|
|
|
|
|
|
|
|
|
|
Twelve month period ended
|
|
|
|
December 31, 2011
|
|
September 30, 2012
|
|
Earnings coverage on long-term debt
(1)
|
|
|
2.7x
|
|
|
-1.1x
(2)
|
|
Notes:
-
(1)
-
Earnings
coverage on long-term debt on a net earnings basis is equal to net earnings before interest expense and income taxes, divided by
interest expense including capitalized interest. For purposes of calculating the earnings coverage ratios set forth herein, long-term debt includes the current portion of
long-term debt and does not include any amounts with respect to Notes that may be issued under this Prospectus Supplement.
-
(2)
-
The
Corporation would have required additional earnings of $483 million for the twelve months ended September 30, 2012, in order to achieve an
earnings coverage ratio of one-to-one for such period.
The
pro forma
earnings coverage ratio for the twelve month period ended December 31,
2011 and the twelve month period ended September 30, 2012, giving effect to this offering and the application of the net proceeds from the sale of the Notes (assuming this offering took place
on the first date of the respective twelve month period), would have been 2.6x and -1.1x, respectively.
The
earnings coverage ratios set forth above do not purport to be indicative of earnings coverage ratios for any future periods. The earnings coverage ratios have been calculated based
on information prepared in accordance with IFRS.
We
evaluate our performance using a variety of measures. Earnings coverage discussed above is not defined under IFRS and, therefore, should not be considered in isolation or as an
alternative to, or more meaningful than, net earnings as determined in accordance with IFRS as an indicator of our financial performance or liquidity. This measure is not necessarily comparable to a
similarly titled measure of another company. Net earnings has been calculated on a consistent basis for the twelve month period ended December 31, 2011 and the twelve month period ended
September 30, 2012.
CERTAIN INCOME TAX CONSIDERATIONS
The following summary is of a general nature only and is not intended to be, and should not be construed to be, legal or tax advice to
any prospective investor and no representation with respect to the tax consequences to any particular investor is made. Accordingly, prospective investors should consult with their own tax advisors
for advice with respect to the income tax consequences to them having regard to their own particular circumstances, including any consequences of an investment in the Notes arising under state,
provincial or local tax laws in the United States or Canada or tax laws of jurisdictions outside the United States or Canada.
Certain Canadian Federal Income Tax Considerations
In the opinion of McCarthy Tétrault LLP, Canadian tax counsel to the Corporation, the following summary, as of
the date hereof, describes the principal Canadian federal income tax considerations
S-13
Table of Contents
generally
applicable under the provisions of the Tax Act to a prospective purchaser of Notes pursuant to this Prospectus Supplement and the accompanying Prospectus who, at all relevant times,
for purposes
of the Tax Act and any applicable tax treaty, is neither resident nor deemed to be resident in Canada, deals with us at arm's length and does not use or hold and is not deemed to use or hold a
Note in carrying on business in Canada (a "
Non-Resident Holder
"). This summary is based on the current provisions of the
Tax Act and the regulations thereunder, proposed amendments to the Tax Act and the regulations thereunder publicly announced prior to the date of this Prospectus Supplement
(the "
Proposed Amendments
") and counsel's understanding of the current published administrative practices of the Canada Revenue Agency in effect
as of the date hereof. This summary is not exhaustive of all possible Canadian federal income tax considerations applicable to a Non-Resident Holder and does not anticipate any changes in
law or administrative practice, nor does it take into account provincial, territorial or foreign tax considerations, which may differ significantly from those discussed herein. Special rules, which
are not discussed below, may apply to a Non-Resident Holder that is an insurer which carries on business in Canada and elsewhere.
Under
the Tax Act the payment of interest, principal or premium, if any, to a Non-Resident Holder of a Note will be exempt from Canadian withholding tax. No other
Canadian taxes on income or capital gains will be payable under the Tax Act in respect of the acquisition, holding, redemption or disposition of a Note by a Non-Resident Holder, or
the receipt of interest, principal or premium thereon by a Non-Resident Holder solely as a consequence of such acquisition, holding, redemption or disposition of a Note.
Certain U.S. Federal Income Tax Considerations
The following is a summary of the principal U.S. federal income tax consequences of the acquisition, ownership and disposition
of a Note by an initial purchaser thereof who is a U.S. Holder (as hereinafter defined) who purchases the Note for cash at its "issue price" (the first price at which a
substantial amount of the Notes is sold for cash, excluding sales to bond houses, brokers, or similar persons acting in the capacity of underwriters, placement agents or wholesalers) and who will hold
the Note as a "capital asset" within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the "
Code
"). This
summary is intended for general information only and does not address all potentially relevant U.S. federal income tax matters.
This
summary does not address the tax consequences to U.S. Holders subject to special provisions of the Code including, without limitation, banks, financial institutions,
tax-exempt organizations, insurance companies, regulated investment companies, holders subject to the alternative minimum tax, certain former citizens or residents of the
United States, dealers in securities or foreign currencies, traders in securities, holders holding Notes as part of a "hedge", "straddle", "conversion transaction" or other integrated
transaction and holders with a "functional currency" other than the U.S. dollar. This summary also does not cover any state, local or foreign tax consequences. This summary is based upon
provisions of the Code, Treasury Regulations, rulings and judicial decisions in effect on the date hereof, all of which are subject to change (possibly with retroactive effect) and differing
interpretations, so as to result in U.S. federal income tax consequences different from those described herein.
As
used herein, the term "
U.S. Holder
" means a beneficial owner of a Note that is (i) an individual citizen or resident of
the United States, (ii) a corporation, or other entity treated as a corporation for U.S. federal income tax purposes, created or organized under the laws of the
United States or any political subdivision thereof, (iii) an estate the income of which is subject to U.S. federal income tax without regard to its source, or (iv) a trust
if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all
substantial decisions of the trust or if the trust has made a valid election to be treated as a United States person.
S-14
Table of Contents
If
a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds Notes, the U.S. federal income tax treatment of a partner in
the partnership will depend on the status of the partner and the activities of the partnership. Partners in partnerships (or other entities treated as partnerships for U.S. federal
income tax purposes) holding Notes should consult their tax advisors regarding the tax consequences of the acquisition, ownership or disposition of the Notes.
Payments of Interest
Interest on the Notes will generally be taxable to a U.S. Holder as ordinary income at the time received or accrued, in
accordance with such holder's method of accounting for U.S. federal income tax purposes. Such interest will constitute income from sources outside the United States and will generally be
treated as "passive category income" (or, in the case of certain U.S. Holders, as "general category income") for U.S. foreign tax credit limitation purposes. The rules governing
U.S. foreign tax credits are complex. Prospective purchasers of Notes should consult their tax advisors regarding the availability of U.S. foreign tax credits in their particular
circumstances.
Sale, Exchange, Retirement or Redemption of Notes
Upon the sale, exchange, retirement, redemption or other taxable disposition of a Note, a U.S. Holder generally will recognize
U.S. source gain or loss equal to the difference between the amount realized on such sale, exchange, retirement or redemption (other than amounts received that are attributable to accrued and
unpaid interest, which amounts will be taxable as ordinary income to the extent not previously included in income) and such U.S. Holder's adjusted tax
basis in the Note, which generally is its cost. Such gain or loss generally will constitute capital gain or loss and will be long-term capital gain or loss if the Note was held by such
U.S. Holder for more than one year. Long-term capital gain of non-corporate U.S. Holders, including individuals, is generally eligible for reduced rates of
taxation. The deductibility of capital losses is subject to limitations.
Information Reporting and Backup Withholding
In general, payments of interest and principal on and the proceeds from sales of Notes held by a U.S. Holder will be required to
be reported to the IRS unless the U.S. Holder is a corporation or other exempt recipient and, when required, demonstrates this fact. In addition, a U.S. Holder that is not an exempt
recipient may be subject to backup withholding of U.S. federal income tax on such payments unless it provides a taxpayer identification number and otherwise complies with applicable
certification requirements. The amount of any backup withholding from a payment to a U.S. Holder generally will be allowed as a credit against such U.S. Holder's U.S. federal
income tax liability and may entitle such U.S. Holder to a refund, provided that the required information is furnished to the IRS in a timely manner. Holders should consult their tax advisors
regarding the application of backup withholding, the availability of an exemption from backup withholding and the procedure for obtaining such an exemption, if available.
Information with Respect to Foreign Financial Assets
Individuals that own "specified foreign financial assets" with an aggregate value in excess of US$50,000 are generally required to file
an information report with respect to such assets with their tax returns. "Specified foreign financial assets" include any financial accounts maintained by foreign financial institutions, as well as
any of the following, but only if they are not held in accounts maintained by financial institutions: (i) stocks and securities issued by non U.S. persons, (ii) financial
instruments and contracts held for investment that have non U.S. issuers or counterparties, and (iii) interests in foreign entities. The Notes may be subject to these rules. Persons
required to file U.S. tax returns that are individuals are urged to consult their tax advisers regarding the application of this legislation to their ownership of the Notes.
S-15
Table of Contents
UNDERWRITING (CONFLICTS OF INTEREST)
We intend to offer the Notes through the underwriters named below for whom Citigroup Global Markets Inc., HSBC Securities
(USA) Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated (collectively, the "
Representatives
") are acting as representatives.
Subject to the terms and conditions contained in the underwriting agreement dated the date of this Prospectus Supplement, each underwriter has severally agreed to purchase, and we have agreed to sell
to such underwriter, the principal amount of Notes set forth opposite the underwriter's name.
|
|
|
|
|
|
Underwriter
|
|
Principal Amounts of Notes
|
|
Citigroup Global Markets Inc.
|
|
US$
|
100,000,000
|
|
HSBC Securities (USA) Inc.
|
|
|
100,000,000
|
|
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
|
|
|
100,000,000
|
|
Mitsubishi UFJ Securities (USA), Inc.
|
|
|
50,000,000
|
|
RBS Securities Inc.
|
|
|
50,000,000
|
|
|
|
|
|
|
Total
|
|
US$
|
400,000,000
|
|
|
|
|
|
In
the underwriting agreement, the underwriters have severally agreed, subject to the terms and conditions set forth therein, to purchase all the Notes offered under this Prospectus
Supplement if any of the Notes are purchased. In the event of default by an underwriter, the underwriting agreement provides that, in certain circumstances, purchase commitments of the
non-defaulting underwriters may be increased or the underwriting agreement may be terminated. The obligations of the underwriters under the underwriting agreement may also be terminated
upon the occurrence of certain stated events.
The
underwriting agreement provides that the obligations of the underwriters to purchase the Notes included in this offering are subject to approval of legal matters by counsel and to
other conditions.
The
underwriters propose to offer the Notes directly to the public at the public offering price set forth on the cover page of this Prospectus Supplement and to dealers at the public
offering price, less a concession not to exceed 0.400% of the principal amount of the Notes. The underwriters may allow, and dealers may re-allow a concession not to exceed 0.200% of the
principal amount of the Notes on sales to other dealers. After the initial offering of the Notes to the public, the Representatives may change the public offering price and concessions.
The
following table shows the underwriting commission that we will pay to the underwriters in connection with this offering (expressed as a percentage of the principal amount of
the Notes).
|
|
|
|
|
|
|
Paid by TransAlta
|
|
Per Note
|
|
|
0.650%
|
|
In
connection with this offering, the Representatives may purchase and sell Notes in the open market. These transactions may include over-allotment, syndicate covering
transactions and stabilizing transactions. Over-allotment involves syndicate sales of the Notes in excess of the principal amount of the Notes to be purchased by the underwriters in this
offering, which creates a syndicate short position. Syndicate covering transactions involve purchases of the Notes in the open market after the distribution has been completed in order to cover
syndicate short positions. Stabilizing transactions consist of certain bids or purchases of the Notes made for the purpose of preventing or retarding a decline in the market price of the Notes while
this offering is in progress.
S-16
Table of Contents
The
underwriters may also impose a penalty bid. Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the Representatives, in covering
syndicate short positions or making stabilizing purchases, repurchases Notes originally sold by that syndicate member.
As
a result of these activities, the market price of the Notes offered under this Prospectus Supplement may be higher than the price that otherwise might exist in the open market. If
these activities are commenced, they may be discontinued by the underwriters at any time without notice. The underwriters may carry out these transactions in the
over-the-counter market or otherwise.
We
estimate that our total expense for this offering will be approximately US$700,000 (not including the underwriting commission).
Certain
of the underwriters and their respective affiliates have in the past performed, and may in the future perform, various financial advisory, investment banking and commercial
lending service for us and our affiliates in the ordinary course of business, for which they have received and will receive customary fees and commissions.
In
addition, in the ordinary course of their business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively trade debt and equity
securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities
activities may involve securities and/or instruments of ours or our affiliates. Certain of the underwriters or their affiliates that have a lending relationship with us routinely hedge their credit
exposure to us consistent with their customary risk management policies. Typically, such underwriters and their affiliates would hedge such exposure by entering into transactions which consist of
either the purchase of credit default swaps or the creation of short positions in our securities, including potentially the notes offered hereby. Any such short positions could adversely affect future
trading prices of the notes offered hereby. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such
securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
We
have agreed to indemnify the underwriters against certain liabilities, including liabilities under the U.S. Securities Act, or to contribute to payments the underwriters may be
required to make because of any such liabilities.
The
Notes will not be qualified for sale under the securities laws of Canada or any province or territory of Canada (other than the Province of Alberta) and may not be, directly or
indirectly, offered, sold or delivered in Canada or to residents of Canada in contravention of the securities laws of any province or territory of Canada. Each underwriter has agreed that it will not,
directly or indirectly, offer, sell or deliver any Notes purchased by it in Canada or to residents of Canada.
Certain
of the underwriters are affiliates of banks or other financial institutions (collectively, the "
Affiliate Lenders
") that are our
lenders and to which we are currently indebted. We intend to use all net proceeds from this offering to repay borrowings under existing credit facilities and for general corporate purposes and, as a
consequence, net proceeds from this offering may be paid to one or more of the Affiliate Lenders. For more information, see "Use of Proceeds". The decision to distribute the Notes pursuant to this
offering was made by us, and the determination of the terms of this offering was made through negotiations between us and the underwriters. The Affiliate Lenders did not have any involvement in such
decision or determination, but have each been advised of this offering and the terms thereof.
Conflicts of Interest
As described in "Use of Proceeds", the net proceeds from this offering will be used to repay borrowings under existing credit
facilities and for general corporate purposes. Because more than 5% of the proceeds from this offering, not including underwriting compensation, may be received by certain
S-17
Table of Contents
affiliates
of the underwriters in this offering, this offering is being conducted pursuant to Rule 5121 of FINRA. Pursuant to that rule, the appointment of a qualified independent underwriter
is not necessary in connection with this offering because the conditions of Rule 5121(a)(1)(C) of FINRA are satisfied.
LEGAL MATTERS
Certain legal matters relating to Canadian law in connection with the offering of the Notes will be passed upon on behalf of the
Corporation by Norton Rose Canada LLP and McCarthy Tétrault LLP as Canadian tax counsel, Calgary, Alberta. Certain legal matters relating to United States law in
connection with the offering of the Notes will be passed upon on behalf of the Corporation by Latham & Watkins LLP, New York, New York and on behalf of the underwriters by
Paul, Weiss, Rifkind, Wharton & Garrison LLP, Toronto, Ontario.
The
partners and associates of Norton Rose Canada LLP, as a group, beneficially own, directly or indirectly, less than 1% of any class of securities of the Corporation.
The
partners and associates of McCarthy Tétrault LLP, as a group, beneficially own, directly or indirectly, less than 1% of any class of securities of the
Corporation.
S-18
Table of Contents
AUDITORS
The Corporation's auditors are Ernst & Young LLP, Chartered Accountants, Calgary, Alberta.
S-19
Table of Contents
AUDITOR'S CONSENT
We have read the prospectus supplement of TransAlta Corporation (the "Corporation") dated November 2, 2012 to the short
form base shelf prospectus dated November 18, 2010, relating to the issue and sale of US$400,000,000 aggregate principal amount of 4.500% senior notes due 2022 (the "Prospectus").
We have complied with Canadian generally accepted standards for an auditor's involvement with offering documents.
We
consent to the incorporation by reference in the Prospectus of our report to the Shareholders of the Corporation on the consolidated statements of financial position of the
Corporation as at December 31, 2011 and 2010, and January 1, 2010, and the consolidated statements of earnings, comprehensive income, changes in equity and cash flows for each of the
years in the two year period ended December 31, 2011 and our report on the effectiveness of internal control over financial reporting as of December 31, 2011. Our reports are dated
March 1, 2012.
|
|
|
Calgary, Canada
November 2, 2012
|
|
(Signed) Ernst & Young LLP
Chartered Accountants
|
S-20
BASE SHELF PROSPECTUS
|
|
|
New Issue
|
|
November 18, 2010
|
TRANSALTA CORPORATION
US$1,000,000,000
Common Shares
First Preferred Shares
Warrants
Subscription Receipts
Debt Securities
We may from time to time offer and issue (i) common shares ("
Common Shares
"), (ii) first preferred shares
("
First Preferred Shares
"), (iii) warrants to purchase Common Shares, First Preferred Shares or other securities
("
Warrants
"), (iv) subscription receipts, each of which, once purchased, entitle the holder to receive upon satisfaction of certain release
conditions, and for no additional consideration, one Common Share ("
Subscription Receipts
"), or (v) debt securities
(the "
debt securities
"), (the Common Shares, First Preferred Shares, Warrants, Subscription Receipts and debt securities are collectively
referred to herein as the "
Securities
") up to an aggregate initial offering price of US$1,000,000,000 (or its equivalent in any other currency or
currency unit used to denominate the Securities) during the 25 month period that this short form base shelf prospectus (the "
Prospectus
"),
including any amendments hereto, remains valid.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE "SEC") OR ANY UNITED STATES STATE SECURITIES
COMMISSION NOR HAS THE SEC OR ANY UNITED STATES STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This offering is made by a Canadian issuer that is permitted, under the multi-jurisdictional disclosure system adopted in the United States, to prepare this Prospectus
in accordance with Canadian disclosure requirements. Prospective investors should be aware that such requirements are different from those of the United States. The financial statements
incorporated herein by reference have been prepared in accordance with Canadian generally accepted accounting principles which are in effect from time to time in Canada ("Canadian GAAP") and are
subject to Canadian auditing and auditor independence standards. As a result, such financial
statements may not be comparable to financial statements of United States companies. See "
About this Prospectus
".
Prospective investors should be aware that the acquisition of the Securities may have tax consequences both in the United States and Canada. Such tax consequences for
investors who are resident in, or citizens of, the United States may not be described fully herein or in any applicable Prospectus Supplement (as defined herein). You should read the tax
discussion under "
Certain Income Tax Considerations
" and in any applicable Prospectus Supplement.
The enforcement by investors of civil liabilities under United States federal securities laws may be affected adversely by the fact that the Corporation is incorporated
and organized under the laws of Canada, that most of its officers and directors are residents of Canada, that some or all of the underwriters or experts named in this Prospectus are residents of
Canada, and that all or a substantial portion of the assets of the Corporation and said persons are located outside the United States.
(continued
on next page)
No underwriter has been involved in the preparation of this Prospectus or performed any review of the contents of this Prospectus.
The
specific terms of any offering of Securities will be set forth in a prospectus supplement or supplements (each, a "
Prospectus Supplement
")
including, where applicable: (i) in the case of Common Shares, the number of Common Shares offered and the offering price; (ii) in the case of First Preferred Shares, the designation of
the particular series, the number of First Preferred Shares offered, the offering price, any voting rights, any rights to receive dividends, any terms of redemption, any conversion or exchange rights
and any other specific terms of the First Preferred Shares; (iii) in the case of Warrants, the designation, number and terms of the Common Shares, First Preferred Shares or other securities
purchasable upon exercise of the Warrants, and any procedures that will result in the adjustment of those numbers, the exercise price, the dates and periods of exercise, the currency or currency unit
in which the Warrants are issued and any other specific terms of the Warrants; (iv) in the case of the Subscription Receipts, the number of Subscription Receipts offered, the offering price,
the terms, conditions and procedures for the conversion of such Subscription Receipts into Common Shares and any other specific terms of the Subscription Receipts; and (v) in the case of debt
securities, the specific designation of the debt securities, any limit on the aggregate principal amount of the debt securities, the currency or currency unit, the maturity, the offering price,
whether payment on the debt securities will be senior or subordinated to our other liabilities and obligations, whether the debt securities will bear interest, the interest rate or method of
determining the interest rate, any interest rate, any terms of redemption, any conversion or exchange rights and any other specific terms of the debt securities. We reserve the right to include in a
Prospectus Supplement specific terms pertaining to the Securities that are not within the options and parameters
set forth in this Prospectus. You should read this Prospectus and any applicable Prospectus Supplement before you invest in any Securities.
All
shelf information permitted under applicable laws to be omitted from this Prospectus will be contained or incorporated by reference in one or more Prospectus Supplements that will be delivered to
purchasers together with this Prospectus. Each Prospectus Supplement will be incorporated by reference into this Prospectus for the purposes of securities legislation as of the date of the applicable
Prospectus Supplement and only for the purposes of the distribution of the Securities to which the applicable Prospectus Supplement pertains.
Our
Common Shares are listed on the Toronto Stock Exchange ("
TSX
") under the symbol "TA" and on the New York Stock Exchange
("
NYSE
") under the symbol "TAC". On November 17, 2010, the closing price of the Common Shares on the TSX was $20.54 and on the NYSE was US$20.11.
There is currently no market
through which the First Preferred Shares, Warrants, Subscription Receipts or debt securities may be sold and purchasers may not be able to resell
such Securities purchased under this Prospectus. This may affect the pricing of such Securities in the secondary market, the transparency and availability of trading prices, the liquidity of the
Securities, and the extent of issuer regulation. Investing in the Securities involves risks. See "
Risk Factors
" in this Prospectus and in any applicable
Prospectus Supplement.
We
may sell the Securities to or through underwriters or dealers purchasing as principals, directly to one or more purchasers pursuant to applicable statutory exemptions or through agents. See
"
Plan of Distribution
". The Prospectus Supplement relating to a particular offering of Securities will identify each underwriter, dealer or agent
engaged in connection with the offering and sale of the Securities, and will set forth the terms of the offering of such Securities, including the method of distribution, the proceeds to us and any
fees, discounts or any other compensation payable to underwriters, dealers or agents and any other material terms of offering of such Securities.
Unless
otherwise specified in the applicable Prospectus Supplement, each series or issue of Securities (other than Common Shares) will be a new issue of Securities with no established trading market.
The Securities may be sold from time to time in one or more transactions at a fixed price or prices or at non-fixed prices. If offered on a non-fixed price basis the Securities
may be offered at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at prices to be negotiated with purchasers, in which case the compensation payable
to an underwriter, dealer or agent in connection with any such sale will be the amount, if any, by which the aggregate price paid for the Securities by the purchasers exceeds the gross proceeds paid
by the underwriter, dealer or agent to us and the price at which the Securities will be offered and sold may vary as between purchasers during the distribution period.
In
connection with any offering of Securities, the underwriters may over-allot or effect transactions which stabilize, maintain or otherwise affect the market price of the Securities at a
level above that which otherwise might prevail on the open market. Such transactions may be commenced, interrupted or discontinued at any time. See "
Plan of
Distribution
".
Our
head and registered office is located at 110 - 12th Avenue S.W., Calgary, Alberta, T2R 0G7.
TABLE OF CONTENTS
|
|
|
ABOUT THIS PROSPECTUS
|
|
1
|
DOCUMENTS INCORPORATED BY REFERENCE
|
|
2
|
CERTAIN AVAILABLE INFORMATION
|
|
4
|
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
|
|
4
|
TRANSALTA CORPORATION
|
|
5
|
USE OF PROCEEDS
|
|
6
|
CHANGES IN CONSOLIDATED CAPITALIZATION
|
|
7
|
EARNINGS COVERAGE RATIOS
|
|
7
|
DESCRIPTION OF SHARE CAPITAL
|
|
8
|
DESCRIPTION OF WARRANTS
|
|
11
|
DESCRIPTION OF SUBSCRIPTION RECEIPTS
|
|
12
|
DESCRIPTION OF DEBT SECURITIES
|
|
13
|
PRIOR SALES
|
|
26
|
MARKET FOR COMMON SHARES
|
|
27
|
CERTAIN INCOME TAX CONSIDERATIONS
|
|
28
|
PLAN OF DISTRIBUTION
|
|
28
|
RISK FACTORS
|
|
29
|
LEGAL MATTERS
|
|
29
|
EXPERTS
|
|
29
|
INTEREST OF EXPERTS
|
|
29
|
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
|
|
29
|
ENFORCEMENT OF CIVIL LIABILITIES
|
|
30
|
CONSENT OF ERNST & YOUNG LLP
|
|
31
|
ABOUT THIS PROSPECTUS
In this Prospectus and in any Prospectus Supplement, unless otherwise specified or the context otherwise requires, all dollar amounts
are expressed in Canadian dollars. "
U.S. dollars
" or "
US$
" means lawful currency of the
United States. Unless otherwise indicated, all financial information included and incorporated by reference in this Prospectus or included in any Prospectus Supplement is determined using
Canadian GAAP. "
U.S. GAAP
" means generally accepted accounting principles which are in effect from time to time in the United States. The
significant differences between Canadian GAAP and U.S. GAAP are summarized in the reconciliations to U.S. GAAP of TransAlta's consolidated financial statements as at December 31,
2009 and 2008 and for each of the years in the three year period ended December 31, 2009 and of TransAlta's unaudited consolidated interim financial statements as at and for the three and nine
month periods ended September 30, 2010 and 2009, all of which are incorporated by reference in this Prospectus. Unless the context otherwise requires, all references in this Prospectus and any
Prospectus Supplement to "
TransAlta
", the "
Corporation
",
"
we
", "
us
" and "
our
" mean TransAlta Corporation and its
consolidated subsidiaries including any consolidated partnerships of which the Corporation or any of its subsidiaries are partners.
1
This
Prospectus provides a general description of the Securities that we may offer. Each time we offer and sell Securities under this Prospectus, we will provide you with a Prospectus
Supplement that will contain specific information about the terms of that offering. The Prospectus Supplement may also add, update or change information contained in this Prospectus. Before investing
in any Securities, you should read both this Prospectus and any applicable Prospectus Supplement together with additional information described below under
"Documents
Incorporated by Reference"
and
"Certain Available Information"
.
All
information permitted under applicable laws to be omitted from this Prospectus will be contained in one or more Prospectus Supplements that will be made available together with this
Prospectus.
You
should rely only on the information contained in or incorporated by reference in this Prospectus or any applicable Prospectus Supplement and on the other information included in the
registration statement on Form F-10 of which this Prospectus forms a part. We have not authorized anyone to provide you with different or additional information. We are not
making an offer to sell these Securities in any jurisdiction where the offer or sale is not permitted by law. You should not assume that the information in this Prospectus, any applicable Prospectus
Supplement or any documents incorporated by reference is accurate as of any date other than the date on the front of those documents as our business, operating results, financial condition and
prospects may have changed since that date.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents of the Corporation, filed with the securities commissions or similar authorities in each of the provinces of
Canada and with the SEC, are specifically incorporated by reference in, and form an integral part of, this Prospectus, provided that such documents are not incorporated by reference to the extent that
their contents are modified or superseded by a statement contained in this Prospectus or in any other subsequently filed document that is also incorporated or deemed to be incorporated by reference in
this Prospectus:
-
(a)
-
consolidated
financial statements as at December 31, 2009 and 2008 and for each of the years in the three year period ended December 31, 2009,
the notes thereto, the auditors' report thereon and the auditors' report on our internal control over financial reporting;
-
(b)
-
management's
discussion and analysis of financial condition and results of operations as at and for the year ended December 31, 2009
("
Annual MD&A
");
-
(c)
-
annual
information form dated February 24, 2010 (the "
Annual Information Form
") for the year
ended December 31, 2009;
-
(d)
-
management
proxy circular dated March 11, 2010 prepared in connection with the Corporation's annual and special meeting of shareholders held on
April 29, 2010;
-
(e)
-
unaudited
consolidated interim financial statements as at and for the three and nine month periods ended September 30, 2010 and 2009 and the
notes thereto;
-
(f)
-
management's
interim discussion and analysis of the financial condition and results of operations as at and for the three and nine month periods ended
September 30, 2010;
-
(g)
-
reconciliation
to U.S. GAAP of the consolidated financial statements as at December 31, 2009 and 2008 and for each of the years in the three
year period ended December 31, 2009 and the auditors' report thereon; and
-
(h)
-
reconciliation
to U.S. GAAP of the unaudited consolidated interim financial statements as at and for the three and nine month periods ended
September 30, 2010 and 2009.
Any
documents of the type required to be incorporated by reference in a short form prospectus pursuant to National Instrument 44-101
Short Form
Prospectus Distributions
("
NI 44-101
") of the Canadian
2
Securities
Administrators, including any documents of the type referred to above, material change reports (excluding confidential material change reports) and business acquisition reports subsequently
filed by the Corporation with any securities commissions or similar authorities in Canada after the date of this Prospectus and prior to the termination of any offering of Securities shall be deemed
to be incorporated by reference into this Prospectus. These documents are available through the internet on the System for Electronic Document Analysis and Retrieval
("
SEDAR
"), which can be accessed at www.sedar.com. In addition, any documents filed by the Corporation with the SEC, including filings on
Form 6-K or Form 40-F, pursuant to the United States Securities Exchange Act of 1934, as amended (the "
Exchange
Act
"), in each case after the date of this Prospectus, shall be deemed to be incorporated by reference into this Prospectus and the registration statement of which
this Prospectus forms a part, if and to the extent expressly provided in such filings. The Corporation's reports on Form 6-K, and beginning with its
Form 40-F for the year ended December 31, 2001, its annual reports on Form 40-F, are available on the SEC's website at www.sec.gov.
Any statement contained in this Prospectus or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for the purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in
the document that it modifies or supersedes. The making of a modifying or superseding statement is not to be deemed an admission for any purposes that the modified or superseded statement, when made,
constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in
light of the circumstances in which it was made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
Upon a new annual information form and related annual audited comparative consolidated financial statements and accompanying management's discussion and analysis
being filed by the Corporation with, and where required, accepted by, the applicable securities regulatory authorities during the term of this Prospectus, the previous annual information form, the
previous annual audited financial statements and accompanying management's discussion and analysis, all interim financial statements and accompanying management's discussion and analysis, all material
change reports and all business acquisition reports filed by the Corporation prior to the commencement of the financial year of the Corporation in which the new annual information form and related
annual audited comparative consolidated financial statements and accompanying management's discussion and analysis are filed shall be deemed no longer to be incorporated by reference into this
Prospectus for purposes of future offers and sales of Securities hereunder. Upon interim financial statements and accompanying management's discussion and analysis being filed by the Corporation with
the applicable securities regulatory authorities during the term of this Prospectus, all interim financial statements and accompanying management's discussion and analysis filed prior to the new
interim consolidated financial statements shall be deemed no longer to be incorporated into this Prospectus for purposes of future offers and sales of Securities hereunder.
Updated earnings coverage ratios will be filed quarterly with the applicable securities regulatory authorities either as Prospectus Supplements or as exhibits to
the Corporation's interim unaudited comparative consolidated financial statements and annual audited comparative consolidated financial statements and will be deemed to be incorporated by reference in
this Prospectus for the purposes of the offering of the Securities.
A
Prospectus Supplement containing the specific terms of any Securities offered thereunder will be delivered to purchasers of such Securities together with this Prospectus and will be
deemed to be incorporated by reference into this Prospectus as of the date of such Prospectus Supplement solely for the purposes of the distribution of the Securities covered by such Prospectus
Supplement.
3
Copies
of the documents incorporated herein by reference (other than exhibits to such documents, unless such exhibits are specifically incorporated by reference in such documents) may be
obtained on request without charge from the Vice-President and Corporate Secretary of TransAlta, 110 - 12th Avenue S.W., Calgary, Alberta, Canada,
T2P 0G7, Telephone (403) 267-7110.
Prospective investors should rely only on the information contained in or incorporated by reference in this Prospectus or any applicable Prospectus Supplement and
on the other information included or incorporated by reference in the registration statement of which this Prospectus forms a part. The Corporation has not authorized anyone to provide
prospective investors with different or additional information. The Corporation is not making an offer of these Securities in any jurisdiction where the offer is not permitted by law. Prospective
investors should not assume that the information contained in or incorporated by reference in this Prospectus or any applicable Prospectus Supplement is accurate as of any date other than the date on
the front of the applicable Prospectus Supplement.
CERTAIN AVAILABLE INFORMATION
The Corporation has filed with the SEC under the
United States Securities Act of
1933
, as amended (the "
U.S. Securities Act
"), a registration statement on Form F-10 relating to
the Securities and of which this Prospectus forms a part. This Prospectus does not contain all of the information set forth in such registration statement, certain items of which are
incorporated by reference in or contained in the exhibits to such registration statement as permitted or required by the rules and regulations of the SEC. See "
Documents Filed
as Part of the Registration Statement
". Statements made in this Prospectus as to the contents of any contract, agreement or other document referred to are only summaries, and
in each instance, reference is made to the exhibit, if applicable, for a more complete description of the relevant matter, each such statement being qualified in its entirety by such reference. Items
of information omitted from this Prospectus but contained in the registration statement on Form F-10 may be inspected and copied at the public reference facilities maintained at the
offices of the SEC described below.
The
Corporation is subject to the information requirements of the
United States Securities and Exchange Act of 1934
, as amended
(the "
U.S. Exchange Act
"), and in accordance therewith, files reports and other information with the SEC. Under the multi-jurisdictional
disclosure system adopted in the United States and Canada, such reports and other information may be prepared in accordance with the disclosure requirements of Canada, which requirements are
different from those of the United States. The Corporation is exempt from the rules under the U.S. Exchange Act prescribing the furnishing and
content of proxy statements, and its officers, directors and principal shareholders are exempt from the reporting and short swing profit recovery provisions contained in Section 16 of the
U.S. Exchange Act. Under the U.S. Exchange Act, the Corporation is not required to publish financial statements as promptly as United States companies. Such reports and other
information may be inspected without charge, and copied upon payment of prescribed fees, at the public reference facility maintained by the SEC at 100 F Street, N.E., Washington, D.C.
20549 and are also are available on the SEC's website at www.sec.gov.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus, including the documents incorporated by reference herein, contains both historical and forward-looking statements. All
forward-looking statements are based on our beliefs as well as assumptions based on information available at the time the assumption was made and on management's experience and perception of
historical trends, current conditions and expected further developments as well as other factors deemed appropriate in the circumstances. These forward-looking statements are not facts, but only
predictions and generally can be identified by the use of statements that include phrases such as "may", "will", "believe," "expect," "anticipate," "intend," "plan," "foresee", "potential", "enable",
"continue" or other words or phrases of similar import. Similarly, statements that describe the Corporation's objectives, plans or goals also are forward-looking statements. These forward-looking
4
statements
are subject to risks, uncertainties and other important factors that could cause actual results to differ materially from those currently anticipated. In addition to the forward-looking
statements contained in the documents incorporated by reference herein, this Prospectus contains, without limitation, forward-looking statements pertaining to the following: anticipated capacities of
electricity generating facilities under construction; and certain terms of the Securities and any offering made under this Prospectus.
With
respect to forward-looking statements contained in this Prospectus, we have made assumptions regarding, among other things: our ability to complete current construction projects
according to planned specifications; our current construction projects when complete will operate as expected; our ability to maintain our existing operations; our ability to obtain financing on
acceptable terms; and that terms of future offerings will be on the terms and conditions consistent with the current industry standards.
Certain
factors that could materially affect these forward-looking statements are described below and are incorporated by reference in this Prospectus, as described under
"
Risk Factors
" in this Prospectus. Potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking
statements and are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included in this document are made only as of the date of
this Prospectus and the Corporation does not undertake to publicly update these forward-looking statements to reflect new information, future events or otherwise, except as required by applicable
laws. In light of these risks, uncertainties and assumptions, the forward-looking events might or might not occur. The Corporation cannot assure you that projected results or events will
be achieved.
Factors
that may adversely impact the Corporation's forward-looking statements include risks relating to: fluctuations in market prices and availability of fuel supplies required to
generate electricity and in the price of electricity; the regulatory and political environments in the jurisdictions in which the Corporation operates; environmental requirements and changes in, or
liabilities under, these requirements; changes in general economic conditions including interest rates; operational risks involving the Corporation's facilities, including unplanned outages at such
facilities; execution and capital cost risks relating to the Corporation's development and construction projects; disruptions in the transmission and distribution of electricity; effects of weather;
disruptions in the source of fuels, water, wind or biomass required to operate the Corporation's facilities; natural disasters; equipment failure; energy trading risks; industry risk and competition;
fluctuations in the value of foreign currencies and foreign political risks; need for additional financing; liquidity risk; structural subordination of securities; counterparty credit risk; insurance
coverage; the Corporation's provision for income taxes; legal proceedings involving the Corporation; reliance on key personnel; labour relations matters; development projects and acquisitions; and
absence of a public market for certain of the Securities offered under this Prospectus. The foregoing risk factors, among others, are described in further detail under the heading
"
Risk Factors
" in this Prospectus and in the documents incorporated by reference in this Prospectus, including the Annual MD&A and the Annual
Information Form.
TRANSALTA CORPORATION
TransAlta is a corporation amalgamated under the
Canada Business Corporations Act
. The
registered office and principal place of business of TransAlta are located at 110 - 12th Avenue S.W., Calgary, Alberta, Canada, T2R 0G7. For further information
on the intercorporate relationships among TransAlta and its subsidiaries, please see "
Corporate Structure Intercorporate
Relationships
" in the Annual Information Form.
TransAlta
and its predecessors have been engaged in the production and sale of electric energy since 1909. The Corporation is among Canada's largest non-regulated electric
generation and energy marketing companies with an aggregate net ownership interest of approximately 8,563 megawatts ("
MW
") of generating capacity
operating in facilities having approximately 10,365 MW of aggregate generating capacity
(1)
. In addition, the Corporation has facilities under construction with a net ownership
interest of
5
427 MW
of generating capacity in facilities designed to have aggregate generating capacity of 652 MW as well as a net ownership interest of approximately 1,405 MW generating
capacity in advanced-stage
development. The Corporation is focused on generating electricity in Canada, the United States and Australia through its diversified portfolio of facilities fuelled by coal, gas, hydroelectric,
wind, geothermal and biomass resources.
-
(1)
-
TransAlta
measures capacity as the net maximum capacity that a unit can sustain over a period of time, which is consistent with industry standards. All
capacity amounts are as of the date of this Prospectus and represent capacity owned and operated by the Corporation unless otherwise indicated.
In Canada, the Corporation holds a net ownership interest of approximately 6,248 MW of electrical generating capacity in thermal,
gas-fired, wind-powered, hydroelectric and biomass facilities, including 5,029 MW in Western Canada, 1,040 MW in Ontario, 99 MW in Québec
and 80 MW in New Brunswick.
In
the United States, the Corporation's principal facilities include a 1,376 MW thermal facility and a 248 MW gas fired facility, both located in Centralia,
Washington, which supply electricity to the Pacific Northwest. The Corporation holds a 50% interest in CE Generation, LLC ("
CE Generation
"),
through which it has an aggregate net ownership interest of approximately 385 MW of generating capacity in geothermal facilities in California and gas fired facilities in Texas, Arizona and
New York. The Corporation also has 6 MW of electrical generating capacity through hydroelectric facilities located in Washington and Hawaii.
In
Australia, the Corporation has 300 MW of net electrical generating capacity from gas-fired generation facilities.
The
Corporation regularly reviews its operations in order to optimize its generating assets and evaluates appropriate growth opportunities. The Corporation has in the past and may in the
future make changes and additions to its fleet of coal, gas, hydro, wind, geothermal and biomass fuelled facilities.
The
Corporation is organized into two business segments: Generation and Commercial Operations and Development. The Generation group is responsible for constructing, operating and
maintaining electricity generation facilities. The Commercial Operations and Development group is responsible for
managing the sale of production, purchases of natural gas, transmission capacity and market risks associated with the Corporation's generation assets and for non asset backed trading activities. Both
segments are supported by a corporate group that provides finance, treasury, legal, regulatory, environmental, health and safety, sustainable development, corporate communications, government
relations, information technology, human resources, internal audit, and other administrative support.
USE OF PROCEEDS
Unless otherwise specified in a Prospectus Supplement, the net proceeds from the sale of the Securities will be used for general
corporate purposes, which may include the repayment of indebtedness and the financing of the Corporation's long-term investment plan. The amount of net proceeds to be used for any such
purpose will be set forth in the applicable Prospectus Supplement. The Corporation expects that it may, from time to time, issue securities (including Securities) other than pursuant to this
Prospectus.
6
CHANGES IN CONSOLIDATED CAPITALIZATION
Other than the effect of changes in foreign currency exchange rates on U.S. dollar denominated loans, there have been no
material changes in our consolidated share or debt capitalization during the period from September 30, 2010 through the date of this Prospectus.
The
following table sets forth the consolidated capitalization of the Corporation as at December 31, 2009 and September 30, 2010, and indicates increases or decreases in
applicable amounts between those two dates. This table should be read in conjunction with the consolidated financial statements of the Corporation as at and for the year ended December 31, 2009
and the unaudited consolidated interim financial statements of the Corporation as at and for the three and nine month periods ended September 30, 2010, all of which have been incorporated by
reference herein.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at
December 31, 2009
|
|
As at
September 30, 2010
|
|
Increase/Decrease
|
|
|
|
(in millions, except Common Share amounts)
|
|
Current Portion of Long-Term Debt
(1)
|
|
$
|
31
|
|
$
|
256
|
|
$
|
225
|
|
Less: Cash and Cash Equivalents
|
|
|
82
|
|
|
80
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
(51
|
)
|
|
176
|
|
|
(227
|
)
|
Long-Term Debt
|
|
|
|
|
|
|
|
|
|
|
|
Recourse
|
|
|
3,857
|
|
|
3,887
|
|
|
30
|
|
|
Non-Recourse
(2)
|
|
|
554
|
|
|
541
|
|
|
(13
|
)
|
Non-Controlling Interests
(3)
|
|
|
478
|
|
|
439
|
|
|
(39
|
)
|
Common Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
|
|
|
2,169
|
|
|
2,194
|
|
|
25
|
|
|
|
|
(218,404,442
Common Shares)
|
|
|
(219,542,527
Common Shares)
|
|
|
(1,138,085
Common Shares)
|
|
|
Retained Earnings
|
|
|
634
|
|
|
600
|
|
|
(34
|
)
|
|
Accumulated Other Comprehensive Income
|
|
|
126
|
|
|
278
|
|
|
152
|
|
|
|
|
|
|
|
|
|
Total Common Shareholders' Equity
|
|
|
2,929
|
|
|
3,072
|
|
|
143
|
|
|
|
|
|
|
|
|
|
Total Capitalization
|
|
|
7,767
|
|
|
8,115
|
|
|
348
|
|
|
|
|
|
|
|
|
|
Notes:
-
(1)
-
Includes
a $225 million maturity in June, 2011.
-
(2)
-
Includes
the Corporation's share of debt in TransAlta Cogeneration L.P., CE Generation, Wailuku Holding Company LLC and all the debt of
Canadian Hydro Developers, Inc., which is non-recourse to the Corporation.
-
(3)
-
TransAlta
Generation Partnership, a wholly-owned subsidiary of the Corporation, holds a direct 50.00% interest in TransAlta Cogeneration, L.P.
TransAlta Cogeneration Ltd., which is a wholly-owned subsidiary of the Corporation and the general partner of TransAlta Cogeneration, L.P., hold a 0.01% interest in TransAlta
Cogeneration, L.P. and the remaining 49.99% interest is held by Stanley Power Inc. CE Generation holds a 75% interest in the 240 MW Saranac gas-fired plant in
Plattsburg, New York, and the Corporation holds an indirect 50% interest in CE Generation.
EARNINGS COVERAGE RATIOS
The following coverage ratios have been prepared in accordance with Canadian securities law requirements and are included in this
Prospectus in accordance with Canadian disclosure requirements.
The
following sets forth the Corporation's earnings coverage ratios calculated for the twelve month period ended December 31, 2009, and the twelve month period ended
September 30, 2010. The earnings coverage ratios set forth below: (i) do not give effect to the issue of any Securities pursuant to this Prospectus; and (ii) do not purport to be
indicative of earnings coverage ratios for any future periods. The
7
earnings
coverage ratios have been calculated based on information prepared in accordance with Canadian GAAP.
|
|
|
|
|
|
|
Twelve month period ended
|
|
|
December 31, 2009
|
|
September 30, 2010
|
Earnings coverage on long-term debt
(1)
|
|
1.9 times
|
|
1.9 times
|
Note:
-
(1)
-
Earnings
coverage on long-term debt on a net earnings basis is equal to net earnings plus net interest expense and income taxes divided by net
interest expense plus capitalized interest. For purposes of calculating the earnings coverage ratios set forth herein, long-term debt includes the current portion of long-term
debt and does not include any amounts with respect to securities that may be issued under this Prospectus.
TransAlta evaluates its performance using a variety of measures. Earnings coverage discussed above is not defined under Canadian GAAP and
therefore should not be considered in isolation or as an alternative to, or more meaningful than, net earnings as determined in accordance with Canadian GAAP as an indicator of the Corporation's
financial performance or liquidity. This measure is not necessarily comparable to a similarly titled measure of another company. Net earnings has been calculated on a consistent basis for the twelve
month period ended December 31, 2009 and the twelve month period ended September 30, 2010.
The
Corporation's interest requirements, as adjusted as described above, amounted to $180 million and $216 million for the 12 months ended December 31, 2009
and September 30, 2010, respectively. The Corporation's earnings before interest and income tax for the 12 month periods then ended was $340 million and $407 million,
respectively, which is 1.9 times and 1.9 times, respectively, TransAlta's interest requirements, as adjusted as described above, for such periods.
DESCRIPTION OF SHARE CAPITAL
General
As of the date of this Prospectus, the Corporation's authorized share capital consists of an unlimited number of Common Shares and an
unlimited number of First Preferred Shares, issuable in series. As at October 31, 2010, 220,335,458 Common Shares were outstanding and no First Preferred Shares were outstanding.
Common Shares
The following description is subject to, and qualified by reference to, the terms and provisions of the Corporation's articles
and by-laws.
Each
Common Share of the Corporation entitles the holder thereof to one vote for each Common Share held at all meetings of shareholders of the Corporation, except meetings at which only
holders of another specified class or series of shares are entitled to vote, to receive dividends if, as and when declared by the board of directors, subject to prior satisfaction of preferential
dividends applicable to any First Preferred Shares, and to participate rateably in any distribution of the assets of the Corporation upon a liquidation, dissolution or winding up, subject to prior
rights and privileges attaching to the First Preferred Shares. The Common Shares are not convertible and are not entitled to any pre-emptive rights. The Common Shares are not entitled to
cumulative voting.
The
transfer agent and registrar for the Common Shares in Canada is CIBC Mellon Trust Company at its principal transfer offices in Vancouver, British Columbia, Calgary, Alberta,
Winnipeg, Manitoba, Toronto, Ontario and Montreal, Quebec. The transfer agent and registrar for the Common Shares in the United States is BNY Mellon Shareowner Services at its principal office
in New York, New York.
8
The
Common Shares offered pursuant to this Prospectus may include Common Shares issuable upon conversion or exchange of any First Preferred Shares of any series or upon exercise of any
Warrants or upon conversion of any Subscription Receipts.
First Preferred Shares
The Corporation is authorized to issue an unlimited number of First Preferred Shares, issuable in series and, with respect to each
series, the board of directors is authorized to fix the number of shares comprising the series and determine the designation, rights, privileges, restrictions and conditions attaching to such shares,
subject to certain limitations.
The
First Preferred Shares of all series rank senior to all other shares of the Corporation with respect to priority in payment of dividends and with respect to distribution of assets in
the event of liquidation, dissolution or winding up of the Corporation, or a reduction of stated capital. Holders of First Preferred Shares are entitled to receive cumulative quarterly dividends on
the subscription price thereof as and when declared by the board of directors at the rate established by the board of directors at the time of issue of shares of a series. No dividends may be declared
or paid on any other shares of the Corporation unless all cumulative dividends accrued upon all outstanding First Preferred Shares have been paid or declared and set apart. In the event of the
liquidation, dissolution or winding up of the Corporation, or a reduction of stated capital, no sum shall be paid or assets distributed to holders of other shares of the Corporation until the holders
of First Preferred Shares shall have been paid the subscription price of the shares, plus a sum equal to the premium payable on a redemption, plus a sum equal to the arrears of dividends accumulated
on the First Preferred Shares to the date of such liquidation, dissolution, winding up, or reduction of stated capital, as applicable. After payment of such amount, the holders of First Preferred
Shares shall not be entitled to share further in the distribution of the assets of the Corporation.
The
directors may include in the share conditions attaching to a particular series of First Preferred Shares certain voting rights effective upon the Corporation failing to make payment
of six quarterly dividend payments, whether or not consecutive. These voting rights continue for so long as any dividends remain in arrears. These voting rights are the right to one vote for each $25
of subscription price on all matters in respect of which shareholders vote, and additionally, the right of all series of First Preferred Shares, voting as a combined class, to elect two directors of
the Corporation if the board of directors then consists of less than 16 directors, or three directors if the board of directors consists of 16 or more directors. Otherwise, except as required
by law, the holders of First Preferred
Shares shall not be entitled to vote or to receive notice of or to attend at any meeting of the shareholders of the Corporation.
Subject
to the share conditions attaching to any particular series providing to the contrary, the Corporation may redeem First Preferred Shares of a series, in whole or from time to time
in part, at the redemption price applicable to each series and the Corporation has the right to acquire any of the First Preferred Shares of one or more series by purchase for cancellation in the open
market or by invitation for tenders at a price not to exceed the redemption price applicable to the series.
The
Prospectus Supplement will set forth the following terms relating to the First Preferred Shares being offered:
-
-
the maximum number of First Preferred Shares;
-
-
the designation of the series;
-
-
the offering price;
-
-
the annual dividend rate and whether the dividend rate is fixed or variable, the date from which dividends will accrue,
and the dividend payment dates;
9
-
-
the price and the terms and conditions for redemption, if any, including redemption at TransAlta's option or at the option
of the holder, including the time period for redemption, and payment of any accumulated dividends;
-
-
the terms and conditions, if any, for conversion or exchange for shares of any other class of TransAlta or any other
series of First Preferred Shares, or any other securities or assets, including the price or the rate of conversion or exchange and the method, if any, of adjustment;
-
-
whether such First Preferred Shares will be listed on any securities exchange;
-
-
the voting rights, if any; and
-
-
any other rights, privileges, restrictions, or conditions.
First
Preferred Shares will be fully paid and non-assessable upon issuance. The First Preferred Shares of any series may be represented, in whole or in part, by one or more
global certificates. If First Preferred Shares are represented by a global certificate, each global certificate will:
-
-
be registered in the name of a depositary or a nominee of the depositary identified in the applicable Prospectus
Supplement; and
-
-
be deposited with such depositary or nominee or a custodian for the depositary.
Related Party Articles Provisions
The articles of the Corporation contain provisions restricting the ability of the Corporation to enter into a
"
Specified Transaction
" with a "
Major Shareholder
". A Specified
Transaction requires the approval of a majority of the votes cast by holders of voting shares of the Corporation, as well as the approval of a majority of the votes cast by holders of such voting
shares, excluding any Major Shareholder. A Major Shareholder generally means the beneficial owner of more than 20% of the outstanding voting shares of the Corporation. There is a broad definition of
beneficial ownership, and in particular, a person is considered to beneficially own shares owned by its associates and affiliates, as those terms are defined in the articles. Transactions which are
considered to be Specified Transactions include the following: a merger or amalgamation of the Corporation with a Major Shareholder; the furnishing of financial assistance by the Corporation to a
Major Shareholder; certain sales of assets or provision of services by the Corporation to a Major Shareholder or vice versa; certain issuances of securities by the Corporation which increase the
proportionate voting interest of a Major Shareholder; a reorganization or recapitalization of the Corporation which increases the proportionate voting interest of a Major Shareholder; and the creation
of a class or series of non-voting shares of the Corporation which has a residual right to participate in earnings of the Corporation and assets of the Corporation upon dissolution or
winding up.
Shareholder Rights Plan
The Corporation implemented a shareholder rights plan (the "
Rights Plan
")
pursuant to a Shareholder Bid Approval Plan Agreement (the "
Rights Plan Agreement
") dated as of October 13, 1992 between the Corporation
and CIBC Mellon Trust Company. The holders of Common Shares reconfirmed the Rights Plan and approved the amendment and restatement, as of April 29, 2010, of the Rights Plan Agreement at
the annual and special meeting of shareholders of the Corporation held on April 29, 2010. For further particulars, reference should be made to the Rights Plan Agreement, as amended and
restated. A copy of the Rights Plan Agreement may be obtained by contacting the Vice President and Corporate Secretary, TransAlta Corporation, 110 - 12th Avenue S.W.,
Calgary, Alberta T2P 0G7; telephone: (403) 267-7110; fax (403) 267-2590; or by email: investorrelations@transalta.com. A copy of the Rights Plan Agreement
can also be accessed on SEDAR at www.sedar.com and on the SEC's website at www.sec.gov.
10
DESCRIPTION OF WARRANTS
General
The Corporation may issue Warrants independently or together with other securities, and Warrants sold with other securities may be
attached to or separate from the other securities. Warrants will be issued under one or more warrant agreements between the Corporation and a warrant agent that the Corporation will name in the
applicable Prospectus Supplement.
Selected
provisions of the Warrants and the warrant agreements are summarized below. This summary is not complete. The statements made in this Prospectus relating to any warrant
agreement and Warrants to be issued thereunder are summaries of certain anticipated provisions thereof and are subject to, and are qualified in their entirety by reference to, all provisions of the
applicable warrant agreement.
The
Prospectus Supplement will set forth the following terms relating to the Warrants being offered:
-
-
the designation of the Warrants;
-
-
the aggregate number of Warrants offered and the offering price;
-
-
the designation, number and terms of the Common Shares, First Preferred Shares or other securities purchasable upon
exercise of the Warrants, and procedures that will result in the adjustment of those numbers;
-
-
the exercise price of the Warrants;
-
-
the dates or periods during which the Warrants are exercisable;
-
-
the designation and terms of any securities with which the Warrants are issued;
-
-
if the Warrants are issued as a unit with another security, the date on and after which the Warrants and the other
security will be separately transferable;
-
-
the currency or currency unit in which the exercise price is denominated;
-
-
any minimum or maximum amount of Warrants that may be exercised at any one time;
-
-
whether such Warrants will be listed on any securities exchange;
-
-
any terms, procedures and limitations relating to the transferability, exchange or exercise of the Warrants; and
-
-
any other terms of the Warrants.
Warrant
certificates will be exchangeable for new warrant certificates of different denominations at the office indicated in the Prospectus Supplement. Prior to the exercise of their
Warrants, holders of Warrants will not have any of the rights of holders of the securities subject to the Warrants.
Modifications
The Corporation may amend the warrant agreements and the Warrants, without the consent of the holders of the Warrants, to cure any
ambiguity, to cure, correct or supplement any defective or inconsistent provision, or in any other manner that will not materially and adversely affect the interests of holders of outstanding
Warrants. Other amendment provisions shall be as indicated in the Prospectus Supplement.
Enforceability
The warrant agent will act solely as the Corporation's agent. The warrant agent will not have any duty or responsibility if the
Corporation defaults under the warrant agreements or the warrant certificates. A
11
Warrant
holder may, without the consent of the warrant agent, enforce by appropriate legal action on its own behalf the holder's right to exercise the holder's Warrants.
DESCRIPTION OF SUBSCRIPTION RECEIPTS
The Corporation may issue Subscription Receipts, independently or together with other securities. Subscription Receipts will be issued
under one or more subscription receipt agreements.
A
Subscription Receipt is a security of the Corporation that will entitle the holder to receive one Common Share upon the completion of a transaction, typically an acquisition by us of
the assets or securities of another entity. After the offering of Subscription Receipts, the subscription proceeds for the Subscription Receipts are held in escrow by the designated escrow agent,
pending the completion of the transaction. Holders of Subscription Receipts will not have any rights of shareholders of the Corporation. Holders of Subscription Receipts are only entitled to receive
Common Shares upon the surrender of their Subscription Receipts to the escrow agent or to a return of the subscription price for the Subscription Receipts together with any payments in lieu of
interest or other income earned on the subscription proceeds.
Selected
provisions of the Subscription Receipts and the subscription receipt agreements are summarized below. This summary is not complete. The statements made in this Prospectus
relating to any subscription receipt agreement and Subscription Receipts to be issued thereunder are summaries of certain anticipated provisions thereof and are subject to, and are qualified in their
entirety by reference to, all provisions of the applicable subscription receipt agreement.
The
Prospectus Supplement will set forth the following terms relating to the Subscription Receipts being offered:
-
-
the designation of the Subscription Receipts;
-
-
the aggregate number of Subscription Receipts offered and the offering price;
-
-
the terms, conditions and procedures for which the holders of Subscription Receipts will become entitled to receive
Common Shares;
-
-
the number of Common Shares that may be obtained upon the conversion of each Subscription Receipt and the period or
periods during which any conversion must occur;
-
-
the designation and terms of any other securities with which the Subscription Receipts will be offered, if any, and the
number of Subscription Receipts that will be offered with each security;
-
-
the gross proceeds from the sale of such Subscription Receipts, including (if applicable) the terms applicable to
the gross proceeds from the sale of such Subscription Receipts, plus any interest earned thereon;
-
-
the material income tax consequences of owning, holding and disposing of such Subscription Receipts;
-
-
whether such Subscription Receipts will be listed on any securities exchange;
-
-
any terms, procedures and limitations relating to the transferability, exchange or conversion of the Subscription
Receipts; and
-
-
any other material terms and conditions of the Subscription Receipts.
12
DESCRIPTION OF DEBT SECURITIES
In this section, the terms "Corporation" and "TransAlta" refer only to TransAlta Corporation without its subsidiaries through which it
operates. The following description sets forth certain general terms and provisions of the debt securities. The Corporation will provide particular terms and provisions of a series of debt securities
and a description of how the general terms and provisions described below may apply to that series in a Prospectus Supplement. Prospective investors should rely on information in the applicable
Prospectus Supplement if it is different from the following information.
The
debt securities will be issued under an indenture (the "
Indenture
") dated as of June 25, 2002 between TransAlta and The
Bank of New York Mellon (formerly known as The Bank of New York) as trustee (the "
Trustee
"). The Indenture is subject to and
governed by the
U.S. Trust Indenture Act of 1939
, as amended. The Indenture has been filed as an exhibit to the registration statement of which
this Prospectus is a part and is available as described above under "
Certain Available Information
". The following is a summary of the Indenture.
Whenever there are references to particular provisions of the
Indenture, those provisions are qualified in their entirety by reference to the Indenture. References in parentheses are to section numbers of the Indenture.
The
Corporation may issue debt securities and incur additional indebtedness other than through the offering of debt securities pursuant to this Prospectus.
General
The Indenture does not limit the aggregate principal amount of debt securities which may be issued under the Indenture. It provides
that debt securities will be in registered or bearer form, may be issued from time to time in one or more series and may be denominated and payable in U.S. dollars or any other currency.
Material Canadian and United States federal income tax considerations applicable to any debt securities, and special tax considerations applicable to the debt securities denominated in a
currency or currency unit other than Canadian or U.S. dollars, will be described in the Prospectus Supplement relating to the offering of debt securities.
The
Prospectus Supplement will set forth the following terms relating to the debt securities being offered:
-
-
the specific designation and any limit on the aggregate principal amount of the debt securities;
-
-
the extent and manner, if any, to which payment on or in respect of the debt securities will be senior or will be
subordinated to the prior payment of other liabilities and obligations of TransAlta;
-
-
the percentage or percentages of principal amount at which the debt securities will be issued;
-
-
the date or dates on which the principal of (and premium, if any, on) the debt securities will be payable and the
portion (if less than the principal amount) to be payable upon a declaration of acceleration of maturity;
-
-
the rate or rates (whether fixed or variable) at which the debt securities will bear interest, if any (or the
manner of calculation thereof) and the date or dates from which such interest will accrue;
-
-
the dates on which any interest will be payable and the regular record dates for the payment of interest on debt
securities in registered form;
-
-
the place or places where the principal of (and premium, if any) and interest, if any, on the debt securities will
be payable and each office or agency where the debt securities may be presented for registration of transfer or exchange;
-
-
the currency or currency unit in which the debt securities are denominated or in which payment of the principal of
(and premium, if any) and interest, if any, on such debt securities will be payable;
13
-
-
whether debt securities will be issuable in the form of one or more global securities and if so the identity of the
depository for the global securities;
-
-
any mandatory or optional sinking fund provisions;
-
-
the period or periods, if any, within which, the price or prices at which, the currency or currency unit in which, and the
terms and conditions upon which, the debt securities may be redeemed or purchased by TransAlta;
-
-
the terms and conditions, if any, upon which TransAlta or the purchaser may redeem debt securities prior to maturity and
the price or prices at which and the currency or currency unit in which the debt securities are payable;
-
-
any index used to determine the amount of payments of principal of (and premium, if any) or interest, if any, on
the debt securities;
-
-
the terms, if any, on which the debt securities may be converted or exchanged for other securities of TransAlta or
other entities;
-
-
whether and under what circumstances TransAlta will pay additional amounts on the debt securities in respect of certain
taxes (and the terms of any such payment) and, if so, whether TransAlta has the right to redeem the debt securities of any series rather than pay the additional amounts (and terms of any
such right);
-
-
any other terms of the debt securities including covenants and Events of Default which apply solely to a particular series
of debt securities being offered which do not apply generally to the debt securities, or any covenants or Events of Default generally applicable to debt securities which do not apply to a particular
series of debt securities;
-
-
whether such debt securities will be listed on any securities exchange;
-
-
whether the debt securities of the series are to be issuable as registered securities, bearer securities (with or without
coupons) or both; and
-
-
if other than denominations of US$1,000 and any integral multiple thereof, the denominations in which any registered
securities of the series shall be issuable and, if applicable the denomination of any bearer securities (Section 3.1).
Unless
otherwise indicated in the applicable Prospectus Supplement, the Indenture does not afford the holders the right to tender debt securities to TransAlta for repurchase or provide
for any increase in the rate or rates of interest at which the debt securities will bear interest, in the event TransAlta should become involved in a highly leveraged transaction or in the event of a
change in control of TransAlta.
Debt
securities may be issued under the Indenture bearing no interest or interest at a rate below the prevailing market rate at the time of issuance, and may be offered and sold at a
discount below their stated principal amount (Section 3.1). The Canadian and United States federal income tax consequences and other special considerations applicable to any such
discounted debt securities or other debt securities offered and sold at par which are treated as having been issued at a discount for Canadian and/or United States federal income tax purposes
will be described in the applicable Prospectus Supplement.
Unless
otherwise indicated in the applicable Prospectus Supplement, TransAlta may, without the consent of the holders thereof reopen a previous issue of a series of debt securities and
issue additional debt securities of such series.
Ranking and Other Indebtedness
Unless otherwise indicated in an applicable Prospectus Supplement, the debt securities will be unsecured obligations and will rank
equally with all of the Corporation's other unsecured and
14
unsubordinated
indebtedness. TransAlta conducts a significant amount of its operations through its subsidiaries. As at September 30, 2010, TransAlta's subsidiaries had outstanding
$604 million aggregate principal amount of long-term debt (excluding intercompany indebtedness). The debt securities issued under this Prospectus will be structurally subordinated
to all existing and future liabilities, including trade payables and other indebtedness of TransAlta's subsidiaries.
Form, Denominations and Exchange
Debt securities of a series are issuable as registered securities in denominations of US$1,000 and integral multiples of US$1,000 or in
such other denominations as may be set out in the terms of the debt securities of any particular series (Section 3.2). The Indenture also provides that debt securities of a series may be
issuable in global form (Section 3.1).
Registered
securities of any series will be exchangeable for other registered securities of the same series and of a like aggregate principal amount and tenor of different authorized
denominations (Section 3.5).
The
applicable Prospectus Supplement may indicate the places to register a transfer of debt securities. Except for certain restrictions set forth in the Indenture, no service charge will
be made for any registration of transfer or exchange of the debt securities, but the Corporation may, in certain instances, require a sum sufficient to cover any tax or other governmental charges
payable in connection with these transactions (Section 3.5).
The
Corporation shall not be required to: (i) issue, register the transfer of or exchange debt securities of any series during a period beginning at the opening of business
15 days before any selection of debt securities of that series to be redeemed and ending at the close of business on the day of mailing of the relevant notice of redemption;
(ii) register the transfer of or exchange any registered security, or portion thereof, called for redemption, except the unredeemed portion of any registered security being redeemed in part; or
(iii) issue, register the transfer of or exchange any debt securities which have been surrendered for repayment at the option of the holder, except the portion, if any, thereof not to be so
repaid (Section 3.5).
Under
limited circumstances, the Corporation may issue debt securities in bearer form, in which case the applicable Prospectus Supplement will contain information regarding form,
denomination and exchange of those bearer securities.
Payment
Unless otherwise indicated in the applicable Prospectus Supplement, payment of principal of and premium, if any, and interest, if any,
on debt securities (other than global securities) will be made at the office or agency of the Trustee, at One Wall Street, New York, New York, 10286, or the Corporation can pay
principal, interest and any premium by (i) cheque, mailed or delivered to the address of the person entitled at the address appearing in the security register of the
Trustee or (ii) wire transfer to an account located in the United States of the person entitled to receive payments (Sections 3.7, 10.1 and 10.2).
Unless
otherwise indicated in the applicable Prospectus Supplement, payment of any interest will be made to the persons in whose name the debt securities are registered at the close of
business on the day or days specified by the Corporation (Section 3.7).
Global Securities
The registered debt securities of a series may be issued in whole or in part in global form (a "
Global
Security
") and will be registered in the name of and be deposited with a depository (the "
Depositary
"), or its nominee,
each of which will be identified in the Prospectus Supplement (Section 3.1). Unless and until exchanged, in whole or in part, for debt securities in definitive registered form, a Global
Security, may not
15
be
transferred except as a whole by the Depositary for such Global Security to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by
the Depositary or any such nominee to a successor of the Depositary or a nominee of the successor (Section 3.5).
The
specific terms of the depository arrangement with respect to any portion of a particular series of debt securities to be represented by a Global Security will be described in the
Prospectus Supplement relating to such series. The Corporation anticipates that the following provisions will apply to all depository arrangements.
Upon
the issuance of a Global Security, the Depositary therefor or its nominee will credit, on its book entry and registration system, the respective principal amounts of the debt
securities represented by the Global Security to the accounts of such persons having accounts with such Depositary or its nominee ("
participants
"). Such
accounts shall be designated by the underwriters, dealers or agents participating in the distribution of the debt securities or by TransAlta if such debt securities are offered and sold directly by
the Corporation. Ownership of beneficial interests in a Global Security will be limited to participants or persons that may hold beneficial interests through participants. Ownership of beneficial
interests in a Global Security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the Depositary therefor or its nominee (with respect to
interests of participants) or by participants or persons that hold through participants (with respect to interests of persons other than participants). The laws of some states in the
United States may require that certain purchasers of securities take physical delivery of such securities in definitive form.
So
long as the Depositary for a Global Security or its nominee is the registered owner of the Global Security, such Depositary or such nominee, as the case may be, will be considered the
sole owner or holder of the debt securities represented by the Global Security for all purposes under the Indenture. Except as provided below, owners of beneficial interests in a Global Security will
not be entitled to have debt securities of the series represented by the Global Security registered in their names, will not receive or be entitled to receive physical delivery of debt securities of
such series in definitive form and will not be considered the owners or holders thereof under the Indenture.
Any
payments of principal, premium, if any, and interest on Global Securities registered in the name of a Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner of the Global Security representing such debt securities. None of TransAlta, the Trustee or any paying agent for debt securities represented by the Global Security
will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of the Global Security or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests.
The
Corporation expects that the Depositary for a Global Security or its nominee, upon receipt of any payment of principal, premium or interest, will credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in the principal amount of the Global Security as shown on the records of such Depositary or its nominee. The Corporation
also expects that payments by participants to owners of beneficial interests in a Global Security held through such participants will be governed by standing instructions and customary practices, as
is now the case with securities held for the accounts of customers registered in "street name", and will be the responsibility of such participants.
If
a Depositary for a Global Security representing a particular series of debt securities is at any time unwilling or unable or no longer qualified to continue as depository and a
successor depository is not appointed by TransAlta within 90 days, the Corporation will issue debt securities of such series in definitive form in exchange for a Global Security representing
such series of debt securities. Further, if an Event of Default under the Indenture occurs and is continuing, debt securities of a series in definitive form will be printed and delivered. In addition,
the Corporation may at any time and in its sole discretion determine not to have debt securities of a series represented by a Global Security and, in such event, will issue debt
16
securities
of a series in definitive form in exchange for all of the Global Securities representing the series of debt securities (Section 3.5).
Definitions
The Indenture contains, among others, definitions substantially to the following effect:
"
Attributable Amount
" means with respect to any sale and leaseback transaction (as defined herein), as at the time of determination, the present
value (discounted at the rate of interest set forth or implicit in the terms of such lease, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of
the lease included in such sale and leaseback transaction.
"
Consolidated Net Tangible Assets
" means all consolidated assets of the Corporation as shown on the most recent audited consolidated balance sheet of
the Corporation, less the aggregate of the following amounts reflected upon such balance sheet:
-
(a)
-
all
goodwill, deferred assets, trademarks, copyrights and other similar intangible assets;
-
(b)
-
to
the extent not already deducted in computing such assets and without duplication, depreciation, depletion, amortization, reserves and any other account
which reflects a decrease in the value of an asset or a periodic allocation of the cost of an asset;
-
(c)
-
minority
interests;
-
(d)
-
current
liabilities; and
-
(e)
-
assets
created, developed, constructed or acquired with or in respect of which Non-Recourse Debt has been incurred, and any and all receivables,
inventory, equipment, chattel paper, intangibles and other rights or collateral arising from or connected with those assets (including the shares or other ownership interests of a single purpose
entity which holds only such assets and other rights and collateral arising from or connected therewith) and to which recourse of the lender of such Non-Recourse Debt is limited.
"
Consolidated Shareholders' Equity
" means, without duplication, the aggregate amount of shareholders' equity (including, without limitation, common
share capital, preferred share capital, contributed surplus and retained earnings) of the Corporation as shown on the most recent audited consolidated balance sheet of the Corporation, adjusted by the
amount by which common share capital, preferred share capital and contributed surplus has been increased or decreased (as the case may be) from the date of such balance sheet to the relevant
date of determination, in accordance with Generally Accepted Accounting Principles, together with the aggregate principal amount of obligations of the Corporation in respect of Preferred Securities.
"
Financial Instrument Obligations
" means obligations arising under:
-
(a)
-
any
interest swap agreement, forward rate agreement, floor, cap or collar agreement, futures or options, insurance or other similar agreement or
arrangement, or any combination thereof, entered into or guaranteed by the Corporation where the subject matter of the same is interest rates or the price, value, or amount payable thereunder is
dependent or based upon the interest rates or fluctuations in interest rates in effect from time to time (but, for certainty, shall exclude conventional floating rate debt);
-
(b)
-
any
currency swap agreement, cross currency agreement, forward agreement, floor, cap or collar agreement, futures or options, insurance or other similar
agreement or arrangement, or any combination thereof entered into or guaranteed by the Corporation where the subject matter of the same is currency exchange rates or the price, value or amount payable
thereunder is dependent or based upon currency exchange rates or fluctuations in currency exchange rates in effect from time to time; and
17
-
(c)
-
any
agreement for the making or taking of any commodity (including natural gas, oil or electricity), any commodity swap agreement, floor, cap or collar
agreement or commodity future or option or other similar agreements or arrangements, or any combination thereof, entered into or guaranteed by the Corporation where the subject matter of the same is
any commodity or the price, value or amount payable thereunder is dependent or based upon the price of any commodity or fluctuations in the price of any commodity;
to
the extent of the net amount due or accruing due by the Corporation thereunder (determined by marking-to-market the same in accordance with their terms).
"
Generally Accepted Accounting Principles
" means generally accepted accounting principles which are in effect from time to time in Canada.
"
Indebtedness
" means all items of indebtedness in respect of any amounts borrowed (including obligations with respect to bankers' acceptances and
contingent reimbursement obligations relating to letters of credit and other financial instruments) and all Purchase Money Obligations which, in accordance with Generally Accepted Accounting
Principles, would be recorded in the financial statements as at the date as of which Indebtedness is to be determined, and in any event including, without duplication:
-
(a)
-
obligations
secured by any Security Interest existing on property owned subject to such Security Interest, whether or not the obligations secured thereby
shall have been assumed; and
-
(b)
-
guarantees,
indemnities, endorsements (other than endorsements for collection in the ordinary course of business) or other contingent liabilities in respect
of obligations of another person for indebtedness of that other person in respect of any amounts borrowed by them.
"
Material Subsidiary
" means, at any time, a Subsidiary:
-
(a)
-
the
total assets of which represent more than 10% of the total assets of the Corporation determined on a consolidated basis as shown in the most recent
audited consolidated balance sheet of the Corporation; or
-
(b)
-
the
total revenues of which represent more than 10% of the total revenues of the Corporation determined on a consolidated basis as shown in the consolidated
income statement of the Corporation for the four most recent fiscal quarters of the Corporation.
"
Non-Recourse Debt
" means any Indebtedness incurred to finance the creation, development, construction or acquisition of assets and any
increases in or extensions, renewals or refundings of any such Indebtedness, provided that the recourse of the lender thereof or any agent, trustee, receiver or other person acting on behalf of the
lender in respect of such Indebtedness or any judgment in respect thereof is limited in all circumstances (other than in respect of false or misleading representations or warranties and customary
indemnities provided with respect to such financings) to the assets created, developed, constructed or acquired in respect of which such Indebtedness has been incurred and to any receivables,
inventory, equipment, chattel paper, intangibles and other rights or collateral arising from or connected with the assets so created, developed, constructed or acquired (including the shares or other
ownership interests of a single purpose entity which holds only such assets and other rights and collateral arising from or connected therewith) and to which the lender has recourse.
"
Permitted Encumbrance
" means any of the following:
-
(a)
-
any
Security Interest existing as of the date of the first issuance by the Corporation of debt securities issued pursuant to the Indenture, or arising
thereafter pursuant to contractual commitments entered into prior to such issuance;
-
(b)
-
any
Security Interest created, incurred or assumed to secure any Purchase Money Obligation;
-
(c)
-
any
Security Interest created, incurred or assumed to secure any Non-Recourse Debt;
18
-
(d)
-
any
Security Interest in favour of any Wholly-owned Subsidiary;
-
(e)
-
any
Security Interest on property of a corporation or its Subsidiaries which Security Interest exists at the time such corporation is merged into, or
amalgamated or consolidated with the Corporation or such property is otherwise directly or indirectly acquired by the Corporation, other than a Security Interest incurred in contemplation of such
merger, amalgamation, consolidation or acquisition;
-
(f)
-
any
Security Interest securing any Indebtedness to any bank or banks or other lending institution or institutions incurred in the ordinary course of
business and for the purpose of carrying on the same, repayable on demand or maturing within 12 months of the date when such Indebtedness is incurred or the date of any renewal or extension
thereof;
-
(g)
-
any
Security Interest on or against cash or marketable debt securities pledged to secure Financial Instrument Obligations;
-
(h)
-
certain
Security Interests in respect of liens or other encumbrances, not related to the borrowing of money, incurred or arising by operation of law or in
the ordinary course of business;
-
(i)
-
any
extension, renewal, alteration or replacement (or successive extensions, renewals, alterations or replacements) in whole or in part, of any
Security Interest referred to in the foregoing clauses (a) through (h) inclusive, provided the extension, renewal, alteration or replacement of such Security Interest is limited to all
or any part of the same property that secured the Security Interest extended, renewed, altered or replaced (plus improvements on such property) and the principal amount of the Indebtedness secured
thereby is not increased; and
-
(j)
-
any
other Security Interest if the aggregate amount of Indebtedness secured pursuant to this clause (j) (together with the Attributable Amount of any
sale and leaseback) does not exceed 20% of Consolidated Net Tangible Assets.
"
Preferred Securities
" means securities which on the date of issue thereof by a person:
-
(a)
-
have
a term to maturity of more than 30 years;
-
(b)
-
rank
subordinate to the unsecured and unsubordinated Indebtedness of such person outstanding on such date;
-
(c)
-
entitle
such person to defer the payment of interest thereon for more than four years without thereby causing an event of default in respect of such
securities to occur; and
-
(d)
-
entitle
such person to satisfy the obligation to make payments of deferred interest thereon from the proceeds of the issuance of its shares.
"
Purchase Money Obligation
" means any monetary obligation created or assumed as part of the purchase price of real or tangible personal property,
whether or not secured, any extensions, renewals, alterations or replacements of any such obligation, provided that the principal amount of such obligation outstanding on the date of such extension,
renewal, alteration or replacement is not increased and further provided that any security given in respect of such obligation shall not extend to any property other than the property acquired in
connection with which such obligation was created or assumed and fixed improvements, if any, erected or constructed thereon.
"
Security Interest
" means any mortgage, charge, pledge, lien, encumbrance, assignment by way of security, title retention agreement or other security
interest whatsoever, howsoever created or arising, whether absolute or contingent, fixed or floating, perfected or not, which secures payment or performance of an obligation.
19
"
Subsidiary
" means, in relation to a person:
-
(a)
-
any
corporation of which at least a majority of the outstanding shares having by the terms thereof ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether at the time shares of any other class or classes of such corporation might have voting power by reason of the happening of any contingency,
unless the contingency has occurred and then only for as long as it continues) is at the time directly, indirectly or beneficially owned or controlled by the person or one or more of its Subsidiaries,
or the person and one or more of its Subsidiaries;
-
(b)
-
any
partnership of which the person or one or more of its Subsidiaries, or the person and one or more of its Subsidiaries: (i) directly, indirectly
or beneficially own or control more than 50% of the income, capital, beneficial or ownership interests (however designated) thereof; and (ii) is a general partner, in the case of a limited
partnership, or is a partner that has authority to bind the partnership, in all other cases; or
-
(c)
-
any
other person of which at least a majority of the income, capital, beneficial or ownership interests (however designated) are at the time directly,
indirectly or beneficially owned or controlled by the first mentioned person or one or more of its Subsidiaries, or the first mentioned person and one or more of its Subsidiaries.
"
Wholly-owned Subsidiary
" means any Subsidiary that the Corporation directly or indirectly beneficially owns 100% of the outstanding shares having by
the terms thereof ordinary voting power to elect a majority of the board of directors of such Subsidiary or owns, directly or indirectly, 100% of the income, capital, beneficial or ownership interests
(however designated) thereof.
Covenants
The Indenture contains covenants substantially to the following effect:
Negative Pledge
So long as any debt securities remain outstanding the Corporation and its Subsidiaries will not create, assume or otherwise have
outstanding any Security Interest, except for Permitted Encumbrances, on or over its or their respective assets (present or future) in respect of any Indebtedness of any person unless, in the opinion
of legal counsel to the Corporation or the Trustee, the obligations of the Corporation in respect of all debt securities then outstanding shall be secured equally and rateably therewith
(Section 10.12).
Restriction on Sales and Leasebacks
The Corporation will not, and will not permit any Subsidiary to, enter into any sale and leaseback transaction unless the Corporation
and its Subsidiaries comply with this restrictive covenant. A "sale and leaseback transaction" generally is an arrangement between the Corporation or any Subsidiary and a bank, insurance company or
other lender or investor where the Corporation or any Subsidiary lease real or personal property which was or will be sold by the Corporation or any Subsidiary to that lender or investor. The
Corporation can comply with this restrictive covenant if it meets either of the following conditions:
-
(a)
-
the
sale and leaseback transaction is entered into prior to, concurrently with or within 270 days after the acquisition, the completion of
construction (including any improvements on an existing property) or the commencement of commercial operations of the property; or
-
(b)
-
the
Corporation or its Subsidiaries could otherwise grant a Security Interest on the property as a Permitted Encumbrance described in
" Negative Pledge" (Section 10.10).
20
Mergers, Consolidations, Amalgamations and Sale of Assets
The Corporation will not enter into any transaction whereby all or substantially all of its undertaking, property and assets would
become the property of any other person (the "
Successor
"), whether by reorganization, consolidation, amalgamation, arrangement, merger, transfer,
sale, or otherwise, unless:
-
(a)
-
the
Successor expressly assumes all of the covenants and obligations of the Corporation under the Indenture and the transaction otherwise meets all of the
requirements of the Indenture;
-
(b)
-
the
entity formed by or continuing from such consolidation or amalgamation or into which the Corporation is merged or with which the Corporation enters into
such arrangement or the person which acquires or leases all or substantially all of the Corporation's properties and assets is organized and existing under the laws of the United States, any
state thereof or the District of Columbia or the laws of Canada or any province thereof; and
-
(c)
-
immediately
before and after giving effect to such transaction, no event of default, and no event which, after notice or lapse of time or both, would become
an event of default, shall have happened and be continuing (Section 8.1).
If,
as a result of any such transaction, any of the properties or assets of the Corporation or its Subsidiaries become subject to a Security Interest, then, unless such Security Interest
could be created pursuant to the Indenture provisions described under "Negative Pledge" above without equally and rateably securing debt securities, the Corporation, simultaneously with or prior to
such transaction, will cause any debt securities of the Corporation then outstanding to be secured equally and rateably with or prior to the Indebtedness secured by such Security Interest
(Section 8.4).
In
addition to the above conditions, such transaction will, to the satisfaction of the Trustee, substantially preserve and not impair any of the rights and powers of the Trustee or of
the security holders. Also, no condition or event will exist as to the Corporation (at the time of such transaction) or the Successor (immediately after such transaction) and after giving full
effect thereto or immediately after the Successor will become liable to pay the principal monies, premium, if any, interest and other monies due or which may become due hereunder, which constitutes or
would constitute an Event of Default under the Indenture.
Payment of Additional Amounts
Unless otherwise specified in an applicable Prospectus Supplement, TransAlta will, subject to the exceptions and limitations set forth
below, pay to the holder of any debt security who is a non-resident of Canada under the
Income Tax Act
(Canada) such additional
amounts as may be necessary so that every net payment on such debt security, after deduction or withholding by TransAlta or any of its paying agents for or on account of any present or future tax,
assessment or other governmental charge (including penalties, interest and other liabilities related thereto) imposed by the government of Canada (or any political subdivision or taxing
authority thereof or therein) (collectively, "
Canadian Taxes
") upon or as a result of such payment, will not be less than the amount provided in such
debt security or in such coupon to be then due and payable (and TransAlta will remit the full amount withheld to the relevant authority in accordance with applicable law). However, TransAlta
will not be required to make any payment of additional amounts:
-
(a)
-
to
any person in respect of whom such taxes are required to be withheld or deducted as a result of such person not dealing at arm's length with TransAlta
(within the meaning of the
Income Tax Act
(Canada));
-
(b)
-
to
any person by reason of such person being connected with Canada (otherwise than merely by holding or ownership of any series of debt securities or
receiving any payments or exercising any rights thereunder), including without limitation a non-resident insurer who carries on an insurance business in Canada and in a country other
than Canada;
21
-
(c)
-
for
or on account of any tax, assessment or other governmental charge which would not have been so imposed but for: (i) the presentation by the
holder of such debt security or coupon for payment on a date more than 30 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided
for, whichever occurs later; or (ii) the holder's failure to comply with any certification, identification, information, documentation or other reporting requirements if compliance is required
by law, regulation, administrative practice or an applicable treaty as a precondition to exemption from or a reduction in the rate of deduction or withholding of; any such taxes, assessment
or charge;
-
(d)
-
for
or on account of any estate, inheritance, gift, sales, transfer, personal property tax or any similar tax, assessment or other governmental charge;
-
(e)
-
for
or on account of any tax, assessment or other governmental charge required to be withheld by any paying agent from any payment to a person on a debt
security if such payment can be made to such person without such withholding by at least one other paying agent the identity of which is provided to such person;
-
(f)
-
for
or on account of any tax, assessment or other governmental charge which is payable otherwise than by withholding from a payment on a debt
security; or
-
(g)
-
for
any combination of items (a), (b), (c), (d), (e) and (f);
nor
will additional amounts be paid with respect to any payment on a debt security to a holder who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent
such payment would be required by the laws of Canada (or any political subdivision thereof) to be included in the income for Canadian federal income tax purposes of a beneficiary or settlor
with respect to such fiduciary or a member of such partnership or a beneficial owner who would not have been entitled to payment of the additional amounts had such beneficiary, settlor, member or
beneficial owner been the holder of such debt security (Section 10.5).
The
Corporation will furnish to the holders of the debt securities, within 30 days after the date of the payment of any Canadian Taxes is due under applicable law, certified
copies of tax receipts or other documents evidencing such payment.
Wherever
in the Indenture there is mentioned, in any context, the payment of principal (and premium, if any), interest or any other amount payable under or with respect to a debt
security, such mention shall be deemed to include mention of the payment of additional amounts to the extent that, in such context additional amounts are, were or would be payable in respect thereof
(Section 10.5).
Redemption
If and to the extent specified in an applicable Prospectus Supplement, the debt securities of a series will be subject to redemption at
the time or times specified therein, at a redemption price equal to the principal amount thereof together with accrued and unpaid interest to the date fixed for redemption, upon the giving of a
notice. Notice of redemption of the debt securities of such series will be given once not more than 60 nor less than 30 days prior to the date fixed for redemption and will specify the
date fixed for redemption (Section 11.4).
Provision of Financial Information
TransAlta will file with the Trustee, within 15 days after it files them with the SEC, copies of its annual report and of the
information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which TransAlta is required to file with the SEC
pursuant to Section 13 or 15(d) of the U.S. Exchange Act. Notwithstanding that TransAlta may not be required to remain subject to the reporting requirements of Section 13
or 15(d) of the U.S. Exchange Act
22
or
otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, TransAlta will continue to
provide the Trustee (a) within 140 days after the end of each fiscal year, the information required to be contained in annual reports on Form 20-F or
Form 40-F as applicable (or any successor form); and (b) within 60 days after the end of each of the first three fiscal quarters of each fiscal year, the
information required to be contained in reports on Form 6-K (or any successor form), which, regardless of applicable requirements shall, at a minimum, consist of such
information required to be provided in quarterly reports under the laws of Canada or any province thereof to security holders of a corporation with securities listed on the Toronto Stock Exchange,
whether or not TransAlta has any of its securities listed on such exchange. Such information will be prepared in accordance with Canadian disclosure requirements and Canadian GAAP
(Section 7.5).
Events of Default
Unless otherwise specified in the Prospectus Supplement relating to a particular series of debt securities, the following events are
defined in the Indenture as "Events of Default" with respect to debt securities of any series: (a) the failure of the Corporation to pay when due the principal of or premium (if any) on
any debt securities; (b) the failure of the Corporation, continuing for 30 days, to pay any interest due on any debt securities; (c) the breach or violation of any covenant or
condition (other than as referred to in (a) and (b) above), which continues for a period of 60 days after notice from the Trustee or from holders of at least 25% in principal
amount of all outstanding debt securities of any series affected thereby (or such longer period as may be agreed to by the Trustee); (d) the failure of the Corporation or any Subsidiary
to pay when due (after giving effect to any applicable grace periods) any amount owing in respect of any Indebtedness other than Non-Recourse Debt, of the Corporation or any Subsidiary
otherwise defaults in connection with such Indebtedness, and if such Indebtedness has not matured it shall have been accelerated, provided that the aggregate principal amount of such Indebtedness is
in excess of the greater of US$75 million and 3% of Consolidated Shareholders' Equity; (e) the taking or entry of certain judgments or decrees against the Corporation or any Material
Subsidiary for the payment of money in excess of the greater of US$75 million and 3% of Consolidated Shareholders' Equity, in the aggregate, if the Corporation or any such Material Subsidiary,
as the case may be, fails to file an appeal or, if the
Corporation or such Material Subsidiary, as the case may be does file an appeal, that judgment or decree is not and does not remain vacated, discharged or stayed as provided in the Indenture;
(f) certain events of bankruptcy, insolvency or reorganization involving the Corporation or a Material Subsidiary; or (g) any other Event of Default provided with respect to debt
securities of that series.
If
an Event of Default occurs and is continuing with respect to any series of debt securities, then and in every such case the Trustee or the holders of at least 25% in aggregate
principal amount of the outstanding debt securities of such affected series may, subject to any subordination provisions thereof; declare the entire principal amount (or, if the debt securities of
that series are original issue discount debt securities, such portion of the principal amount as may be specified in the terms of that series) of all debt securities of such series and all interest
thereon to be immediately due and payable. However, at any time after a declaration of acceleration with respect to any series of debt securities has been made, but before a judgment or decree for
payment of the money due has been obtained, the holders of a majority in principal amount of the outstanding debt securities of that series, by written notice to the Corporation and the Trustee under
certain circumstances (which include payment or deposit with the Trustee of outstanding principal, premium and interest, unless the Prospectus Supplement applicable to an issue of debt securities
otherwise provides), may rescind and annul such acceleration (Section 5.2).
Reference
is made to the Prospectus Supplement relating to each series of debt securities which are original issue discount securities for the particular provisions relating to
acceleration of the maturity of a portion of the principal amount of such original issue discount securities upon the occurrence of any Event of Default and the continuation hereof.
23
The
Indenture provides that, subject to the duty of the Trustee during default to act with the required standard of care, the Trustee shall be under no obligation to exercise any of its
rights and powers under the Indenture at the request or direction of any of the holders, unless such holders shall have offered to the Trustee reasonable indemnity (Section 6.2). Subject to
such provisions for indemnification of the Trustee and certain other limitations set forth in the Indenture, the holders of a majority in principal amount of the outstanding debt securities of all
series affected by an Event of Default shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee, with respect to the debt securities of all series affected by such Event of Default (Section 5.12).
No
holder of a debt security of any series will have any right to institute any proceeding with respect to the Indenture, or for the appointment of a receiver or a Trustee, or for any
other remedy thereunder, unless (a) such holder has previously given to the Trustee written notice of a continuing Event of Default with respect to the debt securities of such series affected
by such Event of Default, (b) the holders of at least 25% in aggregate principal amount of the outstanding debt securities of such series
affected by such Event of Default have made written request, and such holder or holders have offered reasonable indemnity, to the Trustee to institute such proceeding as Trustee, and (c) the
Trustee has failed to institute such proceeding, and has not received from the holders of a majority in aggregate principal amount of the outstanding debt securities of such series affected by such
Event of Default a direction inconsistent with such request, within 60 days after such notice, request and offer (Section 5.7). However, such limitations do not apply to a suit
instituted by the holder of a debt security for the enforcement of payment of the principal of or any premium or interest on such debt security on or after the applicable due date specified in such
debt security (Section 5.8).
The
Corporation will be required to furnish to the Trustee annually a statement by certain of its officers as to whether or not the Corporation, to the best of their knowledge, is in
compliance with all conditions and covenants of the Indenture and, if not, specifying all such known defaults (Section 10.4).
Modification and Waiver
Modifications and amendments of the Indenture may be made by the Corporation and the Trustee with the consent of the holders of a
majority in principal amount of the outstanding debt securities of each series issued under the Indenture affected by such modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the holder of each outstanding debt security of such affected series: (1) change the stated maturity of the principal of; or any instalment of interest, if
any, on any debt security; (2) reduce the principal amount of; or the premium, if any, or the rate of interest, if any, on any debt security; (3) change the place of payment;
(4) change the currency or currency unit of payment of principal of (or premium, if any) or interest, if any, on any debt security; (5) impair the right to institute suit for the
enforcement of any payment on or with respect to any debt security; (6) adversely affect any right to convert or exchange any debt security; (7) reduce the percentage of principal amount
of outstanding debt securities of such series, the consent of the holders of which is required for modification or amendment of the applicable Indenture or for waiver of compliance with certain
provisions of the Indenture or for waiver of certain defaults; (8) reduce the voting or quorum requirements relating to meetings of holders of debt securities; or (9) modify any
provisions of the Indenture relating to the modification and amendment of the Indenture or the waiver of past defaults or covenants except as otherwise specified in the Indenture (Section 9.2).
In addition, any amendment to, or waiver of; the provisions of the Indenture relating to subordination that adversely affects the rights of the holders of debt securities will require the consent of
holders of at least 75% in aggregate principal amount of such debt securities then outstanding.
The
holders of a majority in principal amount of the outstanding debt securities of any series may on behalf of the holders of all debt securities of that series waive, insofar as that
series is concerned, compliance by the Corporation with certain restrictive provisions of the Indenture (Section 10.13). The
24
holders
of a majority in principal amount of 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
the principal of (or premium, if any) and interest, if any, on any debt security of that series or in respect of a provision which under the Indenture cannot be modified or amended without the
consent of the holder of each outstanding debt security of that series (Section 5.13). The Indenture or the debt securities may be amended or supplemented, without the consent of any holder of
debt securities, to cure any ambiguity or inconsistency or to make any change that does not have an adverse effect on the rights of any holder of debt securities (Section 9.1).
Defeasance
The Indenture provides that, at its option, TransAlta will be discharged from any and all obligations in respect of the outstanding
debt securities of any series upon irrevocable deposit with the Trustee, in trust, of money and/or government securities which will provide money in an amount sufficient in the opinion of a nationally
recognized firm of independent chartered accountants to pay the principal of and premium, if any, and each instalment of interest, if any, on the outstanding debt securities of such series
("
Defeasance
") (except with respect to the authentication, transfer, exchange or replacement of debt securities or the maintenance of a place of payment
and certain other obligations set forth in the Indenture). Such trust may only be established if among other things (1) TransAlta has delivered to the Trustee an opinion of counsel in the
United States stating that (a) TransAlta has received from, or there has been published by, the Internal Revenue Service a ruling, or (b) since the date of execution of the
Indenture, there has been a change in the applicable United States federal income tax law, in either case to the effect that the holders of the outstanding debt securities of such series will
not recognize income, gain or loss for United States federal income tax purposes as a result of such Defeasance and will be subject to United States federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if such Defeasance had not occurred; (2) TransAlta has delivered to the Trustee an opinion of counsel in Canada or
a ruling from the Canada Revenue Agency ("
CRA
") to the effect that the holders of such outstanding debt securities of such series will not recognize
income, gain or loss for Canadian federal, provincial or territorial income or other tax purposes as a result of such Defeasance and will be subject to Canadian federal or provincial income and other
tax on the same amounts, in the same manner and at the same times as would have been the case had such Defeasance not occurred (and for the purposes of such opinion, such Canadian counsel shall
assume that holders of the outstanding debt securities of such series include holders who are not resident in Canada); (3) no Event of Default or event that, with the passing of time or the
giving of notice, or both, shall constitute an Event of Default shall have occurred and be continuing on the date of such deposit; (4) TransAlta is not an "insolvent person" within the meaning
of the
Bankruptcy and Insolvency Act
(Canada); (5) TransAlta has delivered to the Trustee an opinion of counsel to the effect that such deposit
shall not cause the Trustee or the trust so created to be subject to the
United States Investment Company Act
of 1940, as amended; and
(6) other
customary conditions precedent are satisfied, TransAlta may exercise its Defeasance option notwithstanding its prior exercise of its Covenant Defeasance option described in the following paragraph if
TransAlta meets the conditions described in the preceding sentence at the time TransAlta exercises the Defeasance option.
The
Indenture provides that, at its option, unless and until TransAlta has exercised its Defeasance option described in the preceding paragraph, TransAlta may omit to comply with
covenants, including the covenants described above under the heading "Covenants", and such omission shall not be deemed to be an Event of Default under the Indenture and the outstanding debt
securities upon irrevocable deposit with the Trustee, in trust, of money and/or government securities which will provide money in an amount sufficient in the opinion of a nationally recognized firm of
independent chartered accountants to pay the principal of and premium, if any, and each instalment of interest, if any, on the outstanding debt securities ("
Covenant
Defeasance
"). If TransAlta exercises its Covenant Defeasance option, the obligations under the Indenture other than with respect to such covenants and the Events of Default
other than with respect to such covenants shall remain in full force and effect. Such trust may only be established if, among other
25
things,
(1) TransAlta has delivered to the Trustee an opinion of counsel in the United States to the effect that the holders of the outstanding debt securities will not recognize income,
gain or loss for United States federal income tax purposes as a result of such Covenant Defeasance and will be subject to United States federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred; (2) TransAlta has delivered to the Trustee an opinion of counsel in Canada or a
ruling from the CRA to the effect that the holders of such outstanding debt securities will not recognize income, gain or loss for Canadian federal, provincial or territorial income or other tax
purposes as a result of such Covenant Defeasance and will be subject to Canadian federal or provincial income and other tax on the same amounts, in the same manner and at the same times as would have
been the case had such Covenant Defeasance not occurred (and for the purposes of such opinion, such Canadian counsel shall assume that holders of the outstanding debt securities include holders
who are not resident in Canada); (3) no Event of Default or event that, with the passing of time or the giving of notice, or both, shall constitute an Event of Default shall have occurred and
be continuing on the date of such deposit; (4) TransAlta is not an "insolvent person" within the meaning of the
Bankruptcy and Insolvency Act
(Canada); (5) TransAlta has delivered to the Trustee an opinion of counsel to the effect that such deposit shall not cause the Trustee or the trust so created to be subject to the
United States Investment Company
Act
of 1940, as amended; and (6) other customary conditions precedent are satisfied (Article 14).
Consent to Jurisdiction and Service
Under the Indenture, TransAlta irrevocably appoints CT Corporation System, 111 Eighth Avenue, 13
th
Floor,
New York, New York 10011, as its authorized agent for service of process in any suit or proceeding arising out of or relating to the debt securities or the Indenture and
for actions brought under federal or state securities laws in any federal or state court located in the City of New York, and irrevocably submits to such jurisdiction (Section 1.13).
Governing Law
The debt securities and the Indenture will be governed by and construed in accordance with the laws of the State of New York.
PRIOR SALES
We issued the following Securities during the 12-month period prior to the date of this
Prospectus:
-
1.
-
on
November 5, 2009, we issued 18,656,800 common shares for aggregate consideration of approximately $412.5 million; and
-
2.
-
on
November 18, 2009, we completed an offering of US$500 million senior notes maturing in 2015 and bearing an interest rate of
4.75%; and
-
3.
-
on
March 12, 2010, we completed our offering of US$300 million senior notes maturing in 2040 and bearing an interest rate of 6.50%.
For
additional information on previously issued Securities, see our consolidated financial statements as at and for the year ended December 31, 2009 and our unaudited consolidated
financial statements as at and for the three and nine month periods ended September 30, 2010, all of which have been incorporated by reference herein.
We
have not issued any First Preferred Shares, Warrants or Subscription Receipts during the 12-month period prior to the date of this Prospectus.
26
MARKET FOR COMMON SHARES
Our Common Shares are listed and traded on the TSX under the symbol "TA" and on the NYSE under the symbol "TAC". The following tables
set forth certain trading information for our Common Shares during the periods indicated as reported by the TSX and the NYSE. For additional trading information relating to our Common Shares, see
"
Market for Securities
" in our Annual Information Form.
|
|
|
|
|
|
|
|
|
|
|
|
|
TSX
|
|
Period
|
|
Common Share
Price ($) High
|
|
Common Share
Price ($) Low
|
|
Volume
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
September
|
|
|
22.22
|
|
|
20.61
|
|
|
13,392,244
|
|
October
|
|
|
22.05
|
|
|
20.10
|
|
|
12,836,564
|
|
November
|
|
|
22.23
|
|
|
20.04
|
|
|
19,249,898
|
|
December
|
|
|
23.65
|
|
|
21.51
|
|
|
15,714,132
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
January
|
|
|
23.98
|
|
|
22.06
|
|
|
12,926,828
|
|
February
|
|
|
24.00
|
|
|
21.62
|
|
|
10,623,554
|
|
March
|
|
|
23.35
|
|
|
22.00
|
|
|
19,248,855
|
|
April
|
|
|
22.93
|
|
|
20.54
|
|
|
17,663,924
|
|
May
|
|
|
21.09
|
|
|
19.55
|
|
|
16,062,435
|
|
June
|
|
|
21.67
|
|
|
19.60
|
|
|
17,881,262
|
|
July
|
|
|
21.12
|
|
|
19.70
|
|
|
9,290,865
|
|
August
|
|
|
21.50
|
|
|
20.26
|
|
|
14,098,678
|
|
September
|
|
|
22.05
|
|
|
21.20
|
|
|
16,199,764
|
|
October
|
|
|
22.24
|
|
|
20.31
|
|
|
11,286,417
|
|
November (1-17)
|
|
|
21.19
|
|
|
20.12
|
|
|
10,582,503
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NYSE
|
|
Period
|
|
Common Share
Price (US$) High
|
|
Common Share
Price (US$) Low
|
|
Volume
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
September
|
|
|
20.73
|
|
|
18.71
|
|
|
852,979
|
|
October
|
|
|
21.31
|
|
|
18.61
|
|
|
839,229
|
|
November
|
|
|
21.23
|
|
|
18.55
|
|
|
689,140
|
|
December
|
|
|
22.72
|
|
|
20.34
|
|
|
816,653
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
January
|
|
|
23.30
|
|
|
20.63
|
|
|
783,952
|
|
February
|
|
|
23.02
|
|
|
19.99
|
|
|
1,111,778
|
|
March
|
|
|
22.87
|
|
|
21.03
|
|
|
892,880
|
|
April
|
|
|
22.92
|
|
|
20.27
|
|
|
934,805
|
|
May
|
|
|
20.80
|
|
|
17.60
|
|
|
1,404,494
|
|
June
|
|
|
21.21
|
|
|
18.45
|
|
|
1,420,998
|
|
July
|
|
|
20.44
|
|
|
18.44
|
|
|
1,031,087
|
|
August
|
|
|
21.18
|
|
|
19.32
|
|
|
1,171,515
|
|
September
|
|
|
21.56
|
|
|
20.08
|
|
|
977,756
|
|
October
|
|
|
21.83
|
|
|
19.82
|
|
|
875,074
|
|
November (1-17)
|
|
|
21.10
|
|
|
19.91
|
|
|
581,718
|
|
27