Filed pursuant to Rule 424(b)(2)
File No. 333-138510
PROSPECTUS SUPPLEMENT
(To prospectus dated December 1, 2006)
$140,000,000
Central Hudson Gas & Electric Corporation
Medium-Term Notes, Series F
We may use this prospectus supplement to offer our unsecured Medium-Term Notes,
Series F, from time to time.
The following terms may apply to the notes. We will provide the final terms for
each note in a pricing supplement.
o They may have maturities of one year to 50 years.
o They may be subject to redemption at our option or repayment at the
option of the holder.
o They will be denominated in U.S. dollars.
o They may bear interest at a fixed rate or certain notes issued at a
discount may not bear interest.
o Interest will be paid on fixed rate notes on May 1 and November 1 of
each year (unless otherwise specified in a pricing supplement) and
at maturity.
o They may be issued in certificated or book-entry form.
o They will be issued in minimum denominations of $1,000 and multiples
of $1,000.
o They will be issued in an aggregate principal amount of up to
$140,000,000.
o They will be offered from time to time on a reasonable best efforts
basis on our behalf by the Agents named below and other Agents
appointed from time to time by us. In addition, any Agent may
purchase notes from us as principal and may resell them to
investors, and we may sell notes directly to investors acting on our
own behalf.
This prospectus supplement may be used to offer and sell the notes only if
accompanied by the prospectus.
We will receive between $138,950,000 and $139,790,000 of the proceeds from
the sale of the notes, after paying the Agents' commissions of between $210,000
and $1,050,000 and before deducting $375,000 in estimated offering expenses
unless otherwise provided in an applicable pricing supplement. The exact
proceeds to us will be set at the time of issuance. We do not expect that any of
the notes will be listed on any securities exchange, and a market for the notes
may not develop.
-----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these notes or passed upon the
adequacy or accuracy of this prospectus supplement or the accompanying
prospectus. Any representation to the contrary is a criminal offense.
-----------------
Banc of America Securities LLC JPMorgan KeyBanc Capital Markets
-----------------
March 19, 2007
TABLE OF CONTENTS
Prospectus Supplement Page Prospectus Page
--------------------- ---- ---------- ----
Introductory Statement................. S-2 About this Prospectus........................ 1
Use of Proceeds........................ S-3 Risk Factors................................. 1
Description of the Notes............... S-3 Where You Can Find More Information.......... 3
Plan of Distribution................... S-7 Forward-Looking Statements................... 3
Where You Can Find More Information.... S-8 Central Hudson Gas & Electric Corporation.... 5
Legal Matters.......................... S-9 Use of Proceeds.............................. 6
Experts................................ S-9 Ratios of Earnings to Fixed Charges.......... 6
Description of the Debt Securities........... 7
Plan of Distribution......................... 14
Legal Matters................................ 15
Experts...................................... 15
You should rely only on the information contained or incorporated by
reference in this prospectus supplement, the accompanying prospectus and in the
applicable pricing supplement. We have not authorized anyone to provide you with
information different from that contained in these documents. The information
contained in this prospectus supplement, the accompanying prospectus and the
applicable pricing supplement is accurate only as of the date on the front of
those documents, regardless of the time of delivery of this prospectus
supplement or any sale of the notes. We are offering to sell the notes and
seeking offers to buy the notes only in jurisdictions where offers and sales are
permitted.
INTRODUCTORY STATEMENT
We are offering our unsecured medium-term notes in the principal amount of
$140,000,000. We intend to use this prospectus supplement, the attached
prospectus and a related pricing supplement to offer the notes from time to
time. This prospectus supplement provides you with certain terms of the notes
and supplements the description of the notes contained in the attached
prospectus. If any information in this prospectus supplement is inconsistent
with the prospectus, this prospectus supplement replaces the inconsistent
information. Each time we issue notes, we will prepare a pricing supplement that
will contain additional terms of the offering and the description of the
specific notes offered. The pricing supplement may also add, update or change
information in this prospectus supplement or the attached prospectus, including
provisions describing the calculation of interest and the method of making
payments under the terms of a note. Any information in the pricing supplement
that is inconsistent with this prospectus supplement will replace the
inconsistent information in this prospectus supplement.
S-2
USE OF PROCEEDS
We expect to use the net proceeds from the sales of the notes for the
purposes set forth under the heading "Use of Proceeds" in the accompanying
prospectus.
DESCRIPTION OF THE NOTES
The following description of the particular terms of the notes
supplements, and to the extent inconsistent therewith replaces, the description
of the debt securities and the indenture under "Description of the Debt
Securities" in the accompanying prospectus, which description you should read.
We have filed the indenture with the Securities and Exchange Commission (the
"SEC"), as referred to in the list of exhibits to the registration statement.
You should read the indenture for provisions that may be important to you. The
following description of the notes will apply to all notes, unless otherwise
specified in an accompanying pricing supplement.
General
We will issue the notes as a single series of unsecured debt securities
under the indenture dated as of April 1, 1992, between us and U.S. Bank Trust
National Association (formerly known as First Trust of New York, National
Association) (as successor trustee to Morgan Guaranty Trust Company of New
York), as trustee. The notes will be limited in aggregate principal amount to
$140,000,000.
We will issue the notes in fully registered form only, without coupons.
Unless we specify otherwise in the applicable pricing supplement, the notes will
be issued as "book-entry" notes, represented by a permanent global note or notes
registered in the name of The Depository Trust Company ("DTC"), or its nominee.
We reserve the right, however, to issue note certificates registered in the name
of the holders of the notes. Unless we specify otherwise in the applicable
pricing supplement, the authorized denominations of the notes will be $1,000 and
integral multiples thereof.
The pricing supplement relating to a note will describe the following terms:
o the price at which the note will be issued;
o the date on which the note will be originally issued;
o the date on which the note will mature;
o if an interest-bearing note, the fixed annual rate at which the note
will bear interest and the interest payment dates for the note
which, unless otherwise specified, will be May 1 and November 1 of
each year;
o whether the note
- may be redeemed by us at our option prior to its maturity date
and/or
- is required to be redeemed by us prior to its maturity date
pursuant to any sinking fund or other mandatory redemption
provision applicable to the note;
and, if so, the related terms and conditions, including applicable
redemption dates and prices;
o any provisions for the repayment or purchase by us of the note at
the option of the holder;
S-3
o any applicable discounts or commissions; and
o any other terms of the note not inconsistent with the provisions of
the indenture.
In the discussion that follows, whenever we talk about:
o paying principal or interest on the notes at maturity, we mean at
the maturity date, redemption date or other date upon which payment
of principal of the notes become due;
o a holder of a note, we mean the person in whose name the note is
registered (which, in the case of global notes representing
"book-entry" notes, will be DTC or its nominee);
o a business day with respect to any note, we mean any day, other than
a Saturday or Sunday, which is not a day on which banking
institutions or trust companies in The City and State of New York,
or other city in which any office or agency is maintained for the
payment of principal of, or premium, if any, or interest on the
note, are generally authorized or required by law, regulation or
executive order to remain closed; and
o the regular record date for any interest payment date for a note
(unless otherwise specified in the applicable pricing supplement),
we mean the April 15 or October 15 (whether or not a business day)
immediately preceding the interest payment date.
Payment of Principal and Interest
Unless otherwise set forth in the applicable pricing supplement, each note
will bear interest from the date of its original issue or from the most recent
interest payment date to which interest has been paid or duly provided for,
whichever is later, at the fixed rate per annum stated on its face until the
principal amount of the note is paid or duly provided for. However, each note
authenticated after the regular record date for any interest payment date but
before such interest payment date will bear interest from such interest payment
date, unless the date of its original issue is after such regular record date
but before such interest payment date, in which case the note will bear interest
from the date of its original issue. Interest on each note will be payable
semiannually in arrears on each interest payment date and at maturity. Each
payment of interest in respect of an interest payment date or at maturity will
include interest accrued through the day before such date. Interest on notes
will be computed on the basis of a 360-day year of twelve 30-day months.
Payments of interest on the notes (other than interest payable at
maturity) will be made to the holders of the notes as of the regular record date
for each interest payment date, commencing with the first interest payment date
following the date of original issue of the note. However, if the date of
original issue of a note is after a regular record date and before the
corresponding interest payment date, interest for the period from and including
its original issue date to but excluding the second interest payment date
following the original issue date will be paid on such second interest payment
date to the holder of the note on the regular record date immediately preceding
such second interest payment date. Unless otherwise specified in the applicable
pricing supplement, payment of interest on a note (other than interest payable
at maturity) may, at our option, be made by check mailed to the holder of the
note or (subject to receipt of proper instructions) by wire transfer to an
account maintained by the holder with a bank in the United States. See
"Supplemental Description of the Notes - Book-Entry Notes."
Unless otherwise specified in the applicable pricing supplement, the
principal of the notes and any premium and interest thereon payable at maturity
will be paid upon surrender of the note at the office of U. S. Bank Trust
National Association in New York, New York, or of any successor paying agent in
New York, New
S-4
York. All payments of principal of, and premium, if any, and interest on, any of
the notes will be made in United States dollars.
Unless we specify otherwise in the applicable pricing supplement, if any
date for payment of principal or interest on a note is not a business day,
payment of amounts due on the note on that date may be made on the next
succeeding business day. If that payment is made or duly provided for on that
business day, no interest shall accrue on those amounts for the period from and
after the payment date to that business day.
Book-Entry Notes
We will issue the notes as "book-entry" notes, unless we specify otherwise
in the applicable pricing supplement.
The Depository Trust Company ("DTC"), New York, NY, will act as securities
depository for the notes. The notes will be issued as fully-registered
securities registered in the name of Cede & Co. (DTC's partnership nominee) or
such other name as may be requested by an authorized representative of DTC. One
fully-registered note certificate will be issued for the notes, in the aggregate
principal amount of such issue, 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 Securities Exchange
Act of 1934. DTC holds and provides asset servicing for U.S. and non-U.S. equity
issues, corporate and municipal debt issues, and money market instruments from
over 85 countries that DTC's participants ("Direct Participants") deposit with
DTC. DTC also facilitates the post-trade settlement among Direct Participants of
sales and other securities transactions in deposited securities, through
electronic computerized book-entry transfers and pledges between Direct
Participants' accounts. This eliminates the need for physical movement of
securities certificates. Direct Participants include both U.S. and non-U.S.
securities brokers and dealers, banks, trust companies, clearing corporations,
and certain other organizations. DTC is a wholly-owned subsidiary of The
Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a
number of Direct Participants of DTC and members of the National Securities
Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing
Corporation, and Emerging Markets Clearing Corporation (NSCC, GSCC, MBSCC, and
EMCC are also subsidiaries of DTCC), as well as by the New York Stock Exchange,
Inc., the American Stock Exchange LLC, and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others
such as both U.S. and non-U.S. securities brokers and dealers, banks, trust
companies, and clearing corporations that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The DTC Rules applicable to its Participants are on file with
the SEC. More information about DTC can be found at www.dtcc.com.
Purchases of notes under the DTC 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 each note ("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. Beneficial Owners are, however, 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
Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in notes, except in the event that use of the book-entry system for
the notes is discontinued.
S-5
To facilitate subsequent transfers, all notes deposited by Direct
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co., or such other name as may be requested by an authorized
representative of DTC. The deposit of notes with DTC and their registration in
the name of Cede & Co. or such other DTC nominee do not effect any 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 Direct and Indirect Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time. Beneficial Owners of notes may wish to take
certain steps to augment the transmission to them of notices of significant
events with respect to the notes, such as redemptions, tenders, defaults, and
proposed amendments to the note documents. For example, Beneficial Owners of
notes may wish to ascertain that the nominee holding the note for their benefit
has agreed to obtain and transmit notices to Beneficial Owners. In the
alternative, Beneficial Owners may wish to provide their names and addresses to
the registrar and request that copies of notices be provided directly to them.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or
vote with respect to notes unless authorized by a Direct Participant in
accordance with DTC's procedures. Under its usual procedures, DTC mails an
Omnibus Proxy to us as soon as possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct Participants to
whose accounts notes are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the notes
will be made to Cede & Co., or such other nominee as may be requested by an
authorized representative of DTC. DTC's practice is to credit Direct
Participants' accounts upon DTC's receipt of funds and corresponding detail
information from us or the trustee, on the payment date in accordance with their
respective holdings shown on DTC's records. Payments by both Direct and Indirect
Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with notes held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC nor its nominee, the trustee,
or us, subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of redemption proceeds, distributions, and dividend
payments to Cede & Co. (or such other nominee as may be requested by an
authorized representative of DTC) is the responsibility of us or the trustee,
disbursement of such payments to Direct Participants will be the responsibility
of DTC, disbursement of such payments to Indirect Participants will be the
responsibility of Direct Participants, and disbursement of such payments to the
Beneficial Owners will be the responsibility of Direct and Indirect
Participants.
A Beneficial Owner shall give notice to elect to have its notes purchased
or tendered, through its Participant, to the trustee, and shall effect delivery
of such notes by causing the Direct Participant to transfer such Participant's
interest in the notes, on DTC's records, to the trustee. The requirement for
physical delivery of notes in connection with an optional tender or a mandatory
purchase will be deemed satisfied when the ownership rights in the notes are
transferred by Direct Participants on DTC's records and followed by a book-entry
credit of tendered notes to the trustee's DTC account.
S-6
DTC may discontinue providing its services as depository with respect to
the notes at any time by giving reasonable notice to us or the trustee. Under
such circumstances, in the event that a successor depository is not obtained,
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 a successor securities depository). In that event, note
certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that we believe to be reliable, but we take no
responsibility for the accuracy thereof.
PLAN OF DISTRIBUTION
Under the provisions of a Distribution Agreement, dated March 19, 2007
(the "Distribution Agreement"), the notes are being offered on a continuing
basis by us through Banc of America Securities LLC, J.P. Morgan Securities Inc.
and KeyBanc Capital Markets, a Division of McDonald Investments Inc., as agents
(the "Agents"), each of which has agreed to use its reasonable best efforts to
solicit offers to purchase the notes. The Company may, upon five days' prior
written notice to the Agents, appoint additional persons to serve as Agents, but
only if each additional person agrees to be bound by all the terms of the
Distribution Agreement. We also may sell notes to an Agent, as principal, at a
price to be agreed upon at the time of sale. Such notes may be resold by such
Agent to investors or other purchasers at varying prices related to prevailing
market prices at the time of such resale, if any, or at a fixed public offering
price set forth in the applicable pricing supplement, as determined by such
Agent. We reserve the right to sell notes directly to investors on our own
behalf in those jurisdictions where we are authorized to do so. We will have the
sole right to accept offers to purchase notes and may reject any proposed
purchase of notes in whole or in part. To the extent a potential investor
contacts us directly, we may refer such investor to any Agent to complete such
sale of notes to the investor. Each Agent will have the right, in its discretion
reasonably exercised, without notice to us, to reject any proposed purchase of
notes through it in whole or in part. Payment of the purchase price of notes
will be required to be made in immediately available funds in The City of New
York. We will pay each Agent a commission in the form of a discount ranging from
..150% to .750% (or, in the case of notes having a term greater than 30 years, a
commission to be negotiated and set forth in the applicable pricing supplement)
of the principal amount of notes sold through such Agent, depending upon the
maturity date of such notes; provided that the discount will be in an amount as
may be agreed to by us and such Agent if we referred the investor to the Agent
as described above. No commission will be payable on any sale made directly by
us. In the event of purchases of notes by the Agents as principal for resale to
investors at a fixed price or prices, such purchases will, unless otherwise
provided in the applicable pricing supplement, be at the principal amount of the
notes less a discount ranging from .150% to .750% (or, in the case of notes
having a term greater than 30 years, a commission to be negotiated and set forth
in the applicable pricing supplement), depending upon the maturity date of such
notes.
Each Agent, whether acting as agent or principal, may be deemed to be an
"underwriter" within the meaning of the Securities Act of 1933 (the "Securities
Act"). We have agreed to indemnify each Agent, whether acting as agent or
principal, against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments that such Agent may be required to
make in respect of any liabilities, and to reimburse such Agent for, or pay,
certain of its expenses, including the fees and disbursements of legal counsel
to such Agent.
In connection with certain offerings of the notes, the Agents may engage
in overallotment, stabilizing transactions and short covering transactions.
Overallotment involves sales in excess of the offering size, which creates a
short position for the Agents. Stabilizing transactions involve bids to purchase
the notes in the open market for the purpose of pegging, fixing or maintaining
the price of the notes. Short covering transactions involve purchases of the
notes in the open market after the distribution has been
S-7
completed in order to cover short positions. Stabilizing transactions and short
covering transactions may cause the price of the notes to be higher than it
would otherwise be in the absence of these transactions. These activities, if
commenced, may be discontinued at any time. Neither we nor any of the Agents
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 notes.
In addition, neither we nor any of the Agents makes any representation that the
Agents will engage in any of the transactions described in this paragraph or
that such transactions, once commenced, will not be discontinued without notice.
The notes will not be listed on any securities exchange and will not have
an established trading market when issued. Each Agent may make a market in the
notes, but such Agent is not obligated to do so and may discontinue
market-making at any time without notice. There can be no assurance that the
notes offered by this prospectus supplement will be sold or that there will be a
secondary market for the notes.
Each Agent and/or certain of its affiliates engages from time to time in
various general financing, investment banking and commercial banking
transactions with us and certain of our affiliates.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with
the SEC. You may read and copy any document we file at the SEC's public
reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the
SEC at 1-800-SEC-0330 for further information on the operation of the public
reference rooms. Our SEC filings are also available to the public over the
Internet at the SEC's web site at http://www.sec.gov and on our website at
www.chenergygroup.com. Information on our website is not part of this prospectus
supplement or the accompanying prospectus, and you should not rely upon such
information. The accompanying prospectus is part of a registration statement on
Form S-3 (File No. 333-138510) filed with the SEC under the Securities Act of
1933. It does not contain all of the information that is important to you. You
should read the registration statement for further information about us and the
debt securities. Statements contained in this prospectus supplement and the
accompanying prospectus concerning the provisions of any document filed as an
exhibit to the registration statement or otherwise filed with the SEC highlight
selected information, and in each instance reference is made to the copy of the
document filed.
The SEC allows us to "incorporate by reference" into this prospectus
supplement the information we file with the SEC, which means that we can
disclose important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus supplement (and the accompanying prospectus), and information that we
file later with the SEC will automatically update and may supersede this
information. To the extent that the information we file with the SEC is made on
a combined basis by us and our holding company parent, CH Energy Group, Inc., we
only incorporate the information that relates to us, not the information that
relates to CH Energy Group, Inc. or its other affiliates. We are incorporating
by reference into this prospectus supplement our Annual Report on Form 10-K for
the year ended December 31, 2006 that we have filed with the SEC and any
subsequent filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 (File No. 001-03268); provided, however,
that we are not incorporating any information furnished under Item 2.02 or 7.01
of any Current Report on Form 8-K,
You may obtain a copy of these filings, at no cost, by writing to or
telephoning us at the following address:
Treasurer
Central Hudson Gas & Electric Corporation
S-8
284 South Avenue
Poughkeepsie, New York 12601-4879
(845) 452-2000
LEGAL MATTERS
Certain legal matters with respect to the debt securities offered hereby
will be passed upon for us by Thompson Hine LLP, our counsel, New York, New
York, and for the agents by Pillsbury Winthrop Shaw Pittman LLP, New York, New
York.
EXPERTS
The financial statements and management's assessment of the effectiveness
of internal control over financial reporting (which is included in Management's
Report on Internal Control over Financial Reporting) incorporated in this
prospectus supplement by reference to our Annual Report on Form 10-K for the
year ended December 31, 2006 have been so incorporated in reliance on the report
of PricewaterhouseCoopers LLP, an independent registered public accounting firm,
given on the authority of said firm as experts in auditing and accounting.
S-9
PROSPECTUS
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
DEBT SECURITIES
By this prospectus, we may offer from time to time up to $140,000,000 of our
debt securities. The debt securities may be issued in one or more series and
will be unsecured. Any series may provide for one or more issuances of debt
securities. The debt securities of each series or issuance will be offered on
terms to be determined at the time of sale. The debt securities may be issued as
individual securities in registered form or as one or more global securities in
registered form. The debt securities will not be listed on any securities
exchange or designated for quotation on the NASDAQ Stock Market.
We may offer the debt securities in any of the following ways:
o directly;
o through agents;
o through dealers; or
o through one or more underwriters or a syndicate of underwriters in
an underwritten offering.
----------
Investing in our debt securities involves risks. See "Risk Factors" beginning on
page 3 of this prospectus.
----------
WE WILL PROVIDE THE SPECIFIC TERMS OF THE DEBT SECURITIES IN ONE OR MORE
SUPPLEMENTS TO THIS PROSPECTUS. YOU SHOULD READ THIS PROSPECTUS AND THE
APPLICABLE SUPPLEMENTS CAREFULLY BEFORE YOU INVEST. THIS PROSPECTUS MAY NOT BE
USED TO SELL SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
----------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these debt securities or passed upon
the adequacy or accuracy of this prospectus. Any representation to the contrary
is a criminal offense.
----------
THE DATE OF THIS PROSPECTUS IS DECEMBER 1, 2006.
TABLE OF CONTENTS
PAGE
About this Prospectus.........................................................1
Risk Factors..................................................................1
Where You Can Find More Information...........................................3
Forward-Looking Statements....................................................3
Central Hudson Gas & Electric Corporation ....................................5
Use of Proceeds...............................................................6
Ratios of Earnings to Fixed Charges...........................................6
Description of the Debt Securities............................................7
Plan of Distribution.........................................................14
Legal Matters................................................................15
Experts......................................................................15
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission. You should rely only on the information we
have provided or incorporated by reference in this prospectus or any prospectus
supplement or any pricing supplement. We have not authorized anyone to provide
you with additional or different information. We are not making an offer of
these debt securities in any state or jurisdiction where the offer or sale is
not permitted. You should assume that the information in this prospectus or any
prospectus supplement or in any pricing supplement is accurate only as of the
date on the front of the document and that any information we have incorporated
by reference is accurate only as of the date of such document containing such
information.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf process, we may offer, from time to time, the debt securities
described in this prospectus in one or more offerings with a total aggregate
principal amount not to exceed $140,000,000. This prospectus provides you with a
general description of the debt securities we may offer. Each time we offer debt
securities, we will provide you with a prospectus supplement and, if applicable,
a pricing supplement. The prospectus supplement and any applicable pricing
supplement will describe the specific amounts, prices and terms of the debt
securities being offered. The prospectus supplement and any applicable pricing
supplement may also add, update or change information in this prospectus. Please
carefully read this prospectus, the applicable prospectus supplement and any
applicable pricing supplement, together with the information contained in the
documents referred to under the heading "Where You Can Find More Information."
For more detailed information about the debt securities, you can also read
the exhibits to the registration statement. The exhibits have been either filed
with the registration statement or incorporated by reference to earlier SEC
filings listed in the registration statement.
RISK FACTORS
Before purchasing any debt securities we offer, you should carefully consider
the following risk factors as well as the other information contained in this
prospectus, any prospectus supplement or any pricing supplement, and the
information incorporated by reference herein in order to evaluate an investment
in our debt securities.
Redeployment of Capital
CH Energy Group, Inc., our holding company parent corporation, is seeking
to invest a significant portion of its cash reserves in energy-related assets
and/or utility assets. These funds were generated from the sales of our
interests in our major generating assets and Energy Group's sale of its former
subsidiary CH Resources, Inc., and are currently held in money market
instruments and short-term securities. Investments in new business ventures may
provide returns that are lower than those anticipated when an investment is
made, including potential losses or write-offs, and may cause Energy Group's
earnings to be more volatile.
Storms and Other Events Beyond Our Control May Interfere with the Operation of
Our Transmission and Distribution Facilities in the Mid-Hudson Valley Region
Our revenues are generated by the delivery of electricity over
transmission and distribution lines and by the delivery of natural gas through
pipelines. These facilities, which are owned and operated by us or by third
party entities, are at risk of damage from storms, natural disasters, wars,
terrorist acts, and other catastrophic events, occurring both within and outside
Central Hudson's franchise territory, and are at risk of curtailment or
cessation of operations as a result of unfavorable regulatory or judicial
orders. The siting, regulatory approval, and construction of natural gas and
electric transmission projects are subject to applicable laws and regulations,
including local considerations, which may increase the cost or delay the
completion of these projects. If we or the relevant third-party entity (as the
case may be) are unable in a timely manner to repair our facilities or to obtain
the rescission or stay of unfavorable regulatory or judicial orders which have
caused the curtailment or cessation of operation of our facilities (as the case
may be), our customers may experience a service disruption and we may experience
lower revenues or increased expenses, or both, that we may not be able to
recover fully through rates, insurance, sales margins, or other means in a
timely manner, or at all.
1
Unusual Temperatures in the Mid-Hudson Valley Region Could Adversely Impact our
Earnings
The mid-Hudson Valley region, which is our service territory, typically
experiences seasonal fluctuations in temperature. If, however, the region were
to experience unusually mild winters and/or cooler summers, our earnings could
be adversely impacted. A considerable portion of our total electric deliveries
is directly or indirectly related to weather-sensitive end uses such as air
conditioning and space heating. The majority of our natural gas deliveries are
directly related to the use of these fuels for space heating. As a result, sales
fluctuate and vary from normal expected levels based on variations in weather
from seasonal normal levels. Such variations in sales volumes could affect
results of operations significantly. We have programs in place to constrain the
potential variability in results of operations through the use of risk
management instruments. However, no assurance can be given that suitable risk
management instruments will remain available.
Our Rate Plans Limit Our Ability to Pass Through Increased Costs to Our
Customers; If Our Rate Plans Are Modified by State Regulatory Authorities, Our
Revenues May Be Lower Than Expected
As a transmission and distribution company delivering electricity and
natural gas within New York State, we are regulated by the Public Service
Commission of the State of New York (the "PSC"), which regulates retail rates,
terms and conditions of service, various business practices and transactions,
financings, and transactions between us and Energy Group or Energy Group's
competitive business subsidiaries.
The rate plans under which we operated from November 2001 through June 30,
2006, were superseded by a new rate plan covering the three-year period from
July 1, 2006 to June 30, 2009. Rate plans generally may not be changed during
their respective terms, absent unusual circumstances. As a result, the new rate
plan may not fully reflect all of the future trends in revenues, expenses,
construction costs, and other important factors that will determine our
financial performance.
The previous effective rate plans and the rate proceeding commenced by us
in 2005 are discussed in Note 2 - "Regulatory Matters" of our Annual Report on
Form 10-K for the year ended December 31, 2005. The new rate plan and the 2006
Joint Proposal (which forms the basis for the new rate plan) are discussed in
Note 3 - "Regulatory Matters" of our Quarterly Report on Form 10-Q for the
quarter ended September 30, 2006.
We Are Subject to Risks Relating to Asbestos Litigation and Manufactured Gas
Plant Facilities
Litigations have been commenced against us arising from the use of
asbestos at our previously owned major generating assets, and we are involved in
a number of matters arising from contamination at former manufactured gas plant
sites. Reference is made to Note 11 - "Commitments and Contingencies" in our
Annual Report on Form 10-K for the year ended December 31, 2005, and in
particular to the subcaptions in the Note regarding "Asbestos Litigation" and
"Former Manufactured Gas Plant Facilities."
There is No Public Market for the Debt Securities Offered by this Prospectus
We can give no assurances as to whether any market may develop for the
debt securities offered by this prospectus, the liquidity of any such market,
the ability of any investor to sell any of the debt securities, or the price at
which investors would be able to sell them. If a market for the debt securities
does not develop, investors may be unable to resell the debt securities for an
extended period of time, if at all. If a market for the debt securities does
develop, it may not continue or it may not be sufficiently liquid to allow
holders to resell any of the debt securities. Consequently, investors may not be
able to liquidate their investment readily, and lenders may not readily accept
the debt securities as collateral for loans. The debt securities will not be
listed on any securities exchange or designated for quotation on the NASDAQ
Stock Market.
2
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with
the SEC. You may read and copy any document we file at the SEC's public
reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the
SEC at 1-800-SEC-0330 for further information on the operation of the public
reference rooms. Our SEC filings are also available to the public over the
Internet at the SEC's web site at http://www.sec.gov and on our website at
www.chenergygroup.com. Information on our website is not part of this
prospectus. This prospectus is part of a registration statement on Form S-3
filed with the SEC under the Securities Act of 1933, as amended. It does not
contain all of the information that is important to you. You should read the
registration statement for further information about us and the debt securities.
Statements contained in this prospectus concerning the provisions of any
document filed as an exhibit to the registration statement or otherwise filed
with the SEC highlight selected information, and in each instance reference is
made to the copy of the document filed.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with the SEC, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and
information that we file later with the SEC will automatically update and may
supersede this information. We are incorporating by reference into this
prospectus the following documents that we have filed with the SEC and any
subsequent filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934, as amended (File No. 001-03268);
provided, however, that we are not incorporating any information furnished under
Item 2.02 or 7.01 (formerly Item 12 or 9) of any Current Report on Form 8-K:
-- Our Annual Report on Form 10-K for the year ended December 31,
2005;
-- Our Quarterly Reports on Form 10-Q for the quarters ended March
31, 2006, June 30, 2006, and September 30, 2006 (as amended by our
Quarterly Report on Form 10-Q/A filed on November 7, 2006); and
-- Our Current Reports on Form 8-K filed on March 13, 2006, April
21, 2006, July 28, 2006, and September 5, 2006, and our Amendment to
Current Report on Form 8-K filed on April 6, 2006.
You may obtain a copy of these filings, at no cost, by writing to or telephoning
us at the following address:
Treasurer
Central Hudson Gas & Electric Corporation
284 South Avenue
Poughkeepsie, New York 12601-4879
(845) 452-2000
FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference may contain
statements which, to the extent they are not recitations of historical fact,
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements may be identified by words including "anticipates,"
"believes," "projects," "intends," "estimates," "expects," "plans," "assumes,"
"seeks," and similar expressions. Forward-looking statements including, without
limitation, those relating to our future business prospects, revenues, proceeds,
working capital, liquidity, income, and margins, are subject to certain risks
and uncertainties that could cause actual results to differ materially from
those indicated in the forward-looking statements, due to several important
factors including those identified from time to time in the forward-looking
statements. Those factors include, but are not limited to:
o weather;
o energy supply and demand;
o fuel prices;
o interest rates;
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o potential future acquisitions;
o developments in the legislative, regulatory and competitive
environment;
o market risks;
o electric and natural gas industry restructuring and cost recovery;
o the ability to obtain adequate and timely rate relief;
o changes in fuel supply or costs;
o the success of strategies to satisfy electricity and natural gas
requirements following the sale of our major generating assets;
o future market prices for energy, capacity, and ancillary services;
o the outcome of pending litigation and certain environmental matters,
particularly the status of inactive hazardous waste disposal sites
and waste site remediation requirements; and
o certain presently unknown or unforeseen factors, including, but not
limited to, acts of terrorism.
Please also refer to the section "Risk Factors" in this prospectus. Any
forward-looking statements speak only as of the date of this prospectus or any
prospectus supplement or any pricing supplement, and we undertake no obligation
to update any forward-looking statements to reflect events or circumstances
after the date on which such statements are made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it is not
possible for us to predict all of such factors, nor can we assess the impact of
any such factor on our business or the extent to which any factor, or
combination of factors, may cause results to differ materially from those
contained in any forward-looking statements. The foregoing review of factors
should not be construed as exhaustive. We undertake no obligation to update
publicly any forward-looking statements, whether as a result of new information,
future events, or otherwise.
4
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
We are a public utility that serves the Mid-Hudson River Valley region of
New York State. We or our predecessors have been in business since 1900. We
purchase, sell at wholesale, and distribute electricity and natural gas in
portions of New York State. We also generate a small portion of our electricity
requirements. We are a wholly-owned subsidiary of CH Energy Group, Inc. CH
Energy Group, Inc. is also the holding company for Central Hudson Enterprises
Corporation ("CHEC). CHEC is comprised of other energy-related companies and
investments engaged primarily in fuel distribution and related services and
renewable energy. Our principal executive office is located at 284 South Avenue,
Poughkeepsie, New York 12601-4879 and our telephone number is (845) 452-2000.
Total revenues and operating income before income taxes (expressed as
percentages) derived from our electric and gas operations accounted for
approximately the following percentages of our total revenues and operating
income before income taxes for each of the last three years:
----------------------------------------------------------------------------------------
Percent of Operating Income
Percent of Total Revenues before Income Taxes
----------------------------------------------------------------------------------------
Electric Gas Electric Gas
----------------------------------------------------------------------------------------
2005 77.00% 23.00% 75.79% 24.21%
----------------------------------------------------------------------------------------
2004 77.47% 22.53% 74.65% 23.35%
----------------------------------------------------------------------------------------
2003 78.77% 21.23% 73.01% 26.99%
----------------------------------------------------------------------------------------
For the year ended December 31, 2005, we served an average of 292,826
electric and 70,714 natural gas customers monthly. Our electric revenues during
that period were derived from the following sources (approximate):
o 52.01% from residential customers;*
o 35.44% from commercial customers;*
o 5.28% from industrial customers;* and
o 7.27% from other utilities and miscellaneous sources.
* includes the energy delivery service attributed to residential, commercial
and industrial customers.
Our total natural gas revenues during that period were derived from the
following sources (approximate):
o 48.02% from residential customers;
o 37.25% from commercial customers;
o 4.16% from industrial customers;
o 4.19% from interruptible customers; and
o 6.38% from miscellaneous sources (including revenues from
transportation of customer-owned natural gas).
5
USE OF PROCEEDS
We are offering hereby our unsecured debt securities, in the maximum
amount described on the cover page of this prospectus, on terms to be determined
when an agreement or agreements to sell any or all of the debt securities are
made from time to time. Unless otherwise set forth in a prospectus supplement,
we will use the net proceeds from sales of the debt securities for general
corporate purposes, which may include:
o the payment of maturing issues of long-term debt;
o repayment of short-term debt incurred or expected to be incurred for
working capital requirements in connection with our construction
program and energy purchases; and/or
o financing expenditures for our construction program and for other
general corporate purposes.
More specific information concerning the use of the proceeds from any
particular sale of debt securities will be set forth in the applicable
prospectus supplement. Pending application of the proceeds for such purposes,
proceeds from the sale of the debt securities may be temporarily invested in
short-term instruments. Reference is made to the information contained in the
documents referred to under the heading "Where You Can Find More Information"
regarding our construction program and other significant capital requirements
and our general financing plan and capabilities.
Although we do not have any definitive plans for sales of the debt
securities offered hereby, subject to market conditions, we anticipate selling
during 2007 approximately $60 to $70 million of debt securities, with
approximately $33 million of the proceeds to be used to repay an equal principal
amount of our 2002 Series D promissory notes which bear interest at the rate of
5.8% per annum and mature on March 28, 2007 and with approximately $27 to $37
million of the proceeds to be used to finance our construction program and for
general corporate purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
Our ratios of earnings to fixed charges for each of the last five fiscal
years (and for the nine months ended September 30, 2006) are as follows:
-----------------------------------------------------------------------------------------------------
Year Ended December 31, Nine months
ended
September 30,
-----------------------------------------------------------------------------------------------------
2001 2002 2003 2004 2005 2006
-----------------------------------------------------------------------------------------------------
Ratio of
Earnings to 2.1 2.7 3.5 4.2 3.9 3.6
Fixed Charges
-----------------------------------------------------------------------------------------------------
For purposes of the determination of this ratio, the following should be noted:
o Earnings consist of pretax income from continuing operations
adjusted to add the amount of fixed charges computed for this ratio
and also include our share in the income of our subsidiary, which is
wholly owned. Since we are a public utility, earnings include
allowance for funds used during construction.
o Fixed charges consist of interest charges on first mortgage bonds,
other long-term debt, other interest charges including interest on
short-term debt, amortization of premium and expense on debt,
preferred dividends and the portion of rents representative of the
interest factor. These charges have not been reduced by any
allowance for funds used during construction.
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DESCRIPTION OF THE DEBT SECURITIES
General: The debt securities will be issued under an indenture, dated as
of April 1, 1992, between us and U.S. Bank Trust National Association (formerly
known as First Trust of New York, National Association) (as successor trustee to
Morgan Guaranty Trust Company of New York), as trustee. The debt securities may
be issued in one or more series. Each series may provide for one or more
issuances of debt securities. The following is a description of the material
terms of the debt securities. For a complete description of the debt securities
you should read the indenture.
The indenture does not limit the aggregate principal amount of debt
securities which may be issued thereunder. The indenture also does not limit the
amount of other debt, secured or unsecured, which we may issue. The debt
securities will be unsubordinated and unsecured obligations ranking equally with
all our existing and future unsubordinated and unsecured obligations. All of our
indebtedness, which as of September 30, 2006 totaled approximately $374,000,000,
is currently unsubordinated and unsecured (of that amount, approximately
$344,000,000 is long term debt and the remainder is short term debt);
accordingly, the debt securities issued hereunder will rank equally with our
currently outstanding indebtedness.
Reference is made to the applicable prospectus supplement for a
description of the following terms of specific series of debt securities:
o the title of debt securities of such series;
o the limit, if any, upon the aggregate principal amount of debt
securities of such series;
o the rate or rates, or the method of determination thereof, at which
debt securities of such series will bear interest, if any; the date
or dates from which such interest will accrue; the dates on which
such interest will be payable; and the regular record dates for the
interest payable on such interest payment dates;
o our obligation, if any, to redeem or purchase debt securities of
such series pursuant to any sinking fund or analogous provisions or
at the option of the holder thereof and the periods within which or
the dates on which, the prices at which and the terms and conditions
upon which debt securities of such series will be redeemed or
purchased, in whole or in part, pursuant to such obligation;
o the periods within which or the dates on which, the prices at which
and the terms and conditions upon which such debt securities may be
redeemed or repurchased, if any, in whole or in part, at our option;
o if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which debt securities of such series
will be issuable;
o whether debt securities of such series are to be issued in whole or
in part in the form of one or more global securities and, if so, the
identity of the depositary for such global securities; and
o any other terms of such debt securities not inconsistent with the
provisions of the indenture.
Payment of Debt Securities; Transfers, Exchanges: Except as may be
provided in the applicable prospectus supplement, interest, if any, on each debt
security payable on each interest payment date will be paid to the person in
whose name such debt security is registered as of the close of business on the
regular record date relating to such interest payment date; provided, however,
that interest payable at maturity (whether at stated maturity, upon redemption
or otherwise) will be paid to the person to whom the principal of such debt
security is paid. However, if there has been a default in the payment of
interest on any debt security, such defaulted interest may be payable to the
registered holder of such debt security as of the close of business on a date
selected by the trustee not more than 15 days and not less than 10 days prior to
the date we propose for payment of such defaulted interest.
Principal of and premium, if any, and interest, if any, on the debt
securities at maturity will be payable upon presentation of the debt securities
at the principal corporate trust office of the initial paying agent, U.S. Bank
Trust
7
National Association, or of any successor paying agent, in New York, New York.
We may change the place of payment on the debt securities, may appoint one or
more paying agents (including ourselves) and may remove any paying agent, all in
our discretion. The applicable prospectus supplement, or a supplement thereto,
will identify any new place of payment and any paying agent appointed and will
disclose the removal of any paying agent effected prior to the date of such
prospectus supplement or supplement thereto. The transfer of debt securities may
be registered, and debt securities may be exchanged for other debt securities of
authorized denominations and of like tenor and aggregate principal amount, at
the principal corporate trust office of the initial transfer agent, U.S. Bank
Trust National Association, or any successor transfer agent and registrar, in
New York, New York. We may change the place for registration of transfer of the
debt securities, may appoint one or more additional security registrars or
transfer agents (including ourselves) and may remove any security registrar or
transfer agent, all in our discretion. The applicable prospectus supplement, or
a supplement thereto, will identify any new place for registration of transfer
and any additional security registrar or transfer agent appointed and will
disclose the removal of any security registrar or transfer agent effected prior
to the date of such prospectus supplement or supplement thereto. No service
charge will be made for any transfer or exchange of the debt securities, but we
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. We will not be required (a) to issue,
register the transfer of, or exchange debt securities during a period of 15 days
prior to giving any notice of redemption or (b) to issue, register the transfer
of, or exchange any debt security selected for redemption in whole or in part,
except the unredeemed portion of any debt security being redeemed in part.
Redemption: Any terms of the optional or mandatory redemption of any
series of debt securities will be set forth in the applicable prospectus
supplement. Except as shall otherwise be provided with respect to any series of
debt securities, or any tranche thereof, redeemable at the option of the holder,
the debt securities of such series, or any tranche thereof, will be redeemable
only upon notice, by mail, not less than 30 nor more than 60 days prior to the
date fixed for redemption and, if less than all of the debt securities of any
series, or any tranche thereof, are to be redeemed, the particular debt
securities will be selected by such method as the trustee deems fair and
appropriate.
Any notice of optional redemption may state that such redemption shall be
conditional upon the receipt by the trustee, on or prior to the date fixed for
such redemption, of money sufficient to pay the principal of and premium, if
any, and interest, if any, on such debt securities and that if such money has
not been so received, such notice will be of no force or effect and we will not
be required to redeem such debt securities.
Events of Default: The following constitute events of default under the
indenture with respect to each series of debt securities outstanding thereunder:
o failure to pay any interest on any debt security of such series
within 60 days after the same becomes due and payable;
o failure to pay any principal of or premium, if any, on any debt
security of such series within three business days after the same
becomes due and payable;
o failure to perform or breach of any of our covenants or warranties
in the indenture (other than a covenant or warranty solely for the
benefit of one or more other series of debt securities) for 60 days
after written notice to us by the trustee, or to us and the trustee
by the holders of at least 33% in principal amount of the debt
securities of such series outstanding under the indenture as
provided in the indenture;
o default under any evidence of indebtedness by us (including a
default with respect to any series of debt securities) or a default
under any instrument under which there may be issued any such
indebtedness, in each case aggregating in excess of $5 million,
which default shall constitute a failure to pay the principal of
such indebtedness when due and payable (after the expiration of any
applicable grace period) or shall have resulted in the acceleration
of when such indebtedness becomes due and payable if (1) either the
trustee, or at least 10% in principal amount of any outstanding
series of debt securities, shall have given us notice of such
default and (2) within 10 days of said notice, such indebtedness is
not discharged or such acceleration is not rescinded or annulled;
o certain events of bankruptcy, insolvency or reorganization; and
8
o any other event of default specified with respect to debt securities
of such series.
Remedies: If an event of default with respect to any series of debt
securities occurs and is continuing, then either the trustee or the holders of
not less than 33% in principal amount of the outstanding debt securities of such
series may declare the principal amount (or if the debt securities of such
series are discount notes or similar debt securities, such portion of the
principal amount as may be specified in the applicable prospectus supplement) of
all of the debt securities of such series to be due and payable immediately;
provided, however, that if such an event of default occurs and is continuing
with respect to more than one series of debt securities, the trustee or the
holders of not less than 33% in aggregate principal amount of the outstanding
debt securities of all such series, considered as one class, may make such
declaration of acceleration and not the holders of the debt securities of any
one of such series.
At any time after the declaration of acceleration with respect to the debt
securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained, the event or events of default
giving rise to such declaration of acceleration will, without further act, be
deemed to have been waived, and such declaration and its consequences will,
without further act, be deemed to have been rescinded and annulled, if-
o we have paid or deposited with the trustee a sum sufficient to pay
all overdue interest on all debt securities of such series,
the principal of and premium, if any, on any debt securities
of such series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate
or rates prescribed therefor in such debt securities,
interest upon overdue interest at the rate or rates prescribed
therefor in such debt securities, to the extent that payment
of such interest is lawful, and
all amounts due to the trustee under the indenture; and
o any other event or events of default with respect to the debt
securities of such series, other than the nonpayment of the
principal of the debt securities of such series which has become due
solely by such declaration of acceleration, have been cured or
waived as provided in the indenture.
If any such event of default with respect to the debt securities of any
series occurs and is continuing, the holders of a majority in principal amount
of the outstanding debt securities of such series will have the right to 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 of such series, subject to the following:
o If such an event of default occurs and is continuing with respect to
more than one series of debt securities, the holders of a majority
in aggregate principal amount of the outstanding debt securities of
all such series, considered as one class, will have the right to
make such direction, and not the holders of the debt securities of
any one of such series;
o Such direction will not be in conflict with any rule of law or with
the indenture and could not involve the trustee in personal
liability in circumstances where reasonable indemnity would not be
adequate;
o The trustee may take any other action it deems proper which is not
inconsistent with such direction; and
o The trustee shall not be obligated to take any action unduly
prejudicial to holders not joining in such direction.
The right of a holder of any debt security of such series to institute a
proceeding with respect to the indenture is subject to certain conditions
precedent, but each holder has an absolute right to receive payment of principal
and premium, if any, and interest, if any, when due and to institute suit for
the enforcement of any such
9
payment. The indenture generally provides that the trustee, within 90 days after
the occurrence of any default thereunder with respect to the debt securities of
a series, is required to give the holders of the debt securities of such series
notice of any default known to it, unless cured or waived. Except in the case of
a default in the payment of principal of or premium, if any, or interest, if
any, on any debt securities of such series, however, the trustee may withhold
such notice if the trustee determines that it is in the interest of such holders
to do so. Furthermore, in the case of such an event of default caused by our
failure to perform or our breach of any covenant or warranty in the indenture,
no such notice shall be given to such holders until at least 75 days after the
occurrence thereof.
We will be required to furnish annually to the trustee a statement as to
our performance of certain of our obligations under the indenture and as to any
default in such performance.
Covenants:
Maintenance of Property: We will cause (or, with respect to property owned
in common with others, make a reasonable effort to cause) all our properties
used or useful in the conduct of our business to be maintained and kept in good
condition, repair and working order, ordinary wear and tear excepted, and will
cause (or with respect to property owned in common with others, make a
reasonable effort to cause) to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as, in our judgment, may
be necessary so that the business carried on in connection therewith may be
properly conducted. The foregoing, however, will not prevent us from
discontinuing, or causing the discontinuance of, the operation and maintenance
of any of our properties if such discontinuance is, in our judgment, desirable
in the conduct of our business.
Preservation of Rights: Subject to the provisions described in the next
paragraph, we will do or cause to be done all things necessary to preserve and
keep in full force and effect our corporate existence and our rights (charter
and statutory) and franchises. We will not, however, be required to preserve any
such right or franchise if, in our judgment, (1) preservation thereof is no
longer desirable in the conduct of our business and (2) the loss thereof does
not adversely affect the interests of the holders in any material respect.
Consolidation or Merger: We will not consolidate with or merge into any
other corporation or corporations or convey, transfer or lease our properties
and assets substantially as an entirety to any person or persons unless:
o the corporation or corporations formed by such consolidation or into
which we are merged or the person or persons which acquires by
conveyance or transfer, or which leases, our properties and assets
substantially as an entirety, expressly assumes, by supplemental
indenture, the due and punctual payment of the principal of and
premium, if any, and interest, if any, on all the outstanding debt
securities and the performance of all of our covenants under the
indenture;
o immediately after giving effect to any such transaction no event of
default, and no event which after notice or lapse of time would
become an event of default, will have occurred and be continuing;
and
o we will have delivered to the trustee an officers' certificate and
an opinion of counsel as provided in the indenture.
New York courts have not judicially determined the exact meaning of the
phrase "substantially as an entirety." Accordingly, as a result of this
uncertainty, it may be difficult for the debt holders to determine whether this
covenant (relating to consolidation, merger, and sale of assets) has been
breached, to declare an event of default and to exercise their acceleration
rights based on the alleged breach.
There could be a disagreement between us and the holders over whether a
specific transaction implicates this covenant. There can be no assurance as to
how a court interpreting New York law would interpret the phrase "substantially
as an entirety."
Negative Pledge: We will not incur or permit to exist any mortgage, lien,
pledge, charge or encumbrance of any kind upon our property to secure
indebtedness without equally and ratably securing the outstanding debt
securities of all series. This restriction will not apply in certain
circumstances, however, including the pledging by
10
us of assets in connection with the incurrences of indebtedness in aggregate
principal amount not exceeding 3% of our net tangible utility assets at any time
outstanding. The indenture also excepts certain encumbrances from this
restriction including, among other things:
o liens for taxes not delinquent and liens for taxes which are
delinquent but are being contested in good faith by us;
o easements, rights of way, restrictions or reservations in our
property for, among other things, roads, utility transmission and
distribution facilities and other utility rights of way and
immaterial defects in title;
o purchase money mortgages on property acquired after the date of the
indenture;
o liens existing on assets prior to the acquisition thereof; and
o liens arising out of the refinancing, extension renewal or refunding
of indebtedness secured by certain of the liens or encumbrances
referred to above, including by any of the two immediately preceding
clauses.
Generally, personal property used in our ordinary business, including
cash, accounts receivable, stock in trade, products generated or purchased by
us, office equipment, motor vehicles, fuel and gas, are also excepted from this
restriction.
Modification of Indenture: Without the consent of any holders of debt
securities, we and the trustee may enter into one or more supplemental
indentures for any of the following purposes:
o to evidence the succession of another person to us and the
assumption by any such successor of our covenants in the indenture
and the debt securities; or
o to add to our covenants for the benefit of the holders of all or any
series of outstanding debt securities, or tranche thereof, or to
surrender any right or power conferred upon us by the indenture; or
o to add any additional events of default with respect to all or any
series of outstanding debt securities; or
o to change or eliminate any provision of the indenture or to add any
new provision to the indenture; provided that if such change,
elimination or addition will adversely affect the interests of the
holders of debt securities of any series or tranche in any material
respect, such change, elimination or addition will become effective
with respect to such series or tranche only when there is no debt
security of such series or tranche remaining outstanding under the
indenture; or
o to provide collateral security for the debt securities; or
o to establish the form or terms of debt securities of any series or
tranche as permitted by the indenture; or
o to evidence and provide for the acceptance of appointment of a
successor trustee under the indenture with respect to the debt
securities of one or more series and to add to or change any of the
provisions of the indenture as shall be necessary to provide for or
to facilitate the administration of the trusts under the indenture
by more than one trustee; or
o to provide for the procedures required to permit the utilization of
a noncertificated system of registration for any series of debt
securities; or
o to change any place where:
-- the principal of and premium, if any, and interest, if any, on
debt securities of any series, or any tranche thereof, shall
be payable;
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-- any debt securities of any series, or any tranche thereof, may
be surrendered for registration of transfer;
-- debt securities of any series, or any tranche thereof, may be
surrendered for exchange; and
-- notices and demands to or upon us in respect of the debt
securities of any series, or any tranche thereof, and the
indenture may be served; or
o to cure any ambiguity or inconsistency, or to make any other
provisions with respect to matters or questions arising under the
indenture, provided such other provisions do not adversely affect
the interests of the holders of debt securities of any series in any
material respect.
The holders of a majority in aggregate principal amount of the debt
securities of all series then outstanding under the indenture may, before the
time compliance by us with certain restrictive provisions of the indenture is
required, waive our compliance with one or more of such provisions. The holders
of not less than a majority in principal amount of the debt securities of any
series then outstanding under the indenture may waive any past default under the
indenture with respect to such series, except a default in the payment of
principal, premium, or interest and certain covenants and provisions of the
indenture that cannot be modified or be amended without the consent of the
holder of each outstanding debt security of such series affected.
Without limiting the generality of the foregoing, if the Trust Indenture
Act is amended after the date of the indenture to require changes to the
indenture or the incorporation therein of additional provisions or permit
changes to, or the elimination of, provisions which, at the date of the
indenture or at any time thereafter, are required by the Trust Indenture Act to
be contained in the indenture, we and the trustee may, without the consent of
any holders, enter into one or more supplemental indentures to effect or reflect
any such change, incorporation or elimination.
In general and except as described above, the consent of the holders of
not less than a majority in principal amount of the debt securities of all
series then outstanding under the indenture, considered as one class, is
required to add, change or eliminate any provision of the indenture pursuant to
one or more supplemental indentures. If less than all of the series of debt
securities outstanding under the indenture are directly affected by a
supplemental indenture, however, then only the consent of the holders of a
majority in aggregate principal amount of the outstanding debt securities of all
series so directly affected, considered as one class, is required. Furthermore,
if the proposed supplemental indenture directly affects the rights of the
holders of debt securities of one or more, but less than all, of the tranches of
any series issued in tranches, then only the consent of the holders of a
majority in aggregate principal amount of the debt securities outstanding of all
tranches so directly affected, considered as one class, will be required. No
such supplemental indenture may, without the consent of the holder of each debt
security outstanding under the indenture of each such series or tranche directly
affected thereby:
o change the stated maturity of, or any installment of principal of or
the rate of interest on (or the amount of any installment of
interest on), any debt security, or reduce the principal thereof or
redemption premium thereon, if any, or change the amount payable
upon acceleration of a discount note or method of calculating the
rate of interest thereon, or otherwise modify certain terms of
payment of the principal thereof or interest or premium thereon;
o reduce the percentage in principal amount of the debt securities
outstanding under such series or tranche required to consent to any
supplemental indenture or waiver of compliance with any provision of
the indenture or any default under the indenture and its
consequences, or reduce the requirements for quorum and voting; or
o modify certain of the provisions in the indenture relating to
supplemental indentures, waivers of certain covenants and waivers of
past defaults.
A supplemental indenture which changes or eliminates any covenant or other
provision of the indenture which has expressly been included solely for the
benefit of one or more particular series of debt securities or of one or more
tranches thereof, or which modifies the rights of the holders of debt securities
of such series or tranche with
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respect to such covenant or other provision, shall be deemed not to affect the
rights under the indenture of the holders of any other debt securities.
Defeasance: The debt securities of any series, or any portion of the
principal amount thereof, will be deemed to have been paid for purposes of the
indenture (except as to any surviving rights of registration of transfer or
exchange expressly provided for in the indenture), and our entire indebtedness
in respect thereof will be deemed to have been satisfied and discharged, if
there is irrevocably deposited with the trustee, in trust:
o money in the amount which will be sufficient; or
o direct obligations of, or obligations unconditionally guaranteed by,
the United States of America and entitled to the benefit of the full
faith and credit thereof and certificates, depositary receipts or
other instruments which evidence a direct ownership interest in such
obligations or in any specific interest or principal payments due in
respect thereof, in each case which do not contain provisions
permitting the redemption or other prepayment thereof at the option
of the issuer thereof, the principal of and the interest on which
when due, without any regard to reinvestment thereof, will provide
monies which, together with the money, if any, deposited with or
held by the trustee, will be sufficient; or
o a combination of the preceding items which will be sufficient, to
pay when due the principal of and premium, if any, and interest, if
any, due and to become due on such debt securities or portions
thereof on and prior to the maturity thereof.
As a condition to defeasing any series of debt securities as described
above, we are obligated to obtain a legal opinion to the effect that the
defeasance will be tax free to the holders of the debt securities to be
defeased.
Title: We, the trustee, and any agent of ours or the trustee may treat the
registered holder of a debt security as the absolute owner thereof (whether or
not such debt security may be overdue) for the purpose of making payment and for
all other purposes.
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PLAN OF DISTRIBUTION
We may sell the debt securities offered by this prospectus:
o directly;
o through agents;
o through dealers; or
o through one or more underwriters or a syndicate of underwriters in
an underwritten offering.
Each prospectus supplement will set forth the terms of the offering
of the debt securities offered thereby, including the name or names of any
underwriters, dealers or agents, the initial public offering price or purchase
price of such debt securities, the proceeds we receive from such sale, any
underwriting discounts and other items constituting underwriters' compensation,
and any discounts or concessions allowed or reallowed or paid to dealers. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time. Only firms named
in a prospectus supplement are deemed to be underwriters, dealers or agents in
connection with the debt securities offered thereby.
We may distribute the securities from time to time in one or more
transactions at: a fixed price; prices that may be changed; prices related to
prevailing market prices, if any, at the time of sale; and negotiated prices. We
will describe the method of distribution in the relevant prospectus supplement.
If underwriters are used in the sale of the debt securities, such debt
securities will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Such debt securities may be offered to the public either
through underwriting syndicates represented by one or more managing underwriters
or directly by one or more underwriters. Any underwriters with respect to any of
the debt securities will be named in the prospectus supplement applicable to
such debt securities and, if an underwriting syndicate is used, the managing
underwriter or underwriters will be named on the cover page of such prospectus
supplement. Unless otherwise set forth in the prospectus supplement, the
obligations of the underwriters to purchase any of the debt securities will be
subject to certain conditions precedent, and the underwriters will be obligated
to purchase all of such debt securities if any are purchased.
Subject to certain conditions, we may agree to indemnify the several
underwriters or agents and their controlling persons against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
arising out of or based upon, among other things, any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement, this prospectus, a prospectus supplement or the documents
incorporated by reference herein or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. See the applicable prospectus supplement. Any underwriter may
engage in over-allotment, stabilizing transactions, short covering transactions
and penalty bids in accordance with Regulation M under the Securities Exchange
Act of 1934. Over-allotment involves sales in excess of the offering size, which
creates a short position. Stabilizing transactions permit bids to purchase the
underlying debt security so long as the stabilizing bids do not exceed a
specified maximum. Short covering transactions involve purchases of the debt
securities in the open market after the distribution is completed to cover short
positions. Penalty bids permit the underwriters to reclaim a selling concession
from a dealer when the debt securities originally sold by the dealer are
purchased in a covering transaction to cover short positions. Those activities
may cause the price of the debt securities to be higher than it would otherwise
be. The underwriters may engage in any such activities on any exchange or other
market in which the debt securities may be traded. If commenced, the
underwriters may discontinue those activities at any time. The prospectus
supplement or pricing supplement, as applicable, will set forth the anticipated
delivery date of the debt securities being sold at that time.
If we use an agent in an offering of the securities, we will name the
agent and describe the terms of the agency in the relevant prospectus supplement
or pricing supplement. Unless we indicate otherwise in the prospectus
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supplement, we will require an agent to act on a best efforts basis for the
period of its appointment. Underwriters, dealers and agents or their affiliates
may engage from time to time in various general financing, investment banking
and commercial banking transactions with us and certain of our affiliates.
Although we do not have any definitive plans for sales of the debt
securities offered hereby, subject to market conditions, we anticipate selling
during 2007 approximately $60 to $70 million of debt securities, with
approximately $33 million of the proceeds to be used to repay an equal principal
amount of our 2002 Series D promissory notes which bear interest at the rate of
5.8% per annum and mature on March 28, 2007, and with approximately $27 to $37
million of the proceeds to be used to finance our construction program and for
general corporate purposes.
LEGAL MATTERS
Certain legal matters with respect to the debt securities offered hereby
will be passed upon for us by Thompson Hine LLP, our counsel, 335 Madison
Avenue, New York, New York.
EXPERTS
The financial statements and management's assessment of the effectiveness
of internal control over financial reporting (which is included in Management's
Report on Internal Control over Financial Reporting) incorporated in this
prospectus by reference to our Annual Report on Form 10-K for the year ended
December 31, 2005 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, an independent registered public accounting firm,
given on the authority of said firm as experts in auditing and accounting.
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