PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 17, 1995)
$100,000,000
South Carolina Electric & Gas Company
First Mortgage Bonds
6 1/8% Series due March 1, 2009
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South Carolina Electric & Gas Company will pay interest on the New
Bonds on March 1 and September 1 of each year. SCE&G will make the first
interest payment on September 1, 1999. The New Bonds may be redeemed at any time
at the option of SCE&G, in whole or in part, at a redemption price equal to the
sum of (i) the principal amount of the New Bonds being redeemed, plus accrued
interest to the redemption date, and (ii) the Make-Whole Amount, if any. See
"Description of the New Bonds - Optional Redemption."
SCE&G has its principal office at 1426 Main Street, Columbia, South
Carolina 29201, telephone (803) 217-9000.
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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 supplement or the accompanying
prospectus. Any representation to the contrary is a criminal offense.
Per New Bond Total
Public Offering Price (1) 99.983% $99,983,000
Underwriting Discount 0.650% $ 650,000
Proceeds, before expenses, to SCE&G 99.333% $99,333,000
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(1) Purchasers will be required to pay accrued interest from March 1, 1999.
We expect the New Bonds will be ready for delivery in book-entry form only
through The Depository Trust Company on or about March 9, 1999.
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PaineWebber Incorporated Credit Suisse First Boston
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The date of this prospectus supplement is March 2, 1999.
You should rely only on the information contained in this document or
to which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
TABLE OF CONTENTS
Page
Prospectus Supplement
Use of Proceeds........................................................S-3
Recent Developments....................................................S-3
Selected Financial Data................................................S-4
Description of the New Bonds...........................................S-5
Basis for Issuance of the New Bonds....................................S-6
Amendments to Class A Mortgage.........................................S-6
Underwriting...........................................................S-6
Experts................................................................S-8
Validity of the Bonds..................................................S-8
Prospectus
Available Information....................................................2
Incorporation of Certain Documents by Reference..........................2
The Company..............................................................3
Ratio of Earnings to Fixed Charges.......................................3
Use of Proceeds..........................................................3
Description of the New Bonds.............................................3
Book-Entry System.......................................................10
Plan of Distribution....................................................12
Experts.................................................................13
Validity of the New Bonds...............................................13
USE OF PROCEEDS
SCE&G will use the net proceeds from the sale of the New Bonds for the
repayment of short-term debt and for general corporate purposes.
RECENT DEVELOPMENTS
On February 16, 1999, SCANA Corporation, SCE&G's parent company,
entered into a definitive agreement providing for the acquisition by SCANA of
Public Service Company of North Carolina, Incorporated in a transaction valued
at approximately $900 million, including the assumption of debt. The proposed
acquisition is subject to customary conditions, including approvals by common
shareholders of both companies and the receipt of governmental and other
authorizations, and it is anticipated that the approval process will be
completed by the end of 1999. SCANA intends to borrow approximately $700 million
to finance the proposed acquisition.
In conjunction with this transaction, SCANA's Board adopted a new
dividend policy which would reduce the quarterly dividend from its current rate
of $.385 per share to $.275 per share effective with the dividend to be paid
after the July 1, 1999 dividend.
Additional information concerning the proposed acquisition and the new
dividend policy is included in SCE&G's Current Report on Form 8-K filed February
26, 1999.
SELECTED FINANCIAL DATA
Twelve Months Ended
December 31, December 31,
1998 1997
(Dollars in Thousands)
(Unaudited)
Consolidated Statements of Income Data:
Operating Revenues $1,451,820 $1,338,260
Operating Income 312,544 282,093
Income Before Interest Charges 325,213 290,897
Interest Charges 101,166 101,263
AFC (includes allowance for both
equity and borrowed funds) 13,791 11,725
Preferred Dividend Requirement of Company -
Obligated Mandatorily Redeemable Preferred Securities 3,775 661
Net Income 227,204 194,660
Ratio of Earnings to Fixed Charges (1) 4.52 3.85
Net Utility Plant 3,432,042 3,309,861
As of December 31, 1998
Actual Percentage Adjusted(2) Percentage(2)
(Dollars in Thousands)
(Unaudited)
Capitalization:
Long-Term Debt (3) $1,205,781 42% $1,305,781 44%
Cumulative Preferred Stock
(not subject to purchase or sinking funds) 106,260 4 106,260 4
Cumulative Preferred Stock
(subject to purchase or sinking funds)(4) 11,443 - 11,443 -
Company - Obligated Mandatorily
Redeemable Preferred Securities of the
Company's Subsidiary Trust, SCE&G
Trust I 50,000 2 50,000 2
Common Stock Equity 1,498,927 52 1,498,927 50
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Total $2,872,411 100% $2,972,411 100%
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(1) For purposes of these ratios, earnings represent net income plus income
taxes and fixed charges. Fixed charges represent interest and the
estimated interest portion of annual rentals.
(2) Gives effect to the sale of all the New Bonds offered hereby.
(3) Excludes current portion of long-term debt of $29,059.
(4) Excludes current portion of preferred stock of $560.
DESCRIPTION OF THE NEW BONDS
SCE&G will issue the First Mortgage Bonds, 6 1/8% Series due March 1, 2009
(the "New Bonds") under the Indenture dated as of April 1, 1993, as supplemented
(the "Mortgage") made by SCE&G to The Bank of New York, successor to NationsBank
of Georgia, National Association (the "Trustee"). The following information
concerning the New Bonds supplements and should be read in conjunction with the
statements under "Description of the New Bonds" in the accompanying prospectus.
Form and Denomination
The New Bonds will be issued as one or more global bonds in the name of
Cede & Co., as nominee for The Depository Trust Company, New York, New York and
will be available only in book-entry form. See "Book-Entry System" in the
accompanying prospectus.
Interest and Maturity
SCE&G will pay interest on the New Bonds from March 1, 1999, at the rate of
6 1/8% per annum, semiannually on March 1 and September 1 of each year
commencing on September 1, 1999, to holders of record on the preceding February
15 and August 15, respectively. The New Bonds will mature March 1, 2009. The
principal and interest are payable at the office or agency of SCE&G in Atlanta,
Georgia (currently, the Trustee). The New Bonds will be limited to $100,000,000
in aggregate principal amount.
Optional Redemption
The New Bonds may be redeemed at any time at the option of SCE&G, in
whole or in part, at a redemption price equal to the sum of (i) the principal
amount of the New Bonds being redeemed, plus accrued interest thereon to the
redemption date, and (ii) the Make-Whole Amount, if any, with respect to such
New Bonds (the "Redemption Price").
"Make-Whole Amount" means the excess, if any, of (i) the aggregate
present value as of the date of any optional redemption of each dollar of
principal being redeemed and the amount of interest (exclusive of interest
accrued to the date of redemption) that would have been payable in respect of
such dollar if such redemption had not been made, determined by discounting, on
a semi-annual basis, such principal and interest at the Reinvestment Rate
(determined on the third Business Day preceding the date notice of such
redemption is given) from the respective dates on which such principal and
interest would have been payable if such redemption had not been made, over (ii)
the aggregate principal amount of the New Bonds being redeemed.
"Reinvestment Rate" means .15% (fifteen one-hundredths of one percent)
plus the arithmetic mean of the yields under the respective headings "This Week"
and "Last Week" published in the Statistical Release under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity, as of the payment date of the
principal being redeemed. If no maturity exactly corresponds to such maturity,
yields for the two published maturities most closely corresponding to such
maturity shall be calculated pursuant to the immediately preceding sentence and
the Reinvestment Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding in each of such relevant periods to the nearest
month. For purposes of calculating the Reinvestment Rate, the most recent
Statistical Release published prior to the date of determination of the
Make-Whole Amount shall be used.
"Statistical Release" means the statistical release designated
"H.15(519)" or any successor publication which is published weekly by the
Federal Reserve System and which establishes yields on actively traded United
States government securities adjusted to constant maturities or, if such
statistical release is not published at the time of any determination, then such
other reasonably comparable index which shall be designated by SCE&G.
BASIS FOR ISSUANCE OF NEW BONDS
SCE&G will issue the New Bonds upon the basis of $100,000,000 of Class A
Bonds held by the Trustee and designated by SCE&G as the basis for such
issuance. After the issuance of the New Bonds, SCE&G will be able to issue
$215,035,000 of additional Bonds on the basis of a like principal amount of
Class A Bonds held by the Trustee and available for such purpose. See
"Description of the New Bonds" in the accompanying prospectus.
AMENDMENTS TO CLASS A MORTGAGE
SCE&G expects in 1999 to amend the Indenture dated as of January 1,
1945, as supplemented (the "Class A Mortgage") to The Chase Manhattan Bank,
successor to Central Hanover Bank and Trust Company, as trustee, to conform
certain of its provisions to those of the Mortgage, including (i) the
elimination of the maintenance and replacement fund and the utilization of
unfunded net property additions previously applied in satisfaction thereof as a
basis for the issuance of bonds; (ii) the issuance of bonds in a principal
amount equal to 70% of unfunded net property additions instead of 60%; and (iii)
the conformance of the interest coverage requirements for the issuance of bonds
to those of the Mortgage. The holders of the New Bonds will have no right to
vote upon or consent to the amendments to the Class A Mortgage.
UNDERWRITING
Subject to the terms and conditions contained in the Underwriting
Agreement between SCE&G and the Underwriters named below, SCE&G has agreed to
sell to the Underwriters, and each of the Underwriters has agreed to purchase
from SCE&G, the respective principal amount of New Bonds set forth opposite its
name. In the Underwriting Agreement, the Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase the entire aggregate
principal amount of the New Bonds if any New Bonds are purchased.
Principal Amount
Underwriters of New Bonds
PaineWebber Incorporated . . . . . . . . . . $ 50,000,000
Credit Suisse First Boston Corporation . . . 50,000,000
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Total . . . . . . . . . . . . . . . . . $100,000,000
SCE&G has been advised by the Underwriters that they propose initially
to offer the New Bonds to the public at the public offering price set forth on
the cover page of this prospectus supplement, and to certain dealers at such
price less a concession not in excess of 0.4% of the principal amount of the New
Bonds. The Underwriters may allow and such dealers may reallow a concession not
in excess of 0.25% of the principal amount. After the initial public offering,
the public offering price and the concessions may be changed.
The New Bonds are a new issue of securities with no established trading
market. SCE&G does not intend to apply for listing of the New Bonds on a
national securities exchange. The Underwriters have told SCE&G that they
presently intend to make a market in the New Bonds, as permitted by applicable
laws and regulations. The Underwriters are not obligated, however, to make a
market in the New Bonds. Any market making by the Underwriters may be
discontinued at any time at the sole discretion of the Underwriters. No
assurance can be given as to whether a trading market for the New Bonds will
develop or as to the liquidity of any trading market.
Until the distribution of the New Bonds is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters to
bid for and purchase the New Bonds. As an exception to these rules, the
Underwriters are permitted to engage in certain transactions that stabilize the
price of the New Bonds. Possible transactions consist of bids or purchases for
the purpose of pegging, fixing or maintaining the price of the New Bonds.
If the Underwriters create a short position in the New Bonds in
connection with this offering, that is, if they sell a greater aggregate
principal amount of New Bonds than is set forth on the cover page of this
prospectus supplement, the Underwriters may reduce that short position by
purchasing New Bonds in the open market. The Underwriters may also impose a
penalty bid on certain selling group members. This means that if an Underwriter
purchases New Bonds in the open market to reduce its short position or to
stabilize the price of the New Bonds, it may reclaim the amount of the selling
concession from the selling group members who sold those New Bonds as part of
the offering.
In general, purchases of a security for the purposes of stabilization
or to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases. The imposition of a penalty
bid might also have an effect on the price of a New Bond to the extent that it
were to discourage resales of the New Bonds.
Neither SCE&G nor the Underwriters make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above might have on the price of the New Bonds. In addition, neither
SCE&G nor the Underwriters make any representation that the Underwriters will
engage in such transactions. Such transactions, once commenced, may be
discontinued without notice.
SCE&G has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
or to contribute to payments that the Underwriters may be required to make in
respect thereof.
The Underwriters and their affiliates have from time to time performed,
and may continue to perform in the future, investment banking services for
SCE&G, for which customary compensation has been received.
SCE&G estimates that its total expenses relating to the offering,
not including the underwriting discount, will be approximately $165,000.
EXPERTS
The statements made under "Description of the New Bonds" in the
accompanying prospectus, as to matters of law and legal conclusions, have been
reviewed by H. Thomas Arthur, II, Esq., and such statements are made upon the
authority of such counsel as an expert. Mr. Arthur is a Senior Vice President,
the General Counsel and an Assistant Secretary of SCE&G.
VALIDITY OF THE BONDS
The validity of the New Bonds will be passed upon for SCE&G by McNair
Law Firm, P.A., of Columbia, South Carolina and by H. Thomas Arthur, II, Esq. of
Columbia, South Carolina, and for the Underwriters by Thelen Reid & Priest LLP,
of New York, New York. Thelen Reid & Priest LLP will rely as to all matters of
South Carolina law upon the opinion of H. Thomas Arthur, II, Esq. Thelen Reid &
Priest LLP from time to time renders legal services to SCE&G.
At December 31, 1998, H. Thomas Arthur, II., Esq, owned beneficially
7,524 shares of SCANA Corporation's Common Stock, including shares acquired by
the trustee under its Stock Purchase-Savings Plan by use of contributions made
by Mr. Arthur and earnings thereon and including shares purchased by such
trustee by use of SCANA contributions and earnings thereon.
$100,000,000
South Carolina Electric & Gas Company
First Mortgage Bonds
6 1/8% Series due March 1, 2009
PROSPECTUS SUPPLEMENT
PaineWebber Incorporated Credit Suisse First Boston
March 2, 1999