Obligation Aevista Corp 5.45% ( US05379BAH06 ) en USD

Aevista Corp

100 % ⇌

Etas-Unis

US05379BAH06 ( en USD )

5.45% par an ( paiement semestriel )

01/12/2019 - Obligation échue

Prospectus brochure de l'obligation Avista Corp US05379BAH06 en USD 5.45%, échue

1 000 USD

90 000 000 USD

05379BAH0

N/A

N/A

Avista Corp est une société énergétique américaine qui fournit de l'électricité et du gaz naturel à des clients dans l'Idaho, l'Oregon, le Washington et la Colombie-Britannique.

Un examen approfondi de l'obligation identifiée par le code ISIN US05379BAH06 révèle les caractéristiques clés d'un instrument de dette précédemment émis par Avista Corp. Avista Corp, l'émetteur de cet instrument, est une société de services publics cotée en bourse, principalement active dans la production, la transmission et la distribution d'électricité et de gaz naturel, desservant des clients dans le nord-ouest des États-Unis. Cette obligation, également identifiée par le code CUSIP 05379BAH0 et émise depuis les États-Unis, offrait un taux d'intérêt annuel de 5,45%, avec une fréquence de paiement semi-annuelle. La taille totale de cette émission s'élevait à 90 000 000 USD, avec une taille minimale d'achat fixée à 1 000 USD, rendant cet instrument accessible à un éventail d'investisseurs. Initialement prévue pour arriver à échéance le 1er décembre 2019, cette obligation a atteint sa maturité à la date prévue et a été entièrement remboursée à son prix nominal de 100% sur le marché, confirmant la bonne gestion des engagements financiers de l'émetteur envers ses obligataires.

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424B2 1 c34413_424b2.htm

Filed Pursuant to Rule 424(b)(2)
File No. 333-64652
Prospectus Supplement to Prospectus dated May 19, 2004.
$90,000,000
Avista Corporation
First Mortgage Bonds, 5.45% Series due 2019
___________________
Our First Mortgage Bonds, 5.45% Series due 2019 (the "Offered Bonds"), constitute a series of our
Bonds described in the accompanying prospectus.
We will pay interest on the Offered Bonds on June 1 and December 1 of each year. The first such
payment will be made on June 1, 2005. The Offered Bonds will mature on December 1, 2019, unless
redeemed on an earlier date. The Offered Bonds are redeemable at our option, in whole at any time or
in part from time to time, at a "make-whole" price as described herein. See "Description of the Offered
Bonds".
See "Risk Factors" beginning on page S-3 to read about certain factors you should consider before
buying the Offered Bonds.
___________________
Neither the Securities and Exchange Commission nor any other regulatory body has
approved or disapproved of these securities or passed upon the accuracy or adequacy of this
prospectus supplement or the accompanying prospectus. Any representation to the contrary is
a criminal offense.
___________________

Per Bond
Total

Initial price to public
99.734%
$89,760,600
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Underwriting discount
0.750%
$
675,000
Proceeds, before expenses, to Avista
98.984%
$89,085,600
The initial public offering price set forth above does not include accrued interest, if any. Interest on
the notes will accrue from November 23, 2004 and must be paid by the purchasers if the notes are
delivered after November 23, 2004.
___________________
The underwriters expect to deliver the Offered Bonds to the purchasers through the facilities of The
Depository Trust Company against payment in New York, New York on November 23, 2004.
Goldman, Sachs & Co.
BNY Capital Markets, Inc.
KeyBanc Capital Markets
___________________
Prospectus Supplement dated November 18, 2004.
This prospectus supplement and the accompanying prospectus incorporate by reference important
business and financial information about Avista Corporation that is not included in or delivered with the
prospectus. This information is available to you as set forth in the accompanying prospectus.
___________________
TABLE OF CONTENTS

Prospectus Supplement

Risk Factors
S-3
Use of Proceeds
S-8
Summary Financial Information
S-8
Capitalization
S-9
Description of the Offered Bonds
S-10
Underwriting
S-14

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Prospectus

About this Prospectus
1
Safe Harbor for Forward-Looking Statements
1
Avista Corporation
3
Use of Proceeds
4
Description of the Bonds
4
Description of the Notes
12
Description of Common Stock
21
Where You Can Find More Information
25
Plan of Distribution
26
Legal Matters
27
Experts
27
We have not authorized anyone to give you any information other than this prospectus supplement
and the accompanying prospectus. You should assume that the information contained or incorporated
in this prospectus supplement and the accompanying prospectus is accurate only as of their respective
dates. We are not offering to sell the Offered Bonds and we are not soliciting offers to buy the Offered
Bonds in any jurisdiction in which offers are not permitted.
S-2
RISK FACTORS
Investing in the Offered Bonds involves risk. You should review all the information contained or
incorporated by reference in this prospectus supplement and the accompanying prospectus before
deciding to invest. See "Where You Can Find More Information" in the accompanying prospectus. In
particular, you should carefully consider the risks and uncertainties referred to below. Certain other
risks and uncertainties are listed under "Safe Harbor For Forward-Looking Statements" in the
accompanying prospectus.
We are subject to various operational and event risks, which are common to the utility industry.
Avista Utilities, our regulated utility operation, is subject to operational and event risks including,
among others, increases in load demand, transmission or transport disruptions, fuel quality
specifications, forced outages at generating plants and disruptions to information systems and other
administrative tools required for normal operations. We also have exposure to weather conditions and
natural disasters that can cause physical damage to our property, requiring repairs to restore utility
service. The emergence of terrorism threats, both domestic and foreign, is a risk to the entire utility
industry, including us. The likelihood of disruptions to operations or destruction of facilities from
terrorism is not readily determinable.
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We are subject to the commodity price risk, credit risk and other risks associated with energy
markets.
Both of our energy-related businesses, Avista Utilities and Avista Energy, are subject to electric and
natural gas commodity price risk. In the case of electricity, prices can be affected by the adequacy of
generating reserve margins, scheduled and unscheduled outages of generating facilities, availability of
streamflows for hydroelectric generation, the price and availability of thermal generating plant fuel, and
disruptions of or constraints on transmission facilities, among other things. Natural gas prices are
affected by a number of factors, including but not limited to, the adequacy of North American
production, the level of imports, the level of inventories, and the availability of pipeline capacity to
transport natural gas from region to region. In addition, oil prices can influence natural gas prices,
because of the fuel-switching capabilities of certain energy users. Demand changes (caused by
variations in the weather and other factors) can also affect market prices. Any combination of these
factors that results in a shortage of energy generally causes the market price of power to move
upward. Price risk also includes the risk of fluctuation in the market price of associated derivative
commodity instruments (such as options and forward contracts).
Avista Utilities and Avista Energy are also subject to credit risk. Credit risk relates to the losses that
we would incur as a result of non-performance by counterparties of their contractual obligations to
deliver energy or make financial settlements. Credit risk includes not only the risk that a counterparty
may default due to circumstances relating directly to it, but also the risk that a counterparty may default
due to circumstances that relate to other market participants that have a direct or indirect relationship
with such counterparty. Should a counterparty, customer or supplier fail to perform, we may be
required to replace existing contracts with contracts at then-current market prices or to honor the
underlying commitment. In addition, we often extend credit to counterparties and customers. While we
perform credit analyses prior to extending credit, Avista Utilities and Avista Energy are exposed to the
risk that we may not be able to collect amounts owed to us.
Avista Utilities and Avista Energy are also subject to liquidity risk resulting from the exposure that
our counterparties perceive with respect to the possible non-performance by us of our physical and
financial energy contracts. These counterparties may seek assurances of performance from us in the
form of letters of credit, prepayment or cash deposits, and, in the case of Avista Energy, parent
company performance guarantees. In periods of price volatility, the level of exposure can change
significantly, with the result that sudden and significant demands may be made against our capital
resource reserves (credit facilities and cash).
Avista Energy has concentrations of suppliers and customers in the electric and natural gas
industries including electric utilities, natural gas distribution companies, and other energy marketing
and trading companies. In addition, Avista Energy has concentrations of credit risk related to
geographic location as
S-3
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Avista Energy operates in the western United States and western Canada. These concentrations of
counterparties and concentrations of geographic location may negatively impact Avista Energy's
overall exposure to credit risk, because the counterparties may be similarly affected by changes in
economic, regulatory or other conditions.
Risk management procedures may not prevent losses.
Avista Utilities and Avista Energy have risk management policies and control procedures designed
to measure and mitigate energy market risks. However, these policies and procedures cannot prevent
material losses in all possible situations or from all potential causes. Included in Avista Energy's risk
management policies are value-at-risk limits and systematic measurement procedures derived from
historic price behavior. Losses could exceed the value-at-risk predictive amounts if prices deviate
significantly from their historic patterns and in cases when actual events fall into the extreme end of the
value-at-risk confidence interval. In addition, continuing trends of small losses that may be individually
less than value-at-risk limits may cumulatively become significant. As a result of these and other
factors, there can be no assurance that our risk management procedures will prevent losses that could
negatively affect our results of operations, cash flows and financial condition.
Our commodity trading, marketing and risk management activities may increase the volatility in
our results of operations; we cannot, and do not attempt to, fully hedge our assets or positions
against changes in commodity prices; and our hedging procedures may not work as planned.
Avista Energy engages in resource management activities, as well as commodity marketing and
trading. These activities include entering into financial and physical derivative transactions. These
derivatives are accounted for in accordance with Statement of Financial Accounting Standards (SFAS)
No. 133, "Accounting for Derivative Instruments and Hedging Activities," as amended by SFAS No.
138 and SFAS No. 149, with respect to the majority of its contracts, which requires Avista Energy to
record all derivatives on the Consolidated Balance Sheet at market value. Changes in the market value
of derivatives are immediately recognized in earnings unless they are designated as hedges of
forecasted transactions. Changes in the market value of derivatives accounted for as cash flow hedges
of forecasted transactions are deferred and recorded as a component of accumulated other
comprehensive income (loss) until the hedged transactions occur and are recognized in earnings. Most
derivative contracts are marked-to-market and changes in their market value, brought upon by
fluctuations in the underlying commodity prices, flow through the Consolidated Statements of Income.
As a result, we are unable to predict the impact that its energy marketing and resource management
activities may have on its results of operations or financial condition.
To reduce financial exposure related to commodity price fluctuations, Avista Utilities and Avista
Energy routinely enter into contracts to hedge a portion of our purchase and sale commitments for
electricity and natural gas, as well as our inventories of natural gas. As part of this strategy, we
routinely utilize derivative instruments, such as forwards, futures, swaps and options traded in the over-
the-counter markets or on exchanges. However, we do not always cover the entire exposure of our
assets or our positions to market price volatility and the coverage will vary over time. To the extent
Avista Utilities or Avista Energy have unhedged positions, or if our hedging positions do not work as
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planned, fluctuating commodity prices could have a material adverse effect on our business, results of
operations, cash flows and financial condition.
Our deferred power costs are subject to regulatory review and it will take several years for
recovery.
We defer the recognition in the income statement of certain power supply costs that are in excess
of the level currently recovered from our retail customers as authorized by the Washington Utilities and
Transportation Commission ("WUTC") and the Idaho Public Utilities Commission ("IPUC"). These
excess power supply costs are recorded as a deferred charge on the balance sheet with certain of
these costs remaining subject to future prudency review and the opportunity for recovery through retail
rates. As such, certain deferred costs may be disallowed by the respective regulatory agencies.
S-4
In Washington, power costs are deferred under an Energy Recovery Mechanism ("ERM") as
established by WUTC order. The ERM allows us to increase or decrease electric rates periodically with
WUTC approval to reflect changes in power supply costs. Under the ERM, we agreed to make an
annual filing on or before April 1st of each year to provide the opportunity for the WUTC and other
interested parties to review the prudency of and audit the ERM deferred power costs transactions for
the prior calendar year.
In Idaho, power costs are deferred under a Power Cost Adjustment ("PCA") mechanism, which
allows us to modify electric rates periodically with IPUC approval to recover or rebate a substantial
portion of the difference between actual net power supply costs and the amount included in base retail
rates.
Despite the opportunity to eventually recover a substantial portion of power and natural gas costs in
excess of the levels currently recovered from retail customers, our cash flows are negatively affected in
the periods in which these costs are paid. Factors that could cause our purchased power costs to
exceed the levels currently recovered from our customers include, but are not limited to, higher prices
in wholesale markets, higher fuel costs for thermal generation, and/or increased requirements to
purchase power. Factors beyond our control that could result in an increased need to purchase power
include, but are not limited to, increases in demand (either due to weather or customer growth), low
availability of hydroelectric resources, outages at generating facilities, the cost of natural gas to fuel
generation and failure of third parties to deliver on energy or capacity contracts. We currently expect
that the recovery of current balances of deferred power costs will take several years.
We are currently the subject of several regulatory proceedings and named in multiple lawsuits
with respect to our participation in western energy markets.
In August 2002, the Federal Energy Regulatory Commission ("FERC") commenced an investigation
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into the trading practices conducted by us and other participants in Western energy markets. In April
2004, the FERC approved an Agreement in Resolution which, among other things, incorporated the
FERC Trial Staff's finding that there was no evidence that we engaged in any efforts to manipulate the
Western energy markets during 2000 and 2001, and resolved all issues in the investigation. However,
various parties, including the Office of the Attorney General of California, the California Public Utilities
Commission and the California Electricity Oversight Board, filing jointly, and the City of Tacoma,
Washington have filed requests for rehearing, and the State of Montana has filed a motion to
intervene. As of November 15, 2004, The FERC has not yet ruled on these rehearing requests or the
State of Montana's Motion to Intervene.
The FERC is conducting industrywide proceedings and investigations related to the alleged
dysfunctions of the organized California market and the Pacific Northwest market during 2000 and
2001. For the proceedings related to the California organized market, we believe we have sufficiently
reserved for any amounts that the FERC may order us to refund. For the proceedings related to the
Pacific Northwest market, on June 25, 2003, the FERC denied the request of certain parties for
retroactive refunds for spot market sales. In November 2003, the FERC denied rehearing requests
made by certain parties seeking refunds in the Pacific Northwest markets. A petition for review of the
FERC's decision was filed by the City of Tacoma on December 24, 2003, with the United States Court
of Appeals for the Ninth Circuit. The Ninth Circuit has not yet ruled upon the rehearing request for
refunds in the Pacific Northwest market.
In addition, the Office of the Attorney General of California (California AG) filed a complaint with the
FERC against certain specific companies (not including Avista Corp. or its subsidiaries) and "all other
public utility sellers" in California alleging that sellers with market-based rates have violated their tariffs
by not filing with the FERC transaction-specific information about all of their sales and purchases at
market-based rates. As a result, the California AG contends that all past sales should be subject to
refund if found to be above just and reasonable levels. The complaint was denied by the FERC and
subsequently appealed by the California AG to the United States Court of Appeals for the Ninth Circuit.
In September 2004, the United States Court of Appeals for the Ninth Circuit upheld the FERC's market-
based rate authority, but remanded the case back to the FERC in order to determine whether
transactional reporting under this authority was
S-5
adequate, and what remedies would be appropriate for those not in compliance. In October 2004,
Avista Energy joined with others in seeking rehearing of the Court's decision to remand the case back
to the FERC for further proceedings.
There has also been a class action shareholder lawsuit filed against us. On August 19, 2003, the
plaintiffs filed a consolidated amended class action complaint. In their complaint, the plaintiffs assert
violations of the federal securities laws in connection with alleged misstatements and omissions of
material fact pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as
amended. In particular, the plaintiffs allege that we did not have adequate risk management processes,
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procedures and controls supporting our activities in the purchase and sale of electricity and natural
gas. The plaintiffs further allege that we failed to disclose that we engaged in unlawful energy trading
practices and that we manipulated western power markets. The plaintiffs assert that alleged
misstatements and omissions have occurred in our filings with the Securities and Exchange
Commission (the "SEC") and other information made publicly available by us, including press releases.
We filed a motion to dismiss this complaint in October 2003. Following argument in March 2004, the
Court denied our motion to dismiss in July 2004. We filed our answer to the complaint in November
2004 denying the plaintiff's allegations.
Several parties, including the Port of Seattle, City of Tacoma and the Attorney General of the State
of Montana, have filed complaints against numerous companies, including us, alleging various
violations of laws with respect to alleged manipulation of western energy markets.
At this time, we cannot predict the outcome or potential impact of these regulatory proceedings and
lawsuits.
We have several contingent liabilities, including but not limited to environmental matters.
We are liable for compensation (not yet determined as to amount) for the use of portions of the bed
and banks of Lake Coeur d'Alene and the St. Joe River which were determined to be property of the
Coeur d'Alene Tribe of Idaho. We and the Tribe are engaged in discussions with respect to past and
future compensation (which may include interest) for use of the portions of the bed and banks of the
Lake which are owned by the Tribe. If the parties cannot agree on the amount of compensation, the
matter could result in litigation.
We are subject to environmental regulation by federal, state and local authorities. Environmental
issues include contamination of certain parcels of land that we currently own or have formerly owned,
contamination of certain portions of the Spokane River, issues surrounding the relicensing of our
hydroelectric facilities on the Spokane River as well as the levels of dissolved gas in waters
downstream of our hydroelectric facilities and the resulting impact on free ranging fish.
In addition, a lawsuit was filed against the owners of the Colstrip Generating Project (Colstrip). We
have a 15 percent ownership interest in units 3 and 4 of Colstrip, which is located in southeastern
Montana. The plaintiffs allege damages to buildings as a result of rising ground water as well as
damages from contaminated waters leaking from the lakes and ponds of Colstrip.
Further, a lawsuit was filed against all private owners of hydroelectric dams in Montana, including
Avista Corp., alleging that the hydroelectric facilities are located on state-owned riverbeds and the
owners have never paid compensation to the state's public school trust fund. In May 2004, the
Montana AG filed a complaint on behalf of the state to join in this lawsuit to allegedly protect and
preserve state lands/school trust lands from use without compensation. In July 2004, the defendants
(including Avista Corp.) filed a motion to dismiss the Montana AG's complaint. In September 2004, the
Court granted the motion to dismiss filed with respect to the original plaintiffs. However, the motion to
dismiss the Montana AG's complaint was denied, citing, among other things, that the FERC does not
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have exclusive jurisdiction over this matter.
S-6
These matters are the subject of ongoing litigation, mediation, investigation and/or negotiation. We
cannot predict the ultimate outcome or potential impact of any particular issue, including the extent, if
any, of insurance coverage or the extent, if any, that amounts payable by us may be recoverable
through the ratemaking process.
We need to maintain adequate credit with banks; and a downgrade in our credit ratings could
negatively affect our energy trading businesses.
We need to maintain access to adequate levels of credit with our banks. We currently have in place
a 364-day revolving credit facility in the amount of $350.0 million, which is scheduled to expire on May
5, 2005. This committed line of credit is secured by $350.0 million of our non-transferable first
mortgage bonds issued to the agent banks. However, at this time, we cannot predict whether we will
have access to credit beyond the May 5, 2005 expiration date. The committed line of credit contains
customary covenants and default provisions. As of September 30, 2004 we were in compliance will all
such covenants, however, any future default on our committed line of credit or other financing
arrangements could result in cross-defaults to other agreements and could induce vendors and other
counterparties to demand collateral. In the event of default, it would be difficult for us to obtain
financing on any reasonable terms to pay creditors or fund operations, and we would likely be
prohibited from paying dividends on our common stock.
On July 23, 2004, Avista Energy and its subsidiary, Avista Energy Canada, Ltd., as co-borrowers,
amended their $110.0 million committed credit agreement to extend the expiration date to July 22,
2005. The Avista Energy credit agreement contains customary covenants and default provisions,
including covenants to maintain "minimum net working capital" and "minimum net worth", as well as a
covenant limiting the amount of indebtedness which the co-borrowers may incur. The credit agreement
also contains covenants and other restrictions related to Avista Energy's trading limits and positions,
including Value-at-Risk limits, restrictions with respect to changes in risk management policies or
volumetric limits, and limits on exposure related to hourly and daily trading of electricity. Also, a
reduction in the long-term corporate credit rating of Avista Corp. below its current levels would
represent an event of default under Avista Energy's credit agreement. These covenants, certain
counterparty agreements and current market liquidity conditions result in Avista Energy maintaining
certain levels of cash and therefore effectively limit the amount of cash dividends that are available for
distribution to Avista Capital and ultimately Avista Corp. At this time, we cannot predict whether Avista
Energy will have access to credit beyond the July 22, 2005 expiration date of its committed line of
credit.
If Avista Energy's credit agreement were to become unavailable, Avista Energy would likely not
have sufficient liquidity to meet its obligations.
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We cannot assure you that an active trading market for the Offered Bonds will develop.
We do not intend to apply for listing of the Offered Bonds on any securities exchange or automated
quotation system. There can be no assurance as to the liquidity of any market that may develop for the
Offered Bonds, the ability of the bondholders to see their Offered Bonds or the price at which the
bondholders will be able to see the Offered Bonds. Future trading prices of the Offered Bonds will
depend on many factors including, among other things, prevailing interest rates, our operating results
and the market for similar securities.
The underwriters have informed us that they intend to make a market in the Offered Bonds.
However, the underwriters are not obligated to do so, and any such market making activity may be
terminated at any time without notice. If a market for the Offered Bonds does not develop, purchasers
may be unable to resell the Offered Bonds for an extended period of time. Consequently, a bondholder
may not be able to liquidate its investment readily, and the Offered Bonds may not be readily accepted
as collateral for loans. In addition, such market making activity will be subject to restrictions of the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.
S-7
USE OF PROCEEDS
We will use net proceeds from the sale of the Offered Bonds to repay a portion of the borrowings
outstanding under our committed line of credit.
SUMMARY FINANCIAL INFORMATION
Set forth below is certain summary unaudited consolidated financial information for the nine months
ended September 30, 2004 and 2003 and audited consolidated financial information for the years
ended December 31, 2003 and 2002. This financial information has been derived from the
consolidated financial statements of Avista Corporation, which are incorporated herein by reference.
The following material should be read in conjunction with our consolidated financial statements and
related notes, management's discussion and analysis of results of operations and other financial
information which are incorporated by reference herein.

9 Months Ended

Year Ended

September 30,

December 31,

2004

2003

2003
2002

(in millions of dollars, except ratios)

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