Prospectus Supplement Ratings: Filed Pursuant to Rule 424(b)(2)
(To Prospectus dated December 14, 2000) Standard & Poor's:
AAA
Moody's: Aaa
(See "Ratings"
Herein)
INDIANA GAS COMPANY, INC.
$20,000,000
7.15% Insured Quarterly Notes due December 15, 2015
$50,000,000
7.45% Insured Quarterly Notes due December 16, 2030
(IQ NotesSM*)
----------------
Our Insured Quarterly Notes due 2015, which we refer to as the "15-Year IQ
Notes", bear interest at a rate of 7.15% per year. The 15-Year IQ Notes will
mature on December 15, 2015. However, we can redeem the 15-Year IQ Notes at
our option on or after December 15, 2004 at 100% of the principal amount plus
any accrued interest thereon.
Our Insured Quarterly Notes due 2030, which we refer to as the "30-Year IQ
Notes", bear interest at a rate of 7.45% per year. The 30-Year IQ Notes will
mature on December 16, 2030. However, we can redeem the 30-Year IQ Notes at
our option on or after December 15, 2005 at 100% of the principal amount plus
any accrued interest thereon.
Interest on the 15-Year IQ Notes and the 30-Year IQ Notes, which we refer
to collectively as the "IQ Notes", is payable quarterly on March 15, June 15,
September 15, and December 15, beginning on March 15, 2001, and at maturity or
earlier redemption.
We will be required to redeem the IQ Notes, subject to individual and
aggregate limitations, at the option of the representative of any deceased
owner of IQ Notes at 100% of the principal amount plus any accrued interest
thereon.
Our timely payment of the regularly scheduled payments of the principal of
and interest on the IQ Notes when due and payments in connection with the
mandatory redemption of IQ Notes at the option of representatives of deceased
owners will be insured by a financial guaranty insurance policy issued by
Ambac Assurance Corporation simultaneously with the delivery of the IQ Notes.
[AMBAC LOGO]
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy of this prospectus supplement or the accompanying prospectus. Any
representation to the contrary is a criminal offense.
Proceeds,
before
Public expenses,
Offering Underwriting to Indiana
Price(1) Discount Gas
----------- ------------ -----------
Per 15-Year IQ Note........................ 100% 2.40% 97.60%
Total.................................... $20,000,000 $480,000 $19,520,000
Per 30-Year IQ Note........................ 100% 3.15% 96.85%
Total.................................... $50,000,000 $1,575,000 $48,425,000
- --------
(1) Plus accrued interest from December 28, 2000, if settlement occurs after
that date
We expect that the IQ Notes will be ready for delivery in book-entry form
only through The Depository Trust Company ("DTC") on or about December 28,
2000.
----------------
*IQ Notes is a service mark of Edward D. Jones & Co., L.P.
----------------
Edward D. Jones & Co., L.P.
----------------
The date of this prospectus supplement is December 21, 2000.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Page
----
Forward-Looking Statements................................................. S-3
Summary of the Offering.................................................... S-4
Use of Proceeds............................................................ S-8
Capitalization............................................................. S-9
Ratio of Earnings to Fixed Charges......................................... S-9
Description of the IQ Notes................................................ S-10
The Policy and the Insurer................................................. S-16
Ratings.................................................................... S-19
Underwriting............................................................... S-19
Legal Opinions............................................................. S-20
Experts.................................................................... S-20
Appendix A--Form of Redemption Request..................................... A-1
Appendix B--Form of Policy................................................. B-1
PROSPECTUS
Indiana Gas Company, Inc................................................... 2
Recent Developments........................................................ 3
Use of Proceeds............................................................ 5
Ratio of Earnings to Fixed Charges......................................... 5
Description of the Debt Securities......................................... 6
Plan of Distribution....................................................... 12
Where You Can Find More Information........................................ 12
Incorporation of Information We File with the SEC.......................... 13
Experts.................................................................... 14
You should rely only on the information contained or incorporated by
reference in this prospectus supplement or the accompanying prospectus. No one
has been authorized to provide you with different or additional information.
If anyone provides you with different or additional information, you should
not rely on it. We are not, and the Underwriter is not, making an offer to
sell the IQ Notes in any jurisdiction where the offer to sell the IQ Notes is
not permitted. You should assume that the information appearing in this
prospectus supplement and the accompanying prospectus, as well as information
we previously filed with the Securities and Exchange Commission that is
incorporated herein by reference, is accurate as of the date on the front
cover of those documents only. Our business, financial condition, results of
operations and prospects may have changed since that date. In this prospectus
supplement and the accompanying prospectus, "Indiana Gas", "we" and "our"
refer to Indiana Gas Company, Inc. and the "Underwriter" refers to Edward D.
Jones & Co., L.P.
S-2
FORWARD-LOOKING STATEMENTS
Statements contained in or incorporated by reference into this prospectus
supplement or the accompanying prospectus include forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Forward-looking statements involve certain risks and
uncertainties that may cause future results to differ materially from those
contemplated, projected, estimated or budgeted in such forward-looking
statements. Factors that may impact forward-looking statements include, but
are not limited to, the following:
. Unusual weather conditions; catastrophic weather-related damage; unusual
maintenance or repairs; unanticipated changes to gas supply costs, or
availability due to higher demand, shortages, transportation problems or
other developments; environmental or pipeline incidents; transmission or
distribution incidents; or gas pipeline system constraints.
. Increased competition in the energy environment, including effects of
industry restructuring and unbundling.
. Regulatory factors such as unanticipated changes in rate-setting policies
or procedures, recovery of investments made under traditional regulation
and the frequency and timing of rate increases.
. Financial or regulatory accounting principles or policies imposed by the
Financial Accounting Standards Board, the Securities and Exchange
Commission, the Federal Energy Regulatory Commission, state public
utility commissions, state entities which regulate natural gas
transmission, gathering and processing, and similar entities with
regulatory oversight.
. General economic conditions, including inflation rates and monetary
fluctuations.
. Changing market conditions and a variety of other factors associated with
physical energy and financial trading activities, including, but not
limited to, price, basis, credit, liquidity, volatility, capacity and
interest rate.
. Availability or cost of capital, resulting from changes in Indiana Gas,
interest rates, and securities ratings or market perceptions of the
utility industry and energy-related industries.
. Employee workforce factors, including changes in key executives,
collective bargaining agreements with union employees, or work stoppages.
. Legal and regulatory delays and other obstacles associated with mergers,
acquisitions, and investments in joint ventures.
. Costs and other effects of legal and administrative proceedings,
settlements, investigations, claims, and other matters, including, but
not limited to, those described in periodic filings made with the
Securities and Exchange Commission by Indiana Gas.
. Changes in federal, state or local legislature requirements, such as
changes in tax laws or rates and environmental laws and regulations.
We assume no obligation to publicly update or revise any forward looking
statements, whether as a result of new information, future events or
otherwise.
S-3
SUMMARY OF THE OFFERING
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in, or incorporated by reference in,
this prospectus supplement and in the accompanying prospectus.
Indiana Gas Company, Inc.
We are an operating public utility providing gas utility service in Indiana.
We supply gas to approximately 514,000 residential, small commercial and
contract (large commercial and industrial) customers in 311 communities in 49
of the 92 counties in Indiana. The largest communities which we serve include
Muncie, Anderson, Lafayette, West Lafayette, Bloomington, Terre Haute, Marion,
New Albany, Columbus, Jeffersonville, New Castle and Richmond.
Our service area has a population of approximately 2 million people and
contains diversified manufacturing and agricultural enterprises. The principal
industries which we serve include:
. automotive parts and accessories;
. feed, flour and grain processing;
. metal castings;
. aluminum products;
. gypsum products;
. electrical equipment;
. metal processing; and
. glass.
We are a wholly-owned subsidiary of Vectren Corporation ("Vectren"), a New
York Stock Exchange-listed company (ticker symbol: VVC).
On March 31, 2000, Indiana Energy, Inc. ("Indiana Energy"), the former
parent of Indiana Gas, and SIGCORP, Inc. ("SIGCORP") merged and combined into
Vectren Corporation, a holding company formed for purposes of the merger.
SIGCORP was an investor-owned energy company that through its utility
subsidiary, Southern Indiana Gas and Electric Company, provided electric and
gas service to southwest Indiana and through its non-regulated subsidiaries
provided energy-related products and services throughout the Midwest and
elsewhere. As provided for in the merger agreement, Indiana Energy shareholders
received one share of Vectren common stock for each share of Indiana Energy
common stock held at the closing date. SIGCORP shareholders received 1.333
shares of Vectren common stock for each share of SIGCORP common stock held at
the closing date. The transaction was a tax-free exchange of shares and was
accounted for as a pooling of interests.
Our principal executive offices are located at 20 N.W. Fourth Street,
Evansville, Indiana 47711 and our telephone number is (812) 491-4000.
S-4
Recent Developments
Acquisition of the Gas Utility Assets of The Dayton Power & Light Company
Vectren purchased the natural gas distribution assets of The Dayton Power
and Light Company ("Dayton Power") for a purchase price of approximately $464
million on October 31, 2000. The acquisition added approximately 305,000 gas
utility customers in 16 counties in west central Ohio. Vectren acquired the gas
utility assets as a tenancy in common through two separate subsidiaries.
Indiana Gas acquired a 47% ownership interest in the assets for approximately
$218 million and Vectren Energy Delivery of Ohio, Inc. ("Vectren of Ohio")
acquired the remaining 53% ownership interest for approximately $246 million.
Vectren of Ohio is the operator of the assets. Because Ohio law requires
domestic incorporation of any entity providing utility services in Ohio,
Indiana Gas has incorporated under Ohio, as well as Indiana, law.
Vectren Utility Holdings, Inc. ("Vectren Utility") is the intermediate
holding company for Vectren's utility interests. As part of the acquisition
financing, Vectren Utility borrowed approximately $435 million under its
commercial paper program. From the proceeds of this financing, Indiana Gas
received $189 million as debt and Vectren of Ohio received $246 million in
debt. Indiana Gas also borrowed $29 million under its commercial paper program.
Indiana Gas and Vectren of Ohio each applied these proceeds to pay its share of
the purchase price for the gas utility assets of Dayton Power. We anticipate
that the commercial paper financings of Vectren Utility and Indiana Gas will be
replaced over time with permanent, long term financing.
Indiana Supreme Court Decision Regarding Gas Supply Agreements with ProLiance
Energy, LLC
ProLiance Energy, LLC ("ProLiance"), a 50 percent owned non-regulated
marketing affiliate of Vectren, began providing natural gas and related
services to Indiana Gas, Citizens Gas and Coke Utility ("Citizens Gas") and
others effective April 1996. The sale of gas and provision of other services to
Indiana Gas by ProLiance is subject to regulatory review through the quarterly
gas cost adjustment process administered by the Indiana Utility Regulatory
Commission (the "Commission").
On September 12, 1997, the Commission issued an order finding the gas supply
agreements between ProLiance and Indiana Gas and Citizens Gas to be consistent
with the public interest. The Commission's decision reflected the significant
gas cost savings to customers obtained through ProLiance's services and
indicated that all material provisions of the gas supply agreements were
reasonable. Nevertheless, with respect to the pricing of gas commodity
purchased from ProLiance and two other pricing terms, the Commission concluded
that additional review in the gas cost adjustment process would be appropriate
and directed that these matters be considered further in the pending
consolidated gas cost adjustment proceeding involving Indiana Gas and Citizens
Gas. This order was appealed by the Indiana Office of Utility Consumer
Counselor and, through a series of appeals, was finally considered by the
Indiana Supreme Court.
On September 22, 2000, the Indiana Supreme Court issued a decision affirming
the September 12, 1997 order of the Commission that found the gas supply
agreements to be consistent with the public interest.
S-5
Increased Gas Costs and Gas Cost Adjustment Proceedings
Commodity prices for natural gas purchases during the winter months of
calendar year 2001 have unexpectedly increased significantly over the past few
months, primarily due to the expectation of a colder winter, which has led to
increased demand and tighter supplies. Since Indiana Gas charges its customers
the actual cost it pays for the natural gas purchased on their behalf, Indiana
Gas's profit margin on gas sales should not be impacted. In 2001, Indiana Gas
may experience higher working capital requirements, increased expenses,
including interest costs and uncollectibles, and possibly some level of price
sensitive reduction in volumes sold. To the extent significantly increased
prices are accompanied by colder than normal weather, higher volumes may be
sold providing increased margins as an offset to the unfavorable results
mentioned.
On October 11, 2000, Indiana Gas filed for approval of its quarterly gas
cost adjustment. The Commission has issued an interim order approving the
request by Indiana Gas for a gas cost adjustment factor for December, 2000. The
Commission will determine the January and February, 2001 gas cost adjustments
in a subsequent order. That order will address the claim by the Office of
Utility Consumer Counselor that a portion of the requested gas cost adjustment
be disallowed because Indiana Gas should have entered into additional
commitments for this winter's gas supply in late 1999 and early 2000. In
procuring gas supply for this winter, Indiana Gas followed established
practices. Accordingly, we believe that the Office of Utility Consumer
Counselor's claim is without merit or precedent and that it is unlikely to be
accepted by the Commission. There can, however, be no assurance as to the
ultimate outcome.
S-6
The Offering
Insured Quarterly Notes Indiana Gas is offering $70,000,000 aggregate
Offered................... principal amount of IQ Notes. We are offering
$20,000,000 of the 15-Year IQ Notes bearing
interest at a rate of 7.15% per year and
$50,000,000 of the 30-Year IQ Notes bearing
interest at a rate of 7.45% per year.
Interest Payment Dates.... Indiana Gas will pay interest on the IQ Notes
quarterly in arrears on March 15, June 15,
September 15, and December 15 of each year,
beginning on March 15, 2001.
Record Date............... Indiana Gas will make interest payments to the
holders of IQ Notes who hold such IQ Notes as of
the 1st calendar day of the month in which each
interest payment date falls, as well as upon
presentation and surrender at maturity or earlier
redemption.
Date of Maturity.......... The 15-Year IQ Notes will mature on December 15,
2015, and the 30-Year IQ Notes will mature on
December 16, 2030, unless, in each case, redeemed
prior to that date.
Optional Redemption by Indiana Gas will have the option to redeem the 15-
Indiana Gas............... Year IQ Notes, in whole or in part, from time to
time on or after December 15, 2004. Indiana Gas
will have the option to redeem the 30-Year IQ Notes
in whole or in part, from time to time on or after
December 15, 2005. The optional redemption price
for the IQ Notes will be 100% of the principal
amount thereof plus unpaid interest accrued to the
redemption date.
Redemption Option of a
Deceased Owner's
Representative...........
Indiana Gas will be required to redeem the IQ Notes
at the option of the representative of any deceased
owner of IQ Notes at 100% of the principal amount
thereof plus unpaid interest accrued to the
redemption date; provided, however, that the
maximum principal amount Indiana Gas will be
required to redeem during the initial period from
the date of the original issuance of the IQ Notes
until and including December 15, 2001, and during
each twelve-month period thereafter, is--
(1) $25,000 principal amount of 15-Year IQ
Notes per deceased owner and an aggregate
of $600,000 for all deceased owners of 15-
Year IQ Notes; and
(2) $25,000 principal amount of 30-Year IQ
Notes per deceased owner and an aggregate
of $1,500,000 for all deceased owners of
30-Year IQ Notes.
S-7
Insurance................. The timely payments of the regularly scheduled
principal of and interest on each series of the IQ
Notes and, subject to certain annual principal
amount limitations referred to under "Description
of the IQ Notes--Limited Right of Redemption upon
Death of an Owner", any payments in connection with
the mandatory redemption of IQ Notes at the option
of representatives of deceased owners thereof will
be insured by a financial guaranty insurance policy
issued by Ambac Assurance Corporation, which will
be issued at the same time the IQ Notes are
delivered.
Security.................. The IQ Notes will be unsecured and will rank
equally with all of the other unsecured senior
indebtedness of Indiana Gas.
Ratings................... Indiana Gas anticipates that the IQ Notes will be
rated "AAA" by Standard & Poor's Ratings Group and
"Aaa" by Moody's Investors Service, Inc.
Use of Proceeds........... Indiana Gas estimates that the net proceeds from
the sale of the IQ Notes will be approximately
$67,500,000. Indiana Gas intends to use these
proceeds from the offering of the IQ Notes for
general corporate purposes, including reducing
short-term debt and financing the continuing
construction program.
Ratio of Earnings to Indiana Gas's historical ratio of earnings to fixed
Fixed Charges............ charges for the twelve months ended on September
30, 2000 and each of the calendar years ended
December 31, 1999, 1998, 1997, 1996 and 1995 was
1.8x, 3.6x, 3.5x, 2.2x, 4.4x and 4.9x,
respectively. The ratio for the twelve months ended
on September 30, 2000 excluding merger related
costs of $15.9 million would have been 2.5x. The
ratio for 1997 excluding restructuring costs of
$39.5 million would have been 4.4x. To be
consistent with its parent company, Indiana Gas has
changed its fiscal year end from September 30 to
December 31.
USE OF PROCEEDS
Indiana Gas estimates that the net proceeds from the sale of the IQ Notes
will be approximately $67,500,000. Indiana Gas will use the proceeds from the
sale of the IQ Notes for general corporate purposes, including reducing short-
term debt and financing the continuing construction program.
S-8
CAPITALIZATION
The following table sets forth Indiana Gas's capitalization at September
30, 2000, as adjusted to reflect the issuance of the IQ Notes and use of
proceeds. The following data are qualified in their entirety by reference to,
and should be read together with, the detailed information and financial
statements appearing in the documents incorporated by reference in this
prospectus supplement and the accompanying prospectus.
At September 30, 2000
-----------------------------------
Pro Pro Forma
Actual Forma(2) As Adjusted(2)(3)
-------- -------- -----------------
(dollars in thousands)
Long-Term Debt (net of current
maturities)(1)...................... $211,274 $211,274 $281,274
Common Shareholders' Equity.......... 227,593 227,593 227,593
-------- -------- --------
Total Capitalization............. $438,867 $438,867 $508,867
======== ======== ========
Short-Term Debt (including current
maturities of long-term debt)(1).... $142,784 $360,784 $293,284
======== ======== ========
- --------
(1) There were no current maturities of long-term debt.
(2) Adjusted to reflect the acquisition of a 47% interest in the natural gas
utility assets of The Dayton Power and Light Company. Short-term debt
(initially used to fund the transaction) will be replaced with permanent
financing.
(3) Adjusted for the sale of the IQ Notes at par.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth Indiana Gas's ratio of earnings to fixed
charges for the periods indicated.
Twelve Months
ended Year Ended December 31,(1)
September 30, ---------------------------
2000(2) 1999 1998 1997(3) 1996 1995
------------- ---- ---- ------- ---- ----
Ratio of Earnings to Fixed
Charges...................... 1.8 3.6 3.5 2.2 4.4 4.9
- --------
(1) To be consistent with its parent company, Indiana Gas has changed its
fiscal year end from September 30 to December 31.
(2) The ratio excluding merger-related costs of $15.9 million would have been
2.5x.
(3) The ratio excluding restructuring costs of $39.5 million would have been
4.4x.
For the purpose of computing these ratios, earnings consist of net income
plus income taxes, investment tax credits and fixed charges. Fixed charges
consist of total interest, amortization of debt discount, premium and expense
and the estimated portion of interest implicit in rentals.
S-9
DESCRIPTION OF THE IQ NOTES
Set forth below is a description of the specific terms of the IQ Notes.
This description supplements, and should be read together with, the
description of the general terms and provisions of the debt securities set
forth in the accompanying prospectus under the caption "Description of the
Debt Securities". The following description does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the
description in the accompanying prospectus and the indenture, dated as of
February 1, 1991, between U.S. Bank Trust National Association (formerly known
as First Trust National Association which was formerly known as Bank of
America Illinois which was formerly known as Continental Bank, National
Association), as trustee (the "Note Trustee") and Indiana Gas (as
supplemented, the "Indenture"), and the supplemental indenture thereto
pursuant to which the IQ Notes will be issued.
The 15-Year IQ Notes and the 30-Year IQ Notes will be issued as separate
series of debt securities under the Indenture. The IQ Notes are not subject to
any sinking fund provision. The IQ Notes are available for purchase in
denominations of $1,000 and integral multiples of $1,000.
15-Year IQ Notes
The 15-Year IQ Notes will be limited in aggregate principal amount to
$20,000,000, subject to the provisions of the Indenture. The entire principal
amount of the 15-Year IQ Notes, unless previously redeemed, will mature and
become due and payable, together with any unpaid interest accrued thereon, on
December 15, 2015. In the event that the stated maturity date or any
redemption date is not a business day, then payment of principal and any
interest will be made on the next business day (and without any interest or
other payment in respect of any such delay), except that if such business day
is in the next calendar year, the payment will be made on the immediately
preceding business day, in each case with the same force and effect as if made
on the original date.
Interest
Each 15-Year IQ Note will bear interest at 7.15% per year from the date of
original issuance, payable quarterly in arrears on March 15, June 15,
September 15, and December 15 of each year (each, an "Interest Payment Date"
in respect of the 15-Year IQ Notes) to the person in whose name such 15-Year
IQ Note is registered at the close of business as of the first calendar day of
the month in which the applicable Interest Payment Date falls and at maturity
or earlier redemption, as the case may be. The initial Interest Payment Date
is March 15, 2001. The amount of interest payable will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any
Interest Payment Date is not a business day, then payment of the interest will
be made on the next business day (and without any interest or other payment in
respect of any such delay), except that if such business day is in the next
calendar year, the payment will be made on the immediately preceding business
day, in each case with the same force and effect as if made on the original
date.
Optional Redemption
Indiana Gas will have the option to redeem the 15-Year IQ Notes, in whole
or in part, without premium, from time to time, on or after December 15, 2004,
upon not less than 30 nor more than 60 days' written notice, at a redemption
price equal to 100% of the principal amount to be redeemed plus any unpaid
interest accrued to the redemption date.
S-10
From the redemption date, the 15-Year IQ Notes to be redeemed will cease to
bear interest, unless Indiana Gas defaults in the payment of the redemption
price. In the event of such default, the principal of the 15-Year IQ Notes to
be redeemed will, until paid, continue to bear interest at the rate indicated
on the cover of this prospectus supplement.
Our right to redeem the 15-Year IQ Notes is independent of our right to
redeem the 30-Year IQ Notes described below. We have the right to redeem
either the 15-Year IQ Notes or the 30-Year IQ Notes in whole or in part
without redeeming the other series of IQ Notes.
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), Indiana Gas or its
affiliates may, at any time and from time to time, purchase outstanding 15-
Year IQ Notes by tender, in the open market or by private agreement. However,
Indiana Gas may not use any purchased IQ Notes as a credit against any
redemption obligation.
30-Year IQ Notes
The 30-Year IQ Notes will be limited in aggregate principal amount to
$50,000,000, subject to the provisions of the Indenture. The entire principal
amount of the 30-Year IQ Notes, unless previously redeemed, will mature and
become due and payable, together with any unpaid interest accrued thereon, on
December 16, 2030. In the event that the stated maturity date or any
redemption date is not a business day, then payment of principal and any
interest will be made on the next business day (and without any interest or
other payment in respect of any such delay), except that if such business day
is in the next calendar year, the payment will be made on the immediately
preceding business day, in each case with the same force and effect as if made
on the original date.
Interest
Each 30-Year IQ Note will bear interest at 7.45% per year from the date of
original issuance, payable quarterly in arrears on March 15, June 15,
September 15, and December 15 of each year (each, an "Interest Payment Date"
in respect of the 30-Year IQ Notes) to the person in whose name such 30-Year
IQ Note is registered as of the close of business on the first calendar day of
the month in which the applicable Interest Payment Date falls and at maturity
or earlier redemption, as the case may be. The initial Interest Payment Date
is March 15, 2001. The amount of interest payable will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any
Interest Payment Date is not a business day, then payment of the interest will
be made on the next business day (and without any interest or other payment in
respect of any such delay), except that if such business day is in the next
calendar year, the payment will be made on the immediately preceding business
day, in each case with the same force and effect as if made on the original
date.
Optional Redemption
Indiana Gas will have the option to redeem the 30-Year IQ Notes, in whole
or in part, without premium, from time to time, on or after December 15, 2005,
upon not less than 30 nor more than 60 days' written notice, at a redemption
price equal to 100% of the principal amount to be redeemed plus any unpaid
interest accrued to the redemption date.
From the redemption date, the 30-Year IQ Notes to be redeemed will cease to
bear interest, unless Indiana Gas defaults in the payment of the redemption
price. In the event of such default, the principal of the 30-Year IQ Notes
will, until paid, continue to bear interest at the rate indicated on the cover
of this prospectus supplement.
S-11
Our right to redeem the 30-Year IQ Notes is independent of our right to
redeem the 15-Year IQ Notes described above. We have the right to redeem
either the 15-Year IQ Notes or the 30-Year IQ Notes in whole or in part
without redeeming the other series of IQ Notes.
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), Indiana Gas or its
affiliates may, at any time and from time to time, purchase outstanding 30-
Year IQ Notes by tender, in the open market or by private agreement. However,
Indiana Gas may not use any purchased IQ Notes as a credit against any
redemption obligation.
Special Insurance Provisions of the Indenture
Notwithstanding any other provision of the Indenture, so long as the
Insurer, as defined under "The Policy and the Insurer", is not in default
under the Policy, as defined under "The Policy and the Insurer", the Insurer
shall be entitled to control and direct the enforcement of all rights and
remedies with respect to the related series of IQ Notes, except for the rights
provided under "--Limited Right of Redemption upon Death of an Owner".
No provision of the Indenture expressly recognizing or granting rights in
or to the Insurer may be amended in any manner which materially affects the
rights of the Insurer without the prior written consent of the Insurer. In
addition, in any instance in which the consent of all or a certain percentage
of the holders of a series of IQ Notes is required under the Indenture, the
Insurer's consent will be required in addition to any such required owners'
consent, so long as the Insurer is not in default under the Policy.
Limited Right of Redemption upon Death of an Owner
Unless the IQ Notes have been declared due and payable prior to their
maturity following an Event of Default (as defined in the accompanying
prospectus), the Representative (as defined herein) of a deceased owner of IQ
Notes, has the right to require Indiana Gas to redeem all or part of its
interest in the IQ Notes, expressed in integral multiples of $1,000 principal
amount, prior to maturity at 100% of the principal amount to be redeemed plus
unpaid interest accrued to the date of payment. However, during the period
from the original issue date through and including December 15, 2001 (the
"Initial Period"), and during any twelve-month period which ends on and
includes each December 15 thereafter (each such twelve-month period being
hereinafter referred to as a "Subsequent Period"), Indiana Gas will not be
required to redeem--
(i) with respect to the 15-Year IQ Notes, (1) on behalf of a deceased
owner, any interest in the 15-Year IQ Notes which exceeds $25,000 principal
amount, or (2) ownership interests in the 15-Year IQ Notes exceeding
$600,000 in aggregate principal amount for all Representatives thereof so
requesting redemption, or
(ii) with respect to the 30-Year IQ Notes, (1) on behalf of a deceased
owner, any interest in the 30-Year IQ Notes which exceeds $25,000 principal
amount, or (2) ownership interests in the 30-Year IQ Notes exceeding
$1,500,000 in aggregate principal amount for all Representatives thereof so
requesting redemption.
Indiana Gas may, although it is not obligated to do so, redeem interests of
any deceased owner in the IQ Notes in the Initial Period or any Subsequent
Period in excess of the $25,000 individual limitation for each series of IQ
Notes. Any such redemption, to the extent that it exceeds the $25,000
individual limitation for each series of IQ Notes for any deceased owner,
shall not be included in the computation of the $600,000 aggregate limitation
for the 15-Year IQ Notes, or the $1,500,000 aggregate limitation for the 30-
Year IQ Notes for such Initial Period or such Subsequent Period, as the case
may be, or for any succeeding Subsequent Period. Indiana Gas may, although it
is not obligated to do so, redeem interests of deceased owners in the 15-Year
IQ Notes or the 30-Year IQ Notes, in the Initial Period or any Subsequent
Period in an aggregate principal amount exceeding the applicable aggregate
limitation. Any such redemption, to the extent it exceeds the applicable
aggregate limitation, shall not reduce the aggregate limitation for any
Subsequent Period.
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Subject to the $25,000 individual limitation for each series of IQ Notes
and the applicable aggregate limitation, Indiana Gas will redeem a deceased
owner's interest in the IQ Notes within 60 days following receipt by Indiana
Gas of a Redemption Request (as defined below) from the Note Trustee. If,
during the Initial Period or any Subsequent Period, Redemption Requests exceed
the applicable aggregate principal amount of interests in either the 15-Year
IQ Notes or the 30-Year IQ Notes required to be redeemed, then such excess
Redemption Requests will be applied in the order received by the Note Trustee
to successive Subsequent Periods, regardless of the number of Subsequent
Periods required to redeem such interests. Indiana Gas may, at any time during
any relevant Initial or Subsequent Period, notify the Note Trustee that it
will redeem, on a date not less than 30 nor more than 60 days thereafter, all
or any such principal amount of IQ Notes for which Redemption Requests have
been received but which are not then eligible for redemption by reason of the
$25,000 individual limitation for each series of IQ Notes or the applicable
aggregate limitation. Any IQ Notes so redeemed shall be redeemed in the order
of receipt of Redemption Requests by the Note Trustee.
A request for redemption of an interest in the IQ Notes may be initiated at
any time and in any principal amount in integral multiples of $1,000 by the
personal representative or other person authorized to represent the estate of
the deceased owner or from a surviving joint tenant(s) or tenant by the
entirety or the trustee of a trust (each, a "Representative"). The
Representative shall deliver a request to the Participant (as defined under
"--Book-Entry Only Issuance--The Depository Trust Company") through whom the
deceased owner owned such interest, in form satisfactory to the Participant,
together with evidence of the death of the owner, evidence of the authority of
the Representative satisfactory to the Participant, such waivers, notices or
certificates as may be required under applicable state or federal law and such
other evidence of the right to such redemption as the Participant shall
require. The request shall also specify the series and principal of the
interest in the IQ Notes to be redeemed. The Participant shall thereupon
deliver to DTC a request for redemption substantially in the form included
herein as Appendix A (a "Redemption Request").
DTC will, on receipt thereof, forward the same to the Note Trustee. The
Note Trustee shall maintain records with respect to Redemption Requests
received by it, including date of receipt, the name of the Participant filing
the Redemption Request and the status of each such Redemption Request with
respect to the $25,000 individual limitation for each series of IQ Notes and
the applicable aggregate limitation. The Note Trustee will immediately file
with Indiana Gas each Redemption Request it receives, together with the
information regarding the eligibility thereof with respect to the $25,000
individual limitation for each series of IQ Notes and the applicable aggregate
limitation. DTC, Indiana Gas and the Note Trustee may conclusively assume,
without independent investigation, that the statements contained in each
Redemption Request are true and correct and shall have no responsibility for
reviewing any documents submitted to the Participant by the Representative or
for determining whether the applicable decedent is in fact the owner of the
interest in the IQ Notes to be redeemed or is in fact deceased and whether the
Representative is duly authorized to request redemption on behalf of the
applicable owner.
The price Indiana Gas will pay for the IQ Notes to be redeemed pursuant to
a Redemption Request is 100% of the principal amount thereof plus unpaid
interest accrued to the date of payment. Subject to arrangements with DTC,
payment for interests in the IQ Notes which are to be redeemed shall be made
to DTC upon presentation of IQ Notes to the Note Trustee for redemption in the
aggregate principal amount specified in the Redemption Requests submitted to
the Note Trustee by DTC which are to be fulfilled in connection with such
payment. The principal amount of any IQ Notes acquired or redeemed by Indiana
Gas other than by redemption
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at the option of any Representative of a deceased owner shall not be included
in the computation of either the $25,000 individual limitation for each series
of IQ Notes or the applicable aggregate limitation for the Initial Period or
for any Subsequent Period.
Any interest in an IQ Note held in tenancy by the entirety, joint tenancy
or by tenants in common will be deemed to be held by a single owner and the
death of a tenant by the entirety, joint tenant or tenant in common will be
deemed the death of an owner. The death of a person who, during such person's
lifetime, was entitled to substantially all of the rights of an owner of an
interest in the IQ Notes will be deemed the death of the owner, regardless of
the recordation of such interest on the records of the related Participant, if
such rights can be established to the satisfaction of such Participant. Such
interests shall be deemed to exist in typical cases of nominee ownership,
ownership under the Uniform Gifts to Minors Act or the Uniform Transfers to
Minors Act, community property or other similar joint ownership arrangements,
including individual retirement accounts or Keogh [H.R. 10] plans maintained
solely by or for the decedent or by or for the decedent and any spouse, and
trust and certain other arrangements where one person has substantially all of
the rights of an owner during the person's lifetime.
Any Redemption Request may be withdrawn by the person(s) presenting the
same upon delivery of a written request for such withdrawal given by the
Participant on behalf of such person to DTC and by DTC to the Note Trustee not
less than 60 days prior to payment thereof by Indiana Gas.
Indiana Gas may, at its option, purchase any IQ Notes for which Redemption
Requests have been received in lieu of redeeming such IQ Notes. Any IQ Notes
so purchased by Indiana Gas will either be reoffered for sale and sold within
180 days after the date of purchase or presented to the Note Trustee for
redemption and cancellation. Any such acquisition of IQ Notes by Indiana Gas
will not be included in the computation of the $25,000 individual limitation
for each series of IQ Notes or the applicable aggregate limitation for the
Initial Period or any Subsequent Period.
During such time or times as the IQ Notes are not represented by global IQ
Notes and are issued in definitive form, all references in this section to
Participants and DTC, including DTC's governing rules, regulations and
procedures, shall be deemed deleted, all determinations which under this
section the Participants are required to make shall be made by Indiana Gas
(including, without limitation, determining whether the applicable decedent is
in fact the owner of the interest in the IQ Notes to be redeemed or is in fact
deceased and whether the Representative is duly authorized to request
redemption on behalf of the applicable owner), all redemption requests, to be
effective, shall be delivered by the Representative to the Note Trustee, with
a copy to Indiana Gas, and shall be in the form of a Redemption Request (with
appropriate changes to reflect the fact that such Redemption Request is being
executed by a Representative) and, in addition to all documents that are
otherwise required to accompany a Redemption Request, shall be accompanied by
the IQ Notes that are the subject of such request.
Book-Entry Only Issuance--The Depository Trust Company
DTC will act as the initial securities depositary for the IQ Notes. Each
series of IQ Notes will be issued only as fully registered securities
registered in the name of Cede & Co., DTC's nominee. One or more fully
registered global IQ Notes will be issued for each series, representing in the
aggregate the total principal amount of IQ Notes of such series, and will be
deposited with DTC. DTC 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 securities that its participants ("Participants")
deposit with DTC. DTC also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited
securities
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through electronic computerized book-entry changes in Participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations ("Direct
Participants"). DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, the American Stock Exchange and the National
Association of Securities Dealers. Access to the DTC system is also available
to others such as securities brokers and dealers, banks and trust companies
that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The
rules applicable to DTC and its Participants are on file with the Securities
and Exchange Commission.
Purchases of IQ Notes within the DTC system must be made by or through
Direct Participants, which will receive a credit for the IQ Notes on DTC's
records. The ownership interest of each actual purchaser of IQ Notes (such
purchaser, or the person to whom such purchaser conveys his or her ownership
interest, is herein referred to as an "owner" or a "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
purchases, but Beneficial Owners are expected to receive written confirmations
providing details of the transactions, as well as periodic statements of their
holdings, from the Direct or Indirect Participants through which the
Beneficial Owners purchased IQ Notes. Transfers of ownership interests in the
IQ Notes are to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in IQ Notes, except in the
event that use of the book-entry system for the IQ Notes is discontinued,
Indiana Gas determines that Beneficial Owners may exchange their ownership
interests for such certificates or there shall have occurred an Event of
Default.
DTC will have no knowledge of the actual Beneficial Owners of the IQ Notes.
DTC's records reflect only the identity of the Direct Participants to whose
accounts such IQ Notes are credited, which may or may not be the Beneficial
Owners. The 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.
Redemption notices will be sent to DTC. If less than all of either series
of IQ Notes are being redeemed, DTC will reduce the amount of the interest of
each Direct Participant in such series of IQ Notes in accordance with its
procedures.
Although voting with respect to the IQ Notes is limited, in those cases
where a vote is required, neither DTC nor Cede & Co. will itself consent or
vote with respect to IQ Notes. Under its usual procedures, DTC would mail an
Omnibus Proxy to Indiana Gas 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 IQ Notes are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Payments on the IQ Notes will be made to DTC. DTC's practice is to credit
Direct Participants' accounts on the relevant payment date in accordance with
their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payments on such payment date. Payments by
Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the account
of customers registered in "street name", and will be the responsibility of
such Participant and not of DTC or Indiana Gas, subject to any statutory or
regulatory requirements as may be in
S-15
effect from time to time. Payment to DTC is the responsibility of Indiana Gas,
disbursements of such payments to Direct Participants is the responsibility of
DTC and disbursements of such payments to the Beneficial Owners is the
responsibility of Direct Participants and Indirect Participants.
Except as provided herein, a Beneficial Owner of an interest in a global IQ
Note will not be entitled to receive physical delivery of IQ Notes.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the IQ Notes. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of securities in
definitive form. Such laws may impair the ability to transfer beneficial
interests in a global IQ Note.
DTC may discontinue providing its services as security depositary with
respect to the IQ Notes at any time by giving reasonable notice to Indiana
Gas. Under such circumstances, in the event that a successor securities
depositary is not obtained, IQ Note certificates will be printed and delivered
to the holders of record. Additionally, Indiana Gas may decide to discontinue
use of the system of book-entry transfers through DTC (or a successor
depositary) with respect to the IQ Notes. In that event, as well as upon the
occurrence of an event of default under the Policy, certificates for the IQ
Notes will be printed and delivered to the holders of record.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that Indiana Gas believes to be reliable, but
Indiana Gas takes no responsibility for the accuracy thereof. Indiana Gas has
no responsibility for the performance by DTC or its Participants of their
respective obligations as described herein or under the rules and procedures
governing their respective operations.
THE POLICY AND THE INSURER
The following information has been furnished by Ambac Assurance Corporation
(the "Insurer") for use in this prospectus supplement. Reference is made to
Appendix A for a specimen of the Insurer's policy. No representation is made
by Indiana Gas or the Underwriter as to the accuracy or completeness of such
information.
Payment Pursuant to the Financial Guaranty Insurance Policy
The Insurer has made a commitment to issue a financial guaranty insurance
policy relating to the 15-Year IQ Notes and the 30-Year IQ Notes (the
"Policy"), effective as of the date of issuance of the IQ Notes. The form of
the Policy is included herein as Appendix B. Under the terms of the Policy,
the Insurer will pay to the United States Trust Company of New York, in New
York, New York or any successor thereto (the "Insurance Trustee") that portion
of the principal of and interest on the applicable series of IQ Notes which
shall become Due for Payment but shall be unpaid by reason of Nonpayment by
the Issuer (as such terms are defined in the Policy). The Insurer will make
such payments to the Insurance Trustee on the later of the date on which such
principal and interest become Due for Payment or within one business day
following the date on which the Insurer shall have received notice of
Nonpayment from the Note Trustee. Under the Policy, the definition of "Due for
Payment" will include the redemption date in connection with the mandatory
redemption of IQ Notes at the option of the Representative of a deceased owner
of IQ Notes upon the death of such owner, subject to certain annual principal
amount limitations referred to under "Description of the IQ Notes--Limited
Right of Redemption upon Death of an Owner". The Policy will extend for the
term of each series of IQ Notes and, once issued, cannot be canceled by the
Insurer.
The Policy will insure payment only on the stated maturity date or on a
redemption date in connection with the mandatory redemption of IQ Notes at the
option of the Representative of a deceased owner of IQ Notes upon
S-16
the death of such owner, in the case of principal, and on the Interest Payment
Dates, in the case of interest. If the applicable series of IQ Notes becomes
subject to mandatory or optional redemption (other than redemption in
connection with the death of an owner of IQ Notes) and insufficient funds are
available for redemption of all outstanding IQ Notes in such series, the
Insurer will remain obligated to pay principal of and interest on outstanding
IQ Notes on the originally scheduled interest and principal payment dates. In
the event of any acceleration of the principal of the IQ Notes upon the
occurrence of an Event of Default, the insured payments will be made at such
times and in such amounts as would have been made had there not been an
acceleration.
In the event the Note Trustee has notice that any payment of principal of
or interest on an IQ Note which has become Due for Payment and which has been
made to an owner by or on behalf of Indiana Gas has been deemed a preferential
transfer and therefore recovered from such owner pursuant to the United States
Bankruptcy Code in accordance with a final, nonappealable order of a court of
competent jurisdiction, such owner will be entitled to payment from the
Insurer to the extent of such recovery if sufficient funds are not otherwise
available from Indiana Gas.
The Policy does not insure any risk other than Nonpayment, as defined in
the Policy. Specifically, the Policy does not cover:
1. payment on acceleration, as a result of a call for redemption (other
than redemption in connection with the death of an owner of IQ Notes) or
as a result of any other advancement of maturity, and
2. nonpayment of principal or interest caused by the insolvency or
negligence of the Note Trustee, if any.
If it becomes necessary to call upon the Policy, payment of principal
requires surrender of the related IQ Notes to the Insurance Trustee, together
with an appropriate instrument of assignment so as to permit ownership of such
IQ Notes to be registered in the name of the Insurer to the extent of the
related payment under the Policy. Payment of interest pursuant to the Policy
requires proof of an owner's entitlement to interest payments and an
appropriate assignment to the Insurer of such owner's right to such payment to
the extent of the related payment under the Policy.
Upon payment of the insurance benefits in respect of any IQ Notes, the
Insurer will become the owner of the related IQ Notes, in the case of a
payment of principal, or the right to payment of interest on such IQ Notes, in
the case of a payment of interest, and will be fully subrogated to the rights
of the owners to whom such benefits were paid.
The Insurer
The Insurer is a Wisconsin-domiciled stock insurance corporation regulated
by the Office of the Commissioner of Insurance of the State of Wisconsin and
licensed to do business in 50 states, the District of Columbia, the Territory
of Guam and the Commonwealth of Puerto Rico, with admitted assets of
approximately $4,259,000,000 (unaudited) and statutory capital of
approximately $2,633,000,000 (unaudited) as of September 30, 2000. Statutory
capital consists of the Insurer's policyholders' surplus and statutory
contingency reserve. Moody's Investors Service, Inc. ("Moody's"), Standard &
Poor's Ratings Services, a division of the McGraw-Hill Companies, Inc. ("S&P")
and Fitch IBCA, Inc. ("Fitch IBCA") have each assigned a triple-A financial
strength rating to the Insurer.
The Insurer makes no representation regarding the IQ Notes or the
advisability of investing in the IQ Notes and makes no representation
regarding, nor has it participated in the preparation of, this prospectus
supplement
S-17
other than the information supplied by the Insurer and presented under the
heading "The Policy and the Insurer" in this prospectus supplement and in the
financial statements of the Insurer incorporated herein by reference.
The Insurer has obtained a ruling from the Internal Revenue Service to the
effect that the insuring of an obligation by the Insurer will not affect the
treatment for federal income tax purposes of interest on such obligation and
that insurance proceeds representing maturing interest paid by the Insurer
under policy provisions substantially identical to those contained in the
Policy shall be treated for federal income tax purposes in the same manner as
if such payments were made by the issuer of the IQ Notes.
Available Information
The parent company of the Insurer, Ambac Financial Group, Inc. ("AFG"), is
subject to the informational requirements of the Exchange Act, and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission. Such reports, proxy statements
and other information may be inspected and copied at the public reference
facilities maintained by the Securities and Exchange Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Securities and Exchange
Commission's regional offices at 7 World Trade Center, New York, New York
10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained from the
public reference section of the Securities and Exchange Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition,
the aforementioned material may also be inspected at the offices of the New
York Stock Exchange, Inc. (the "NYSE") at 20 Broad Street, New York, New York
10005. AFG's common stock is listed on the NYSE. AFG's filings are also
available over the Internet at the Securities and Exchange Commission's
website (http://www.sec.gov).
Incorporation of Certain Documents by Reference
The following documents filed by AFG with the Securities and Exchange
Commission (File No. 1-10777) are incorporated by reference:
(1) AFG's Current Report on Form 8-K dated January 26, 2000 and filed on
January 27, 2000;
(2) AFG's Current Report on Form 8-K dated March 13, 2000 and filed on
March 13, 2000;
(3) AFG's Current Report on Form 8-K dated March 21, 2000 and filed on
March 22, 2000;
(4) AFG's Annual Report on Form 10-K for the fiscal year ended December 31,
1999 and filed on March 30, 2000;
(5) AFG's Quarterly Report on Form 10-Q for the fiscal quarterly period
ended March 31, 2000 and filed on May 12, 2000;
(6) AFG's Quarterly Report on Form 10-Q for the fiscal quarterly period
ended June 30, 2000 and filed on August 11, 2000; and
(7) AFG's Quarterly Report on Form 10-Q for the fiscal quarterly period
ended September 30, 2000 and filed on November 13, 2000.
S-18
All documents subsequently filed by AFG pursuant to the requirements of the
Exchange Act after the date of this prospectus supplement will be available
for inspection in the same manner as described above in "Available
Information".
RATINGS
It is anticipated that S&P and Moody's will assign the IQ Notes the ratings
set forth on the cover page hereof conditioned upon the issuance and delivery
by the Insurer at the time of delivery of the IQ Notes of the Policy, insuring
the timely payment of the principal of and interest on the IQ Notes. Such
ratings reflect only the views of such rating agencies, and an explanation of
the significance of such ratings may be obtained only from such rating
agencies at the following addresses: S&P, 25 Broadway, New York, New York
10004 and Moody's, 99 Church Street, New York, New York 10007. There is no
assurance that such ratings will, in fact, be assigned or remain in effect for
any period of time or that they will not be revised downward or withdrawn
entirely by the rating agencies if, in their judgment, circumstances warrant.
Neither Indiana Gas nor the Underwriter has undertaken any responsibility to
oppose any proposed downward revision or withdrawal of a rating on the IQ
Notes. Any such downward revision or withdrawal of such ratings would likely
have an adverse effect on any trading market for, and/or the market price of,
the IQ Notes.
At present, each of such rating agencies maintains four categories of
investment grade ratings. They are for S&P--AAA, AA, A and BBB and for
Moody's--Aaa, Aa, A and Baa. S&P defines "AAA" as the highest rating assigned
to a debt obligation. Moody's defines "Aaa" as representing the best quality
debt obligation carrying the smallest degree of investment risk.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, Indiana
Gas has agreed to sell to the Underwriter, and the Underwriter has agreed to
purchase from Indiana Gas, the entire principal amount of the IQ Notes at
97.60% of the principal amount thereof, in the case of the 15-Year IQ Notes,
and 96.85% of the principal amount thereof, in the case of the 30-Year IQ
Notes.
The Underwriter has advised Indiana Gas that it proposes to offer the IQ
Notes to the public initially at the public offering prices set forth on the
cover of this prospectus supplement and to certain dealers at such prices,
less a concession of 2.10%, in the case of the 15-Year IQ Notes and 2.85%, in
the case of the 30-Year IQ Notes. After the initial public offering of the
particular series of IQ Notes, the public offering prices and concessions may
be changed.
Prior to this offer, there has been no public market for the IQ Notes. The
Underwriter has advised Indiana Gas that it intends to make a market in the IQ
Notes. The Underwriter will have no obligation to make a market in the IQ
Notes, however, and may cease market making activities, if commenced, at any
time. The IQ Notes will not be listed on any securities exchange.
Indiana Gas has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments the Underwriter may be required to make in respect
thereof.
S-19
Indiana Gas has agreed, during the period of 15 days from the date on which
the IQ Notes are purchased by the Underwriter, not to sell, offer to sell,
grant any option for the sale of, or otherwise dispose of any additional IQ
Notes, any security convertible into or exchangeable into or exercisable for
IQ Notes or any debt securities substantially similar to the IQ Notes, without
the prior written consent of the Underwriter.
In connection with the offering, the Underwriter is permitted to engage in
certain transactions that stabilize the price of the IQ Notes. Such
transactions consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of the IQ Notes. If the Underwriter creates a short
position in the IQ Notes of a particular series in connection with the
offering, i.e., if it sells a greater aggregate principal amount of IQ Notes
of any series than is set forth on the cover of this prospectus supplement,
the Underwriter may reduce that short position by purchasing IQ Notes of the
particular series in the open market. In general, purchases of a security for
the purpose 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.
Neither we nor the Underwriter makes any representation or prediction as to
the direction or magnitude of any effect that the transactions described above
may have on the price of the IQ Notes. In addition, neither we nor any
Underwriter makes any representation that the Underwriter will engage in such
transactions or that such transactions, once commenced, will not be
discontinued without notice.
The Underwriter has performed services for Indiana Gas and its affiliates
in the past for which it has received customary compensation.
LEGAL OPINIONS
The validity of the IQ Notes will be passed upon for Indiana Gas by Barnes
& Thornburg, Indianapolis, Indiana. Certain matters will be passed upon for
the Underwriter by Brown & Wood llp, New York, New York.
EXPERTS
The audited consolidated financial statements of Indiana Gas and Subsidiary
Companies as of December 31, 1999 and 1998 and for each of the years in the
three year period ended December 31, 1999 incorporated herein by reference
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
The consolidated financial statements of Ambac Assurance Corporation and
subsidiaries as of December 31, 1999 and 1998 and for each of the years in the
three-year period ended December 31, 1999 are incorporated herein by reference
in reliance on the report of KPMG LLP, independent certified public
accountants, incorporated herein by reference, and upon the authority of said
firm as experts in accounting and auditing.
S-20
APPENDIX A--FORM OF REDEMPTION REQUEST
INDIANA GAS COMPANY, INC. INSURED QUARTERLY NOTES
due [December 15, 2015/December 16, 2030]
(the "IQ Notes")
CUSIP NO. [454758AL7/454758AM5]
The undersigned, (the "Participant"), pursuant to the provisions
of that certain Indenture of Trust dated as of February 1, 1991, as
supplemented, including the Fifth Supplemental Indenture dated as of December
28, 2000 (the "Indenture") made by Indiana Gas Company, Inc. (the "Company")
and U.S. Bank Trust National Association, as Trustee (the "Trustee"), does
hereby certify to The Depository Trust Company (the "Depositary"), the Company
and the Trustee that:
1. [Name of deceased Beneficial Owner] is deceased.
2. [Name of deceased Beneficial Owner] had a $ interest in the
above referenced IQ Notes.
3. [Name of Representative] is [Beneficial Owner's personal
representative/other person authorized to represent the estate of the
Beneficial Owner/surviving joint tenant/surviving tenant by the
entirety/trustee of a trust] of [Name of deceased Beneficial Owner] and has
delivered to the undersigned a request for redemption in form satisfactory
to the undersigned, requesting that $ principal amount of said IQ
Notes be redeemed pursuant to said Indenture. The documents accompanying
such request, all of which are in proper form, are in all respects
satisfactory to the undersigned and the [Name of Representative] is
entitled to have the IQ Notes to which this Request relates redeemed.
4. The Participant holds the interest in the IQ Notes with respect to
which this Request for Redemption is being made on behalf of [Name of
deceased Beneficial Owner].
5. The Participant hereby certifies that it will indemnify and hold
harmless the Depositary, the Trustee and the Company (including their
respective officers, directors, agents, attorneys and employees), against
all damages, loss, cost, expense (including reasonable attorneys' and
accountants' fees), obligations, claims or liability (collectively, the
"Damages") incurred by the indemnified party or parties as a result of or
in connection with the redemption of IQ Notes to which this Request
relates. The Participant will, at the request of the Company, forward to
the Company, a copy of the documents submitted by [Name of Representative]
in support of the request for redemption.
IN WITNESS WHEREOF, the undersigned has executed this Redemption Request as
of , .
[PARTICIPANT NAME]
By: ___________________________________
Name: _________________________________
Title: ________________________________
A-1
APPENDIX B - FORM OF POLICY
[SPECIMEN]
Ambac Assurance Corporation
c/o CT Corporation Systems
Ambac 44 East Mifflin Street, Madison,
Wisconsin 53703
Financial Guaranty Insurance Policy Administrative Office:
One State Street Plaza, New York,
New York 10004
Telephone: (212) 668-0340
Obligor: Policy Number:
Obligations: Premium:
Ambac Assurance Corporation (Ambac) A Wisconsin Stock Insurance Company in
consideration of the payment of the premium and subject to the terms of this
Policy, hereby agrees to pay to United States Trust Company of New York, as
trustee, or its successor (the "Insurance Trustee"), for the benefit of the
Obligees, that portion of the principal of and interest on the above-described
obligations (the "Obligations") which shall become Due for Payment but shall be
unpaid by reason of Nonpayment by the Obligor.
Ambac will make such payments to the Insurance Trustee within one (1) business
day following notification to Ambac of Nonpayment. Upon an Obligee's
presentation and surrender to the Insurance Trustee of such unpaid Obligations
or appurtenant coupons, uncanceled and in bearer form and free of any adverse
claim, the Insurance Trustee will disburse to the Obligee the face amount of
principal and interest which is then Due for Payment but is unpaid. Upon such
disbursement, Ambac shall become the owner of the surrendered Obligations and
coupons and shall be fully subrogated to all of the Obligee's rights to payment.
In cases where the Obligations are issuable only in a form whereby principal is
payable to registered Obligees or their assigns, the Insurance Trustee shall
disburse principal to an Obligee as aforesaid only upon presentation and
surrender to the Insurance Trustee of the unpaid Obligation, uncanceled and free
of any adverse claim, together with an instrument of assignment, in form
satisfactory to the Insurance Trustee duly executed by the Obligee or such
Obligee's duly authorized representative, so as to permit ownership of such
Obligation to be registered in the name of Ambac or its nominee. In cases where
the Obligations are issuable only in a form whereby interest is payable to
registered Obligees or their assigns the Insurance Trustee shall disburse
interest to an Obligee as aforesaid only upon presentation to the Insurance
Trustee of proof that the claimant is the person entitled to the payment of
interest on the Obligation and delivery to the Insurance Trustee of an
instrument of assignment in form satisfactory to the Insurance Trustee, duly
executed by the claimant Obligee or such Obligee's duly authorized
representative, transferring to Ambac all rights under such Obligation to
receive the interest in respect of which the insurance disbursement was made.
Ambac shall be subrogated to all of the Obligees' rights to payment on
registered Obligations to the extent of the insurance disbursements so made.
In the event that a trustee or paying agent for the Obligations has notice that
any payment of principal of or interest on an Obligation which has become Due
for Payment and which is made to an Obligee by or on behalf of the Obligor has
been deemed a preferential transfer and theretofore recovered from the Obligee
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court of competent jurisdiction, such Obligee will be
entitled to payment from Ambac to the extent of such recovery if sufficient
funds are not otherwise available.
As used herein, the term "Obligee" means any person other than the Obligor who,
at the time of Nonpayment, is the owner of an Obligation or of a coupon
appertaining to an Obligation. As used herein, "Due for Payment", when referring
to the principal of Obligations, is when the stated maturity date or mandatory
redemption date for the application of a required sinking fund installment has
been reached and does not refer to any earlier date on which payment is due by
reason of call for redemption (other than by application of required sinking
fund installments), acceleration or other advancement of maturity; and, when
referring to interest on the Obligations, is when the stated date for payment of
interest has been reached. As used herein, "Nonpayment" means the failure of the
Obligor to have provided sufficient funds to the paying agent for payment in
full of all principal of and interest on the Obligations which are Due for
Payment.
This Policy is noncancelable. The premium on this Policy is not refundable for
any reason, including payment of the Obligations prior to maturity. This Policy
does not insure against loss of any prepayment or other acceleration payment
which at any time may become due in respect of any Obligation, other that at the
sole option of Ambac, nor against any risk other than Nonpayment.
In witness whereof, Ambac has caused this Policy to be affixed with a facsimile
of its corporate seal and to be signed by its duly authorized officers in
facsimile to become effective as its original seal and signatures and binding
upon Ambac by virtue of the countersignature of its duly authorized
representative.
/s/ P. Lassiter [SEAL] /s/ Anne G. Gill
President Secretary
Effective Date: Authorized Representative
UNITED STATES TRUST COMPANY OF NEW YORK /s/ H. William Weber
acknowledges that it has agreed to perform the
duties of Insurance Trustee under this Policy. Authorized Officer
Form No.: 2B-0012 (7/97)
B-1
[SPECIMEN]
Ambac Assurance Corporation
Ambac c/o CT Corporation Systems
44 East Mifflin Street, Madison, Wisconsin 53703
Administrative Office:
Endorsement One State Street Plaza, New York, New York 10004
Telephone: (212) 668-0340
Policy for: Attached to and forming part of Policy No.:
Effective Date of Endorsement:
Notwithstanding the terms and provisions contained in this Policy, it is further
understood that the term "Due for Payment" shall also mean, when referring to
the principal of and interest on an Obligation, any date on which the
Obligations shall have been duly called for mandatory redemption pursuant to
Section 108 of the Fifth Supplemental Indenture to Indenture dated as of
February 1, 1991, dated as of November __, 2000, relating to the Obligations.
Nothing herein contained shall be held to vary, alter, waive or extend any of
the terms, conditions, provisions, agreements or limitations of the above
mentioned Policy other than as above stated.
In Witness Whereof, Ambac has caused this Endorsement to be affixed with a
facsimile of its corporate seal and to be signed by its duly authorized officers
in facsimile to become effective as its original seal and signatures and binding
upon Ambac by virtue of the countersignature of its duly authorized
representative.
Ambac Assurance Corporation
/s/ P. Lassiter [SEAL] /s/ Anne G. Gill
President Secretary
Authorized Representative
Form No.: 2B-0027 (4/94)
B-2
PROSPECTUS
[INDIANA GAS LOGO]
Indiana Gas Company, Inc.
Debt Securities
. By this prospectus, we may offer from time to time up to
$100,000,000 of our debt securities.
. When we offer debt securities, we will provide you with a
prospectus supplement describing the terms of the specific issue
of securities including the offering price of the securities.
. You should read this prospectus and the prospectus supplement
relating to the specific offering of securities carefully before
you invest.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
----------------
The date of this prospectus is December 14, 2000.
INDIANA GAS COMPANY, INC.
We are an operating public utility providing gas utility service in
Indiana. We supply gas to approximately 514,000 residential, small commercial
and contract (large commercial and industrial) customers in 311 communities in
49 of the 92 counties in Indiana. The largest communities which we serve
include Muncie, Anderson, Lafayette, West Lafayette, Bloomington, Terre Haute,
Marion, New Albany, Columbus, Jeffersonville, New Castle and Richmond.
Our service area has a population of approximately 2 million people and
contains diversified manufacturing and agricultural enterprises. The principal
industries which we serve include:
. automotive parts and accessories;
. feed, flour and grain processing;
. metal castings;
. aluminum products;
. gypsum products;
. electrical equipment;
. metal processing; and
. glass.
We are a wholly-owned subsidiary of Vectren Corporation ("Vectren"), a New
York Stock Exchange-listed company (ticker symbol: VVC).
On March 31, 2000, Indiana Energy, Inc. ("Indiana Energy"), the former
parent of Indiana Gas, and SIGCORP, Inc. ("SIGCORP") merged and combined into
Vectren Corporation, a holding company formed for purposes of the merger.
SIGCORP was an investor-owned energy company that through its utility
subsidiary, Southern Indiana Gas and Electric Company, provided electric and
gas service to southwest Indiana and through its non-regulated subsidiaries
provided energy-related products and services throughout the Midwest and
elsewhere. As provided for in the merger agreement, Indiana Energy
shareholders received one share of Vectren common stock for each share of
Indiana Energy common stock held at the closing date. SIGCORP shareholders
received 1.333 shares of Vectren common stock for each share of SIGCORP common
stock held at the closing date. The transaction was a tax-free exchange of
shares and was accounted for as a pooling of interests.
Our principal executive offices are located at 20 N.W. Fourth Street,
Evansville, Indiana 47711 and our telephone number is (812) 491-4000.
If you want to find more information about us, please see the sections
entitled "Where You Can Find More Information" and "Incorporation of
Information We File with the SEC" in this prospectus.
2
RECENT DEVELOPMENTS
Acquisition of the Gas Utility Assets of The Dayton Power & Light Company
Vectren purchased the natural gas distribution assets of The Dayton Power
and Light Company ("Dayton Power") for a purchase price of approximately $464
million on October 31, 2000. The acquisition added approximately 305,000 gas
utility customers in 16 counties in west central Ohio. Vectren acquired the
gas utility assets as a tenancy in common through two separate subsidiaries.
Indiana Gas acquired a 47% ownership interest in the assets for approximately
$218 million and Vectren Energy Delivery of Ohio, Inc. ("Vectren of Ohio")
acquired the remaining 53% ownership interest for approximately $246 million.
Vectren of Ohio is the operator of the assets. Because Ohio law requires
domestic incorporation of any entity providing utility services in Ohio,
Indiana Gas has incorporated under Ohio, as well as Indiana, law.
Vectren Utility Holdings, Inc. ("Vectren Utility") is the intermediate
holding company for Vectren's utility interests. As part of the acquisition
financing, Vectren Utility borrowed approximately $435 million under its
commercial paper program. From the proceeds of this financing, Indiana Gas
received $189 million as debt and Vectren of Ohio received $246 million in
debt. Indiana Gas also borrowed $29 million under its commercial paper
program. Indiana Gas and Vectren of Ohio each applied these proceeds to pay
its share of the purchase price for the gas utility assets of Dayton Power. We
anticipate that the commercial paper financings of Vectren Utility and Indiana
Gas will be replaced over time with permanent, long term financing.
Indiana Supreme Court Decision Regarding Gas Supply Agreements with ProLiance
Energy, LLC
ProLiance Energy, LLC ("ProLiance"), a 50 percent owned non-regulated
marketing affiliate of Vectren, began providing natural gas and related
services to Indiana Gas, Citizens Gas and Coke Utility ("Citizens Gas") and
others effective April 1996. The sale of gas and provision of other services
to Indiana Gas by ProLiance is subject to regulatory review through the
quarterly gas cost adjustment process administered by the Indiana Utility
Regulatory Commission (the "Commission").
On September 12, 1997, the Commission issued an order finding the gas
supply agreements to be consistent with the public interest. The Commission's
decision reflected the significant gas cost savings to customers obtained
through ProLiance's services and indicated that all material provisions of the
gas supply agreements were reasonable. Nevertheless, with respect to the
pricing of gas commodity purchased from ProLiance and two other pricing terms,
the Commission concluded that additional review in the gas cost adjustment
process would be appropriate and directed that these matters be considered
further in the pending consolidated gas cost adjustment proceeding involving
Indiana Gas and Citizens Gas. This order was appealed by the Indiana Office of
Consumer Counselor and, through a series of appeals, was finally considered by
the Indiana Supreme Court.
3
On September 22, 2000, the Indiana Supreme Court issued a decision
affirming the September 12, 1997 order of the Commission that found the gas
supply agreements between ProLiance and Indiana Gas and Citizens Gas to be
consistent with the public interest.
Increased Gas Costs and Gas Cost Adjustment Proceedings
Commodity prices for natural gas purchases during the winter months of
calendar year 2001 have unexpectedly increased significantly over the past few
months, primarily due to the expectation of a colder winter, which has led to
increased demand and tighter supplies. Since Indiana Gas charges its customers
the actual cost it pays for the natural gas purchased on their behalf, Indiana
Gas's profit margin on gas sales should not be impacted. In 2001, Indiana Gas
may experience higher working capital requirements, increased expenses,
including interest costs and uncollectibles, and possibly some level of price
sensitive reduction in volumes sold. To the extent significantly increased
prices are accompanied by colder than normal weather, higher volumes may be
sold providing increased margins as an offset to the unfavorable results
mentioned.
On October 11, 2000, Indiana Gas filed for approval of its quarterly gas
cost adjustment. The Commission has issued an interim order approving the
request by Indiana Gas for a gas cost adjustment factor for December, 2000.
The Commission will determine the January and February, 2001 gas cost
adjustments in a subsequent order. That order will address the claim by the
Office of Utility Consumer Counselor that a portion of the requested gas cost
adjustment be disallowed because Indiana Gas should have entered into
additional commitments for this winter's gas supply in late 1999 and early
2000. In procuring gas supply for this winter, Indiana Gas followed
established practices. Accordingly, we believe that the Office of Utility
Consumer Counselor's claim is without merit or precedent and that it is
unlikely to be accepted by the Commission. There can, however, be no assurance
as to the ultimate outcome.
4
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement, we will
use the net proceeds from the sale of the debt securities for general
corporate purposes, including reducing short-term debt and financing the
continuing construction program. The following table sets forth information
relating to our capital expenditures for the periods indicated.
Fiscal Year Ended December 31, (1)
----------------------------------
2001 2000 1999 1998
------- ------- ------- -------
(in thousands)
Amount of Capital Expenditures (2)... $58,000 $57,200 $62,880 $55,320
Percentage of Capital Expenditures
Provided by Internal Funds (2)(3)... 70% 40% 57% 57%
- --------
(1) To be consistent with its parent corporation, Indiana Gas changed its
fiscal year end from September 30 to December 31.
(2) Amounts for 2001 and 2000 are estimated.
(3) The estimated percentage of capital expenditures provided by internal
funds for 2000 excluding estimated merger costs, net of tax, of $11.7
million would have been 60%.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our historical ratios of earnings to fixed
charges for the periods indicated.
Twelve Months Ended Fiscal Years Ended December 31, (1)
September 30, ------------------------------------------------------------
2000 1999 1998 1997 1996 1995
------------------- ---- ---- ---- ---- ----
1.8 3.6 3.5 2.2 4.4 4.9
- --------
(1) To be consistent with its parent corporation, Indiana Gas changed its
fiscal year end from September 30 to December 31.
For the purpose of computing these ratios, earnings consist of net income
plus income taxes, investment tax credits and fixed charges. Fixed charges
consist of total interest, amortization of debt discount, premium and expense
and the estimated portion of interest implicit in rentals. The ratio of
earnings to fixed charges for fiscal
5
1997 before the restructuring charge of $39.5 million relating to the
restructuring of operations of Indiana Gas to reduce costs and remain
competitive would have been 4.4. The ratio of earnings to fixed charges for
the twelve months ended September 30, 2000 excluding merger-related costs of
$15.9 million would have been 2.5.
DESCRIPTION OF THE DEBT SECURITIES
General
The debt securities will be issued under an indenture dated as of February
1, 1991, between Indiana Gas and U.S. Bank Trust National Association
(formerly Continental Bank, National Association), as trustee, as
supplemented, a copy of which is filed as an exhibit to the registration
statement of which this prospectus is a part.
The following summaries of certain provisions of the indenture are not
complete and are subject to, and are qualified in their entirety by reference
to, all of the provisions of the indenture, including the definitions of
terms.
The indenture does not limit the amount of debt, secured or unsecured,
which may be issued by Indiana Gas. The debt securities offered by this
Prospectus are unsecured and rank equally with the other unsecured and
unsubordinated indebtedness of Indiana Gas.
Unless otherwise indicated in the applicable prospectus supplement, Indiana
Gas will issue the debt securities only in fully registered form, without
coupons, in denominations of $1,000 or any multiple thereof. Unless otherwise
specified in the applicable prospectus supplement, the debt securities will be
registered for transfer and exchange, and principal, premium, if any, and
interest, if any, will be payable at the corporate trust offices of the
trustee in Chicago, Illinois and New York, New York. No service charge will be
made for any transfer or exchange of the debt securities, but Indiana Gas may
require payment of a sum sufficient to cover any tax or other government
charge payable in connection with any registration or exchange other than
certain exchanges not involving any transfer.
Terms of the Debt Securities
Indiana Gas may issue the debt securities from time to time, without
limitation as to aggregate principal amount and in one or more series. Indiana
Gas may issue debt securities upon the satisfaction of conditions, including
the delivery to the trustee of a supplemental indenture, a resolution of the
Board of Directors of Indiana Gas or a committee of the Board of Directors, or
a certificate of an officer of Indiana Gas who has been authorized by the
Board of Directors to take that kind of action, which fixes or establishes the
terms of the debt securities being issued. Any resolution or officer's
certificate approving the issuance of any issue of debt securities will
include the following terms of that issue of debt securities:
6
. the title of the debt securities;
. any limit on the aggregate principal amount of the debt securities;
. the date or dates on which the principal will be payable;
. the rate or rates (or manner of calculating the rate or rates) at which
the debt securities will bear interest, if any, and the date or dates
from which any interest will accrue;
. the interest payment dates and the regular record date for any interest
payable;
. the place or places where the principal (and premium, if any) and
interest, if any, will be payable and where the securities may be
surrendered for registration, transfer, or exchange;
. the period or periods within which, the price or prices at which, and the
terms and conditions upon which, the debt securities may be redeemed or
purchased, in whole or in part;
. any mandatory redemption or sinking fund or analogous provisions;
. the denominations in which any debt securities will be issuable if other
than denominations of $1,000 and any integral multiple thereof;
. the currency or currencies of payment of principal (and premium, if any)
and interest (if other than U.S. dollars);
. if the amount of payments of principal (and premium, if any) or interest
may be determined with reference to an index, the manner in which such
amounts will be determined;
. if other than the full principal amount, the portion of the principal
amount which will be payable upon declaration of acceleration of
maturity;
. any additional events of default or covenants of Indiana Gas; and
. any other terms of the debt securities.
The applicable prospectus supplement will also describe any special
provisions for the payment of additional amounts with respect to the debt
securities.
7
Limitations on Liens
Indiana Gas may not create or permit to be created or to exist any mortgage
on, pledge of, or other lien on or security interest in, any property or
assets of Indiana Gas securing any indebtedness for money borrowed, unless
Indiana Gas offers to each holder of the debt securities by written notice an
undertaking by Indiana Gas to provide that the debt securities will be equally
and ratably secured with that indebtedness and any other indebtedness which is
entitled to be equally and ratably secured. Any holder of a debt security may
accept this offer in writing delivered to Indiana Gas on or prior to the 30th
day following the date of the notice given by Indiana Gas. However, these
restrictions on liens do not apply to:
. certain governmental charges and similar liens, assessments, pledges and
deposits described in the indenture;
. leases made, or existing on property acquired, in the ordinary course of
business (including leases made in sale and lease-back transactions);
. zoning restrictions, easements, licenses or restrictions on the use of
real property or minor irregularities in the title, which do not, in the
opinion of Indiana Gas, materially impair the use of such property in the
operation of the business of Indiana Gas or the value of such property
for the purpose of that business;
. liens on any property acquired, constructed or improved by Indiana Gas
after the date of the indenture which are created or assumed at the time
of, or within 120 days after, the acquisition or completion of the
construction or improvement, or within six months after the acquisition
or completion pursuant to a firm commitment for financing arranged with a
lender or investor within such 120-day period, to secure or provide for
the payment of all or any part of the purchase price of the property or
the cost of the construction or improvement incurred after the date of
the indenture;
. liens on any property already existing at the time of acquisition, so
long as the liens do not apply to any other property owned by Indiana Gas
other than unimproved real property on which the property constructed or
the improvement is located;
. existing liens on any property or indebtedness of a corporation which is
merged or consolidated with Indiana Gas;
. liens in favor of the United States, any state, or any department, agency
or instrumentality or political subdivision of the United States or any
state, to secure partial, progress, advance or other payments pursuant to
any contract or statute or to secure any indebtedness incurred for the
purpose of financing all or any part of the purchase price of or the cost
of constructing or improving the property subject to such liens,
including, without limitation, liens to secure debt of the pollution
control or industrial revenue bond type;
8
. liens to secure loans to Indiana Gas maturing within 12 months from their
creation and made in the ordinary course of business;
. liens on any property (including any natural gas, oil or other mineral
property) to secure all or part of the cost of exploration, drilling or
development of the property or to secure debt incurred to provide funds
for that purpose; or
. liens for the sole purpose of extending, renewing or replacing in whole
or in part debt secured by any lien referred to above or in this bullet
point, so long as the principal amount of debt secured does not exceed
the principal amount of debt secured at the time of that extension,
renewal or replacement, and that the extension, renewal or replacement is
limited to all or a part of the property or indebtedness which secured
the lien so extended, renewed or replaced (plus improvements on such
property).
Other than the restrictions on the issuance of additional secured debt
described above, there are no provisions of the indenture which afford holders
of the debt securities protection in the event of a highly leveraged or
similar transaction involving Indiana Gas. However, such a transaction would
require regulatory approval and management of Indiana Gas believes that such
approval would be unlikely in a highly leveraged or similar context.
Events of Default
The following constitute events of default under the indenture with respect
to debt securities of any series:
. default in the payment of principal of (or premium, if any, on) any debt
security when due and continuing for three business days;
. default in the payment of interest on any debt security when due and
continuing for 30 days;
. default in the payment of any sinking fund payment when due and
continuing for three business days;
. default in the performance or breach of any covenant or warranty of
Indiana Gas in the indenture for the benefit of such series and
continuing for 60 days after written notice to Indiana Gas as provided in
the indenture;
. default in the payment of principal, premium, if any, or interest on
(after any applicable period of grace), or acceleration of, indebtedness
evidenced by any other series issued under the indenture or any other
mortgage, indenture or instrument, or other evidence of indebtedness of
Indiana Gas for borrowed money,
9
in an aggregate amount exceeding $10,000,000, which default is not
rescinded, or indebtedness not discharged, within 90 days after written
notice to Indiana Gas as provided in the indenture;
. certain events of bankruptcy, insolvency or reorganization; and
. any other event of default provided with respect to debt securities of
that series.
If an event of default occurs and is continuing, either the trustee or the
holders of at least 33% in aggregate principal amount of the outstanding debt
securities may declare the principal amount of all debt securities to be due
and payable immediately. At any time after the declaration of acceleration
with respect to the debt securities has been made, but before a judgment or
decree based on acceleration has been obtained, the holders of a majority in
principal amount of the outstanding debt securities may, under certain
circumstances, rescind and annul such acceleration.
Subject to the provisions of the indenture relating to the duties of the
trustee, before proceeding to exercise any right under the indenture at the
direction of the holders, the trustee is entitled to receive reasonable
security or indemnity from the holders. The holders of a majority in principal
amount of the outstanding debt securities may direct the time, method and
place of conducting any proceeding for any remedy available to the trustee, or
exercising any trust or power conferred on the trustee, with respect to the
debt securities. The holder of debt securities has an absolute right to
receive payment of principal, premium, if any, and interest when due and may
institute suit for the enforcement of any such payment. The trustee must,
within 90 days after a default occurs notify the holders of the default,
unless cured or waived. The trustee may withhold notice of default (except
default in payment of principal or interest) if it determines that it is in
the interest of the holders to do so. The trustee must withhold such notice
for 45 days in the event of a default relating to breaches of covenants or
representations contained in the indenture.
Indiana Gas is required to furnish annually to the trustee a statement as
to the performance by Indiana Gas of certain of its obligations under the
indenture and as to any default in that performance.
Consolidation, Merger, Sale or Conveyance
Indiana Gas may not merge or consolidate with another corporation or sell
or convey its property or assets as an entirety or substantially as an entity
unless
. Indiana Gas is the continuing corporation or the successor corporation
expressly assumes the obligations of Indiana Gas under the indenture, and
. Indiana Gas or the successor corporation immediately after the
transaction is not in default under the indenture.
10
Modification of the Indenture
The indenture may be modified and amended by Indiana Gas and the trustee
with the consent of holders of a majority in principal amount of each series
of debt securities affected. However, without the consent of each holder of
any debt security affected, no amendment or modification to any indenture may
. change the maturity of any debt security;
. reduce the principal amount of any debt security;
. change the currency of payment of principal or interest;
. reduce the interest rate or extend the time for payment of interest;
. reduce the overdue rate;
. reduce any amount payable upon redemption;
. reduce the percentage in principal amount of the outstanding debt
securities of any series, the consent of whose holders is required to
modify or amend the indenture or waive default;
. change any obligation of Indiana Gas to maintain an office or agency in
the place of payment for the debt securities;
. change the method of calculating the rate of interest of any debt
security;
. change any obligation of Indiana Gas to pay additional amounts as
provided in the indenture;
. change the place of payment; or
. impair the right to institute suit for the enforcement of payments on any
debt security on or after the stated maturity date or date of redemption
or repayment.
The indenture permits Indiana Gas and the trustee to amend the indenture
without the consent of holders of any debt securities to evidence the
succession of another entity to Indiana Gas or the replacement of the trustee
and for certain other purposes.
11
PLAN OF DISTRIBUTION
Indiana Gas may sell securities:
. to the public through underwriters,
. to private investors through agents or dealers,
. directly to purchasers.
In connection with the sale of the debt securities, underwriters may
receive compensation from Indiana Gas or from purchasers of the debt
securities for whom they may act as agents in the form of discounts,
concessions or commissions. Underwriters may sell the debt securities to or
through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agents. Underwriters, dealers and
agents that participate in the distribution of the debt securities may be
deemed to be underwriters, and any discounts or commissions received by them
from Indiana Gas and any profit on the resale of the debt securities by them
may be deemed to be underwriting discounts and commissions under the
Securities Act of 1933. Any such underwriter, dealer or agent will be
identified, and any such compensation received from Indiana Gas will be
described, in a prospectus supplement or pricing supplement.
If so indicated in the prospectus supplement, Indiana Gas will authorize
underwriters to solicit offers by certain institutions to purchase debt
securities from Indiana Gas pursuant to delayed delivery contracts providing
for payment and delivery on the date stated in the prospectus supplement. Each
contract will be for an amount not less than, and, unless Indiana Gas
otherwise agrees, the aggregate principal amount of debt securities sold
pursuant to the contracts shall not be more than, the respective amounts
stated in the prospectus supplement. Institutions with whom the contracts,
when authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions, and other institutions, but shall in all cases be subject to the
approval of Indiana Gas. Delayed delivery contracts will not be subject to any
conditions except that the purchase by an institution of the debt securities
covered under that contract shall not at the time of delivery be prohibited
under the laws of any jurisdiction in the United States to which that
institution is subject.
Indiana Gas will indemnify the agents and the underwriters against certain
civil liabilities, including liabilities under the Securities Act of 1933, or
contribute to payments the agents or the underwriters may be required to make.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the Securities
and Exchange Commission. Our Securities and Exchange Commission filings are
also available over the Internet at the Securities and Exchange
12
Commission's web site at http://www.sec.gov. You may also read and copy any
document we file by visiting the Securities and Exchange Commission's public
reference rooms in Washington, D.C., New York, New York, and Chicago,
Illinois. Please call the Securities and Exchange Commission at 1-800-SEC-0330
for further information about the public reference rooms.
We have filed a registration statement on Form S-3 with the Securities and
Exchange Commission covering the debt securities. For further information on
Indiana Gas and the securities, you should refer to our registration statement
and its exhibits. This prospectus summarizes material provisions of contracts
and other documents that we refer you to. Because the prospectus may not
contain all the information that you may find important, you should review the
full text of these documents. We have included copies of these documents as
exhibits to our registration statement of which this prospectus is a part.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The Securities and Exchange Commission allows us to incorporate by
reference the information we file with them, which means
. incorporated documents are considered part of this prospectus;
. we can disclose important information to you by referring you to those
documents; and
. information that we file with the Securities and Exchange Commission will
automatically update and, to the extent inconsistent, supersede this
prospectus and previously incorporated information.
We incorporate by reference the documents listed below which were filed
with the Securities and Exchange Commission under the Securities Exchange Act
of 1934:
. transition report of Indiana Gas on Form 10-K/A for the year ended
December 31, 1999;
. quarterly reports of Indiana Gas on Form 10-Q and Form 10-Q/A for the
quarters ended December 31, 1999, March 31, 2000, June 30, 2000, and
September 30, 2000; and
. current reports of Indiana Gas on Form 8-K and Form 8-K/A filed October
29, 1999, April 14, 2000, April 17, 2000, April 27, 2000 and November 15,
2000.
We also incorporate by reference each of the following documents that we
will file with the Securities and Exchange Commission after the date of this
prospectus until this offering is completed or after the date of the
13
registration statement and before the effectiveness of the registration
statement:
. all documents filed under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act; and
. any reports filed under Section 15(d) of the Exchange Act.
You should rely only on information contained or incorporated by reference
in this prospectus. We have not authorized any other person to provide you
with different or additional information. If anyone provides you with
different or additional information, you should not rely on it. We are not
making an offer to sell these securities in any jurisdiction where the offer
or sale is not permitted.
You should assume that the information appearing in this prospectus is
accurate as of the date of this prospectus only. Our business, financial
condition and results of operations may have changed since that date.
You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address: Vice
President and Treasurer, Indiana Gas Company, Inc., 20 N.W. Fourth Street,
Evansville, Indiana 47702-0209, telephone (812) 491-4000.
EXPERTS
The audited consolidated financial statements of Indiana Gas and Subsidiary
Companies as of December 31, 1999 and 1998 and for each of the years in the
three year period ended December 31, 1999 incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
14
$70,000,000
[INDIANA GAS LOGO]
Indiana Gas Company, Inc.
$20,000,000
7.15% Insured Quarterly Notes due December 15, 2015
$50,000,000
7.45% Insured Quarterly Notes due December 16, 2030
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Prospectus Supplement
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Edward D. Jones & Co., L.P.
December 21, 2000