Rule 424B(2)
Registration Statement No. 333-65460
PROSPECTUS
$400,000,000
SOUTH CAROLINA ELECTRIC & GAS COMPANY
1426 Main Street
Columbia, South Carolina 29201
(803) 217-9000
First Mortgage Bonds
South Carolina Electric & Gas Company may offer and sell from time to
time up to $400,000,000 aggregate principal amount of its First Mortgage Bonds,
which we refer to as the New Bonds. SCE&G may sell the New Bonds in one or more
series (1) through underwriters or dealers, (2) directly to a limited number of
institutional purchasers or (3) through agents. See "Plan of Distribution." We
will provide the specific terms of these securities in supplements to this
prospectus. This prospectus may not be used to sell securities unless
accompanied by a prospectus supplement. You should read this prospectus and the
prospectus supplement before you invest.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is January 15, 2001.
Table of Contents
Page
About this Prospectus................................................ 6
Where You Can Find More Information.................................. 6
South Carolina Electric & Gas Company................................ 7
Ratio of Earnings to Fixed Charges................................... 7
Use of Proceeds...................................................... 8
Description of the New Bonds......................................... 8
Book-Entry System.................................................... 17
Plan of Distribution................................................. 20
Experts.............................................................. 20
Validity of the New Bonds............................................ 21
About This Prospectus
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission (the "SEC") utilizing a "shelf"
registration process. Under this shelf process, we may sell any or all of the
New Bonds described in this prospectus in one or more offerings up to a total
offering amount of $400,000,000. This prospectus provides you with a general
description of the New Bonds. Each time we sell New Bonds, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and the relevant prospectus supplement, together with the additional information
described under the heading "Where You Can Find More Information."
We believe we have included all information material to investors but
certain details that may be important to you have not been included. To see more
detail, you should read the exhibits filed with the registration statement. All
references in this prospectus to "SCE&G," "we," "us" and "our" are to South
Carolina Electric & Gas Company and its subsidiaries unless otherwise indicated.
Where You Can Find More Information
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file with the SEC at, and obtain copies of these documents
by mail (at prescribed rates) from, the Public Reference section of the SEC, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
room. Because we have preferred stock which is listed on The New York Stock
Exchange, you may also read our filings at the Stock Exchange offices at 20
Broad Street, New York, New York 10005. The information on our website is not a
part of this prospectus.
This prospectus does not repeat important information that you can find
in the registration statement and in the reports and other documents which we
file with the SEC under the Securities Exchange Act of 1934 (the "Exchange
Act"). The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference our Annual Report on Form 10-K for the year ended December 31,
2000, as amended on October 1, 2001, our Quarterly Report on Form 10-Q for the
quarter ended March 31, 2001, our Quarterly Report on Form 10-Q for the quarter
ended June 30, 2001, as amended on October 1, 2001, our Quarterly Report on Form
10-Q for the quarter ended September 30, 2001, our Current Report on Form 8-K
dated January 9, 2001, and any future filing made with the SEC under Sections
13(a), 13(c), 14, or 15(d) of the Exchange Act until we sell all of the New
Bonds. In addition, we are also incorporating by reference any additional
documents that we file with the SEC pursuant to these sections of the Exchange
Act after the date of the filing of the registration statement containing this
prospectus and prior to the date of effectiveness of the registration statement.
We are not required to, and do not, provide annual reports to holders
of our debt securities unless specifically requested by a holder.
You may request a copy of our SEC filings at no cost by writing or
telephoning us at the following address:
H. John Winn, III
Manager - Investor Relations and Shareholder Services
South Carolina Electric & Gas Company
Columbia, South Carolina 29218
(803) 217-9240
You may obtain more information by contacting the Internet website of
SCE&G's parent company, SCANA Corporation, at http://www.scana.com (which is not
intended to be an active hyperlink). The information on our Internet website is
not incorporated by reference in this prospectus, and you should not consider it
part of this prospectus.
You should rely on the information we incorporate by reference or
provide in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
South Carolina Electric & Gas Company
SCE&G is a wholly-owned subsidiary of SCANA Corporation and is a
regulated public utility which generates, transmits, distributes and sells
electricity, and purchases and sells natural gas at retail, in South Carolina.
SCE&G also operates an urban bus service in Columbia, South Carolina. The SCE&G
electric service area covers over 15,000 square miles and extends into 24
counties in central, southern and southwestern portions of South Carolina. The
service area for natural gas encompasses all or part of 31 of the 46 counties in
South Carolina. The total population of SCE&G's combined electric and gas
service area is approximately 2.5 million. SCE&G has its principal executive
offices at 1426 Main Street, Columbia, South Carolina 29201, telephone number
(803) 217-9000.
Ratio of Earnings to Fixed Charges
SCE&G's historical ratios of earnings to fixed charges are as follows:
Twelve Months Ended Year Ended December 31,
-------------------------------------
September 30, 2001 2000 1999 1998 1997 1996
---------------------- ---- ---- ---- ---- ----
3.91 4.24 3.71 4.40 3.85 3.80
For purposes of this ratio, earnings represent net income plus income taxes and
fixed charges. Fixed charges represent interest charges and the estimated
interest portion of annual rentals.
Use of Proceeds
SCE&G will use the proceeds from the sale of the New Bonds to finance
its construction program and to reduce short-term indebtedness incurred for such
purpose, to refinance senior securities and for other general corporate
purposes.
Description of the New Bonds
General
SCE&G will issue the New Bonds in one or more series under an
Indenture, dated as of April 1, 1993, between SCE&G and The Bank of New York,
successor to NationsBank of Georgia, National Association, as trustee (the
"Trustee"), as supplemented (the "Mortgage"). The New Bonds and all other debt
securities issued and outstanding under the Mortgage are referred to in this
prospectus as the "Bonds." Capitalized terms used under this heading (other than
under the caption "The Class A Mortgage") which are not otherwise defined in
this prospectus have the meanings given those terms in the Mortgage. The
summaries under this heading are not detailed. Whenever particular provisions of
the Mortgage or terms defined in the Mortgage are referred to, those statements
are qualified by reference to the Mortgage. References to article and section
numbers under this heading, unless otherwise indicated, are references to
article and section numbers of the Mortgage. A copy of the Mortgage is included
as an exhibit to the registration statement of which this prospectus is a part.
Each prospectus supplement which accompanies this prospectus will set
forth the following information to describe the series of New Bonds related to
that prospectus supplement, unless the information is the same as the
information included in this section:
o the title of the series of New Bonds;
o any limit upon the aggregate principal amount of the series of New Bonds;
o the date or dates on which the principal of the series of New Bonds will
be payable;
o the rate or rates at which the series of New Bonds will bear
interest, if any (or the method of calculating the rate); the date
or dates from which the interest will accrue; the dates on which
the interest will be payable ("Interest Payment Dates"); the
record dates for the interest payable on the Interest Payment
Dates;
o any option of SCE&G to redeem the series of New Bonds and redemption terms
and conditions;
o any obligation of SCE&G to redeem or purchase the series of New
Bonds in accordance with any sinking fund or analogous provisions
or at the option of the holder and the relevant terms and
conditions for that redemption or purchase;
o the denominations of the series of New Bonds;
o whether the series of New Bonds are subject to a book-entry system of
transfers and payments; and
o any other particular terms of the series of New Bonds and of their
offering.
Payment of New Bonds; Transfers; Exchanges
We will pay any interest which is due on each New Bond to the person in
whose name that New Bond is registered as of the close of business on the record
date relating to the Interest Payment Date. (Section 207) However, we will pay
interest which is payable when the New Bonds mature (whether the New Bonds
mature on their stated date of maturity, the date the New Bonds are redeemed or
otherwise) to the person to whom the relevant principal payment on the New Bonds
is to be paid.
We will pay principal of, and any premium and interest on, the New
Bonds at our office or agency in Atlanta, Georgia (currently, the Trustee). The
prospectus supplement identifies any other place of payment and any other paying
agent. We may change the place at which the New Bonds will be payable, may
appoint one or more additional paying agents (including SCE&G) and may remove
any paying agent, all at our discretion. (Section 702)
You may transfer or exchange the New Bonds for other New Bonds of the
same series, authorized denominations (which are, unless otherwise stated in the
prospectus supplement, denominations of $1,000 and any integral multiple
thereof) and of like tenor and aggregate principal amount, at our office or
agency in Atlanta, Georgia (currently, the Trustee). At our discretion, we may
change the place for registration and transfer of the New Bonds, and we may
appoint one or more additional Security Registrars (including SCE&G) and remove
any Security Registrar. The prospectus supplement will identify any additional
place for registration of transfer and any additional Security Registrar. You
are not responsible for paying a service charge for any transfer or exchange of
the New Bonds, but you may have to pay a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any
registration of transfer or exchange of the New Bonds. (Sections 202 and 205)
For additional information with respect to the rights of the owners of
beneficial interests in New Bonds subject to a book-entry system of transfers
and payments, see "Book-Entry System."
Redemption
The New Bonds are subject to redemption, as set forth in the relevant
prospectus supplement, only upon notice by mail not less than 30 days prior to
the redemption date. If less than all the New Bonds of a series are to be
redeemed, the particular New Bonds to be redeemed will be selected by that
method as shall be provided for any particular series, or in the absence of any
such provision, by any method as the Security Registrar deems fair and
appropriate. (Sections 903 and 904)
We may, in any notice of redemption, make any redemption conditional
upon receipt by the Trustee, on or prior to the date fixed for redemption, of
money sufficient to pay the redemption price. If the Trustee has not received
that money, we will not be required to redeem those New Bonds and we will then
give notice to that effect. (Section 904)
Security
General. The New Bonds will be equally and ratably secured with all
other Bonds issued under the Mortgage. The Bonds are
secured by:
o a like principal amount of non-interest bearing first mortgage
bonds (the "Class A Bonds" as more particularly described below),
and
o the lien of the Mortgage on substantially all of the properties of
SCE&G used in the generation, purchase, transmission, distribution
and sale of electricity and any other property which SCE&G may
elect to subject to the lien of the Mortgage.
The lien of the Mortgage is junior to the lien of SCE&G's Indenture, dated as of
January 1, 1945 (the "Class A Mortgage") to The Chase Manhattan Bank, successor
to Central Hanover Bank and Trust Company, as trustee (the "Class A Trustee").
If SCE&G merges or is consolidated into another corporation and certain
conditions set forth in the Mortgage are satisfied, then SCE&G may deliver to
the Trustee bonds issued under an existing mortgage on the properties of such
other corporation in lieu of or in addition to Class A Bonds. In that event, the
Bonds will be secured, additionally, by such bonds (which would become Class A
Bonds) and by the lien of the Mortgage on the properties of such other
corporation, subject to such existing mortgage, which lien would be junior to
the liens of such existing mortgage (which would become a Class A Mortgage) and
the Class A Mortgage. (Section 1206)
When no Class A Bonds are outstanding under a Class A Mortgage except
for Class A Bonds held by the Trustee, then, subject to the satisfaction of
certain conditions, the Trustee will surrender those Class A Bonds for
cancellation and the related Class A Mortgage will be satisfied and discharged.
In that event, the lien of such Class A Mortgage on SCE&G's property will cease
to exist and the Mortgage will constitute, subject to certain exceptions, a
first mortgage lien on the property mortgaged thereby. (Section 1207)
Class A Bonds. The Class A Bonds are issued under the Class A Mortgage,
and delivered to the Trustee under the Mortgage. The Class A Bonds will be
registered in the name of the Trustee and will be owned and held, subject to the
provisions of the Mortgage, for the benefit of the holders of all of the Bonds
Outstanding from time to time. SCE&G will have no interest in the Class A Bonds
designated as the basis for authentication and delivery of Bonds. (Section 1201)
The Trustee may not transfer any Class A Bonds which have been
designated as the basis for the authentication and delivery of Bonds, except to
a successor trustee. At the time any Bonds which have been authenticated and
delivered upon the basis of Class A Bonds are no longer Outstanding, SCE&G may
request the Trustee to surrender for cancellation an equal principal amount of
such Class A Bonds. (Sections 1203 and 1204)
Lien of the Mortgage. The properties subject to the lien of the
Mortgage are also subject to the prior first mortgage lien of the Class A
Mortgage. As discussed under the caption "The Class A Mortgage--Security," the
lien of the Class A Mortgage is a first mortgage lien, subject to certain
exceptions, against the properties subject thereto. Until the Class A Mortgage
is discharged, the Bonds have the benefit of the lien of the Class A Mortgage on
the property mortgaged thereby, to the extent of the aggregate principal amount
of Class A Bonds designated as the basis for the authentication and delivery of
Bonds held by the Trustee.
(Granting Clauses and Article Twelve)
The lien of the Mortgage is also subject to liens on after-acquired
property existing at the time of acquisition and to various liens, including:
o tax liens, mechanics', materialmen's and similar liens and certain
employees' liens, in each case, which are not delinquent
and which are being contested,
o certain judgment liens, easements, reservations and rights of
others (including governmental entities) in, and defects of title
to, the property subject to the lien of the Mortgage which do not
materially impair its use by SCE&G,
o certain leases, and
o certain other liens and encumbrances. (Granting Clauses and Section 101)
The following, among other things, are excepted from the lien of the
Mortgage:
o cash and securities not held under the Mortgage,
o contracts, leases and other agreements, bills, notes and other
instruments, receivables, claims, certain intellectual property
rights and other general intangibles,
o automotive and similar vehicles, movable equipment, and railroad, marine
and flight equipment,
o all goods, stock in trade, wares and merchandise held for sale in the
ordinary course of business,
o fuel (including nuclear fuel assemblies), materials, supplies and other
personal property consumable in the operation of SCE&G's business,
o portable equipment,
o furniture and furnishings, and computers, machinery and equipment used
exclusively for corporate administrative or clerical purposes,
o electric energy, gas and other products generated, produced or purchased,
o substances mined, extracted or otherwise separated from the land and all
rights thereto, leasehold interests, and,
o with certain exceptions, all property which is located outside of the
State of South Carolina or Columbia County, Georgia. (Granting Clauses)
The Mortgage contains provisions subjecting (with certain exceptions and
limitations and subject to the prior lien of the Class A Mortgage)
after-acquired electric utility property to the lien of the Mortgage. (Granting
Clauses)
The Mortgage provides that the Trustee has a lien upon the property subject
to the lien of the Mortgage, for the payment of its compensation and expenses.
This Trustee's lien is prior to the lien on behalf of the holders of the Bonds.
(Section 1607)
Issuance of Bonds
The maximum principal amount of Bonds which SCE&G may issue under the
Mortgage is unlimited. (Section 201) SCE&G may issue Bonds of any series from
time to time on the basis of, and in an aggregate principal amount not exceeding
the sum of:
o the aggregate principal amount of Class A Bonds issued and delivered to
the Trustee and designated by SCE&G as the basis for such issuance,
o 70% of the amount of Unfunded Net Property Additions (generally
defined as Property Additions (net of retirements) which are not
subject to the lien of the Class A Mortgage and which have not
been made or deemed to have been made the basis of the
authentication and delivery of Bonds or used for other purposes
under the Mortgage),
o the aggregate principal amount of retired Bonds, and
o cash deposited with the Trustee. (Sections 101, 104 and 302 and Articles
Four, Five and Six)
Property Additions are generally defined to include any Property
subject to the lien of the Mortgage (the "Mortgaged Property") which SCE&G may
elect to designate as such, except (with certain exceptions) goodwill, going
concern value rights, intangible property or any property the cost of
acquisition or construction of which is properly chargeable to an operating
expense account of SCE&G. (Section 104)
Since the Mortgaged Property is subject to the lien of the Class A
Mortgage, the New Bonds are issued on the basis of Class A Bonds. The amount of
Bonds SCE&G may issue on that basis will be limited by the amount of Class A
Bonds which may be issued under the Class A Mortgage. See the caption "The Class
A Mortgage - Issuance of Additional Bonds."
With certain exceptions in the case of Bonds issued on the basis of
Class A Bonds and retired Bonds as described above, SCE&G can issue Bonds only
if the Adjusted Net Earnings of SCE&G for 12 consecutive months within the
preceding 18 months is at least twice the Annual Interest Requirements on:
o all Bonds at the time outstanding,
o the Bonds then applied for, and
o all outstanding Class A Bonds other than Class A Bonds held by the
Trustee under the Mortgage. (Sections 103, 301, 302 and 501)
Release of Property
SCE&G may obtain the release of property from the lien of the Mortgage
either upon the basis of an equal amount of Unfunded Net Property Additions or
upon the basis of the deposit of cash or a credit for Retired Securities and
certain other obligations. SCE&G may also obtain the release of property upon
the basis of the release of the property from the lien of the Class A Mortgage.
(Article Ten)
Withdrawal of Cash
SCE&G may withdraw cash deposited as the basis for the issuance of
Bonds and cash representing payments in respect of Class A Bonds designated as
the basis for the issuance of Bonds upon the basis of (1) Unfunded Net Property
Additions in an amount equal to ten-sevenths of such cash, (2) an equal amount
of Retired Bonds or (3) an equal amount of Class A Bonds not then designated as
the basis for the issuance of Bonds or the withdrawal of cash. (Sections 601 and
1202) In addition, SCE&G may withdraw cash upon the basis of (a) an equal amount
of Unfunded Net Property Additions, or (b) ten-sevenths of the amount of Retired
Securities, or may apply such cash to (y) the purchase of Bonds (at prices not
exceeding ten-sevenths of the principal amount thereof) or (z) the redemption or
payment at stated maturity of Bonds. (Sections 601 and 1005)
Modification of Mortgage
Except for modifications which will not have a material adverse effect
upon the interests of the Holders of the Bonds, the holders of a majority in
aggregate principal amount of the Outstanding Bonds (or if only certain series
would be affected, the Outstanding Bonds of that series) must consent to amend
the Mortgage. However, no amendment may, without the consent of the holder of
each Outstanding Bond directly affected by the amendment, among other things (1)
change the Stated Maturity of the principal of, or any installment of principal
of or interest on that Bond, or reduce the principal amount, or the rate of
interest on that Bond, or change the method of calculating the interest rate, or
reduce any premium payable on that Bond, or impair any right to enforce payment
on that Bond, or (2) permit the creation of a lien prior to the lien of the
Mortgage on substantially all of the Mortgaged Property or otherwise deprive
those holders of the security of the lien of the Mortgage or (3) reduce the
percentage in principal amount of Bonds, the consent of whose Holders is
required for any supplemental indenture or any waiver. (Section 1702)
Events of Default
Each of the following events is an Event of Default under the Mortgage:
o SCE&G fails to make payments of principal or premium within three
business days, or interest within 60 days, after the due date,
o SCE&G fails to perform or breaches any other covenant or warranty for a
period of 90 days after notice,
o SCE&G files for bankruptcy or certain other events involving insolvency,
receivership or bankruptcy occur, or
o SCE&G defaults under any Class A Mortgage. (Section 1101)
If an Event of Default occurs and is continuing, either the Trustee or
the Holders of 25% in principal amount of the Outstanding Bonds may declare the
principal amount of all of the Outstanding Bonds to be immediately due and
payable. After the declaration of acceleration has been made, but before the
sale of any of the Mortgaged Property and before the Trustee has obtained a
judgment or decree for payment of money, the Event of Default giving rise to
such declaration of acceleration will be deemed to be waived, and such
declaration and its consequences will be rescinded and annulled, if SCE&G (a)
pays to the Trustee all overdue interest, principal and any premium on any
Outstanding Bonds and (b) cures any other such Event of Default. (Sections 1102
and 1117)
The Holders of a majority in principal amount of the Outstanding Bonds
may direct the time, method and place of conducting any proceeding for the
enforcement of the Mortgage available to the Trustee or exercising any trust or
power conferred on the Trustee. No Holder of any Bond has the right to institute
any proceeding with respect to the Mortgage, or for the appointment of a
receiver or for any other remedy thereunder, unless:
o that Holder previously gave written notice of a continuing Event of
Default to the Trustee,
o the Holders of a majority in principal amount of Outstanding Bonds
has offered to the Trustee reasonable indemnity against costs and
liabilities and requested that the Trustee take action,
o the Trustee declined to take action for 60 days, and
o the Holders of a majority in principal amount of Outstanding Bonds have
given no inconsistent direction during such 60-day period;
provided, however, that each Holder of a Bond has the right to enforce payment
of that Bond when due. (Sections 1111, 1112 and 1116)
In addition to the rights and remedies provided in the Mortgage, the
Trustee may exercise any right or remedy available to the Trustee in its
capacity as the owner and holder of Class A Bonds which arises as a result of a
default under the Class A Mortgage. (Section 1119)
Evidence of Compliance
The Trust Indenture Act requires that SCE&G give the Trustee, at least
annually, a brief statement as to SCE&G's compliance
with the conditions and covenants under the Mortgage. (Article Eight)
The Class A Mortgage
General. Capitalized terms used under this caption which are not
otherwise defined in this prospectus have the meanings ascribed to those terms
in the Class A Mortgage. The summaries under this caption are not detailed.
Whenever particular provisions of the Class A Mortgage or terms defined in the
Class A Mortgage are referred to in this caption, those provisions or
definitions are qualified by reference to the Class A Mortgage. References to
article and section numbers in this caption, unless otherwise indicated, are
references to article and section numbers of the Class A Mortgage. A copy of the
Class A Mortgage is included as an exhibit to the registration statement of
which this prospectus is a part.
Security. The Class A Bonds are secured, equally and ratably with all
other bonds issued and outstanding under the Class A Mortgage, by a direct lien
on substantially all of SCE&G's fixed property and franchises used or useful in
its public utility businesses (except cash, securities, contracts and accounts
receivable, materials and supplies, natural gas, oil, certain minerals and
mineral rights and certain other assets) now owned by SCE&G. The lien of the
Class A Mortgage is a first lien except that it is subject to (1) certain
excepted encumbrances and (2) the fact that titles to certain properties are
subject to reservations and encumbrances such as are customarily encountered in
the public utility business and which do not materially interfere with their
use. The Class A Mortgage contains provisions that allow us to subject (with
certain exceptions and limitations) after-acquired property of SCE&G to the lien
thereof. (Granting Clauses)
The Class A Mortgage prohibits SCE&G from acquiring property subject to
prior liens if, following the acquisition, prior lien bonds would exceed 15% of
the aggregate of outstanding bonds unless the principal amount of indebtedness
secured by such prior liens does not exceed 70% of the cost of such property to
SCE&G and unless, in certain cases, the net earnings of such property meet
certain tests. (Section 7.05 and Fifty-third Supplemental Section 2.02)
The Class A Trustee has a lien upon the property subject to the lien of
the Class A Mortgage for payment of its reasonable compensation and expenses and
for indemnification against certain liabilities. This lien is prior to the lien
on behalf of the holders of bonds. (Section 16.10)
Issuance of Additional Bonds. The principal amount of bonds which may
be secured by the Class A Mortgage is limited to $5,000,000,000 but may be
increased by a supplemental indenture or indentures without the consent of
bondholders or stockholders. (Section 2.01 and Fifty-third Supplemental Section
1.04) Additional bonds may from time to time be issued on the basis of:
o 70% of unfunded net property additions,
o deposit of cash or
o retirement of bonds. (Articles Four, Five and Six, Fifty-third Supplemental
Section 2.02)
With certain exceptions in the case of bonds issued on the basis of the
retirement of bonds, we can issue bonds only if net earnings for 12 consecutive
months out of the preceding 18 months are at least twice the annual interest
requirements on all bonds to be outstanding and all prior lien bonds. (Section
103 and Articles Four, Five and Six, Fifty-third Supplemental Section 2.02)
SCE&G may withdraw, or apply to the purchase or redemption of bonds,
cash deposited with the Class A Trustee as the basis for the issuance of bonds
in an amount equal to the principal amount of bonds which SCE&G is then entitled
to have authenticated and delivered. (Section 1.03 and Articles Four, Five and
Six) At September 30, 2001 unfunded net property additions were approximately
$1,586.9 million, sufficient to permit the issuance of approximately $1,110.8
million principal amount of bonds under the Class A Mortgage. Retirement credits
in the amount of $44.9 million were available at September 30, 2001.
Sinking Fund. The Class A Mortgage requires SCE&G to deposit, on or
before June 1 in each year, with the Class A Trustee as a "sinking fund
requirement" an amount equal to 1% of the aggregate principal amount of bonds
(other than bonds authenticated on the basis of retirements of other bonds and
certain retired bonds). SCE&G may pay the sinking fund requirement in cash or
bonds. In addition, we may satisfy a portion of the sinking fund requirement by
certifying to the Class A Trustee unfunded net property additions in an amount
equal to ten-sevenths of the portion of the sinking fund requirement being
satisfied. Any cash deposited may be applied to the purchase or redemption of
bonds of any series or may be withdrawn by SCE&G against deposit of bonds.
(Section 2.12, Second Supplemental Section 2, Third through Fifth, Seventh
through Eleventh, Thirteenth through Fifty-third Supplementals, Section 1.03 and
Sixth and Twelfth Supplementals Section 2.03)
Events of Default; Concerning the Trustee. The following are defaults under
the Class A Mortgage:
o SCE&G fails to make payments of principal or interest when due,
o SCE&G fails to make any sinking fund or purchase fund payment when due,
o SCE&G files for bankruptcy or certain other events involving insolvency,
receivership or bankruptcy occur, and
o SCE&G fails to perform certain covenants or agreements.
Certain of these events become defaults only after the lapse of prescribed
periods of time and/or notice from the Trustee. (Section 11.01) The Trust
Indenture Act, with which SCE&G has convenanted to abide, requires SCE&G to
furnish the Class A Trustee with periodic evidence as to the absence of defaults
and as to compliance with the terms of the Class A Mortgage. (Section 18.03)
Upon the occurrence of a default under the Class A Mortgage, either the
Class A Trustee or the holders of not less than 20% in principal amount of
outstanding bonds may declare the principal of all outstanding bonds immediately
due and payable. However, if the default is cured, the holders of a majority in
principal amount of outstanding bonds may rescind that declaration and waive the
default and its consequences. (Section 11.05)
The holders of a majority in principal amount of outstanding bonds may
direct the time, method and place of conducting any proceeding for the
enforcement of the Class A Mortgage. (Section 11.12) No holder of any bond has
the right to institute any proceeding with respect to the Class A Mortgage
unless:
o the holder previously gave written notice of a default to the Class A
Trustee,
o the holders of not less than 20% in principal amount of outstanding bonds
have offered to the Class A Trustee reasonable indemnity against costs and
liabilities and requested the Class A Trustee to take action,
o the Class A Trustee declined to take action for 60 days, and
o the holders of a majority in principal amount of outstanding bonds have
given no inconsistent direction;
provided, however, that each holder of a bond shall have the right to enforce
payment of that bond when due. (Section 11.14)
Miscellaneous. Subject to certain exceptions and limitations contained
in the Class A Mortgage, property subject to the lien of that mortgage may be
released only upon the substitution of cash, divisional bonds, bonds
authenticated under the Class A Mortgage or certain other property. (Article
Ten) Amendments of the Class A Mortgage require the consent of the holders of 66
2/3% in principal amount of outstanding bonds; provided, the bondholders shall
have no power:
o to extend the fixed maturity, or reduce the rate or extend the
time of payment of interest on any bonds, or reduce the principal
amount of any bonds, or change provisions relating to the sinking
fund or the redemption provisions of any series of bonds
outstanding under the Class A Mortgage, without the express
consent of the holder of each bond which would be affected,
o to reduce the percentages of holders whose consent is required to
enter into any supplemental indenture, without the consent
of the holders of all bonds outstanding,
o to permit the creation by SCE&G of any mortgage or pledge or lien
in the nature thereof, ranking prior to or equal with the lien of
the Class A Mortgage on any of the mortgaged property, or
o to deprive the holder of any bond outstanding under the Class A
Mortgage of the lien of the Class A Mortgage on any of the
mortgaged property. (Fifty-third Supplemental Section 2.01)
Amendment of the Class A Mortgage by Vote of Trustee
The Mortgage provides that, if SCE&G requests the holders of the Class
A Bonds to eliminate the sinking provisions of the Mortgage, the Trustee, as
such a holder, will vote to amend the Class A Mortgage to eliminate the sinking
provisions accordingly. The Company intends to request the Trustee to do so at
such time as the Trustee is the sole holder of the Class A Bonds. (Section 1205,
Fifty-third Supplemental)
With respect to any other amendments to the Class A Mortgage, the
Trustee will vote proportionately with what it reasonably believes will be the
vote of the holders of all other Class A Bonds. However, if the proposed
amendment of the Mortgage is an amendment or modification described under the
caption "Modification of Mortgage" that requires the prior consent of a majority
in aggregate principal amount of the Outstanding Bonds (or if only certain
series would be affected, the Outstanding Bonds of such series), then the
Trustee will not vote in favor of that amendment unless the consent requirement
has already been met. (Section 1205)
Book-Entry System
If provided in the prospectus supplement, except under the
circumstances described below, SCE&G will issue the New Bonds in the form of one
or more global Bonds (each a "Global Bond"), each of which will represent
beneficial interests in the New Bonds. Each such beneficial interest in a Global
Bond is called a "Book-Entry Bond" in this prospectus. We will deposit those
Global Bonds with, or on behalf of, The Depository Trust Company, New York, New
York ("DTC"), or another depository as we may subsequently designate (the
"Depository") relating to the New Bonds, and register them in the name of a
nominee of the Depository.
So long as the Depository, or its nominee, is the registered owner of a
Global Bond, the Depository or its nominee, as the case may be, will be
considered the owner of that Global Bond for all purposes under the Mortgage. We
will make payments of principal of, any premium and interest on the Global Bond
to the Depository or its nominee, as the case may be, as the registered owner of
that Global Bond. Except as set forth below, owners of a beneficial interest in
a Global Bond will not be entitled to have any individual New Bonds registered
in their names, will not receive or be entitled to receive physical delivery of
any New Bonds and will not be considered the owners of New Bonds under the
Mortgage.
Accordingly, to exercise any of the rights of the registered owners of
the New Bonds, each person holding a beneficial interest in a Global Bond must
rely on the procedures of the Depository. If that person is not a Direct
Participant (hereinafter defined), then that person must also rely on procedures
of the Direct Participant through which that person holds its interest.
DTC
The following information concerning DTC and DTC's book-entry system
has been obtained from sources that SCE&G believes to be reliable, but neither
SCE&G nor any underwriter, dealer or agent takes any responsibility for the
accuracy of that information.
DTC will act as the initial securities depository for the Global Bonds.
The Global Bonds will be issued only 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 New
Bond certificate will be issued for each issue of the New Bonds, each in the
aggregate principal amount of such issue, and will be deposited with DTC. If,
however, the aggregate principal amount of any issue exceeds $400 million, one
certificate will be issued with respect to each $400 million of principal amount
and an additional certificate will be issued with respect to any remaining
principal amount of such issue.
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 securities that its participants ("Direct Participants")
deposit with DTC. DTC also facilitates the settlement among Direct Participants
of securities transactions such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in Direct
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its Direct Participants and 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 securities brokers and dealers, banks, and trust
companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and its Direct and Indirect Participants are on file with the
SEC.
Purchases of the New Bonds under the DTC system must be made by or
through Direct Participants, which will receive a credit for the New Bonds on
DTC's records. The ownership interest of each actual purchaser of each New Bond
("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, but 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 New Bonds 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 New
Bonds, except in the event that use of the book-entry system for the New Bonds
is discontinued.
To facilitate subsequent transfers, all New Bonds 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 New Bonds with DTC and their registration
in the name of Cede & Co. or such other nominee do not effect any change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of
the New Bonds; DTC's records reflect only the identity of the Direct
Participants to whose accounts such New Bonds 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 may wish to take certain
steps to augment transmission to them of notices of significant events with
respect to the New Bonds, such as redemptions, tenders, defaults and proposed
amendments to the security documents. Beneficial Owners may wish to ascertain
that the nominee holding the New Bonds for their benefit has agreed to obtain
and transmit notices to Beneficial Owners or in the alternative, Beneficial
Owners may wish to provide their names and addresses to the registrar and
request that copies of the notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the New
Bonds within an issue are being redeemed, 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., nor any other DTC nominee, will consent or
vote with respect to the New Bonds. 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 the New Bonds are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Principal and interest payments on the New Bonds 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 from us or the Trustee on the relevant
payment date in accordance with their respective holdings shown on DTC's
records. 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 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 principal and
interest to Cede & Co. or such other nominee as may be requested by an
authorized representative of DTC, is our responsibility or that of the Trustee.
Disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners shall be the
responsibility of Direct and Indirect Participants.
A Beneficial Owner shall give notice to elect to have its New Bonds
purchased or tendered by us, through its Participant, to the Trustee and shall
effect delivery of such Book-Entry Bonds by causing the Direct Participant to
transfer the Participant's interest in the New Bonds representing such New
Bonds, on DTC's records, to the Trustee. The requirement for physical delivery
of New Bonds in connection with a demand for repayment will be deemed satisfied
when the ownership rights in the Global Bond or Bonds representing such New
Bonds are transferred by Direct Participants on DTC's records and followed by a
credit of tendered New Bonds to the Trustee's DTC account.
DTC may discontinue providing its services as securities depository
with respect to the New Bonds at any time by giving reasonable notice to us or
the Trustee. Under such circumstances, in the event that a successor securities
depository is not obtained, New Bonds in certificated form are required to be
printed and delivered. In addition, we may decide to discontinue use of the
system of book-entry transfers through DTC or a successor securities depository.
In that event, New Bonds in certificated form will be printed and delivered.
Neither we nor the Trustee will have any responsibility or obligation
to the Depository, any Participant in the book-entry system or any Beneficial
Owner with respect to (1) the accuracy of any records maintained by DTC or any
Participant; (2) the payment by DTC or by any Participant of any amount due to
any Participant or Beneficial Owner, respectively, in respect of the principal
amount or purchase price or redemption price of, or interest on, any New Bonds;
(3) the delivery of any notice by DTC or any participant; (4) the selection of
the Beneficial Owners to receive payment in the event of any partial redemption
of the New Bonds; or (5) any other action taken by DTC or any Participant.
Plan of Distribution
SCE&G may offer the New Bonds in any of three ways:
o through underwriters or dealers,
o directly to a limited number of purchasers or to a single purchaser, or
o through agents.
Each prospectus supplement will set forth:
o the terms of the offering of the New Bonds,
o the proceeds to SCE&G,
o any underwriting discounts and other items constituting underwriters'
compensation, and
o any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers.
From time to time, SCE&G may change any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers.
If underwriters are involved, the New Bonds being sold will be acquired
by them for their own account and they may resell the New Bonds 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.
Underwriters may offer the New Bonds to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The applicable prospectus supplement will
name any underwriter involved in a sale of New Bonds and the cover page will
state the name of the managing underwriter. Any underwriting agreement will
provide that the obligations of the underwriters are subject to certain
conditions precedent, and that the underwriters will be obligated to purchase
all of the New Bonds to which that underwriting agreement relates if any are
purchased. SCE&G may agree to indemnify any underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933.
SCE&G may sell the New Bonds directly or through agents designated by
SCE&G from time to time. In the applicable prospectus supplement, SCE&G will
state the name of any agent involved in the offer or sale of the New Bonds as
well as any commissions payable by SCE&G to such agent. Unless otherwise
indicated in the prospectus supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
Experts
The consolidated financial statements and related financial statement
schedule incorporated by reference from SCE&G's Annual Report on Form 10-K for
the year ended December 31, 2000 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report (which expresses an unqualified
opinion and includes an explanatory paragraph referring to a change in SCE&G's
method of accounting for operating revenues), which is incorporated by reference
into this prospectus and is so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
Validity of the New Bonds
McNair Law Firm, P.A., of Columbia, South Carolina, and H. Thomas Arthur,
Esq., Senior Vice President and General Counsel of SCE&G, or Sarena D. Burch,
Deputy General Counsel of SCE&G, will pass upon the validity of the New Bonds
for SCE&G. Thelen Reid & Priest LLP, of New York, New York, will pass upon the
validity of the New Bonds for any underwriters. Thelen Reid & Priest LLP will
rely as to all matters of South Carolina law upon the opinion of H. Thomas
Arthur, Esq. or Sarena D. Burch, Esq.. Thelen Reid & Priest LLP, from time to
time, renders legal services to SCE&G.
At October 31, 2001, H. Thomas Arthur, Esq., and Sarena D. Burch, Esq.,
owned beneficially 13,760 and 2,957, respectively (and options to purchase
27,938 and 9,570, respectively), shares of SCANA Corporation's Common Stock,
including shares acquired by the trustee under its Stock Purchase-Savings
Program by use of contributions made by Mr. Arthur and Ms. Burch and earnings
thereon and including shares purchased by the trustee by use of SCANA
contributions and earnings thereon.