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U.S. Securities and Exchange Commission

SECURITIES AND EXCHANGE COMMISSION

(Release No. 35-27839 )

Entergy Louisiana, Inc.

Order Authorizing: the Issuance and Sale of First Mortgage Bonds, Preferred Stock, Unsecured Long-term Indebtedness, and Other Forms of Preferred or Equity-Linked Securities; Acquisition of Special Purpose Subsidiaries; Entrance Into Arrangements With One or More Government Authorities to Issue and Sell Tax Exempt Bonds on Behalf of the Company; and Certain Related Transactions

December 29, 2003

Entergy Louisiana, Inc. ("Entergy Louisiana"), New Orleans, Louisiana, a direct, wholly owned public-utility subsidiary company of Entergy Corporation ("Entergy"), a registered holding company, has filed with the Securities and Exchange Commission ("Commission") an application-declaration under sections 6(a), 7, 9(a), 10, 12(c), and 12(d) of the Public Utility Holding Company Act of 1935, as amended ("Act") and rules 42, 44, 46, and 54 under the Act. On November 15, 2002, the Commission issued a notice of the application-declaration (Holding Co. Act Release No. 27602).

Entergy Louisiana requests authority, through March 31, 2006 ("Authorization Period"), to issue and sell up to an aggregate amount of $750 million ("Aggregate Limit") in any combination of: (1) unsecured long-term indebtedness ("Long-Term Debt"); (2) first mortgage bonds ("First Mortgage Bonds"); (3) preferred stock ("Preferred Stock"); and (4) directly or indirectly through one or more financing subsidiaries (as described below), other forms of preferred or equity-linked securities ("Other Securities"). The terms of the proposed securities are described below. Generally, the proceeds from sales of the proposed securities will be used by Entergy Louisiana for its general corporate purposes, including: financing its capital expenditures; repaying, redeeming, refunding or purchasing any of its securities issued in reliance on rule 42 and/or those securities issued on Entergy Louisiana's behalf under to section 9(c)(1); and financing its working capital requirements.

Long-Term Debt may be convertible into any other securities of Entergy Louisiana (except common stock), and would mature in between one and fifty years. These securities may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above the principal amount. Long-Term Debt may be entitled to mandatory or optional sinking fund provisions, and may provide for reset of the coupon under to a remarketing arrangement. Additionally, Long-Term Debt may be issued at fixed or floating rates of interest, and may be called from existing investors by a third party. The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, of Long-Term Debt, as well as any associated placement, underwriting or selling agent fees, commissions, and discounts, if any, would be established by negotiation or competitive bidding. The interest rate on Long-Term Debt would not exceed, at the time of issuance, the greater of: (1) 500 basis points over U.S. Treasury securities having a remaining term comparable to the term of such series, if issued at a fixed rate or, if issued at a floating rate, 500 basis points over the London Interbank Offered Rate ("LIBOR") for the relevant interest rate period; and (2) a spread over U.S. Treasury securities or LIBOR, as the case may be, that is consistent with similar securities of comparable credit quality and maturities.

All First Mortgage Bonds will have maturities ranging between one and fifty years. First Mortgage Bonds may be subject to optional and/or mandatory redemption, in whole or in part, at par or at premiums above the principal amount. They may be entitled to mandatory or optional sinking fund provisions and may be issued at fixed or floating rates of interest. First Mortgage Bonds may provide for reset of the coupon under to a remarketing arrangement and may be called from existing investors by a third party. Additionally, they may be backed by a bond insurance policy. The interest rate on First Mortgage Bonds will not exceed at the time of issuance the greater of: (1) 500 basis points over U.S. Treasury securities having a remaining term comparable to the term of such series if issued at a fixed rate or, if issued at a floating rate, 500 basis points over LIBOR for the relevant interest rate period; and (2) a spread over U.S. Treasury securities or LIBOR, as the case may be, that is consistent with similar securities of comparable credit quality and maturities issued by other companies.

Entergy Louisiana proposes to issue and sell shares of its Preferred Stock, Cumulative, $100 Par Value ("$100 Preferred"), or Preferred Stock, Cumulative, $25 Par Value ("$25 Preferred"), as currently authorized by its Restated Articles of Incorporation, as amended ("Articles"). In addition to these denominations, if Preferred Stock shares with different denominations are likely to have a materially better market reception than shares of $100 Preferred or $25 Preferred respectively, Entergy Louisiana may issue and sell such series of Preferred Stock to underwriters for deposit, then deliver to purchasers in a subsequent public offering. Entergy Louisiana also seeks to have the flexibility to issue Other Securities directly or indirectly through one or more SPEs (including trust preferred securities).

Preferred Stock and Other Securities may be issued in one or more series with rights, preferences and priorities, including those related to redemption, designated in the instrument creating the series. Preferred Stock or Other Securities may be redeemable, or may be perpetual in duration. The dividend rate on any series of Preferred Stock or Other Securities would not exceed at the time of issuance the greater of: (1) 500 basis points over the yield to maturity of a U.S. Treasury security having a remaining term comparable to the term of such series, if issued at a fixed rate or, if issued at a floating rate, 500 basis points over LIBOR for the relevant interest rate period; and (2) a rate that is consistent with similar securities of comparable credit quality and maturities. Dividends or distributions on Preferred Stock or Other Securities may be made subject to terms that allow the issuer to defer dividend payments for specified periods.

Entergy Louisiana requests authority to acquire during the Authorization Period all of the outstanding ownership interests of special purpose subsidiaries ("SPEs"), which will be organized specifically for the purpose of facilitating the issuance of Other Securities. Entergy Louisiana would hold the ownership interests of an SPE directly or indirectly. SPEs may be organized in any of the following corporate forms: a limited liability company; a limited partnership; a business trust; or any other domestic entity or structure considered advantageous by Entergy Louisiana.

Entergy Louisiana also requests authority to: (1) acquire financing subsidiaries ("Financing Subsidiaries"), which would hold Entergy Louisiana's ownership interests in SPEs and, as discussed below, facilitate the issuance of Other Securities; and (2) acquire directly, or through a Financing Subsidiary, all of the ownership interests of one or more special purpose subsidiaries organized to hold certain types of ownership interests in SPEs ("Partner Subs"). Partner Subs would be created to hold: (1) membership interests of an SPE where applicable State law requires that a limited liability company have at least two members; and (2) general partnership and/or limited partnership interests in an SPE to ensure that an SPE has a limited partner as may be required under applicable State law.

Entergy Louisiana, a Financing Subsidiary, and/or a Partner Sub would acquire all of the ownership interests of an SPE for an amount not less than the minimum required by applicable law.1 Entergy Louisiana requests authority to issue and sell Other Securities either directly or through SPEs. Entergy Louisiana further requests authority to finance any indirect issuance of Other Securities by directly, or through a Financing Subsidiary, issuing and selling to an SPE unsecured subordinated debentures, unsecured promissory notes or other unsecured debt instruments ("Notes") governed by an indenture or other document. In turn, that SPE would use the Equity Contribution and proceeds from its sale of Other Securities (collectively, "Proceeds") to purchase those Notes. Alternatively, Entergy Louisiana and/or a Financing Subsidiary would issue Notes to an SPE in an amount equal to the Proceeds. The terms (e.g., interest rate, maturity, amortization, prepayment terms, default provisions, etc.) of all Notes will generally be designed to parallel the terms of the Other Securities to which the Notes relate, and so the maximum principal amount of Notes issued will not exceed the Proceeds. Additionally, Entergy Louisiana requests authority for the Financing Subsidiaries and SPEs to transfer, directly or indirectly, the proceeds from sales of Other Securities to Entergy Louisiana.

Solely in connection with the issuance of Other Securities by a SPE, Entergy Louisiana and the Financing Subsidiaries also request authority to guarantee: (1) payment of dividends or distributions on Other Securities by the SPE if and to the extent the SPE has funds legally available; (2) payments to the holders of such securities due upon liquidation of the SPE or redemption of the Other Securities of the SPE; and (3) certain additional amounts that may be payable in respect of such Other Securities. Entergy Louisiana also requests authority to provide credit support for any guaranty that is provided by a Financing Subsidiary.

Entergy Louisiana also requests authority through the Authorization Period to enter into arrangements ("Arrangements") with one or more government authorities (each, "Issuer") to issue and sell on behalf of the company up to an aggregate amount of $420 million of tax exempt bonds ("Tax-Exempt Bonds") under one or more trust indentures (collectively, "Indentures") between the Issuer(s) and one or more trustees.2 Under the Arrangements, Entergy Louisiana would be obligated to make payments sufficient to provide for payment by the Issuer(s) of the principal or redemption price of, premium (if any) and interest on, and other amounts owing with respect to the Tax-Exempt Bonds, together with related expenses. Proceeds from the sale of the Tax-Exempt Bonds would be applied to financing, or refinancing existing tax-exempt bonds issued for the purpose of financing, certain Entergy Louisiana pollution control facilities and/or sewage or solid waste disposal facilities ("Facilities").

Under the Arrangements, Entergy Louisiana may be required to issue and pledge first mortgage bonds ("Collateral Bonds") as collateral for the Tax-Exempt Bonds. Therefore, Entergy Louisiana requests authority through the Authorization Period to issue and sell up to an aggregate amount of $470 million of Collateral Bonds.3 Under the terms of the Facilities Agreement, the Issuer(s) may purchase from Entergy Louisiana the subject Facilities, and Entergy Louisiana would then repurchase the Facilities from the Issuer(s). Correspondingly, Entergy Louisiana requests authority through the Authorization to sell the Facilities, which are utility assets.

Each series of Tax-Exempt Bonds would have a maturity ranging from one to forty years. Additionally, Tax-Exempt Bonds may: (1) be subject to optional and/or mandatory redemption at par or at premiums above the principal amount; (2) be subject to mandatory or optional sinking fund provisions; (3) provide for reset of the coupon under to a remarketing arrangement; (4) be issued at fixed or floating rates of interest; (5) be called from existing investors by a third party; (6) be backed by a municipal bond insurance policy; (7) be supported by credit support such as a bank letter of credit and reimbursement agreement; and (8) be supported by a subordinated lien on the facilities related to the Tax-Exempt Bonds. The maturity dates, interest rates, redemption and sinking fund provisions and conversion features, if any, with respect to Tax-exempt Bonds of a particular series, as well as any associated placement, underwriting or selling agent fees, commissions and discounts, if any, will be established by negotiation or competitive bidding. The interest rate on Tax-Exempt Bonds would not exceed at the time of issuance the greater of: (1) 400 basis points over U.S. Treasury securities having a remaining term comparable to the term of such series if issued at a fixed rate or, if issued at a floating rate, 400 basis points over LIBOR for the relevant interest rate period; and (2) a spread over U.S. Treasury securities or LIBOR, as the case may be, that is consistent with similar securities of comparable credit quality and maturities issued on behalf of companies.

Entergy Louisiana represents that it would not issue any of the proposed securities if, as a consequence of the issuance, the common equity component of the company's capital structure would comprise less than thirty percent of its total capitalization. Entergy Louisiana also represents that it would not publicly issue any senior secured indebtedness that is rated by any nationally recognized statistical rating organization ("nationally recognized statistical rating organization"), as that term is used in paragraphs (c)(2)(vi)(E), (F) and (H) of rule 15c3-1 under the Securities Exchange Act of 1934, unless the securities are rated at the investment grade level as established by at least one such nationally recognized statistical rating organization, except for: (1) new debt issued to refund or redeem existing debt that, if voluntarily refunded, is at a lower effective after-tax cost of money; (2) debt issued to replace currently maturing debt; or (3) privately-placed debt.

Applicants state that Entergy cannot comply with all of the requirements of rule 53(a), but that none of the adverse conditions described in rule 53(b) exist. During the twelve month period that ended September 30, 2002, Entergy's "aggregate investment," as that term is defined in rule 53(a)(1)(i), in exempt wholesale generators ("EWGs") and foreign utility companies ("FUCOs"), as those terms are respectively defined in sections 32 and 33 of the Act, was approximately $1.9 billion, which was approximately 51.7% of Entergy's consolidated retained earnings during that period. Although Entergy's current aggregate investment in EWGs and FUCOs exceeds the limit described in rule 53(a), the company is still below the previously established aggregate investment limit.4 Applicants state that, since the Commission issued the Prior EWG/FUCO Order, these types of investments have contributed positively to Entergy's overall earnings. Entergy's common stock equity ratio has not decreased materially since the issuance of the Prior EWG/FUCO Order.5

Applicants state that the fees, commissions and expenses incurred or to be incurred in connection with the proposed transactions will not exceed five percent of the proceeds of such transactions in the case of First Mortgage Bonds, Long-term Debt, Preferred Stock, Other Securities, and/or Tax-Exempt Bonds. Applicants state that no state or federal commission, other than this Commission, has jurisdiction over the proposed transactions.

The Commission issued a notice of the underlying application-declaration and did not receive any requests for hearing. Based on the facts in the record, it is found that the applicable standards of the Act are satisfied and that no adverse findings are necessary.

IT IS ORDERED, under the applicable provisions of the Act and rules under the Act, that the post-effective amendment is granted and permitted to become effective immediately, subject to the terms and conditions prescribed in rule 24 under the Act.

For the Commission, by the Division of Investment Management, pursuant to delegated authority.


Jill M. Peterson
Assistant Secretary


Endnotes


http://www.sec.gov/divisions/investment/opur/filing/35-27839.htm

Modified: 06/28/2004