PROSPECTUS
ALLETE,
Inc.
Common
Stock
and
First
Mortgage Bonds
ALLETE,
Inc. may offer any combination of the securities described in this prospectus in
one or more offerings from time to time in amounts authorized from time to
time.
ALLETE
will provide specific terms of the securities, including the offering prices, in
supplements to this prospectus. The supplements may also add, update
or change information contained in this prospectus. You should read
this prospectus and any supplements carefully before you invest.
ALLETE’s
common stock is listed on the New York Stock Exchange and trades under the
symbol “ALE.”
ALLETE’s
principal executive offices are located at 30 West Superior Street, Duluth,
Minnesota 55802-2093, telephone number (218) 279-5000.
See
the discussion of risk factors, if any, contained in ALLETE’s annual, quarterly
and current reports filed with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, which are incorporated by reference into this
prospectus, to read about certain factors you should consider before purchasing
any of the securities being offered.
ALLETE
may offer the securities to or through underwriters or dealers, directly to
purchasers or through agents designated from time to time. The
supplements to this prospectus will describe the terms of any particular plan of
distribution, including any underwriting arrangements. The “Plan of
Distribution” section beginning on page 14 of this prospectus also provides more
information on this topic.
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Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a
criminal offense.
December
10, 2007
This
prospectus is part of a registration statement that ALLETE, Inc. filed under the
Securities Act of 1933 with the Securities and Exchange Commission, or SEC,
using a “shelf” registration process. ALLETE, Inc. is referred to in
this prospectus as “ALLETE.” Under this shelf registration process,
ALLETE may issue and sell any combination of the securities described in this
prospectus in one or more offerings from time to time.
This prospectus
provides you with a general description of the securities ALLETE may
offer. Each time ALLETE sells securities, ALLETE will provide a
prospectus supplement that will contain specific information about the terms of
that offering. Material United States federal income tax
considerations applicable to the offered securities will be discussed in the
applicable prospectus supplement, if necessary. The prospectus
supplement may also add, update or change information contained in this
prospectus. You should read both this prospectus and any prospectus
supplement together with additional information described under the headings
“Where You Can Find More Information” and “Incorporation by
Reference.”
For more
detailed information about the securities, you can read the exhibits to the
registration statement. Those exhibits have been either filed with
the registration statement or incorporated by reference to earlier SEC filings
listed in the registration statement.
ALLETE
files annual, quarterly and other reports and other information with the
SEC. You can read and copy any information filed by ALLETE with the
SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549. You can obtain additional information about the Public
Reference Room by calling the SEC at 1-800-SEC-0330.
In
addition, the SEC maintains an Internet site (www.sec.gov) that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC, including
ALLETE. ALLETE also maintains an Internet site
(www.allete.com). Information contained on ALLETE’s Internet site
does not constitute part of this prospectus.
The SEC
allows ALLETE to “incorporate by reference” the information that ALLETE files
with the SEC, which means that ALLETE may, in this prospectus, disclose
important information to you by referring you to those documents. The
information incorporated by reference is an important part of this
prospectus. Information that ALLETE files in the future with the SEC
will automatically update and supersede this information. ALLETE is
incorporating by reference the documents listed below and any future filings
ALLETE makes with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after the date of this prospectus until ALLETE
sells all of these securities:
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ALLETE’s
Annual Report on Form 10-K for the year ended December 31,
2006;
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ALLETE’s
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2007, June
30, 2007 and September 30, 2007;
and
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ALLETE’s
Current Reports on Form 8-K filed with the SEC on June 7, 2007, July 23,
2007 and December 7, 2007.
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You may
request a copy of these documents, at no cost to you, by writing or
calling:
Shareholder
Services
ALLETE
30 West
Superior Street
Duluth,
Minnesota 55802-2093
telephone:
(218) 723-3974
e-mail:
shareholder@allete.com
ALLETE
will provide to each person, including any beneficial owner, to whom this
prospectus is delivered, a copy of any or all of the information that has been
incorporated by reference in this prospectus but not delivered with this
prospectus.
In
connection with the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995, ALLETE is hereby filing cautionary statements identifying
important factors that could cause ALLETE’s actual results to differ materially
from those projected in forward-looking statements (as that term is defined in
the Private Securities Litigation Reform Act of 1995) made by or on behalf of
ALLETE which are made in this prospectus or any prospectus supplement, in
presentations, in response to questions or otherwise. Any statements
that express, or involve discussions as to, expectations, beliefs, plans,
objectives, assumptions or future events or performance (often, but not always,
through the use of words or phrases such as “anticipates,” “believes,”
“estimates,” “expects,” “intends,” “plans,” “projects,” “will likely result,”
“will continue,” “could,” “may,” “potential,” “target,” “outlook” or similar
expressions) are not statements of historical facts and may be
forward-looking.
Forward-looking
statements involve estimates, assumptions and uncertainties, which are beyond
ALLETE’s control and may cause actual results or outcomes to differ materially
from those that may be projected. These statements are qualified in
their entirety by reference to, and are accompanied by, the following important
factors, in addition to any assumptions and other factors referred to
specifically:
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ALLETE’s
ability to successfully implement its strategic
objectives;
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ALLETE’s
ability to manage expansion and integrate
acquisitions;
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prevailing
governmental policies, regulatory actions and legislation, including those
of the United States Congress, state legislatures, the Federal Energy
Regulatory Commission, the Minnesota Public Utilities Commission, the
Public Service Commission of Wisconsin and various local and county
regulators, and city administrators, about allowed rates of return,
financings, industry and rate structure, acquisition and disposal of
assets and facilities, real estate development, operation and construction
of plant facilities, recovery of purchased power and capital investments,
present or prospective wholesale and retail competition (including but not
limited to transmission costs), zoning and permitting of land held for
resale and environmental
regulation;
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effects
of restructuring initiatives in the electric
industry;
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economic
and geographic factors, including political and economic
risks;
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changes
in and compliance with laws and
policies;
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natural
disasters and pandemic diseases;
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war
and acts of terrorism;
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wholesale
power market conditions;
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population
growth rates and demographic
patterns;
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effects
of competition, including competition for retail and wholesale
customers;
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changes
in the real estate market;
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pricing
and transportation of commodities;
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changes
in tax rates or policies or in rates of
inflation;
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unanticipated
project delays or changes in project
costs;
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availability
of construction materials and skilled construction labor for capital
projects;
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unanticipated
changes in operating expenses and capital
expenditures;
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global
and domestic economic conditions;
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ALLETE’s
ability to access capital markets and bank
financing;
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changes
in interest rates and the performance of the financial
markets;
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ALLETE’s
ability to replace a mature workforce and retain qualified, skilled and
experienced personnel; and
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the
outcome of legal and administrative proceedings (whether civil or
criminal) and settlements that affect the business and profitability of
ALLETE.
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Additional
factors that could cause ALLETE’s results and performance to differ from those
projected in forward-looking statements are set forth in the discussion of risk
factors, if any, contained in ALLETE’s annual, quarterly and current reports
filed with the SEC under the Securities Exchange Act of 1934, which are
incorporated by reference into this prospectus and in any prospectus
supplement. Any forward-looking statement speaks only as of the date
on which that statement is made, and ALLETE undertakes no obligation to update
any forward-looking statement to reflect events or circumstances after the date
on which that statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time and it is not possible
for management to predict all of those factors, nor can it assess the impact of
each of those factors on the businesses of ALLETE or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statement. You should
also refer to ALLETE’s reports and other information incorporated by reference
herein for any additional factors.
ALLETE is
a diversified company that has provided fundamental products and services since
1906. These include our former operations in the water, paper,
telecommunications and automotive industries and the core Energy and Real Estate businesses we
operate today.
Energy is comprised of
Regulated Utility, Nonregulated Energy Operations and Investment in
ATC.
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Regulated Utility
includes retail and wholesale rate regulated electric, natural gas and
water services in northeastern Minnesota and northwestern Wisconsin under
the jurisdiction of state and federal regulatory
authorities.
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Nonregulated Energy
Operations includes coal mining activities in North Dakota,
approximately 50 megawatts of nonregulated generation and Minnesota
land sales.
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Investment in ATC
includes an equity ownership interest in American Transmission
Company LLC.
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Real Estate includes Florida
real estate operations.
Other includes investments in
emerging technologies, and earnings on cash and short-term
investments.
Unless
otherwise stated in the prospectus supplement, ALLETE will add the net proceeds
from the sale of the securities to its general funds. ALLETE will use
its general funds for corporate purposes, including, without limitation, capital
investments in its existing business, acquisitions made by or on behalf of it or
its subsidiaries, to repay short-term borrowings and to repay, redeem or
repurchase outstanding long-term debt obligations. ALLETE will
temporarily invest any proceeds that it does not immediately need to use in
short-term instruments.
ALLETE’s
consolidated ratio of earnings to fixed charges for each of its last five fiscal
years is as follows:
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2006
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2005
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2004
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2003
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2002
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5.16
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1.66
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1.74
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1.51
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1.35
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ALLETE’s
consolidated ratio of earnings to fixed charges for the nine months ended
September 30, 2007 was 5.65.
General. The
following statements describing ALLETE’s common stock are not intended to be a
complete description. For additional information, please see ALLETE’s
Articles of Incorporation and bylaws. Each of these documents has
been previously filed with the SEC and they are exhibits to the registration
statement filed with the SEC of which this prospectus is a
part. Reference is also made to the laws of the State of
Minnesota.
ALLETE
has the following capital stock authorized by its Articles of Incorporation:
43,333,333 shares of common stock, without par value, and 3,616,000 shares of
preferred stock. As of the date of this prospectus, 30,825,618 shares
of common stock were issued and outstanding and no shares of preferred stock
were issued and outstanding.
Dividend
Rights. ALLETE’s common stock is entitled to dividends only
after ALLETE has provided for dividends and any sinking fund requirements on any
issued and outstanding preferred stock. ALLETE’s Articles of
Incorporation contain provisions which would restrict net income available for
the payment of cash dividends on outstanding common stock in the event that
shares of ALLETE’s preferred stock were outstanding and certain common stock
equity capitalization ratios were not met.
Voting Rights (Non-Cumulative
Voting). Holders of ALLETE’s common stock are entitled to
receive notice of and to vote at any meeting of shareholders. Each
share of ALLETE’s common stock, as well as each share of any of ALLETE’s issued
and outstanding preferred stock, is entitled to one vote. Since the
holders of these shares do not have cumulative voting rights, the holders of
more than 50 percent of the shares voting can elect all directors. If
that happens, the holders of the remaining shares voting (less than
50 percent) cannot elect any directors. In addition, whenever
dividends on any of ALLETE’s preferred stock are in default in the amount of
four full quarterly payments or more, and until all the dividends in default are
paid, the holders of ALLETE’s preferred stock are entitled, as one class, to
elect a majority of the directors. ALLETE’s common stock, as one
class, would then elect the minority.
The
Articles of Incorporation include detailed procedures and other provisions
relating to these rights and their termination, including:
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terms
of directors elected;
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The
Articles of Incorporation contain provisions that make it difficult to obtain
control of ALLETE through transactions not having the approval of the Board of
Directors. These provisions include:
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a
provision requiring the affirmative vote of 75 percent of the outstanding
shares of all classes of ALLETE’s capital stock, present and entitled to
vote, in order to authorize certain mergers or consolidations, or sales or
leases of a significant amount of assets, of ALLETE, and other significant
transactions that may have an effect on the control of
ALLETE. Any of those transactions are required to meet certain
“fair price” and procedural requirements. Neither a 75 percent
shareholder vote nor a “fair price” is required for any of those
transactions that have been approved by a majority of the “Disinterested
Directors,” as that term is defined in the Articles of
Incorporation;
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a
provision permitting a majority of the Disinterested Directors to
determine whether the above requirements have been satisfied;
and
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a
provision providing that some parts of the Articles of Incorporation
cannot be altered unless approved by 75 percent of the outstanding shares
of all classes of ALLETE’s capital stock, present and entitled to vote,
unless the alteration is recommended to the shareholders by a majority of
the Disinterested Directors. The parts of the Articles of
Incorporation that cannot be altered except as stated above include some
parts relating to:
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mergers
or consolidations, or sales or leases of a significant amount of assets,
of ALLETE, and other significant transactions that may have an effect on
the control of ALLETE; and
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the
number, election, terms of office and removal of directors of ALLETE and
the way in which vacancies on the Board of Directors are
filled.
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Liquidation
Rights. After ALLETE has satisfied creditors and the
preferential liquidation rights of any of its outstanding preferred stock, the
holders of its common stock are entitled to share ratably in the distribution of
all remaining assets.
Miscellaneous. Holders
of ALLETE’s common stock have no preemptive or conversion
rights. ALLETE’s common stock is listed on the New York Stock
Exchange. The transfer agents and registrars for ALLETE’s common
stock are Wells Fargo Bank, N.A. and ALLETE.
Description of Preferred Share
Purchase Rights. The following statements describing ALLETE’s
preferred share purchase rights, each a “Right,” are not intended to be a
complete description. For additional information, please see the
Amended and Restated Rights Agreement, dated as of July 12, 2006, or the Rights
Plan, between ALLETE and the Corporate Secretary of ALLETE, as Rights Agent,
which sets forth the terms of the Rights. The Rights Plan has been
previously filed with the SEC and is an exhibit to the registration statement
filed with the SEC of which this prospectus is a part. Reference is
also made to the laws of the State of Minnesota.
On July
12, 2006, the Board of Directors of ALLETE amended the terms of the Rights
Agreement, dated July 14, 1996 between ALLETE and the Corporate Secretary
of ALLETE. Pursuant to the Rights Plan, ALLETE will issue rights
certificates, or “Right Certificates,” to the record holders of its common stock
when certain events occur, as discussed below. Each record holder of
ALLETE’s common stock will receive a Right Certificate, evidencing one Right for
each share of common stock so held, subject to adjustment. Except as
described below, each Right, when exercisable, currently entitles the registered
holder to purchase from ALLETE one and one-half one-hundredths (three
two-hundreths) of a share of Junior Serial Preferred Stock A, without par value,
or Serial
Preferred. The
purchase price is $90 per one one-hundredth of a share of Serial Preferred, or
the Purchase Price. The Purchase Price is subject to
adjustment.
Initially,
no separate Right Certificates were distributed. Until the
Distribution Date, ALLETE’s common stock
certificates together with a copy of a summary of the Rights Plan are proof of
the Rights. The “Distribution Date” is the earlier to occur
of:
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10
days following a public announcement that a person or group of affiliated
or associated persons (an “Acquiring Person”) has acquired, or obtained
the right to acquire, beneficial ownership of 15 percent or more of the
outstanding shares of ALLETE’s common stock, or the “Stock Acquisition
Date;” or
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15
business days following the commencement of (or a public announcement of
an intention to make) a tender or exchange offer where a person or group
would become the beneficial owner of 15 percent or more of ALLETE’s
outstanding shares of common stock. At any time before a person
becomes an Acquiring Person, the Board of Directors may extend the
15-business day time period.
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Until the
Distribution Date (or the earlier redemption, expiration or termination of the
Rights), the Rights will be transferred only with ALLETE’s common
stock. The transfer of any certificates for ALLETE’s common stock,
with or without a copy of the summary of Rights Plan, will also constitute the
transfer of the Rights associated with those common stock
certificates. As soon as practicable following the Distribution Date,
ALLETE will mail separate certificates evidencing the Rights to holders of
record of ALLETE’s common stock as of the close of business on the Distribution
Date. After the Distribution Date, separate certificates for the
Rights alone will be given as proof of the Rights.
Each
whole share of ALLETE’s Serial Preferred will have a minimum preferential
quarterly dividend rate equal to the greater of $51 per share or, subject to
adjustment, 100 times the aggregate per share amount of all cash dividends and
100 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in shares of
common stock or a subdivision of the outstanding shares of common
stock. If ALLETE liquidates, no distribution will be made to the
holders of shares of ALLETE’s stock ranking junior to the Serial Preferred until
the holders of ALLETE’s Serial Preferred have received a liquidation preference
of $100 per share, plus accrued and unpaid dividends and
distributions. Holders of ALLETE’s Serial Preferred will be entitled
to receive notice of and to vote at any meeting of ALLETE’s
shareholders. Each whole share of ALLETE’s Serial Preferred is
entitled to one vote. These shares do not have cumulative voting
rights.
ALLETE’s
Articles of Incorporation provide that whenever dividends on any of ALLETE’s
preferred stock are in default in the amount of four quarterly payments, and
until all the dividends in default are paid, the holders of ALLETE’s Serial
Preferred and other preferred stock will be entitled, together as one class, to
elect a majority of directors. Holders of ALLETE’s common stock would
then elect the minority. If, in any merger or other transaction,
shares of ALLETE’s common stock are exchanged for or converted into stock or
other securities, cash and/or any other property, each whole share of ALLETE’s
Serial Preferred will be entitled to receive, subject to adjustment, 100 times
the aggregate amount of stock, securities, cash and/or other property (payable
in kind), as the case may be, for or into which each share of ALLETE’s common
stock is exchanged or converted. ALLETE cannot redeem the shares of
Serial Preferred.
The
Rights are not exercisable until the Distribution Date and will expire at the
earliest of:
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July 11,
2009 (“Final Expiration Date”);
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the
redemption of the Rights as described below;
or
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the
exchange of all Rights for ALLETE’s common stock as described
below.
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If any
person (other than ALLETE, its affiliates or any person receiving newly-issued
shares of common stock directly from ALLETE) becomes the beneficial owner of 15
percent or more of the then outstanding shares of common stock, each holder of a
Right will have a right to receive, upon exercise at the then current exercise
price of the Right, common stock (or, in the discretion of the Board of
Directors, cash, property or other securities of
ALLETE)
with a value equal to two times the exercise price of the Right. The
Rights Plan contains an exemption for any common stock ALLETE issues directly to
any person. This exemption applies even if the person would become
the beneficial owner of 15 percent or more of ALLETE’s common stock,
provided that such person does not acquire any additional shares of ALLETE’s
common stock. Examples of situations where ALLETE might issue common
stock directly include private placements or acquisitions where ALLETE’s common
stock is used as consideration.
If,
following the Stock Acquisition Date, ALLETE is acquired in a merger or other
business combination transaction or 50 percent or more of its assets or earning
power are sold, ALLETE will make proper provision so that each holder of a Right
will, after the transaction, have the right to receive, upon exercise at the
then current exercise price of the Right, common stock of the acquiring or
surviving company with a value equal to two times the exercise price of the
Right.
If the
events described in the preceding two paragraphs happen, otherwise called
“Triggering Events,” any Rights that an Acquiring Person beneficially owns, or
transferred to certain persons, will immediately become null and
void.
The
Purchase Price payable and the number of shares of ALLETE’s Serial Preferred or
other securities or property issuable if the Rights are exercised, are subject
to adjustment. An adjustment would be made to prevent dilution, if
there was a stock dividend on, or a subdivision, split, combination,
consolidation or reclassification of, ALLETE’s Serial Preferred or its common
stock, or a reverse split of its outstanding shares of Serial Preferred or
common stock.
ALLETE’s
Board of Directors may exchange the Rights at an exchange ratio of one share of
common stock per Right, subject to adjustment, at any time that is:
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after
the acquisition by a person or group of affiliated or associated persons
of beneficial ownership of 15 percent or more of the outstanding
common stock; and
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before
the acquisition by that person or group of 50 percent or more of the
outstanding common stock.
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This
exchange ratio is subject to adjustment and does not include Rights that have
become null and void.
With
certain exceptions, no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least one percent in the
Purchase Price. ALLETE will not be required to issue fractional
shares of Serial Preferred or common stock (other than fractions in multiples of
one one-hundredths of a share of Serial Preferred). Instead, ALLETE
may make an adjustment in cash based on the market price of the Serial Preferred
or common stock on the last trading date before the date of
exercise.
ALLETE’s
Board of Directors may redeem the Rights in whole, but not in part, at a price
of $.005 per Right, or the “Redemption Price,” any time before a person becomes
an Acquiring Person. At its option, ALLETE may pay the Redemption
Price in cash, shares of its common stock or other consideration that its Board
of Directors deems appropriate. If ALLETE redeems the Rights, the
Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
The
Rights Plan contains several provisions related to the occurrence of Triggering
Events. ALLETE is prohibited from consolidating, merging, or selling
a majority of its assets or earning power if doing so would be counter to the
intended benefits of the Rights or would result in the distribution of Rights to
the shareholders of the other parties to the transaction. The Rights
Plan also provides that once the Rights become exercisable, the Board of
Directors is not permitted to take any action that could reasonably
be foreseen to diminish substantially or otherwise eliminate the intended
benefits of the Rights, provided that this provision does not prevent the Board
of Directors from exercising its existing authority, under certain
circumstances, to redeem or exchange the Rights, or to further amend the
Plan. Finally, the Rights Plan includes a requirement that certain
provisions to which a counterparty to a proposed consolidation, merger, sale or
transfer is subject and which would disrupt the intended effects of the Rights
Plan be cancelled, waived, or amended.
If the
Rights are exercised, issuance of Serial Preferred or common stock
will be subject to any necessary regulatory approvals. Until a Right
is exercised, the holder of the Right will have no rights as ALLETE’s
shareholder, including, without limitation, the right to vote or to receive
dividends. One million shares of Serial Preferred were reserved for
issuance if the Rights are exercised.
ALLETE
may amend the provisions of the Rights Plan. However, any amendment
adopted after the time that a person becomes an Acquiring Person may not
adversely affect the interests of holders of Rights.
Pursuant
to the Rights Plan, a special committee of the Board of Directors known as the
IDE Committee, comprising all of the independent directors of ALLETE, is
required to conduct an annual review of the terms and conditions of the Rights
Plan, including whether termination or modification of the Rights Plan is in the
best interests of ALLETE and its shareholders. The IDE Committee will
annually make recommendations to the Board of Directors based on such
review.
The
Rights have anti-takeover effects. The Rights will cause substantial
dilution to a person or group that attempts to acquire ALLETE without
conditioning the offer on the redemption of the Rights or on the acquisition of
a substantial number of Rights. The Rights beneficially owned by that
person or group may become null and void. The Rights should not
interfere with any merger or other business combination approved by ALLETE’s
Board of Directors. This is because, at any time before a person
becomes an Acquiring Person, ALLETE’s Board of Directors may redeem all of the
then outstanding Rights at the Redemption Price.
General. The
following description sets forth certain general terms and provisions of
ALLETE’s first mortgage bonds that ALLETE may offer by this
prospectus. ALLETE will describe the particular terms of the first
mortgage bonds, and provisions that vary from those described below, in one or
more prospectus supplements.
ALLETE
may issue the first mortgage bonds from time to time in one or more
series. ALLETE will issue the first mortgage bonds under its Mortgage
and Deed of Trust, dated as of September 1, 1945, with Irving Trust Company
(now The Bank of New York) and Richard H. West (Douglas J. MacInnes, successor),
as mortgage trustees (“mortgage trustee” or “mortgage trustees”), which has been
amended and supplemented in the past, may be supplemented prior to the issuance
of these first mortgage bonds and which will be supplemented again by one or
more supplemental indentures relating to these first mortgage
bonds. The Mortgage and Deed of Trust, as so amended and
supplemented, is referred to in this prospectus as the “mortgage.”
This
section briefly summarizes some of the terms of the first mortgage bonds and
some of the provisions of the mortgage and uses some terms that are not defined
in this prospectus but that are defined in the mortgage. This summary
is not complete. You should read this summary together with the
mortgage and the supplemental indenture establishing the first mortgage bonds
for a complete understanding of all the provisions. References to
certain sections of the mortgage are included in parentheses. The
mortgage and the form of supplemental indenture have been previously filed with
the SEC, and are exhibits to the registration statement filed with the SEC of
which this prospectus is a part. In addition, the mortgage is
qualified as an indenture under the Trust Indenture Act of 1939 and is therefore
subject to the provisions of the Trust Indenture Act of 1939. You
should read the Trust Indenture Act of 1939 for a complete understanding of its
provisions. All first mortgage bonds issued or to be issued under the
mortgage, including the first mortgage bonds offered by this prospectus, are
referred to herein as “first mortgage bonds.”
All first
mortgage bonds of one series need not be issued at the same time, and a series
may be re-opened for issuances of additional first mortgage bonds of such
series. This means that ALLETE may from time to time, without notice
to, or the consent of the existing holders of the first mortgage bonds of a
particular series, create and issue additional first mortgage bonds of such
series. Such additional first mortgage bonds will have the same terms
as the first mortgage bonds of such series in all respects (except for the
payment of interest accruing prior to the issue date of the additional first
mortgage bonds or except for the first payments of interest following the issue
date of the additional first mortgage bonds) so that the additional first
mortgage bonds may be consolidated and form a single series with the first
mortgage bonds of such series.
Reference
is made to a prospectus supplement relating to each series of first mortgage
bonds offered by this prospectus for the following specific terms of that
series, among others:
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the
designation of the series of first mortgage bonds and aggregate principal
amount of the first mortgage bonds,
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the
percentage or percentages of their principal amount at which the series
will be issued,
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the
offering price of the series,
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the
place where the principal of and interest on the series will be payable,
if other than at The Bank of New York in The City of New
York,
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the
date or dates on which the series will
mature,
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the
rate or rates at which the series will bear interest, or how the interest
rate(s) will be determined,
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the
times at which such interest will be
payable,
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whether
all or a portion of the series will be in global form,
and
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redemption
terms or any other terms or provisions relating to the series that are not
inconsistent with the provisions of the
mortgage.
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The first
mortgage bonds may be sold at a discount below their principal
amount. Some of the important United States federal income tax
considerations applicable to first mortgage bonds sold at a discount below their
principal amount may be described in the prospectus supplement. In
addition, some of the important United States federal income tax or other
considerations applicable to any first mortgage bonds which are denominated or
payable in a currency or currency unit other than United States dollars may be
described in the prospectus supplement.
Except as
may otherwise be described in the prospectus supplement, the covenants contained
in the mortgage will not afford holders of the first mortgage bonds protection
in the event of a highly-leveraged or similar transaction involving ALLETE or in
the event of a change in control.
Form and
Exchanges. The first mortgage bonds offered by this prospectus
will be issued in fully registered form without coupons, unless otherwise stated
in a prospectus supplement. The first mortgage bonds will be issued
in denominations of $1,000 and multiples thereof, or in other authorized
denominations, and will be transferable and exchangeable without charge (except
for stamp taxes, if any, or other governmental charges) at The Bank of New York,
in The City of New York.
A holder
of first mortgage bonds may exchange those first mortgage bonds, without charge,
for an equal aggregate principal amount of first mortgage bonds of the same
series, having the same issue date and with identical terms and provisions,
unless otherwise stated in a prospectus supplement. A holder of first
mortgage bonds may transfer those first mortgage bonds without cost to the
holder, other than for applicable stamp taxes or other governmental charges,
unless otherwise stated in a prospectus supplement. ALLETE may issue
all or some of the first mortgage bonds in “book-entry” form, which means that
they will be represented by global notes, instead of certificates. If
ALLETE issues global notes representing any first mortgage bonds, then a
depository selected by ALLETE will keep a record of the beneficial interests in
those global notes and record any transfers of those beneficial interests and
the depository, or its custodian, will hold those global notes. Any
additional requirements as to the form and method of exchange of first mortgage
bonds will be described in a prospectus supplement.
Redemption and Purchase of First
Mortgage Bonds. The first mortgage bonds may be redeemable mandatorily or
at the option of ALLETE upon 30 days notice at predetermined
prices. If the first mortgage bonds are redeemable, ALLETE may use
certain deposited cash and/or proceeds of released property to effect the
redemption.
Reference
is made to the prospectus supplement for the redemption terms of the first
mortgage bonds offered by this prospectus.
If at the
time notice of redemption is given the redemption moneys are not on deposit with
The Bank of New York, as mortgage trustee, the redemption may be made subject to
their receipt before the date fixed for redemption.
Cash
deposited under any provisions of the mortgage (with certain exceptions) may
generally be applied to the purchase of first mortgage bonds of any
series. (See Mortgage, Article X.)
Subject
to applicable law, including United States federal securities law, ALLETE may
purchase outstanding first mortgage bonds by tender, in the open market or by
private agreement.
Sinking or Improvement
Fund. Reference is made to the prospectus supplement
concerning whether or not the first mortgage bonds offered by this prospectus
are entitled to the benefit of a sinking or improvement fund or other provision
for amortization prior to maturity. None of the currently outstanding
first mortgage bonds has sinking fund or improvement fund
provisions.
Replacement
Fund. The first mortgage bonds offered by this prospectus are
not entitled to the benefit of any replacement fund.
Special Provisions for Retirement of
First Mortgage Bonds. If, during any 12 month period,
mortgaged property is disposed of by order of or to any governmental authority
resulting in the receipt by ALLETE of $5 million or more as proceeds,
ALLETE (subject to certain conditions) must apply such proceeds, less certain
deductions, to the retirement of first mortgage bonds. If this
occurs, ALLETE may redeem first mortgage bonds of any series that are redeemable
for such reason at the redemption prices applicable to those first mortgage
bonds. (See Mortgage, Section 64.) Reference is made to
the prospectus supplement for information concerning whether the first mortgage
bonds offered by this prospectus are redeemable for this purpose and, if so, at
what redemption prices.
Security. The
first mortgage bonds offered by this prospectus and any other first mortgage
bonds now or hereafter issued under the mortgage will be secured by the
mortgage, which constitutes a first lien on all of the electric generating
plants and other materially important physical properties of ALLETE and
substantially all other properties described in the mortgage as owned by ALLETE,
other than those expressly excepted. The lien of the mortgage is or
may be subject to the following:
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excepted
encumbrances, including defects which ALLETE has the right to cure and
which do not impair the use of such properties by
ALLETE;
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possible
defects in title to reservoir lands, easements or rights of way, any
property not costing in excess of $25,000, or lands or rights held for
flowage, flooding or seepage purposes, or riparian
rights;
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vendors’
liens, purchase money mortgages and liens on property that already exist
at the time ALLETE acquires that
property;
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liens
for labor, materials, supplies or other objects given priority by law;
and
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liens
for taxes, assessments or other governmental charges given priority by
law.
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The
mortgage does not create a lien on the following “excepted
property”:
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merchandise,
equipment, materials or supplies held for sale or other
disposition;
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fuel,
oil and similar materials used in the operation of the properties of
ALLETE;
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aircraft,
automobiles and other vehicles, and materials and supplies for repairing
and replacing the same;
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timber,
minerals, mineral rights and
royalties;
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receivables,
contracts, leases and operating agreements;
and
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materials
or products, including electric energy, that ALLETE generates, produces or
purchases for sale or use by
ALLETE.
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The
mortgage contains provisions that impose the lien of the mortgage on property
acquired by ALLETE after the date of the mortgage, other than “excepted
property.” However, if ALLETE consolidates or merges with, or conveys
or transfers all or substantially all of ALLETE’s mortgaged property to another
corporation, the lien created by the mortgage will generally not cover the
property of the successor company, other than the property it acquires from
ALLETE and improvements, replacements and additions to that
property. (See Mortgage, Section 87.)
The
mortgage provides that the mortgage trustees shall have a lien upon the
mortgaged property for the payment of their reasonable compensation, expenses
and disbursements and for indemnity against certain liabilities. This
lien takes priority over the lien securing the first mortgage
bonds. (See Mortgage, Section 96.)
No stock,
properties or other assets of ALLETE’s subsidiaries are subject to the
mortgage.
Issuance of Additional First
Mortgage Bonds. The maximum principal amount of first mortgage
bonds which may be issued under the mortgage is not limited so long as it meets
the issuance tests set forth in the mortgage, which are generally described
below. First mortgage bonds of any series may be issued from time to
time on the basis of:
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(1)
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deposit
with the mortgage trustee of cash or, to a limited extent, purchase money
mortgages;
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(2)
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property
additions acquired by ALLETE in the last five years, after adjustments in
certain cases to offset retirement and after making adjustments for
qualified lien bonds outstanding against property additions;
and/or
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(3)
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waiver
of the right to issue first mortgage
bonds,
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With
certain exceptions in the case of (2) above, ALLETE may not issue first mortgage
bonds unless it meets the “net earnings” test set forth in the mortgage, which
requires adjusted net earnings before income taxes for 12 out of the preceding
15 months of at least twice the annual interest requirements on all first
mortgage bonds at the time outstanding, including the additional issue, and on
all indebtedness of prior rank. Such adjusted net earnings are
computed after provision for retirement and depreciation of property equal to
$750,000 plus, for each of the 12 calendar months selected for the net earnings
test, 1/12th of two percent of the net additions to depreciable mortgaged
property made after June 30, 1945 and prior to the beginning of the calendar
year within which that calendar month is included. It is expected
that the first mortgage bonds offered by this prospectus will be issued upon the
basis of the retirement of first mortgage bonds or property
additions.
Property
additions generally include electric, gas, steam or hot water property acquired
after June 30, 1945. Securities, fuel, aircraft, automobiles or other
vehicles, or property used principally for the production of gathering of
natural gas will not qualify as property additions.
ALLETE
has the right to amend the mortgage without any consent or other action by
holders of any series of first mortgage bonds, including the holders of first
mortgage bonds offered by this prospectus, so as to include nuclear fuel as well
as similar or analogous devices or substances as property
additions.
The
mortgage contains certain restrictions upon the issuance of first mortgage bonds
against property subject to liens and upon the increase of the amount of such
liens. (See Mortgage, Sections 4-8, 20-30, and 46; Fifth
Supplemental, Section 2.)
Release and Substitution of
Property. Property may be released upon the basis
of:
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(1)
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deposit
with the mortgage trustee of cash or, to a limited extent, purchase money
mortgages;
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(2)
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property
additions acquired by ALLETE in the last five years, after adjustments in
certain cases to offset retirement and after making adjustments for
qualified lien bonds outstanding against property additions;
and/or
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(3)
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waiver
of the right to issue first mortgage
bonds,
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in each
case without applying any earnings test. Cash may be withdrawn upon
the bases stated in (2) and (3) above.
When
property released is not funded property, property additions used to effect the
release may again, in certain cases, become available as credits under the
mortgage, and the waiver of the right to issue first mortgage bonds to effect
the release may, in certain cases, cease to be effective as such a
waiver. Similar provisions are in effect as to cash proceeds of such
property. The mortgage contains special provisions with respect to
qualified lien bonds pledged, and disposition of moneys received on pledged
prior lien bonds. (See Mortgage, Sections 5, 31, 32, 37, 46-50,
59-63, 100 and 118.)
Modification of the
Mortgage. The rights of bondholders may be modified with the
consent of the holders of 66-2/3 percent of the first mortgage bonds and, if
less than all series of first mortgage bonds are affected, the consent also of
the holders of 66-2/3 percent of the first mortgage bonds of each series
affected. In general, no modification of the terms of payment of
principal and interest and no modification affecting the lien or reducing the
percentage required for modification, is effective against any bondholder
without his consent. (See Mortgage, Article XIX; Twenty-first
Supplemental, Section 3.)
Defaults and Notice
Thereof. Defaults are defined as being:
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failure
to pay principal of any first mortgage
bond;
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failure
to pay interest on any first mortgage bond for 60 days after that interest
is due;
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failure
to pay any installments of funds for retirement of first mortgage bonds
for 60 days after that installment is
due;
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failure
to pay principal of or interest on any qualified lien bond beyond any
applicable grace period for the payment of that principal or
interest;
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certain
events in bankruptcy, insolvency or reorganization;
and
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the
expiration of 90 days following notice by the mortgage trustee or holders
of 15 percent of the first mortgage bonds relating to other
covenants. (See Mortgage, Section
65.)
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The
mortgage trustees may withhold notice of default, except in payment of
principal, interest or funds for retirement of first mortgage bonds, if they
think it is in the interest of the bondholders. (See Mortgage,
Section 66.) Under the Trust Indenture Act of 1939, ALLETE is
required to provide to the mortgage trustees an annual statement by an
appropriate officer as to ALLETE’s compliance with all conditions and covenants
under the mortgage.
The Bank
of New York, as mortgage trustee, or the holders of 25 percent of the first
mortgage bonds may declare the principal and interest due on default, but a
majority may annul such declaration if the default has been
cured. (See Mortgage, Section 67.) No holder of first
mortgage bonds may enforce the lien of the mortgage without giving the mortgage
trustees written notice of a default and unless holders of 25 percent of the
first mortgage bonds have requested the mortgage trustees to act and offered
them reasonable opportunity to act and indemnity satisfactory to the mortgage
trustees and they shall have failed to act. (See Mortgage, Section
80.) The holders of a majority of the first mortgage bonds may direct
the time, method and place of conducting any proceedings for any remedy
available to the mortgage trustees, or exercising any trust or power conferred
upon the mortgage trustees,
but the
mortgage trustees are not required to follow such direction if not sufficiently
indemnified for expenditures. (See Mortgage, Section
71.)
Information about the Mortgage
Trustees. The Bank of New York is the corporate mortgage
trustee and Douglas J. MacInnes is the individual mortgage
trustee. In addition to acting as mortgage trustee, The Bank of New
York may also act as trustee under other indentures, trusts and guarantees of
ALLETE and its affiliates from time to time.
Satisfaction and Discharge of
Mortgage. The mortgage may be satisfied and discharged if and
when ALLETE provides for the payment of all of the first mortgage bonds and all
other sums due under the mortgage. (See Mortgage, Section
106.)
Evidence to be Furnished to the
Mortgage Trustee. ALLETE will provide to the mortgage trustee
an annual statement by an appropriate officer as to ALLETE’s compliance with all
conditions and covenants under the mortgage. (See Trust Indenture Act
of 1939, Section 314(a)(4).)
ALLETE
may sell the securities offered pursuant to this prospectus:
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through
underwriters or dealers;
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directly
to one or more purchasers.
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Through Underwriters or
Dealers. If ALLETE uses underwriters in the sale of the
securities, the underwriters will acquire the securities for their own
account. The underwriters may resell the securities in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The
underwriters may sell the securities directly or through underwriting syndicates
represented by managing underwriters. Unless otherwise stated in the
prospectus supplement relating to any of the securities, the obligations of the
underwriters to purchase the securities will be subject to certain conditions,
and the underwriters will be obligated to purchase all of the securities if they
purchase any of them. If ALLETE uses a dealer in the sale, ALLETE
will sell the securities to the dealer as principal. The dealer may
then resell those securities at varying prices determined at the time of
resale.
Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Through
Agents. ALLETE may designate one or more agents to sell the
securities. Unless stated in a prospectus supplement, the agents will
agree to use their best efforts to solicit purchases for the period of their
appointment.
Directly. ALLETE
may sell the securities directly to one or more purchasers. In this
case, no underwriters, dealers or agents would be involved.
General
Information. A prospectus supplement will state the name of
any underwriter, dealer or agent and the amount of any compensation,
underwriting discounts or concessions paid, allowed or reallowed to
them. A prospectus supplement will also state the proceeds to ALLETE
from the sale of the securities, any initial public offering price and other
terms of the offering of the securities.
ALLETE
may authorize agents, underwriters or dealers to solicit offers by certain
institutions to purchase the securities at the public offering price and on
terms described in the related prospectus supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in the
future.
The
securities may also be offered and sold, if so indicated in the applicable
prospectus supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms, which are referred to herein as the “remarketing firms,”
acting as principals for their own accounts or as ALLETE’s agent. Any
remarketing firm will be identified and the terms of its agreement, if any, with
ALLETE and its compensation will be described in the applicable prospectus
supplement. Remarketing firms may be deemed to be underwriters, as
that term is defined in the Securities Act of 1933, in connection with the
securities remarketed thereby.
ALLETE
may enter into derivative transactions with third parties, or sell securities
not covered by this prospectus to third parties in privately-negotiated
transactions. If the applicable prospectus supplement indicates, in
connection with those derivatives, the third parties may sell securities covered
by this prospectus and the applicable prospectus supplement, including in short
sale transactions. If so, the third party may use securities pledged
by ALLETE or borrowed from ALLETE or others to settle those sales or to close
out any related open borrowings of securities, and may use securities received
from ALLETE in settlement of those derivatives to close out any related open
borrowings of securities. The third party in such sale transactions
will be an underwriter and, if not identified in this prospectus, will be
identified in the applicable prospectus supplement.
ALLETE
may make sales of its common stock to or through one or more underwriters,
dealers or agents in “at-the-market” offerings, and, if ALLETE engages in such
transactions, it will do so pursuant to the terms of a agreement between ALLETE
and the underwriters, dealers or agents. If ALLETE engages in
at-the-market sales pursuant to a distribution agreement, ALLETE will issue and
sell shares of its common stock to or through one or more underwriters or
agents, which may act on an agency basis or on a principal basis.
ALLETE
may have agreements to indemnify agents, underwriters and dealers against, or to
contribute to payments which the underwriters, dealers and agents may be
required to make in respect of, certain civil liabilities, including liabilities
under the Securities Act of 1933.
The
legality of the common stock and first mortgage bonds will be passed upon for
ALLETE by Deborah A. Amberg, Esq., Senior Vice President, General Counsel and
Secretary, and by Thelen Reid Brown Raysman & Steiner LLP, New York, New
York, counsel to ALLETE. Thelen Reid Brown Raysman & Steiner LLP
may rely as to all matters of Minnesota law upon the opinion of Ms.
Amberg. Ms. Amberg may rely as to all matters of New York law upon
the opinion of Thelen Reid Brown Raysman & Steiner LLP.
The
consolidated financial statements and management’s assessment of the
effectiveness of internal control over financial reporting (which is included in
Management’s Report on Internal Control over Financial Reporting) incorporated
in this Prospectus by reference to the Annual Report on Form 10-K for the year
ended December 31, 2006, have been so incorporated in reliance on the reports of
PricewaterhouseCoopers LLP, an independent registered public accounting firm,
given on the authority of said firm as experts in auditing and
accounting.
As of
December 1, 2007, Ms. Amberg owned 5,813 shares of common stock of
ALLETE. Ms. Amberg is acquiring additional shares of ALLETE common
stock at regular intervals as a participant in the Minnesota Power and
Affiliated Companies Retirement Savings and Stock Ownership
Plan. Under the Executive Long-Term Incentive Compensation Plan, Ms.
Amberg has:
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outstanding
options to purchase 24,755 shares of ALLETE common stock, of which 14,038
options are fully vested, the remainder of which shall vest between
February 1, 2008 and February 1, 2010, and all of which will expire ten
years from the date of grant; and
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an
award opportunity for up to 5,918 additional performance shares contingent
upon the attainment of certain performance goals of ALLETE for the periods
January 1, 2005 through December 31, 2007, January 1, 2006
through December 31, 2008, and January 1, 2007 through December 31,
2009.
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___________________
You
should rely only on the information incorporated by reference or provided in
this prospectus or any prospectus supplement or in any written communication
from ALLETE specifying the final terms of a particular offering of
securities. ALLETE has not authorized anyone else to provide you with
additional or different information. ALLETE is not making an offer of
these securities in any jurisdiction where the offer is not
permitted. You should not assume that the information in this
prospectus or any prospectus supplement is accurate as of any date other than
the date on the front of those documents or that the information incorporated by
reference is accurate as of any date other than the date of the document
incorporated by reference.