Rule 424(b)(5)
Registration Statement No. 33-62488
PROSPECTUS SUPPLEMENT
(To Prospectus dated March 14, 1994)
2,500,000 Shares
Pacific Gas and Electric Company
6.30% REDEEMABLE FIRST PREFERRED STOCK
$25 PAR VALUE
----------------
THE NEW PREFERRED STOCK IS ENTITLED TO CUMULATIVE DIVIDENDS AT THE ANNUAL
RATE SET FORTH ABOVE FROM THE DATE OF ORIGINAL ISSUE. THE NEW PREFERRED
STOCK WILL NOT BE REDEEMABLE BEFORE JANUARY 31, 2004. ON AND AFTER
THAT DATE, THE NEW PREFERRED STOCK WILL BE REDEEMABLE AT THE
OPTION OF THE COMPANY, IN WHOLE OR IN PART, UPON NOT LESS
THAN 30 DAYS' NOR MORE THAN 60 DAYS' NOTICE, AT A
REDEMPTION PRICE OF $25 PER SHARE PLUS AN AMOUNT
EQUAL TO ACCUMULATED AND UNPAID DIVIDENDS TO AND
INCLUDING THE REDEMPTION DATE. SEE
"DESCRIPTION OF THE NEW PREFERRED
STOCK--REDEMPTION PROVISIONS" HEREIN.
----------------
THE NEW PREFERRED STOCK IS ENTITLED TO A SINKING FUND PROVIDING FOR THE
REDEMPTION OF 125,000 SHARES ANNUALLY ON JANUARY 31, 2004 THROUGH
2008, INCLUSIVE, AND 1,875,000 SHARES ON JANUARY 31, 2009, AT
A REDEMPTION PRICE OF $25 PER SHARE PLUS AN AMOUNT EQUAL
TO ACCUMULATED AND UNPAID DIVIDENDS TO AND
INCLUDING THE REDEMPTION DATE. SEE
"DESCRIPTION OF THE NEW PREFERRED STOCK--
SINKING FUND" HEREIN.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------
PRICE $25 A SHARE AND ACCRUED DIVIDENDS, IF ANY
----------------
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
----------- -------------- -------------
Per Share.............................. $25.000 $.075 $24.925
Total.................................. $62,500,000 $187,500 $62,312,500
- --------
(1) Plus accrued dividends, if any, from the date of original issue.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deduction of expenses payable by the Company, estimated at
$130,000.
----------------
The New Preferred Stock is offered subject to prior sale, when, as and if
accepted by the Underwriters and subject to approval of certain legal matters
by Orrick, Herrington & Sutcliffe, counsel for the Underwriters. It is
expected that delivery of the New Preferred Stock will be made on or about
March 28, 1994, at the office of Morgan Stanley & Co. Incorporated, New York,
N.Y., against payment therefor in New York funds.
----------------
MORGAN STANLEY & CO.
Incorporated
GRIGSBY BRANDFORD & CO., INC.
SMITH MITCHELL INVESTMENT GROUP INC.
MORGAN KEEGAN & COMPANY, INC.
March 14, 1994
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY OR ANY OTHER SECURITIES OF THE COMPANY AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the
detailed information and financial statements appearing elsewhere in this
Prospectus Supplement, the accompanying Prospectus or the documents
incorporated therein by reference.
THE OFFERING
Securities Offered................... 2,500,000 shares of 6.30% Redeemable First
Preferred Stock, $25 Par Value
Dividend Payment Dates............... Quarterly, commencing May 15, 1994
As set forth on the Prospectus Supplement
Redemption........................... cover
As set forth on the Prospectus Supplement
Sinking Fund......................... cover
Use of Proceeds...................... For capital expenditures
THE COMPANY
Principal Business................... Supplying electric and natural gas service
Service Area......................... Most of Northern and Central California
Population of Service Area........... Approximately 12,800,000
YEAR ENDED
DECEMBER 31, 1993
--------------------
ELECTRIC GAS
----------- --------
Operating Revenues......................................... 74% 26%
Operating Income........................................... 85% 15%
CONSOLIDATED FINANCIAL INFORMATION
(DOLLAR AMOUNTS IN THOUSANDS)
YEARS ENDED DECEMBER 31,
--------------------------------------------------------
1989 1990 1991 1992 1993
---------- ---------- ---------- ----------- -----------
Operating Revenues...... $8,588,264 $9,470,092 $9,778,119 $10,296,088 $10,582,408
Net Income.............. $ 900,628 $ 987,170 $1,026,392 $ 1,170,581 $ 1,065,495
Ratios of Earnings to
Combined Fixed Charges
and Preferred Stock
Dividends*............. 2.40x 2.73x 2.89x 3.15x 3.19x
- --------
*See "Ratios of Earnings to Combined Fixed Charges and Preferred Stock
Dividends" in the accompanying Prospectus.
AS OF DECEMBER 31,
1993
----------------------
AMOUNT PERCENTAGE
----------- ----------
Common Stock Equity...................................... $ 8,446,037 45.4%
Preferred Stock Without Mandatory Redemption............. 807,995 4.3
Preferred Stock With Mandatory Redemption................ 75,000 .4
Long-term Debt........................................... 9,292,100 49.9
----------- -----
Total Capitalization................................. $18,621,132 100.0%
=========== =====
Current Liabilities:
Long-term Debt......................................... $ 221,416
Short-term Borrowings.................................. 764,163
S-2
DESCRIPTION OF THE NEW PREFERRED STOCK
The following description of the particular terms of the 2,500,000 shares of
the Company's 6.30% Redeemable First Preferred Stock, $25 Par Value (the "New
Preferred Stock"), offered hereby supplements the description of the general
terms and provisions of the New Preferred Stock set forth in the accompanying
Prospectus under the heading "Description of the New Preferred Stock," to which
description reference is hereby made. As used hereinafter, the terms "first
preferred stock" and "$100 first preferred stock" shall have the same meanings
as the same terms used under the heading "Description of the New Preferred
Stock" in the accompanying Prospectus.
DIVIDEND RIGHTS
The New Preferred Stock will be entitled to receive, from the date of issue,
out of funds legally available therefor, cumulative preferential dividends,
when and as declared by the Company's Board of Directors, at the annual
dividend rate set forth in the title thereof. The New Preferred Stock will rank
equally with all shares of any series of first preferred stock and $100 first
preferred stock with regard to preference in dividend rights. It is the
practice of the Company to pay dividends on preferred stock on the 15th day of
February, May, August and November for the quarterly periods ending on the last
day of the preceding calendar month. The initial quarterly dividend on the New
Preferred Stock will be payable on or about May 15, 1994 and will be less than
subsequent quarterly dividends since it will be for the period commencing with
the date of issuance of the New Preferred Stock and ending April 30, 1994.
Thereafter, dividends will be payable at the full quarterly rate.
REDEMPTION PROVISIONS
The New Preferred Stock is not redeemable before January 31, 2004. On and
after January 31, 2004, the Company may redeem the New Preferred Stock in whole
or in part upon not less than 30 days' nor more than 60 days' notice at a
redemption price of $25 per share plus an amount equal to the accumulated and
unpaid dividends thereon, if any, to and including the date of redemption,
provided that there are no arrearages in the payment of dividends or sinking
fund payments, if any, on any series of the first preferred stock or $100 first
preferred stock.
SINKING FUND
After payment of all dividends on all series of first preferred stock and
$100 first preferred stock for past dividend periods, the Company is required
to redeem 125,000 shares of the New Preferred Stock annually on January 31,
commencing in 2004 through and including 2008, and 1,875,000 shares on January
31, 2009, at a redemption price of $25 per share plus an amount equal to
accumulated and unpaid dividends to and including the redemption date.
Shares of the New Preferred Stock redeemed otherwise than through the sinking
fund, or purchased or otherwise acquired by the Company, may be applied to
satisfy any subsequent mandatory sinking fund requirement. Shares redeemed,
purchased or otherwise acquired by the Company shall become authorized and
unissued shares of first preferred stock but shall not be reissued as shares of
the New Preferred Stock.
The sinking fund on the New Preferred Stock is on a parity with the Company's
other preferred stock sinking funds. In the event of any deficiency in any
mandatory sinking fund payments of any such series, the Company would be
precluded from paying any dividend or making any other distribution on any
stock junior thereto or from purchasing, redeeming or otherwise acquiring any
shares of first preferred stock or $100 first preferred stock or any stock
junior thereto, other than redemptions of any shares of first preferred stock
or $100 first preferred stock pursuant to a mandatory sinking fund and then on
a proportionate basis with all other such sinking funds.
S-3
UNDERWRITERS
Under the terms and subject to the conditions contained in a Purchase
Agreement dated the date hereof, the Underwriters named below have severally
agreed to purchase, and the Company has agreed to sell to them, severally, the
respective number of shares of the New Preferred Stock set forth below:
NUMBER OF
NAME SHARES
---- ---------
Morgan Stanley & Co. Incorporated............................... 2,190,000
Grigsby Brandford & Co., Inc.................................... 125,000
Smith Mitchell Investment Group Inc............................. 125,000
Morgan Keegan & Company, Inc.................................... 60,000
---------
Total....................................................... 2,500,000
=========
The Purchase Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of the New Preferred
Stock are subject to the approval of certain legal matters by their counsel and
to certain other conditions. A default by one or more Underwriters would not
relieve the non-defaulting Underwriters from their several obligations and, in
the event of a default involving not more than 10% of the aggregate number of
shares of New Preferred Stock, the non-defaulting Underwriters would be
required to purchase the shares of New Preferred Stock agreed to be purchased
by such defaulting Underwriters in proportion to their respective purchase
obligations. In the event of a default in excess of 10% of the aggregate number
of shares of New Preferred Stock, the Company may, at its option, sell less
than all of the New Preferred Stock.
The Underwriters propose to offer part of the shares of the New Preferred
Stock directly to the public at the public offering price set forth on the
cover page hereof and part to certain dealers at a price that represents a
concession of not in excess of $.0625 per share under the public offering
price. The Underwriters may allow, and such dealers may reallow, a concession
of not in excess of $.05 per share under the public offering price to certain
other dealers. After the initial public offering, the public offering price and
concessions may be changed.
The shares of the New Preferred Stock are a new issue of securities with no
established trading market. The Underwriters have advised the Company that one
or more of them intend to act as market makers for the New Preferred Stock.
However, the Underwriters are not obligated to do so and may discontinue any
market making at any time without notice. No assurances can be given as to the
liquidity of the trading market for the New Preferred Stock.
The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
S-4
PROSPECTUS
PACIFIC GAS AND ELECTRIC COMPANY
FIRST PREFERRED STOCK ($25 PAR VALUE)
Pacific Gas and Electric Company (the "Company") from time to time may issue
in one or more series up to 5,000,000 shares of its First Preferred Stock, par
value $25 per share (the "New Preferred Stock"), on terms to be determined at
the time of sale. The specific number of shares, designation, issuance price,
dividend rate, any redemption or sinking fund provisions, and other specific
terms of the series of New Preferred Stock in respect of which this Prospectus
is being delivered will be set forth in an accompanying Prospectus Supplement
(a "Prospectus Supplement").
The New Preferred Stock may be sold for public offering on a negotiated or
competitive bid basis to or through underwriters or dealers, which may include
a group of underwriters represented by one or more managing underwriters. In
addition, the New Preferred Stock may be sold directly by the Company or
through agents designated from time to time. See "Plan of Distribution." The
names of any such agents or underwriters involved in the sale of the New
Preferred Stock in respect of which this Prospectus is being delivered and any
applicable commission or discount will be set forth in a Prospectus Supplement.
This Prospectus may not be used to consummate sales of New Preferred Stock
unless accompanied by a Prospectus Supplement.
---------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------
THE DATE OF THIS PROSPECTUS IS MARCH 14, 1994.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and, in accordance therewith, files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference room of the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C., and the public reference
facilities in the New York Regional Office, 7 World Trade Center, New York, New
York and the Chicago Regional Office, Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois. Copies of such material can be
obtained at prescribed rates by writing to the Securities and Exchange
Commission, Public Reference Section, Washington, D.C. 20549. Such material can
also be inspected at the New York, American and Pacific Stock Exchanges. This
Prospectus does not contain all information set forth in the related
registration statement on Form S-3 (together with all amendments and exhibits
thereto, the "Registration Statement") which the Company has filed with the
Commission under the Securities Act of 1933.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated by reference in this Prospectus:
1. The Company's annual report on Form 10-K for the year ended December 31,
1992.
2. The Company's quarterly reports on Form 10-Q for the quarters ended
March 31, 1993, June 30, 1993 and September 30, 1993.
3. The Company's current reports on Form 8-K dated January 13, 1993,
January 21, 1993, February 26, 1993, March 2, 1993, March 15, 1993,
March 23, 1993, March 29, 1993, April 13, 1993, April 22, 1993, May 25,
1993, June 18, 1993, July 12, 1993, July 27, 1993, August 20, 1993,
September 3, 1993, September 17, 1993, October 14, 1993, October 25,
1993, November 4, 1993, November 17, 1993, December 7, 1993, December
23, 1993, January 10, 1994, January 24, 1994, March 2, 1994 and March
11, 1994.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 after the date of this Prospectus
and prior to the termination of the offering of the New Preferred Stock shall
be deemed to be incorporated by reference in this Prospectus.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN
DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR
ALL THE DOCUMENTS REFERRED TO ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED IN
THIS PROSPECTUS BY REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE
NOT SPECIFICALLY INCORPORATED BY REFERENCE IN THE INFORMATION THAT THIS
PROSPECTUS INCORPORATES. REQUESTS SHOULD BE DIRECTED TO MR. LESLIE GULIASI,
TRANSFER AGENT, SHAREHOLDER SERVICES, PACIFIC GAS AND ELECTRIC COMPANY, 77
BEALE STREET, ROOM 2600, P. O. BOX 770000, SAN FRANCISCO, CALIFORNIA 94177
(TELEPHONE: 1-800-367-7731).
------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES
OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR
ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE.
2
THE COMPANY
Pacific Gas and Electric Company is an operating public utility engaged
principally in the business of supplying electric and natural gas service
throughout most of northern and central California. The Company was
incorporated in California in 1905. Its principal executive office is located
at 77 Beale Street, P.O. Box 770000, San Francisco, California 94177, and its
telephone number is (415) 973-7000.
USE OF PROCEEDS
Except as otherwise described in any Prospectus Supplement, the net proceeds
from the sale of the New Preferred Stock will become part of the treasury funds
of the Company and will be applied to capital expenditures and to the
redemption, repayment or retirement of outstanding indebtedness or preferred
stock. On February 18, 1994, the Company redeemed the Series 8.16% Redeemable
First Preferred Stock at an aggregate redemption price of approximately $83
million, and the Company has authorized the possible future redemption during
1994 of the Series 8.00% Redeemable First Preferred Stock, of which $50 million
par value is outstanding, and the Series 8.20% Redeemable First Preferred
Stock, of which $50 million par value is outstanding. In addition, on March 1,
1994, the Company redeemed its First and Refunding Mortgage Bonds, Series SS, 7
1/2%, due June 1, 2001, at an aggregate redemption price of approximately $81
million, and the Company has authorized the possible future redemption or
repurchase during 1994 of approximately $1.022 billion aggregate principal
amount of its First and Refunding Mortgage Bonds and $85 million aggregate
principal amount of its Medium-Term Notes. Specific dates for these redemptions
and repurchases have not yet been determined.
RATIOS OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratios of earnings to combined fixed
charges and preferred stock dividends of the Company and its subsidiaries for
each of the years 1989 through 1993.
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
2.40 2.73 2.89 3.15 3.19
For the purpose of computing the Company's ratios of earnings to combined
fixed charges and preferred stock dividends, "earnings" represent net income
adjusted for the Company's equity in undistributed earnings or loss of
unconsolidated affiliates, income taxes and fixed charges (excluding
capitalized interest). "Fixed charges" consist of interest on short-term and
long-term debt (including amortization of bond premium, discount and expense;
and excluding interest on decommissioning trust funds (for which an equal
amount of interest income is recorded) and amortization of the gain or loss on
reacquired debt securities) and interest on capital leases (including
capitalized interest). "Preferred stock dividends" represent the sum of
requirements for preferred stock dividends that are deductible for federal
income tax purposes and requirements for preferred stock dividends that are not
deductible for federal income tax purposes increased to an amount representing
pretax earnings which would be required to cover such dividend requirements.
DESCRIPTION OF THE NEW PREFERRED STOCK
The following description of the terms of the New Preferred Stock sets forth
certain general terms and provisions of the New Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of the New
Preferred Stock offered by any Prospectus Supplement will be described in such
Prospectus Supplement. If so indicated in a Prospectus Supplement, the terms of
any such series may differ from the terms set forth below. The description of
certain provisions of the New Preferred Stock set forth below and in any
Prospectus Supplement does not purport to be complete and is subject to and
qualified in its entirety by reference to the Company's Restated Articles of
Incorporation (the "Articles of Incorporation"), and the certificates of
determination of preferences (a "Certificate of Determination")
3
relating to each series of the New Preferred Stock which will be filed or
incorporated by reference, as the case may be, as an exhibit to the
Registration Statement of which this Prospectus is a part at or prior to the
time of the issuance of such series of the New Preferred Stock. A form of
Certificate of Determination is filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
The Company is authorized to issue 800,000,000 shares of common stock, par
value $5 per share ("common stock"), 75,000,000 shares of first preferred
stock, par value $25 per share ("first preferred stock," which term, as used
herein, includes the New Preferred Stock), and 10,000,000 shares of $100 first
preferred stock, par value $100 per share ("$100 first preferred stock").
As of January 31, 1994, there were issued and outstanding 428,685,869 shares
of common stock. The first preferred stock consists of three series of
authorized nonredeemable shares (a 6% series of 4,211,662 shares, a 5.50%
series of 1,173,163 shares and a 5% series of 400,000 shares, all of which were
outstanding on January 31, 1994), and 69,215,175 authorized redeemable shares,
of which 29,534,958 shares were outstanding on January 31, 1994. No $100 first
preferred stock was outstanding as of January 31, 1994.
Under the Articles of Incorporation, the Board of Directors of the Company is
authorized without further shareholder action to provide for the issuance of up
to 39,680,217 additional shares of first preferred stock and up to 10,000,000
shares of $100 first preferred stock, in one or more additional series, with
such rights, preferences, privileges and restrictions as shall be stated and
expressed in the resolution or resolutions providing for the issue of such
stock, or series thereof, adopted, at any time or from time to time, by the
Board of Directors of the Company (as used herein the term "Board of Directors"
includes any duly authorized committee thereof).
The New Preferred Stock will have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in a Prospectus
Supplement relating to a particular series of the New Preferred Stock.
Reference is made to the Prospectus Supplement relating to the particular
series of the New Preferred Stock offered thereby for specific terms,
including: (i) the designation of such New Preferred Stock and the number of
shares offered; (ii) the initial public offering price at which such New
Preferred Stock will be issued; (iii) the dividend rate and the dates from
which dividends shall accrue; (iv) any redemption or sinking fund provisions;
and (v) any additional dividend, redemption, sinking fund or other rights,
preferences, privileges, limitations or restrictions.
The rights of the holders of each series of the New Preferred Stock will be
subordinate to those of the Company's general creditors.
DIVIDEND RIGHTS
Holders of the New Preferred Stock will be entitled to receive, from the date
of issue, out of funds legally available therefor, cumulative preferential
dividends, when and as declared by the Board of Directors, at such annual
dividend rate as is set forth in the title of such series of the New Preferred
Stock. Each such dividend will be payable to the holders of record as they
appear on the stock books of the Company on such record date as will be fixed
by the Board of Directors of the Company.
All shares of first preferred stock (including shares of each series of the
New Preferred Stock) and $100 first preferred stock will rank equally with
regard to preference in dividend rights, except that shares of different
classes or different series thereof may differ as to the amounts of dividends
to which they are entitled.
It is the practice of the Company to pay dividends on preferred stock on the
15th day of February, May, August and November for the quarterly periods ending
on the last day of the preceding calendar month.
Dividends on the New Preferred Stock shall be declared and shall be either
paid or set apart for payment before any dividend on the common stock shall be
either declared or paid.
4
LIQUIDATION RIGHTS
Upon the liquidation or dissolution of the Company at any time or in any
manner, holders of shares of the New Preferred Stock will be entitled to
receive an amount equal to the par value of such shares plus an amount equal to
all accumulated and unpaid dividends thereon to and including the date fixed
for such distribution or payment before any amount shall be paid to the holders
of common stock.
All shares of first preferred stock (including shares of each series of the
New Preferred Stock) and $100 first preferred stock will rank equally with
regard to preference in liquidation rights, except that shares of different
classes or different series thereof may differ as to the amounts of liquidation
payments to which they are entitled.
REDEMPTION PROVISIONS
The shares of any series of the New Preferred Stock may be redeemed in whole
or in part at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case on the date or
dates and at the redemption price or prices (including the applicable premium,
if any) set forth in the Prospectus Supplement relating to such series,
together with accumulated and unpaid dividends at the rate fixed therefor to
and including the date fixed for redemption. However, no such redemption and no
purchase of first preferred stock and $100 first preferred stock or any stock
junior thereto shall be made by the Company if there is an arrearage in the
payment of dividends or sinking fund payments, if any, on the first preferred
stock or $100 first preferred stock.
If fewer than all the outstanding shares of any series of the New Preferred
Stock are to be redeemed, the shares to be redeemed shall be determined pro
rata or by lot in such manner as the Board of Directors may determine.
Unless the Prospectus Supplement relating to a series of the New Preferred
Stock provides otherwise, notice of every redemption shall be published in a
newspaper of general circulation in the City and County of San Francisco, State
of California, and in a newspaper of general circulation in the Borough of
Manhattan, City and State of New York, at least once in each of two successive
weeks, commencing not earlier than 60 nor later than 30 days before the date
fixed for redemption. A copy of such notice shall be mailed within the same
period of time to each holder of record, as of the record date, of the shares
to be redeemed, but the failure to mail such notice to any shareholder shall
not invalidate the redemption of such shares.
From and after the date fixed for redemption, unless default be made by the
Company in paying the amount due upon redemption, dividends on the shares
called for redemption shall cease to accrue, and such shares shall be deemed to
be redeemed and shall be no longer outstanding, and the holders thereof shall
cease to be shareholders with respect to such shares and shall have no rights
with respect thereto except the right to receive from the Company upon
surrender of their certificates the amount payable upon redemption without
interest.
NON-ASSESSABILITY; VOTING RIGHTS; NO PREEMPTIVE OR CONVERSION RIGHTS
All shares of the New Preferred Stock, when issued, will be fully paid and
nonassessable, and will have full voting rights entitled to one vote per share.
No shareholder of the Company is entitled to cumulate his or her voting power
in the election of directors. The New Preferred Stock will have no preemptive
rights. No holder of shares of the New Preferred Stock will have any rights to
convert such shares into shares of any other class or series of capital stock
of the Company.
FAIR PRICE AMENDMENT
Under certain circumstances, the "Fair Price Amendment" to the Articles of
Incorporation requires the affirmative vote of at least 75% of the outstanding
stock of the Company for the approval of any business
5
combination between the Company or any of its subsidiaries and any person or
entity holding 5% or more of the Company's outstanding stock (a "Related
Person"). Business combinations for this purpose include mergers, sales to or
purchases from the Related Person of assets of $100 million or more, issuance
or transfer to the Related Person of securities of the Company or any of its
subsidiaries worth $100 million or more, a recapitalization of the Company or
any other transaction that would increase the voting power of the Related
Person, or a merger with a subsidiary which would eliminate the Fair Price
Amendment from the articles. The 75% vote will not be required if (i) the
Related Person seeking a business combination gives all holders of stock a
price per share in cash or property having a fair market value meeting certain
defined minimum price criteria and certain specified procedural requirements
are satisfied, or (ii) the business combination is approved by a majority of
disinterested directors of the Board of Directors.
DIVIDEND REINVESTMENT PLAN
The Company has a Dividend Reinvestment Plan under which holders of its
common and preferred stock may automatically reinvest their dividends in newly
issued shares of common stock, without payment of brokerage commissions or
service charges. A prospectus and other information regarding the plan may be
obtained by writing to Pacific Gas and Electric Company, Dividend Reinvestment
Plan, 77 Beale Street, Room 2600, P.O. Box 770000, San Francisco, California
94177.
TRANSFER AGENT AND REGISTRAR
Unless otherwise indicated in any Prospectus Supplement, the Company will be
the transfer agent and dividend and redemption price disbursement agent and
First Interstate Bank of California will be the registrar for shares of each
series of the New Preferred Stock.
PLAN OF DISTRIBUTION
The Company may sell the New Preferred Stock being offered hereby (i) to one
or more underwriters for public offering and sale by them and (ii) to investors
or dealers directly or through agents. The distribution of the New Preferred
Stock may be effected from time to time in one or more transactions at a fixed
price or prices (which may be changed from time to time), at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or on a competitive bid basis. Each Prospectus
Supplement will describe the method of distribution of the New Preferred Stock
offered thereby.
In connection with the sale of the New Preferred Stock, underwriters, dealers
or agents may receive compensation from the Company or from purchasers of the
New Preferred Stock for whom they may act as agents, in the form of discounts,
concessions or commissions. The underwriters, dealers or agents which
participate in the distribution of the New Preferred Stock may be deemed to be
underwriters under the Securities Act of 1933 (the "Act") and any discounts or
commissions received by them and any profit on the resale of the New Preferred
Stock received by them may be deemed to be underwriting discounts and
commissions thereunder. Any such underwriter, dealer or agent will be
identified and any such compensation received from the Company will be
described in a Prospectus Supplement. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
If the New Preferred Stock is offered on a competitive bid basis, the Company
will receive bids by telephone or otherwise prior to a designated time. Each
bid will be required to be made for all the New Preferred Stock being sold and
the Company will reserve the right to reject all bids. If any bid is accepted,
the Company will accept the qualified bid which in its sole and final
determination will result in the lowest effective cost of money to it for the
New Preferred Stock being sold. No bidder will be entitled to submit or
participate as a bidder in more than one bid.
6
Under agreements that may be entered into with the Company, underwriters,
dealers and agents may be entitled to indemnification by the Company against
certain civil liabilities, including liabilities under the Act, or to
contribution with respect to payments which the underwriters, dealers or agents
may be required to make in respect thereof.
Certain of the underwriters or agents and their associates may be customers
of, engage in transactions with and perform services for, the Company in the
ordinary course of business.
EXPERTS
The consolidated balance sheet and statement of consolidated capitalization
of the Company and subsidiaries as of December 31, 1993 and 1992, and the
related statements of consolidated income, cash flows, common stock equity and
preferred stock, and the schedule of consolidated segment information for each
of the three years in the period ended December 31, 1993, incorporated by
reference in this Prospectus, have been audited by Arthur Andersen & Co.,
independent public accountants, as indicated in their report with respect
thereto which is incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report. Reference is made to said report which includes explanatory paragraphs
that describe the uncertainties regarding the ultimate outcome of the gas
reasonableness proceedings, and the recovery of the remaining unrecovered Helms
costs and of certain lost revenues and the Hinkley litigation, as discussed in
Note 2 and Note 11, respectively, of Notes to Consolidated Financial Statements
included in the Company's current report on Form 8-K dated March 2, 1994.
Reference is made to said report which includes an explanatory paragraph with
respect to the change in 1993 in the method of accounting for postretirement
benefits other than pensions and for income taxes, as discussed in Note 1 and
Note 7 of Notes to Consolidated Financial Statements included in the Company's
current report on Form 8-K dated March 2, 1994.
LEGAL OPINIONS
The legality of the New Preferred Stock and certain other legal matters in
connection therewith will be passed upon for the Company by Bruce R.
Worthington, Esq., Chief Counsel, Corporate in the Company's Law Department.
The statements in this Prospectus involving matters of law have been reviewed
by Mr. Worthington and are made on his authority. Mr. Worthington and his
associates in the Company's Law Department who will participate in
consideration of legal matters relating to the New Preferred Stock, together
with members of their respective families, own in the aggregate approximately
1,700 shares of the Company's common stock.
Unless otherwise indicated in any Prospectus Supplement, the legality of the
New Preferred Stock and certain other legal matters in connection therewith
will be passed upon for the underwriters or agents by Orrick, Herrington &
Sutcliffe, 400 Sansome Street, San Francisco, California 94111. From time to
time, Orrick, Herrington & Sutcliffe performs legal services for the Company.
7