Dominion Power 2002 Annual Report Download - page 81

22 Company Obligated Mandatorily
Redeemable Preferred Securities of
Subsidiary Trusts
From 1997 through 2002, Dominion established five subsidiary
capital trusts that sold trust preferred securities that represented
preferred beneficial interests and 97 percent beneficial owner-
ship in the assets held by the capital trusts. In exchange for the
funds realized from the sale of the trust preferred securities
and common securities that represent the remaining 3 percent
beneficial ownership interest in the assets held by the capital
trust, Dominion issued various junior subordinated debt instru-
ments. The junior subordinated debt instruments constitute
100 percent of each capital trust’s assets. The trust must redeem
the trust preferred securities when the junior subordinated
notes are repaid at maturity or if redeemed prior to maturity.
The following table provides summary information about
the capital trusts and junior subordinated debt instruments
outstanding as of December 31, 2002:
79
Dominion ’02 Annual Report
In 2002, Virginia Power redeemed $139 million of junior
subordinated debt instruments held by Virginia Power Capital
Trust I. The trust redeemed all outstanding trust preferred secu-
rities for $135 million and redeemed $4 million of its common
securities held by Virginia Power.
Distribution payments on the trust preferred securities are
guaranteed by the respective company that issued the debt
instruments held by each trust, but only to the extent that the
trusts have funds legally and immediately available to make dis-
tributions. The trust’s ability to pay amounts when they are due
on the trust preferred securities is solely dependent upon the
payment of amounts by Dominion, Virginia Power or CNG
when they are due on the junior subordinated debt instruments.
If the payment on the junior subordinated notes is deferred, the
company that issued them may not make distributions related
to its capital stock, including dividends, redemptions, repur-
chases, liquidation payments or guarantee payments. Also,
during the deferral period, it may not make any payments or
redeem or repurchase any debt securities that are equal in right
of payment with, or subordinated to, the junior subordinated
debt instruments.
23Preferred Stock
Dominion is authorized to issue up to 20 million shares of pre-
ferred stock. Dominion issued 665,000 shares of Series A
mandatorily convertible preferred stock, liquidation preference
$1,000 per share, to Piedmont Share Trust (Piedmont Trust) in
connection with the formation of DFV and the issuance of
senior notes by DFV. Dominion is the beneficial owner of the
Piedmont Trust which is consolidated in the preparation of
Dominion’s Consolidated Financial Statements, thus eliminat-
ing these outstanding shares of preferred stock. See Note 30.
Virginia Power is authorized to issue up to 10 million shares
of preferred stock, $100 liquidation preference. Upon involun-
tary liquidation, dissolution or winding-up of Virginia Power,
each share is entitled to receive $100 per share plus accrued
dividends. Dividends are cumulative.
Holders of the outstanding preferred stock of Virginia
Power are not entitled to voting rights except under certain pro-
visions of the amended and restated articles of incorporation
and related provisions of Virginia law restricting corporate
action, or upon default in dividends, or in special statutory
proceedings and as required by Virginia law (such as mergers,
consolidations, sales of assets, dissolution and changes in voting
rights or priorities of preferred stock).
Trust
Preferred Common
Date Securities Securities
Established Capital Trusts Units Rate Amount Amount
(thousands) (millions)
December, 1997 Dominion Resources Capital Trust I(1) 250 7.83% $ 250 $ 8
January, 2001 Dominion Resources Capital Trust II(2) 12,000 8.4% 300 9
January, 2001 Dominion Resources Capital Trust III(3) 250 8.4% 250 8
October, 2001 Dominion CNG Capital Trust I(4) 8,000 7.8% 200 6
August, 2002 Virginia Power Capital Trust II(5) 16,000 7.375% 400 12
1,400
Unamortized discount (3)
Total at December 31, 2002 $1,397
Junior subordinated notes/debentures held as assets by each capital trust were as follows:
(1) $258 million—Dominion Resources, Inc. 7.83% Debentures due 12/1/2027.
(2) $309 million—Dominion Resources, Inc. 8.4% Debentures due 1/30/2041.
(3) $258 million—Dominion Resources, Inc. 8.4% Debentures due 1/15/2031.
(4) $206 million—CNG 7.8% Debentures due 10/31/2041.
(5) $412 million—Virginia Power 7.375% Debentures due 7/30/2042.