance of
any terms, provisions or conditions of the indenture or, if there has been such
a default, specifying each default and its status.
The indenture does not have a cross-default provision. Thus, a default by
us on any other debt, including any other series of trust preferred notes, would
not constitute an event of default under the indenture. A supplemental indenture
may provide for a cross-default provision; in that case the prospectus
supplement will describe the terms of that provision.
MODIFICATION OF THE INDENTURE
The indenture provides that we or the trustee may modify or amend its terms
with the consent of (i) the holders of not less than a majority in aggregate
principal amount of the outstanding debt securities of each affected series and
(ii) 66 2/3% in aggregate principal amount of the outstanding debt securities of
all affected series. However, without the consent of each holder of all of the
outstanding debt securities affected by that modification, we may not:
- change the date stated on the debt security on which any payment of
principal or interest is stated to be due;
- reduce the principal amount or any premium or interest on, any debt
security, in the case of a discounted debt security, the amount payable
upon acceleration of the maturity thereof;
- change the place of payment or currency of payment of principal of, or
premium, if any, or interest on, any debt security;
- impair the right to institute suit for the enforcement of any payment on
or with respect to any debt security after the stated maturity (or, in
the case of redemption, on or after the redemption date); or
- reduce the percentage in principal amount of outstanding debt securities
of any series, the consent of the holders of which is required for
modification or amendment of the indenture, for waiver of compliance with
some provisions of the indenture or for waiver of some defaults.
Under limited circumstances and only upon the fulfillment of conditions, we
and the trustee may make modifications and amendments of the indenture without
the consent of any holders of the debt securities.
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However, unless stated otherwise in the applicable prospectus supplement:
- we are not permitted to adopt an amendment that adversely affects the
holders of the trust preferred securities in any material respect, and
- no termination of the indenture shall occur,
without the prior consent of the holders of not less than a majority in
aggregate liquidation amount of the trust preferred securities then outstanding
unless and until the principal (and premium, if any) of the trust preferred
notes of that series and all accrued and unpaid interest thereon have been paid
in full. Furthermore, no amendment can be made to the provisions of the
indenture allowing holders of trust preferred securities to sue directly
following our failure to make timely payments on the trust preferred notes as
described above without the prior consent of the holder of each trust preferred
security then outstanding unless and until the principal (and premium, if any)
of the trust preferred notes of the series and all accrued and unpaid interest
thereon have been paid in full.
SATISFACTION AND DISCHARGE OF THE INDENTURE
We will have satisfied and discharged the indenture and it will cease to be
in effect (except as to our obligations to compensate, reimburse and indemnify
the trustee pursuant to the indenture and some other obligations), when we
deposit or cause to be deposited with the trustee, in trust, an amount
sufficient to pay and discharge the entire indebtedness on the debt securities
not previously delivered to the trustee for cancellation, for the principal (and
premium, if any) and interest to the date of the deposit (or to the stated
maturity date or earlier redemption date for debt securities that have been
called for redemption).
DEFEASANCE OF THE TRUST PREFERRED NOTES
Unless otherwise provided in the applicable prospectus supplement, we may
cause ourself (subject to the terms of the indenture) to be discharged from any
and all obligations with respect to any trust preferred notes or series of trust
preferred notes (except for certain obligations to register the transfer or
exchange of the trust preferred notes, to replace the trust preferred notes if
stolen, lost or mutilated, to maintain paying agencies and to hold money for
payment in trust) on and after the date that the conditions provided for in the
indenture are satisfied. Those conditions include the deposit with the trustee,
in trust for this purpose, of money and/or U.S. government obligations, whose
scheduled payments of principal and interest, will provide money in an amount
sufficient to pay the principal of and any premium and interest on the trust
preferred notes on the stated maturity date of those payments or upon
redemption, as the case may be, under the terms of the indenture and the trust
preferred notes.
Under current Federal income tax law, the defeasance of the trust preferred
notes would be treated as a taxable exchange of the relevant trust preferred
notes in which holders of trust preferred notes would recognize gain or loss. In
addition, thereafter, the amount, timing and character of amounts that holders
would be required to include in income might be different from that which would
be includable in the absence of such defeasance. Prospective investors are urged
to consult their own tax advisors as to the specific consequences of a
defeasance, including the applicability and effect of tax laws other than the
Federal income tax law.
REGARDING THE TRUSTEE
The Bank of New York will act as trustee and registrar for the trust
preferred notes issued under the indenture. Unless otherwise indicated in a
prospectus supplement, the trustee will also act as transfer agent and paying
agent with respect to the trust preferred notes. The Bank of New York maintains
banking relationships with us in the ordinary course of business and serves as
trustee under other indentures with us and certain of our affiliates.
GOVERNING LAW
The indenture and trust preferred notes will be governed by and construed
in accordance with the laws of the State of New York.
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DESCRIPTION OF THE GUARANTEE
When the trust preferred securities and the company preferred securities
are issued, we will execute and deliver a guarantee agreement for the benefit of
the holders of the company preferred securities and, indirectly, the holders of
the trust preferred securities as a result of their beneficial interest in the
company preferred securities. The guarantee agreement will be qualified as an
indenture under the Trust Indenture Act. The Bank of New York will act as
guarantee trustee under the guarantee for the purposes of compliance with the
Trust Indenture Act. It will hold the guarantee for the benefit of the holders
of the corresponding company preferred securities of TECO Funding Company III,
LLC and, indirectly, the holders of the corresponding trust preferred securities
of TECO Capital Trust III.
We have summarized the material provisions of the guarantee below.
GENERAL
We will promise to pay the guarantee payments to the holders of the company
preferred securities, as and when due, regardless of any defense, right of
set-off or counterclaim that TECO Funding Company III, LLC may have or assert,
other than the defense of payment. The guarantee payments will rank equal to the
corresponding trust preferred notes. The guarantee payments include the
following, to the extent not paid by or on behalf of TECO Funding Company III,
LLC:
- any accumulated and unpaid distributions required to be paid on the
company preferred securities;
- the redemption price for any company preferred securities called for
redemption; and
- upon a voluntary or involuntary dissolution, winding up or liquidation of
TECO Funding Company III, LLC (unless the trust preferred notes are
distributed to the holders of the company preferred securities), the
greater of:
- the liquidation distribution payable on the company preferred
securities; and
- the amount of assets of TECO Funding Company III, LLC remaining
available for distribution to holders of company preferred securities.
Our obligation to make a guarantee payment may be satisfied either by our
direct payment of the required amounts to the holders of the company preferred
securities or by causing TECO Funding Company III, LLC to pay them.
The guarantee will be an irrevocable guarantee of the obligations of TECO
Funding Company III, LLC under the company preferred securities.
All of our consolidated operating assets are owned by our subsidiaries, and
most are owned by regulated utilities. Accordingly, our obligations under the
guarantee will be effectively subordinated to all existing and future
liabilities of our subsidiaries and could be affected by regulatory limitations.
See "DESCRIPTION OF THE TRUST PREFERRED NOTES -- General" and "-- Ranking of the
Trust Preferred Notes." Except as otherwise provided in the applicable
prospectus supplement, we and our subsidiaries are not limited in the amount of
secured or unsecured debt that we may have outstanding.
Our obligations described in this prospectus and any accompanying
prospectus supplement, through the guarantee agreement, limited liability
company agreement, trust agreement, trust preferred notes, and supplemental
indenture, taken together, constitute our full, irrevocable and unconditional
guarantee of payments due on the company preferred securities. No single
document standing alone or operating in conjunction with fewer than all of the
other documents constitutes the guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the obligations of TECO Funding Company III, LLC
under the company preferred securities. See "TECO CAPITAL TRUST III," "TECO
FUNDING COMPANY III, LLC," "DESCRIPTION OF THE TRUST PREFERRED SECURITIES,"
"DESCRIPTION OF THE COMPANY PREFERRED SECURITIES," and "DESCRIPTION OF THE TRUST
PREFERRED NOTES."
STATUS OF THE GUARANTEE
The guarantee will constitute our unsecured obligation and may be senior
to, on a parity with, or subordinated to our other indebtedness as described in
the applicable prospectus supplement.
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The guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against us
as the guarantor to enforce its rights under the guarantee without first suing
anyone else). The guarantee will be held for the benefit of the holders of the
company preferred securities. The guarantee will be discharged only by payment
of the guarantee payments in full (to the extent not paid by TECO Funding
Company III, LLC) or by distribution of the trust preferred notes to the holders
of the company preferred securities. The guarantee does not place a limitation
on the amount of additional senior indebtedness, if any, that we may incur. We
expect from time to time to incur additional indebtedness constituting senior
indebtedness.
AMENDMENTS AND ASSIGNMENT
The guarantee may be amended without the prior approval of any holders of
the related company preferred securities if the change does not adversely affect
the rights of those holders in any material respect. Otherwise, an amendment
will require prior approval of holders of a majority of the aggregate
liquidation amount of the related outstanding company preferred securities. The
manner of obtaining the required approval will be as set forth under
"DESCRIPTION OF THE COMPANY PREFERRED SECURITIES -- Voting Rights; Amendment of
Limited Liability Company Agreement." All guarantees and agreements contained in
the guarantee agreement will bind our successors, assigns, receivers, trustees
and representatives and will benefit the holders of the company preferred
securities then outstanding.
EVENTS OF DEFAULT
We will be in default under the guarantee agreement if (a) we do not make
required payments or (b) we are notified that we have not performed some other
obligation and have not cured that failure within 90 days.
The holders of a majority in aggregate liquidation amount of the related
company preferred securities have the right to:
- direct the time, method and place of conducting any proceeding for any
remedy available to the guarantee trustee in respect of the guarantee
agreement; or
- direct the exercise of any power conferred upon the guarantee trustee
under the guarantee agreement.
Holders of a majority in aggregate liquidation amount of the related
company preferred securities also have the right to waive any past event of
default and its consequences.
The guarantee agreement provides that, to the fullest extent permitted by
law, without the need for any other action of any person, including the
guarantee trustee or any other holder of the trust preferred securities or
company preferred securities, each holder of trust preferred securities or
company preferred securities will be entitled to enforce the rights of the
holders of the company preferred securities under the guarantee agreement.
As guarantor, we are required to file annually with the guarantee trustee a
certificate stating whether or not we are in compliance with all the conditions
and covenants applicable to us under the guarantee agreement.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee promises to perform only the duties that are
specifically set forth in the guarantee agreement, other than during the
occurrence and continuance of a default by us in performance of the guarantee.
After we default and while the default continues, the guarantee trustee must
exercise the same degree of care and skill as a prudent person would exercise or
use in the conduct of his or her own affairs. Subject to this provision, the
guarantee trustee is under no obligation to exercise any of the powers vested in
it by the guarantee agreement at the request of any holder of trust preferred
securities or company preferred securities unless it is offered indemnity
satisfactory to it against the costs, expenses and liabilities that it might
incur by doing so.
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TERMINATION OF THE GUARANTEE
The guarantee will terminate upon full payment of the redemption price of
the related company preferred securities, upon full payment of the amounts
payable upon liquidation of TECO Funding Company III, LLC or upon the later to
occur of distribution of trust preferred notes to the holders of the company
preferred securities or to holders of the trust preferred securities. The
guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of the related company preferred securities must
restore payment of any sums paid under the company preferred securities or the
guarantee.
GOVERNING LAW
The guarantee agreement will be governed by and construed in accordance
with the laws of the State of New York.
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RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, COMPANY
PREFERRED SECURITIES, THE TRUST PREFERRED NOTES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
We will irrevocably guarantee payments of distributions and other amounts
due on the company preferred securities as and to the extent described above
under "DESCRIPTION OF THE GUARANTEE." Taken together, our obligations under each
series of trust preferred notes, the related supplemental indenture, the
indenture, the related limited liability company agreement, the related trust
agreement and the related guarantee agreement provide, in the aggregate, a full,
irrevocable and unconditional guarantee of payments of distributions and other
amounts due on the related company preferred securities. No single document
standing alone or operating in conjunction with fewer than all of the other
documents constitutes the full guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the obligations of TECO Funding Company III, LLC
under the company preferred securities.
If and to the extent that we do not make payments on a series of trust
preferred notes, TECO Funding Company III, LLC will not pay distributions or
other amounts due on the related company preferred securities. In that event,
the remedy for a holder of company preferred securities is to institute a legal
proceeding directly against us to enforce payment of the distributions to the
holder or to seek such holder's rights under the guarantee. Our obligations
under the guarantee will rank senior to, on parity with or subordinate to our
other indebtedness, as described in the applicable prospectus supplement.
SUFFICIENCY OF PAYMENTS
As long as all payments are made when due on each series of trust preferred
notes, those payments will be sufficient to cover distributions and other
payments due on the related company preferred securities. This is primarily
because:
- the aggregate principal amount of each series of trust preferred notes
will be equal to the sum of the aggregate stated liquidation amount of
the related company preferred securities and common securities and the
aggregate principal amount of each series of company preferred securities
will be equal to the sum of the aggregate stated liquidation amount of
the related trust preferred securities;
- the interest rate and interest and other payment dates on each series of
trust preferred notes will match the distribution rate and distribution
and other payment dates for the related company preferred securities;
- we have promised to pay any and all costs, expenses and liabilities of
TECO Capital Trust III except the trust's obligations under its trust
preferred securities;
- we have promised to pay any and all costs, expenses and liabilities of
TECO Funding Company III, LLC except the limited liability company's
obligations under its securities;
- the trust agreement provides that TECO Capital Trust III will not engage
in any activity that is not consistent with the limited purposes of TECO
Capital Trust III; and
- the limited liability company agreement provides that TECO Funding
Company III, LLC will not engage in any activity that is inconsistent
with the limited purposes of TECO Funding Company III, LLC.
We have the right to set-off any payment we are otherwise required to make
under the indenture if and to the extent we have already made, or are
concurrently making, a payment under the guarantee agreement.
In the event of payment defaults under, or acceleration of, any senior
indebtedness, the subordination provisions of the applicable supplemental
indenture will provide that no payments may be made in respect
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of the trust preferred notes until the senior indebtedness has been paid in full
or any payment default thereunder has been cured or waived.
ENFORCEMENT RIGHTS OF HOLDERS OF TRUST PREFERRED SECURITIES
A holder of any trust preferred security may institute a legal proceeding
directly against us to enforce its rights under the guarantee agreement without
first instituting a legal proceeding against the guarantee trustee, TECO Capital
Trust III, TECO Funding Company III, LLC or anyone else.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of TECO Capital Trust III
involving the liquidation of the assets that it holds, the holders of the trust
preferred securities will be entitled to receive the liquidation distribution in
cash, out of assets of TECO Capital Trust III (after satisfaction of creditors
of TECO Capital Trust III as provided by applicable law). If we become subject
to any voluntary or involuntary liquidation or bankruptcy, the property trustee,
as holder of the trust preferred notes, would be one of our creditors. The
property trustee would be subordinated in right of payment to all of our
indebtedness that is designated as senior, but it would be entitled to receive
payment in full of principal and interest before payment of any of our
indebtedness made subordinate to the trust preferred notes and before our
stockholders receive payments or distributions. We are the guarantor under the
guarantee agreement and under the indenture, and as borrower, have agreed to pay
all costs, expenses and liabilities of TECO Capital Trust III (other than the
obligations of TECO Capital Trust III to the holders of its trust preferred
securities). Accordingly, in the event of our liquidation or bankruptcy the
positions of a holder of trust preferred securities and of a holder of trust
preferred notes are expected to be substantially the same relative to our other
creditors and our stockholders.
BOOK-ENTRY ISSUANCE
The trust preferred securities, company preferred securities and
corresponding series of trust preferred notes may be issued in whole or in part
in the form of one or more global securities that will be deposited with, or on
behalf of, the depositary identified in the prospectus supplement relating to
that series. The depositary will be DTC unless otherwise indicated in the
applicable prospectus supplement. Book-entry securities may be issued only in
fully registered form and in either temporary or permanent form. Unless and
until it is exchanged for the individual securities that it represents, a
book-entry security may not be transferred except as a whole to a nominee of the
depositary or to a successor depositary or any nominee of the successor.
DTC has advised us that it is a limited purpose trust company organized
under the New York Banking Law, a "banking organization" within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934. DTC holds securities that its participants
deposit with it. DTC also facilitates the settlement among participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Direct participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. DTC is owned
by a number of its participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain custodial relationships with participants, either directly or
indirectly. The rules applicable to DTC and its participants are on file with
the SEC.
Purchases of book-entry securities within the DTC system must be made by or
through direct participants, which will receive a credit for the book-entry
securities on DTC's records. The ownership interest of each actual purchaser of
each book-entry security (Beneficial Owner) is in turn to be recorded
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on the direct and indirect participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchases, but Beneficial Owners
are expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the direct
or indirect participants through which the Beneficial Owners purchased
book-entry securities. Transfers of ownership interests in the book-entry
securities are to be accomplished by entries made on the books of participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in book-entry securities,
except in the event that use of the book-entry system is discontinued. The laws
of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a global security.
To facilitate subsequent transfers, all book-entry securities deposited by
participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of book-entry securities with DTC and their registration
in the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the book-entry securities; DTC's
records reflect only the identity of the direct participants to whose accounts
such book-entry securities are credited, which may or may not be the Beneficial
Owners. The participants will remain responsible for keeping account of their
holdings on behalf of their customers.
We expect that conveyance of notices and other communications by DTC to
direct participants, by direct participants to indirect participants, and by
direct participants and indirect participants to Beneficial Owners and the
voting rights of direct participants, indirect participants and 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.
Redemption notices shall be sent to Cede & Co. as the registered holder of
the book-entry securities.
Although voting with respect to the book-entry securities is limited to the
holders of record of the book-entry securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to book-entry securities. Under its usual procedures, DTC would mail an
omnibus proxy to the relevant trustee as soon as possible after the record date.
The omnibus proxy assigns Cede & Co.'s consenting or voting rights to those
direct participants to whose accounts such book-entry securities are credited on
the record date (identified in a listing attached to the omnibus proxy).
Distribution payments on the trust preferred securities, company preferred
securities or the trust preferred notes held in book-entry form will be made to
DTC. We have been advised that DTC's practice is to credit direct participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payments on such payment date. Payments by participants to
Beneficial Owners will be governed by standing instructions and customary
practices and will be the responsibility of such participant and not of DTC, the
relevant trustee, TECO Funding Company III, LLC (as applicable), TECO Capital
Trust III (as applicable) or us, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment on book-entry
securities to DTC is our responsibility or the responsibility of the limited
liability company or the relevant trustee (as applicable), disbursement of such
payments to direct participants is the responsibility of DTC and disbursements
of such payments to the Beneficial Owners is the responsibility of direct and
indirect participants.
Unless otherwise specified in the prospectus supplement, if a depositary
for a series of trust preferred securities is at any time unwilling, unable or
ineligible to continue as depositary and TECO Funding Company III, LLC does not
appoint a successor depositary within 90 days, the trust will issue individual
trust preferred securities of such series in exchange for the global security
representing that series of trust preferred securities. In addition, TECO
Funding Company III, LLC may at any time and in its sole discretion, subject to
any limitations described in the prospectus supplement relating to the trust
preferred securities, determine not to have any trust preferred securities of a
series represented by one or more global securities and, in that event, will
issue individual trust preferred securities of that series in exchange for the
global security or securities representing that series of trust preferred
securities. Further, if we so
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specify with respect to trust preferred securities of a series, an owner of a
beneficial interest in a global security representing trust preferred securities
of that series may, on terms acceptable to us, the property trustee and the
depositary for such global security, receive individual trust preferred
securities of that series in exchange for that owner's beneficial interests,
subject to any limitations described in the prospectus supplement relating to
those trust preferred securities. In that instance, a Beneficial Owner in the
global security will be entitled to physical delivery of individual trust
preferred securities of the series represented by the global security equal in
liquidation amount to such beneficial interest and to have such trust preferred
securities registered in its name. Individual trust preferred securities of the
series so issued will be issued in the denominations described in the related
prospectus supplement.
If TECO Capital Trust III issues certificated trust preferred securities,
they will be registered in the name of the security holder. The trust preferred
securities may be transferred or exchanged, based on administrative procedures
in the trust agreement, without the payment of any service charge (other than
any tax or other governmental charge) by contacting the registrar and transfer
agent, as specified in the applicable prospectus supplement.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be accurate, but we assume no
responsibility for the accuracy thereof. Neither we nor TECO Funding Company
III, LLC or TECO Capital Trust III have any responsibility for the performance
by DTC or its participants of their respective obligations as described herein
or under the rules and procedures governing their respective operations.
USE OF PROCEEDS
TECO Capital Trust III will use all of the proceeds it receives from the
sale of its trust preferred securities to purchase from TECO Funding Company
III, LLC the corresponding company preferred securities. TECO Funding Company
III, LLC will use all of the proceeds it receives from the sale of its company
preferred securities and common securities to purchase from us the corresponding
trust preferred notes. Except as otherwise described in the prospectus
supplement, we intend to use the proceeds from our sale of the trust preferred
notes to TECO Funding Company III, LLC for general corporate purposes, which may
include investment in subsidiaries, working capital, capital expenditures,
repayment of debt and other business opportunities.
PLAN OF DISTRIBUTION
At our direction, TECO Capital Trust III may sell the trust preferred
securities in any one or more of the following ways from time to time: (a) to or
through underwriters or dealers; (b) directly to one or more purchasers; or (c)
through agents. The applicable prospectus supplement will set forth with respect
to the securities being offered the terms of the offering, including the name or
names of any underwriters, the purchase price of the securities and the proceeds
to TECO Capital Trust III from such sale, any underwriting discounts and other
items constituting underwriters' compensation, any initial public offering
price, any discounts or concessions allowed or reallowed or paid to dealers, and
any securities exchange on which the securities may be listed. Only underwriters
so named in the applicable prospectus supplement are deemed to be underwriters
in connection with the securities being offered.
If underwriters are used in the sale, the securities will be acquired by
the underwriters for their own account and may be resold 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
obligations of the underwriters to purchase those securities will be subject to
certain conditions precedent, and the underwriters will be obligated to purchase
all the securities of the series offered by us and/or TECO Capital Trust III and
described in the applicable prospectus supplement if any of those securities are
purchased. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
38
Securities may also be sold directly by TECO Capital Trust III at our
direction or through agents designated by us from time to time. Any agent
involved in the offering and sale of the securities in respect of which this
prospectus is delivered will be named, and any commissions payable by us and/or
TECO Capital Trust III to such agent will be set forth in the applicable
prospectus supplement. Unless otherwise indicated in the prospectus supplement,
the agent will be acting on a best efforts basis for the period of its
appointment.
If so indicated in the applicable prospectus supplement, we and/or TECO
Capital Trust III will authorize agents, underwriters or dealers to solicit
offers by certain institutional investors to purchase securities providing for
payment and delivery on a future date specified in the prospectus supplement.
There may be limitations on the minimum amount which may be purchased by any
institutional investor or on the portion of the aggregate principal amount of
the particular securities which may be sold pursuant to those arrangements.
Institutional investors to which those offers may be made, when authorized,
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and such other
institutions as may be approved by us and/or TECO Capital Trust III. The
obligations of any of those purchasers under such delayed delivery and payment
arrangements will not be subject to any conditions except (a) the purchase by an
institution of the particular securities shall not at the time of delivery be
prohibited under the laws of any jurisdiction in the United States to which such
institution is subject, and (b) if the particular securities are being sold to
underwriters, TECO Capital Trust III shall have sold to those underwriters all
of those securities other than the securities covered by those arrangements.
Underwriters will not have any responsibility in respect of the validity of
those arrangements or the performance by us or those institutional investors
under those arrangements.
If the prospectus supplement or term sheet so indicates, we will authorize
agents, underwriters or dealers to solicit offers from institutions to purchase
stock purchase units from us at the public offering price set forth in the
prospectus supplement or term sheet consisting of trust preferred securities and
stock purchase or delayed delivery contracts providing for payment and delivery
on a specified date in the future. The contracts will be subject only to those
conditions set forth in the prospectus supplement or term sheet, and the
prospectus supplement or term sheet will set forth the commission payable for
solicitation of the contracts.
If any underwriter or any selling group member intends to engage in
stabilizing, syndicate short covering transactions, penalty bids or any other
transaction in connection with the offering of securities that may stabilize,
maintain, or otherwise affect the price of those securities, that intention and
a description of those transactions will be described in the applicable
prospectus supplement.
Agents and underwriters may be entitled under agreements entered into with
us and/or TECO Capital Trust III and TECO Funding Company III, LLC to
indemnification by us against certain civil liabilities, including liabilities
under the Securities Act of 1933, or to contribution with respect to payments
which the agents or underwriters may be required to make in respect thereof.
Agents and underwriters may engage in transactions with, or perform services
for, us and our subsidiaries in the ordinary course of business.
LEGAL MATTERS
Unless otherwise indicated in the applicable prospectus supplements,
certain legal matters in connection with the securities will be passed upon (a)
for us by Palmer & Dodge LLP, Boston, Massachusetts, (b) for TECO Capital Trust
III (with respect to the validity of the trust preferred securities under
Delaware law) by Richards, Layton & Finger, P.A., Wilmington, Delaware, special
Delaware counsel to us and TECO Capital Trust III, and (c) for TECO Funding
Company III, LLC (with respect to the validity of the company preferred
securities under Delaware law) by Richards, Layton & Finger, P.A., Wilmington,
Delaware, special Delaware counsel to us and TECO Funding Company III, LLC.
39
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K of TECO Energy for the year ended
December 31, 2001 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent certified public accountants, given on
the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any of these documents at the
SEC's public reference room at 450 Fifth Street, N.W. Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference room. Our SEC filings are also available to the public on the SEC's
website at http://www.sec.gov. Copies of certain information filed by us with
the SEC are also available on our website at http://www.tecoenergy.com. Our
website is not part of this prospectus.
We and TECO Capital Trust III and TECO Funding Company III, LLC filed a
registration statement on Form S-3 with the SEC covering the trust preferred
notes, company preferred securities and trust preferred securities. For further
information on us, TECO Capital Trust III, TECO Funding Company III, LLC, the
trust preferred notes, the securities of TECO Funding Company III, LLC and the
securities of TECO Capital Trust III, you should refer to the registration
statement and its exhibits. This prospectus discusses material provisions of the
indenture under which the trust preferred notes will be issued. Because the
prospectus may not contain all the information that you may find important, you
should review the full text of the indenture and other documents we have
incorporated by reference into the registration statement.
The SEC allows us to "incorporate by reference" the information that we
file with the SEC, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 until all of the securities are sold:
- our Annual Report on Form 10-K for the fiscal year ended December 31,
2001; and
- our Current Reports on Form 8-K filed April 22, 2002, January 24, 2002,
January 15, 2002, January 11, 2002 and January 9, 2002.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Director of Investor Relations
TECO Energy, Inc.
702 North Franklin Street
Tampa, Florida 33602
(813) 228-4111
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement or term sheet. We have not
authorized anyone to provide you with different information. We are not making
an offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any supplement or
term sheet is accurate as of any date other than the date on the front of these
documents.
40
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses in connection with the offering of the securities will be borne by
the registrant and are estimated as follows:
SEC registration fee........................................ $ 110,400
Rating agency fees.......................................... $ 450,000
Trustee's fees and expenses................................. $ 20,000
Accountant's fees and expenses.............................. $ 100,000
Legal fees and expenses..................................... $ 400,000
Printing costs.............................................. $ 240,000
Blue Sky fees and expenses.................................. $ 20,000
Miscellaneous expenses...................................... $ 40,000
----------
Total............................................. $1,380,400
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
TECO Energy, Inc.
Our bylaws provide that we will indemnify to the full extent permitted by
the law any person who is or was a party to any threatened, pending or completed
proceeding, because such person is or was a director or officer for us or is or
was serving at our request as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise. The indemnification
provided for in our bylaws is expressly not exclusive of all other rights to
which the person may be entitled as a matter of law.
Section 607.0850 of the Florida Business Corporation Act provides that a
corporation may indemnify each person who was or is a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving,
at the request of the corporation, as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against liability, expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with any such action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the registrant, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful; provided, however, no
indemnification shall be made in connection with any proceeding brought by or in
the right of the registrant where the person involved is adjudged to be liable
to the corporation, except to the extent approved by a court.
We maintain an insurance policy on behalf of our directors and officers,
covering certain liabilities that may be incurred by the directors and officers
when acting in their capacities as such.
If the securities are sold to or through underwriters or agents, the
agreement with such underwriters or agents will provide that such underwriters
or agents will indemnify our directors and officers against certain liabilities,
including certain liabilities under the Securities Act.
TECO Capital Trust III
Under the Amended and Restated Trust Agreement for TECO Capital Trust III,
TECO Funding Company III, LLC will agree, to the fullest extent permitted by
applicable law, to indemnify and hold harmless The Bank of New York (as Property
Trustee), and The Bank of New York (Delaware) as Delaware Trustee and any
affiliate, officer, director, shareholder, employee, representative or agent of
any of them, and any employee or agent of the Trust or its affiliates, from and
against any loss, damage,
II-1
liability, tax, penalty, expense or claim of any kind or nature incurred by any
of them by reason of the creation, operation or termination of the Trust or any
act or omission performed or omitted by any of them in good faith on behalf of
the Trust and in a manner reasonably believed by them to be within the scope of
authority conferred by the Amended and Restated Trust Agreement, except that
none of them will be entitled to be indemnified for any loss, damage or claim
incurred by them by reason of acts or omissions constituting gross negligence or
willful misconduct by any of them.
TECO Funding Company III, LLC
Under the Amended and Restated Limited Liability Company Agreement, TECO
Funding Company III, LLC will agree, to the fullest extent permitted by
applicable law, to indemnify and hold harmless its directors and officers from
and against any loss, damage, claim or expense incurred by any of them by reason
of any act or omission performed or omitted by such director or officer in good
faith on behalf of the Company and in a manner reasonably believed by such
director or officer to be within the scope of authority conferred on such
director or officer by the Amended and Restated Limited Liability Company
Agreement, other than acts or omissions determined by a court of competent
jurisdiction to have constituted gross negligence or willful misconduct of any
such director or officer. The indemnity provided will be provided out of and to
the extent of any director and officer insurance policy and no securityholder of
TECO Funding Company III, LLC will have any personal liability on account of the
indemnity provided.
ITEM 16. EXHIBITS
See Exhibit Index immediately following the signature page hereof.
ITEM 17. UNDERTAKINGS
(a) We hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by us pursuant to Section 13 or 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
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(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) We hereby undertake that, for purposes of determining any liability
under the Securities Act, each filing of our annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing
of any employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) We hereby undertake to provide to the underwriter at the closing
specified in the underwriting agreements, certificates in such denominations and
registered in such names as required by the underwriter to permit prompt
delivery to each purchaser.
(d) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the provisions referred to in Item 15 hereof, or otherwise, we have been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by us of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, we
will, unless in the opinion of our counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by us is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(e) We hereby undertake that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 2 to this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida,
on May 3, 2002.
TECO ENERGY, INC.
By: /s/ GORDON L. GILLETTE
------------------------------------
Gordon L. Gillette
Senior Vice President -- Finance
and Chief Financial Officer
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated as of May 3, 2002.
SIGNATURE TITLE
--------- -----
* Chairman of the Board, President and Chief
----------------------------------------------------- Executive Officer (Principal Executive
R. D. Fagan Officer)
/s/ G. L. GILLETTE Senior Vice President-Finance and Chief
----------------------------------------------------- Financial Officer (Principal Financial
G. L. Gillette Officer)
* Vice President-Corporate Accounting and Tax
----------------------------------------------------- (Principal Accounting Officer)
S. A. Myers
* Director
-----------------------------------------------------
C. D. Ausley
* Director
-----------------------------------------------------
S. L. Baldwin
* Director
-----------------------------------------------------
J. L. Ferman, Jr.
* Director
-----------------------------------------------------
L. Guinot, Jr.
* Director
-----------------------------------------------------
I. D. Hall
* Director
-----------------------------------------------------
T. L. Rankin
* Director
-----------------------------------------------------
W.D. Rockford
* Director
-----------------------------------------------------
W. P. Sovey
* Director
-----------------------------------------------------
J. T. Touchton
II-4
SIGNATURE TITLE
--------- -----
* Director
-----------------------------------------------------
J. A. Urquhart
* Director
-----------------------------------------------------
J. O. Welch, Jr.
*By: /s/ G. L. GILLETTE
-----------------------------------------------------
G. L. Gillette
Attorney-in-Fact
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
TECO Capital Trust III certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 2 to this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tampa, State of Florida,
on May 3, 2002.
TECO Capital Trust III
(Registrant)
By: /s/ GORDON L. GILLETTE
------------------------------------
Gordon L. Gillette
Attorney-in-Fact
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
TECO Funding Company III, LLC certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this Amendment No. 2 to this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Tampa,
State of Florida, on May 3, 2002.
TECO Funding Company III, LLC
(Registrant)
By: TECO Energy, Inc.
as Member
By: /s/ GORDON L. GILLETTE
------------------------------------
Gordon L. Gillette
Senior Vice President -- Finance
and Chief Financial Officer
II-7
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
4.1 TECO Energy, Inc. Articles of Incorporation, as amended on
April 20, 1993. Filed as Exhibit 3 to TECO Energy, Inc.'s,
Quarterly Report on Form 10-Q for the quarter ended March
31, 1993 and incorporated herein by reference.
4.2 Bylaws of TECO Energy, Inc., as amended effective January
18, 2001. Filed as Exhibit 3.2 to the TECO Energy, Inc.'s
Annual Report on Form 10-K for the year ended December 31,
2000 and incorporated herein by reference.
4.3 Indenture dated as of August 17, 1998 between TECO Energy,
Inc. and The Bank of New York, as trustee. Filed as Exhibit
4 to TECO Energy, Inc.'s Amendment No. 1 to Registration
Statement on Form S-3 (No. 333-60819) filed with the
Commission on August 24, 1998 and incorporated herein by
reference.
4.4 Form of Supplemental Indenture. Previously filed.
4.5 Certificate of Trust of TECO Capital Trust III. Filed as
Exhibit 4.9 to TECO Energy, Inc.'s Registration Statement on
Form S-3 (No. 333-50808) and incorporated herein by
reference.
4.6 Trust Agreement of TECO Capital Trust III. Filed as Exhibit
4.10 to TECO Energy, Inc.'s Registration Statement on Form
S-3 (No. 333-50808) and incorporated herein by reference.
4.7 Form of Amended and Restated Trust Agreement for TECO
Capital Trust III. Previously filed.
4.8 Form of Preferred Security Certificate for TECO Capital
Trust III (incorporated by reference to Exhibit C of Exhibit
4.7).
4.9 Limited Liability Company Agreement of TECO Funding Company
III, LLC. Filed as Exhibit 4.15 to TECO Energy, Inc.'s
Registration Statement on Form S-3 (No. 333-50808) and
incorporated herein by reference.
4.10 By-Laws of TECO Funding Company III, LLC (incorporated by
reference to Annex C of Exhibit 4.11).
4.11 Form of Amended and Restated Limited Liability Company
Agreement of TECO Funding Company III, LLC. Previously
filed.
4.12 Form of TECO Energy, Inc. Guarantee Agreement for TECO
Funding Company III, LLC. Previously filed.
4.13 Form of TECO Energy, Inc. Note. (incorporated by reference
to Exhibit A of Exhibit 4.4).
4.14 Form of Preferred Security Certificate for TECO Funding
Company III, LLC (incorporated by reference to Annex F of
Exhibit 4.11).
5.1 Opinion of Palmer & Dodge LLP. Previously filed.
5.2 Opinion of Ropes & Gray. Previously filed.
5.3 Opinion of Richards, Layton & Finger, P.A. as to the
legality of the Preferred Securities to be issued by TECO
Capital Trust III and TECO Funding Company III, LLC.
Previously filed.
12.1 Computation of Ratio of Earnings to Fixed Charges.
Previously filed.
23.1 Consent of PricewaterhouseCoopers LLP. Previously filed.
23.2 Consent of Palmer & Dodge LLP (included in Exhibit 5.1).
23.3 Consent of Ropes & Gray (included in Exhibit 5.2).
23.4 Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5.3).
24.1 Power of Attorney (included on signature page of the initial
filing of this Registration Statement).
25.1 Statement of Eligibility of Trustee on Form T-1. Previously
filed.
25.2 Statement of Eligibility of Trustee on Form T-1 with respect
to the Amended and Restated Trust Agreement of TECO Capital
Trust III. Previously filed.
25.3 Statement of Eligibility of Trustee on Form T-1 with respect
to the Guarantee for the benefit of the holders of the
Preferred Securities of TECO Funding Company III, LLC.
Previously filed.