Registration No.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
SOUTH CAROLINA ELECTRIC & GAS COMPANY
(Exact name of registrant as specified in its charter)
South Carolina 57-0248695
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1426 Main Street
Columbia, South Carolina 29201
(803) 217-9000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
H. T. Arthur, Esq.
Senior Vice President and General Counsel
SCANA Corporation
1426 Main Street
Columbia, South Carolina 29201
(803) 217-8547
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
With copies to:
John W. Currie, Esq. James J. Wheaton, Esq.
McNair Law Firm, P.A. Troutman Sanders LLP
1301 Gervais Street - 17th Floor 222 Central Park Avenue, Suite 2000
Columbia, SC 29201 Virginia Beach, VA 23462
(803) 799-9800 (757) 687-7500
Approximate date of commencement of proposed sale to the public: After the
effective date of the Registration Statement, as determined by market conditions
and other factors.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.
(___)
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. (X)
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. (___)
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. (___)
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. (___)
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of each maximum maximum aggregate
class of securities Amount to be offering offering Amount
to be registered registered price price* of registration
per unit* fee
First Mortgage Bonds $600,000,000 100% $600,000,000 $48,540
* Determined solely for the purpose of calculating the registration fee.
Note: Fees of $46,000 were previously paid in connection with Registration
Statement No. 333-101449. Of the First Mortgage Bonds registered under
Registration Statement No. 333-101449, $100,000,000 principal amount is being
carried forward, for which the associated registration fee was $9,200.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Pursuant to Rule 429, the prospectus included in this registration statement
includes $100,000,000 principal amount First Mortgage Bonds previously
registered under Registration Statement No. 333-101449.
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION DATED ,
PROSPECTUS
$700,000,000
SOUTH CAROLINA ELECTRIC & GAS COMPANY
1426 Main Street
Columbia, South Carolina 29201
(803) 217-9000
First Mortgage Bonds
Investing in our First Mortgage Bonds, which we refer to herein as the
New Bonds, involves risks. See "Risk Factors" on page for information on certain
factors you should consider before buying the New Bonds.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is , 2003.
Table of Contents
Page
About this Prospectus...............................................
Risk Factors........................................................
Where You Can Find More Information.................................
South Carolina Electric & Gas Company...............................
Ratio of Earnings to Fixed Charges..................................
Use of Proceeds.....................................................
Description of the New Bonds........................................
Book-Entry System...................................................
Plan of Distribution................................................
Experts.............................................................
Legal Opinions......................................................
ABOUT THIS PROSPECTUS
.........This prospectus is part of a registration statement that we filed
with the Securities and Exchange Commission (the "SEC") utilizing a "shelf"
registration process. Under this shelf process, we may sell any or all of the
New Bonds described in this prospectus in one or more offerings up to a total
offering amount of $700,000,000. This prospectus provides you with a general
description of the New Bonds. Each time we sell New Bonds, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and the relevant prospectus supplement, together with the additional information
described under the heading "Where You Can Find More Information."
.........We believe we have included all information material to investors
but certain details that may be important to you have not been included. To see
more detail, you should read the exhibits filed with the registration statement
and the information incorporated by reference in this prospectus. All references
in this prospectus to "SCE&G," "we," "us" and "our" are to South Carolina
Electric & Gas Company and its subsidiary unless otherwise indicated.
RISK FACTORS
..........Investing in the New Bonds involves risks that could affect us and our
business as well as the energy industry generally. We have identified a number
of these risk factors in our most recent Annual Report on Form 10-K for the year
ended December 31, 2002, under the heading "Risk Factors" within Item 1,
Business, which is incorporated by reference into this prospectus. Much of the
financial and operational data and other business information contained in our
risk factors is updated in our periodic reports, which are also incorporated by
reference into this prospectus. Before purchasing our securities, you should
carefully consider the risks discussed in our Annual Report on Form 10-K, any
new or updated risk factors that may be contained in any of our periodic reports
filed after the date of this prospectus, and any risk factors contained in any
prospectus supplement. Each of the risks described could affect the value of
your investment in the New Bonds.
WHERE YOU CAN FIND MORE INFORMATION
.........We file annual, quarterly and special reports, proxy statements
and other information with the SEC. Our SEC filings are available to the public
over the Internet at the SEC's web site at http://www.sec.gov. You may also read
and copy any document we file with the SEC at, and obtain copies of these
documents by mail (at prescribed rates) from, the Public Reference section of
the SEC, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of the public
reference rooms. Because we have preferred stock which is listed on The New York
Stock Exchange, you may also read our filings at the Stock Exchange's offices at
20 Broad Street, New York, New York 10005.
..........This prospectus does not repeat important information that you can find
in the registration statement and in the reports and other documents which we
file with the SEC under the Securities Exchange Act of 1934 (the "Exchange
Act"). The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede some of this information. We
incorporate by reference our Annual Report on Form 10-K for the year ended
December 31, 2002, our Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2003 and June 30, 2003, our Current Reports on Form 8-K filed January
15, 2003, January 17, 2003, February 19, 2003, and May 16, 2003 and any future
filing made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Exchange Act until we sell all of the New Bonds. In addition, we are also
incorporating by reference any additional documents that we file with the SEC
pursuant to these sections of the Exchange Act after the date of the filing of
the registration statement containing this prospectus and prior to the date of
effectiveness of the registration statement.
.........We are not required to, and do not, provide annual reports to
holders of our debt securities unless specifically requested by a holder.
.........You may request a copy of our SEC filings at no cost by writing or
telephoning us at the following address or phone number, as the case may be:
..........H. John Winn, III
..........Director - Investor Relations and Shareholder Services
South Carolina Electric & Gas Company
..........Columbia, South Carolina 29218
..........(803) 217-9240
.........You may obtain more information by contacting SCANA's Internet
website at http://www.scana.com (which is not intended to be an active
hyperlink). The information on SCANA's Internet website is not incorporated by
reference in this prospectus, and you should not consider it part of this
prospectus.
.........You should rely on the information we incorporate by reference or
provide in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents, because our business, financial condition, results of operations and
prospects may have changed since that date.
SOUTH CAROLINA ELECTRIC & GAS COMPANY
General
We are a wholly-owned subsidiary of SCANA Corporation and a regulated
public utility engaged in the generation, transmission, distribution and sale of
electricity and the purchase and sale, primarily at retail, of natural gas in
South Carolina. Our electric service area extends into 24 counties covering more
than 15,000 square miles of the central, southern and southwestern portions of
South Carolina. Our service area for natural gas encompasses all or part of 34
of South Carolina's 46 counties, and covers more than 22,000 square miles. The
total population of the counties representing our combined service area in South
Carolina is approximately 2.7 million.
We provide all of our electric generation capacity through our own
facilities and maintain a balanced supply and demand position as it relates to
electric generation. We have executed a contract with a third party for the
portion of the generating capacity of a new Jasper County, South Carolina
generating station currently under construction that we do not expect to be able
to utilize immediately when that plant begins operations, which is scheduled for
2004.
We also operate and have a two-thirds interest in the V.C. Summer
nuclear station in South Carolina. This station furnished approximately 21% of
our electric generation capacity in 2002. In September 2002 we filed an
application with the Nuclear Regulatory Commission ("NRC") to extend our license
on the plant for an additional twenty years, until 2042. SCE&G expects the
extension to be issued in mid-2004.
..........In 1999 the Federal Energy Regulatory Commission ("FERC") mandated that
we reinforce our Lake Murray dam in order to comply with new federal safety
standards and maintain the lake in case of an extreme earthquake. Construction
for the project and related activities, which began in the third quarter of
2001, is expected to cost approximately $275 million and be completed in 2005.
We are subject to the jurisdiction of the Public Service Commission of
South Carolina ("PSC"). We maintain a generally constructive relationship with
the PSC. We are allowed, subject to PSC approval during annual fuel and
purchased gas cost hearings, full pass-through to retail customers of our
electric fuel and natural gas costs. Such approval has historically been
granted. There is also a weather normalization clause in effect for natural gas,
which mitigates our commodity price risk and allows us to focus our efforts on
serving our customers. The PSC approved an electric rate increase that went into
effect in February 2003. The rate increase relates primarily to our expenditures
for a recently completed generating station in Aiken County, South Carolina and
for the Jasper County plant.
Business Strategy
.........Our business plan is based on traditional utility operations. We
have a straight-forward strategic plan that is focused on retail service to
customers in South Carolina. We believe we can implement this strategy by:
o........Maintaining excellent customer service. We have received several
prominent customer satisfaction awards, including a number one ranking
for overall customer satisfaction in a national survey of large
electric customers released by TQS Research in August 2003 and a shared
second place ranking for overall residential customer satisfaction
among electric utilities in the 12-state southern region in a study
released by J. D. Power and Associates in July 2003.
o Continuing our ability to provide cost-effective electric generation
with the completion of our Jasper plant and obtaining a license
extension for the V. C. Summer nuclear station.
o Maintaining a strong credit rating and capital structure.
o Developing our personnel by continued training. We conduct ongoing code
of conduct and compliance training for all of our employees annually.
RATIO OF EARNINGS TO FIXED CHARGES
Our historical ratios of earnings to fixed charges are as follows:
Twelve Months Ended Year Ended December 31,
------------------------------------------
June 30, 2003 2002 2001 2000 1999 1998
- ---------------------------- ---- ---- ---- ---- ----
3.33 3.47 3.78 4.24 3.71 4.40
For purposes of this ratio, earnings represent net income plus income taxes and
fixed charges. Fixed charges represent interest charges and the estimated
interest portion of annual rentals.
USE OF PROCEEDS
We will use the proceeds from the sale of the New Bonds to finance our
construction program, to reduce short-term indebtedness incurred for such
purpose, and for other general corporate purposes.
DESCRIPTION OF THE NEW BONDS
General
We will issue the New Bonds in one or more series under an Indenture,
dated as of April 1, 1993, between us and The Bank of New York, successor to
NationsBank of Georgia, National Association, as trustee (the "Trustee"), as
supplemented (the "Mortgage"). The New Bonds and all other debt securities
issued and outstanding under the Mortgage are referred to in this prospectus as
the "Bonds." Capitalized terms used under this heading (other than under the
caption "The Class A Mortgage") which are not otherwise defined in this
prospectus have the meanings given those terms in the Mortgage. We have
summarized selected provisions of the Mortgage below. The Mortgage is filed as
an exhibit to the registration statement, and you should read the Mortgage for
provisions that may be important to you. In the summary below, we have included
references to section numbers of the Mortgage so that you can easily locate
these provisions.
Provisions of a Particular Series
The New Bonds of a series need not be issued at the same time, bear
interest at the same rate or mature on the same date. Unless otherwise provided
in the terms of a series, a series may be reopened, without notice to or consent
of any holder of outstanding Bonds, for issuances of additional New Bonds of
that series. Each prospectus supplement which accompanies this prospectus will
set forth the following information to describe the series of New Bonds related
to that prospectus supplement, unless the information is the same as the
information included in this section:
o the title of the series of New Bonds;
o the aggregate principal amount and any limit upon the aggregate
principal amount of the series of New Bonds;
o the portion of the principal payable upon acceleration of maturity, if
other than the entire principal amount;
o the date or dates on which the principal of the series of New Bonds
will be payable, and any right that we have to change
the date on which principal is payable;
o the rate or rates at which the series of New Bonds will bear interest,
if any (or the method of calculating the rate);
o the date or dates from which the interest will accrue;
o the dates on which the interest will be payable ("Interest Payment
Dates");
o the record dates for the interest payable on the Interest Payment
Dates;
o any payments due if the maturity of the New Bonds is accelerated;
o any option on our part to redeem the series of New Bonds and redemption
terms and conditions;
o any obligation on our part to redeem or purchase the series of New
Bonds in accordance with any sinking fund or analogous provisions or at
the option of the holder and the relevant terms and conditions for that
redemption or purchase;
o the denominations of the series of New Bonds;
o whether the series of New Bonds is subject to a book-entry system of
transfers and payments; and
o any other particular terms of the series of New Bonds and of its
offering.
Payment of New Bonds; Transfers; Exchanges
We will pay any interest which is due on each New Bond to the person in
whose name that New Bond is registered as of the close of business on the record
date relating to the Interest Payment Date. (Section 207) However, we will pay
interest which is payable when the New Bonds mature (whether the New Bonds
mature on their stated date of maturity, the date the New Bonds are redeemed or
otherwise) to the person to whom the relevant principal payment on the New Bonds
is to be paid.
We will pay principal of, and any premium and interest on, the New
Bonds at our office or agency in Atlanta, Georgia (currently, the Trustee). The
applicable prospectus supplement for any series of New Bonds will specify any
other place of payment and any other paying agent. We may change the place at
which the New Bonds will be payable, may appoint one or more additional paying
agents (including us) and may remove any paying agent, all at our discretion.
(Section 702)
You may transfer or exchange the New Bonds for other New Bonds of the
same series, authorized denominations (which are, unless otherwise stated in the
prospectus supplement, denominations of $1,000 and any integral multiple
thereof) and of like tenor and aggregate principal amount, at our office or
agency in Atlanta, Georgia (currently, the Trustee). At our discretion, we may
change the place for registration and transfer of the New Bonds, and we may
appoint one or more additional security registrars (including us) and remove any
security registrar. The prospectus supplement will identify any additional place
for registration of transfer and any additional security registrar. You are not
responsible for paying a service charge for any transfer or exchange of the New
Bonds, but you may have to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of the New Bonds. (Sections 202 and 205)
For additional information with respect to the rights of the owners of
beneficial interests in New Bonds subject to a book-entry system of transfers
and payments, see "Book-Entry System."
Redemption
The New Bonds are subject to redemption, as set forth in the relevant
prospectus supplement, only upon notice by mail (unless waived) not less than 30
days prior to the redemption date. If less than all the New Bonds of a series
are to be redeemed, the particular New Bonds to be redeemed will be selected by
the method as shall be provided for any particular series, or in the absence of
any such provision, by any method as the security registrar deems fair and
appropriate. (Sections 409, 903 and 904)
We may, in any notice of redemption, make any redemption conditional
upon receipt by the Trustee, on or prior to the date fixed for redemption, of
money sufficient to pay the redemption price. If the Trustee has not received
that money, we will not be required to redeem those New Bonds and we will then
give notice to that effect. (Section 904)
Security
General The New Bonds will be equally and ratably secured with all
other Bonds issued under the Mortgage. The Bonds are secured by:
o a like principal amount of non-interest bearing first and refunding
mortgage bonds (the "Class A Bonds", as more particularly described
below), and
o the lien of the Mortgage on substantially all of our properties used in
the generation, purchase, transmission, distribution and sale of
electricity and any other property which we may elect to subject to the
lien of the Mortgage on the Mortgaged Property.
The lien of the Mortgage is junior to the lien of our Indenture, dated as
of January 1, 1945 (the "Class A Mortgage") to JPMorgan Chase Bank, successor to
Central Hanover Bank and Trust Company, as trustee (the "Class A Trustee").
If we merge or are consolidated with another corporation and certain
conditions set forth in the Mortgage are satisfied, then we may deliver to the
Trustee bonds issued under an existing mortgage on the properties of such other
corporation in lieu of or in addition to Class A Bonds. In that event, the Bonds
will be secured, additionally, by such bonds (which would become Class A Bonds)
and by the lien of the mortgage on the properties of such other corporation,
subject to such existing mortgage, which lien would be junior to the liens of
such existing mortgage (which would become a Class A Mortgage) and the Class A
Mortgage. (Section 1206)
When no Class A Bonds are outstanding under a Class A Mortgage except
for Class A Bonds held by the Trustee, then, subject to the satisfaction of
certain conditions, the Trustee will surrender those Class A Bonds for
cancellation and the related Class A Mortgage will be satisfied and discharged.
In that event, the lien of such Class A Mortgage on our property will cease to
exist and the Mortgage will constitute, subject to certain exceptions, a first
mortgage lien on the property mortgaged thereby. (Section 1207)
Class A Bonds The Class A Bonds are issued under the Class A Mortgage,
and delivered to the Trustee under the Mortgage. The Class A Bonds will be
registered in the name of the Trustee and will be owned and held, subject to the
provisions of the Mortgage, for the benefit of the holders of all of the Bonds
outstanding from time to time. We will have no interest in the Class A Bonds
designated as the basis for authentication and delivery of Bonds. (Section 1201)
The Trustee may not transfer any Class A Bonds which have been
designated as the basis for the authentication and delivery of Bonds, except to
a successor trustee. At the time any Bonds which have been authenticated and
delivered upon the basis of Class A Bonds are no longer outstanding, we may
request the Trustee to surrender for cancellation an equal principal amount of
such Class A Bonds. (Sections 1203 and 1204)
Lien of the Mortgage The properties subject to the lien of the Mortgage
are also subject to the prior first mortgage lien of the Class A Mortgage. As
discussed under the caption Description of the New Bonds--The Class A
Mortgage--Security in this prospectus, the lien of the Class A Mortgage is a
first mortgage lien, subject to certain exceptions, against the properties
subject thereto. Until the Class A Mortgage is discharged, the Bonds have the
benefit of the lien of the Class A Mortgage on the property mortgaged thereby,
to the extent of the aggregate principal amount of Class A Bonds designated as
the basis for the authentication and delivery of Bonds held by the Trustee.
(Granting Clauses and Article Twelve)
The lien of the Mortgage is also subject to liens on after-acquired
property existing at the time of acquisition and to various liens, including:
o tax liens, mechanics', materialmen's and similar liens and certain
employees' liens, in each case, which are not delinquent
and which are being contested,
o certain judgment liens, easements, reservations and rights of others
(including governmental entities) in, and defects of title to, the
property subject to the lien of the Mortgage which do not materially
impair its use by us,
o certain leases, and
o certain other liens and encumbrances.(Granting Clauses and Section 101)
The following, among other things, are excepted from the lien of the
Mortgage:
o cash and securities not held under the Mortgage,
o contracts, leases and other agreements, bills, notes and other
instruments, receivables, claims, certain intellectual property rights
and other general intangibles,
o automotive and similar vehicles, movable equipment, and railroad,
marine and flight equipment,
o all goods, stock in trade, wares and merchandise held for sale in the
ordinary course of business,
o fuel (including nuclear fuel assemblies), materials, supplies and other
personal property consumable in the operation of our business,
o portable equipment,
o furniture and furnishings, and computers, machinery and equipment used
exclusively for corporate administrative or clerical purposes,
o electric energy, gas and other products generated, produced or
purchased,
o substances mined, extracted or otherwise separated from the land and
all rights thereto, leasehold interests, and
o with certain exceptions, all property which is located outside of the State of
South Carolina or Columbia County, Georgia.
(Granting Clauses)
The Mortgage contains provisions subjecting (with certain exceptions and
limitations and subject to the prior lien of the Class A Mortgage)
after-acquired electric utility property to the lien of the Mortgage. (Granting
Clauses)
The Mortgage provides that the Trustee has a lien upon the property
subject to the lien of the Mortgage, for the payment of its compensation and
expenses. This Trustee's lien is prior to the lien on behalf of the holders of
the Bonds. (Section 1607)
Issuance of Bonds
The maximum principal amount of Bonds which we may issue under the
Mortgage is unlimited. (Section 201) We may issue Bonds of any series from time
to time on the basis of, and in an aggregate principal amount not exceeding the
sum of:
o the aggregate principal amount of Class A Bonds issued and delivered to
the Trustee and designated by us as the basis for such issuance,
o 70% of the amount of Unfunded Net Property Additions (generally defined
as Property Additions (net of retirements) which have not been made or
deemed to have been made the basis of the authentication and delivery
of Bonds or used for other purposes under the Mortgage),
o the aggregate principal amount of retired Bonds, and
o cash deposited with the Trustee. (Sections 101, 104 and 302 and
Articles Four, Five and Six)
Property Additions are generally defined to include any Property
subject to the lien of the Mortgage (the "Mortgaged Property") which we may
elect to designate as such, except (with certain exceptions) goodwill, going
concern value rights, intangible property or any property the cost of
acquisition or construction of which is properly chargeable to an operating
expense account.
(Section 104)
Because the Mortgaged Property is subject to the lien of the Class A
Mortgage, the New Bonds are issued on the basis of Class A Bonds. The amount of
Bonds we may issue on that basis will be limited by the amount of Class A Bonds
which may be issued under the Class A Mortgage. See "The Class A Mortgage -
Issuance of Additional Bonds."
With certain exceptions in the case of Bonds issued on the basis of
Class A Bonds and retired Bonds as described above, we can issue Bonds only if
our Adjusted Net Earnings for 12 consecutive months within the preceding 18
months is at least twice the Annual Interest Requirements on:
o all Bonds at the time outstanding,
o the Bonds then applied for, and
o all outstanding Class A Bonds other than Class A Bonds held by the
Trustee under the Mortgage. (Sections 103, 301, 302 and 501)
Release of Property
We may obtain the release of property from the lien of the Mortgage either
upon the basis of an equal amount of Unfunded Net Property Additions or upon the
basis of the deposit of cash or a credit for retired Bonds. We may also obtain
the release of property upon the basis of the release of the property from the
lien of the Class A Mortgage. (Article Ten)
Withdrawal of Cash
We may withdraw cash deposited as the basis for the issuance of Bonds
and cash representing payments in respect of Class A Bonds designated as the
basis for the issuance of Bonds upon the basis of (1) Unfunded Net Property
Additions in an amount equal to ten-sevenths of such cash, (2) an equal amount
of retired Bonds or (3) an equal amount of Class A Bonds not then designated as
the basis for the issuance of Bonds or the withdrawal of cash. (Sections 601 and
1202) In addition, we may withdraw cash upon the basis of (a) an equal amount of
Unfunded Net Property Additions, or (b) ten-sevenths of the amount of retired
Bonds, or may apply such cash to (y) the purchase of Bonds (at prices not
exceeding ten-sevenths of the principal amount thereof) or (z) the redemption or
payment at stated maturity of Bonds. (Sections 601 and 1005)
Modification of Mortgage
Except for modifications which will not have a material adverse effect
upon the interests of the Holders of the Bonds, the holders of a majority in
aggregate principal amount of the Outstanding Bonds (or if only certain series
would be affected, the Outstanding Bonds of that series) must consent to amend
the Mortgage. (Section 1701) However, no amendment may, without the consent of
the holder of each outstanding Bond directly affected by the amendment, among
other things (1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on that Bond, or reduce the principal
amount, or the rate of interest on that Bond, or change the method of
calculating the interest rate, or reduce any premium payable on that Bond, or
impair any right to enforce payment on that Bond, or (2) permit the creation of
a lien prior to the lien of the Mortgage on substantially all of the Mortgaged
Property or otherwise deprive those holders of the security of the lien of the
Mortgage or (3) reduce the percentage in principal amount of Bonds, the consent
of whose Holders is required for any supplemental indenture or any waiver.
(Section 1702)
Events of Default
Each of the following events is an Event of Default under the Mortgage:
o We fail to make payments of principal or premium within three business
days, or interest within 60 days, after the due date,
o We fail to perform or breach any other covenant or warranty for a
period of 90 days after notice,
o We file for bankruptcy or certain other events involving insolvency,
receivership or bankruptcy occur, or
o We default under any Class A Mortgage. (Section 1101)
If an Event of Default occurs and is continuing, either the Trustee or
the Holders of 25% in principal amount of the Outstanding Bonds may declare the
principal amount of all of the Outstanding Bonds to be immediately due and
payable. After the declaration of acceleration has been made, but before the
sale of any of the Mortgaged Property and before the Trustee has obtained a
judgment or decree for payment of money, the Event of Default giving rise to
such declaration of acceleration will be deemed to be waived, and such
declaration and its consequences will be rescinded and annulled, if we (a) pay
to the Trustee all overdue interest, principal and any premium on any
Outstanding Bonds and (b) cure any other such Event of Default. (Sections 1102
and 1117)
The Holders of a majority in principal amount of the Outstanding Bonds
may direct the time, method and place of conducting any proceeding for the
enforcement of the Mortgage available to the Trustee or exercising any trust or
power conferred on the Trustee. No Holder of any Bond has the right to institute
any proceeding with respect to the Mortgage, or for the appointment of a
receiver or for any other remedy thereunder, unless:
o that Holder previously gave written notice of a continuing Event of
Default to the Trustee,
o the Holders of a majority in principal amount of Outstanding Bonds have
offered to the Trustee reasonable indemnity against costs and
liabilities and requested that the Trustee take action,
o the Trustee declined to take action for 60 days, and
o the Holders of a majority in principal amount of Outstanding Bonds have
given no inconsistent direction during such 60-day period;
provided, however, that each Holder of a Bond has the right to enforce payment
of that Bond when due. (Sections 1111, 1112 and 1116)
In addition to the rights and remedies provided in the Mortgage, the
Trustee may exercise any right or remedy available to the Trustee in its
capacity as the owner and holder of Class A Bonds which arises as a result of a
default under the Class A Mortgage. (Section 1119)
Evidence of Compliance and Indemnification of Trustee
The Trust Indenture Act requires that we give the Trustee, at least
annually, a brief statement as to our compliance with the conditions and
covenants under the Mortgage. (Article Eight)
The Trustee will be under no obligation to exercise any of the rights
or powers vested in it by the Mortgage at the request or direction of any Holder
pursuant to the Mortgage, unless such Holder shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or direction.
(Section 1603)
The Class A Mortgage
General Capitalized terms used under this caption which are not
otherwise defined in this prospectus have the meanings ascribed to those terms
in the Class A Mortgage. The summaries under this caption are not detailed.
Whenever particular provisions of the Class A Mortgage or terms defined in the
Class A Mortgage are referred to in this caption, those provisions or
definitions are qualified by reference to the Class A Mortgage. References to
article and section numbers in this caption, unless otherwise indicated, are
references to article and section numbers of the Class A Mortgage. A copy of the
Class A Mortgage is included as an exhibit to the registration statement of
which this prospectus is a part.
Security The Class A Bonds are secured, equally and ratably with all
other bonds issued and outstanding under the Class A Mortgage, by a direct lien
on substantially all of our fixed property and franchises used or useful in our
public utility businesses (except cash, securities, contracts and accounts
receivable, materials and supplies, natural gas, oil, certain minerals and
mineral rights and certain other assets) now owned by us. The lien of the Class
A Mortgage is a first lien except that it is subject to (1) certain excepted
encumbrances and (2) the fact that titles to certain properties are subject to
reservations and encumbrances such as are customarily encountered in the public
utility business and which do not materially interfere with their use. The Class
A Mortgage contains provisions that allow us to subject (with certain exceptions
and limitations) after-acquired property to the lien thereof. (Granting Clauses)
The Class A Mortgage prohibits us from acquiring property subject to
prior liens if, following the acquisition, prior lien bonds would exceed 15% of
the aggregate of outstanding bonds under the Class A Mortgage unless the
principal amount of indebtedness secured by such prior liens does not exceed 70%
of the cost of such property to us and unless, in certain cases, the net
earnings of such property meet certain tests. (Section 7.05 and Fifty-third
Supplemental Section 2.02)
The Class A Trustee has a lien upon the property subject to the lien of
the Class A Mortgage for payment of its reasonable compensation and expenses and
for indemnification against certain liabilities. This lien is prior to the lien
on behalf of the holders of bonds secured by the Class A Mortgage. (Section
16.10)
Issuance of Additional Bonds The principal amount of bonds which may be
secured by the Class A Mortgage is currently limited to $5,000,000,000 and may
be increased by a supplemental indenture or indentures without the consent of
bondholders or stockholders. (Section 2.01 and Fifty-third Supplemental Section
1.04) Additional bonds secured by the Class A Mortgage may from time to time be
issued on the basis of:
o 70% of unfunded net property additions,
o the deposit of cash, or
o the retirement of bonds issued under the Class A Mortgage. (Articles
Four, Five and Six, Fifty-third Supplemental Section 2.02)
With certain exceptions in the case of bonds issued under the Class A
Mortgage on the basis of the retirement of bonds issued under the Class A
Mortgage, we can issue bonds under the Class A Mortgage only if net earnings for
12 consecutive months out of the preceding 18 months are at least twice the
annual interest requirements on all bonds issued under the Class A Mortgage to
be outstanding and all prior lien bonds. (Section 103 and Articles Four, Five
and Six, Fifty-third Supplemental Section 2.02)
We may withdraw, or apply to the purchase or redemption of bonds issued
under the Class A Mortgage, cash deposited with the Class A Trustee as the basis
for the issuance of bonds under the Class A Mortgage in an amount equal to the
principal amount of bonds which we are then entitled to have authenticated and
delivered under the Class A Mortgage. (Section 1.03 and Articles Four, Five and
Six) Based upon property additions certified to the Class A Trustee as of
October 31, 2002 (the last date of certification of property additions under the
Class A Mortgage), we have unfunded net property additions of approximately $454
million, sufficient to permit the issuance of approximately $318 million of
additional Class A Bonds on the basis thereof. Retirement credits in the amount
of $163.7 million were available at June 30, 2003.
Sinking Fund The Class A Mortgage requires us to deposit, on or before
June 1 in each year, with the Class A Trustee as a "sinking fund requirement" an
amount equal to 1% of the aggregate principal amount of bonds heretofore issued
under the Class A Mortgage (other than bonds authenticated under the Class A
Mortgage on the basis of retirements of other bonds and certain retired bonds).
We may pay the sinking fund requirement in cash or bonds. In addition, we may
satisfy a portion of the sinking fund requirement by certifying to the Class A
Trustee unfunded net property additions in an amount equal to ten-sevenths of
the portion of the sinking fund requirement being satisfied. Any cash deposited
may be applied to the purchase or redemption of bonds of any series issued under
the Class A Mortgage or may be withdrawn by us against deposit of bonds issued
under the Class A Mortgage. (Section 2.12, Second Supplemental Section 2, Third
through Fifth, Seventh through Eleventh, Thirteenth through Fifty-third
Supplementals Section 1.03 and Sixth and Twelfth Supplementals Section 2.03)
Events of Default; Concerning the Trustee The following are defaults
under the Class A Mortgage:
o We fail to make payments of principal or interest on any bond issued and
outstanding under the Class A Mortgage when due,
o We fail to make any sinking fund or purchase fund payment required under the
Class A Mortgage when due,
o We file for bankruptcy or certain other events involving insolvency,
receivership or bankruptcy occur, and
o We fail to perform certain covenants or agreements under the Class A Mortgage.
Certain of these events become defaults only after the lapse of prescribed
periods of time and/or notice from the Class A Trustee. (Section 11.01) The
Trust Indenture Act, with which we have covenanted to abide, requires us to
furnish the Class A Trustee with periodic evidence as to the absence of defaults
and as to compliance with the terms of the Class A Mortgage. (Section 18.03)
Upon the occurrence of a default under the Class A Mortgage, either the
Class A Trustee or the holders of not less than 20% in principal amount of bonds
outstanding under the Class A Mortgage may declare the principal of all bonds
outstanding under the Class A Mortgage immediately due and payable. However, if
the default is cured, the holders of a majority in principal amount of bonds
outstanding under the Class A Mortgage may rescind that declaration and waive
the default and its consequences. (Section 11.05)
The holders of a majority in principal amount of bonds outstanding
under the Class A Mortgage may direct the time, method and place of conducting
any proceeding for the enforcement of the Class A Mortgage. (Section 11.12) No
holder of any bond outstanding under the Class A Mortgage has the right to
institute any proceeding with respect to the Class A Mortgage unless:
o the holder previously gave written notice of a default to the Class A
Trustee,
o the holders of not less than 20% in principal amount of bonds
outstanding under the Class A Mortgage have offered to the Class A
Trustee reasonable indemnity against costs and liabilities and
requested the Class A Trustee to take action,
o the Class A Trustee declined to take action for 60 days, and
o the holders of a majority in principal amount of bonds outstanding
under the Class A Mortgage have given no inconsistent direction;
provided, however, that each holder of a bond outstanding under the Class A
Mortgage shall have the right to enforce payment of that bond when due. (Section
11.14)
Miscellaneous Subject to certain exceptions and limitations contained
in the Class A Mortgage, property subject to the lien of that mortgage may be
released only upon the substitution of cash, divisional bonds, bonds
authenticated under the Class A Mortgage or certain other property. (Article
Ten) Amendments of the Class A Mortgage require the consent of the holders of 66
2/3% in principal amount of bonds outstanding under the Class A Mortgage;
provided, the bondholders shall have no power:
o to extend the fixed maturity, or reduce the rate or extend the time of
payment of interest on any bonds, or reduce the principal amount of any
bonds, or change provisions relating to the sinking fund or the
redemption provisions of any series of bonds outstanding under the
Class A Mortgage, without the express consent of the holder of each
bond which would be affected,
o to reduce the percentages of holders whose consent is required to enter
into any supplemental indenture, without the consent of the holders of
all bonds outstanding under the Class A Mortgage,
o to permit the creation by us of any mortgage or pledge or lien in the
nature thereof, ranking prior to or equal with the lien of the Class A
Mortgage on any of the mortgaged property, or
o to deprive the holder of any bond outstanding under the Class A
Mortgage of the lien of the Class A Mortgage on any of the
mortgaged property. (Fifty-third Supplemental Section 2.01)
The Class A Trustee will be under no obligation to exercise any of the
trusts or powers of the Class A Mortgage at the request, order or direction of
any of the holders of the bonds outstanding under the Class A Mortgage, pursuant
to the provisions of the Class A Mortgage, unless each such holder shall have
offered to the Class A Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby.
(Section 16.06)
Amendment of the Class A Mortgage by Vote of Trustee
The Mortgage provides that, if we request the holders of the Class A
Bonds to eliminate the sinking fund provisions of the Mortgage, the Trustee, as
such a holder, will vote to amend the Class A Mortgage to eliminate the sinking
fund provisions accordingly. The Company intends to request the Trustee to do so
at such time as the Trustee is the sole holder of the Class A Bonds. (Section
1205, Fifty-third Supplemental)
With respect to any other amendments to the Class A Mortgage, the
Trustee will vote proportionately with what it reasonably believes will be the
vote of the holders of all other Class A Bonds. However, if the proposed
amendment of the Mortgage is an amendment or modification described under the
caption "Modification of Mortgage" that requires the prior consent of a majority
in aggregate principal amount of the Outstanding Bonds (or if only certain
series would be affected, the Outstanding Bonds of such series), then the
Trustee will not vote in favor of that amendment unless the consent requirement
has already been met. (Section 1205)
BOOK-ENTRY SYSTEM
If provided in the prospectus supplement, except under the
circumstances described below, we will issue the New Bonds in the form of one or
more global Bonds (each a "Global Bond"), each of which will represent
beneficial interests in the New Bonds. Each such beneficial interest in a Global
Bond is called a "Book-Entry Bond" in this prospectus. We will deposit those
Global Bonds with, or on behalf of, The Depository Trust Company, New York, New
York ("DTC"), or another depository as we may subsequently designate (the
"Depository") relating to the New Bonds, and register them in the name of a
nominee of the Depository.
So long as the Depository, or its nominee, is the registered owner of a
Global Bond, the Depository or its nominee, as the case may be, will be
considered the owner of that Global Bond for all purposes under the Mortgage. We
will make payments of principal of, any premium and interest on the Global Bond
to the Depository or its nominee, as the case may be, as the registered owner of
that Global Bond. Except as set forth below, owners of a beneficial interest in
a Global Bond will not be entitled to have any individual New Bonds registered
in their names, will not receive or be entitled to receive physical delivery of
any New Bonds and will not be considered the owners of New Bonds under the
Mortgage.
Accordingly, to exercise any of the rights of the registered owners of
the New Bonds, each person holding a beneficial interest in a Global Bond must
rely on the procedures of the Depository. If that person is not a Direct
Participant (hereinafter defined), then that person must also rely on procedures
of the Direct Participant through which that person holds its interest.
DTC
The following information concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be reliable, but neither we
nor any underwriter, dealer or agent take any responsibility for the accuracy of
that information.
DTC will act as the initial securities depository for the Global Bonds.
The Global Bonds will be issued only as fully-registered securities registered
in the name of Cede & Co., DTC's partnership nominee, or such other name as may
be requested by an authorized representative of DTC. One fully-registered New
Bond certificate will be issued for each series of the New Bonds, each in the
aggregate principal amount of such series, and will be deposited with DTC. If,
however, the aggregate principal amount of any series exceeds $500 million, one
certificate will be issued with respect to each $500 million of principal amount
and an additional certificate will be issued with respect to any remaining
principal amount of such series.
DTC, the world's largest depository, 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. DTC holds and provides asset servicing for over two
million issues of U.S. and non-U.S. equity issues, corporate and municipal debt
issues, and money market instruments from over 85 countries that DTC's
participants ("Direct Participants") deposit with DTC. DTC also facilitates the
post-trade settlement among Direct Participants of sales and other securities
transactions in deposited securities, through electronic computerized book-entry
transfers and pledges between Direct Participants' accounts. This eliminates the
need for physical movement of securities certificates. Direct Participants
include both U.S. and non-U.S. securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. DTC is a
wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC").
DTCC, in turn, is owned by a number of Direct Participants of DTC and members of
the National Securities Clearing Corporation, Government Securities Clearing
Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation
(NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New
York Stock Exchange, Inc., the American Stock Exchange LLC, and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as both U.S. and non-U.S. securities brokers and
dealers, banks, trust companies, and clearing corporations that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating:
AAA. The DTC Rules applicable to its Participants are on file with the SEC. More
information about DTC can be found at www.dtcc.com.
Purchases of the New Bonds under the DTC system must be made by or
through Direct Participants, which will receive a credit for the New Bonds on
DTC's records. The ownership interest of each actual purchaser of each New Bond
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the New Bonds are to be accomplished by entries made on the books
of Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in the New Bonds, except in the event that use of the book-entry
system for the New Bonds is discontinued.
To facilitate subsequent transfers, all New Bonds deposited by Direct
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co., or such other name as may be requested by an authorized
representative of DTC. The deposit of New Bonds with DTC and their registration
in the name of Cede & Co. or such other nominee do not effect any change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of
the New Bonds; DTC's records reflect only the identity of the Direct
Participants to whose accounts such New Bonds are credited, which may or may not
be the Beneficial Owners. The Direct and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time. Beneficial Owners may wish to take certain
steps to augment transmission to them of notices of significant events with
respect to the New Bonds, such as redemptions, tenders, defaults and proposed
amendments to the New Bond documents. Beneficial Owners may wish to ascertain
that the nominee holding the New Bonds for their benefit has agreed to obtain
and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners
may wish to provide their names and addresses to the registrar and request that
copies of the notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the New
Bonds within an issue are being redeemed, DTC's practice is to determine by lot
the amount of the interest of each Direct Participant in such issue to be
redeemed.
Neither DTC nor Cede & Co., nor any other DTC nominee, will consent or
vote with respect to the New Bonds, unless authorized by a Direct Participant in
accordance with DTC's procedures. Under its usual procedures, DTC mails an
Omnibus Proxy to us as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts the New Bonds are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Principal and interest payments on the New Bonds will be made to Cede &
Co. or such other nominee as may be requested by an authorized representative of
DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's
receipt of funds and corresponding detail information from us or the Trustee, on
the relevant payment date in accordance with their respective holdings shown on
DTC's records. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such Participant and not of DTC (nor
its nominee), the Trustee or us, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal and
interest to Cede & Co., or such other nominee as may be requested by an
authorized representative of DTC, is our responsibility or that of the Trustee.
Disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct and Indirect Participants.
A Beneficial Owner shall give notice to elect to have its New Bonds
purchased or tendered by us, through its Participant, to the Trustee and shall
effect delivery of such Book-Entry Bonds by causing the Direct Participant to
transfer the Participant's interest in the New Bonds representing such New
Bonds, on DTC's records, to the Trustee. The requirement for physical delivery
of New Bonds in connection with a demand for repayment will be deemed satisfied
when the ownership rights in the Global Bond or Bonds representing such New
Bonds are transferred by Direct Participants on DTC's records and followed by a
credit of tendered New Bonds to the Trustee's DTC account.
DTC may discontinue providing its services as securities depository
with respect to the New Bonds at any time by giving reasonable notice to us or
the Trustee. Under such circumstances, in the event that a successor securities
depository is not obtained, New Bonds in certificated form are required to be
printed and delivered. In addition, we may decide to discontinue use of the
system of book-entry transfers through DTC or a successor securities depository.
In that event, New Bonds in certificated form will be printed and delivered.
Neither we nor the Trustee will have any responsibility or obligation
to the Depository, any Participant in the book-entry system or any Beneficial
Owner with respect to (1) the accuracy of any records maintained by DTC or any
Participant; (2) the payment by DTC or by any Participant of any amount due to
any Participant or Beneficial Owner, respectively, in respect of the principal
amount or purchase price or redemption price of, or interest on, any New Bonds;
(3) the delivery of any notice by DTC or any participant; (4) the selection of
the Beneficial Owners to receive payment in the event of any partial redemption
of the New Bonds; or (5) any other action taken by DTC or any Participant.
PLAN OF DISTRIBUTION
We may offer the New Bonds in any of three ways:
o through underwriters or dealers,
o directly to a limited number of purchasers or to a single purchaser, or
o through agents.
Each prospectus supplement will set forth:
o the terms of the offering of the New Bonds,
o the proceeds to us,
o any underwriting discounts and other items constituting underwriters'
compensation, and
o any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers.
o From time to time, we may change any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers.
By Underwriters
If underwriters are used in the sale, the New Bonds being sold will be
acquired by them for their own account and they may resell the New Bonds from
time to time in one or more transactions, including negotiated transactions, at
a fixed public offering price or at varying prices determined at the time of
sale. Underwriters may offer the New Bonds to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more firms acting as underwriters. The applicable prospectus
supplement will name any underwriter involved in a sale of New Bonds and the
amount of New Bonds underwritten by such underwriters and the cover page will
state the name of the managing underwriter. Any underwriting agreement will
provide that the obligations of the underwriters are subject to certain
conditions precedent, and that the underwriters will be obligated to purchase
all of the New Bonds to which that underwriting agreement relates if any are
purchased. Any initial public offering price and any discounts or concessions
allowed or re-allowed or paid to underwriters or dealers may be changed from
time to time.
We will agree to indemnify the underwriters against some liabilities,
including liabilities under the Securities Act of 1933, or to contribute to
payments the underwriters may be required to make because of any of those
liabilities. Specifically, the underwriting agreement will provide that we will
indemnify the underwriters for losses, claims, liabilities, expenses or damages
arising out of or based on untrue statements of a material fact contained in
this prospectus or the registration statement of which the prospectus is a part
(or any amendment hereto or thereto) or in any document filed under the Exchange
Act and deemed to be incorporated by reference herein, or omissions to state
material facts required to be stated herein or therein in order to make the
statements contained herein or therein not misleading, with certain exceptions.
Direct Sales
We may also sell the New Bonds directly. In this case, no underwriters or agents
would be involved.
By Agents
We may sell the New Bonds directly or through agents designated by us
from time to time. In the applicable prospectus supplement, we will state the
name of any agent involved in the offer or sale of the New Bonds as well as any
commissions payable by us to such agent. Unless otherwise indicated in the
prospectus supplement, any such agent will be acting on a best efforts basis for
the period of its appointment.
EXPERTS
The consolidated financial statements and related financial statement
schedule incorporated in this prospectus by reference from our Annual Report on
Form 10-K for the year ended December 31, 2002 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report which is
incorporated herein by reference (which report expresses an unqualified opinion
and includes an explanatory paragraph referring to a change in our method of
accounting for operating revenues associated with its regulated utility
operations effective January 1, 2000), and has been so incorporated in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
LEGAL OPINIONS
McNair Law Firm, P.A., of Columbia, South Carolina, and H. Thomas Arthur,
Esq., our Senior Vice President and General Counsel, will pass upon the validity
of the New Bonds for us. Troutman Sanders LLP, of Richmond, Virginia, will serve
as counsel to any underwriters. Troutman Sanders LLP will rely as to all matters
of South Carolina law upon the opinion of H. Thomas Arthur, Esq.
The statements made under Description of the New Bonds above, as to
matters of law and legal conclusions, have been reviewed by H. Thomas Arthur,
Esq., our Senior Vice President and General Counsel, and such statements are
made upon the authority of such counsel as an expert. At July 31, 2003, H.
Thomas Arthur, Esq., owned beneficially 16,434 (and options to purchase 70,930),
shares of SCANA's Common Stock, including shares acquired by the trustee under
its Stock Purchase-Savings Program by use of contributions made by Mr. Arthur
and earnings thereon and including shares purchased by the trustee by use of
SCANA contributions and earnings thereon.
PART II
INFORMATION NOT REQUIRED
IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Securities and Exchange Commission filing fee $48,540
Printing Expense 17,000*
Blue Sky and Legal fees 75,000*
Rating Agency fees 50,000*
Trustee fees 25,000*
Accounting services 30,000*
Miscellaneous 10,000*
------
Total $255,540*
*Estimated
Item 15. Indemnification of Directors and Officers
The South Carolina Business Corporation Act of 1988 permits
indemnification of the registrant's directors and officers in a variety of
circumstances, which may include indemnification for liabilities under the
Securities Act. Under Sections 33-8-510, 33-8-550 and 33-8-560 of the South
Carolina Business Corporation Act of 1988, a South Carolina corporation is
authorized generally to indemnify its directors and officers in civil or
criminal actions if they acted in good faith and reasonably believed their
conduct to be in the best interests of the corporation and, in the case of
criminal actions, had no reasonable cause to believe that the conduct was
unlawful. In addition, the registrant carries insurance on behalf of directors,
officers, employees or agents that may cover liabilities under the Securities
Act. The registrant's restated articles of incorporation provide that no
director of the registrant shall be liable to the registrant or its shareholders
for monetary damage for breach of his fiduciary duty as a director occurring
after April 26, 1989, except for (i) any breach of the director's duty of
loyalty to the registrant or its shareholders, (ii) acts or omissions not in
good faith or which involve gross negligence, intentional misconduct or a
knowing violation of law, (iii) certain unlawful distributions or (iv) any
transaction from which the director derived an improper personal benefit.
Item 16. Exhibits
Exhibits required to be filed with this registration statement are
listed in the following Exhibit Index. Certain of such exhibits which have
heretofore been filed with the SEC and which are designated by reference to
their exhibit numbers in prior filings are hereby incorporated herein by
reference and made a part hereof.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) to include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3, except for the assignment of a
security rating pursuant to transaction requirement B-2 of Form S-3, which
requirement the Registrant reasonably believes will be met by the time of sale,
and has duly caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Columbia, State of
South Carolina, on September 12, 2003.
(REGISTRANT) South Carolina Electric & Gas Company
By: s/N. O. Lorick
(Name & Title): N. O. Lorick, President and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
(i) Principal executive officer:
By: s/W. B. Timmerman
(Name & Title): W. B. Timmerman, Chairman of the Board,
Chief Executive Officer and Director
Date: September 12, 2003
(ii) Principal financial officer:
By: s/K. B. Marsh
(Name & Title): K. B. Marsh, Senior Vice President-Finance and
Chief Financial Officer
Date: September 12, 2003
(iii) Principal accounting officer:
By: s/J. E. Swan, IV
(Name & Title) J. E. Swan, IV, Controller
Date: September 12, 2003
(iv) Other Directors:
*B. L. Amick; J. A. Bennett; W. B. Bookhart, Jr.; W. C. Burkhardt; E. T.
Freeman; D. M. Hagood; W. H. Hipp; L. M. Miller; M. K. Sloan; H. C. Stowe and G.
S. York
* Signed on behalf of each of these persons by Kevin B. Marsh, Attorney-in-Fact
Date: September 12, 2003
EXHIBIT INDEX
Exhibit No.
Description
1.01 Underwriting Agreement
Form of Underwriting Agreement relating to the New Bonds (Filed
herewith)
3.01 Restated Articles of Incorporation, as adopted on May 3, 2001
(Filed as Exhibit 3.01 to Registration Statement No. 333-65460)
3.02 Articles of Amendment of the Articles of Incorporation of SCE&G
dated as of the dates indicated below and filed as exhibits to
the Registration Statements as set forth below
May 22, 2001 Exhibit 3.02 to Registration No. 333-65460
June 14, 2001 Exhibit 3.04 to Registration No. 333-65460
August 30, 2001 Exhibit 3.05 to Registration No. 333-101449
March 13, 2002 Exhibit 3.06 to Registration No. 333-101449
May 9, 2002 Exhibit 3.07 to Registration No. 333-101449
June 4, 2002 Exhibit 3.08 to Registration No. 333-101449
August 12, 2002 Exhibit 3.09 to Registration No. 333-101449
3.03 Articles of Amendment of the Articles of Incorporation of SCE&G
dated March 13, 2003 (Filed herewith)
3.04 Articles of Amendment of the Articles of Incorporation of SCE&G
dated May 22, 2003 (Filed herewith)
3.05 Articles of Amendment of the Articles of Incorporation of SCE&G
dated June 18, 2003 (Filed herewith)
3.06 Articles of Amendment of the Articles of Incorporation of SCE&G
dated August 7, 2003 (Filed herewith)
3.07 Articles of Correction of the Articles of Incorporation of SCE&G
dated June 1, 2001 (Filed as Exhibit 3.03 to Registration
Statement No. 333-65460)
3.08 By-Laws as revised and amended on February 22, 2001 (Filed as
Exhibit 3.05 to Registration Statement No. 333-65460)
4.01 Indenture dated as of January 1, 1945, from the South Carolina
Power Company (the "Power Company") to Central Hanover Bank and
Trust Company, as Trustee, as supplemented by three Supplemental
Indentures dated respectively as of May 1, 1946, May 1, 1947 and
July 1, 1949 (Filed as Exhibit 2-B to Registration Statement No.
2-26459)
4.02 Fourth Supplemental Indenture dated as of April 1, 1950, to
Indenture referred to in Exhibit 4.01, pursuant to which SCE&G
assumed said Indenture (Filed as Exhibit 2-C to Registration
Statement No. 2-26459)
4.03 Fifth through Fifty-second Supplemental Indentures to Indenture
referred to in Exhibit 4.01 dated as of the dates indicated
below and filed as exhibits to the Registration Statements
whose file numbers are set forth below:
December 1, 1950 Exhibit 2-D to Registration No. 2-26459
July 1, 1951 Exhibit 2-E to Registration No. 2-26459
Description
June 1, 1953 Exhibit 2-F to Registration No. 2-26459
June 1, 1955 Exhibit 2-G to Registration No. 2-26459
November 1, 1957 Exhibit 2-H to Registration No. 2-26459
September 1, 1958 Exhibit 2-I to Registration No. 2-26459
September 1, 1960 Exhibit 2-J to Registration No. 2-26489
June 1, 1961 Exhibit 2-K to Registration No. 2-26459
December 1, 1965 Exhibit 2-L to Registration No. 2-26459
June 1, 1966 Exhibit 2-M to Registration No. 2-26459
June 1, 1967 Exhibit 2-N to Registration No. 2-26459
September 1, 1968 Exhibit 4-O to Registration No. 2-29693
June 1, 1969 Exhibit 4-C to Registration No. 2-31569
December 1, 1969 Exhibit 4-O to Registration No. 33-38580
June 1, 1970 Exhibit 4-R to Registration No. 2-35388
March 1, 1971 Exhibit 2-B-17 to Registration No. 2-37363
January 1, 1972 Exhibit 2-B to Registration No. 2-40324
July 1, 1974 Exhibit 2-A-19 to Registration No. 33-38580
May 1, 1975 Exhibit 4-C to Registration No. 2-51291
July 1, 1975 Exhibit 2-B-21 to Registration No. 33-38580
February 1, 1976 Exhibit 2-B-22 to Registration No. 2-53908
December 1, 1976 Exhibit 2-B-23 to Registration No. 2-55304
March 1, 1977 Exhibit 2-B-24 to Registration No. 2-57936
May 1, 1977 Exhibit 4-C to Registration No. 2-58662
February 1, 1978 Exhibit 4-C to Registration No. 33-38580
June 1, 1978 Exhibit 2-A-3 to Registration No. 2-61653
April 1, 1979 Exhibit 4-C to Registration No. 33-38580
June 1, 1979 Exhibit 2-A-3 to Registration No. 33-38580
April 1, 1980 Exhibit 4-C to Registration No. 33-38580
June 1, 1980 Exhibit 4-C to Registration No. 33-38580
December 1, 1980 Exhibit 4-C to Registration No. 33-38580
April 1, 1981 Exhibit 4-D to Registration No. 33-49421
June 1, 1981 Exhibit 4-D to Registration No. 2-73321
March 1, 1982 Exhibit 4-D to Registration No. 33-49421
April 15, 1982 Exhibit 4-D to Registration No. 33-49421
May 1, 1982 Exhibit 4-D to Registration No. 33-49421
December 1, 1984 Exhibit 4-D to Registration No. 33-49421
December 1, 1985 Exhibit 4-D to Registration No. 33-49421
June 1, 1986 Exhibit 4-D to Registration No. 33-49421
February 1, 1987 Exhibit 4-D to Registration No. 33-49421
September 1, 1987 Exhibit 4-D to Registration No. 33-49421
January 1, 1989 Exhibit 4-D to Registration No. 33-49421
January 1, 1991 Exhibit 4-D to Registration No. 33-49421
February 1, 1991 Exhibit 4-D to Registration No. 33-49421
July 15, 1991 Exhibit 4-D to Registration No. 33-49421
August 15, 1991 Exhibit 4-D to Registration No. 33-49421
April 1, 1993 Exhibit 4-E to Registration No. 33-49421
July 1, 1993 Exhibit 4-D to Registration No. 33-57955
Exhibit
No. Description
4.04 Fifty-Third Supplemental Indenture, dated as of May 1, 1999, to
Indenture referred to in Exhibit 4.01 (Filed as Exhibit 4.04 to
Registration Statement No. 333-86387)
4.05 Indenture dated as of April 1, 1993 from SCE&G to NationsBank of
Georgia, National Association (Filed as Exhibit 4-F to
Registration Statement No. 33-49421)
4.06 First Supplemental Indenture to Indenture referred to in Exhibit
4.05 dated as of June 1, 1993 (Filed as Exhibit 4-G to
Registration Statement No. 33-49421)
4.07 Second Supplemental Indenture to Indenture referred to in
Exhibit 4.05 dated as of June 15, 1993 (Filed as Exhibit 4-G to
Registration Statement No. 33-57955)
5.01 Opinion Re Legality
Opinion of H. Thomas Arthur, Esq. (Filed herewith)
8.01 Opinion Re Tax Matters (Not Applicable)
10.01 Service Agreement between SCE&G and SCANA Services, Inc.,
effective April 1, 2002 (Filed as Exhibit 10.01 to Registration
Statement No. 333-101449)
12.01 Statements Re Computation of Ratios (Filed herewith)
15.01 Letter re Unaudited Interim Financial Information
(Not applicable)
16.01 Letter re Change in Certifying Accountant (Not Applicable)
23.01 Consents of Experts and Counsel
Consent of Deloitte & Touche LLP (Filed herewith)
Consent of H. Thomas Arthur, Esq. (Included in opinion filed as
Exhibit 5.01).
24.01 Power of Attorney (Filed herewith)
25.01 Statement of Eligibility of Trustee
Statement of Eligibility of The Bank of New York, as Trustee
(Form T-1) (Filed herewith)
26.01 Invitations for Competitive Bids (Not applicable)
99.01 Additional Exhibits (Not applicable)