FILED PURSUANT TO RULE 424(b)(2)
FILE NO. 333-82173
Prospectus Supplement to Prospectus dated July 12, 1999.
[LOGO]
$80,000,000
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
6.72% Senior Notes due August 1, 2029
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Southern Indiana Gas and Electric Company will pay interest on the Notes on
February 1 and August 1 of each year. The first interest payment will be made on
February 1, 2000. The Notes will mature on August 1, 2029. The Notes will be
issued only in denominations of $1,000 and integral multiples of $1,000. Until
the amount of other outstanding First Mortgage Bonds falls below certain levels,
the Notes will be secured by First Mortgage Bonds issued by Southern Indiana Gas
and Electric Company for that purpose. Southern Indiana Gas and Electric Company
may redeem the Notes, in whole or in part, at any time, at a redemption price
equal to the greater of (1) 100% of principal or (2) the sum of the remaining
scheduled payments of principal and interest on the Notes, discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Yield plus 0.10%, plus in each case
accrued interest to the redemption date, as set forth in this Prospectus
Supplement. The Notes may be repaid on August 3, 2009, at the option of the
registered holders of the Notes, at 95.50% of their principal amount, together
with accrued interest to August 3, 2009.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY
HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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Per Note Total
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Initial public offering price...................................................... 100.00% $ 80,000,000
Underwriting discount.............................................................. 0.65% $ 520,000
Proceeds before expenses, to SIGECO................................................ 99.35% $ 79,480,000
The initial public offering price set forth above does not include accrued
interest, if any. Interest on the Notes will accrue from July 26, 1999 and must
be paid by the purchaser if the Notes are delivered after July 26, 1999.
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The underwriters expect to deliver the Notes in book-entry form only through
the facilities of The Depository Trust Company against payment in New York, New
York on July 26, 1999.
GOLDMAN, SACHS & CO.
A.G. EDWARDS & SONS, INC.
BANC ONE CAPITAL MARKETS, INC.
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Prospectus Supplement dated July 15, 1999.
SUMMARY INFORMATION
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus or in the Prospectus
Supplement or in the financial statements or other documents incorporated in
this Prospectus by reference.
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY ("SIGECO")
BUSINESS
Primarily generation, transmission, distribution and sale of electric energy
and the purchase of natural gas and its transportation, distribution and sale in
Indiana. On June 14, 1999, the parent holding company of SIGECO, SIGCORP, Inc.,
and Indiana Energy, Inc., a publicly owned holding company with subsidiaries and
affiliates engaged in natural gas distribution, gas portfolio administrative
services and marketing of natural gas, electric power and related services,
announced that they had signed a definitive merger agreement. SIGECO's
obligations with respect to the Notes and the Senior Note First Mortgage Bonds
will not change with the merger.
SERVICE AREA
SIGECO serves ten counties in southwestern Indiana. In 1998, SIGECO provided
electric service to 124,340 customers in Evansville and 74 other cities and
towns, and supplied gas service to 108,335 customers in Evansville and 64 other
nearby communities.
FINANCIAL INFORMATION
SIGECO's EBITDA for the twelve months ended March 31, 1999 was $130,349,000,
and the ratio of EBITDA to interest expense for the same period was 6.64x.
EBITDA represents earnings before interest expense, provision for income taxes,
depreciation and amortization and is presented herein because it is a widely
accepted indicator of a company's ability to service debt. EBITDA does not
represent net income or cash flow from operations as those items are defined by
generally accepted accounting principles, should not be considered by
prospective purchasers of the Notes as an alternative to net income and does not
necessarily indicate whether cash flows will be sufficient to fund cash needs.
CERTAIN TERMS OF THE NOTES
Please read the following information concerning the Notes in conjunction
with the statements under "Description of Senior Notes" in the accompanying
Prospectus, which the following information supplements and, in the event of any
inconsistencies, supersedes. Capitalized terms not defined in this Prospectus
Supplement are used as defined or otherwise provided in the accompanying
Prospectus.
GENERAL
We will offer $80,000,000 principal amount of our 6.72% Senior Notes due
August 1, 2029.
INTEREST PAYMENTS
The Notes will bear interest from July 26, 1999. Interest on the Notes will
be payable commencing February 1, 2000. Interest payments will be made
semi-annually on February 1 and August 1 to the person in whose name the Note is
registered at the close of business on the January 15 or July 15 immediately
preceding such February 1 or August 1. Principal and interest are payable at
Bankers Trust Company (the "Senior Note Trustee") in New York, New York.
SECURITY
As more fully described in the accompanying Prospectus, until the Release
Date, all of the Notes will be secured by Senior Note First Mortgage Bonds,
which we will issue and deliver to the Senior Note Trustee. On the Release Date,
the Notes will cease to be secured by Senior Note First Mortgage Bonds and will
become our unsecured general obligations.
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RELEASE DATE
The Release Date will be the date that we have repaid, redeemed or otherwise
retired our First Mortgage Bonds, excluding Senior Note First Mortgage Bonds
securing Senior Notes (including the Notes) and other First Mortgage Bonds which
do not in aggregate principal amount exceed the greater of 5% of our Net
Tangible Assets or 5% of our Capitalization, provided that no event of default
has occurred and is continuing.
CERTAIN COVENANTS
The Notes will be issued under the Senior Note Indenture and the First
Supplemental Senior Note Indenture (the "Indentures") which contain covenants
that, among other things, limit our ability to incur certain additional liens or
engage in certain sale-leaseback transactions following the Release Date.
APPLICATION OF PROCEEDS
We will use the net proceeds from the sale of the Notes to repay a
$45,000,000 loan from Banc One, an affiliate of Banc One Capital Markets, Inc.
The proceeds of this loan were used to pay at maturity $45,000,000 aggregate
principal amount of our First Mortgage Bonds, 6% Series of 1993, due 1999. We
will use the balance of the proceeds of the Notes to reduce outstanding
short-term borrowings, $15,000,000 of which was loaned to us under a credit
facility with Banc One. At July 12, 1999, we had approximately $110,000,000 in
short-term borrowings (including the $45,000,000 loan referred to above) at an
average interest rate of 5.8%.
FORM AND DENOMINATION
The Notes will initially be represented by a Global Security registered in
the name of a nominee of the Depositary. See "Global Securities" below.
OPTIONAL REDEMPTION
We may redeem the Notes, in whole or in part, at any time, at a redemption
price equal to the greater of (1) 100% of principal or (2) the sum of the
remaining scheduled payments of principal and interest on the Notes, discounted
to the redemption date on a semiannual basis (assuming a 360-day year consisting
of twelve 30-day months) at the Treasury Yield plus 0.10%, plus in each case
accrued interest to the redemption date.
"Treasury Yield" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes that would be utilized, at the time of selection
and in accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
Notes.
"Independent Investment Banker" means Goldman, Sachs & Co. or, if such firm
is unwilling or unable to select the Comparable Treasury Issue, an independent
investment banking institution of national standing selected by us and appointed
by the Senior Note Trustee.
"Comparable Treasury Price" means, with respect to any redemption date, the
Reference Treasury Dealer Quotation for such redemption date.
"Reference Treasury Dealer Quotation" means, with respect to the Reference
Treasury Dealer and any redemption date, the average of the bid and asked prices
for the Comparable Treasury Issue (expressed as a percentage of its principal
amount) quoted in writing to the
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Senior Note Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third
business day preceding such redemption date.
"Reference Treasury Dealer" means Goldman, Sachs & Co. and its successors,
PROVIDED, HOWEVER, that if Goldman, Sachs & Co. shall cease to be a primary U.S.
Government Securities dealer in New York City (a "Primary Treasury Dealer"), we
shall substitute for it another Primary Treasury Dealer.
If we elect to redeem less than all of the Notes, the Senior Note Trustee
will select, in such manner as it deems fair and appropriate, the particular
Notes or portions of them to be redeemed. Notice of redemption shall be given by
mail not less than 30 nor more than 60 days prior to the date fixed for
redemption to the holders of Notes to be redeemed (which, as long as the Notes
are held in the book-entry only system, will be the Depositary, its nominee or a
successor depositary). On and after the date fixed for redemption (unless we
default in the payment of the redemption price and interest accrued thereon to
such date), interest on the Notes or the portions of them so called for
redemption shall cease to accrue.
OPTIONAL REPAYMENT
The Notes may be repaid on August 3, 2009, at the option of the registered
holders of the Notes, at 95.50% of their principal amount, together with accrued
interest to August 3, 2009. In order for a holder to exercise this option, we
must receive at our agency in New York, New York, during the period beginning on
June 3, 2009 and ending at 5:00 p.m. (New York City time) on July 3, 2009 (or,
if July 3, 2009 is not a Business Day, the next succeeding Business Day), the
Note with the form entitled "Option to Elect Repayment on August 3, 2009" on the
reverse of the Note duly completed. Any such notice received by us during the
period beginning on June 3, 2009 and ending at 5:00 p.m. (New York City time) on
July 3, 2009 shall be irrevocable. See "Global Securities" below. The repayment
option may be exercised by the holder of a Note for less than the entire
principal amount of the Notes held by such holder, so long as the principal
amount that is to be repaid is equal to $1,000 or an integral multiple of
$1,000. All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of any Note for repayment will be determined by us,
which determination will be final and binding.
Our failure to repay the Notes when required as described in the preceding
paragraph will result in an Event of Default under the Senior Note Indenture.
As long as the Notes are represented by a Global Security, the Depositary's
nominee will be the registered holder of the Notes and therefore it will be the
only entity that can exercise the right to repayment. See "Global
Securities" below.
GLOBAL SECURITIES
The Notes will be represented by a Global Security that will be deposited
with, or on behalf of, The Depository Trust Company ("DTC"), and will be
available for purchase in denominations of $1,000 and any integral multiple of
that
amount.
DTC is
o a limited-purpose trust company organized under the New York Banking
Law,
o a "banking organization" within the meaning of the New York Banking Law,
o a member of the Federal Reserve System,
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and
o a "clearing agency" registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934.
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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 through
electronic computerized book-entry changes in Participants' accounts. This
book-entry system eliminates the need for physical movement of securities
certificates.
Participants in DTC include direct participants ("Direct Participants") and
indirect participants ("Indirect Participants"). Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to Indirect Participants, which include,
among others, securities brokers and dealers, banks and trust companies that
clear through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly. The rules applicable to DTC and its Participants
are on file with the Securities and Exchange Commission.
Purchases of Notes under DTC's system must be made by or through Direct
Participants, which will receive a credit for the Notes on DTC's records. The
ownership interest of each actual purchaser of Notes ("Beneficial Owner") is in
turn to be recorded on the Direct and Indirect Participants' records. Beneficial
Owners will not receive written confirmation from DTC of their purchase; rather,
Beneficial Owners are expected to receive written confirmations providing
details of the transaction as well as periodic statements of their holdings from
the Direct or Indirect Participant through which the Beneficial Owner entered
into the transaction. Transfers of ownership interests in the 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 the Notes, except in the event that use of the
book-entry system for the Notes is discontinued.
To facilitate subsequent transfers, all Notes deposited by Participants with
DTC are registered in the name of DTC's partnership nominee, Cede & Co. The
deposit of Notes with DTC and their registration in the name of Cede & Co.
effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Notes; DTC's records reflect only the identity of the
Direct Participants to whose accounts such 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.
SO LONG AS CEDE & CO., AS NOMINEE FOR DTC, IS THE SOLE HOLDER OF THE NOTES,
THE SENIOR NOTE TRUSTEE SHALL TREAT CEDE & CO. AS THE ONLY HOLDER OF THE OFFERED
NOTES FOR ALL PURPOSES, INCLUDING RECEIPT OF ALL PRINCIPAL OF, PREMIUM, IF ANY,
AND INTEREST ON SUCH NOTES, RECEIPT OF NOTICES, AND VOTING AND REQUESTING OR
DIRECTING THE SENIOR NOTE TRUSTEE TO TAKE OR NOT TO TAKE, OR CONSENT TO, CERTAIN
ACTIONS.
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 applicable statutory or regulatory
requirements.
We will send any redemption notices to DTC. If we redeem less than all of
the Notes within an issue, DTC's practice is to determine by lot the amount of
the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the Notes.
Under its usual procedures, DTC mails an Omnibus Proxy to us as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s
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consenting or voting rights to those Direct Participants to whose accounts the
Notes are credited on the record date and includes an attached list identifying
such Direct Participants.
Principal of, and premium, if any, and interest payments on the Notes will
be made to DTC. DTC's practice is to credit Direct Participants' accounts on the
applicable payment date in accordance with the Direct Participants' respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payment on that 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 accounts of customers in bearer form or
registered in "street name," and will be the responsibility of the Participants
and not of DTC, the Senior Note Trustee or us, subject to applicable statutory
or regulatory requirements. Payment of principal, and premium, if any, and
interest to DTC is our responsibility, or the responsibility of the Senior Note
Trustee with funds we provide. Disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
DTC has advised us that DTC's management is aware that some computer
applications, systems and the like for processing data that are dependent upon
calendar dates, including dates before, on and after January 1, 2000, may
encounter "Year 2000 problems." DTC has informed its participants and other
members of the financial community that it has developed and is implementing a
program so that its systems, as the same relate to the timely payment of
distributions (including principal and interest payments) to security holders,
book- entry deliveries, and settlement of trades within DTC, continue to
function appropriately. This program includes a technical assessment and a
remediation plan, each of which is complete. Additionally, DTC's plan includes a
testing phase, which is expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC licenses software and hardware, and
third- party vendors on whom DTC relies for information or the provision of
services, including telecommunication and electric utility service providers,
among others. DTC has informed its participants and other members of the
financial community that it is contacting (and will continue to contact)
third-party vendors from whom DTC acquires services to: (i) impress upon them
the importance of such services being Year 2000 compliant and (ii) determine the
extent of their efforts for Year 2000 remediation (and, as appropriate, testing)
of their services. In addition, DTC is in the process of developing such
contingency plans as it deems appropriate.
DTC may discontinue providing its services as securities depository with
respect to the Notes at any time by giving reasonable notice to us or the Senior
Note Trustee. Under such circumstances, in the event that a successor securities
depository is not obtained, individual note certificates are required to be
printed and delivered.
We may decide to discontinue use of the system of book-entry transfers
through DTC or its successor. In that event, individual note certificates will
be printed and delivered.
Neither SIGECO, the Senior Note Trustee nor any underwriter makes any
representation as to the accuracy of the above description of DTC's business,
organization and procedures, which is based on information received from sources
we believe to be reliable.
WE, THE UNDERWRITERS AND THE SENIOR NOTE TRUSTEE HAVE NO RESPONSIBILITY OR
OBLIGATION TO DTC PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO
(A) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DEPOSITARY
PARTICIPANT,
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(B) THE PAYMENT BY ANY DEPOSITARY PARTICIPANT OF ANY AMOUNT DUE TO ANY
BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL OF, PREMIUM, IF ANY, AND
INTEREST ON, THE OFFERED BONDS,
(C) THE DELIVERY OR TIMELINESS OF DELIVERY BY DTC TO ANY DEPOSITARY
PARTICIPANT OR BY ANY DEPOSITARY PARTICIPANT TO ANY BENEFICIAL OWNER OF
ANY NOTICE WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE
MORTGAGE TO BE GIVEN TO HOLDERS OF THE NOTES, OR
(D) ANY OTHER ACTION TAKEN BY DTC OR ITS NOMINEE, CEDE & CO., AS HOLDER OF
THE NOTES.
A further description of DTC's procedures with respect to the Notes is set
forth under "Global Securities" in the accompanying
Prospectus.
LEGAL MATTERS
Winthrop, Stimson, Putnam & Roberts of New York, New York, and Bamberger,
Foreman, Oswald & Hahn, LLP of Evansville, Indiana, will issue opinions about
certain legal matters relating to the Notes. The underwriters will be advised
about issues relating to the offering by their own legal counsel, Simpson
Thacher & Bartlett of New York, New York.
S-7
UNDERWRITING
SIGECO and the underwriters for the offering (the "Underwriters") named
below have entered into an underwriting agreement and a pricing agreement with
respect to the Notes.
Subject to certain conditions, each Underwriter has severally agreed to
purchase the principal amount of Notes indicated in the following table:
Underwriters Principal Amount of Notes
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Goldman, Sachs & Co....................... $40,000,000
A.G. Edwards & Sons, Inc.................. $20,000,000
Banc One Capital Markets, Inc. ........... $20,000,000
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Total................................. $80,000,000
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Notes sold by the Underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this Prospectus
Supplement. Any Notes sold by the Underwriters to securities dealers may be sold
at a discount from the initial public offering price of up to 0.40% of the
principal amount of Notes. Any such securities dealers may resell any Notes
purchased from the Underwriters to certain other brokers or dealers at a
discount from the initial public offering price of up to 0.25% of the principal
amount of Notes. If all the Notes are not sold at the initial offering price,
the Underwriters may change the offering price and the other selling terms.
The Notes are a new issue of securities with no established trading market.
SIGECO has been advised by the Underwriters that the Underwriters intend to make
a market in the Notes but are not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for the Notes.
In connection with the offering, the Underwriters may purchase and sell
Notes in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the Underwriters of a greater number of
Notes than they are required to purchase in the offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the Notes while the
offering is in progress.
The Underwriters also may impose a penalty bid. This occurs when a
particular Underwriter repays to the Underwriters a portion of the underwriting
discount received by it because the representatives have repurchased Notes sold
by or for the account of such Underwriter in stabilizing or short covering
transactions.
These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the Notes. As a result, the price of the Notes may be
higher than the price that otherwise might exist in the open market. If these
activities are commenced, they may be discontinued by the Underwriters at any
time. These transactions may be effected in the over-the-counter market or
otherwise.
SIGECO estimates that its share of the total expenses of the offering,
excluding underwriting discounts and commissions, will be approximately
$250,000.
In the ordinary course of their respective businesses, the Underwriters or
their affiliates from time to time provide commercial and investment banking and
other financial services to SIGECO. Banc One, an affiliate of Banc One Capital
Markets, Inc., has made loans to SIGECO which will be repaid with the proceeds
of this offering. See "Application of Proceeds." Because an affiliate of Banc
One Capital Markets, Inc. will receive more than 10% of the proceeds from the
sale of the Notes, not including underwriting compensation, this offering is
being conducted in compliance with
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the National Association of Securities Dealers Conduct Rule 2710(c)(8).
SIGECO has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
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No dealer, salesperson or other person is authorized to give any information or
to represent anything not contained in this prospectus. You must not rely on any
unauthorized information or representations. This prospectus is an offer to sell
only the Notes offered hereby, but only under circumstances and in jurisdictions
where it is lawful to do so. The information contained in this prospectus is
current only as of its date.
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Table of Contents
Page
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Prospectus Supplement
Summary Information....................................................... S-2
Certain Terms of the Notes................................................ S-2
Legal Matters............................................................. S-7
Underwriting.............................................................. S-8
Prospectus
Where You Can Find More Information....................................... 2
The Company............................................................... 2
Recent Developments....................................................... 2
Prospectus Supplement..................................................... 3
Use of Proceeds........................................................... 3
Certain Consolidated Financial Information................................ 3
Description of Senior Notes............................................... 4
Global Securities......................................................... 18
Description of First Mortgage Bonds....................................... 19
Plan of Distribution...................................................... 23
Experts................................................................... 24
Legal Opinions............................................................ 24
$80,000,000
SOUTHERN INDIANA GAS
AND
ELECTRIC COMPANY
6.72% Senior Notes due 2029
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[LOGO]
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GOLDMAN, SACHS & CO.
A.G. EDWARDS & SONS, INC.
BANC ONE CAPITAL MARKETS, INC.
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