Filed Pursuant to Rule 424(b)(5)
Registration No. 333-159131

 

SUBJECT TO COMPLETION, DATED MAY 11, 2009

 

PRELIMINARY PROSPECTUS SUPPLEMENT

(To Prospectus Dated May 11, 2009)

5,000,000 Equity Units

(Initially Consisting of 5,000,000 Corporate Units)

Great Plains Energy Incorporated

 

The Equity Units will each have a stated amount of $50 and will initially be in the form of Corporate Units, each of which consists of a purchase contract issued by us and, initially, a 1/20, or 5%, undivided beneficial ownership interest in $1,000 principal amount of our     % subordinated notes due 2042, which we refer to as the “notes.”

 

The purchase contract will obligate you to purchase from us, no later than June 15, 2012, for a price of $50 in cash, the following number of shares of our common stock, subject to anti-dilution adjustments:

 

 

The notes will initially bear interest at a rate of     % per year, payable quarterly. The notes will initially be subordinated to all of our existing and future “Senior Indebtedness” (as defined under “Description of the Debt Securities — Subordination” in the accompanying prospectus). In addition, the notes will be effectively subordinated to all liabilities of our subsidiaries. Prior to June 15, 2012, we have the right to defer interest payments on the notes one or more times for one or more consecutive interest periods without giving rise to an event of default. The remarketing agent will attempt to remarket the notes as described in this prospectus supplement. If a remarketing of the notes, as described in this prospectus supplement, is successful, the notes will rank equally with all of our existing and future unsecured and unsubordinated obligations as of the “reset effective date” (as defined herein). The interest rate on the notes will also be reset to a new fixed rate, effective as of the reset effective date, in which case interest will thereafter be payable at the reset rate. Interest on the remarketed notes will be payable annually, unless we elect to pay interest semi-annually. In addition, in connection with a successful remarketing of the notes, we may elect to change the maturity and optional redemption terms of the notes, and we will remove the interest deferral terms of the notes as described in this prospectus supplement.

 

We will also pay you quarterly contract adjustment payments at a rate of     % per year of the stated amount of $50 per Equity Unit, or $      per year, subject to our right to defer contract adjustment payments, as described in this prospectus supplement.

 

You can create Treasury Units from Corporate Units by substituting qualifying Treasury securities for the notes, and you can recreate Corporate Units by substituting notes for the qualifying Treasury securities comprising a part of the Treasury Units.

 

Your ownership interest in a note or, if substituted for it, the qualifying Treasury securities or the applicable ownership interest in the Treasury portfolio, as the case may be, will be pledged to us to secure your obligation under the related purchase contract.

 

If there is a successful remarketing during the “period for early remarketing” described in this prospectus supplement, the notes comprising a part of the Corporate Units will be replaced by the Treasury portfolio described in this prospectus supplement.

 

Concurrently with this offering of Equity Units, we are offering, by means of a separate prospectus supplement, 10,000,000 shares of our common stock (or 11,500,000 shares of our common stock if the underwriters of that offering exercise in full their overallotment option). This offering of Equity Units is not contingent on our offering of common stock, and the offering of common stock is not contingent upon this offering of Equity Units. See “Concurrent Common Stock Offering” in this prospectus supplement.

 

We will apply to list the Corporate Units on the New York Stock Exchange under the symbol “GXPPRF,” and we expect trading on the New York Stock Exchange to begin on or about the date of initial issuance of the Corporate Units. Prior to this offering, there was no public market for the Corporate Units. Our common stock is traded on the New York Stock Exchange under the symbol “GXP.” The last reported sale price of our common stock on May 8, 2009 on the New York Stock Exchange was $15.15 per share.

 

 

 

Investing in our Equity Units involves risks. See “Risk factors” beginning on page S-30 of this prospectus supplement and page 3 of the accompanying prospectus.

 

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

If the underwriters sell more than 5,000,000 Equity Units, the underwriters have the option to purchase up to an additional 750,000 Equity Units from us at the initial price to public less the underwriting discount and such additional Equity Units must be issued by us within a 13-day period beginning on (and including) the initial date of issuance of the Equity Units.

 

The underwriters expect to deliver the Equity Units against payment therefor on or about May   , 2009.

Joint Book-Running Managers

Joint Lead Manager

Wachovia Securities

Senior Co-Manager

BNP PARIBAS

Co-Managers

 

May   , 2009

 

TABLE OF CONTENTS

 

 

This document is in two parts. The first part is this prospectus supplement, which describes the terms of the offering of the Equity Units. The second part is the accompanying prospectus dated May 11, 2009, which we refer to as the “accompanying prospectus.” The accompanying prospectus contains a description of the securities we may offer under the registration statement of which this prospectus supplement and the accompanying prospectus form a part and gives more general information, some of which may not apply to the Equity Units.

 

You should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus or in any written communication from us or any underwriter specifying the final terms of the offering of the Equity Units. We have not, and the underwriters have not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference is accurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed materially since those dates.

 

Before you invest in the Equity Units, you should carefully read the registration statement (including the exhibits thereto) of which this prospectus supplement and the accompanying prospectus form a part, this prospectus supplement, the accompanying prospectus and the documents incorporated by reference into this prospectus supplement and accompanying prospectus. The incorporated documents are described in this prospectus supplement under “Where You Can Find More Information.”

 

We file annual, quarterly and current reports, and proxy statements and other information with the Securities and Exchange Commission (the “SEC”) through the SEC’s Electronic Data Gathering, Analysis and Retrieval system and these filings are publicly available through the SEC’s website (http://www.sec.gov). You may read and copy such material at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

 

The SEC allows us to “incorporate by reference” into this prospectus supplement the information we file with it. This means that we can disclose important information to you by referring you to the documents containing the information. The information we incorporate by reference is considered to be included in and an important part of this prospectus supplement and should be read with the same care. Information that we file later with the SEC that is incorporated by reference into this prospectus supplement will automatically update and supersede this information. We are incorporating by reference into this prospectus supplement the following documents that we have filed with the SEC and any subsequent filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (excluding information deemed to be furnished and not filed with the SEC) until the offering of the securities described in this prospectus supplement is completed:

 

 

Our website is www.greatplainsenergy.com. Information contained on our website is not incorporated herein except to the extent specifically so indicated. We make available, free of charge, on or through our website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. In addition, we make available on or through our website all other reports, notifications and certifications filed electronically with the SEC. You may obtain a free copy of our filings with the SEC by writing or telephoning us at the following address: Great Plains Energy Incorporated, 1201 Walnut Street, Kansas City, Missouri 64106-2124 (Telephone No.: 816-556-2200), Attention: Corporate Secretary, or by contacting us on our website.

 

PROSPECTUS SUPPLEMENT SUMMARY

 

Our Company

	•	Kansas City Power & Light Company (“KCP&L”) is an integrated, regulated electric utility that provides electricity to customers primarily in the states of Missouri and Kansas. KCP&L has one wholly owned subsidiary, Kansas City Power & Light Receivables Company.
	•	GMO is an integrated, regulated electric utility that primarily provides electricity to customers in the state of Missouri. GMO also provides regulated steam service to certain customers in the St. Joseph, Missouri area. GMO wholly owns MPS Merchant Services, Inc., which has certain long-term natural gas contracts remaining from its former non-regulated trading operations. Great Plains Energy acquired GMO on July 14, 2008.
	•	Great Plains Energy Services Incorporated (“Services”) obtains certain goods and third-party services for us and our subsidiaries. On December 16, 2008, Services employees were transferred to KCP&L.
	•	KLT Inc. is an intermediate holding company that primarily holds investments in affordable housing limited partnerships.

Issuer		Great Plains Energy Incorporated
Securities Offered		5,000,000 Equity Units (or 5,750,000 Equity Units if the underwriters exercise in full their option to purchase additional Equity Units), each with a stated amount of $50, and consisting of either Corporate Units or Treasury Units as described below. The Equity Units offered will initially consist of 5,000,000 Corporate Units (or 5,750,000 Corporate Units if the underwriters exercise in full their option to purchase additional Equity Units).
Use of Proceeds		The net proceeds from this offering, after deducting underwriting discounts and estimated expenses of the offering, are expected to be approximately $     million (or approximately $      million if the underwriters exercise in full their option to purchase additional Equity Units). In addition, we expect to receive net proceeds, after deducting underwriting discounts and commissions and estimated offering expenses, of approximately $      million from our concurrent common stock offering (or approximately $      million if the underwriters of that offering exercise in full their overallotment option). We intend to use the net proceeds from both of these offerings to repay all or a portion of the short-term borrowings under our revolving credit facility and to make contributions of capital to KCP&L and GMO for general corporate purposes, principally for repayment of all or a portion of KCP&L’s outstanding commercial paper, and repayment of all or a portion of the short-term borrowings under GMO’s revolving credit facilities. Pending any specific application, we may invest the net proceeds from the offerings in short-term marketable securities. See “Use of Proceeds” on page S-39 of this prospectus supplement.
		We currently intend to use the proceeds from the settlement of the purchase contracts to repay debt as soon as practicable following such settlement, and we have agreed not to use such proceeds to repurchase shares of our common stock.
The Corporate Units		Each Corporate Unit consists of a purchase contract and, initially, a 1/20, or 5%, undivided beneficial ownership interest in $1,000 principal amount of our     % subordinated notes due 2042, which we call the “notes.” The notes will be issued in minimum denominations of $1,000 and integral multiples thereof. The notes that are components of your Corporate Units will be owned by you, but initially will be pledged to us through the collateral agent to secure your obligations under the related purchase contracts. The remarketing agent will attempt to

		remarket the notes to settle the holders’ purchase contract obligations, unless the holder elects not to participate in the remarketing, and the notes are subject to being remarketed early. If the notes are successfully remarketed during the “period for early remarketing” or if a “special event redemption” occurs, each as described in this prospectus supplement, the notes that are components of the Corporate Units will be replaced by the Treasury portfolio described in this prospectus supplement, and the Treasury portfolio that is a component of the Corporate Units will then be pledged to us through the collateral agent to secure your obligations under the related purchase contract.
		Holders of Corporate Units will be entitled to receive, quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on September 15, 2009, cash distributions consisting of their pro rata share of interest payments on the notes (or distributions on the Treasury portfolio if the notes have been replaced by the Treasury portfolio in connection with an early remarketing of the notes or if a special event redemption occurs) and contract adjustment payments payable by us, subject to our right to defer interest payments on the notes and contract adjustment payments, both as described below.

Settlement Rate		Each purchase contract that is a component of an Equity Unit obligates the holder of the purchase contract to purchase, and obligates us to sell, on June 15, 2012, which we refer to as the “purchase contract settlement date,” for $50 in cash, a number of newly issued shares of our common stock equal to the “settlement rate.”
		The settlement rate will be calculated as follows:
		• if the applicable market value (as defined below) of our common stock is equal to or greater than $     , which we refer to as the “threshold appreciation price,” the settlement rate will be           shares of our common stock (the “minimum settlement rate”);
		• if the applicable market value of our common stock is less than the threshold appreciation price but greater than $      , which we refer to as the “reference price,” the settlement rate will be a number of shares of our common stock equal to $50, divided by the applicable market value; and
		• if the applicable market value of our common stock is less than or equal to the reference price, the settlement rate will be           shares of our common stock (the “maximum settlement rate”).
		The “applicable market value” of our common stock means the average of the closing price per share of our common stock on each of the 20 consecutive trading days ending on the third trading day immediately preceding the purchase contract settlement

		date. The reference price is the public offering price of our common stock in the concurrent common stock offering. The threshold appreciation price represents a     % appreciation over the reference price. The minimum settlement rate, the maximum settlement rate and the applicable market value are subject to adjustment as described in this prospectus supplement.
		The closing price of our common stock on any date of determination means the closing sale price (or, if no closing sale price is reported, the last reported sale price) of the common stock on the New York Stock Exchange on that date or, if the common stock is not listed for trading on the New York Stock Exchange on any such date, as reported in the composite transactions for the principal United States national or regional securities exchange on which the common stock is so listed. If the common stock is not so listed on a United States national or regional securities exchange, the closing price means the last quoted bid price for the common stock in the over-the-counter market as reported by the Pink Sheets LLC or a similar organization. If the bid price is not available, the closing price means the market value of the common stock on the date of determination as determined by a nationally recognized independent investment banking firm retained by us for this purpose.
		We will not issue any fractional shares of our common stock upon settlement of a purchase contract. Instead you will receive an amount in cash equal to the applicable fraction, multiplied by the applicable market value of our common stock.
		For a description of our common stock, see “Description of Common Stock” in the accompanying prospectus.
Contract Adjustment Payments		Under the purchase contracts, we will be obligated to pay quarterly contract adjustment payments at the rate of     % per year on the stated amount of $50 or $      per year. Contract adjustment payments will accrue from the date of issuance of the purchase contracts and will be payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on September 15, 2009.
		However, we have the right to defer the payment of contract adjustment payments until no later than the purchase contract settlement date; provided that in the event of a fundamental change early settlement or an early settlement of the purchase contracts, each as described in this prospectus supplement, we will pay deferred contract adjustment payments to, but excluding, the fundamental change early settlement date or to, but excluding, the quarterly payment date immediately preceding the early settlement date, respectively. Any deferred contract adjustment payments will accrue additional contract adjustment payments at the rate of     % per year until paid, compounded quarterly, to, but excluding, the payment date. We refer to additional contract adjustment payments that accrue on deferred contract adjustment payments as “compounded contract adjustment payments.”

		If we exercise our option to defer the payment of contract adjustment payments, then until the deferred contract adjustment payments (including compounded contract adjustment payments thereon) have been paid, we will not declare or pay dividends on, make distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to, any of our capital stock, subject to the exceptions set forth under “Description of the Purchase Contracts — Contract Adjustment Payments.”
Treasury Units		A Treasury Unit is a unit created from a Corporate Unit and consists of a purchase contract and a 1/20, or 5%, undivided beneficial interest in a qualifying Treasury security as described in “Description of the Equity Units — Creating Treasury Units.” The qualifying Treasury security that is a component of the Treasury Unit will be owned by you, but will be pledged to us through the collateral agent to secure your obligations under the related purchase contract.
		Holders of Treasury Units will be entitled to receive quarterly contract adjustment payments payable by us as described above, subject to our right to defer contract adjustment payments.
		There will be no distributions in respect of the qualifying Treasury securities that are components of the Treasury Units but the holders of the Treasury Units will continue to receive the scheduled quarterly interest payments on the notes that were released to them when they created the Treasury Units as long as they continue to hold the notes.
		If, at the time the holder of a Corporate Unit wishes to substitute qualifying Treasury securities for the related notes, such qualifying Treasury securities have a yield that is less than zero, then, a Treasury Unit will instead be a unit created from a Corporate Unit and will consist of a purchase contract and a 1/20, or 5%, undivided beneficial interest in $1,000 cash. The cash that is a component of the Treasury Unit will be owned by you, but will be pledged to us through the collateral agent to secure your obligations under the related purchase contract.
Creating Treasury Units and Recreating Corporate Units		Subject to certain exceptions described in this prospectus supplement, each holder of Corporate Units will have the right, at any time on or prior to 4:00 p.m., New York City time, on the seventh business day immediately preceding the purchase contract settlement date, to substitute for the related notes held by the collateral agent, qualifying Treasury securities in a total principal amount at maturity equal to the aggregate principal amount of the notes for which substitution is being made. Because qualifying Treasury securities and the notes are issued in integral multiples of $1,000, holders of Corporate Units may make this substitution only in integral multiples of 20 Corporate Units. This substitution will create Treasury Units, and the notes will be released to the holder and be tradable separately from the Treasury Units.

		In addition, subject to certain exceptions described in this prospectus supplement, each holder of Treasury Units will have the right, at any time on or prior to 4:00 p.m., New York City time, on the seventh business day immediately preceding the purchase contract settlement date, to substitute for the related qualifying Treasury securities held by the collateral agent, notes having a principal amount equal to the aggregate principal amount at stated maturity of the qualifying Treasury securities for which substitution is being made. Because qualifying Treasury securities and the notes are issued in integral multiples of $1,000, holders of Treasury Units may make these substitutions only in integral multiples of 20 Treasury Units. This substitution will recreate Corporate Units, and the applicable qualifying Treasury securities will be released to the holder and be separately tradable from the Corporate Units.
Early Settlement of the Purchase Contracts		You can settle a purchase contract for cash prior to the purchase contract settlement date, subject to certain exceptions and conditions described under “Description of the Purchase Contracts — Early Settlement” in this prospectus supplement. If a purchase contract is settled early, the number of shares of our common stock to be issued per purchase contract will be equal to the “minimum settlement rate” (subject to adjustment as described in this prospectus supplement). Additionally, you will be entitled to receive any accrued and unpaid contract adjustment payments, including any deferred contract adjustment payments and compounded contract adjustment payments thereon, to, but excluding, the quarterly payment date immediately preceding the early settlement date. You will not be entitled to any other accrued and unpaid contract adjustment payments.
		In addition, upon the occurrence of a “fundamental change” as defined in this prospectus supplement, you will have the right, subject to certain exceptions and conditions described in this prospectus supplement, to accelerate and settle a purchase contract early at the “fundamental change settlement rate,” which will depend on the stock price in such fundamental change and the date such fundamental change occurs, as described under “Description of the Purchase Contracts — Early Settlement Upon a Fundamental Change.” If you elect to settle a purchase contract early upon a fundamental change, you will be entitled to receive any accrued and unpaid contract adjustment payments, including any deferred contract adjustment payments and compounded contract adjustment payments thereon, with respect to such purchase contract, to, but excluding, the fundamental change early settlement date.
		Holders of Corporate Units may settle early only in integral multiples of 20 Corporate Units. If the Treasury portfolio has replaced the notes that are components of the Corporate Units, holders of the Corporate Units may settle early only in integral multiples of           Corporate Units (or such other number of

		Corporate Units as may be determined by the remarketing agent upon a successful remarketing of notes).
		Holders of Treasury Units may settle early only in integral multiples of 20 Treasury Units.
Satisfying Your Payment Obligations under the Purchase Contracts		As a holder of Corporate Units or Treasury Units, you may satisfy your obligations under the purchase contracts as follows:

	•	through early settlement of your purchase contracts in the manner described in this prospectus supplement;
	•	through separate cash settlement prior to the final three-business day remarketing period described below in the case of holders of Corporate Units, unless the Treasury portfolio has replaced the notes that are components of the Corporate Units, in the manner described in this prospectus supplement;
	•	through the automatic application of the proceeds of the qualifying Treasury securities, in the case of a Treasury Unit, or proceeds from the Treasury portfolio if it has replaced the notes that are components of the Corporate Units;
	•	through the automatic application of the proceeds of a successful remarketing of the notes during the final remarketing period in the manner described in this prospectus supplement; or
	•	through exercise of the right to put the notes to us as described below if no successful remarketing has occurred prior to the purchase contract settlement date and none of the above events has taken place.

		In addition, the purchase contracts and our rights and obligations and the rights and obligations of the holders of the Corporate Units and Treasury Units under the purchase contracts will terminate without any further action upon a bankruptcy, insolvency or reorganization involving us (and not, for the avoidance of doubt, a bankruptcy involving only our subsidiaries).

Remarketing the Notes		We may, at our option, elect to remarket the notes that are components of the Corporate Units on any remarketing date occurring during the period (which we call the “period for early remarketing”) beginning on December 15, 2011 and ending on May 15, 2012, unless the notes have been previously redeemed in connection with a special event redemption or have been previously successfully remarketed. Any remarketing during this period will occur during one or more three-business day remarketing periods that consist of three sequential possible

		remarketing dates selected by us and will include the notes that are components of the Corporate Units and other notes of holders that have elected to include those notes in the remarketing, as described below. During any remarketing occurring during the period for early remarketing, we have the right to postpone such remarketing in our absolute discretion.
		On each remarketing date occurring during the period for early remarketing, the remarketing agent will use its reasonable efforts to obtain a price for the notes remarketed equal to approximately 100% of the sum of the purchase price for the “remarketing Treasury portfolio” and the “separate notes purchase price,” each as described in this prospectus supplement, plus, at our option, the applicable remarketing fee. To obtain that price, the remarketing agent may reset the interest rate on the notes and we may make other modifications to the terms of the notes, as described below. If the remarketing is successful, interest on the notes will be reset to the reset rate described below, each of the other modifications to the terms of the notes elected to be made by us, as described under “Description of the Purchase Contracts — Remarketing — Early Remarketing” and “Description of the Notes — Modification of the Terms of the Notes in Connection with a Successful Remarketing,” will take effect and the portion of the proceeds from the remarketing attributable to notes that were components of Corporate Units that is equal to the “remarketing Treasury portfolio purchase price,” as defined in this prospectus supplement, will automatically be applied to purchase the remarketing Treasury portfolio. Any remaining proceeds attributable to notes that were components of Corporate Units, net of any remarketing fee if we elect to request the remarketing agent to obtain a remarketing price that includes the remarketing fee as noted above, will be remitted to the holders of the Corporate Units. This remarketing Treasury portfolio will be substituted for the notes that are components of the Corporate Units and will be pledged to us through the collateral agent to secure the Corporate Unit holders’ obligations under the purchase contracts. When paid at maturity, an amount of the remarketing Treasury portfolio equal to the principal amount of the substituted notes will automatically be applied to satisfy the Corporate Unit holders’ obligations to purchase our common stock under the purchase contracts on June 15, 2012. The remarketing Treasury portfolio will also provide for the payments to the holders of amounts equal to the interest that would have been paid on the notes if there had been no successful remarketing and no change in the interest rate. See “Description of the Purchase Contracts — Remarketing” in this prospectus supplement.
		If U.S. Treasury securities (or principal or interest strips thereof) that are to be included in a remarketing Treasury portfolio have a yield that is less than zero, then the cash proceeds from the remarketing (and not the U.S. Treasury securities) will be substituted for the notes that are components of the Corporate Units and will be pledged to us through the collateral agent to secure the Corporate Unit holders’ obligation to purchase our common stock under the purchase contracts.

		If none of the remarketings occurring during a three-business day remarketing period results in a successful remarketing, the interest rate on the notes will not be reset, none of the other modifications to the terms of the notes elected to be made by us will take effect, the notes that are components of Corporate Units will continue to be components of Corporate Units and subsequent remarketings may, subject to the next paragraph, be attempted during one or more subsequent three-business day remarketing periods, as described above.
		You may notify the purchase contract agent on or prior to the seventh business day immediately preceding June 15, 2012 of your intention to pay cash in order to satisfy your obligations under the related purchase contracts, unless the notes previously have been successfully remarketed during the period for early remarketing. If you have not given such notification, or have given such notification but failed to pay the purchase price to settle your purchase contracts on or prior to the sixth business day immediately preceding June 15, 2012, and the notes have not been successfully remarketed during the period for early remarketing, the remarketing agent will attempt to remarket the notes during a three-business day remarketing period beginning on, and including, the fifth business day, and ending on, and including, the third business day, immediately preceding June 15, 2012. This three-business day remarketing period is referred to as the “final three-business day remarketing period” and we refer to the third business day immediately preceding June 15, 2012 as the “final remarketing date.” In this remarketing, the remarketing agent will use its reasonable efforts to obtain a price for the notes equal to approximately 100% of the aggregate principal amount of the notes being remarketed, plus all accrued and unpaid deferred interest (including compounded interest thereon), if any, on the notes being remarketed, plus, at our option, the applicable remarketing fee. If the remarketing is successful, interest on the notes will be reset to the “reset rate” described below, each of the other modifications as we elect or are required to make to the terms of the notes will take effect and, the portion of the proceeds from the remarketing attributable to notes that were components of Corporate Units that is equal to the aggregate principal amount of such notes being remarketed will automatically be applied to satisfy in full the Corporate Unit holders’ obligations to purchase our common stock under the related purchase contracts on the purchase contract settlement date.
		If the notes have not been successfully remarketed on or prior to the final remarketing date, the interest rate on the notes will not be reset, none of the other modifications to the terms of the notes elected to be made by us will take effect and holders of all notes will have the right to put their notes to us on the purchase contract settlement date at a put price equal to $1,000 per $1,000 principal amount note ($50 per applicable ownership interest) plus accrued and unpaid interest (including all accrued and unpaid deferred interest, if any, and compounded interest

		thereon). Holders do not have any put rights with respect to any additional notes issued to pay deferred interest on the notes. A holder of a note that is a component of a Corporate Unit will be deemed to have automatically exercised this put right unless such holder provides a written notice of an intention to settle the related purchase contract with cash as described in this prospectus supplement. Unless a Corporate Unit holder has settled the related purchase contracts with separate cash, such holder will be deemed to have elected to apply a portion of the proceeds of the put price equal to the principal amount of the notes that are components of such Corporate Units against such holder’s obligations to us under the related purchase contracts, thereby satisfying such obligations in full, and we will deliver to such holder our common stock pursuant to the related purchase contracts.
		If a remarketing of the notes is successful, as of the reset effective date, the notes will rank equally with all of our existing and future unsecured and unsubordinated obligations. The interest rate on the notes will be reset to a new fixed rate, effective as of the reset effective date, and thereafter interest will be payable at the reset rate. Such interest on the remarketed notes will be payable annually, unless we elect to pay interest semi-annually. In addition, in connection with a successful remarketing of the notes, we may elect to change the maturity and optional redemption terms of the notes, and we will remove the interest deferral terms of the notes as described under “Description of the Notes — Modification of the Terms of the Notes in Connection with a Successful Remarketing.”
Election Not to Participate in the Remarketing		You may elect not to participate in any remarketing and to retain the notes that are components of your Corporate Units by:

	•	creating Treasury Units as described above;
	•	settling purchase contracts early as described above; or
	•	in the case of the final three-business day remarketing period, notifying the purchase contract agent of your intention to pay cash to satisfy your obligation under the related purchase contracts on or prior to the seventh business day before the purchase contract settlement date and delivering the cash payment required under the purchase contracts to the collateral agent on or prior to the sixth business day before the purchase contract settlement date.

		Whether or not you participate in the remarketing, upon a successful remarketing your notes will become subject to the modified provisions described under “Description of the Purchase Contracts — Remarketing — Early Remarketing” and “Description of the Notes — Modification of the Terms of Notes in Connection with a Successful Remarketing.”

Interest		Interest on the notes will initially be payable quarterly in arrears at the rate of     % per year of the principal amount of the notes to, but excluding, the “reset effective date.” The “reset effective date” will be:

	•	in the case of a remarketing during the period for early remarketing, the third business day following the date on which a remarketing of the notes is successfully completed, unless the remarketing is successful within five business days of the next succeeding interest payment date on the notes in which case such interest payment date will be the reset effective date; or
	•	in the case of a remarketing during the final three-business day remarketing period, the purchase contract settlement date.

		Following a successful remarketing, the notes will bear interest at the “reset rate” described below from the reset effective date to, but excluding, June 15, 2042, unless we elect to modify the notes’ stated maturity to an earlier date (no earlier than June 15, 2014), in which case the notes will bear interest from the reset effective date to, but excluding, such earlier maturity date. If there is not a successful remarketing of the notes, the interest rate will not be reset and the notes will continue to bear interest at the initial interest rate to, but excluding, June 15, 2042.
		Prior to the reset effective date, interest payments will be payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on September 15, 2009. From the reset effective date, we will pay interest on all notes annually in arrears, unless we elect to pay interest semi-annually in arrears. If no successful remarketing of the notes occurs, interest payments on all notes will remain payable quarterly in arrears on the original quarterly interest payment dates.
Deferral of Interest Payments		Prior to June 15, 2012, we may elect at one or more times to defer payment of interest on the notes for one or more consecutive interest periods; provided that each deferred interest payment may only be deferred until the earlier of (x) the third anniversary of the interest payment date on which the interest payment was originally scheduled to be paid and (y) June 15, 2014. We may pay any such deferred interest on any scheduled interest payment date occurring on or prior to June 15, 2014. Deferred interest on the notes will bear interest at the interest rate applicable to the notes, compounded on each interest payment date, subject to applicable law. In connection with any successful remarketing, all then-outstanding deferred interest (including compounded interest thereon) will be paid to the holders of the remarketed notes on the immediately following scheduled interest payment date from the proceeds of the successful remarketing. As of the reset effective date for any successful remarketing, solely with respect to notes that were not remarketed in such remarketing, all then-outstanding deferred

		interest (including compounded interest thereon) will be paid to the holders of such notes on the immediately following scheduled interest payment date, at our election, in cash or by issuing additional notes to the holders of such notes in principal amount equal to the amount of such deferred interest (including compounded interest thereon). The additional notes will: (i) have a maturity date of June 15, 2014, (ii) bear interest at an annual rate that is equal to the then market rate of interest for similar instruments (not to exceed     %), as determined by a nationally-recognized investment banking firm selected by us, (iii) be subordinate and junior in right of payment to all of our then existing and future Senior Indebtedness, and on parity with the notes (as of their date of issuance and not taking into account the modifications to the ranking of the notes in connection with a successful remarketing); and (iv) be redeemable at our option at any time at their principal amount plus accrued and unpaid interest thereon to, but excluding, the date of redemption.
		In the event that we exercise our option to defer the payment of interest, then until the deferred interest payments (including compounded interest thereon) have been paid, among other things, we generally will not (i) declare or pay dividends on, make distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to, any of our capital stock or (ii) make a payment on any of our indebtedness or on a guarantee that in each case ranks pari passu with, or junior to, the notes (as of their date of issuance and not taking into account the modifications to the ranking of the notes in connection with a successful remarketing), subject to certain exceptions. See “Description of the Notes — Dividend and Other Payment Stoppages During Interest Deferral and under Certain Other Circumstances.”
		For the avoidance of doubt, in all cases, including in the event of a final failed remarketing, we will have no right to defer the payment of interest on the notes beyond June 15, 2014. In connection with a successful remarketing, we will remove the interest deferral provisions of the notes.
The Reset Rate		Unless a special event redemption has occurred, the reset rate on the notes will become effective on the reset effective date. The reset rate will be a fixed interest rate determined by the remarketing agent, in consultation with us, as the rate the notes should bear in order for the notes to have an approximate aggregate market value on the remarketing date of:

	•	100% of the sum of the remarketing Treasury portfolio purchase price and the separate note purchase price, plus, at our option, the applicable remarketing fee, in the case of a remarketing during the period for early remarketing; or
	•	100% of the aggregate principal amount of the notes being remarketed, plus all accrued and unpaid deferred interest (including compounded

		interest thereon), if any, on the notes being remarketed, plus, at our option, the applicable remarketing fee, in the case of a remarketing during the final three-business day remarketing period.

		The interest rate on the notes will not be reset if there is not a successful remarketing, and the notes will continue to bear interest at the initial interest rate, payable quarterly in arrears. If the remarketing is successful and the rate is reset, the reset rate will apply to all outstanding notes (other than any additional notes issued in connection with payment of deferred interest), whether or not the holders participate in the remarketing and will become effective on the reset effective date. Any reset rate may not exceed the maximum rate, if any, permitted by applicable law and may not be a contingent or floating rate.
Maturity		The initial maturity date of the notes will be June 15, 2042. In connection with a successful remarketing of the notes, we may elect, without the consent of any of the holders, to modify the notes’ stated maturity to any date on or after June 15, 2014 and earlier than June 15, 2042. Such earlier maturity date, if any, will be selected on the remarketing date and will become effective on the reset effective date. If the notes are not successfully remarketed by the close of business on the third business day prior to June 15, 2012, the stated maturity of the notes will remain as June 15, 2042.
Redemption		Prior to June 15, 2014, the notes will not be redeemable at our option. At the time of a remarketing we may include redemption provisions in the remarketed debt as described in the notice of remarketing; provided however that the notes may not be redeemed prior to June 15, 2014. The notes will be redeemable thereafter, at our option, in whole or in part, at any time, and from time to time, at a redemption price equal to the principal amount thereof and any accrued and unpaid interest. In connection with a successful remarketing, we may add to, modify or remove altogether our optional redemption right; provided that there will be at least two years between the purchase contract settlement date and any optional redemption date; and provided further that the redemption price shall always equal the principal amount of the notes being redeemed plus any accrued and unpaid interest thereon to, but excluding, the redemption date.
		In addition, the notes are redeemable at our option, in whole but not in part, on any interest payment date prior to the earlier of the date of a successful remarketing and the purchase contract settlement date, upon the occurrence and continuation of a “tax event” or an “accounting event,” as such terms are defined in this prospectus supplement (collectively, a “special event”) under “Description of the Notes — Optional Redemption — Special Event.” Following any such redemption of the notes, which we refer to as a “special event redemption,” the “redemption price” (as defined herein) for the notes that underlie the Corporate Units will be paid to the collateral agent who will

		purchase the “special event Treasury portfolio” (as defined herein) and remit any remaining proceeds to the holders. Thereafter, the applicable ownership interests in the special event Treasury portfolio will replace the applicable ownership interests in the notes as components of the Corporate Units and will be pledged to us through the collateral agent. Any then-outstanding accrued and unpaid deferred interest (including compounded interest thereon) will not be included in such redemption price and will be paid to the holders of the Corporate Units or “separate notes” (as defined herein), as applicable, on the “special event redemption date” (as defined herein), at our election, in cash or by issuing additional notes to the holders of such Corporate Units and separate notes in principal amount equal to the amount of such deferred interest (including compounded interest thereon). Such additional notes will have terms as described under “Description of the Notes — Option to Defer Interest Payments.” Holders of separate notes will receive the redemption price and any additional notes that may be issued in payment of any outstanding deferred interest in such special event redemption directly. If U.S. Treasury securities (or principal or interest strips thereof) that are to be included in a special event Treasury portfolio have a yield that is less than zero, then the cash received upon redemption (and not the U.S. Treasury securities) of the notes will be substituted for the applicable ownership in the notes that are components of the Corporate Units and will be pledged to us through the collateral agent to secure the Corporate Unit holders’ obligation to purchase our common stock under the purchase contracts.
Ranking		The notes will initially be subordinated to all of our existing and future “Senior Indebtedness” (as defined under “Description of the Debt Securities — Subordination” in the accompanying prospectus). Senior Indebtedness generally includes, and the notes will be junior to, our obligations (other than non-recourse obligations) of, or guaranteed or assumed by, us for borrowed money or for the payment of money relating to any capitalized lease, or our indebtedness evidenced by bonds, debentures, notes and other similar instruments (except any of the foregoing that is effectively by its terms or expressly made subordinate to or pari passu with the notes), but excluding our trade accounts payable and accrued liabilities arising in the ordinary course of business. As of March 31, 2009, we had $1,405.1 million of outstanding indebtedness (including guaranties of GMO indebtedness), all of which was Senior Indebtedness.
		Our obligations under the notes are also effectively subordinated to our subsidiaries’ obligations. As of March 31, 2009, our subsidiaries had approximately $3,296.9 million of indebtedness (including debt guaranteed by us) outstanding.
		See “Description of the Notes — Subordination.” In connection with a successful remarketing, we will change the ranking of the notes such that they rank equally with all of our existing and future unsecured and unsubordinated obligations.

Participation in a Remarketing for Holders of Separate Notes		Holders of notes that are not part of the Corporate Units, which we refer to as “separate notes,” may elect, in the manner described in this prospectus supplement, to have their notes remarketed by the remarketing agent along with the notes included in the Corporate Units. See “Description of the Notes — Remarketing.” Such holders may also participate in any remarketing by recreating Corporate Units from their Treasury Units at any time prior to the first day of the restricted period described under “Description of the Equity Units— Creating Treasury Units.” Whether or not you participate in the remarketing, upon a successful remarketing your notes will become subject to the modified provisions described under “Description of the Purchase Contracts — Remarketing — Early Remarketing.”
Put Right for Holders of Separate Notes		Holders of separate notes may exercise their put right upon a failed final remarketing by providing written notice at least two business days prior to the purchase contract settlement date. The put price will be paid to such holder on the purchase contract settlement date. Holders do not have any put rights with respect to any additional notes issued to pay deferred interest on the notes.
U.S. Federal Income Tax Considerations		For a discussion of material U.S. Federal income tax considerations relating to an investment in the Equity Units, see “Material U.S. Federal Income Tax Considerations” below.
Risk factors		You should consider carefully all the information set forth and incorporated by reference in this prospectus supplement and the accompanying prospectus and, in particular, you should evaluate the specific factors set forth under “Risk Factors” beginning on page S-30 of this prospectus supplement before deciding whether to invest in the Equity Units.
Concurrent Common Stock Offering		Concurrently with this offering of Equity Units, we are offering 10,000,000 shares of our common stock (or 11,500,000 shares of our common stock if the underwriters of that offering exercise their overallotment option in full), which we refer to as the “concurrent common stock offering.” The concurrent common stock offering will be effected pursuant to a separate prospectus supplement. This prospectus supplement shall not be deemed an offer to sell or a solicitation of an offer to buy any shares of the common stock in that offering. We cannot assure you that the concurrent common stock offering will be completed or, if completed, on what terms it may be completed. The concurrent common stock offering and this offering are not contingent on each other.

(1)		If the applicable market value of our common stock is less than or equal to the reference price of $     , the number of shares of our common stock to be delivered to a holder of an Equity Unit will be calculated by dividing the stated amount of $50 by the reference price (subject to adjustment).
(2)		If the applicable market value of our common stock is between the reference price and the threshold appreciation price of $      , the number of shares of our common stock to be delivered to a holder of an Equity Unit will be calculated by dividing the stated amount of $50 by the applicable market value (subject to adjustment).
(3)		If the applicable market value of our common stock is greater than or equal to the threshold appreciation price, the number of shares of our common stock to be delivered to a holder of an Equity Unit will be calculated by dividing the stated amount of $50 by the threshold appreciation price of $      (subject to adjustment).
(4)		The reference price is the public offering price of our common stock in the concurrent common stock offering.
(5)		The threshold appreciation price represents a     % appreciation over the reference price.
(6)		Expressed as a percentage of the reference price. The “applicable market value” means the average of the closing price per share of our common stock on each of the 20 consecutive trading days ending on the third trading day immediately preceding the purchase contract settlement date, subject to anti-dilution adjustments and certain other modifications.

Purchase Contract		1/20 Ownership Interest in Note(1)(2)
(Owed to Holder) Common Stock at settlement (June 15, 2012) + Contract Adjustment Payments      % per annum paid quarterly(3)		(Owed to Holder) Interest      % per annum paid quarterly(4) (following a successful remarketing, interest will be paid to the purchaser at the reset rate annually or, at our election, semi-annually)
(Owed to Great Plains Energy) $50 at Settlement (June 15, 2012)		(Owed to Holder) $50 at Maturity (June 15, 2042)(5)

	•	The holder of a Corporate Unit owns the 1/20 undivided beneficial ownership interest in the note but will pledge it to us to secure the holder’s obligation under the related purchase contract.
	•	The foregoing analysis assumes the notes are successfully remarketed during the final three-business day remarketing period. If a remarketing of the notes were to be successful prior to such period, then, following such successful remarketing, the applicable ownership interests in the remarketing Treasury portfolio will replace the applicable ownership interest in notes as components of the Corporate Units and the reset rate would be effective three business days following the successful remarketing.
	•	If the special event Treasury portfolio has replaced the notes as a result of a special event redemption prior to June 15, 2012, the applicable ownership interest in the special event Treasury portfolio will also replace the applicable ownership interest in notes as components of the Corporate Units.

(1)		Each holder will own a 1/20, or 5%, undivided beneficial ownership interest in, and will be entitled to a corresponding portion of each interest payment payable in respect of, a $1,000 principal amount note.
(2)		Notes will be issued in minimum denominations of $1,000 and integral multiples thereof.
(3)		Contract adjustment payments may be deferred as described in this prospectus supplement.
(4)		Interest payments may be deferred as described in this prospectus supplement. In connection with a successful remarketing, the optional deferral provisions of the notes will cease to apply.
(5)		In connection with the successful remarketing of the notes, we may elect to modify the notes’ stated maturity to any date on or after June 15, 2014 and earlier than June 15, 2042 and change certain other terms of the notes as described under “Description of the Purchase Contracts — Remarketing — Early Remarketing” and “Description of the Notes — Modification of the Terms of Notes in Connection with a Successful Remarketing.”

		1/20 Ownership Interest in
Purchase Contract		Treasury Security
(Owed to Holder) Common Stock at settlement (June 15, 2012) + Contract Adjustment Payments      % per annum paid quarterly(1)
(Owed to Great Plains Energy) $50 at Settlement (June 15, 2012)		(Owed to Holder) $50 at Maturity (June 15, 2012)

	•	The holder owns the 1/20 ownership interest in the qualifying Treasury security that forms a part of the Treasury Unit but will pledge it to us through the collateral agent to secure the holder’s obligations under the related purchase contract. Unless the purchase contract is terminated as a result of our bankruptcy, insolvency or reorganization or the holder recreates a Corporate Unit, the cash due on maturity of the qualifying Treasury security will be used to satisfy the holder’s obligation under the related purchase contract.
	•	Treasury Units can only be created with integral multiples of 20 Corporate Units, subject to certain exceptions as described under “Description of the Equity Units — Creating Treasury Units.”

(1)		Contract adjustment payments may be deferred as described in this prospectus supplement.

(1)		Treasury Units may only be created in integral multiples of 20. As a result, the creation of 20 Treasury Units will release a $1,000 principal amount note held by the collateral agent.
(2)		Interest payments may be deferred as described in this prospectus supplement. In connection with a successful remarketing, the optional deferral provisions of the notes will cease to apply.

(3)		In connection with the successful remarketing of the notes, we may elect to modify the notes’ stated maturity to any date on or after June 15, 2014 and earlier than June 15, 2042 and change certain other terms of the notes as described under “Description of the Purchase Contracts — Remarketing — Early Remarketing” and “Description of the Notes — Modification of the Terms of Notes in Connection with a Successful Remarketing.”

	•	Because the notes and the qualifying Treasury securities are issued in minimum denominations of $1,000, holders of Corporate Units may only create Treasury Units in integral multiples of 20 Corporate Units.
	•	To create 20 Treasury Units, a holder separates 20 Corporate Units into their two components — 20 purchase contracts and a note — and then combines the purchase contracts with a qualifying Treasury security that matures on the purchase contract settlement date.
	•	The note, which is no longer a component of a Corporate Unit and has a principal amount of $1,000, is released to the holder and is tradable as a separate security.
	•	A holder owns the qualifying Treasury security that forms a part of the Treasury Units but will pledge it to us through the collateral agent to secure its obligations under the related purchase contract.
	•	The qualifying Treasury security together with the 20 purchase contracts constitute 20 Treasury Units.

	•	Following the successful remarketing of the notes prior to the final three-business day remarketing period or a special event redemption, the applicable ownership interests in the Treasury portfolio, rather than the note, will be released to the holder upon the transformation of Corporate Units into Treasury Units and will be tradable separately.
	•	Prior to a successful remarketing of the notes or a special event redemption, the holder can also transform 20 Treasury Units and a $1,000 principal amount note into 20 Corporate Units. Following that transformation, the qualifying Treasury security, which will no longer be a component of the Treasury Unit, will be released to the holder and will be tradable as a separate security.

	•	If the applicable ownership interest in the remarketing Treasury portfolio or special event Treasury portfolio has replaced the notes that are components of the Corporate Units, the transformation of Corporate Units into Treasury Units and the transformation of Treasury Units into Corporate Units can only be made in certain larger minimum amounts, as more fully described in this prospectus supplement.

(1)		Each holder will own a 1/20, or 5%, undivided beneficial ownership interest in, and will be entitled to a corresponding portion of each interest payment payable in respect of, a $1,000 principal amount note.
(2)		Notes will be issued in minimum denominations of $1,000 and integral multiples thereof.
(3)		Contract adjustment payments may be deferred as described in this prospectus supplement.
(4)		Interest payments may be deferred as described in this prospectus supplement. In connection with a successful remarketing, the optional deferral provisions of the notes will cease to apply.
(5)		In connection with the successful remarketing of the notes, we may elect to modify the notes’ stated maturity to any date on or after June 15, 2014 and earlier than June 15, 2042 and change certain other terms of the notes as described under “Description of the Purchase Contracts — Remarketing — Early Remarketing” and “Description of the Notes — Modification of the Terms of Notes in Connection with a Successful Remarketing.”

Date		Event
T-16 business days (10 business days prior to the remarketing announcement date)		Notice to Holders. We will request, not later than 10 business days prior to the remarketing announcement date, that the depositary notify its participants holding notes, Corporate Units and Treasury Units of the remarketing.
T-6 business days (six business days immediately preceding the first remarketing date of a three-business day remarketing period)		Remarketing Announcement Date. We will announce any remarketing of the notes on such business day by causing a remarketing announcement to be published by making a timely release to any appropriate news agency, including Bloomberg Business News and the Dow Jones News Services.
T-5 business days (five business days prior to the first day of the three-business day remarketing period)		Beginning of Early Remarketing Election Period. Holders of separate notes may elect to have their notes remarketed in the same manner and at the same price as notes that are components of Corporate Units by delivering their notes along with a notice of this election to the custodial agent.
T-2 business days (two business days prior to the first day of the three-business day remarketing period)		End of Early Remarketing Election Period. This is the last day for holders of separate notes to (i) elect to have their notes remarketed in the same manner and at the same price as notes that are components of Corporate Units by delivering their notes along with a notice of this election to the custodial agent or (ii) withdraw their prior election by written notice to the custodial agent.
		This is also the last day prior to the three-business day remarketing period:
		•  to create Treasury Units from Corporate Units and recreate Corporate Units from Treasury Units; and
		•  for holders of Corporate Units to settle the related purchase contracts early.
		Holders of Corporate Units will once again be able to make any of these elections on the business day following the last remarketing day of the three-business day remarketing period if the remarketing is unsuccessful.

Date		Event
T to T+2 business days (three business days beginning on, and including, the first day of the remarketing period)		Three-Business Day Remarketing Period: •  if a failed remarketing occurs, we will cause a notice of the unsuccessful remarketing attempt of notes to be published by making a timely release to any appropriate news agency, including Bloomberg Business News and the Dow Jones News Service, on the business day following the last of the three remarketing dates comprising the three-business day remarketing period; and
		•  if a successful remarketing occurs, (i) the remarketing agent will purchase the remarketing Treasury portfolio in substitution for the notes that are components of the Corporate Units and (ii) we will request the depositary to notify its participants holding separate notes of the reset rate, interest payment dates, modified maturity, ranking and optional redemption terms, if any, established for the notes during the remarketing on the business day following the remarketing date on which the notes were successfully remarketed.
		Reset Effective Date. The reset rate, interest payment dates, modified maturity and optional redemption terms, if any, will be determined on the date that the remarketing agent is able to successfully remarket the notes, and those terms, the change in ranking and the elimination of the interest deferral terms will become effective, if the remarketing is successful, on the reset effective date, which will be the third business day following the date on which a remarketing of the notes is successfully completed, unless the remarketing is successful within five business days of an interest payment date on the notes in which case such interest payment date will be the reset effective date. Holders of separate notes included in the successful remarketing will receive the portion of the remarketing proceeds attributable to such separate notes on the reset effective date.

Date		Event
No later than May 21, 2012 (10 business days prior to the final remarketing announcement date)		Notice to Holders. We will request, not later than 10 business days prior to the final remarketing announcement date, that the depositary notify its participants holding notes, Corporate Units and Treasury Units of the remarketing.
June 1, 2012 (five business days prior to the first day of the final three-business day remarketing period)		Beginning of Final Remarketing Election Period. Holders of separate notes may elect to have their notes remarketed in the same manner and at the same price as notes that are components of Corporate Units by delivering their notes along with a notice of this election to the custodial agent.
June 5, 2012 (three business days prior to the first business day of the final three-business day remarketing period)		Final Remarketing Announcement Date. We will announce the remarketing to occur during the final three-business day remarketing period on such day by causing a remarketing announcement to be published by making a timely release to any appropriate news agency, including Bloomberg Business News and the Dow Jones News Services.
June 6, 2012 (two business days prior to the first day of the final three-business day remarketing period and seven business days immediately preceding June 15, 2012)		End of Final Remarketing Election Period. This is the last day for holders of separate notes to elect to have their notes remarketed in the same manner and at the same price as notes that are components of Corporate Units by delivering their notes along with a notice of this election to the custodial agent.
		Notice to Settle With Cash. A holder of a Corporate Unit wishing to settle the related purchase contract with separate cash must notify the purchase contract agent by presenting and surrendering the Corporate Unit certificate evidencing the Corporate Unit at the offices of the purchase contract agent with the form of “Notice of Cash Settlement,” substantially in the form attached to the purchase contract and pledge agreement, completed and executed as indicated on or prior to 4:00 p.m., New York City time, on this day.
		This is also the last day prior to the final three-business day remarketing period:
		•  to create Treasury Units from Corporate Units and recreate Corporate Units from Treasury Units;
		•  for holders of Corporate Units or Treasury Units to settle the related purchase contracts early; and
		•  for holders of Corporate Units who have elected to settle the related purchase contracts with separate cash to deliver the required cash payment to the collateral agent on or prior to 11:00 a.m., New York City time, on such day.

Date		Event
June 8, 2012 to June 12, 2012 (final remarketing period)		Final Three-Business Day Remarketing Period. We will attempt a final remarketing beginning on, and including, the fifth business day, and ending on, and including, the third business day, immediately preceding the purchase contract settlement date.
		If a successful remarketing does not occur during the final three-business day remarketing period, we will cause a notice of the unsuccessful remarketing attempt to be published by making a timely release to any appropriate news agency, including Bloomberg Business News and the Dow Jones News Service, not later than 9:00 a.m., New York City time, on the business day following the last of the three remarketing dates comprising the final three-business day remarketing period.
June 15, 2012 (the purchase contract settlement date)		Reset Effective Date. The reset rate, interest payment dates, modified maturity and optional redemption terms, if any, will be determined on the date that the remarketing agent is able to successfully remarket the notes, and those terms, the change in ranking and the elimination of the interest deferral terms will become effective, if the final remarketing is successful, on the reset effective date, which will be the purchase contract settlement date. If the purchase contract settlement date is not a business day, then the purchase contract settlement date shall be the next succeeding day that is a business day.

		Three Months Ended March 31,								Year Ended December 31,
		2009				2008				2008				2007				2006
		($ in millions; except per share data)
Income Statement Data:
Operating revenues		$	419.2			$	297.6			$	1,670.1			$	1,292.7			$	1,140.4
Operating expenses			398.3				278.5				1,395.1				1,036.2				880.7
Operating income		$	20.9			$	19.1			$	275.0			$	256.5			$	259.7
Income (loss) from continuing operations		$	21.7			$	(5.4	)		$	119.5			$	120.9			$	136.7
Income (loss) from discontinued operations, net of Income taxes			—				52.9				35.0				38.3				(9.1	)
Net income		$	21.7			$	47.5			$	154.5			$	159.2			$	127.6
Per Share Data:
Average number of basic common shares outstanding			119.2				85.9				101.1				84.9				78.0
Average number of diluted common shares outstanding			119.3				85.9				101.2				85.2				78.2
Basic earnings (loss) per common share
Continuing operations		$	0.18			$	(0.07	)		$	1.16			$	1.14			$	1.74
Discontinued operations			—				0.62				0.35				0.45				(0.12	)
Basic earnings per common share		$	0.18			$	0.55			$	1.51			$	1.86			$	1.62
Diluted earnings (loss) per common share
Continuing operations		$	0.18			$	(0.07	)		$	1.16			$	1.40			$	1.73
Discontinued operations			—				0.62			$	0.35			$	0.45			$	(0.12	)
Diluted earnings per common share		$	0.18			$	0.55			$	1.51			$	1.85			$	1.61
Cash dividends declared per common share		$	0.2075			$	0.415			$	1.66			$	1.66			$	1.66
Cash Flow Data:
Cash flows from operating activities		$	3.5			$	75.9			$	437.9			$	332.2			$	308.9
Cash flows from investing activities			(318.8	)			(193.8	)			(579.1	)			(547.0	)			(475.7	)
Cash flows from financing activities			337.5				136.6				135.2				220.1				125.5
Other Financial Data:
Depreciation and amortization		$	69.0			$	52.2			$	238.3			$	183.8			$	160.5
Amortization of:
Nuclear fuel			4.4				3.3				14.5				16.8				14.4
Other			(3.9	)			2.2				(1.9	)			7.4				9.4
Utility capital expenditures			303.1				182.1				1,023.7				511.5				475.9

Three Months
Ended
March 31,		Year Ended December 31,
2009		2008				2007				2006				2005				2004
(a)			2.26				2.53				3.50				3.09				2.77

(a)		A $4.5 million deficiency in earnings caused the ratio of earnings to fixed charges to be less than a one-to-one coverage.

 

An investment in the Equity Units is subject to various risks. These risks should be considered carefully with the information provided elsewhere and incorporated by reference in this prospectus supplement and the accompanying prospectus before deciding to invest in the Equity Units. In addition to the risk factors set forth below, please read the information included or incorporated by reference under “Risk Factors” and “Cautionary Statements Regarding Certain Forward-Looking Information” in the accompanying prospectus and our Annual Report on Form 10-K for the year ended December 31, 2008 for a description of additional uncertainties associated with our business, results of operations and financial condition and the forward-looking statements included or incorporated by reference in this prospectus supplement and the accompanying prospectus.

 

The Corporate Units consist of a purchase contract to acquire our common stock and notes issued by us. When considering an investment in our Corporate Units, you are making an investment decision with respect to our common stock and our notes as well as the Corporate Units. You can create Treasury Units from Corporate Units by substituting treasury securities for our notes. You should carefully review the information in this prospectus supplement and the accompanying prospectus about all of these securities. As used in this section, “we,” “our,” “us” and the “Company” refer to Great Plains Energy Incorporated and not to any of its subsidiaries.

 

Risks Related to the Equity Units and Our Common Stock

 

You assume the risk that the market value of our common stock may decline.

 

As a holder of Corporate Units or Treasury Units, you will have an obligation to buy shares of our common stock pursuant to the purchase contracts that are part of the Corporate Units or Treasury Units. On the purchase contract settlement date, unless you pay cash to satisfy your obligation under the purchase contracts or the purchase contracts are terminated due to our bankruptcy, insolvency or reorganization, (i) in the case of Corporate Units, either (x) the principal of the applicable ownership interests in the Treasury portfolio when paid at maturity or (y) either the proceeds attributable to the applicable ownership interest in a note derived from the successful remarketing of a note or, if no successful remarketing has occurred, the put price paid upon the automatic put of a note to us, or (ii) in the case of Treasury Units, the principal of the related qualifying Treasury securities when paid at maturity, will automatically be used to purchase a specified number of shares of our common stock on your behalf.

 

The number of shares of our common stock that you will receive upon the settlement of a purchase contract is not fixed but instead will depend on the average of the closing price per share of our common stock on the 20 consecutive trading days ending on the third trading day immediately preceding the purchase contract settlement date, which we refer to as the applicable market value. There can be no assurance that the market value of common stock received by you on the purchase contract settlement date will be equal to or greater than the price per share paid by you for our common stock. If the applicable market value of the common stock is less than $     , the market value of the common stock issued to you pursuant to each purchase contract on the purchase contract settlement date (assuming that the market value is the same as the applicable market value of the common stock) will be less than the effective price per share paid by you for the common stock on the date of issuance of the Equity Units. Accordingly, you assume the risk that the market value of the common stock may decline and that the decline could be substantial.

 

The trading prices for the Corporate Units and Treasury Units will be directly affected by the trading prices of our common stock, the general level of interest rates and our credit quality.

 

It is impossible to predict whether the price of our common stock or interest rates will rise or fall. Trading prices of our common stock will be influenced by our operating results and prospects and by economic, financial and other factors. In addition, general market conditions, including the level of, and fluctuations in, the trading prices of stocks generally, and sales or other issuances of substantial amounts of common stock (or securities convertible into, or that may otherwise be settled in, shares of common stock) by us in the market subsequent to the offering of the Equity Units or the perception that such sales or other

issuances could occur, could affect the price of our common stock. The price of our common stock could also be affected by possible sales of our common stock by investors who view the Equity Units as a more attractive means of equity participation in us and by hedging or arbitrage trading activity that may develop involving our common stock. This trading activity could, in turn, affect the trading price of the Corporate Units or the Treasury Units.

 

The Equity Units provide limited settlement rate adjustments, and an event could occur that adversely affects the value of the Equity Units or our common stock but that does not result in an adjustment to the settlement rate.

 

The number of shares of common stock that you are entitled to receive on the purchase contract settlement date, or as a result of early settlement of a purchase contract, is subject to adjustment for certain events arising from stock splits and combinations, stock dividends, cash dividends and certain other transactions. See “Description of the Purchase Contracts — Anti-Dilution Adjustments.” We will not adjust the number of shares of common stock that you are to receive on the purchase contract settlement date, or as a result of early settlement of a purchase contract, for other events, including offerings or issuances of common stock by us for cash or in connection with acquisitions, employee stock option grants, ownership plans or awards, benefit and equity incentive plans or ordinary dividends (at the level we currently pay). There can be no assurance that an event that adversely affects the value of the Equity Units or our common stock, but does not result in an adjustment to the settlement rate, will not occur. Further, we are not restricted from issuing additional common stock during the term of the purchase contracts and have no obligation to consider your interests. If we issue additional shares of common stock, it may materially and adversely affect the trading price of our common stock and the Corporate Units or Treasury Units.

 

The opportunity for equity appreciation provided by an investment in the Equity Units is less than that provided by a direct investment in our common stock.

 

Your opportunity for equity appreciation afforded by investing in the Equity Units is less than your opportunity for equity appreciation if you directly invested in our common stock. This opportunity is less because the market value of the common stock to be received by you pursuant to the purchase contract on the purchase contract settlement date (assuming that the market value is the same as the applicable market value of the common stock) will only exceed the effective price per share paid by you for our common stock on the purchase contract settlement date if the applicable market value of the common stock exceeds the threshold appreciation price (which represents an appreciation of     % over the reference price). If the applicable market value of our common stock exceeds the reference price but falls below the threshold appreciation price, you will realize no equity appreciation of the common stock for the period during which you own the purchase contract. Furthermore, if the applicable market value of our common stock equals or exceeds the threshold appreciation price, you would receive on the purchase contract settlement date only approximately     % of the value of the shares of common stock you could have purchased with $50 at the last reported sale price of our common stock on the date of pricing of the Equity Units.

 

Recent developments in the convertible securities markets may adversely affect the market value of the notes.

 

The convertible securities markets (including the Equity Units markets) recently experienced unprecedented disruptions resulting from, among other things, the recent instability in the credit and capital markets and the emergency orders issued by the SEC on September 17 and 18, 2008 (and extended on October 1, 2008). These orders were issued as a stop-gap measure while Congress worked to provide a comprehensive legislative plan to stabilize the credit and capital markets. Among other things, these orders temporarily imposed a prohibition on effecting short sales of the common stock of certain financial companies. As a result, the SEC orders made the convertible arbitrage strategy that many convertible securities investors (including Equity Units investors) employ difficult to execute for outstanding convertible securities of those companies whose common stock was subject to the short sale prohibition. The SEC orders expired on Wednesday, October 8, 2008. However, the SEC is currently considering instituting other limitations on effecting short

sales (such as the uptick rule) and other regulatory organizations may do the same. Any future governmental actions that interfere with the ability of convertible securities investors to effect short sales on the underlying common stock would significantly affect the market value of our Equity Units.

 

If you hold Corporate Units or Treasury Units, you will not be entitled to any rights with respect to our common stock, but you will be subject to all changes made with respect to our common stock.

 

If you hold Corporate Units or Treasury Units, you will not be entitled to any rights with respect to our common stock (including, without limitation, voting rights and rights to receive any dividends or other distributions on the common stock), but you will be subject to all changes affecting our common stock. You will be entitled to rights on our common stock only when we deliver shares of common stock upon settlement of the purchase contracts that are part of Corporate Units or Treasury Units on the purchase contract settlement date, or as a result of early settlement, as the case may be, and the applicable record date, if any, for the exercise of rights occurs on or after the date you receive the shares. For example, in the event that an amendment is proposed to our articles of incorporation or by-laws requiring common shareholder approval and the record date for determining the shareholders of record entitled to vote on the amendment occurs on or prior to the delivery date for our common stock under the purchase contracts, you will not be entitled to vote on the amendment, although you will nevertheless be subject to any changes in the powers, preferences or special rights of our common stock.

 

The secondary market for the Corporate Units, Treasury Units or notes may be illiquid.

 

It is not possible to predict how Corporate Units, Treasury Units or notes will trade in the secondary market or whether the market will be liquid or illiquid. There is currently no secondary market for either our Corporate Units, Treasury Units or notes. We will apply to list the Corporate Units on the New York Stock Exchange and we expect trading to begin on or about the initial date of issuance of the Corporate Units. If the Treasury Units or the notes are separately traded to a sufficient extent that applicable exchange listing requirements are met, we will endeavor to list the Treasury Units or the notes on the same exchange as the Corporate Units. There can be no assurance as to the liquidity of any market that may develop for the Corporate Units, the Treasury Units or the notes, your ability to sell these securities or whether a trading market, if it develops, will continue. In addition, in the event a sufficient number of holders were to convert their Treasury Units to Corporate Units or their Corporate Units to Treasury Units, as the case may be, the liquidity of Corporate Units or Treasury Units could be adversely affected. There can be no assurance that the Corporate Units will not be de-listed from the New York Stock Exchange or that trading in the Corporate Units will not be suspended as a result of your election to create Treasury Units by substituting collateral, which could cause the number of Corporate Units to fall below the requirement for listing securities on the New York Stock Exchange.

 

Your rights to the pledged securities will be subject to our security interest.

 

Although you will be the beneficial owner of the applicable ownership interests in notes, qualifying Treasury securities or the Treasury portfolio, as applicable, those securities will be pledged to us through the collateral agent to secure your obligations under the related purchase contracts. Thus, your rights to the pledged securities will be subject to our security interest. Additionally, notwithstanding the automatic termination of the purchase contracts, in the event that we become the subject of a case under the U.S. Bankruptcy Code, the delivery of the pledged securities to you may be delayed by the imposition of the automatic stay under Section 362 of the Bankruptcy Code or by exercise of the bankruptcy court’s power under Section 105(a) of the Bankruptcy Code. Claims arising out of the notes, like all other claims in bankruptcy proceedings, will be subject to the equitable jurisdiction and powers of the bankruptcy court.

 

The purchase contract and pledge agreement will not be qualified under the trust indenture act and the obligations of the purchase contract agent are limited.

 

The purchase contract and pledge agreement among us, the purchase contract agent, the collateral agent, the custodial agent and the securities intermediary will not be qualified as an indenture under the

Trust Indenture Act of 1939, or the Trust Indenture Act, and the purchase contract agent will not be required to qualify as a trustee under the Trust Indenture Act. Thus, you will not have the benefit of the protection of the Trust Indenture Act with respect to the purchase contract and pledge agreement or the purchase contract agent, the collateral agent, the custodial agent or the securities intermediary. The notes composing a part of the Corporate Units will be issued pursuant to a subordinated indenture, which will be qualified under the Trust Indenture Act. Accordingly, if you hold Corporate Units, you will have the benefit of the protections of the Trust Indenture Act only to the extent applicable to the applicable ownership interests in notes included in the Corporate Units. The protections generally afforded the holder of a security issued under an indenture that has been qualified under the Trust Indenture Act include:

 

 

Prior to a successful remarketing, our obligations to make payments on the notes are subordinate to our payment obligations under our Senior Indebtedness. We depend upon dividends or other intercompany transfers from our subsidiaries to meet our obligations under the notes. Claims of creditors of these subsidiaries may have priority over claims by us with respect to the assets and earnings of these subsidiaries.

 

Prior to a successful remarketing, our obligations under the notes are unsecured and rank junior in right of payment to all of our existing and future Senior Indebtedness. See “Description of the Debt Securities — Subordination” in the accompanying prospectus for the definition of “Senior Indebtedness.” This means that, unless all Senior Indebtedness is repaid in full, we cannot make any payments on the notes if our unsecured indebtedness for borrowed money is accelerated, in the event of our bankruptcy, insolvency or liquidation or in the event of the acceleration of the notes. As of March 31, 2009, we had $1,405.1 million of outstanding indebtedness (including guaranties of GMO indebtedness), all of which was Senior Indebtedness.

 

We are a holding company that derives substantially all of our income from our operating subsidiaries. As a result, our cash flows and consequent ability to service our debt and other liabilities, including the notes, are dependent upon the earnings of our subsidiaries and distribution of those earnings to us and other payments or distributions of funds by our subsidiaries to us, including payments of principal and interest under intercompany indebtedness. Our operating subsidiaries are separate and distinct legal entities and will have no obligation, contingent or otherwise, to pay any dividends or make any distributions (except for payments required pursuant to the terms of intercompany indebtedness) to us or otherwise pay amounts due with respect to the notes or to make specific funds available for such payments. In addition, none of these subsidiaries are guaranteeing the notes. All existing and future liabilities of our subsidiaries will be effectively senior to the notes. Our rights and the rights of any holder of the notes (or other of our creditors) to participate in the assets of any subsidiary upon that subsidiary’s liquidation, bankruptcy or recapitalization will be subject to the prior claims of that subsidiary’s creditors and preferred equity holders, if any, except to the extent we may be a creditor with recognized claims against such subsidiary. In the event of our bankruptcy, insolvency, liquidation, reorganization, dissolution or other winding up, the holders of the notes may not receive any amounts with respect to the notes until after the payment in full of the claims of creditors and preferred equity holders, if any, of our subsidiaries. As of March 31, 2009 our subsidiaries had $3,296.9 million of total indebtedness (including debt guaranteed by us).

 

The terms of the subordinated indenture do not limit our ability to incur additional debt, including secured or unsecured debt that will rank senior to the notes and purchase contracts.

We may defer contract adjustment payments under the purchase contracts, and this may have an adverse effect on the trading prices of the Equity Units.

 

We may at our option defer the payment of all or part of the contract adjustment payments under the purchase contracts. If we exercise our right to defer contract adjustment payments, the market price of the Equity Units is likely to be adversely affected. As a result of the existence of our deferral rights, the market price of the Equity Units may be more volatile than the market prices of other securities that are not subject to these optional deferrals. Furthermore, you will be subject to the risk that we may not be able to pay such deferred contract adjustment payments (including compounded contract adjustment payments thereon) in the future. In addition, if we make such a deferral, you may be required to continue to recognize income for U.S. federal income tax purposes in respect of the purchase contracts in advance of your receipt of any corresponding cash distributions.

 

In connection with a successful remarketing of the notes, the terms of your notes may be modified even if you elect not to participate in the remarketing.

 

When we attempt to remarket the notes, the remarketing agent will agree to use its reasonable efforts to sell the notes included in the remarketing. In connection with the remarketing, we and the remarketing agent may materially change the terms of the notes, including their interest rate, interest payment dates, maturity date and optional redemption terms. Furthermore, in connection with a successful remarketing, we will change the ranking of the notes such that they rank equally with all of our existing and future unsecured and unsubordinated obligations, and we will remove the interest deferral provisions of the notes. If the remarketing is successful, the modified terms will apply to all the notes, even if they were not included in the remarketing. However, holders of the notes must elect to participate in the remarketing before knowing what the modified terms of the notes will be. You may determine that the revised terms are not as favorable to you as you would deem appropriate.

 

If we exercise our right to defer interest payments on the notes, the market price of the Corporate Units is likely to be adversely affected.

 

Prior to June 15, 2012, we may at our option defer interest payments on the notes for one or more consecutive interest periods. During any such “deferral period” (as defined below under “Description of the Notes — Option to Defer Interest Payments”), holders of the notes will receive limited or no current payments and, so long as we are otherwise in compliance with our obligations, such holders will have no remedies against us for nonpayment unless we fail to pay all previously deferred interest (including compounded interest thereon) in cash or in additional notes within 30 days of the date due. If we exercise our right to defer interest, the market price of the Corporate Units is likely to be adversely affected. As a result of the existence of our deferral rights, the market price of the Corporate Units may be more volatile than the market prices of other securities that are not subject to optional interest deferrals. We may not be able to pay such deferred interest (including compounded interest thereon) in the future.

 

Interest and principal payments may be made on subordinated debt securities that rank pari passu with the notes even though interest has not been paid on the notes.

 

We may during a deferral period be required to make payments of interest on any subordinated debt securities that we issue that rank pari passu with the notes, which we refer to as pari passu securities, that are not made pro rata with payments of interest on the notes. The terms of the notes permit us during a deferral period:

 

 

We currently do not have any pari passu securities outstanding but we may issue such securities in the future.

We may redeem the notes upon the occurrence of a special event.

 

We may redeem the notes, on not less than 30 days’ notice and not more than 60 days’ prior written notice, in whole but not in part, on any interest payment date, before the earlier of the date of a successful remarketing of the notes and the purchase contract settlement date if a special event occurs and continues under the circumstances described in this prospectus supplement. If we exercise this option, we will redeem the notes for cash at the redemption amount plus accrued and unpaid interest, if any, which we refer to as the “redemption price.” The redemption price payable to you as a holder of Corporate Units will be distributed to the collateral agent, who in turn will purchase the special event Treasury portfolio on your behalf, and will remit the remainder of the redemption price, if any, to you as the holder, and the special event Treasury portfolio will be substituted for the notes as collateral to secure your obligations under the purchase contracts related to the Corporate Units. Any then-outstanding accrued and unpaid deferred interest (including compounded interest thereon) on the notes will not be included in such redemption price and will be paid to the holders of the Corporate Units and separate notes, as applicable, on the special event redemption date, at our election, in cash or by issuing additional notes to the holders of such Corporate Units and separate notes in principal amount equal to the amount of such deferred interest (including compounded interest thereon). Such additional notes will have terms as described under “Description of the Notes — Option to Defer Interest Payments.” If your notes are separate notes, you will receive redemption payments and any cash or additional notes that may be issued in payment of any outstanding deferred interest directly. There can be no assurance as to the impact on the market prices for the Corporate Units if the special event Treasury portfolio is substituted as collateral in place of any notes redeemed. A special event redemption will be a taxable event to the holders of the notes.

 

The fundamental change early settlement rate may not adequately compensate you.

 

If a fundamental change (as defined below under “Description of the Purchase Contracts — Early Settlement Upon a Fundamental Change”) occurs and you exercise your fundamental change early settlement right (as defined below under “Description of the Purchase Contracts — Early Settlement Upon a Fundamental Change”), you will be entitled to settle your purchase contract at the fundamental change early settlement rate (as defined below under “Description of the Purchase Contracts — Early Settlement Upon a Fundamental Change”), subject to certain conditions. See “Description of the Purchase Contracts — Early Settlement Upon a Fundamental Change.” Although the fundamental change early settlement rate is designed to compensate you for the lost value of your Equity Units as a result of the fundamental change, this feature may not adequately compensate you for such loss. In addition, if the effective date of the fundamental change occurs after May 7, 2012, or if the stock price is greater than $      per share or less than $      per share (in each case, subject to adjustment), the fundamental change provisions in the purchase contract will not compensate you for any additional loss suffered in connection with a fundamental change.

 

You may have to pay taxes with respect to distributions on our common stock that you do not receive.

 

The number of shares of common stock that you are entitled to receive on the purchase contract settlement date or as a result of early settlement of a purchase contract is subject to adjustment for certain events arising from stock splits and combinations, stock dividends, cash dividends and certain other actions by us that modify our capital structure. See “Description of the Purchase Contracts — Anti-Dilution Adjustments.” If the settlement rate is adjusted as a result of a distribution that is taxable to our common shareholders, such as a cash dividend, you would be required to include an amount in income for U.S. federal income tax purposes, notwithstanding the fact that you do not actually receive such gross distribution. Non-U.S. Holders of the Equity Units may, in certain circumstances, be deemed to have received a distribution subject to U.S. federal withholding tax requirements. See “Material U.S. Federal Income Tax Considerations — U.S. Holders — Purchase Contracts — Adjustment to the Settlement Rate” and “Material U.S. Federal Income Tax Considerations — Non-U.S. Holders — Dividends.”

The U.S. federal income tax consequences of the purchase, ownership and disposition of the Equity Units are unclear.

 

The Internal Revenue Service (IRS) has issued a ruling addressing the tax treatment of units similar to the Equity Units. Consistent with the IRS ruling, we intend to treat the notes and the purchase contracts as separate securities and the notes as our debt instruments for U.S. federal income tax purposes. However, no assurance can be given that the conclusions in the ruling would apply to the Equity Units. We have not sought a ruling from the IRS. As a result, the U.S. federal income tax consequences of the purchase, ownership and disposition of Equity Units are not entirely clear. If the IRS were to challenge our characterization of the Equity Units successfully, the IRS’s recharacterization could adversely affect the amount, timing or character of the income, gain or loss you recognize with respect to our Equity Units and non-U.S. Holders may be subject to U.S. federal withholding tax on the payments of interest on their notes.

 

In addition, any gain on a disposition of a note or a Corporate Unit to the extent such gain is allocable to the applicable ownership interest in notes prior to the date the reset rate has been determined will generally be treated as ordinary interest income; thus, the ability to offset such interest income with a loss, if any, on a purchase contract may be limited. For a more detailed discussion of these issues, we urge you to read the discussion set forth under “Material U.S. Federal Income Tax Considerations.”

 

Special U.S. federal income tax rules will apply to U.S. Holders of the notes.

 

While the matter is not free from doubt, because of the manner in which the interest rate on the notes is reset, we intend to treat, and by purchasing an Equity Unit, each holder agrees to treat, the notes as contingent payment debt instruments. Special U.S. federal income tax rules apply to contingent payment debt obligations. Under these rules, a U.S. Holder will be required to accrue interest income on the notes regardless of whether the U.S. Holder uses the cash or accrual method of tax accounting and may be required to include interest in taxable income in excess of interest payments actually received in a taxable year. In addition, upon the sale, exchange or other disposition of a note before the determination of the reset rate, a U.S. Holder generally will be required to treat any gain recognized upon the disposition of the note as ordinary income, rather than capital gain. The treatment of a U.S. Holder’s gain or loss recognized on the sale, exchange, or other taxable disposition of a note on or after the date on which the reset rate has been determined may depend on whether any interest payments are made within the six-month period following the determination of the reset rate. See “Material U.S. Federal Income Tax Considerations — U.S. Holders — Taxation of the Notes — Sale, Exchange or Other Taxable Disposition of the Notes.”

 

For additional tax-related risks, see “Material U.S. Federal Income Tax Considerations” in this prospectus supplement.

 

We Intend to Take the Position That We Are a U.S. Real Property Holding Corporation (“USRPHC”) for U.S. Federal Income Tax Purposes.

 

Although the matter is not free from doubt, we intend to take the position that we are a USRPHC for U.S. federal income tax purposes. If we are a USRPHC, a Non-U.S. Holder may be subject to “FIRPTA Tax” (as defined below) on gain, if any, recognized on the disposition of Equity Units (to the extent allocable to the purchase contracts) if such Non-U.S. Holder owns, or is deemed to own, at any time during the relevant Testing Period (as defined below) (A) more than 5% of the outstanding Equity Units or (B) Equity Units that, at the times such Equity Units were acquired, had a fair market value allocable to the purchase contracts greater than 5% of the total fair market value of our outstanding common stock. Similarly, a Non-U.S. Holder may be subject to “FIRPTA Tax” on gain, if any, recognized on the disposition of our common stock if such Non-U.S. Holder owns, or is deemed to own, more than 5% of our outstanding common stock at any time during the relevant Testing Period.

 

If the Equity Units are listed on the New York Stock Exchange and meet certain public trading requirements (which we expect to be met), although the matter is not free from doubt due to the lack of direct precedent, a Non-U.S. Holder will not be subject to withholding on the proceeds of a disposition of Equity Units that are allocable to the purchase contracts. However, if the public trading requirements are not met, a

Non-U.S. Holder that owns, or is deemed to own, at any time during the relevant Testing Period, Equity Units with a fair market value allocable to the purchase contracts greater than 5% of the total fair market value of our outstanding common stock could be subject to withholding at a 10% rate on the proceeds of any disposition of Equity Units (to the extent allocable to the purchase contracts).

 

For a more thorough discussion of the tax consequences to Non-U.S. Holders of our treatment as a USRPHC, we urge you to review the discussion under the heading “Material U.S. Federal Income Tax Considerations — Non-U.S. Holders — Foreign Investment in Real Property Tax Act.”

 

Fluctuations in interest rates may give rise to arbitrage opportunities, which would affect the trading price of the Corporate Units, Treasury Units, the notes and our common stock.

 

Fluctuations in interest rates may give rise to arbitrage opportunities based upon changes in the relative value of the common stock underlying the purchase contracts and of the other components of the Equity Units. Any such arbitrage could, in turn, affect the trading prices of the Corporate Units, Treasury Units, the notes and our common stock.

 

We may be unable to, or may choose not to, continue to pay dividends on our common stock at current rates or at all.

 

Any future payments of cash dividends will depend on our financial condition, our capital requirements and earnings, and the ability of our operating subsidiaries to distribute cash to us, as well as other factors that our board of directors may consider.

 

You may not be able to exercise your rights to settle a purchase contract prior to the purchase contract settlement date unless a registration statement under the Securities Act is in effect and a prospectus is available covering the shares of common stock deliverable upon early settlement of a purchase contract.

 

The early settlement rights (including the fundamental change early settlement right) under the purchase contracts are subject to the condition that, if required under the U.S. federal securities laws, we have a registration statement under the Securities Act of 1933, as amended, in effect and an available prospectus covering the shares of common stock and other securities, if any, deliverable upon settlement of a purchase contract. Although we have agreed to use commercially reasonable efforts to have such a registration statement in effect and to provide a prospectus if so required under the U.S. federal securities laws, any failure or inability to maintain an effective registration statement or to have available a prospectus covering the common stock, including as a result of pending corporate events or announcements that prevent the delivery of a current prospectus, may prevent or delay an early settlement.

 

The price of our common stock recently has been volatile. This volatility may affect the price at which you could sell your common stock, and the sale of substantial amounts of our common stock could adversely affect the price of our common stock.

 

The market price for our common stock has varied between a high of $29.29 (in January 2008) and a low of $10.20 (in March 2009) during the period from January 1, 2008 through May 8, 2009. This volatility may affect the price at which you could sell the common stock you receive upon settlement of the purchase contracts, and the sale of substantial amounts of our common stock could adversely affect the price of our common stock. Our stock price may continue to be volatile and subject to significant price and volume fluctuations in response to market and other factors, including the other risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2008; variations in our quarterly operating results from expectations of securities analysts’ or investors’ expectations; downward revisions in securities analysts’ estimates; and announcement by us or our competitors of significant acquisitions, joint ventures, capital commitments or other material developments.

 

In addition, the sale of substantial amounts of our common stock could adversely impact its price. Concurrently with this offering, we are offering, by means of a separate prospectus supplement, 10,000,000 shares of our common stock, plus up to an additional 1,500,000 shares of our common stock if the

underwriters of that offering exercise in full their option to purchase additional shares of our common stock. As of March 31, 2009, we had outstanding approximately 123,154,726 shares of our common stock and options to purchase approximately 414,280 shares of our common stock (of which all were exercisable as of that date). We also had outstanding approximately 207,999 performance shares as of March 31, 2009, under which up to 415,998 shares of common stock could be issued, depending upon achievement of specified goals and approximately 20,705 director deferred share units.

 

We expect that we will need to raise additional capital, and raising additional funds by issuing securities or with additional debt financing may cause dilution to existing stockholders or restrict our operations.

 

We expect that we will need to raise additional capital in the future. We may raise additional funds through public or private equity offerings or debt financings. Additional issuance of equity securities could dilute the value of shares of our common stock and cause the market price of our common stock to decline. Any new debt financing we enter into may include covenants that restrict our operations more than our current outstanding debt and credit facilities. These restrictive covenants could include limitations on additional borrowings, specific restrictions on the use of our assets as well as prohibitions or limitations on our ability to create liens, pay dividends, receive distributions from our subsidiaries, redeem our stock or make investments. These factors could hinder our access to the capital markets and limit or delay our ability to carry out our capital expenditure program.

 

We estimate that our net proceeds from our sale of the Equity Units in this offering, after deducting underwriting discounts and commissions and estimated offering expenses, to be approximately $      (or approximately $      if the underwriters of this offering exercise in full their options to purchase additional Equity Units).

 

In addition, we expect to receive net proceeds, after deducting underwriting discounts and commissions and estimated offering expenses, of approximately $      million from our concurrent common stock offering (or approximately $      if the underwriters of that offering exercise in full their option to purchase additional shares).

 

We intend to use the net proceeds from both of these offerings to repay all or a portion of the short-term borrowings under our revolving credit facility and to make contributions of capital to KCP&L and GMO for general corporate purposes, principally for repayment of all or a portion of KCP&L’s outstanding commercial paper, and repayment of all or a portion of the short-term borrowings under GMO’s revolving credit facilities. As of April 30, 2009, we had $8.0 million of outstanding cash borrowings under our revolving credit facility with a weighted-average interest rate of 0.95%; KCP&L had $229.6 million of commercial paper outstanding at a weighted-average interest rate of 2.773%; and GMO had $252.0 million of outstanding cash borrowings under its $400 million revolving credit facility with a weighted-average interest rate of 1.73% and $36.8 million of outstanding cash borrowings under its $50 million revolving credit facility with a weighted-average interest rate of 2.50%. Pending any specific application, we may invest the net proceeds from the offerings in short-term marketable securities.

 

We currently intend to use the proceeds from the settlement of the purchase contracts to repay debt as soon as practicable following such settlement, and we have agreed not to use such proceeds to repurchase shares of our common stock.

 

This offering of Equity Units is not contingent upon our concurrent common stock offering.

 

Concurrently with this offering of Equity Units, we are offering, by means of a separate prospectus supplement, 10,000,000 shares of our common stock (or 11,500,000 shares of our common stock if the underwriters of that offering exercise in full their option to purchase additional shares).

 

We estimate that our net proceeds from the sale of our common stock in the concurrent common stock offering will be approximately $      , after deducting underwriting discounts and commissions and estimated offering expenses (or approximately $      if the underwriters of that offering exercise in full their option to purchase additional shares).

 

Because the closing of this offering of Equity Units is not contingent upon the closing of the common stock offering, you should not assume that the sale of our common stock will take place.

 

The following table sets forth our consolidated capitalization as of March 31, 2009, and as adjusted to give effect to:

 

 

The following table assumes (i) proceeds from the sale of the Equity Units, after underwriting commissions and estimated expenses, of approximately $240.8 million (or $276.9 million if the underwriters exercise their overallotment option in full) and (ii) proceeds from the sale of our common stock, after underwriting commissions and estimated expenses, of approximately $144.3 million (or $166.0 million if the underwriters exercise their overallotment option in full). The table also assumes that the notes will bear interest at a rate of 10% per year and that contract adjustment payments will be paid at the rate of 2% per year. These figures are for illustrative purposes only.

 

Because the closing of this Equity Units offering is not contingent upon the closing of the common stock offering, you should not assume that the sale of our common stock, as reflected in the third column below, will take place. See “Concurrent Common Stock Offering” in this prospectus supplement. This table should be read in conjunction with our consolidated financial statements and related notes incorporated by reference in this prospectus supplement and the accompanying prospectus. See “Where You Can Find More Information” in this prospectus supplement.

 

 

 

Our common stock is listed on the New York Stock Exchange under the symbol “GXP.” The following table sets forth the high and low sale prices, as reported in the consolidated transaction reporting system and adjusted for historical stock dividends and dividends declared per share of our common stock. As of March 31, 2009, there were 123,154,726 shares of our common stock outstanding.

 

 

 

On May 8, 2009, the last reported sale price of our common stock in the consolidated transaction reporting system was $15.15. As of March 31, 2009, there were approximately 30,050 holders of record of our common stock.

 

On May 5, 2009, our Board of Directors declared a quarterly dividend of $0.2075 per share on our common stock payable June 19, 2009 to shareholders of record on May 29, 2009.

 

The net proceeds from the sale of the Corporate Units will be allocated between the purchase contracts and the notes in proportion to their respective fair market values at the time of issuance. The present value of the Corporate Units contract adjustment payments will be initially charged to shareholders’ equity, with an offsetting credit to liabilities. This liability is accreted approximately over three years by interest charges to the income statement based on a constant rate calculation. Contract adjustment payments will reduce this liability.

 

The purchase contracts are forward transactions in our common stock. Upon settlement of each purchase contract, we will receive $50 on the purchase contract and will issue the requisite number of shares of our common stock. The $50 that we receive will be credited to shareholders’ equity.

Before the issuance of our common stock upon settlement of the purchase contracts, the purchase contracts will be reflected in our diluted earnings per share calculations using the treasury stock method. Under this method, the number of shares of our common stock used in calculating diluted earnings per share (based on the settlement formula applied at the end of the reporting period) is deemed to be increased by the excess, if any, of the number of shares that would be issued upon settlement of the purchase contracts over the number of shares that could be purchased by us in the market (at the average market price during the period) using the proceeds receivable upon settlement. Consequently, we anticipate that there will be no dilutive effect on our earnings per share except during periods when the average market price of our common stock is above the threshold appreciation price of $           .

 

Both the Financial Accounting Standards Board and its Emerging Issues Task Force continue to study the accounting for financial instruments and derivative instruments, including instruments such as the Corporate Units. It is possible that our accounting for the purchase contracts and the notes could be affected by any new accounting rules that might be issued by these groups or other accounting standard setting groups or in the event of any other change in any law or regulation of any accounting rule, pronouncement or interpretation.

 

The following description of the terms of the Equity Units supplements and, to the extent inconsistent therewith, replaces the description of the general terms and provisions of the Equity Units set forth under “Description of Stock Purchase Contracts and Stock Purchase Units or Warrants for Stock” in the accompanying prospectus, to which we refer you. This summary, together with the summary of some of the provisions of the related documents described below, contains a description of the material terms of the Equity Units but is not complete. We refer you to the copies of those documents which have been or will be filed and incorporated by reference in the registration statement of which this prospectus supplement and accompanying prospectus form a part. For purposes of this summary, the terms “we,” “our,” “ours” and “us” refer to Great Plains Energy Incorporated and, unless otherwise expressly stated or the context otherwise requires, not any of our subsidiaries.

 

We will issue the Equity Units under the purchase contract and pledge agreement among us, The Bank of New York Mellon Trust Company, N.A., in its capacity as the purchase contract agent, and The Bank of New York Mellon Trust Company, N.A., in its capacity as the collateral agent, custodial agent and securities intermediary. Equity Units may be either Corporate Units or Treasury Units. The Equity Units will initially consist of 5,000,000 Corporate Units (or 5,750,000 Corporate Units if the underwriters exercise in full their option to purchase additional Equity Units), each with a stated amount of $50.

 

Corporate Units

 

Each Corporate Unit consists of:

 

(a) a purchase contract under which:

 

(1) the holder will agree to purchase from us, and we will agree to sell to the holder, not later than June 15, 2012, which we refer to as the purchase contract settlement date, for $50 in cash, which we refer to as the purchase contract settlement price, a number of newly issued shares of our common stock equal to the settlement rate described below under “Description of the Purchase Contracts — Purchase of Common Stock,” which we refer to as the settlement rate, subject to anti-dilution adjustments under the circumstances set forth under “Description of the Purchase Contracts — Anti-Dilution Adjustments;” and

 

(2) we will pay the holder quarterly contract adjustment payments at the rate of     % per year on the stated amount of $50, subject to our right to defer such contract adjustment payments; and

 

(b) either:

 

(1) 1/20, or 5%, undivided beneficial ownership interest in a $1,000 principal amount     % subordinated note due June 15, 2042 issued by us; or

 

(2) following a successful remarketing of the notes during the period for early remarketing described under “Description of the Purchase Contracts — Remarketing” below, or the occurrence of a special event redemption described under “Description of the Notes — Optional Redemption — Special Event,” the applicable ownership interest in a portfolio of U.S. Treasury securities, which we refer to as the “remarketing Treasury portfolio” (in the case of a successful early remarketing) or the “special event Treasury portfolio” (in the case of a special event redemption).

 

Because each note has a principal amount of $1,000, a holder of one Corporate Unit will not hold that note directly. Instead, a holder will own, as described above, a 1/20, or 5%, beneficial interest in the note that is a component of the Corporate Unit. Upon a successful remarketing during the period for early remarketing, however, the notes that are components of the Corporate Units will be sold in the remarketing and will be replaced by the “remarketing Treasury portfolio.” This is a portfolio of U.S. Treasury securities that, in the aggregate, will (i) produce sufficient cash to make the remaining interest payments (including all accrued and unpaid deferred interest payments, if any, and compounded interest thereon) on the notes as if they remained part of the Corporate Units and (ii) pay the purchase contract settlement price. In connection

with a special event redemption, the notes will be redeemed and will be replaced by the “special event Treasury portfolio” (as defined under “Description of the Notes — Optional Redemption — Special Event”). We refer to a “remarketing Treasury portfolio” or a “special event Treasury portfolio” as the “Treasury portfolio.” Because each Treasury security in a Treasury portfolio is issued in $1,000 denominations, a holder will not own the Treasury security directly, but will own an “applicable ownership interest” in such Treasury portfolio. The “applicable ownership interest” means, with respect to a Corporate Unit and the U.S. Treasury securities in a Treasury portfolio:

 

(1) for a remarketing Treasury portfolio,

 

 

(2) for a special event Treasury portfolio,

 

 

The purchase price of each Equity Unit will be allocated between the related purchase contract and the related applicable ownership interest in the notes in proportion to their respective fair market values at the time of issuance. We have determined that, at the time of issuance, the fair market value of the applicable ownership interest in the notes will be $      and the fair market value of each purchase contract will be $     . This position generally will be binding on each beneficial owner of each Equity Unit but will not be binding on the IRS. See “Material U.S. Federal Income Tax Considerations — U.S. Holders — Allocation of the Purchase Price.”

 

As long as an Equity Unit is in the form of a Corporate Unit, any ownership interest in a note or any applicable ownership interest in the Treasury portfolio forming a part of the Corporate Unit (other than the portion of the Treasury portfolio necessary to make the remaining interest payments on the notes as if they remained part of the Corporate Units) will be pledged to us through the collateral agent to secure your obligation to purchase common stock under the related purchase contract.

 

If U.S. Treasury securities (or principal or interest strips thereof) that are to be included in a Treasury portfolio in connection with an early remarketing described under “Description of the Purchase Contracts — Remarketing” or the occurrence of a special event redemption described under “Description of the Notes — Optional Redemption — Special Event,” have a yield that is less than zero, then each Corporate Unit will instead consist of:

 

(a) a purchase contract under which:

 

(1) the holder will agree to purchase from us, and we will agree to sell to the holder, not later than the purchase contract settlement date, for $50 in cash, a number of newly issued shares of our common stock equal to the settlement rate, subject to anti-dilution adjustments; and

 

(2) we will pay the holder quarterly contract adjustment payments at the rate of     % per year on the stated amount of $50, subject to our right to defer such contract adjustment payments; and

 

(b) in the case of an early remarketing of the notes:

 

(1) 1/20, or 5%, undivided beneficial ownership interest in $1,000 cash; and

 

(2) if the reset effective date in connection with an early remarketing of the notes occurs on or prior to March 15, 2012, with respect to the originally scheduled quarterly interest payment dates on the notes that would have occurred on March 15, 2012 and June 15, 2012, cash in an amount equal to (i) the interest payment that would be due on each of March 15, 2012 and June 15, 2012 on a 1/20, or 5%, beneficial ownership interest in $1,000 principal amount of the notes (assuming no remarketing and no reset of the interest rate on the notes) and (ii) any accrued and unpaid deferred interest payments (including compounded interest thereon) on a 1/20, or 5%, beneficial ownership interest in $1,000 principal amount of the notes (assuming no remarketing and no reset of the interest rate on the notes) accruing from the beginning of the deferral period to, but excluding, March 15, 2012; and

 

(3) if the reset effective date in connection with an early remarketing of the notes occurs after March 15, 2012, with respect to the originally scheduled quarterly interest payment date on the notes that would have occurred on June 15, 2012, cash in an amount equal to (i) the interest payment that would be due on June 15, 2012 on a 1/20, or 5%, beneficial ownership interest in $1,000 principal amount of the notes (assuming no remarketing and no reset of the interest rate on the notes) and (ii) any accrued and unpaid deferred interest payments (including compounded interest thereon) on a 1/20, or 5%, beneficial ownership interest in $1,000 principal amount of the notes (assuming no

remarketing and no reset of the interest rate on the notes) accruing from the beginning of the deferral period to, but excluding, June 15, 2012; and

 

(c) in the case of a special event redemption:

 

(1) 1/20, or 5%, undivided beneficial ownership interest in $1,000 cash; and

 

(2) for each scheduled interest payment date on the notes that occurs after the “special event redemption date” and on or prior to June 15, 2012, cash in an amount equal to the interest payment that would be due on each such scheduled interest payment date on a 1/20, or 5%, beneficial ownership interest in $1,000 principal amount of the notes (assuming no remarketing and reset of the interest rate on the notes).

 

The cash described in clauses (b)(1) and (c)(1) above will be owned by you but will be pledged to us through the collateral agent to secure your obligation to purchase common stock under the related purchase contract. If the provisions set forth in this paragraph apply, references in this prospectus supplement to “U.S. Treasury securities” and “U.S. Treasury securities (or principal or interest strips thereof)” will, thereafter, be deemed to be references to the applicable amount of cash determined as described above.

 

Creating Treasury Units

 

Each holder of Corporate Units will have the right, at any time on or prior to 4:00 p.m. New York City time, on the seventh business day immediately preceding the purchase contract settlement date, to substitute for the related notes held by the collateral agent, qualifying Treasury securities (as described below), in a total principal amount at maturity equal to the aggregate principal amount of the notes for which substitution is being made; provided that no such substitution may be made during a “restricted period” as described below.” Because qualifying Treasury securities and the notes are issued in integral multiples of $1,000, holders of Corporate Units may make this substitution only in integral multiples of 20 Corporate Units.

 

A “business day” means any day other than a Saturday, Sunday or any other day on which banking institutions and trust companies in the City of New York are permitted or required by any applicable law to close.

 

The “restricted period” means the period commencing on, and including, the business day preceding any three-business day remarketing period as described under “Description of the Purchase Contracts — Remarketing — Early Remarketing” below and ending on, and including, the later of the reset effective date and the business day following the last remarketing date during that three-business day remarketing period.

 

Each of these substitutions will create Treasury Units, and the applicable notes or applicable ownership interests in the Treasury portfolio will be released to the holder and be separately tradable from the Treasury Units. The qualifying Treasury securities to be substituted, as pledged securities, for the notes in order to create Treasury Units from Corporate Units will be:

 

(a) with respect to a substitution prior to May 31, 2012, zero-coupon Treasury securities maturing May 31, 2012 (CUSIP. No. 912820PR2); and

 

(b) with respect to a substitution on or after May 31, 2012, the following Treasury securities identified by the Company:

 

(1) the U.S. Treasury bill (or principal or interest strips thereof) that matures at least one but not more than six business days prior to the purchase contract settlement date; or

 

(2) if no such U.S. Treasury bill (or principal or interest strips thereof) exists, any other U.S. Treasury security (or principal or interest strips thereof) that is outstanding, is highly liquid and matures at least one business day prior to the purchase contract settlement date; provided that any U.S. Treasury security identified pursuant to this bullet will be selected in a manner intended to minimize the cash value of the security selected.

Prior to May 31, 2012, so long as no Treasury Units are currently outstanding, with five business days prior written notice to all holders of the Corporate Units, we may specify, in lieu of the zero-coupon Treasury securities maturing May 31, 2012 (CUSIP. No. 912820PR2), an alternative U.S. Treasury security (or principal or interest strips thereof) as the qualifying Treasury security, in which event the references in the immediately preceding paragraph to May 31, 2012, will be deemed to be references to the maturity date of such alternative U.S. Treasury security.

 

To the extent a qualifying Treasury security matures more than six business days prior to the purchase contract settlement date, the collateral agent will, no later than one business day immediately following such date, apply the principal amount paid at maturity of all such qualifying Treasury securities to purchase a like principal amount of qualifying Treasury securities identified by the Company maturing not more than six business days nor less than one business day prior to purchase contract settlement date. On the purchase contract settlement date following such maturity date, the collateral agent will pay the excess, if any, of such principal amount paid over the purchase price to the holders of the relevant Treasury Units on the record date immediately preceding the purchase contract settlement date pro rata in accordance with the stated amount of Treasury Units they held on such record date.

 

You will be able to obtain the issue date, the maturity date and, when available, the CUSIP number of the U.S. Treasury securities that are qualifying Treasury securities at any time from us by calling 1-800-245-5275. We will, to the extent that a qualifying Treasury security previously identified is no longer expected to be outstanding at any point prior to the purchase contract settlement date, identify another qualifying Treasury security meeting the foregoing criteria. The security most recently identified by us with respect to the purchase contract settlement date will be the “qualifying Treasury security” with respect to the period from, and including, its date of issuance to, but excluding, its date of maturity, and our identification of a security as a qualifying Treasury security for such period will be final and binding for all purposes absent manifest error.

 

Each Treasury Unit will consist of a unit with a stated amount of $50 comprising:

 

(a) a purchase contract under which:

 

(1) the holder will agree to purchase from us, and we will agree to sell to the holder, not later than the purchase contract settlement date, for $50 in cash, a number of newly issued shares of our common stock equal to the settlement rate, subject to anti-dilution adjustments; and

 

(2) we will pay the holder quarterly contract adjustment payments at the rate of     % per year on the stated amount of $50, subject to our right to defer such contract adjustment payments; and

 

(b) a 1/20, or 5%, undivided beneficial interest in a qualifying Treasury security with a principal amount of $1,000.

 

To create 20 Treasury Units, unless the Treasury portfolio has replaced the notes that are components of the Corporate Units, the Corporate Unit holder must:

 

 

Upon the deposit and receipt of an instruction from the purchase contract agent, the collateral agent will release the related note from the pledge under the purchase contract and pledge agreement, free and clear of our security interest, to the purchase contract agent. The purchase contract agent then will:

 

 

The qualifying Treasury security will be substituted for the note and will be pledged to us through the collateral agent to secure the holder’s obligation to purchase common stock under the related purchase contracts. The related note released to the holder thereafter will trade separately from the resulting Treasury Units.

 

Notwithstanding the foregoing, if the Treasury portfolio has replaced the notes that are components of the Corporate Units, holders of Corporate Units will have the right, at any time on or prior to 4:00 p.m., New York City time, on the second business day immediately preceding the purchase contract settlement date, to substitute qualifying Treasury securities for the applicable ownership interests in the Treasury portfolio that is a component of the Corporate Unit, but holders of Corporate Units can only make this substitution in integral multiples of           Corporate Units (or such other number of Corporate Units as may be determined by the remarketing agent upon a successful remarketing of notes). In such instance, the collateral agent will release the related applicable ownership interest in the Treasury portfolio that is a component of the Corporate Unit.

 

If, at the time the holder of a Corporate Unit wishes to substitute qualifying Treasury securities for the related notes, such qualifying Treasury securities have a yield that is less than zero, then, each Treasury Unit will instead consist of a unit with a stated amount of $50 comprising:

 

(a) a purchase contract under which:

 

(1) the holder will agree to purchase from us, and we will agree to sell to the holder, not later than the purchase contract settlement date, for $50 in cash, a number of newly issued shares of our common stock equal to the settlement rate, subject to anti-dilution adjustments; and

 

(2) we will pay the holder quarterly contract adjustment payments at the rate of     % per year on the stated amount of $50, subject to our right to defer such contract adjustment payments; and

 

(b) a 1/20, or 5%, undivided beneficial interest in $1,000 cash.

 

The cash described in clause (b) above will be owned by you but will be pledged to us through the collateral agent to secure your obligation to purchase common stock under the related purchase contract. If the provisions set forth in this paragraph apply, references in this prospectus supplement to “qualifying Treasury securities” and “U.S. Treasury securities (or principal or interest strips thereof)” will, thereafter, be deemed to be references to the applicable amount of cash determined as described above.

 

Recreating Corporate Units

 

Each holder of Treasury Units will have the right at any time on or prior to 4:00 p.m. New York City time, on the seventh business day immediately preceding the purchase contract settlement date, to substitute for the related qualifying Treasury securities held by the collateral agent, notes having a principal amount equal to the aggregate principal amount at stated maturity of the qualifying Treasury securities for which substitution is being made; provided that no such substitution may be made during the restricted period described above. Because qualifying Treasury securities and notes are issued in integral multiples of $1,000, holders of Treasury Units may make these substitutions only in integral multiples of 20 Treasury Units.

 

These substitutions will recreate Corporate Units, and the applicable qualifying Treasury securities will be released to the holder and be separately tradable from the Corporate Units.

 

To create 20 Corporate Units, unless the Treasury portfolio has replaced the notes that are components of the Corporate Units, the Treasury Unit holder will:

 

 

Upon the deposit and receipt of an instruction from the purchase contract agent, the collateral agent will release the related qualifying Treasury security from the pledge under the purchase contract and pledge agreement, free and clear of our security interest, to the purchase contract agent. The purchase contract agent will then:

 

 

Notwithstanding the foregoing, if the Treasury portfolio has replaced the notes underlying the Corporate Units, holders of Treasury Units will have the right, at any time on or prior to the second business day immediately preceding the purchase contract settlement date, to substitute the applicable ownership interests in the Treasury portfolio for the qualifying Treasury securities that were a component of the Treasury Units, but holders of Treasury Units can only make this substitution in integral multiples of           Treasury Units (or such other number of Treasury Units as may be determined by the remarketing agent upon a successful remarketing of notes). Holders of Treasury Units seeking to make this substitution will be required to transfer the applicable ownership interest in the Treasury portfolio to the collateral agent for deposit to the collateral account.

 

The substituted note will be pledged to us through the collateral agent to secure the Corporate Unit holder’s obligation to purchase our common stock under the related purchase contracts.

 

Holders that elect to substitute pledged securities, thereby creating Treasury Units or recreating Corporate Units, will be responsible for any fees or expenses payable in connection with the substitution.

 

Current Payments

 

Holders of Corporate Units will be entitled to receive quarterly cash distributions consisting of their pro rata share of interest payments on the notes calculated at the rate of     % per year on the principal amount of notes (or distributions on the applicable ownership interests in the Treasury portfolio purchased in connection with an early remarketing of the notes or a special event redemption), and contract adjustment payments payable at the rate of     % per year on the stated amount of $50 per Corporate Unit, subject to our right to defer contract adjustment payments as described under “Description of the Purchase Contracts — Contract Adjustment Payments” and interest payments on the notes as described under “Description of the Notes — Option to Defer Interest Payments.”

 

Holders of Treasury Units will be entitled to receive quarterly contract adjustment payments payable at the rate of     % per year on the stated amount of $50 per Treasury Unit, subject to our right to defer contract adjustment payments. There will be no distributions in respect of the qualifying Treasury securities that are components of the Treasury Units but the holders of the Treasury Units will continue to receive the scheduled quarterly interest payments on the notes that were released to them when the Treasury Units were created for as long as they hold the notes.

 

Ranking

 

The notes will be issued under a subordinated indenture between us and The Bank of New York Mellon Trust Company, N.A., as trustee, as amended and supplemented by a supplemental indenture between us and the trustee.

 

The notes and our obligations to make contract adjustment payments will be unsecured, will rank subordinate and junior in payment to all of our existing and future Senior Indebtedness as described under “Description of the Notes — Subordination,” and will be effectively subordinated to all liabilities of our

subsidiaries. As of March 31, 2009, we had $1,405.1 million of outstanding indebtedness (including guaranties of GMO indebtedness), all of which was Senior Indebtedness, and our subsidiaries had approximately $3,296.9 million of aggregate outstanding debt (including debt guaranteed by us). The notes will cease to be subordinated and become our senior unsecured debt securities upon the reset effective date.

 

Voting and Certain Other Rights

 

Holders of purchase contracts forming part of the Corporate Units or Treasury Units, in their capacities as such holders, will have no voting or other rights in respect of the common stock.

 

Listing of the Securities

 

We will apply to list the Corporate Units on the New York Stock Exchange under the symbol “GXPPRF,” and we expect trading on the New York Stock Exchange to begin on or about the date of initial issuance of the Corporate Units. Unless and until substitution has been made as described in “— Creating Treasury Units” or “— Recreating Corporate Units,” none of the notes, the applicable ownership interests in notes or the applicable ownership interests in the Treasury portfolio will trade separately from the Corporate Units. The applicable ownership interests in notes or the applicable ownership interests in the Treasury portfolio component will trade as a unit with the purchase contract component of the Corporate Units. If the Treasury Units or the notes are separately traded to a sufficient extent that applicable exchange listing requirements are met, we will endeavor to list the Treasury Units or the notes on the same exchange as the Corporate Units are then listed, including, if applicable, the New York Stock Exchange.

 

Miscellaneous

 

We or our affiliates may from time to time purchase any of the securities offered by this prospectus supplement which are then outstanding by tender, in the open market or by private agreement.

 

This section summarizes some of the terms of the purchase contract and pledge agreement, the purchase contracts and the subordinated indenture between us and The Bank of New York Mellon Trust Company, N.A., as trustee, as amended and supplemented by a supplemental indenture between us and the trustee, which we collectively refer to as the “indenture.” The following description supplements and, to the extent inconsistent therewith, replaces the description of the general terms and provisions of the Equity Units set forth under “Description of Stock Purchase Contracts and Stock Purchase Units or Warrants for Stock” in the accompanying prospectus, to which we refer you. This summary is not complete and should be read together with the purchase contract and pledge agreement and indenture, forms of which have been or will be filed or incorporated by reference as exhibits to the registration statement of which this prospectus supplement and the accompanying prospectus form a part. For purposes of this summary, the terms “we,” “our,” “ours” and “us” refer to Great Plains Energy Incorporated and, unless otherwise expressly stated or the context otherwise requires, not any of our subsidiaries.

 

Purchase of Common Stock

 

Subject to a holder’s early settlement right as described below under “— Early Settlement,” and “— Early Settlement Upon a Fundamental Change” and the termination of the purchase contracts as described below under “— Termination,” each purchase contract underlying a Corporate Unit or Treasury Unit will obligate the holder of the Corporate Unit or Treasury Unit to purchase, and us to sell, on the purchase contract settlement date, for an amount in cash equal to the stated amount of $50 of the Corporate Unit or Treasury Unit, a number of newly issued shares of our common stock equal to the “settlement rate.” The settlement rate will be calculated as follows:

 

 

Accordingly, if the applicable market value for the common stock is greater than the threshold appreciation price, the aggregate market value of the shares of common stock issued upon settlement of each purchase contract will be higher than the stated amount, assuming that the market price of the common stock on the purchase contract settlement date is the same as the applicable market value of the common stock.

 

 

Accordingly, if the applicable market value for the common stock is less than the threshold appreciation price, but greater than the reference price, the aggregate market value of the shares of common stock issued upon settlement of each purchase contract will be equal to the stated amount, assuming that the market price of the common stock on the purchase contract settlement date is the same as the applicable market value of the common stock.

 

 

Accordingly, if the applicable market value for the common stock is less than the reference price, the aggregate market value of the shares of common stock issued upon settlement of each purchase contract will be less than the stated amount, assuming that the market price on the purchase contract settlement date is the same as the applicable market value of the common stock.

The maximum settlement rate, minimum settlement rate, and the applicable market value are subject to adjustment as described under “— Anti-Dilution Adjustments” below. We refer to the minimum settlement rate and the maximum settlement rate collectively as the “fixed settlement rates.”

 

If you elect to settle your purchase contract early in the manner described under “— Early Settlement” (other than in connection with a fundamental change), the number of shares of our common stock issuable upon settlement of such purchase contract will be          , the minimum settlement rate, subject to adjustment as described under “— Anti-Dilution Adjustments.”

 

“Applicable market value” means the average of the closing price per share of our common stock on each of the 20 consecutive trading days ending on the third trading day immediately preceding the purchase contract settlement date; provided however that in the case of certain reclassifications, consolidations, mergers, sales or transfers of assets or other transactions that cause our common stock to be converted into the right to receive other securities, cash or property as described under “— Anti-Dilution,” the applicable market value will mean the value of such other securities, cash or property. The reference price is the public offering price of our common stock in the concurrent common stock offering. The threshold appreciation price represents a     % appreciation over the reference price.

 

“Closing price” of our common stock on any date of determination means the closing sale price (or, if no closing price is reported, the last reported sale price) of the common stock on the New York Stock Exchange on that date or, if the common stock is not listed for trading on the New York Stock Exchange on any such date, as reported in the composite transactions for the principal United States national or regional securities exchange on which the common stock is listed for trading. If the common stock is not listed for trading on a United States national or regional securities exchange, the closing price means the last quoted bid price for the common stock in the over-the-counter market as reported by Pink Sheets LLC or a similar organization. If the bid price is not available, the closing price means the market value of the common stock on the date of determination as determined by a nationally recognized independent investment banking firm retained by us for this purpose.

 

A “trading day” means a day on which our common stock:

 

 

If our common stock is not traded on a securities exchange or association or quoted in the over-the-counter market, then “trading day” means “business day.”

 

We will not issue any fractional shares of common stock pursuant to the purchase contracts. In lieu of fractional shares otherwise issuable (calculated on an aggregate basis) in respect of purchase contracts being settled by a holder of Corporate Units or Treasury Units, the holder will be entitled to receive an amount of cash equal to the fraction of a share, multiplied by the applicable market value (or, in the case of any optional early settlement or an early settlement in connection with a fundamental change, the closing price on the relevant early settlement date).

 

On the business day immediately preceding the purchase contract settlement date, unless:

 

 

 

then the following proceeds will be applied automatically to satisfy the holder’s obligation under the purchase contracts:

 

 

The common stock will then be issued and delivered to the holder or the holder’s designee, upon presentation and surrender of the certificate evidencing the Corporate Units or Treasury Units and payment by the holder of any transfer or similar taxes payable in connection with the issuance of the common stock to any person other than the holder.

 

Each holder of Corporate Units or Treasury Units, by acceptance of these securities, will be deemed to have:

 

 

In addition, each beneficial owner of Corporate Units or Treasury Units, by acceptance of the beneficial interest therein, will be deemed to have agreed to treat for U.S. federal, state and local income tax purposes:

 

Remarketing

 

  Early Remarketing

 

Pursuant to the remarketing agreement that we will enter into with the purchase contract agent and one or more remarketing agents to be designated by us (which may be the underwriters named in this prospectus supplement), we may, at our option, elect to remarket the notes during the period (which we call the “period for early remarketing”) beginning on, and including, December 15, 2011 and ending on, and including, May 15, 2012. Any remarketing during the period for early remarketing will occur during a three-business day remarketing period consisting of three sequential possible remarketing dates selected by us and will include notes that are components of Corporate Units and the separate notes of holders that have elected to include those notes in the remarketing. During any remarketing occurring during the period for early remarketing, we have the right to postpone such remarketing in our absolute discretion. We will not attempt a remarketing if the purchase contracts have been terminated, if the notes have been redeemed in a special event redemption, or if the notes have already been successfully remarketed.

 

On each remarketing date occurring during the period for early remarketing, the remarketing agent will use its reasonable efforts to obtain a price for the notes remarketed equal to approximately 100% of the sum of the purchase price for the remarketing Treasury portfolio and the separate notes purchase price described below, plus, at our option, the applicable remarketing fee. A portion of the proceeds from the remarketing equal to the remarketing Treasury portfolio purchase price will be applied to purchase on the reset effective date (as defined below) a remarketing Treasury portfolio consisting of:

 

Notwithstanding the foregoing, if on the date the quotation agent is to determine the remarketing Treasury portfolio purchase price, U.S. Treasury securities (or principal or interest strips thereof) that are to be included in a remarketing Treasury portfolio have a yield that is less than zero, then “remarketing Treasury portfolio” shall mean:

 

 

The remarketing Treasury portfolio will be substituted for the notes that are components of the Corporate Units and will be pledged to us through the collateral agent to secure the Corporate Unit holders’ obligation to purchase our common stock under the purchase contracts.

 

We will pay the remarketing fee in connection with any remarketing unless we direct the remarketing agent to include such fee in the price of the remarketed notes and the remarketing agent is able to remarket the notes for an amount which includes such fee. In this case, the remarketing agent may deduct the applicable remarketing fee from any amount of the proceeds from the remarketing of the notes in excess of the remarketing Treasury portfolio purchase price. The remarketing agent will then remit any remaining portion of the proceeds for the benefit of the holders whose notes were remarketed. Corporate Unit holders whose component notes are remarketed will not otherwise be responsible for the payment of any remarketing fee in connection with any remarketing. The applicable remarketing fee shall be determined by negotiation between us and the remarketing agent.

 

As used in this context, “remarketing Treasury portfolio purchase price” means the lowest aggregate price quoted by a primary U.S. government securities dealer in New York City to the quotation agent on the third business day immediately preceding the reset effective date for the purchase of the remarketing Treasury portfolio described above for settlement on the reset effective date; provided that if the remarketing Treasury portfolio is comprised solely of cash, as described above, the remarketing Treasury portfolio purchase price will be the aggregate amount of cash comprising the remarketing Treasury portfolio. “Quotation agent” means any primary U.S. government securities dealer in New York City selected by us.

 

The amount and issue of U.S. Treasury securities (or principal or interest strips thereof) constituting the remarketing Treasury portfolio will be determined by the remarketing agent.

 

If U.S. Treasury securities (or principal or interest strips thereof) that are to be included in a remarketing Treasury portfolio have a yield that is less than zero, then the cash proceeds from the remarketing (and not the U.S. Treasury securities) will instead be substituted for the notes that are components of the Corporate Units and will be pledged to us through the collateral agent to secure the Corporate Unit holders’

obligation to purchase our common stock under the purchase contracts as described under “Description of the Equity Units — Corporate Units.” If the provisions set forth in the immediately preceding sentence apply, references in this prospectus supplement to “U.S. Treasury securities” and “U.S. Treasury securities (or principal or interest strips thereof)” will, thereafter, be deemed to be references to the applicable amount of cash determined as described above.

 

In the event of a successful remarketing, each holder of a separate note that was included in the remarketing will receive on the reset effective date the remarketing price per separate note, which, for each separate note, is an amount in cash equal to the quotient of the remarketing Treasury portfolio purchase price divided by the number of notes (assuming that each “note” means a $1,000 denomination note) included in such remarketing that are held as components of Corporate Units. The “separate notes purchase price” means the amount in cash equal to the product of (i) the remarketing price per separate note and (ii) the number of notes included in such remarketing that are not part of Corporate Units, which we refer to as “separate notes.”

 

In connection with a successful remarketing (whether during the period for early remarketing or the final remarketing period described below), interest on the notes will be reset to a new fixed rate. The reset rate on the notes may not be a contingent or floating rate. The interest rate on the remarketed notes will be reset to the rate determined by the remarketing agent, in consultation with us, such that the remarketing proceeds will not be less than (i) 100% of the sum of the remarketing Treasury portfolio purchase price and the separate notes purchase price plus, at our option, the applicable remarketing fee, in the case of the remarketing during the period for early remarketing, or (ii) 100% of the aggregate principal amount of the notes being remarketed, plus all accrued and unpaid deferred interest (including compounded interest thereon), if any, on the notes being remarketed, plus, at our option, the applicable remarketing fee, in the case of a remarketing during the final remarketing period. Interest on the remarketed notes will be payable annually if the notes are successfully remarketed, unless we elect to pay interest semi-annually. In addition, we may:

 

 

In addition, in connection with a successful remarketing of the notes, without the consent of any of the holders of the notes, we will change the ranking of the notes such that they rank equally with all of our existing and future unsecured and unsubordinated obligations, and we will remove the interest deferral provisions of the notes.

 

From and including the reset effective date, interest on the notes will be payable annually on December 31 of each year, unless we elect to pay interest semi-annually on June 15 and December 15 of each year.

 

The reset rate and any changes in the notes as described above will be determined on the date that the remarketing agent is able to successfully remarket the notes, and will become effective, if the remarketing is successful, on the “reset effective date,” which will be:

 

 

The reset rate and any changes in the notes as described above will apply to holders of notes who do not participate in the remarketing.

If a remarketing attempt described above is unsuccessful on the first remarketing date of a three-business day remarketing period, subsequent remarketings will be attempted (unless impracticable) as described above on each of the two following remarketing dates in that three-business day remarketing period until a successful remarketing occurs. If (i) despite using its reasonable efforts, the remarketing agent cannot remarket the notes at a price equal to or greater than 100% of the sum of the remarketing Treasury portfolio purchase price and the separate notes purchase price, plus, at our election, the applicable remarketing fee or (ii) the remarketing has not occurred because a condition precedent to the remarketing has not been fulfilled, in each case, resulting in an unsuccessful remarketing on each of the three remarketing dates comprising the three-business day remarketing period, the notes that are components of the Corporate Units prior to the remarketing will continue to be components of the Corporate Units and additional remarketings may, subject to the next paragraph, be attempted during one or more subsequent three-business day remarketing periods as described above.

 

In connection with any successful remarketing, solely with respect to notes that were not remarketed in such remarketing, any then-outstanding deferred interest (including compounded interest thereon) will be paid to the holders of such separate notes on the immediately following scheduled interest payment date, at our election, in cash or by issuing additional notes to the holders of such separate notes in principal amount equal to the amount of such deferred interest (including compounded interest thereon). See “Description of the Notes — Option to Defer Interest Payments” below.

 

  Final Remarketing

 

Unless the notes have been successfully remarketed during the period for early remarketing or a special event redemption date has occurred or will occur prior to June 15, 2012, the notes that are components of Corporate Units whose holders (i) have failed to notify the purchase contract agent on or prior to the seventh business day preceding the purchase contract settlement date of their intention to settle the related purchase contracts with separate cash, or (ii) have given such notice but failed to pay the purchase price for the related purchase contracts on or prior to the sixth business day preceding the purchase contract settlement date, together with the separate notes of holders that have elected to include those notes in the remarketing, will be remarketed during a three-business day remarketing period beginning on, and including, the fifth business day, and ending on, and including, the third business day, immediately preceding the purchase contract settlement date. This three-business day remarketing period is referred to as the “final three-business day remarketing period” and we refer to the third business day immediately preceding the purchase contract settlement date as the “final remarketing date.” The “reset effective date” relating to any remarketing during the final three-business day remarketing period will be the purchase contract settlement date. In this remarketing, the remarketing agent will use its reasonable efforts to obtain a price for the notes equal to approximately 100% of the aggregate principal amount of the notes remarketed, plus all accrued and unpaid deferred interest (including compounded interest thereon), if any, on the notes being remarketed, plus, at our option, the applicable remarketing fee. A portion of the proceeds from this remarketing equal to the aggregate principal amount of the notes that are components of the Corporate Units will be automatically applied to satisfy in full the Corporate Unit holders’ obligations to purchase our common stock on June 15, 2012. A portion of the proceeds of this remarketing equal to the aggregate principal amount of the separate notes being remarketed, plus all accrued and unpaid deferred interest (including compounded interest thereon) on such separated notes being remarketed, will be paid to the holders of those notes on June 15, 2012.

 

We will pay any remarketing fee in connection with any remarketing, unless we direct the remarketing agent to include such fee in the price of the remarketed notes and the remarketing agent is able to remarket the notes for an amount that includes such fee. In this case, if a remarketing during the final three-business day remarketing period is successful, the remarketing agent may deduct the applicable remarketing fee from any amount of the proceeds in excess of the aggregate principal amount of the remarketed notes, plus all accrued and unpaid deferred interest (including compounded interest thereon), if any, on such remarketed notes. The remarketing agent will then remit any remaining portion of the proceeds for the benefit of the holders. The applicable remarketing fee shall be determined by negotiation between us and the remarketing

agent. Corporate Unit holders whose component notes are remarketed will not otherwise be responsible for the payment of any remarketing fee in connection with any remarketing.

 

If a remarketing attempt described above is unsuccessful on the first remarketing date of the final three-business day remarketing period, subsequent remarketings will be attempted as described above on each of the two following remarketing dates in the final three-business day remarketing period until a successful remarketing occurs. If (i) despite using its reasonable efforts, the remarketing agent cannot remarket the notes during the final three-business day remarketing period at a price equal to or greater than 100% of the aggregate principal amount of the notes, plus all accrued and unpaid deferred interest (including compounded interest thereon), if any, on the notes being remarketed, plus, at our election, the applicable remarketing fee or (ii) the remarketing during the final three-business day remarketing period has not occurred because a condition precedent to the remarketing has not been fulfilled, in each case, resulting in a failure of the notes to be remarketed during the final three-business day remarketing period, the holders of the notes will have the right to put their notes to us on the purchase contract settlement date, at a price equal to $1,000 per note ($50 per applicable ownership interest), plus accrued and unpaid interest (including all accrued and unpaid deferred interest, if any, and compounded interest thereon). The put right of holders of notes that underlie the Corporate Units will be automatically exercised unless such holders (i) prior to 11:00 a.m., New York City time, on the second business day immediately preceding the purchase contract settlement date, provide written notice of their intention to settle the related purchase contract with separate cash, and (ii) on or prior to the business day immediately preceding the purchase contract settlement date, deliver to the collateral agent $50 in cash per purchase contract. Unless a Corporate Unit holder has settled the related purchase contract with separate cash on or prior to the purchase contract settlement date, such holder will be deemed to have elected to apply a portion of the proceeds of the put price equal to the principal amount of the notes against such holder’s obligations to us under the related purchase contracts, thereby satisfying such obligations in full, and we will deliver our common stock to such holder pursuant to the related purchase contracts. Any remaining amount of the put price following satisfaction of the purchase contract will be paid to such Corporate Unit holder. Holders do not have any put rights with respect to additional notes issued to pay deferred interest on the notes. Holders of notes that do not underlie the Corporate Units may elect to exercise put rights with respect to their separate notes as described under “Description of the Notes — Put Right Following a Failed Remarketing.”

 

In connection with any successful remarketing in the final three-business day remarketing period, solely with respect to notes that were not remarketed in such remarketing, any then-outstanding deferred interest (including compounded interest thereon) will be paid to the holders of such separate notes on the purchase contract settlement date, at our election, in cash or by issuing additional notes to the holders of such separate notes in principal amount equal to the amount of such deferred interest (including compounded interest thereon). See “Description of the Notes — Option to Defer Interest Payments” below.

 

Remarketing Announcements

 

We will announce any remarketing of the notes on the sixth business day immediately preceding the first remarketing date of a three-business day remarketing period and, for the final three-business day remarketing period, we will announce the remarketing of the notes on the third business day immediately preceding the first remarketing date of the final three-business day remarketing period. Each such announcement (each a “remarketing announcement”) on each such date (each, a “remarketing announcement date”) shall specify:

 

(1) (A) if the remarketing announcement relates to a remarketing to occur during the period for early remarketing, that the notes may be remarketed on any or all of the sixth, seventh or eighth business days following the remarketing announcement date; or

 

(B) if the remarketing announcement relates to a remarketing to occur during the final three-business day remarketing period, that the notes may be remarketed on any or all of the third, fourth or fifth business days following the remarketing announcement date;

 

(2) (A) if the remarketing announcement relates to a remarketing to occur during the period for early remarketing, that the reset effective date will be the third business day following the remarketing date on

which the notes are successfully remarketed, unless the remarketing is successful within five business days of the next succeeding interest payment date in which case such interest payment date will be the reset effective date; or

 

(B) if the remarketing announcement relates to a remarketing to occur during the final three-business day remarketing period, that the reset effective date will be June 15, 2012 if there is a successful remarketing;

 

(3) that the reset rate, interest payment dates, maturity date and optional redemption terms, if any, will be established on the remarketing date on which the notes are successfully remarketed and effective on and after the reset effective date, and that, upon a successful remarketing, the ranking of the notes will change such that the notes will rank equally with all of our existing and future unsecured and unsubordinated obligations and the interest deferral provisions of the notes will be removed;

 

(4) (A) if the remarketing announcement relates to a remarketing to occur during the period for early remarketing, that the reset rate will equal the interest rate on the notes that will enable the notes to be remarketed at a price equal to the sum of the remarketing Treasury portfolio purchase price and the separate notes purchase price, plus, at our option, the applicable remarketing fee; or

 

(B) if the remarketing announcement relates to a remarketing to occur during the final three-business day remarketing period, that the reset rate will equal the interest rate on the notes that will enable the notes to be remarketed at a price equal to 100% of their aggregate principal amount, plus all accrued and unpaid deferred interest (including compounded interest thereon), if any, on the notes being remarketed, plus, at our option, the applicable remarketing fee; and

 

(5) the range of possible remarketing fees.

 

We will cause each remarketing announcement to be published on the remarketing announcement date by making a timely release to any appropriate news agency, including Bloomberg Business News and the Dow Jones News Service. In addition, we will request, not later than 10 business days prior to each remarketing announcement date, that the depositary notify its participants holding notes, Corporate Units and Treasury Units of the remarketing. If required, we will use commercially reasonable efforts to ensure that a registration statement with respect to the full principal amount of the notes to be remarketed is effective such that the remarketing agent may rely on it in connection with the remarketing process. If a successful remarketing occurs on a remarketing date, we will request the depositary to notify its participants holding notes of the reset rate, interest payment dates, maturity date, ranking and optional redemption terms established, if any, for the notes during the remarketing on the business day following the remarketing date on which the notes were successfully remarketed. If a successful remarketing does not occur during a three-business day remarketing period, we will cause a notice of the unsuccessful remarketing attempt of notes to be published on the business day following the last of the three remarketing dates comprising the three-business day remarketing period (which notice, in the event of a failed remarketing on the final remarketing date, shall be published not later than 9:00 a.m., New York City time, and shall include the procedures that must be followed if a holder of notes wishes to exercise its right to put such notes to us), in each case, by making a timely release to any appropriate news agency, including Bloomberg Business News and the Dow Jones News Service.

 

In connection with a remarketing, holders of notes that do not underlie the Corporate Units may elect to have their notes remarketed as described under “Description of the Notes — Remarketing.”

 

You may elect not to participate in any remarketing and to retain the principal amount of notes underlying the applicable ownership interests in notes comprising part of your Corporate Units by:

 

For the avoidance of doubt, we need not give any notice in the event that we decide not to elect to remarket the notes during the period for early remarketing.

 

Notice to Settle with Cash

 

Unless the Treasury portfolio has replaced the notes that are components of the Corporate Units or the purchase contracts have been terminated or previously settled in an early settlement or fundamental change early settlement, a holder of Corporate Units may settle the related purchase contract with separate cash. A holder of a Corporate Unit wishing to settle the related purchase contract with separate cash must (A) notify the purchase contract agent by presenting and surrendering at the offices of the purchase contract agent (i) the Corporate Unit certificate evidencing the Corporate Unit, if the Corporate Units are in certificated form, and (ii) the form of “Notice of Cash Settlement,” substantially in the form attached to the purchase contract and pledge agreement, completed and executed as indicated on or prior to 4:00 p.m., New York City time, on the seventh business day immediately preceding the purchase contract settlement date and (B) deliver the required cash payment to the collateral agent on or prior to 11:00 a.m., New York City time, on the sixth business day immediately preceding the purchase contract settlement date. If a holder that has given notice of its intention to settle the related purchase contract with separate cash fails to deliver the cash to the collateral agent on the sixth business day immediately preceding the purchase contract settlement date, such holder’s notes will be included in the remarketing of notes during the final three-business day remarketing period beginning on the fifth business day immediately preceding the purchase contract settlement date.

 

Early Settlement

 

Subject to the conditions described below, a holder of Corporate Units or Treasury Units may settle the related purchase contracts in cash at any time on or prior to 4:00 p.m., New York City time, on the seventh business day immediately preceding the purchase contract settlement date, other than during a restricted period (as defined under “Description of the Equity Units — Creating Treasury Units”) or following the effectiveness of a fundamental change in which case “— Early Settlement Upon a Fundamental Change” below will apply. Holders may effect such settlement by presenting and surrendering the related Corporate Unit or Treasury Units certificate, if they are in certificated form, at the offices of the purchase contract agent with the form of “Election to Settle Early” on the reverse side of such certificate, duly completed and accompanied by payment to us in immediately available funds of an amount equal to:

 

 

Holders of Corporate Units may settle early only in integral multiples of 20 Corporate Units. If the Treasury portfolio has replaced the notes that are components of the Corporate Units, holders of the Corporate Units may settle early only in integral multiples of          Corporate Units (or such other number of Corporate Units as may be determined by the remarketing agent upon a successful remarketing of notes). Holders of Treasury Units may settle early only in integral multiples of 20 Treasury Units.

 

So long as the Equity Units are evidenced by one or more global security certificates deposited with the depositary, procedures for early settlement will also be governed by standing arrangements between the depositary and the purchase contract agent.

 

The early settlement right is also subject to the condition that, if required under the U.S. federal securities laws, we have a registration statement under the Securities Act in effect covering the shares of common stock and other securities, if any, deliverable upon settlement of a purchase contract. We have agreed that, if required under the U.S. federal securities laws, we will (i) use commercially reasonable efforts to have a registration statement in effect covering those shares of common stock and other securities to be delivered in respect of the purchase contracts being settled, and (ii) provide a prospectus in connection therewith, in each

case in a form that may be used in connection with the early settlement right (it being understood that if there is a material business transaction or development with respect to us that has not yet been publicly disclosed, we will not be required to file such registration statement or provide such a prospectus, and the early settlement right will not be available, until we have publicly disclosed such transaction or development or have determined that such transaction or development does not prevent us from filing a registration statement or providing a prospectus; provided that we will use commercially reasonable efforts to make such disclosure or make such determination, as applicable, as soon as it is commercially reasonable to do so). In the event that a holder seeks to exercise its early settlement right and a registration statement is required to be effective in connection with the exercise of such right but no such registration statement is then effective, the holder’s exercise of such right shall be void unless and until such a registration statement becomes effective.

 

Upon early settlement of the purchase contracts related to any Corporate Units or Treasury Units:

 

 

If the purchase contract agent receives a Corporate Unit certificate or Treasury Unit certificate, if they are in certificated form, accompanied by the completed “Election to Settle Early” on the reverse side of such certificate, and the required immediately available funds, from a holder of Corporate Units or Treasury Units by 4:00 p.m., New York City time, on a business day and all conditions to early settlement have been satisfied, that day will be considered the settlement date. If the purchase contract agent receives the above after 4:00 p.m., New York City time, on a business day or at any time on a day that is not a business day, the next business day will be considered the settlement date.

 

Upon early settlement of purchase contracts in the manner described above, presentation and surrender of the certificate evidencing the related Corporate Units or Treasury Units if they are in certificated form and payment of any transfer or similar taxes payable by the holder in connection with the issuance of the related common stock to any person other than the holder of the Corporate Units or Treasury Units, we will cause the shares of common stock being purchased to be issued, and the aggregate principal amount of notes, the applicable ownership interests in the Treasury portfolio or the qualifying Treasury securities, as the case may be, securing the purchase contracts to be released from the pledge under the purchase contract and pledge agreement described in “— Pledged Securities and Purchase Contract and Pledge Agreement” and transferred, within three business days following the settlement date, to the purchasing holder or the holder’s designee.

Early Settlement Upon a Fundamental Change

 

If a “fundamental change” (as defined below) occurs at least 20 business days prior to the purchase contract settlement date, then each holder of a purchase contract will have the right, on the “fundamental change early settlement date” (as defined below), to accelerate and settle such contract early at the “fundamental change early settlement rate” described below. We refer to this right as the “fundamental change early settlement right.”

 

We will provide each of the holders with a notice of a fundamental change within 15 business days after its occurrence, but in any case at least 15 business days prior to the purchase contract settlement date. The notice will specify, among other things (i) the deadline by which each holder’s fundamental change early settlement right must be exercised, (ii) the date on which the fundamental change settlement shall occur, which will be at least 10 days after the date of the notice but no later than five business days prior to the purchase contract settlement date and which we refer to as the “fundamental change early settlement date,” (iii) the applicable fundamental change early settlement rate and (iv) the amount of the cash, securities and other consideration receivable by the holder upon settlement. To exercise the fundamental change early settlement right, you must deliver to the purchase contract agent, no later than 4:00 p.m., New York City time, on the third business day immediately preceding the fundamental change early settlement date, the certificate evidencing your Corporate Units or Treasury Units if they are held in certificated form, duly endorsed for transfer to us in blank with the form of “Election to Settle Early” on the reverse side of such certificate duly completed, and accompanied by payment to us in immediately available funds of an amount equal to the stated amount of $50 times the number of purchase contracts being settled.

 

So long as the Equity Units are evidenced by one or more global security certificates deposited with the depositary, procedures for early settlement upon a fundamental change will also be governed by standing arrangements between the depositary and the purchase contract agent.

 

A “fundamental change” will be deemed to have occurred if any of the following occurs:

 

(1) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of our common equity representing more than 50% of the voting power of our common equity (other than in connection with a consolidation, merger or other transaction described in clause (2) below, in which case clause (2) shall apply); or

 

(2) we are involved in a consolidation with or merger into any other person, or any merger of another person into us, or any other transaction or series of related transactions (other than a merger that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of our common stock), in each case in which 90% or more of our common stock is exchanged for or converted into securities, cash or other property, 10% or more of which consists of securities, cash or other property that is not (or will not be immediately upon the effectiveness of such consolidation, merger or transaction) common stock listed on the New York Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market; or

 

(3) our common stock ceases to be listed or quoted on the New York Stock Exchange, the NASDAQ Global Select Market or the NASDAQ Global Market (other than in connection with a consolidation, merger or other transaction described in clause (2) above, in which case clause (2) shall apply); or

 

(4) our shareholders vote for our liquidation, dissolution or termination.

 

The “fundamental change early settlement rate” will be determined by reference to the table below, based on the date on which the fundamental change occurs or becomes effective (the “effective date”) and the “stock price” in the fundamental change, which will be:

 

 

The stock prices set forth in the first column of the table below will be adjusted as of any date on which any fixed settlement rate is otherwise adjusted. The adjusted stock prices will equal the stock prices applicable immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the fixed settlement rate immediately prior to the adjustment giving rise to the stock price adjustment and the denominator of which is the fixed settlement rate as so adjusted. The number of shares in the table below will be adjusted in the same manner as the fixed settlement rates as set forth under “— Anti-Dilution Adjustments.”

 

The following table sets forth the fundamental change settlement rate per $50 stated amount of Equity Units based on various hypothetical stock prices and effective dates:

 

 

The exact stock prices and effective dates may not be set forth in the table above, in which case:

 

 

The maximum number of shares of our common stock deliverable under a purchase contract is          , subject to adjustment in the same manner as each fixed settlement rate as set forth under “— Anti-Dilution Adjustments.”

If you exercise the fundamental change early settlement right, we will (or will cause the collateral agent to) deliver to you on the fundamental change early settlement date:

 

 

If the fundamental change causes our common stock to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of shareholder election) and you exercise the fundamental change early settlement right, we will deliver to you on the fundamental change early settlement date consideration in the types and amounts as is proportional to the types and amounts of consideration received by the holders of our common stock that affirmatively make such an election.

 

If you do not elect to exercise your fundamental change early settlement right, your Corporate Units or Treasury Units will remain outstanding and subject to normal settlement on the purchase contract settlement date. We have agreed that, if required under the U.S. federal securities laws, we will use commercially reasonable efforts to (i) have in effect a registration statement covering the common stock and other securities, if any, to be delivered in respect of the purchase contracts being settled and (ii) provide a prospectus in connection therewith, in each case in a form that may be used in connection with the early settlement upon a fundamental change (it being understood that if there is a material business transaction or development with respect to us that has not yet been publicly disclosed, we will not be required to file such registration statement or provide such a prospectus, and the fundamental change early settlement right will not be available, until we have publicly disclosed such transaction or development or have determined that such transaction or development does not prevent us from filing a registration statement or providing a prospectus; provided that we will use commercially reasonable efforts to make such disclosure or such determination, as applicable, as soon as it is commercially reasonable to do so). In the event that a holder seeks to exercise its fundamental change early settlement right and a registration statement is required to be effective in connection with the exercise of such right but no such registration statement is then effective, the holder’s exercise of such right shall be void unless and until such a registration statement becomes effective, but such holder shall receive consideration calculated as described in this “— Early Settlement Upon a Fundamental Change” section when such registration statement becomes effective.

 

If the Treasury portfolio has replaced the notes that are components of the Corporate Units, holders of the Corporate Units may exercise the fundamental change early settlement right only in integral multiples of           Corporate Units (or such other number of Corporate Units as may be determined by the remarketing agent upon a successful remarketing of notes). Otherwise, a holder of Corporate Units or Treasury Units may exercise the fundamental change early settlement right only in integral multiples of 20 Corporate Units or 20 Treasury Units, as the case may be.

 

Contract Adjustment Payments

 

Contract adjustment payments in respect of Corporate Units and Treasury Units will be fixed at a rate per year of     % of the stated amount of $50 per purchase contract. Contract adjustment payments payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. Contract adjustment payments will accrue from the date of issuance of the purchase contracts and will be payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on September 15, 2009, subject to our right to defer the payment of the contract adjustment payments as described below.

Contract adjustment payments will be payable to the holders of purchase contracts as they appear on the books and records of the purchase contract agent at the close of business on the relevant record dates, which will be on the first day of the month (whether or not a business day) in which the relevant payment date falls. These distributions will be paid through the purchase contract agent, who will hold amounts received in respect of the contract adjustment payments for the benefit of the holders of the purchase contracts relating to the Equity Units. Subject to any applicable laws and regulations, each such payment will be made as described under “— Book-Entry System.”

 

If any date on which contract adjustment payments are to be made is not a business day, then payment will be made on the next succeeding day which is a business day, and no interest or payment will be paid in respect of the delay. However, if that business day is in the next succeeding calendar year, that payment will be made on the immediately preceding business day, in each case with the same force and effect as if made on that payment date.

 

Our obligations with respect to contract adjustment payments will be subordinated and junior in right of payment to our obligations under any of our Senior Indebtedness.

 

We may, at our option and upon prior written notice to the holders of the Equity Units and the purchase contract agent, defer the payment of contract adjustment payments on the related purchase contracts forming a part of the Equity Units until no later than the purchase contract settlement date; provided, however, that in (x) an early settlement upon a fundamental change, we will pay deferred contract adjustment payments (including compounded contract adjustment payments thereon as described below) to, but excluding, the fundamental change early settlement date and (y) an early settlement, we will pay deferred contract adjustment payments (including compounded contract adjustment payments thereon as described below) to, but excluding, the quarterly payment date immediately preceding the early settlement date.

 

Deferred contract adjustment payments will accrue additional contract adjustment payments at the rate of     % per year until paid, compounded quarterly, which is equal to the rate of total distributions on the Corporate Units (compounding on each succeeding payment date), to, but excluding, the payment date. We refer to additional contract adjustment payments that accrue on deferred contract adjustment payments as “compounded contract adjustment payments.” If the purchase contracts are terminated (upon the occurrence of certain events of bankruptcy, insolvency or reorganization with respect to us), the right to receive contract adjustment payments and deferred contract adjustment payments (including compounded contract adjustment payments thereon) will also terminate.

 

If we exercise our option to defer the payment of contract adjustment payments, then, until the deferred contract adjustment payments (including compounded contract adjustment payments thereon) have been paid, we will not declare or pay any dividends or make any distributions on, or redeem, purchase or acquire or make a liquidation payment with respect to, any shares of our capital stock.

 

The restrictions listed above do not apply to:

 

 

Anti-Dilution Adjustments

 

Each fixed settlement rate will be adjusted, without duplication, if certain events occur:

 

(1) The issuance of our common stock as a dividend or distribution to all holders of our common stock, or a subdivision or combination of our common stock, in which event each fixed settlement rate will be adjusted based on the following formula:

 

SR₁ =SR₀ x (OS₁ / OS₀)

 

where,

 

 

(2) The issuance to all holders of our common stock of rights, options or warrants (other than pursuant to any dividend reinvestment or share purchase plans) entitling them for a period expiring 45 days or less from the date of issuance of such rights, options or warrants to purchase shares of our common stock at less than the current market price of our common stock as of the record date for such issuance, in which event each fixed settlement rate will be increased based on the following formula:

 

SR₁ = SR₀ x (OS₀+X) / (OS₀+Y)

 

where,

 

 

However, each fixed settlement rate will be readjusted to the extent that any such rights, options or warrants are not exercised prior to their expiration.

 

(3) (a) The dividend or other distribution to all holders of our common stock of shares of our capital stock (other than common stock), rights to acquire our capital stock or evidences of our indebtedness or our

assets (excluding (i) any dividend, distribution or issuance covered by clause (1) or (2) above or clause (4) below and (ii) any spin-off to which the provisions in clause 3(b) below apply), in which event each fixed settlement rate will be increased based on the following formula:

 

SR₁ = SR₀ x SP₀ / (SP₀ - FMV)

 

where,

 

 

(b) However, if the transaction that gives rise to an adjustment pursuant to clause (3)(a) above is one pursuant to which the dividend or other distribution on our common stock consists of shares of capital stock of, or similar equity interests in, a subsidiary or other business unit of ours, (i.e., a spin-off) that are, or, when issued, will be, listed or traded on a U.S. national or regional securities exchange, then each fixed settlement rate will instead be increased based on the following formula:

 

SR₁ =SR₀ x (FMV₀ + MP₀) / MP₀

 

where,

 

 

The adjustment to each fixed settlement rate under this clause 3(b) will occur on the last day of the valuation period; provided that if a holder elects to early settle the purchase contracts, or the purchase contract settlement date occurs, in either case, during the valuation period, references with respect to 10 trading days shall be deemed replaced with such lesser number of trading days as have elapsed between the ex-dividend date of such spin-off and the date on which such holder elected its early settlement right, or the business day immediately preceding the purchase contract settlement date, as the case may be, in determining the applicable fixed settlement rates.

 

(4) We make a distribution consisting exclusively of cash to all holders of our common stock, excluding (a) any regular, quarterly cash dividend on our common stock to the extent that the amount per share of our common stock does not exceed $0.2075 in the then current fiscal quarter (the “dividend threshold amount”), (b) any cash that is distributed as part of a distribution referred to in clause (3) above, and (c) any consideration payable in connection with a tender or exchange offer made by us or any of our subsidiaries

referred to in clause (5) below, in which event, each fixed settlement rate will be increased based on the following formula:

 

SR₁ = SR₀ x SP₀ / (SP₀ - C)

 

where,

 

 

The dividend threshold amount is subject to adjustment on an inversely proportional basis whenever the fixed settlement rates are adjusted, but no adjustment will be made to the dividend threshold amount for any adjustment made to the fixed settlement rates pursuant to this clause (4). For the avoidance of doubt, the dividend threshold amount will be zero in the case of a cash dividend amount that is not a regular, quarterly dividend.

 

(5) We or one or more of our subsidiaries make purchases of our common stock pursuant to a tender offer or exchange offer by us or one of our subsidiaries for our common stock to the extent that the cash and value of any other consideration included in the payment per share of our common stock validly tendered or exchanged exceeds the average of the closing price of our common stock over the 10 consecutive trading days commencing on, and including, the trading day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (the “expiration date”), in which event each fixed settlement rate will be increased based on the following formula:

 

SR₁ = SR₀ x [(FMV + (SP₁ x OS₁)] / (SP₁ x OS₀)

 

where,

 

 

The adjustment to each fixed settlement rate under the preceding paragraph will occur at the close of business on the tenth trading day immediately following, and including, the trading day next

succeeding the date such tender or exchange offer expires; provided that if a holder elects to early settle the purchase contracts, or the purchase contract settlement date occurs, in either case, during the 10 trading days immediately following, and including, the expiration date of any tender or exchange offer, references with respect to 10 trading days shall be deemed replaced with such lesser number of trading days as have elapsed between the expiration date of such tender or exchange offer and the date on which such holder elected its early settlement right, or the business day immediately preceding the purchase contract settlement date, as the case may be, in determining the applicable fixed settlement rates.

 

The “current market price” per share of our common stock on any day means the average of the daily closing price of our common stock over each of the 10 consecutive trading days ending on the earlier of the day in question and the day before the “ex dividend date” with respect to the issuance or distribution requiring the computation.

 

For purposes of this section, the term “ex-dividend date,” when used with respect to any issuance or distribution, will mean the first date on which our common stock trades regular way on the applicable exchange or in the applicable market without the right to receive the issuance or distribution.

 

“Record date” means, for purposes of this section, with respect to any dividend, distribution or other transaction or event in which the holders of our common stock have the right to receive any cash, securities or other property or in which our common stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of our common stock entitled to receive such cash, securities or other property (whether such date is fixed by our board of directors or by statute, contract or otherwise).

 

To the extent we have a rights plan in effect upon settlement of a purchase contract, you will receive in addition to our common stock the rights under the plan, unless prior to such settlement, the rights have separated from our common stock, in which case each fixed settlement rate for a purchase contract will be adjusted as if we distributed, to all holders of our common stock, evidences of indebtedness, shares of capital stock, securities, cash or other assets as described under clause (3) above, subject to readjustment in the event of the expiration, termination or redemption of the rights.

 

In the case of certain reclassifications, consolidations, mergers, sales or transfers of assets or other transactions that cause our common stock to be converted into the right to receive other securities, cash or property, each purchase contract then outstanding would, without the consent of the holders of the related Corporate Units or Treasury Units, as the case may be, become a contract to purchase such other securities, cash and property instead of our common stock. If any such reclassification, consolidation, merger, sale or transfer of assets or other transaction causes our common stock to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of shareholder election), each purchase contract then outstanding would become a contract to purchase the amount of other securities, cash and/or property as is proportional to the types and amounts of consideration received by the holders of our common stock that affirmatively make such an election. Upon the occurrence of any such transaction, on the purchase contract settlement date, early settlement date or fundamental change early settlement date, as applicable, the settlement rate will be determined based on the securities, cash or property a holder of our common stock would have received when such transaction occurred.

 

If at any time we make a distribution of property to our shareholders that would be taxable to the shareholders as a dividend for U.S. federal income tax purposes (e.g., distributions out of our current or accumulated earnings and profits or distributions of evidences of indebtedness or assets, but generally not stock dividends or rights to subscribe for capital stock) and, pursuant to the fixed settlement rate adjustment provisions of the purchase contract and pledge agreement, the settlement rate is increased, this increase will likely give rise to a taxable dividend to holders of Corporate Units or Treasury Units; certain other adjustments to the settlement rate may also give rise to a taxable dividend to holders of Corporate Units or Treasury Units, see “Material U.S. Federal Income Tax Considerations — U.S. Holders — Purchase Contracts — Adjustment to the Settlement Rate” in this prospectus supplement.

In addition, we may make increases in each fixed settlement rate as our board of directors deems advisable to avoid or diminish any income tax to holders of our capital stock resulting from any dividend or distribution of capital stock (or rights to acquire capital stock) or from any event treated as such for income tax purposes or for any other reasons. We may only make such a discretionary adjustment if we make the same proportionate adjustment to each fixed settlement rate.

 

Adjustments to each fixed settlement rate will be calculated to the nearest 1/10,000 of a share. No adjustment to the fixed settlement rates will be required unless the adjustment would require an increase or decrease of at least one percent in one or both of the fixed settlement rates. If any adjustment is not required to be made because it would not change one or both of the settlement rates by at least one percent, then the adjustment will be carried forward and taken into account in any subsequent adjustment; provided that effect shall be given to all anti-dilution adjustments no later than the close of business on the business day immediately preceding the first trading day in the 20 consecutive trading days during which the “applicable market value” is determined (or, if earlier, the close of business on the business day immediately preceding the date on which the fundamental change early settlement rate is determined).

 

We will be required, within ten business days following the adjustment to each fixed settlement rate, to provide written notice to the purchase contract agent of the occurrence of the adjustment and a statement in reasonable detail setting forth the method by which the adjustment to each fixed settlement rate was determined and setting forth the revised settlement rate.

 

The fixed settlement rate will not be adjusted:

 

 

Each adjustment to each fixed settlement rate will result in a corresponding adjustment to the number of shares of common stock issuable upon early settlement of a purchase contract. If any adjustment is made to the fixed settlement rates, an adjustment also will be made to the applicable market value solely to determine which of the clauses of the definition of settlement rate will be applicable on the purchase contract settlement date or any fundamental change early settlement date. In addition, if any adjustment to the fixed settlement rates becomes effective, or any ex-dividend date or record date for any issuance, dividend or distribution (relating to a required fixed settlement rate adjustment) occurs, during the period beginning on, and including, (i) the open of business on a first trading day of the 20 trading-day period during which the applicable market value is calculated or (ii) in the case of the optional early settlement, the relevant early settlement date and, in each case, ending on, and including, the date on which we deliver shares of our common stock under the related purchase contract, we will make appropriate adjustments to the fixed settlement rates and/or the

number of shares of our common stock deliverable upon settlement of the purchase contract, in each case, consistent with the anti-dilution adjustments set forth above.

 

Each fixed settlement rate will not be adjusted under clauses (1) (but only with respect to stock dividends or distributions), (2), (3) and (4) above, if holders of the Corporate Units or Treasury Units participate, as a result of holding the Corporate Units or Treasury Units and at the same time as holders of our common stock, without having to settle the purchase contracts forming a part of their Corporate Units or Treasury Units as if they held, per purchase contract, a number of shares of our common stock equal to the maximum settlement rate.

 

Termination

 

The purchase contracts, and our rights and obligations and the rights and obligations of the holders of the Corporate Units and Treasury Units under the purchase contracts, including the right and obligation to purchase shares of common stock and the right to receive accrued and unpaid (including deferred) and future contract adjustment payments, will immediately and automatically terminate, without any further action, upon the occurrence of a bankruptcy, insolvency or reorganization under the U.S. Bankruptcy Code of us (and not, for the avoidance of doubt, our subsidiaries). In the event of such a termination of the purchase contracts as a result of our bankruptcy, insolvency or reorganization under the U.S. Bankruptcy Code, holders of the purchase contracts will not have a claim in bankruptcy under the purchase contract with respect to our issuance of shares of common stock or the right to receive contract adjustment payments.

 

Upon any termination, the collateral agent will release the aggregate principal amount of notes underlying the applicable ownership interests in notes, the Treasury portfolio or the qualifying Treasury securities, as the case may be, held by it to the purchase contract agent for distribution to the holders, subject, in the case of the applicable ownership interests in the Treasury portfolio or the qualifying Treasury securities, to the purchase contract agent’s disposition of the subject securities for cash, and the payment of this cash to the holders, to the extent that the holders would otherwise have been entitled to receive less than $1,000 principal amount or interest, as the case may be, at maturity of any such security. Upon any termination, however, the release and distribution may be subject to a delay. In the event that we become the subject of a case under the U.S. Bankruptcy Code, the delay may occur as a result of the automatic stay under the Bankruptcy Code and continue until the automatic stay has been lifted.

 

Pledged Securities and the Purchase Contract and Pledge Agreement

 

The pledged securities will be pledged to us through the collateral agent, for our benefit, pursuant to the purchase contract and pledge agreement to secure the obligations of holders of Corporate Units and Treasury Units to purchase shares of common stock under the related purchase contracts. The rights of holders of Corporate Units and Treasury Units to the related pledged securities will be subject to our security interest created by the purchase contract and pledge agreement.

 

No holder of Corporate Units or Treasury Units will be permitted to withdraw the pledged securities related to the Corporate Units or Treasury Units from the pledge arrangement except:

 

 

Subject to the security interest and the terms of the purchase contract and pledge agreement, each holder of Corporate Units, unless the Treasury portfolio has replaced the notes that are components of the Corporate Units, will be entitled through the purchase contract agent and the collateral agent to all of the

proportional rights of the related notes, including voting and redemption rights. Each holder of Treasury Units and each holder of Corporate Units, if the Treasury portfolio has replaced the notes that are components of the Corporate Units, will retain beneficial ownership of the related qualifying Treasury securities or the applicable ownership interests in the Treasury portfolio, as applicable, pledged in respect of the related purchase contracts. We will have no interest in the pledged securities other than our security interest.

 

Except as described in “Certain Provisions of the Purchase Contract and Pledge Agreement — General,” the collateral agent will, upon receipt, if any, of payments on the pledged securities, distribute the payments to the purchase contract agent, which will in turn distribute those payments, together with contract adjustment payments received from us, to the persons in whose names the related Corporate Units or Treasury Units are registered at the close of business on the record date immediately preceding the date of payment.

 

Book-Entry System

 

The Depository Trust Company, which we refer to along with its successors in this capacity as the depositary, will act initially as securities depositary for the Corporate Units and Treasury Units. The Corporate Units and Treasury Units will be issued only as fully registered securities registered in the name of Cede & Co., the depositary’s nominee. One or more fully registered global security certificates, representing the total aggregate number of Corporate Units and Treasury Units, will be issued and will be deposited with the depositary and will bear a legend regarding the restrictions on exchanges and registration of transfer referred to below.

 

The laws of some jurisdictions may require that some purchasers of securities take physical delivery of securities in definitive form. These laws may impair the ability to transfer beneficial interests in the Corporate Units or the Treasury Units so long as the Corporate Units or the Treasury Units are represented by global security certificates.

 

The depositary is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. The depositary holds securities that its participants deposit with the depositary. The depositary also facilitates the settlement among participants of securities transactions, including transfers and pledges, in deposited securities through electronic computerized book-entry changes in participants’ accounts, thereby eliminating the need for physical movement of securities certificates. Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. The depositary is owned by a number of its direct participants and by the New York Stock Exchange and the Financial Industry Regulatory Authority. Access to the depositary’s system is also available to others, including securities brokers and dealers, banks and trust companies that clear transactions through or maintain a direct or indirect custodial relationship with a direct participant either directly, or indirectly. The rules applicable to the depositary and its participants are on file with the SEC.

 

We will issue the Corporate Units and Treasury Units in definitive certificated form:

 

Any global Corporate Unit or Treasury Unit, or portion thereof, that is exchangeable pursuant to this paragraph will be exchangeable for Corporate Unit or Treasury Unit certificates, as the case may be, registered in the names directed by the depositary. We expect that these instructions will be based upon directions received by the depositary from its participants with respect to ownership of beneficial interests in the global security certificates.

 

As long as the depositary or its nominee is the registered owner of the global security certificates, the depositary or its nominee, as the case may be, will be considered the sole owner and holder of the global security certificates and all Corporate Units or Treasury Units represented by these certificates for all purposes under the Corporate Units or Treasury Units and the purchase contract and pledge agreement. Except in the limited circumstances referred to above, owners of beneficial interests in global security certificates:

 

 

All payments on the Corporate Units or Treasury Units represented by the global security certificates and all transfers and deliveries of related notes, Treasury portfolio, qualifying Treasury securities and shares of common stock will be made to the depositary or its nominee, as the case may be, as the holder of the securities.

 

Ownership of beneficial interests in the global security certificates will be limited to participants or persons that may hold beneficial interests through institutions that have accounts with the depositary or its nominee. Ownership of beneficial interests in global security certificates will be shown only on, and the transfer of those ownership interests will be effected only through, records maintained by the depositary or its nominee, with respect to participants’ interests, or any participant, with respect to interests of persons held by the participant on their behalf. Procedures for settlement of purchase contracts on the purchase contract settlement date or upon early settlement will be governed by arrangements among the depositary, participants and persons that may hold beneficial interests through participants designed to permit settlement without the physical movement of certificates. Payments, transfers, deliveries, exchanges and other matters relating to beneficial interests in global security certificates may be subject to various policies and procedures adopted by the depositary from time to time. None of us, the purchase contract agent or any agent of ours or of the purchase contract agent will have any responsibility or liability for any aspect of the depositary’s or any participant’s records relating to, or for payments made on account of, beneficial interests in global security certificates, or for maintaining, supervising or reviewing any of the depositary’s records or any participant’s records relating to these beneficial ownership interests.

 

Although the depositary has agreed to the foregoing procedures in order to facilitate transfer of interests in the global security certificates among participants, the depositary is under no obligation to perform or continue to perform these procedures, and these procedures may be discontinued at any time. We will not have any responsibility for the performance by the depositary or its direct participants or indirect participants under the rules and procedures governing the depositary.

 

The information in this section concerning the depositary and its book-entry system has been obtained from sources that we believe to be reliable, but we have not attempted to verify the accuracy of this information.

 

This section summarizes some of the other terms of the purchase contract and pledge agreement. This summary is not complete and should be read together with the purchase contract and pledge agreement, a form of which has been or will be filed and incorporated by reference as an exhibit to the registration statement of which this prospectus supplement and the accompanying prospectus form a part. For purposes of this summary, the terms “we,” “our,” “ours” and “us” refer to Great Plains Energy Incorporated and, unless otherwise expressly stated or the context otherwise requires, not any of our subsidiaries.

 

General

 

Except as described in “Description of the Purchase Contracts — Book-Entry System,” payments on the Equity Units will be made, purchase contracts (and documents relating to the Corporate Units, Treasury Units and purchase contracts) will be settled, and transfers of the Corporate Units and Treasury Units will be registrable, at the office of the purchase contract agent in The Borough of Manhattan, The City of New York. In addition, if the Corporate Units and Treasury Units do not remain in book-entry form, payment on the Equity Units may be made, at our option, by check mailed to the address of the holder entitled to payment as shown on the security register or by a wire transfer to the account designated by the holder by a prior written notice.

 

Shares of common stock will be delivered on the purchase contract settlement date (or earlier upon early settlement), or, if the purchase contracts have terminated, the related pledged securities will be delivered (potentially after a delay as a result of the imposition of the automatic stay under the Bankruptcy Code, see “Description of the Purchase Contracts — Termination”) at the office of the purchase contract agent upon presentation and surrender of the applicable certificate evidencing the Corporate Units or Treasury Units.

 

If you fail to present and surrender the certificate evidencing the Corporate Units or Treasury Units to the purchase contract agent on or prior to the purchase contract settlement date, the shares of common stock issuable upon settlement of the related purchase contract will be registered in the name of the purchase contract agent. The shares, together with any distributions, will be held by the purchase contract agent as agent for your benefit until the certificate is presented and surrendered or you provide satisfactory evidence that the certificate has been destroyed, lost or stolen, together with any indemnity that may be required by the purchase contract agent and us.

 

If the purchase contracts terminate prior to the purchase contract settlement date, the related pledged securities are transferred to the purchase contract agent for distribution to the holders, and if a holder fails to present and surrender the certificate evidencing the holder’s Corporate Units or Treasury Units to the purchase contract agent, the related pledged securities delivered to the purchase contract agent and payments on the pledged securities will be held by the purchase contract agent as agent for the benefit of the holder until the applicable certificate is presented or the holder provides the evidence and indemnity described above.

 

The purchase contract agent will have no obligation to invest or to pay interest on any amounts held by the purchase contract agent pending payment to any holder.

 

No service charge will be made for any registration of transfer or exchange of the Corporate Units or Treasury Units, except for any tax or other governmental charge that may be imposed in connection with a transfer or exchange.

 

We currently intend to use the proceeds from the settlement of the purchase contracts to repay debt as soon as practicable following such settlement, and we have agreed not to use such proceeds to repurchase shares of our common stock.

Modification

 

The purchase contract and pledge agreement will contain provisions permitting us, the purchase contract agent and the collateral agent, to modify the purchase contract and pledge agreement without the consent of the holders for any of the following purposes:

 

 

For purposes of the immediately preceding bullet, any amendment made solely to conform the provisions of the purchase contract and pledge agreement to this prospectus supplement will be deemed not to adversely affect the interests of holders.

 

The purchase contract and pledge agreement will contain provisions permitting us, the purchase contract agent and the collateral agent, with the consent of the holders of not less than a majority of the purchase contracts at the time outstanding to modify the terms of the purchase contracts or the purchase contract and pledge agreement. However, no such modification may, without the consent of the holder of each outstanding purchase contract affected by the modification:

 

 

If any amendment or proposal referred to above would adversely affect only the Corporate Units or the Treasury Units, then only the affected class of holders will be entitled to vote on the amendment or

proposal, and the amendment or proposal will not be effective except with the consent of the holders of not less than a majority of the affected class or of all of the holders of the affected classes, as applicable.

 

No Consent to Assumption

 

Each holder of Corporate Units or Treasury Units, by acceptance of these securities, will under the terms of the purchase contract and pledge agreement and the Corporate Units or Treasury Units, as applicable, be deemed expressly to have withheld any consent to the assumption (i.e., affirmance) of the related purchase contracts by us or our trustee if we become the subject of a case under the Bankruptcy Code or other similar state or federal law provision for reorganization or liquidation.

 

Consolidation, Merger, Sale or Conveyance

 

We will covenant in the purchase contract and pledge agreement that we will not merge with or into, consolidate with or convert into any other entity or sell, assign, transfer, lease or convey all or substantially all of our properties and assets to any person or entity, unless (1)(a) we will be the surviving entity or (b) the successor entity will be a corporation organized and existing under the laws of the United States of America or any state thereof or the District of Columbia and that entity expressly assumes our obligations under the purchase contracts, the purchase contract and pledge agreement and the remarketing agreement (if we have executed a remarketing agreement on or prior to the time of the merger, consolidation, conversion, sale, assignment, transfer, lease or conveyance) and (2) we are not or, if we will not be the surviving entity, the successor corporation is not, immediately after the merger, consolidation, conversion, sale, assignment, transfer, lease or conveyance, in default of its payment obligations under the purchase contracts, the purchase contract and pledge agreement, the Corporate Units or Treasury Units and the remarketing agreement or in material default in the performance of any other covenants under these agreements.

 

Title

 

We, the purchase contract agent and the collateral agent may treat the registered owner of any Corporate Units or Treasury Units as the absolute owner of the Corporate Units or Treasury Units for the purpose of making payment and settling the related purchase contracts and for all other purposes.

 

Replacement of Equity Unit Certificates

 

In the event that physical certificates have been issued, any mutilated Corporate Unit or Treasury Unit certificate will be replaced by us at the expense of the holder upon surrender of the certificate to the purchase contract agent. Corporate Unit or Treasury Unit certificates that have been destroyed, lost or stolen will be replaced by us at the expense of the holder upon delivery to us and the purchase contract agent of evidence of their destruction, loss or theft satisfactory to us and the purchase contract agent. In the case of a destroyed, lost or stolen Corporate Unit or Treasury Unit certificate, security and/or an indemnity satisfactory to the purchase contract agent and us may be required at the expense of the holder of the Corporate Units or Treasury Units evidenced by the certificate before a replacement will be issued.

 

Notwithstanding the foregoing, we will not be obligated to issue any Corporate Unit or Treasury Unit certificates on or after the business day immediately preceding the purchase contract settlement date (or after early settlement or fundamental change early settlement) or after the purchase contracts have terminated. The purchase contract and pledge agreement will provide that, in lieu of the delivery of a replacement Corporate Unit or Treasury Unit certificate following the purchase contract settlement date, early settlement date or fundamental change early settlement, the purchase contract agent, upon delivery of the evidence and security or indemnity described above, will (i) deliver the shares of common stock issuable pursuant to the purchase contracts included in the Corporate Units or Treasury Units evidenced by the certificate and (ii) if a fundamental change early settlement or an early settlement occurs or if the purchase contracts have terminated prior to the purchase contract settlement date, transfer the pledged securities included in the Corporate Units or Treasury Units evidenced by the certificate.

Governing Law

 

The purchase contract and pledge agreement and the purchase contracts will be governed by, and construed in accordance with, the laws of the State of New York.

 

Information Concerning the Purchase Contract Agent

 

The Bank of New York Mellon Trust Company, N.A. will be the purchase contract agent. The purchase contract agent will act as the agent for the holders of Corporate Units and Treasury Units from time to time. The purchase contract and pledge agreement will not obligate the purchase contract agent to exercise any discretionary actions in connection with a default under the terms of the Corporate Units and Treasury Units or the purchase contract and pledge agreement.

 

The purchase contract and pledge agreement will contain provisions limiting the liability of the purchase contract agent. The purchase contract and pledge agreement will contain provisions under which the purchase contract agent may resign or be replaced. This resignation or replacement would be effective upon the acceptance of appointment by a successor.

 

As of March 31, 2009, The Bank of New York Mellon Trust Company, N.A. and its affiliates were the trustees for $100.0 million of our unsecured debt and $1,378.7 million of secured and unsecured debt (including Environmental Improvement Revenue Refunding debt issued by certain governmental entities) of KCP&L, one of our subsidiaries, under several separate indentures. In addition, an affiliate of The Bank of New York Mellon Trust Company, N.A. is one of the lenders under separate credit agreements with us, KCP&L and one of our other subsidiaries and is the trustee under a KCP&L nuclear decommissioning fund trust. Affiliates of The Bank of New York Mellon Trust Company, N.A. also perform other services for, and transact other banking business with our affiliates and us in the normal course and may do so in the future. For additional information, see “Description of the Notes — About the Trustee.”

 

Information Concerning the Collateral Agent

 

The Bank of New York Mellon Trust Company, N.A. will be the collateral agent. The collateral agent will act solely as our agent and will not assume any obligation or relationship of agency or trust for or with any of the holders of the Corporate Units or Treasury Units except for the obligations owed by a pledgee of property to the owner of the property under the pledge agreement and applicable law.

 

The purchase contract and pledge agreement will contain provisions limiting the liability of the collateral agent. The purchase contract and pledge agreement will contain provisions under which the collateral agent may resign or be replaced. This resignation or replacement would be effective upon the acceptance of appointment by a successor.

 

Because The Bank of New York Mellon Trust Company, N.A. is serving as both the collateral agent and the purchase contract agent, if an event of default occurs under the indenture or a collateral event of default occurs under the purchase contract and pledge agreement, The Bank of New York Mellon Trust Company, N.A. will resign as the collateral agent, but remain as the purchase contract agent. We will then select a new collateral agent in accordance with the terms of the purchase contract and pledge agreement.

 

Miscellaneous

 

The purchase contract and pledge agreement will provide that we will pay all fees and expenses, other than underwriters’ expenses (including counsel), related to the offering of the Corporate Units, the retention of the collateral agent, the purchase contract agent, the custodial agent and the securities intermediary. However, should you elect to substitute the related pledged securities, create Treasury Units or recreate Corporate Units, you shall be responsible for any fees or expenses payable in connection with that substitution, as well as any commissions, fees or other expenses incurred in acquiring the pledged securities to be substituted, and we shall not be responsible for any of those fees or expenses.

 

The following description of the particular terms of the notes supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of the notes set forth in the accompanying prospectus, to which we refer you. This summary is not complete and should be read together with the subordinated indenture between us and The Bank of New York Mellon Trust Company, N.A. (the “trustee”) and the supplemental indenture establishing the terms of the notes, forms of which have been or will be filed and incorporated by reference as exhibits to the registration statement of which this prospectus supplement and the accompanying prospectus form a part. In this summary, we refer to the subordinated indenture between us and the trustee and the supplemental indenture establishing the terms of the notes, collectively, as the indenture. For purposes of this summary, the terms “we,” “our,” “ours” and “us” refer to Great Plains Energy Incorporated and, unless otherwise expressly stated or the context otherwise requires, not any of our subsidiaries.

 

General

 

The notes will be issued under a subordinated indenture between us and the trustee as amended and supplemented by a supplemental indenture between us and the trustee (as so amended and supplemented, the “indenture”). The notes will be issued in one series initially due June 15, 2042.

 

The notes will be issued in an aggregate principal amount of $250,000,000. If the underwriters exercise their over-allotment option to purchase additional Corporate Units in full, up to an additional $37,500,000 aggregate principal amount of the notes will be issued. In addition, without the consent of the holders, we can from time to time issue additional notes in an aggregate principal amount determined by us.

 

The trustee will initially be the security registrar and the paying agent for the notes. Notes forming a part of the Corporate Units will be issued in fully registered certificated form, without coupons, and will be in denominations of $1,000 and integral multiples of $1,000.

 

The notes may be transferred or exchanged, without service charge but upon payment of any taxes or other governmental charges payable in connection with any registration of transfer or exchange of the notes, at the office described below. Payments on notes issued as a global security will be made to the depositary or a successor depositary. Principal and interest with respect to certificated notes will be payable, the transfer of the notes will be registrable and notes will be exchangeable for notes of a like aggregate principal amount in denominations of $1,000 and integral multiples of $1,000, at the office or agency maintained by us for this purpose in The City of New York, provided that payment of interest may be made at our option by check mailed to the holder or by wire transfer to the holder. We have initially designated the corporate trust office of the trustee as that office for purposes of registering transfers and exchange of the notes.

 

The notes will not be subject to a sinking fund provision. Unless a special event redemption occurs prior to June 15, 2012, the entire principal amount of the notes will mature and initially become due and payable, together with any accrued and unpaid interest thereon (other than deferred interest payments and compounded interest thereon which will be due and payable at the end of the deferral period as described below under “— Option to Defer Interest Payments”), on June 15, 2042. In connection with a remarketing of the notes, we may elect to change the maturity date to a date on or after June 15, 2014 and earlier than June 15, 2042. As described below under “— Put Right Following a Failed Final Remarketing,” holders of separate notes will have the right to require us to purchase their notes under certain circumstances.

 

Except as set forth under “— Put Right Following a Failed Final Remarketing,” and “— Dividend and Other Payment Stoppages During Interest Deferral and under Certain Other Circumstances,” the indenture will not contain any financial covenants or any restrictions on the payment of dividends, the making of investments, the incurrence of indebtedness or the redemption or repurchase of securities by us.

 

The indenture does not contain provisions that afford holders of the notes protection in the event we are involved in a highly leveraged transaction or other similar transaction that may adversely affect such holders. The indenture does not limit our ability to issue or incur other debt or issue preferred stock.

Ranking

 

The notes will be our subordinated obligations. The notes are subordinated in right of payment to all “Senior Indebtedness” (as defined under “Description of the Debt Securities — Subordination” in the accompanying prospectus). We may issue additional series of subordinated notes that rank pari passu with the notes. In connection with a successful remarketing, we will change the ranking of the notes such that they rank equally with all of our existing and future unsecured and unsubordinated obligations.

 

As of March 31, 2009, we had $1,405.1 million of outstanding indebtedness (including guaranties of GMO indebtedness), all of which was our Senior Indebtedness.

 

We are a holding company that derives substantially all of our income from our operating subsidiaries. As a result, our cash flows and consequent ability to service our debt, including the notes, are dependent upon the earnings of our subsidiaries and distribution of those earnings to us and other payments or distributions of funds by our subsidiaries to us, including payments of principal and interest under intercompany indebtedness. Our operating subsidiaries are separate and distinct legal entities and will have no obligation, contingent or otherwise, to pay any dividends or make any other distributions (except for payments required pursuant to the terms of intercompany indebtedness) to us or to otherwise pay amounts due with respect to the debt securities or to make specific funds available for such payments. Furthermore, except to the extent we have a priority or equal claim against our subsidiaries as a creditor, the notes will be effectively subordinated to debt at the subsidiary level because, as the common shareholder of our subsidiaries, we will be subject to the prior claims of creditors of our subsidiaries. As of March 31, 2009, our subsidiaries had approximately $3,296.9 million of aggregate outstanding debt (including debt guaranteed by us).

 

Interest

 

Each note will bear interest from the issuance date at the rate of     % per year to, but excluding, the reset effective date or, if no successful remarketing of the notes occurs, June 15, 2042. Interest will be payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on September 15, 2009, to the person in whose name the note is registered at the close of business on the first day of the month (whether or not a business day) in which the relevant interest payment date falls (unless otherwise specified) and, at maturity, to the person to whom principal is payable.

 

Following a successful remarketing of the notes, all of the notes will bear interest from the reset effective date at the reset rate to, but excluding, June 15, 2042 or, if we elect to make the notes mature at any time earlier than June 15, 2042 (but on or later than June 15, 2014), such earlier maturity date. The notes will be remarketed as fixed-rate notes and interest thereon will be paid on an annual basis, unless we elect to pay interest on a semi-annual basis. If a successful remarketing of the notes does not occur, the interest rate will not be reset and the notes will continue to bear interest at the initial interest rate, payable quarterly in arrears. From and including the reset effective date, interest on the notes will be payable annually on December 31 of each year, unless we elect to pay interest semi-annually on June 15 and December 15 of each year.

 

The amount of interest payable on the notes for any period will be computed (i) for any full quarterly, semi-annual or annual period on the basis of a 360-day year of twelve 30-day months and (ii) for any period shorter than a full quarterly, semi-annual or annual period, on the basis of a 30-day month and, for any period less than a month, on the basis of the actual number of days elapsed per 30-day month. In the event that any date on which interest is payable on the notes is not a business day, then payment of the interest payable on such date will be made on the next day that is a business day (and without any interest or other payment in respect of any such delay), with the same force and effect as if made on such originally scheduled date. However, if payment on the next business day causes the interest payable on such date to be paid in the next calendar year, then payment will be on the immediately preceding business day, in each case with the same force and effect as if made on that interest payment date.

Option to Defer Interest Payments

 

Prior to June 15, 2012, we may elect at one or more times to defer payment of interest on the notes for one or more consecutive interest periods; provided that each deferred interest payment may only be deferred until the earlier of (x) the third anniversary of the interest payment date on which the interest payment was originally scheduled to be paid and (y) June 15, 2014. For the avoidance of doubt, in all cases, including the event of a failed remarketing, we will have no right to defer the payment of interest on the notes beyond June 15, 2014.

 

Deferred interest on the notes will bear interest at the interest rate applicable to the notes, compounded on each interest payment date, subject to applicable law. As used in this prospectus supplement, a “deferral period” refers to the period beginning on an interest payment date with respect to which we elect to defer interest and ending on the earlier of (i) the next interest payment date on which we have paid all accrued and previously unpaid interest on the notes, (ii) the third anniversary of the interest payment date on which the interest payment was originally scheduled to be paid and (iii) June 15, 2014.

 

We will give the holders of the notes and the trustee written notice of our election to begin a deferral period at least one business day before the record date for the next interest payment date. However, our failure to pay interest on any interest payment date will itself constitute the commencement of a deferral period unless we pay such interest within five business days after the interest payment date, whether or not we provide a notice of deferral. We may pay deferred interest (including compounded interest thereon) in cash on any scheduled interest payment date occurring on or prior to June 15, 2014.

 

In connection with any successful remarketing of the notes, all then-outstanding deferred interest (including compounded interest thereon) will be paid to the holders of the remarketed notes on the immediately following scheduled interest payment date from the proceeds of the successful remarketing. As of the reset effective date for any successful remarketing, solely with respect to notes that were not remarketed in such remarketing, all then-outstanding deferred interest (including compounded interest thereon) will be paid to the holders of such separate notes on the immediately following scheduled interest payment date, at our election, in cash or by issuing additional notes to the holders of such separate notes in principal amount equal to the amount of such deferred interest (including compounded interest thereon).

 

On a special event redemption date, all then-outstanding accrued and unpaid deferred interest (including compounded interest thereon) will be paid to the holders of Corporate Units and separate notes, at our election, in cash or by issuing additional notes to the holders of such Corporate Units and separate notes in principal amount equal to the amount of such deferred interest (including compounded interest thereon).

 

In the event that we pay any deferred interest on a note by issuance of additional notes, such additional notes will:

 

 

If we have paid all deferred interest (including compounded interest thereon) on the notes, we can again defer interest payments on notes as described above. The indenture does not limit the number or frequency of interest deferral periods.

If we have not paid all such deferred amounts (including compounded interest thereon) in cash or by issuing additional notes as described above on or prior to the 30th day following the end of the deferral period or the special event redemption date, as applicable, we will be in default under the indenture. See “Description of Debt Securities — Events of Default” in the accompanying prospectus. We currently do not intend to exercise our option to defer interest on the notes.

 

Dividend and Other Payment Stoppages During Interest Deferral and under Certain Other Circumstances

 

We have agreed that until the earlier of (i) the purchase contract settlement date for the notes and (ii) the reset effective date, if:

 

 

then we will not:

 

 

The restrictions listed above do not apply to:

 

 

 

 

Market Reset Rate

 

If the remarketing of the notes is successful and the rate is reset, the reset rate, which will be a fixed rate, will apply to all outstanding notes (other than any additional notes issued in connection with payment of deferred interest), whether or not the holders of all outstanding notes participated in such remarketing, and will become effective on the applicable reset effective date. The interest rate on the notes will be the reset rate determined by the remarketing agent, in consultation with us, as described under “Description of the Purchase Contracts — Remarketing — Early Remarketing” and “Description of the Purchase Contracts — Remarketing — Final Remarketing.” For the avoidance of doubt, the reset rate on the remarketed notes may not be a contingent or floating rate.

 

From and including the reset effective date, interest on the notes will be payable annually on December 31 of each year, unless we elect to pay interest semi-annually on June 15 and December 15 of each year.

 

If a successful remarketing of the notes does not occur, the interest rate will not be reset and the notes will continue to bear interest at the initial interest rate, payable quarterly in arrears.

 

Optional Redemption — Special Event

 

If a “special event,” as defined below, occurs and is continuing, prior to the earlier of (1) the date of a successful remarketing or (2) the purchase contract settlement date, we may redeem, at our option on any interest payment date, the notes in whole, but not in part, at a price equal to, for each note, the “redemption amount,” as defined below, plus accrued and unpaid interest thereon (provided that the portion of such amount consisting of accrued and unpaid interest will be paid to the record holder of such note on the immediately preceding record date), which we refer to collectively as the “redemption price,” to the date of redemption, which we refer to as the “special event redemption date.” The redemption price payable in respect of all notes included in Corporate Units will be distributed to the collateral agent, which in turn will apply such redemption price to purchase the “special event Treasury portfolio” (as defined below) on behalf of the holders of the Corporate Units and remit the remaining portion (net of fees and expenses, if any), if any, of such redemption price to the purchase contract agent for payment to the holders of the Corporate Units. Thereafter, the applicable ownership interests in the special event Treasury portfolio will be substituted for the applicable ownership interests in notes and will be pledged to us through the collateral agent to secure the Corporate Unit holders’ obligations to purchase our shares of common stock under the related purchase contract. Any then-outstanding accrued and unpaid deferred interest (including compounded interest thereon) on the notes will not be included in such redemption price and will be paid to the holders of the Corporate Units and separate notes, as applicable, on the special event redemption date, at our election, in cash or by issuing additional notes to the holders of such Corporate Units and separate notes in principal amount equal to the amount of such deferred interest (including compounded interest thereon). Such additional notes will have terms as described under “Description of the Notes — Option to Defer Interest Payments.” Holders of separate notes

will directly receive the redemption price and any cash or additional notes that may be issued in payment of any outstanding deferred interest.

 

“Special event” means either a tax event or an accounting event, each as defined below.

 

“Tax event” means the receipt by us of an opinion of counsel, rendered by a law firm having a recognized national tax practice, to the effect that, as a result of any amendment to, change in or announced proposed change in the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative decision, pronouncement, judicial decision or action interpreting or applying such laws or regulations, which amendment or change is effective or which proposed change, pronouncement, action or decision is announced on or after the date of issuance of notes, there is more than an insubstantial increase in the risk that interest payable by us on the notes is not, or within 90 days of the date of such opinion, will not be, deductible by us, in whole or in part, for U.S. federal income tax purposes.

 

“Accounting event” means the receipt by the audit committee of our board of directors of a written report in accordance with Statement on Auditing Standards (“SAS”) No. 97, “Amendment to SAS No. 50 — Reports on the Application of Accounting Principles,” from our independent registered public accounting firm, provided at the request of management, to the effect that, as a result of a change in accounting rules after the date of original issuance of the notes, we must either (a) account for the purchase contracts as derivatives under Statement of Financial Accounting Standards (“SFAS”) No. 133 (or otherwise mark-to-market or measure the fair value of all or any portion of the purchase contract with changes appearing in our income statement) or (b) account for the Equity Units using the if-converted method under SFAS No. 128, and that such accounting treatment will cease to apply upon redemption of the notes.

 

“Redemption amount” means, for each note, the product of the principal amount of such note and a fraction, the numerator of which is the Special event Treasury portfolio purchase price, as defined below, and the denominator of which is the applicable principal amount, as defined below; provided that in no event shall the redemption amount for any note be less than the principal amount of such note.

 

“Special event Treasury portfolio purchase price” means the lowest aggregate ask-side price quoted by a primary U.S. government securities dealer to the quotation agent (as defined below) on the third business day immediately preceding the special event redemption date for the purchase of the special event Treasury portfolio for settlement on the special event redemption date ; provided that if the special event Treasury portfolio is comprised solely of cash, as described below, the special event Treasury portfolio purchase price will be the aggregate amount of cash comprising the special event Treasury portfolio.

 

“Applicable principal amount” means the aggregate principal amount of the notes that underlie the Corporate Units on the special event redemption date.

 

“Special event Treasury portfolio” means a portfolio of U.S. Treasury securities (or principal or interest strips thereof) that mature (i) on or prior to June 15, 2012 in an aggregate amount at maturity equal to the applicable principal amount of notes included in the Corporate Units and (ii) with respect to each scheduled interest payment date on the notes that occurs after the special event redemption date to, and including the purchase contract settlement date, on or prior to each such scheduled interest payment date in an aggregate amount at maturity equal to the aggregate interest payment (assuming no reset of the interest rate) that would be due on the applicable principal amount of the notes on such date. Notwithstanding the foregoing, if on the date the quotation agent is to determine the special event Treasury portfolio Price, U.S. Treasury securities (or principal or interest strips thereof) that are to be included in a special event Treasury portfolio have a yield that is less than zero, then “special event Treasury portfolio” shall mean (i) cash in an aggregate amount at maturity equal to the applicable principal amount of notes included in the Corporate Units; and (ii) with respect to each scheduled interest payment date on the notes that occurs after the special event redemption date to, and including the purchase contract settlement date, cash in an aggregate amount at maturity equal to the aggregate interest payment (assuming no remarketing and no reset of the interest rate) that would be due on the applicable principal amount of notes included in the Corporate Units on such date.

 

“Quotation agent” means any primary U.S. government securities dealer selected by us.

If we redeem the notes at any time upon the occurrence of a special event, we intend to do so only to the extent that during the 180 days prior to the date of that redemption we have received proceeds from the sale to third party purchasers, other than one of our subsidiaries, of securities that are as or more equity-like than the Equity Units at the time of such redemption.

 

If U.S. Treasury securities (or principal or interest strips thereof) that are to be included in a special event Treasury portfolio have a yield that is less than zero, then the cash received upon redemption (and not the U.S. Treasury securities) of the notes will instead be substituted for the applicable ownership in the notes that are components of the Corporate Units and will be pledged to us through the collateral agent to secure the Corporate Unit holders’ obligation to purchase our common stock under the purchase contracts as described under “Description of the Equity Units — Corporate Units.” If the provisions set forth in the immediately preceding sentence apply, references in this prospectus supplement to “U.S. Treasury securities” and “U.S. Treasury securities (or principal or interest strips thereof)” will, thereafter, be deemed to be references to the applicable amount of cash determined as described above.

 

Redemption at Our Option

 

The notes will be redeemable at our option, in whole or in part, on a date (the “earliest redemption date”) not earlier than June 15, 2014, which we refer to as our “optional redemption right.” The redemption price with respect to this optional redemption will be the principal amount, plus accrued and unpaid interest, if any, to but excluding the redemption date. In connection with a successful remarketing, we may add to, modify or remove altogether our optional redemption right; provided that there will be at least two years between the purchase contract settlement date and any optional redemption date; and provided further that the redemption price will always be equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

 

In the event of a failed final remarketing, the notes provide that under certain circumstances we will apply the principal amount of the notes against your obligations under the purchase contracts. This remedy has the effect similar to an automatic redemption of the notes, but we do not have to give you prior notice or follow any of the other redemption procedures outlined in this section.

 

Redemption Procedures

 

We may not redeem the notes, either in connection with an optional redemption right or a special event, if they have been accelerated and such acceleration has not been rescinded or unless all accrued and unpaid interest has been paid in full on all outstanding notes for all interest periods terminating on or prior to the redemption date.

 

We will mail a notice of redemption to holders of the notes not less than 30 days, nor more than 60 days, before the date fixed for redemption.

 

If (i) we give an irrevocable notice of redemption of the notes and (ii) we have paid or delivered to the trustee a sufficient amount of cash or additional notes, as applicable, in connection with the related redemption or maturity of the notes, then, on the redemption date, such trustee will irrevocably deposit with DTC funds or additional notes sufficient to satisfy any amount owed for the notes being redeemed. See “— Book-Entry System.” We will also give DTC irrevocable instructions and authority to pay or deliver any amount owed in connection with a redemption in immediately available funds or additional notes, as applicable, to the holders of beneficial interests in the global security certificates representing such notes. Distributions of interest to be paid on or before the redemption date for any notes called for redemption will be payable to the holders on the record dates for the related dates of distribution.

 

Once notice of redemption is given and funds or additional notes, as applicable, are irrevocably deposited, interest on the notes will cease to accrue immediately prior to the close of business on the redemption date and all rights of the holders of such notes will cease, except for the right to receive any amount owed in connection with a redemption (but without interest on such amount).

If any redemption date is not a business day, then any amount owed in connection with a redemption will be payable or deliverable on the next business day (and without any interest or other payment in respect of any such delay). However, if payment or delivery on the next business day causes such payment or delivery of the redemption price to be in the next calendar year, then payment or delivery will be on the immediately preceding business day, in each case with the same force and effect as if made on that payment date.

 

If payment or delivery of any amount owed in connection with a redemption of the notes is improperly withheld or refused and not paid or delivered, then interest on such notes will continue to accrue at the applicable interest rate then borne by such notes from the original redemption date scheduled to the actual date of payment. In this case, the actual payment date will be considered the redemption date for purposes of calculating any amount owed in connection with a redemption.

 

In connection with an optional redemption under “— Redemption at Our Option” above, if we decide to redeem fewer than all of the notes outstanding, the trustee will select the notes to be redeemed by lot, pro rata or by another method the trustee considers fair and appropriate.

 

Modification of the Terms of the Notes in Connection with a Successful Remarketing

 

In connection with a successful remarketing of the notes, without the consent of any of the holders of the notes, in consultation with the remarketing agent, we may (but will not be required to) make any of the following elections:

 

 

In addition, in connection with a successful remarketing of the notes, without the consent of any of the holders of the notes, we will change the ranking of the notes such that they rank equally with all of our existing and future unsecured and unsubordinated obligations, and we will remove the interest deferral provisions of the notes.

 

Any such elections shall be made by irrevocable notice to the trustee, who will notify the holders of the Corporate Units and separate notes at least 16 business days prior to the first of the three sequential remarketing dates of any three business day remarketing period. Any such elections will be effective on the reset effective date and will apply to all of the notes, regardless of whether the notes were included in the successful remarketing.

 

Remarketing

 

Each of the notes that are components of Corporate Units will be included in any remarketing during the period for early remarketing described under “Description of the Purchase Contracts — Remarketing — Early Remarketing” and, if all such remarketings are unsuccessful and a special event redemption date has not occurred, the final three-business day remarketing period described under “Description of the Purchase Contracts — Remarketing — Final Remarketing”; provided that holders of notes that are components of Corporate Units that (i) choose to settle their purchase contracts with cash, (ii) notify the purchase contract agent of such election not later than the seventh business day preceding the purchase contract settlement date and (iii) pay the purchase price for such purchase contracts to the securities intermediary by 11:00 a.m., New York City time, on the sixth business day preceding the purchase contract settlement date, will not have their notes that are components of the Corporate Units included in the remarketing during the final three-business day remarketing period.

Holders of separate notes also may have their separate notes remarketed in the same manner and at the same price as notes that are components of Corporate Units by either (i) recreating Corporate Units from their Treasury Units at any time prior to the first day of the restricted period described under “Description of the Equity Units — Creating Treasury Units” or (ii) delivering their notes along with a notice of election to participate in a remarketing to the custodial agent at or prior to 4:00 p.m., New York City time, by the second business day, but no earlier than the fifth business day, immediately preceding the first of the three sequential remarketing dates of any three-business day remarketing period. By delivering such notice, holders will elect to have their notes remarketed in all three remarketing attempts during the applicable three-business day remarketing period, whether such three-business day remarketing period occurs during the period for early remarketing or during the final three-business day remarketing period. The custodial agent will hold the separate notes delivered to it in an account separate from the collateral account in which the pledged securities will be held. Holders of separate notes electing to have their notes remarketed also will have the right to withdraw the election by notifying the custodial agent on or prior to 4:00 p.m., New York City time, by the second business day immediately preceding the first of the three sequential remarketing dates of the applicable three-business day remarketing period. If there is a successful remarketing during the applicable three-business day remarketing period, the custodial agent will deliver, on the reset effective date, the proceeds of the sale of such separate notes to the holder who elected to have such notes remarketed. If all three remarketing attempts during the applicable three-business day remarketing period are unsuccessful, the collateral agent will return the separate notes delivered to it to their holders and, except with respect to a failed remarketing during the final three-business day remarketing period, these holders may elect to have their notes included in the remarketings during each subsequent three business day remarketing period by redelivering their notes and notice of election in the manner described in this paragraph.

 

In the event that all three remarketing attempts during the final three-business day remarketing period are unsuccessful, all holders of notes will have the put rights with respect to their notes described under “— Put Right Following a Failed Final Remarketing.”

 

Put Right Following a Failed Final Remarketing

 

If the notes have not been successfully remarketed prior to the purchase contract settlement date, all note holders will have the right to put their notes, but not any additional notes issued to pay deferred interest on such notes, to us on the purchase contract settlement date, at a price equal to $1,000 per note ($50 per applicable ownership interest), plus accrued and unpaid interest thereon (including all accrued and unpaid deferred interest, if any, and compounded interest thereon) to, but excluding, the purchase contract settlement date. The put rights of holders of notes that are components of Corporate Units will be deemed automatically exercised as described under “Description of the Purchase Contracts — Remarketing — Final Remarketing” unless any such holder has settled the related purchase contracts with separate cash on or prior to the purchase contract settlement date. This deemed automatic exercise has an effect similar to an automatic redemption of these notes, but we do not have to give you prior notice or follow any of the other redemption procedures outlined under “— Redemption at Our Option” above. See “Description of the Purchase Contracts — Remarketing — Final Remarketing.” Holders of separate notes may exercise their put right by providing notice of such election to the trustee at or prior to 11:00 a.m., New York City time, on the second business day prior to the purchase contract settlement date.

 

Events of Default

 

In addition to the events of default described in the accompanying prospectus under “Description of Debt Securities — Events of Default,” (i) our failure to pay all deferred interest (including compounded interest thereon) in cash or (if permitted) by issuing additional notes on or prior to the 30th day following the end of the deferral period or the special event redemption date, as applicable, and (ii) our failure to pay the put price of any note following the exercise of the put right by any holder of notes on the purchase contract settlement date shall also constitute an “event of default” with respect to the notes.

Upon changing the ranking of the notes such that they rank equally with all of our existing and future unsecured and unsubordinated obligations, the “events of default” with respect to the notes will be modified to conform with our senior indenture in existence at such time.

 

Remedies if an Event of Default Occurs

 

All remedies available upon the occurrence of an event of default under the indenture will be subject to the restrictions described below under “— Subordination” for so long as they apply. For information regarding your rights and remedies if an event of default occurs, see “Description of Debt Securities — Events of Default” in the accompanying prospectus.

 

Subordination

 

Holders of the notes should recognize that contractual provisions in the indenture may prohibit us from making payments on the notes. The notes are subordinate and junior in right of payment, to the extent and in the manner stated in the indenture and described in the accompanying prospectus under Description of Debt Securities — Subordination,” to all of our Senior Indebtedness, as defined in such section of the accompanying prospectus. The notes will also be effectively subordinated to all obligations of our subsidiaries.

 

This subordination will not prevent the occurrence of any event of default with respect to the notes. There is no limitation on the issuance of additional Senior Indebtedness in the indenture. As of March 31, 2009, we had $1,405.1 million of outstanding Senior Indebtedness (including guaranties of GMO indebtedness), and our subsidiaries had approximately $3,296.9 million of indebtedness (including debt guaranteed by us) outstanding.

 

Modification

 

In addition to the modification provisions described in the accompanying prospectus under “Description of Debt Securities — Modification,” without the consent of each holder of a note, no modification may:

 

 

In addition, without the consent of any holder of a note, we and the trustee may amend the indenture to conform the provisions of the indenture to the “Description of the Equity Units,” “Description of the Purchase Contracts,” “Certain Provisions of the Purchase Contract and Pledge Agreement” and “Description of the Notes” sections in this prospectus supplement.

 

Defeasance and Discharge

 

After the purchase contract settlement date, if we deposit, in trust, with the trustee, money or U.S. government obligations that will provide money, in an amount sufficient, without reinvestment, to pay all the principal of, and interest on, the notes on the dates payments are due, we may elect to (i) defease and be discharged, or (ii) be released, from our obligations with respect to the notes, in each case as, and subject to the conditions, described under “Description of Debt Securities — Defeasance” in the accompanying prospectus.

 

Governing Law

 

The indenture and the notes will be governed by, and construed in accordance with, the laws of the State of New York.

About the Trustee

 

The Bank of New York Mellon Trust Company, N.A. is the trustee under the indenture and will be the principal paying agent and registrar for the notes. The Bank of New York Mellon Trust Company, N.A. will also act as purchase contract agent and collateral agent in connection with the Equity Units.

 

As of March 31, 2009, The Bank of New York Mellon Trust Company, N.A. and its affiliates were the trustees for $100.0 million of our unsecured debt and $1,378.7 million of secured and unsecured debt (including Environmental Improvement Revenue Refunding debt issued by certain governmental entities) of KCP&L, one of our subsidiaries, under several separate indentures. In addition, an affiliate of The Bank of New York Mellon Trust Company, N.A. is one of the lenders under separate credit agreements with us, KCP&L and another of our subsidiaries and is the trustee under a KCP&L nuclear decommissioning fund trust. Affiliates of The Bank of New York Mellon Trust Company, N.A. also perform other services for, and transact other banking business with our affiliates and us in the normal course and may do so in the future.

 

Under the indenture, the trustee is required to transmit annual reports to all holders regarding its eligibility and qualifications as trustee under the applicable indenture and specified related matters. See “Certain Provisions of Purchase Contract and Pledge Agreement — Information Concerning the Collateral Agent” in this prospectus supplement and “Description of Debt Securities — Concerning the Trustee for Senior Debt Securities” in the accompanying prospectus.

 

Agreement by Purchasers of Certain Tax Treatment

 

Each note will provide that, by acceptance of the note or a beneficial interest therein, you intend that the note constitutes debt and you agree to treat it as debt for U.S. federal, state and local tax purposes in the manner described under “Material U.S. Federal Income Tax Considerations.”

 

Book-Entry System

 

Notes which are released from the pledge following substitution or settlement of the purchase contracts will be issued in the form of one or more global certificates, which are referred to as global securities, registered in the name of the depositary or its nominee. Except under the limited circumstances described below or except upon recreation of Corporate Units, notes represented by the global securities will not be exchangeable for, and will not otherwise be issuable as, notes in certificated form. The global securities described above may not be transferred except by the depositary to a nominee of the depositary or by a nominee of the depositary to the depositary or another nominee of the depositary or to a successor depositary or its nominee. For additional information concerning the depositary and its book-entry system, see “Description of the purchase contracts — Book-entry system.”

 

The laws of some jurisdictions may require that some purchasers of securities take physical delivery of the securities in certificated form. These laws may impair the ability to transfer beneficial interests in such a global security.

 

Except as provided below, owners of beneficial interests in such a global security will not be entitled to receive physical delivery of notes in certificated form and will not be considered the holders (as defined in the indenture) thereof for any purpose under the indenture, and no global security representing notes shall be exchangeable, except for another global security of like denomination and tenor to be registered in the name of the depositary or its nominee or a successor depositary or its nominee. Accordingly, each beneficial owner must rely on the procedures of the depositary, or if such person is not a participant, on the procedures of the participant through which such person owns its interest to exercise any rights of a holder under the indenture.

 

In the event that:

 

 

certificates for the notes will be printed and delivered in exchange for beneficial interests in the global security certificates. Any global note that is exchangeable pursuant to the preceding sentence shall be exchangeable for note certificates registered in the names directed by the depositary. We expect that these instructions will be based upon directions received by the depositary from its participants with respect to ownership of beneficial interests in the global security certificates. In addition, as noted above, interests in global securities may be exchanged for notes in certificated form in connection with the recreation of Corporate Units.

 

The following discussion summarizes material U.S. federal income tax considerations to U.S. Holders and Non-U.S. Holders (each as defined below) of the purchase, ownership and disposition of the Equity Units, the ownership interests in the notes, purchase contracts, the Treasury securities and the applicable ownership interest in the Treasury portfolio that are or may be the components of an Equity Unit, and shares of our common stock acquired under the purchase contract. This summary is included herein for general information purposes only and does not address all tax considerations that may be relevant to holders in light of their personal circumstances or that may be relevant to certain types of holders subject to special treatment under U.S. income tax laws (for example, financial institutions, tax-exempt organizations, insurance companies, real estate investment trusts, regulated investment companies, persons that are broker-dealers, traders in securities who elect the mark-to-market method of accounting for their securities, U.S. Holders that have a functional currency other than the U.S. dollar, corporations that accumulate earnings to avoid U.S. federal income tax, investors in partnerships (or other entities characterized as partnerships for U.S. federal income tax purposes) or other pass-through entities that hold Equity Units, ownership interests in the notes, purchase contracts, the Treasury securities, the applicable ownership interest in the Treasury portfolio or shares of our common stock, or U.S. Holders who hold Equity Units, ownership interests in the notes, purchase contracts, the Treasury securities, the applicable ownership interest in the Treasury portfolio, or shares of our common stock as part of a “straddle,” “hedge,” “conversion transaction” or other integrated transaction). Furthermore, this discussion does not address the tax consequences to Non-U.S. Holders that are engaged in the conduct of a trade or business within the United States, controlled foreign corporations, passive foreign investment companies or Non-U.S. Holders who own (actually or constructively) 10% or more of the total combined voting power of all classes of our stock. The discussion set forth below is limited to holders who purchase the Equity Units at the initial “issue price” (i.e., the first price to the public, excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers, at which a substantial amount of the Equity Units is sold for money) pursuant to this offering and who hold the Equity Units, ownership interests in the notes, purchase contracts, the Treasury securities, the applicable ownership interest in the Treasury portfolio, or shares of our common stock as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the “Code”). In addition, this discussion does not address the effect of federal alternative minimum tax, gift or estate tax laws, or any state, local or foreign tax laws.

 

The discussion below is based upon provisions of the Code, the legislative history thereof, U.S. Treasury regulations promulgated thereunder and administrative rulings and judicial decisions in effect as of the date hereof. Such authorities may be repealed, revoked or modified (possibly with retroactive effect) so as to result in U.S. federal income tax consequences different from those discussed below.

 

For purposes of the following discussion, the term “U.S. Holder” means a beneficial owner of Equity Units that is for U.S. federal income tax purposes:

 

 

For purposes of the following discussion, the term Non-U.S. Holder means a beneficial owner of Equity Units (other than a partnership or an entity treated as a partnership for U.S. federal income tax purposes) that is not a U.S. Holder.

If a partnership (or other entity treated as a partnership or a pass-through entity for U.S. federal income tax purposes) holds Equity Units, ownership interests in the notes, purchase contracts, the Treasury securities, the applicable ownership interest in the Treasury portfolio, or shares of our common stock acquired pursuant to the purchase contract, the tax treatment of a partner (or other equity holder of such entity) will generally depend upon the status of the person and the activities of the partnership (or such entity). Partnerships and other entities treated as partnerships or pass-through entities for U.S. federal income tax purposes holding any of the above instruments, and partners or other equity holders in such entities, should consult their own tax advisors.

 

THIS DISCUSSION OF U.S. FEDERAL INCOME TAX CONSIDERATIONS IS NOT INTENDED, AND SHOULD NOT BE CONSTRUED TO BE, TAX OR LEGAL ADVICE TO ANY PARTICULAR INVESTOR IN OR HOLDER OF EQUITY UNITS. PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION OF THE U.S. FEDERAL TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION OR ANY APPLICABLE TAX TREATIES, AND THE POSSIBLE EFFECT OF CHANGES IN APPLICABLE TAX LAW.

 

Characterization of Equity Units for Tax Purposes

 

The IRS has issued a published ruling discussing certain aspects of instruments substantially similar to the Equity Units. In the ruling, the IRS concluded that the notes issued as part of units that contained the notes and the purchase contracts constituted separate economic interests from the purchase contracts and that such notes should be treated as debt for U.S. federal income tax purposes. We have not sought a ruling from the IRS. Therefore, there is no assurance that the IRS or a court will agree with the U.S. federal income tax consequences described herein in the context of this offering of Equity Units. The IRS could contend that the terms of the Equity Units differ in some respects from the units addressed by the IRS in the ruling or that, given recent market conditions, the standard set forth in the ruling with respect to the remarketing is not satisfied here. As a result, the Equity Units could be treated, not as consisting of debt and a forward contract, but as another type of financial instrument, such as a prepaid forward contract to purchase our common stock or as a separate class of our stock. If the IRS is successful in its assertion, the periodic payments on the notes that are made to Non-U.S. Holders could generally be subject to U.S. withholding tax at a rate of 30%, unless reduced by an applicable income tax treaty. Additionally, the timing and character of income and gain recognized by U.S. Holders under any such recharacterization may differ significantly from the treatment discussed herein.

 

We believe that, for U.S. federal income tax purposes, the notes and the purchase contracts should be treated as separate economic interests, and that the notes should be treated as debt instruments, and the purchase contracts should be treated as forward contracts. By purchasing the Equity Units, each holder agrees to treat the notes and the purchase contracts in the manner described above. Prospective investors should consult their own tax advisors regarding the likelihood and consequences of any recharacterization of the Equity Units by the IRS or a court.

 

Ownership of Interests in the Notes, Purchase Contracts, Treasury Securities, or the Applicable Ownership Interest in the Treasury Portfolio

 

We and, by acquiring Equity Units, each holder agrees to treat the ownership interests in the notes, purchase contracts, the Treasury securities, or the applicable ownership interest in the Treasury portfolio, constituting a part of the Equity Units as owned by such holder for U.S. federal income tax purposes, and the remainder of this summary assumes such treatment.

U.S. Holders

 

Allocation of the Purchase Price

 

A U.S. Holder’s acquisition of an Equity Unit will be treated as an acquisition of an ownership interest in a note and the purchase contract constituting the Equity Unit. The purchase price of each Equity Unit will be allocated between the ownership interest in a note and the purchase contract in proportion to their respective fair market values at the time of purchase. Such allocation will establish the U.S. Holder’s initial tax basis in the ownership interest in a note and the purchase contract. We have determined that     % of the issue price of an Equity Unit is allocable to the ownership interest in a note and     % is allocable to the purchase contract. Each U.S. Holder, by purchasing the Equity Units, will be deemed to have agreed to this allocation; however, this allocation is not binding on the IRS. The remainder of this discussion assumes that the above allocation of the purchase price of an Equity Unit will be respected for U.S. federal income tax purposes.

 

Sale, Exchange or Other Taxable Disposition of Equity Units

 

Upon the sale, exchange or other taxable disposition of an Equity Unit, a U.S. Holder will be treated as having disposed of the purchase contract and the ownership interest in the note, the Treasury securities or the applicable ownership interest in the Treasury portfolio, as the case may be, that constitute the Equity Unit. The proceeds realized on such disposition will be allocated between the purchase contract and the ownership interest in the note, the Treasury securities or the applicable ownership interest in the Treasury portfolio, in proportion to their respective fair market values at the time of disposition. A U.S. Holder generally will recognize gain or loss equal to the difference between (i) the portion of the proceeds allocable to each of the purchase contract and the ownership interest in the note, the Treasury securities or the applicable ownership interest in the Treasury portfolio, as the case may be, and (ii) such U.S. Holder’s adjusted tax basis in each of the purchase contract, the ownership interest in the note, the Treasury securities or the applicable ownership interest in the Treasury portfolio, as the case may be.

 

If the sale, exchange or other taxable disposition of an Equity Unit occurs when the purchase contract has a negative value, a U.S. Holder should be considered to have received additional consideration for the ownership interest in the note, the Treasury securities or the applicable ownership interest in the Treasury portfolio, as the case may be, in an amount equal to such negative value, and then to have paid such amount to be released from such U.S. Holder’s obligation under the purchase contract. U.S. Holders should consult their tax advisors regarding a disposition of Equity Units at a time when the purchase contract has negative value.

 

Any recognized gain or loss that is attributable to the purchase contract, the Treasury securities or the applicable ownership interest in the Treasury portfolio will be capital gain or loss, provided, however, that gain in respect of a Treasury security with a term of one year or less will be treated as ordinary income to the extent of any accrued “acquisition discount,” as discussed more fully below under “— The Treasury Portfolio— Interest Income, Original Issue Discount and Acquisition Discount.” Any such capital gain or loss will be long-term capital gain or loss if the U.S. Holder has held the purchase contract or applicable Treasury security for more than one year at the time of the disposition. Under current U.S. federal income tax law (currently effective for tax years beginning before 2011), long-term capital gains of certain non-corporate U.S. Holders, including individuals, are eligible for reduced rates of U.S. federal income taxation. The deductibility of capital losses is limited.

 

The rules governing the determination of the character of gain or loss on the sale, exchange, or other taxable disposition of the notes, the Treasury securities or the applicable ownership interest in the Treasury portfolio are more fully described below under the relevant heading.

Taxation of the Notes

 

Interest Income and Original Issue Discount

 

We believe that, for U.S. federal income tax purposes, the notes should be treated as indebtedness and unless otherwise noted, the rest of this summary so assumes.

 

While the matter is not free from doubt, because of the manner in which the interest rate on the notes is reset, we intend to treat the notes as contingent payment debt instruments subject to the “noncontingent bond method” for accruing original issue discount, as set forth in applicable Treasury regulations. By purchasing the Equity Units, each U.S. Holder will be deemed to have agreed to this treatment, and this discussion assumes that the notes will be so treated for U.S. federal income tax purposes.

 

Under the noncontingent bond method, a U.S. Holder will accrue original issue discount in respect of the notes on a constant yield to maturity basis based on the “comparable yield” of the notes (generally, the rate at which we would issue a fixed rate debt instrument with no interest reset feature but with terms and conditions otherwise similar to the notes). As discussed more fully below, the application of the noncontingent bond method to the notes will (i) require each U.S. Holder, regardless of its usual method of tax accounting, to use an accrual method of accounting to determine the amount of interest income that is recognized with respect to the notes, (ii) result in interest income being accrued by a U.S. Holder in excess of interest payments actually received for all accrual periods beginning before the earlier of the reset effective date and the purchase contract settlement date, and (iii) generally cause any gain recognized on the sale, exchange or other taxable disposition of notes before the determination of the reset rate to be treated as ordinary income rather than capital gain. See “— Sale, Exchange or Other Taxable Disposition of the Notes.”

 

We are required to provide the comparable yield and, solely for tax purposes, a projected payment schedule that must produce the comparable yield, to U.S. Holders of the notes. We have determined that the comparable yield for the notes is     %, compounded quarterly through the reset date and, thereafter, annually. A copy of the projected payment schedule may be obtained by written request to the following address: Great Plains Energy Incorporated, 1201 Walnut Street, Kansas City, Missouri 64106-2124, Attn: Treasurer. The comparable yield and projected payment schedule are supplied by us solely for determining U.S. Holders’ accrual of original issue discount and adjustments in respect of the notes in computing income under the noncontingent bond method for U.S. federal income tax purposes, and do not constitute a projection or representation as to the amounts that U.S. Holders of notes actually will receive. U.S. Holders generally will be bound by the comparable yield and projected payment schedule provided by us, unless our determinations are unreasonable. In the event that a U.S. Holder does not use such comparable yield and projected payment schedule to determine interest accruals, the U.S. Holder will be required to disclose this fact and reasons for it in a statement attached to the timely filed U.S. federal income tax return of the U.S. Holder for the taxable year that includes the date of acquisition of Equity Units, and to apply the rules described below using its own comparable yield and projected payment schedule.

 

Original issue discount that accrues on the notes generally will be included in gross income by a U.S. Holder as ordinary income, regardless of the U.S. Holder’s method of tax accounting. The amount of original issue discount accruing on a note for each accrual period is determined by multiplying the comparable yield of the note (adjusted for the length of the accrual period) by the note’s adjusted issue price at the beginning of the accrual period. Based on the allocation of the purchase price of each Corporate Unit described above, the adjusted issue price of each note, per $1,000 of principal amount, at the beginning of each accrual period will be equal to $     , increased by any original issue discount previously accrued by the U.S. Holder on such note and decreased by projected payments received on such note (regardless of the actual amounts received). The amount of original issue discount so determined will then be allocated on a ratable basis to each day in the accrual period that the U.S. Holder holds the note.

 

If the amount of an actual payment on the notes differs from the projected payment set forth in the projected payment schedule, a U.S. Holder will be required to take into account the amount of such difference for the relevant taxable year either as a positive or negative adjustment. If the U.S. Holder has a net positive adjustment for a taxable year, the net positive adjustment will be treated as additional interest income. If the

U.S. Holder has a net negative adjustment for the taxable year, the net negative adjustment first will reduce the amount of interest in respect of the note that a U.S. Holder otherwise would be required to include in gross income for the taxable year, and then will give rise to an ordinary loss, but only to the extent that (i) the U.S. Holder’s total previous interest inclusions in respect of the note exceed (ii) the total amount of the U.S. Holder’s net negative adjustments treated as ordinary loss on the note in prior taxable years. Any remaining net negative adjustment for a taxable year will be carried forward to offset future interest income in respect of the note, or to reduce the amount realized on a sale, exchange or other taxable disposition of the note. A net negative adjustment is not subject to the two percent floor limitation imposed on miscellaneous itemized deductions under Section 67 of the Code.

 

U.S. Holders should consult their tax advisors regarding the time period over which such U.S. Holders should take into account any positive or negative adjustments that may arise if, after the determination of the reset rate, the remaining amounts of interest payable on the notes differ from the payments set forth on the projected payment schedule. U.S. Holders are also advised to consult their tax advisors as to the U.S. federal income tax consequences if we elect to defer interest payments on the notes.

 

Sale, Exchange or Other Taxable Disposition of the Notes

 

Upon the sale, exchange, or other taxable disposition of a note (including in connection with a remarketing of the note or a redemption of a note), a U.S. Holder will recognize gain or loss in an amount equal to the difference between (i) the amount realized in the sale, exchange or other taxable disposition and (ii) the U.S. Holder’s adjusted tax basis in the note. A U.S. Holder’s adjusted tax basis in a note will be equal to (i) the portion of the purchase price of the Corporate Units allocated to the ownership interest in the notes, (ii) increased by the amount of any interest (including original issue discount) included in gross income by such U.S. Holder with respect to the note and (iii) decreased by the amount of any noncontingent payment and the projected amount of any contingent payment previously made on the note. As explained above, a net negative adjustment may be carried forward and can reduce the amount realized upon sale, exchange or other taxable disposition of a note in certain circumstances.

 

Gain recognized on the sale, exchange or other taxable disposition of a note before the determination of the reset rate will be treated as ordinary interest income. Loss realized on the sale, exchange or other taxable disposition of a note before the determination of the reset rate will be treated as ordinary loss to the extent of a U.S. Holder’s prior net income inclusions on the note. Any loss in excess of the U.S. Holder’s prior net income inclusions will be treated as capital loss.

 

The treatment of a U.S. Holder’s gain or loss recognized on the sale, exchange, or other taxable disposition of a note on or after the date on which the reset rate has been determined may vary depending on whether any interest payments are made within the six-month period following the determination of the reset rate. U.S. Holders of the notes should consult with their tax advisors regarding the treatment as capital or ordinary of any such gain or loss.

 

If a U.S. Holder does not participate in the remarketing, any reset of the interest rate, or change in the ranking, maturity or frequency of paying interest on the notes in connection with the remarketing should not cause the U.S. Holder to be treated as having sold, exchanged or otherwise disposed of the notes.

 

Taxation of the Purchase Contracts

 

Contract Adjustment Payments

 

There is no direct authority under current law that discusses the treatment of the contract adjustment payments, and their treatment is, therefore, uncertain. We intend to report the contract adjustment payments as ordinary taxable income to you. Accordingly, you should include the contract adjustment payments in income when received or accrued, in accordance with your regular method of tax accounting. The following discussion assumes that the contract adjustment payments are so treated for U.S. federal income tax purposes. However, other treatments are possible. In addition, if we exercise our right to defer contract adjustment payments, you

may be required to continue to recognize income for U.S. federal income tax purposes in respect of the purchase contracts in advance of your receipt of any corresponding cash distributions.

 

Investors are urged to consult their tax advisors concerning the treatment, for U.S. federal income tax purposes, of the contract adjustment payments, including the possibility that any contract adjustment payment may be treated as a purchase price adjustment, rebate or payment analogous to option premium, rather than being included in gross income as paid or accrued, as well as the treatment of deferred contract adjustment payments, if any.

 

Early Settlement of a Purchase Contract

 

A U.S. Holder will not recognize gain or loss on the receipt of the U.S. Holder’s ownership interest in the notes, the Treasury securities or the Treasury portfolio upon early settlement of a purchase contract, and such holder’s tax basis in, and holding period for, the ownership interest in notes, the Treasury securities or the Treasury portfolio will not be affected by the early settlement.

 

Termination of a Purchase Contract

 

If a purchase contract terminates, a U.S. Holder will recognize a loss equal to such U.S. Holder’s adjusted tax basis, if any, in the purchase contract at the time of the termination. In general, the loss will be capital loss and will be long-term capital loss if the U.S. Holder held such purchase contract for more than one year at the time of such termination. The deductibility of capital losses is limited.

 

A U.S. Holder will not recognize gain or loss on the receipt of such U.S. Holder’s ownership interest in the notes, the Treasury securities or the Treasury portfolio upon termination of the purchase contract, and such U.S. Holder will have the same adjusted tax basis and holding period in the notes, the Treasury securities or the Treasury portfolio as before such termination.

 

Adjustment to the Settlement Rate

 

A U.S. Holder might be treated as receiving a constructive distribution from us if (1) the settlement rate is adjusted (or fails to be adjusted) and, as a result of that adjustment (or failure to adjust), such U.S. Holder’s proportionate interest in our assets or earnings and profits is increased and (2) the adjustment (or failure to adjust) is not made pursuant to a bona fide, reasonable anti-dilution formula. An adjustment in the settlement rate would not be considered made pursuant to such a formula if the adjustment were made to compensate a U.S. Holder for certain taxable distributions with respect to our common stock. Thus, under certain circumstances, an adjustment to (or a failure to adjust) the settlement rate might give rise to a taxable dividend to a U.S. Holder even though such U.S. Holder would not receive any cash.

 

Acquisition and Taxation of the Common Stock

 

Acquisition of Common Stock

 

Generally, a U.S. Holder will not recognize gain or loss on the purchase of shares of our common stock under a purchase contract, except with respect to any cash paid to a U.S. Holder instead of a fractional share of our common stock, which should be treated as paid in exchange for such fractional share. A U.S. Holder’s aggregate initial tax basis in the shares of common stock received under a purchase contract should generally equal (i) the purchase price paid for such shares of common stock, (ii) increased by the properly allocable portion of such U.S. Holder’s adjusted tax basis in the purchase contract, if any, and (iii) decreased by the portion of such purchase price allocable to any fractional share. The holding period for shares of our common stock received under a purchase contract will commence on the day following the acquisition of such shares of common stock.

Distributions on Common Stock

 

A distribution on shares of our common stock will constitute a dividend to the extent of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) and will be includible in income by a U.S. Holder when received. Any such dividend will be eligible for the dividends received deduction if the U.S. Holder is an otherwise qualifying corporate Holder that meets the holding period and other requirements for the dividends received deduction. For tax years beginning before 2011, certain non-corporate U.S. Holders, including individuals, who receive dividends are eligible for a reduced rate of taxation if certain holding period and other requirements are satisfied.

 

Sale, Exchange or Other Taxable Disposition of Common Stock

 

Upon a sale, exchange, or other taxable disposition of shares of our common stock, a U.S. Holder will recognize capital gain or loss in an amount equal to the difference between (i) the amount realized and (ii) such U.S. Holder’s adjusted tax basis in shares of our common stock (see “— Purchase Contracts — Acquisition of common stock under a Purchase Contract”). Such capital gain or loss will be long-term capital gain or loss if the U.S. Holder held the shares for more than one year at the time of the disposition. Under current U.S. federal income tax law (currently effective for tax years beginning before 2011), long-term capital gains of certain non-corporate U.S. Holders, including individuals, are eligible for reduced rates of U.S. federal income taxation. The deductibility of capital losses is limited.

 

Taxation of the Treasury Portfolio

 

Interest Income, Original Issue Discount and Acquisition Discount

 

Following a special event redemption or a successful remarketing, if the Treasury portfolio contains interest-paying securities that are not Treasury strips, a U.S. holder will be required to recognize ordinary income to the extent of the U.S. holder’s pro rata portion of the interest paid with respect to such Treasury securities. In addition, each U.S. Holder will be required to treat a pro rata portion of each Treasury strip in the Treasury portfolio, if any, as a debt instrument that was originally issued on the date the collateral agent acquired the relevant Treasury strip and that has original issue discount (or, in the case of short-term Treasury securities, acquisition discount, each as defined below) equal to such holder’s pro rata portion of the excess, if any, of the amounts payable on such Treasury strip over such holder’s pro rata portion of the purchase price of the Treasury strip acquired on behalf of holders of Corporate Units. A U.S. Holder generally will be required to include such original issue discount in gross income for U.S. federal income tax purposes as it accrues on a constant yield to maturity basis, regardless of the holder’s regular method of tax accounting. The actual cash payments on the Treasury strips, however, will not be taxable.

 

In the case of any Treasury security with a maturity of one year or less from the date of its issue (a “short-term Treasury security”), an accrual basis U.S. Holder generally will be required to include in gross income the excess of the amounts payable at maturity with respect to such Treasury security over such holder’s U.S. federal income tax basis in the short-term Treasury security (“acquisition discount”). Such acquisition discount will be accrued on a straight-line basis, unless such U.S. Holder elects to accrue the acquisition discount on a constant yield to maturity basis. A cash basis U.S. Holder generally will recognize the accrued acquisition discount as ordinary income only upon payment on the short-term Treasury securities or a sale, exchange or other taxable disposition of the related Equity Unit. A U.S. Holder that obtains the release of its applicable ownership interest in the Treasury portfolio and subsequently disposes of such interest will recognize ordinary income on such disposition to the extent of any gain realized on any short-term Treasury security that does not exceed an amount equal to the ratable share of the acquisition discount on such Treasury security not previously included in gross income.

 

Tax Basis of and Gain on the Applicable Ownership Interest in the Treasury Portfolio

 

A U.S. Holder’s initial tax basis in such holder’s applicable ownership interest in the Treasury portfolio will equal such U.S. Holder’s proportionate share of the amount paid by the collateral agent for the Treasury portfolio. A U.S. Holder’s adjusted tax basis in the applicable ownership interest in the Treasury

portfolio will be increased by the amount of original issue discount or acquisition discount included in gross income with respect thereto, and decreased by the amount of cash received with respect to original issue discount or acquisition discount in the Treasury portfolio.

 

Upon the disposition or maturity of your pro rata portion of the Treasury securities in the Treasury portfolio, a U.S. Holder will recognize gain or loss on the difference between the amount realized and its adjusted tax basis in such Treasury securities. Such gain or loss will generally be capital gain or loss, except to the extent of any gain realized on the U.S. Holder’s interest in short-term U.S. Treasury securities that does not exceed an amount equal to the ratable share of the acquisition discount on such U.S. Treasury securities not previously included in income which will be treated as ordinary income.

 

Taxation of the Treasury Units

 

Substitution of Treasury Securities to Create Treasury Units

 

A U.S. Holder of Corporate Units who delivers Treasury securities to the collateral agent in substitution for notes or other pledged securities generally will not recognize gain or loss upon the delivery of such Treasury securities or the release of the notes or other pledged securities to such U.S. Holder. Rather, such U.S. Holder will continue to take into account items of income or deduction otherwise includible or deductible, respectively, by such holder with respect to the delivered Treasury securities and released notes or applicable ownership interests in the Treasury portfolio, and the holder’s adjusted tax basis in, and holding period for, the notes, the Treasury securities or the applicable ownership interests in the Treasury portfolio and the purchase contracts will not be affected by the delivery and release. U.S. Holders should consult their tax advisors regarding the tax consequences of purchasing, owning and disposing of the Treasury securities so delivered to the collateral agent.

 

Substitution of the Notes or the Applicable Ownership Interests in the Treasury Portfolio to Recreate Corporate Units

 

A U.S. Holder of Treasury Units who delivers notes or the applicable ownership interests in the Treasury portfolio to the collateral agent in substitution for pledged Treasury securities generally will not recognize gain or loss upon the delivery of such notes or the applicable ownership interests in the Treasury portfolio or the release of the pledged Treasury securities to such U.S. Holder. Rather, such U.S. Holder will continue to take into account items of income or deduction otherwise includible or deductible, respectively, by such holder with respect to such released Treasury securities and such delivered notes or the applicable ownership interests in the Treasury portfolio. Such U.S. Holder’s adjusted tax basis in, and holding period for, the notes or the applicable ownership interests in the Treasury portfolio, the Treasury securities and the purchase contract will not be affected by such delivery and release. U.S. Holders should consult their tax advisors regarding the U.S. federal income tax consequences of purchasing, owning and disposing of the Treasury securities so delivered to the collateral agent.

 

Information Reporting and Backup Withholding

 

Unless a U.S. Holder is an exempt recipient (such as a corporation), payments under the Equity Units, ownership interests in the notes, purchase contracts, the Treasury securities, the applicable ownership interests in the Treasury portfolio, or shares of common stock, the proceeds received with respect to a fractional share of common stock upon the settlement of a purchase contract, and the proceeds received from the sale of the Equity Units, ownership interests in the notes, purchase contracts, the Treasury securities, the applicable ownership interests in the Treasury portfolio, or shares of common stock, may be subject to information reporting. In addition, such amounts may be subject to U.S. federal backup withholding, currently at a rate of 28%, if the U.S. Holder fails to supply an accurate taxpayer identification number or otherwise fails to comply with applicable U.S. information reporting or certification requirements. Backup withholding does not represent an additional income tax. Any amount withheld under the backup withholding rules is allowable as a credit against the holder’s U.S. federal income tax and may entitle the U.S. Holder to a refund, provided that the required information is timely furnished to the IRS.

Non-U.S. Holders

 

Payments of Principal and Interest on the Notes, Treasury Securities, and the Applicable Ownership Interest in the Treasury Portfolio

 

Under the agreed-to characterization of the Equity Units as described above, no U.S. federal withholding tax will be imposed on any payment of principal or interest (including any original issue discount or acquisition discount) on the notes, the Treasury securities or applicable ownership interest in the Treasury portfolio, provided that the Non-U.S. Holder provides the payor with a properly executed IRS Form W-8BEN (or successor form). However, if the Equity Units were recharacterized as discussed above under “— Characterization of Equity Units for Tax Purposes” the periodic payments on the notes made to Non-U.S. Holders could be subject to U.S. federal withholding tax at a rate of 30%, unless such Non-U.S. Holder is entitled to claim a lower rate as may be specified by an applicable income tax treaty and such holder has satisfied the relevant certification requirements. Non-U.S. Holders should consult their tax advisors concerning the treatment of the notes, including the possibility of a recharacterization of the Equity Units.

 

Dividends and Contract Adjustment Payments

 

Dividends received by a Non-U.S. Holder on shares of our common stock generally will be subject to U.S. federal withholding tax at a rate of 30%. In certain circumstances, a Non-U.S. Holder may be entitled to a reduced rate of withholding pursuant to an applicable income tax treaty. In order to claim the benefits of an applicable income tax treaty, a Non-U.S. Holder will generally be required to provide a properly executed IRS Form W-8BEN (or successor form), certifying its entitlement to such treaty benefits. As discussed above, an adjustment (or failure to adjust) to the settlement rate may result in a constructive distribution that is treated as a taxable constructive dividend to the holder of Equity Units (see “U.S. Holders — Purchase Contracts — Adjustment to the Settlement Rate”). If we determine that any such adjustment (or failure to adjust) results in a constructive dividend to a Non-U.S. Holder of Equity Units, we may withhold on amounts otherwise paid to the Non-U.S. Holder in order to pay the proper U.S. withholding tax on such constructive dividend.

 

We intend to treat any contract adjustment payments paid to a Non-U.S. Holder as amounts generally subject to United States withholding tax at a 30% rate. In certain circumstances, a Non-U.S. Holder may be entitled to a reduced rate of withholding (or a complete exemption from withholding) pursuant to an applicable income tax treaty. In order to claim any benefits of an applicable income tax treaty that may be available, a Non-U.S. Holder will be required to provide a properly executed IRS Form W-8BEN (or suitable substitute form). Prospective investors should consult their own tax advisors concerning contract adjustment payments including the possibility that any contract adjustment payment may be treated as a loan, purchase price adjustment, rebate, or payment analogous to an option premium and whether the investor may be entitled to a refund or credit from the IRS with respect to amounts withheld from contract adjustment payments.

 

Sale, Exchange, or Other Taxable Disposition of Equity Units, Notes, Treasury Securities, Applicable Ownership Interest in the Treasury Portfolio, or Shares of Common Stock

 

Any gain recognized by a Non-U.S. Holder upon the sale, exchange, or other taxable disposition of Equity Units, notes, the Treasury securities, applicable ownership interest in the Treasury portfolio, or shares of our common stock (including with respect to certain distributions that are in excess of our current and accumulated earnings and profits) generally will not be subject to U.S. federal income tax, unless (1) the Non-U.S. Holder is an individual who is present in the United States for 183 or more days during the taxable year in which the disposition takes place and certain other conditions are met or, (2) in the case of the purchase contracts that underlie the Equity Units or our common stock, we are or have been a “U.S. real property holding corporation” (a “USRPHC”) for U.S. federal income tax purposes during the shorter of either (i) the 5-year period ending on the date of the relevant disposition or distribution or (ii) the period during which a Non-U.S. Holder held an interest in the U.S. corporation that is a “United States real property interest” (a “USRPI”) (the “Testing Period”).

The U.S. federal income tax consequences that may apply to a Non-U.S. Holder in the event that we have been, currently are or were to become a USRPHC are described below under the heading “— Foreign Investment in Real Property Tax Act.”

 

Foreign Investment in Real Property Tax Act

 

Although the matter is not free from doubt, we intend to take the position that we are a USRPHC for U.S. federal income tax purposes. If we are a USRPHC, Non-U.S. Holders would be subject to U.S. federal income tax at the regular graduated rates (“FIRPTA Tax”) on gain, if any, recognized in connection with such holder’s disposition of the Equity Units (to the extent allocable to the purchase contracts) or our common stock (including, in each case, certain distributions on such interests in excess of our current and accumulated earnings and profits) to the extent such purchase contracts or common stock constitute USRPIs.

 

For purposes of the FIRPTA Tax, a USRPI is defined to include an interest in an entity (other than an interest solely as a creditor), including common stock in a corporation and any right (whether or not presently exercisable) directly or indirectly to acquire, by purchase, conversion, exchange, or in any other manner, stock in a corporation. However, under applicable Treasury Regulations, an interest held by a Non-U.S. Holder generally will not be treated as a USRPI (and therefore an exception to FIRPTA Tax generally will be available) if (i) any class of the U.S. corporation’s stock is regularly traded on an established securities market at any time during the calendar year and (ii) such Non-U.S. Holder has during the relevant Testing Period owned (directly, indirectly, or constructively), in the case of a regularly-traded class of interests (referred to as a “regularly-traded interest”), no more than 5% of the total fair market value of that class of interests. Special rules apply in the case of a non-regularly-traded class of interests to determine if such interests will be treated as a USRPI. As long as our common stock and the Equity Units are listed on an established securities market, such as the New York Stock Exchange, and meet certain public trading requirements, shares of our common stock will continue to be treated as regularly-traded interests and the purchase contracts, although the matter is not free from doubt due to the lack of direct precedent, will be treated as regularly-traded interests, in each case, for purposes of the FIRPTA Tax. We expect that our common stock and the Equity Units will be listed on an established securities market and will satisfy the applicable public trading requirements.

 

For purposes of the FIRPTA Tax, shares of our common stock will not be treated as USRPIs pursuant to the exception set forth above for regularly-traded interests in the case of a Non-U.S. Holder that owns no more than 5% of our outstanding common stock throughout the relevant Testing Period (taking into account shares owned directly and constructively by such holder). Similarly, although the matter is not free from doubt due to the lack of direct precedent, the Equity Units (and the purchase contracts that underlie the Equity Units) will not be treated as USRPIs in the case of a Non-U.S. Holder that owns (A) no more than 5% of the outstanding Equity Units and (B) Equity Units that, at the time such Equity Units were acquired, had a fair market value allocable to the purchase contracts equal to no more than 5% of the total fair market value of our outstanding common stock, in each case, at all times during the relevant Testing Period (taking into account Equity Units owned directly and constructively by such holder). However, the IRS or a court could disagree with this conclusion. Non-U.S. Holders who exceed the limits described above could be subject to FIRPTA Tax with respect to gains on the disposition of our common stock or Equity Units (to the extent allocable to the purchase contracts), as applicable, or with respect to certain distributions on our common stock or the Equity Units (to the extent allocable to the purchase contracts) in excess of our current and accumulated earnings and profits. A Non-U.S. Holder subject to FIRPTA Tax will be required to file a U.S. federal income tax return with the IRS. An exemption from FIRPTA Tax or a reduced tax rate may be available under certain United States income tax treaties.

 

If the Equity Units are listed on the New York Stock Exchange and meet certain public trading requirements (which we expect to be met), although the matter is not free from doubt due to the lack of direct precedent, a Non-U.S. Holder will not be subject to withholding on the proceeds of a disposition of Equity Units that are allocable to the purchase contracts. However, if the above public trading requirements are not satisfied, a Non-U.S. Holder that owns, or is deemed to own, at any time during the relevant Testing Period, Equity Units with a fair market value allocable to the purchase contracts greater than 5% of the total fair

market value of our outstanding common stock could be subject to withholding at a 10% rate on the proceeds of any disposition of Equity Units (to the extent allocable to the purchase contracts).

 

BECAUSE OF THE COMPLEXITY OF THESE RULES, NON-U.S. HOLDERS OF EQUIY UNITS AND OUR COMMON SHARES ARE URGED TO CONSULT THEIR TAX ADVISORS TO DETERMINE THE POSSIBLE APPLICATION OF THE FIRPTA TAX AND AVAILABILITY OF AN EXEMPTION OR TAX REDUCTION UNDER AN APPLICABLE UNITED STATES INCOME TAX TREATY.

 

Information Reporting and Backup Withholding

 

Generally, we must report annually to the IRS and to Non-U.S. Holders the amount of interest or dividends paid to Non-U.S. Holders and the amount of tax, if any, withheld with respect to those payments. Copies of the information returns reporting such interest, dividends and withholding may also be made available to the tax authorities in the country in which a Non-U.S. Holder resides pursuant to the provisions of an applicable treaty or other information exchange agreement.

 

In general, backup withholding will not be required with respect to payments made by us on the Equity Units, notes, the Treasury securities, the applicable ownership interest in the Treasury portfolio, or shares of our common stock if the Non-U.S. Holder provides us with a properly executed IRS Form W-8BEN (or applicable substitute form) and we do not have actual knowledge or reason to know that the Non-U.S. Holder is a United States person. In addition, no information reporting or backup withholding will be required with respect to proceeds from a disposition of Equity Units, notes, the Treasury securities, applicable ownership interest in the Treasury portfolio, or shares of our common stock (even if the disposition is considered to be effected within the United States or through a U.S. financial intermediary) if the payor receives a properly executed IRS Form W-8BEN (or successor form) and does not have actual knowledge or reason to know that the Non-U.S. Holder is a United States person, or if the Non-U.S. Holder otherwise establishes an exemption. Backup withholding is not an additional tax. Any amount withheld under the backup withholding rules is allowable as a credit against the Non-U.S. Holder’s U.S. federal income tax and may entitle the Non-U.S. Holder to a refund, provided that the required information is timely furnished to the IRS.

 

Subject to the terms and conditions of the underwriting agreement, the underwriters named below, for whom Goldman, Sachs & Co. and J.P. Morgan Securities Inc. are acting as representatives, have severally agreed to purchase from us, and we have agreed to sell, the following respective numbers of Equity Units listed opposite their names below at the public offering price less the underwriting discount set forth on the cover page of this prospectus supplement:

 

 

The underwriting agreement provides that the obligations of the underwriters to purchase the Equity Units are subject to the approval of legal matters by counsel and to other conditions. The underwriters are obligated to purchase all the Equity Units (other than those Equity Units covered by the option described below) if any are purchased. The underwriting agreement also provides that if one or more underwriters default, the purchase commitments of non-defaulting underwriters may be increased or the offering of Equity Units may be terminated.

 

Concurrently with this offering of Equity Units, we are offering, by a separate prospectus supplement, 10,000,000 shares of our common stock, plus up to an additional 1,500,000 shares of our common stock if the underwriters of that offering exercise in full their option to purchase additional shares. This offering of Equity Units is not contingent on our offering of common stock.

 

We have been advised by the representatives that the underwriters propose to offer the Equity Units directly to the public at the public offering price set forth on the cover page of this prospectus supplement and to selling group members at that price less a selling concession of $      per Equity Unit. After the initial public offering the representatives may change the public offering price, selling concession and discount to broker/dealers.

 

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended, and to contribute to payments the underwriters may be required to make because of any of those liabilities.