DRAFT
THE NARRAGANSETT ELECTRIC COMPANY
INVITATION FOR BIDS
FOR PURCHASE OF
FIRST MORTGAGE BONDS
The Narragansett Electric Company (the Company) is inviting bids, subject
to the terms and conditions for bids attached hereto (the Terms and
Conditions), for the purchase of not exceeding $___ million aggregate
principal amount of its First Mortgage Bonds (New Bonds). The series
designation, principal amount, maturity date, redemption provisions, and
interest payment dates of each issue of New Bonds, the time, date, and place
for the submission of bids therefor, and the place for delivery of
Confirmations of Bids therefor, shall be designated by the Company by prior
notice given pursuant to the Terms and Conditions. Copies of the
registration statement, the Terms and Conditions, and the form of
confirmation of bid may be obtained from the Company's Corporate Finance
Department at the offices of New England Power Service Company, 25 Research
Drive, Westborough, Massachusetts 01582. Bids will be considered only if
made in accordance with, and subject to, the Terms and Conditions. Prior to
the acceptance of any bid, the bidder or bidders will be furnished with a
copy of a prospectus relating to the New Bonds which meets the requirements
of section 10(a) of the Securities Act of 1933 at that time.
The issue of a particular series of New Bonds shall not be contingent upon
the issue of any other series. A bidder may bid for any one or more series
or issue of New Bonds, but shall submit a separate bid for each such series
or issue. The bidding for each series or issue shall be a separate
transaction, and a bidder shall fully and timely comply with the Terms and
Conditions separately for such series or issue.
Inquiries and requests for additional information with respect to the
bidding for the New Bonds may be directed to the Company's Corporate Finance
Department at 25 Research Drive, Westborough, Massachusetts 01582 (telephone
508-366-9011).
THE NARRAGANSETT ELECTRIC COMPANY
DRAFT
By: ______________________________
______________________________
Providence, Rhode Island
, 19__
THE NARRAGANSETT ELECTRIC COMPANY
TERMS AND CONDITIONS FOR BIDS
FOR PURCHASE OF
FIRST MORTGAGE BONDS
The Narragansett Electric Company (the Company) is inviting bids, subject
to the following terms and conditions, for the purchase of its First Mortgage
Bonds (New Bonds). Details concerning the New Bonds and the submission of
bids therefor will be designated in a notice given to prospective bidders as
set forth in Section 1 hereof. The registration statement referred to below
contains brief summaries of some of the terms of the New Bonds and of the
Indenture (as defined below) under which the New Bonds are to be issued.
These summaries use terms defined in the Indenture and are qualified in their
entirety by reference to the Indenture.
The Company may invite bids for more than one series or issue of New Bonds.
The issue of a particular series or issue of New Bonds shall not be
contingent upon the issue of any other series or issue. A bidder may bid for
any one or more series or issue of New Bonds, but shall submit a separate bid
for each such series or issue. The bidding for each series or issue shall be
a separate transaction, and a bidder shall fully and timely comply with the
Terms and Conditions separately for each such series or issue.
1. Information and Forms Available to Prospective Bidders
The following documents relating to the New Bonds may be examined by
prospective bidders at the offices of New England Power Service Company,
Corporate Finance Department, 25 Research Drive, Westborough, Massachusetts,
on any business day between 10 A.M. and 4 P.M.:
(a) the registration statement on Form S-3 (including the financial
statements, exhibits, any documents incorporated therein by reference, and
any amendments or supplements thereto), as filed with the Securities and
Exchange Commission, and the prospectus included therein;
(b) the First Mortgage Indenture and Deed of Trust of the Company, dated
as of September 1, 1944, the indentures supplemental thereto and the form of
Supplemental Indenture thereto (collectively the Indenture), to Rhode Island
Hospital Trust National Bank (successor to Rhode Island Hospital Trust
Company), Trustee;
(c) the form of confirmation of bid to be used in confirming the
telephonic submissions of bids (the Confirmation of Bid) which, together with
all schedules thereto, constitutes the form of purchase agreement (the
Purchase Agreement);
(d) the form of questionnaire referred to in Section 2 hereof (the
Questionnaire) to be used by prospective bidders in furnishing certain
information to the Company and to the Trustee under the Indenture and, in the
case of a group of bidders, in designating the Representative (as defined
below) of such group;
(e) the order of the Division of Public Utilities and Carriers of the
State of Rhode Island; and
(f) the surveys by Milbank, Tweed, Hadley & McCloy (referred to in
Section 9 hereof) with respect to the necessity for qualification of the New
Bonds for sale under securities or "blue sky" laws of the various states and
with respect to legality of the New Bonds for investment in certain states by
savings banks, life insurance companies, and trustees.
Copies in reasonable quantities of Item (a) above, excluding any exhibits
incorporated therein, and of Items (c), (d), and (f) above will be supplied
to prospective bidders upon request.
Not later than 4 p.m., Providence time, on the day immediately preceding
the day for submission of bids for the New Bonds, the Company shall designate
to prospective bidders, by telephone, telecopy, or telegram:
(i) the series designation of the New Bonds to be issued;
(ii) the aggregate principal amount of the New Bonds to be issued;
(iii) the maturity date of the New Bonds, which maturity date shall be
not later than 30 years from the date as of which the New Bonds
are first issued;
(iv) the redemption provisions;
(v) the dates on which interest shall be paid; and
(vi) the date, time, and place for submission of bids and the place
for delivery of the Confirmations of Bids.
The Company reserves the right to amend and/or supplement the registration
statement and prospectus and to make changes in these Terms and Conditions
and in the documents referred to in this Section, including the forms of
supplemental indentures, and will give notice of the making of any such
amendment, supplement, or change that, in the opinion of the Company, is
material. Upon request, the Company will furnish copies of any amendment,
supplement, or change to each prospective single bidder or to the
Representative of any group of prospective bidders.
Any notice given by the Company under these Terms and Conditions need be
sent only to prospective bidders who have filed Questionnaires as provided in
Section 2 hereof. If a group of bidders shall have designated a
Representative, such notice need be sent only to said Representative.
2. General Provisions with Respect to Bidders
In case of a bid by a group of bidders, the several bidders in the group
shall act through a duly authorized representative or representatives (the
Representative), who shall be a member of such group and who shall be
designated and authorized as Representative by each member of such group in
the Questionnaire filed by such member, or who may be substituted for a named
Representative in accordance with the terms of said Questionnaire. (If a
Representative ceases to be duly authorized by reason of substitution,
withdrawal from the group, or otherwise, any action by the Representative
while duly authorized shall continue in full force and effect, unless
expressly modified or terminated.)
No bid for the New Bonds will be considered unless the bidder (or, in the
case of a group of bidders, each bidder) shall have filed with the Company's
Corporate Finance Department, at the offices of New England Power Service
Company, 25 Research Drive, Westborough, Massachusetts 01582, before noon,
Boston time, seven days prior to the date of bid opening (or such later date
as may be fixed by the Company), a Questionnaire properly filled in and
signed in duplicate. Notwithstanding the filing of such Questionnaire, any
prospective bidder may thereafter determine not to bid. The Company reserves
the right to waive any irregularity in any Questionnaire or in the filing
thereof and to obtain by telephone or other means of communication any
information required by a Questionnaire. New Questionnaires properly filled
in and signed in duplicate shall be submitted from time to time as necessary
to reflect any changes in the information contained therein.
3. Form and Content of Bids and Confirmation of Bids
Each bid may be made by a single bidder or by a group of bidders and shall
be for the purchase of all of the New Bonds. No bidder may submit or
participate in more than one bid for the New Bonds. If any bidder
participating in the winning bid for the New Bonds shall have submitted or
participated in another bid, said bidder shall be deemed a defaulting bidder
and the provisions of Section 12 of the Purchase Agreement shall apply to its
participation. If a bid is made by a representative on behalf of a group of
bidders, the obligations of the members of the group shall be several, and
not joint or joint and several.
All bids must be submitted by telephone and confirmed in writing in the
manner set forth below on a Confirmation of Bid signed by the Representative
on behalf of the members of a group of bidders, or in the case of a single
bidder, by such bidder. Each bid must specify: (a) the interest rate, which
shall be a multiple of 1/8 of 1% (if the interest rate specified exceeds
____% per annum, a further order of the Division of Public Utilities and
Carriers will be necessary); and (b) the price to be paid to the Company for
the New Bonds, which shall be expressed as a percentage of the principal
amount of the New Bonds and shall not be less than 95% thereof nor more than
100% thereof. If the Confirmation of Bid is not signed by a partner or
executive officer of the bidder or Representative, authority to sign and
deliver said bid must be appended thereto unless previously furnished to the
Company. The Confirmation of Bid shall specify the same interest rate and
price specified in the telephonic bid and, if submitted by a Representative
on behalf of a group of bidders, the principal amount of the offering of New
Bonds to be purchased by each member of the group.
4. Submission of Bids and Delivery of Confirmations of Bids
All bids must be submitted by telephone, in the manner hereinafter set
forth, at the time designated by the Company. Each Representative or single
bidder, by submission of a bid, agrees to confirm the bid in writing, within
one hour after the time designated for the submission of bids, by delivery of
a Confirmation of Bid meeting the requirements of Section 3, at the place
(which shall be in New York City) designated by the Company for delivery of
the Confirmations of Bids, if notified that such bidder has tentatively been
identified as the lowest bidder, or by telecopy if not so notified. The
Company reserves the right at any time and from time to time to postpone the
bidding date or time.
Not less than one hour prior to the time designated by the Company for
submission of bids, the Representative or single bidder shall notify the
Company's Corporate Finance Department, at the offices of New England Power
Service Company, 25 Research Drive, Westborough, Massachusetts, by telephone
(508-366-9011), of the name and telephone number of the person or persons
(the Authorized Telephonic Bidder) designated by the Representative or the
single bidder to submit its bid.
Not more than fifteen nor less than five minutes prior to the time
designated for submission of bids, a representative of the Company shall
establish telephonic contact with the Authorized Telephonic Bidder. Promptly
at the time designated for submission of bids, the representative of the
Company shall request the Authorized Telephonic Bidder to state the bid. The
representative of the Company shall then repeat the bid to the Authorized
Telephonic Bidder to verify its accuracy. Upon such verification of the
accuracy of the bid, the representative of the Company shall make a record of
the bid. Such record of the Company shall be controlling, except in the case
of manifest error, for all purposes hereunder. After the closing of bids,
information as to bids submitted by other bidders or groups of bidders will
be furnished upon request.
5. Acceptance or Rejection of Bids
Each Confirmation of Bid will be examined by the Company promptly upon
receipt at the place designated for the delivery thereof. Each bid, as
evidenced by such confirmation, will be accepted or rejected in its entirety
by the Company at said place within four hours after the time designated for
submission of bids, and each bid not accepted within such four-hour period
shall be deemed to have been rejected. Acceptance of a bid will be evidenced
by endorsement by the Company upon the applicable Confirmation of Bid of its
acceptance thereof and announcement thereof at said place and within such
period.
The Company reserves the right: (a) not to receive any bids; (b) to waive
any irregularities in the form or submission of bids or the form or delivery
of Confirmations of Bids; (c) to reject all bids after the submission
thereof; and (d) to disqualify and reject the bid of any bidder or group of
bidders (i) if the Company, in the opinion of its counsel, may not lawfully
sell the New Bonds to such bidder or to one or more members of such group,
(ii) if the Company is not satisfied with the financial responsibility of
such bidder or of one or more members of such group, or (iii) if, in the
opinion of counsel for the Company, such bidder or one or more members of
such group is in such relationship with Rhode Island Hospital Trust National
Bank, Providence, Rhode Island, as would disqualify said Bank from acting as
trustee under the Indenture if such bid were accepted (unless, in the case of
a group of bidders, within two hours after the time designated for submission
of bids, each such member shall have withdrawn from the group and the
remaining members shall have agreed to purchase the New Bonds which such
withdrawing member or members had offered to purchase); and any bid so
disqualified and rejected by the Company shall be disregarded in determining
the bid to be accepted.
If, in a Confirmation of Bid submitted by a Representative, the total of
the principal amounts designated to be purchased by the various members of
the group does not equal the aggregate principal amount of the New
Bonds being offered, the Representative executing such bid may, forthwith
upon notice of the discrepancy, correct any error in the Confirmation of Bid.
If after any such correction is made there remains a discrepancy, the
Representative's allocable share shall be increased or decreased by an amount
necessary to eliminate such discrepancy; provided that, if the
Representative's allocable share is eliminated entirely and the total of the
principal amounts allocable to the remaining members of the group still
exceeds the aggregate principal amount of the New Bonds, the remaining
members' shares shall be ratably reduced by an amount necessary to eliminate
the discrepancy. If, in a Confirmation of Bid submitted by a Representative,
any bidder designated shall not have filed a Questionnaire as provided in
Section 2 hereof, and such filing shall not have been expressly waived by the
Company, said bidder's name shall be stricken from the list and the
Representative's allocable share shall be increased by the amount designated
for the bidder whose name is stricken. (If there is more than one
Representative, such increases or decreases shall be divided among them in
proportion to the amount of New Bonds initially specified to be taken by
each.) Any other errors with respect to the amounts allocable to various
members of a group of bidders may be corrected by the Representative at any
time prior to the acceptance of a bid by the Company. The Company shall be
entitled to note any correction or change made pursuant to this paragraph on
Schedule A to the Confirmation of Bid.
If the interest rate or price specified in a Confirmation of Bid is not
identical to that shown on the record of bid maintained by the Company, the
Representative or single bidder, forthwith upon notice of the discrepancy,
shall correct the Confirmation of Bid to conform to said record except if
there shall be manifest error in such record.
If any bid is accepted, the qualified bid resulting in the lowest cost of
money to the Company (the Best Bid) will be accepted. The Best Bid will be
that bid which, as determined by the Company, results in the lowest yield on
the New Bonds being offered based on this term, the interest rate, and the
bid price to the Company. The determination by the Company of the Best Bid
shall be final.
If two or more bids would yield the same lowest cost of money to the
Company, the Company may, in its discretion, accept any one of such bids or
may give the makers of such bids an opportunity to improve their bids within
a designated time. If the Representative of any group of bidders which has
submitted one of such bids shall within the designated time submit an
improved bid for all of the New Bonds being offered that does not include all
members of the original bidding group, the Company shall be entitled to
accept the improved bid, provided that the bidders shall thereafter be
limited to those designated in the improved bid. If no improved bid is
submitted within the designated time, or if there are submitted two or more
improved bids yielding the same lowest cost of money to the Company, the
Company may in its discretion accept any one of such bids.
Prior to acceptance of any bid, each bidder designated therein will be
furnished a prospectus relating to the New Bonds which meets the requirements
of Section 10(a) of the Securities Act of 1933 at that time.
6. Determination of Redemption Prices for the New Bonds
Forthwith upon the acceptance of a bid, the successful bidder or, if a
group of bidders, the Representative, shall specify in writing the proposed
initial public offering price of the New Bonds or shall state that no public
offering of the New Bonds is intended to be made. The redemption prices of
the New Bonds will thereupon be determined by the Company in the following
manner, which determination shall be final.
The Initial Public Offering Price shall be the price at which the New Bonds
are to be initially offered for sale to the public, as specified by the
successful bidder or the Representative of the successful bidders; provided
that, in the event the successful bidder or the Representative shall have
stated as aforesaid that no public offering of the New Bonds is intended, or
declines to state a price at which the New Bonds are to be initially offered
for sale to the public, the Initial Public Offering Price shall be deemed to
be the price to be paid by the successful bidder or bidders to the Company
for the New Bonds. The Annual Redemption Period shall be the twelve-month
period beginning on the first day of the month as of which the New Bonds were
first issued in each year, commencing with the year the New Bonds are first
issued.
Special Redemption Prices
The special redemption price applicable to each Annual Redemption Period
shall be 100% of the principal amount of the New Bonds.
General Redemption Prices
The initial general redemption price applicable during the twelve-month
period beginning on the date as of which the New Bonds are first issued shall
be the Initial Public Offering Price plus a percentage of the principal
amount thereof equal to the interest rate of the New Bonds, which total, if
not a multiple of 1/100 of 1%, shall be increased to the next higher multiple
of 1/100 of 1%. Such initial general redemption price shall be reduced
annually on the first day of the month as of which the New Bonds were first
issued, commencing the year immediately following the year in which the New
Bonds are first issued, by 1/* of the amount by which the initial general
redemption price exceeds the principal amount of the New Bonds; provided,
however:
(a) that, if any general redemption price so determined is not a
multiple of 1/100 of 1%, such redemption price shall be increased to the next
higher multiple of 1/100 of 1%;
(b) that the general redemption price applicable to any Annual
Redemption Period shall not in any event be lower than the special redemption
price applicable to such Annual Redemption Period; and
(c) that the Company may designate additional terms, such as
restrictions on redemption, as set forth in Section 1.
7. The Purchase Agreement
Forthwith upon the acceptance by the Company of a bid for the New Bonds,
the accepted Confirmation of Bid together with all schedules thereto shall
become a binding contract, which shall be the Purchase Agreement between the
Company and the successful bidder or bidders, all of whose rights shall
thereupon be determined solely in accordance with the terms thereof, subject
to such changes therein as may be appropriate if the successful bidder or
bidders shall not contemplate a public offering. The Company shall, upon
request, indicate its acceptance of the accepted bid by signing and
delivering to the successful bidder or Representative of the successful
bidders a duplicate copy of the Confirmation of Bid.
8. Counsel for the Successful Bidder or Bidders
Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New
York 10005, have been selected by the Company as counsel for the successful
bidder or bidders for the New Bonds to give opinions with respect to the New
Bonds. Such counsel have prepared surveys for prospective bidders
contemplating a reoffering of New Bonds, with respect to the necessity for
qualification of the New Bonds for sale under securities or "blue sky" laws
of various states and with respect to the legality of the New Bonds for
investment in certain states by savings banks, life insurance companies, and
________________________________
* The denominator of the fraction is two-thirds of the number of years from
the first day of the month as of which the New Bonds are first issued to the
maturity date specified by the Company in the notice given pursuant to
Section 1 hereof, or, if such calculation does not produce an integer, the
denominator shall be the next higher integer.
trustees. The successful bidder or bidders are to pay the compensation and
disbursements of such counsel, except as otherwise provided in the Purchase
Agreement. Such counsel will, on request, advise any prospective bidder who
has filed a Questionnaire as provided in Section 2 hereof of the amounts of
such compensation and estimates of the disbursements.
THE NARRAGANSETT ELECTRIC COMPANY
DRAFT
By: ______________________________
_______________________________
Providence, Rhode Island
, 19__