South Carolina Electric & Gas Co.
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-108760
Prospectus Supplement
(To Prospectus dated October 17, 2003)
$100,000,000
South Carolina Electric & Gas Company
First Mortgage Bonds, 5.25% Series due March 1, 2035
We are offering $100 million aggregate principal amount of
our First Mortgage Bonds, 5.25% Series due March 1, 2035,
which we refer to herein as the New Bonds. We will pay interest
on the New Bonds semiannually in arrears on March 1 and
September 1 of each year, beginning September 1, 2005.
The New Bonds may be redeemed at our option, at any time in
whole or from time to time in part, at a redemption price equal
to 100% of the principal amount of the New Bonds being redeemed
or such greater amount as calculated herein, together with
accrued and unpaid interest to the redemption date. See
Terms of the New Bonds Optional
Redemption. We will not make application to list the New
Bonds on any securities exchange or to include them in any
automated quotation system.
Investing in our New Bonds involves risks. See Risk
Factors beginning on page S-2 and on page 2 of
the accompanying prospectus.
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Per New Bond | |
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Total | |
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Price to Public(1)
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98.179% |
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$ |
98,179,000 |
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Underwriting Discount
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0.875% |
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$ |
875,000 |
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Proceeds to SCE&G Before Expenses(1)
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97.304% |
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$ |
97,304,000 |
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(1) |
Plus accrued interest from March 8, 2005, if settlement
occurs after that date. |
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved these
securities or determined if this prospectus supplement or the
accompanying prospectus is truthful and complete. Any
representation to the contrary is a criminal offense.
The underwriters expect to deliver the New Bonds in book-entry
form only through The Depository Trust Company on or about
March 8, 2005.
Joint Book-Running Managers
Banc of America Securities LLC
Wachovia Securities
Co-Managers
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BNY Capital Markets, Inc. |
BB&T Capital Markets |
March 1, 2005
TABLE OF CONTENTS
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Prospectus Supplement |
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S-1 |
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S-2 |
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S-2 |
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S-2 |
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S-3 |
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S-4 |
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S-5 |
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S-6 |
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S-6 |
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Prospectus |
About This Prospectus
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2 |
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Risk Factors
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Where You Can Find More Information
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South Carolina Electric & Gas Company
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Ratio of Earnings to Fixed Charges
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Use of Proceeds
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Description of the New Bonds
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Book-Entry System
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Plan of Distribution
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Experts
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16 |
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Legal Opinions
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16 |
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You should rely only on the information contained in this
document or to which we have referred you. We have not, and the
underwriters have not, authorized anyone to provide you with
information that is different. This document may only be used
where it is legal to sell these securities. The information in
this document may only be accurate on the date of this
document.
When this prospectus supplement uses the words
SCE&G, we, us, and
our, they refer to the South Carolina Electric &
Gas Company, unless otherwise expressly stated or the context
otherwise requires.
Our mailing address is 1426 Main Street, Columbia, South
Carolina 29201, and our telephone number is (803) 217-9000.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange
Commission (SEC). Our SEC filings are available to
the public over the Internet at the SECs 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 rooms. Because we have preferred stock which is
listed on The New York Stock Exchange, you may also read our
filings at the Stock Exchanges offices at 20 Broad Street,
New York, New York 10005.
This prospectus supplement does not repeat important information
that you can find in our registration statement (File
No. 333-108760) and in the reports and other documents
which we file with the SEC under the Securities Exchange Act of
1934, as amended (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 supplement and the accompanying prospectus, and
information that we file later with the SEC will automatically
update and supersede some of this information. We incorporate by
reference our Annual Report on Form 10-K for the year ended
December 31, 2004, and any future filings 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.
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 or phone number, as
the case may be:
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H. John Winn, III |
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Director Investor Relations and Shareholder Services |
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South Carolina Electric & Gas Company |
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Columbia, South Carolina 29218 |
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(803) 217-9240 |
You may obtain more information by visiting SCANA
Corporations Internet web site at
http://www.scana.com (which is not intended to be
an active hyperlink). The information on SCANA
Corporations Internet web site is not incorporated by
reference in this prospectus supplement or the accompanying
prospectus, and you should not consider it part of this
prospectus supplement or the accompanying prospectus.
S-1
RATIO OF EARNINGS TO FIXED CHARGES
Our historical ratios of earnings to fixed charges are as
follows:
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Year Ended December 31, | |
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2004 | |
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2003 | |
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2002 | |
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2001 | |
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2000 | |
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4.31 |
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4.13 |
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4.28 |
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4.54 |
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5.02 |
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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.
The ratios for 2003 and earlier have been recalculated to
reflect retrospective consolidation of South Carolina Generating
Company, Inc. in accordance with Financial Accounting Standards
Board Interpretation No. 46 (Revised 2003).
RISK FACTORS
Investing in our New Bonds involves risks. See Risk
Factors included in our most recent Annual Report on
Form 10-K for the year ended December 31, 2004, within
Item 1, Business, which is incorporated by reference into
this prospectus supplement and the accompanying prospectus, and
see page 2 of the accompanying prospectus. Each of the risks
described could affect the value of your investment in the New
Bonds.
USE OF PROCEEDS
We will use the net proceeds from the sale of the New Bonds,
together with certain other funds, for the redemption prior to
maturity of our First Mortgage Bonds,
75/8%
Series due April 1, 2025.
S-2
TERMS OF THE NEW BONDS
We will issue the First Mortgage Bonds, 5.25% Series due
March 1, 2035 (the New Bonds) under the
Indenture dated as of April 1, 1993, as supplemented (the
Mortgage), made between us and The Bank of New York,
successor to NationsBank of Georgia, National Association, as
trustee (the Trustee). The New Bonds will initially
be limited to $100,000,000 in aggregate principal amount. We
may, without the consent of the existing holders of the New
Bonds, issue additional Bonds under the Mortgage having the same
ranking and the same interest rate, maturity and other terms as
the New Bonds. Any additional Bonds having similar terms,
together with the New Bonds, will constitute a single series of
bonds under the Mortgage. The following information concerning
the New Bonds supplements and should be read in conjunction with
the statements under Description of the New Bonds in
the accompanying prospectus.
Form
The New Bonds will be issued as one or more global bonds in the
name of Cede & Co., as nominee for The Depository
Trust Company, New York, New York, and will be available
only in book-entry form. See Book-Entry System in
the accompanying prospectus.
Interest and Maturity
We will pay interest on the New Bonds from March 8, 2005,
at the rate of 5.25% per year (based upon a 360-day year of
twelve 30-day months), semiannually in arrears on March 1
and September 1 of each year commencing on
September 1, 2005, to holders of record on the preceding
February 15 and August 15, respectively. The New Bonds will
mature March 1, 2035. The principal and interest are
payable at the office or agency of SCE&G in Atlanta, Georgia
(currently, the Trustee).
Optional Redemption
The New Bonds are redeemable, in whole or in part, at any time
and from time to time, at our option, at a redemption price
equal to the greater of:
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100% of the principal amount of the New Bonds being redeemed, or |
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the sum of the present values of the remaining scheduled
payments of principal and interest thereon (not including any
portion of payments of interest accrued as of the redemption
date) discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at
the Adjusted Treasury Rate, plus 10 basis points (.10%), as
calculated by an Independent Investment Banker. |
plus, in either of the above cases, accrued and unpaid interest
thereon to the redemption date.
Adjusted Treasury Rate means, with respect to any
redemption date:
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the yield, under the heading that represents the average for the
week immediately preceding the calculation date, appearing in
the most recently published statistical release designated
H.15(519) or any successor publication that is
published weekly by the Board of Governors of the Federal
Reserve System and that establishes yields on actively traded
United States Treasury securities adjusted to constant maturity
under the caption Treasury Constant Maturities, for
the maturity corresponding to the Comparable Treasury Issue (if
no maturity is within three months before or after the Remaining
Life, yields for the two published maturities most closely
corresponding to the Comparable Treasury Issue shall be
determined and the Adjusted Treasury Rate shall be interpolated
or extrapolated from those yields on a straight line basis,
rounding to the nearest month); or |
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if such release (or any successor release) is not published
during the week immediately preceding the calculation date or
does not contain such yields, the rate per year equal to the
semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price for the Comparable
Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such
redemption date. |
S-3
The Adjusted Treasury Rate shall be calculated on the third
business day preceding the redemption date.
Comparable Treasury Issue means the United States
Treasury security selected by an Independent Investment Banker
as having a maturity comparable to the remaining term of the New
Bonds to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practice,
in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of those New Bonds (the
Remaining Life).
Comparable Treasury Price means (1) the average
of five Reference Treasury Dealer Quotations for the redemption
date, after excluding the highest and lowest Reference Treasury
Dealer Quotations, or (2) if the Independent Investment
Banker obtains fewer than five Reference Treasury Dealer
Quotations, the average of all such quotations.
Independent Investment Banker means one of the
Reference Treasury Dealers appointed by us.
Reference Treasury Dealer means:
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each of Banc of America Securities LLC and UBS Securities LLC,
and their respective successors; provided that, if any of the
foregoing ceases to be a primary U.S. Government securities
dealer in the United States (a Primary Treasury
Dealer), we will substitute another Primary Treasury
Dealer; and |
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any other Primary Treasury Dealer selected by us. |
Reference Treasury Dealer Quotations means, with
respect to each Reference Treasury Dealer and any redemption
date, the average, as determined by the Independent Investment
Banker, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal
amount) quoted in writing to the Independent Investment Banker
at 5:00 p.m., New York City time, on the third business day
preceding such redemption date.
Unless we default in payment of the redemption price, interest
will cease to accrue on and after the redemption date on the New
Bonds or portions thereof called for redemption.
BASIS FOR ISSUANCE OF THE NEW BONDS
We will issue the New Bonds upon the basis of $100,000,000 of
Class A Bonds held by the Trustee and designated by us as
the basis for such issuance. After the issuance of the New
Bonds, we will be able to issue approximately $925,000,000 of
additional Bonds on the basis of a like principal amount of
Class A Bonds held by the Trustee and available for such
purpose and after giving effect to the application of the
proceeds of these New Bonds for refinancing purposes, we will be
able to issue approximately $1,025,000,000 of additional Bonds.
See Description of the New Bonds in the accompanying
prospectus. Based upon property additions certified to the
Class A Trustee as of July 31, 2004 (the last date of
certification of property additions under the Class A
Mortgage), we have unfunded net property additions of
approximately $1,400,000,000, sufficient to permit the issuance
of approximately $980,000,000 of additional Class A Bonds
on the basis thereof. Retirement credits under the Class A
Mortgage in the amount of approximately $121,000,000 were
available as of December 31, 2004.
S-4
UNDERWRITING
Under the terms and subject to the conditions contained in an
underwriting agreement, dated March 1, 2005, the
underwriters named below have severally agreed to purchase, and
we have agreed to sell to them, severally, the respective
principal amount of New Bonds set forth opposite their names
below:
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Principal Amount | |
Underwriters |
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of New Bonds | |
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Banc of America Securities LLC
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28,800,000 |
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UBS Securities LLC
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28,800,000 |
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Wachovia Capital Markets, LLC
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28,800,000 |
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BNY Capital Markets, Inc.
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10,000,000 |
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BB&T Capital Markets, a division of Scott &
Stringfellow, Inc.
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3,600,000 |
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Total
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100,000,000 |
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The underwriting agreement provides that the obligations of the
several underwriters to pay for and accept delivery of the New
Bonds is subject to, among other things, the approval of certain
legal matters by their counsel and certain other conditions. The
underwriters are obligated to take and pay for all of the New
Bonds if any are taken.
The underwriters initially propose to offer part of the New
Bonds directly to the public at the public offering price set
forth on the cover page of this prospectus supplement and part
to certain dealers at a price that represents a concession not
in excess of 0.500% of the principal amount of the New Bonds.
Any underwriter may allow, and any such dealers may reallow, a
concession to certain other dealers not to exceed 0.300% of the
principal amount of the New Bonds. After the initial offering of
the New Bonds, the offering price and other selling terms may be
changed by the underwriters.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of
1933, as amended, and to contribute to payments the underwriters
may be required to make in respect of any of these liabilities.
We estimate that our total expenses relating to the offering,
not including the underwriting discount, will be approximately
$150,000.
We do not intend to apply for listing of the New Bonds on a
national securities exchange or for their inclusion in any
automated quotation system, but have been advised by the
underwriters that they intend to make a market in the New Bonds.
The underwriters are not obligated, however, to do so and may
discontinue their market making at any time without notice. No
assurance can be given as to the liquidity or development of the
trading market for the New Bonds.
In order to facilitate the offering of the New Bonds, the
underwriters may engage in transactions that stabilize, maintain
or otherwise affect the price of the New Bonds. Specifically,
the underwriters may overallot in connection with the offering,
creating a short position in the New Bonds for their own
account. In addition, to cover overallotments or to stabilize
the price of the New Bonds, the underwriters may bid for, and
purchase, the New Bonds in the open market. Finally, the
underwriters may reclaim selling concessions allowed to an
underwriter or a dealer for distributing the New Bonds in the
offering, if they repurchase previously distributed New Bonds in
transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price for the New Bonds
above independent market levels. The underwriters are not
required to engage in these activities and may end any of these
activities at any time without notice.
BNY Capital Markets, Inc. is an affiliate of The Bank of New
York, our Trustee.
Each of the underwriters and certain of their respective
affiliates have, from time to time, performed various investment
or commercial banking and financial advisory services for us and
our affiliates in the ordinary course of business for which they
have received customary fees. Affiliates of the underwriters,
S-5
including the Trustee, are lenders or trustees under various of
our and our affiliates credit facilities and indentures.
Wachovia Securities is the trade name for the corporate and
investment banking services of Wachovia Corporation and its
subsidiaries, including Wachovia Capital Markets, LLC, member
NYSE, NASD, SIPC.
We expect that delivery of the New Bonds will be made against
payment therefor on or about March 8, 2005, which will be
the fifth business day following the date hereof (this
settlement date being referred to as T+5). Under
Rule 15c6-1 of the SEC under the Exchange Act, trades in
the secondary market generally are required to settle in three
business days, unless the parties to that trade expressly agree
to otherwise. Accordingly, purchasers who wish to trade New
Bonds on the date hereof or the next succeeding business day
will be required, by virtue of the fact that the New Bonds
initially will settle in T+5, to specify an alternate settlement
cycle at the time of any such trade to prevent a failed
settlement and should consult their own advisors.
LEGAL MATTERS
Certain legal matters in connection with the offering of the New
Bonds will be passed on for SCE&G by McNair Law Firm, P.A.,
of Columbia, South Carolina, and Francis P. Mood, Jr., Esq., of
Columbia, South Carolina, and for the underwriters by Troutman
Sanders LLP, of Richmond, Virginia, which also performs certain
legal services for us and our affiliates on other matters.
Troutman Sanders LLP will rely as to all matters of South
Carolina law upon the opinion of Francis P. Mood, Jr., Esq., our
Senior Vice President and General Counsel.
The statements made under Description of the New
Bonds in the accompanying prospectus, as to matters of law
and legal conclusions, have been reviewed by Francis P. Mood,
Jr., Esq., and such statements are made upon the authority of
such counsel as an expert. At January 31, 2005, Francis P.
Mood, Jr., Esq., owned beneficially 900 shares of SCANA
Corporations Common Stock.
EXPERTS
The financial statements, financial statement schedule, and
managements report on the effectiveness of internal
control over financial reporting, all incorporated by reference,
have been audited by Deloitte & Touche LLP, an independent
registered public accounting firm, as stated in their reports
which are also incorporated by reference, and have been so
incorporated in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
S-6
PROSPECTUS
$700,000,000
South Carolina Electric & Gas Company
1426 Main Street
Columbia, South Carolina 29201
(803) 217-9000
FIRST MORTGAGE BONDS
Investing in our First Mortgage Bonds, which we refer to
herein as the New Bonds, involves risks. See Risk
Factors on page 2 for information on certain factors you
should consider before buying the New Bonds.
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 October 17, 2003.
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 $700,000,000. 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 and the
information incorporated by reference in this prospectus. All
references in this prospectus to SCE&G,
we, us and our are to South
Carolina Electric & Gas Company and its subsidiary unless
otherwise indicated.
RISK FACTORS
Investing in the New Bonds involves risks that could affect us
and our business as well as the energy industry generally. We
have identified a number of these risk factors in our most
recent Annual Report on Form 10-K for the year ended
December 31, 2002, under the heading Risk
Factors within Item 1, Business, which is
incorporated by reference into this prospectus. Much of the
financial and operational data and other business information
contained in our risk factors is updated in our periodic
reports, which are also incorporated by reference into this
prospectus. Before purchasing our securities, you should
carefully consider the risks discussed in our Annual Report on
Form 10-K, any new or updated risk factors that may be
contained in any of our periodic reports filed after the date of
this prospectus, and any risk factors contained in any
prospectus supplement. Each of the risks described could affect
the value of your investment in the New Bonds.
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 SECs 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 rooms. Because we have preferred stock which is
listed on The New York Stock Exchange, you may also read our
filings at the Stock Exchanges offices at 20 Broad Street,
New York, New York 10005.
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 some
of this information. We incorporate by reference our Annual
Report on Form 10-K for the year ended December 31,
2002, our Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2003 and June 30, 2003, our Current
Reports on Form 8-K filed January 15, 2003,
January 17, 2003, February 19, 2003, and May 16,
2003 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.
2
You may request a copy of our SEC filings at no cost by writing
or telephoning us at the following address or phone number, as
the case may be:
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H. John Winn, III |
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Director Investor Relations and Shareholder Services |
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South Carolina Electric & Gas Company |
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Columbia, South Carolina 29218 |
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(803) 217-9240 |
You may obtain more information by contacting SCANAs
Internet website at http://www.scana.com (which is not
intended to be an active hyperlink). The information on
SCANAs 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, because our business, financial
condition, results of operations and prospects may have changed
since that date.
SOUTH CAROLINA ELECTRIC & GAS COMPANY
General
We are a wholly-owned subsidiary of SCANA Corporation and a
regulated public utility engaged in the generation,
transmission, distribution and sale of electricity and the
purchase and sale, primarily at retail, of natural gas in South
Carolina. Our electric service area extends into 24 counties
covering more than 15,000 square miles of the central, southern
and southwestern portions of South Carolina. Our service area
for natural gas encompasses all or part of 34 of South
Carolinas 46 counties, and covers more than 22,000 square
miles. The total population of the counties representing our
combined service area in South Carolina is approximately 2.7
million.
We provide all of our electric generation capacity through our
own facilities and maintain a balanced supply and demand
position as it relates to electric generation. We have executed
a contract with a third party for the portion of the generating
capacity of a new Jasper County, South Carolina generating
station currently under construction that we do not expect to be
able to utilize immediately when that plant begins operations,
which is scheduled for 2004.
We also operate and have a two-thirds interest in the V.C.
Summer nuclear station in South Carolina. This station furnished
approximately 21% of our electric generation capacity in 2002.
In September 2002 we filed an application with the Nuclear
Regulatory Commission (NRC) to extend our license on
the plant for an additional 20 years, until 2042. SCE&G
expects the extension to be issued in mid-2004.
In 1999 the Federal Energy Regulatory Commission
(FERC) mandated that we reinforce our Lake Murray
dam in order to comply with new federal safety standards and
maintain the lake in case of an extreme earthquake. Construction
for the project and related activities, which began in the third
quarter of 2001, is expected to cost approximately $275 million
and be completed in 2005.
We are subject to the jurisdiction of the Public Service
Commission of South Carolina (PSC). We maintain a
generally constructive relationship with the PSC. We are
allowed, subject to PSC approval during annual fuel and
purchased gas cost hearings, full pass-through to retail
customers of our electric fuel and natural gas costs. Such
approval has historically been granted. There is also a weather
normalization clause in effect for natural gas, which mitigates
our commodity price risk and allows us to focus our efforts on
serving our customers. The PSC approved an electric rate
increase that went into effect in February 2003. The rate
increase relates primarily to our expenditures for a recently
completed generating station in Aiken County, South Carolina and
for the Jasper County plant.
3
Business Strategy
Our business plan is based on traditional utility operations. We
have a straight-forward strategic plan that is focused on retail
service to customers in South Carolina. We believe we can
implement this strategy by:
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Maintaining excellent customer service. We have received several
prominent customer satisfaction awards, including a number one
ranking for overall customer satisfaction in a national survey
of large electric customers released by TQS Research in August
2003 and a shared second place ranking for overall residential
customer satisfaction among electric utilities in the 12-state
southern region in a study released by J. D. Power and
Associates in July 2003. |
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Continuing our ability to provide cost-effective electric
generation with the completion of our Jasper plant and obtaining
a license extension for the V. C. Summer nuclear station. |
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Maintaining a strong credit rating and capital structure. |
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Developing our personnel by continued training. We conduct
ongoing code of conduct and compliance training for all of our
employees annually. |
RATIO OF EARNINGS TO FIXED CHARGES
Our historical ratios of earnings to fixed charges are as
follows:
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Year Ended December 31, | |
Twelve Months Ended | |
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June 30, 2003 | |
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2002 | |
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2001 | |
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2000 | |
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1999 | |
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1998 | |
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3.33 |
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3.47 |
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3.78 |
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4.24 |
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3.71 |
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4.40 |
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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
We will use the proceeds from the sale of the New Bonds to
finance our construction program, to reduce short-term
indebtedness incurred for such purpose, and for other general
corporate purposes.
DESCRIPTION OF THE NEW BONDS
General
We will issue the New Bonds in one or more series under an
Indenture, dated as of April 1, 1993, between us 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. We have summarized selected
provisions of the Mortgage below. The Mortgage is filed as an
exhibit to the registration statement, and you should read the
Mortgage for provisions that may be important to you. In the
summary below, we have included references to section numbers of
the Mortgage so that you can easily locate these provisions.
Provisions of a Particular Series
The New Bonds of a series need not be issued at the same time,
bear interest at the same rate or mature on the same date.
Unless otherwise provided in the terms of a series, a series may
be reopened, without notice to or consent of any holder of
outstanding Bonds, for issuances of additional New Bonds of that
series. Each prospectus supplement which accompanies this
prospectus will set forth the following information to describe
the
4
series of New Bonds related to that prospectus supplement,
unless the information is the same as the information included
in this section:
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the title of the series of New Bonds; |
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the aggregate principal amount and any limit upon the aggregate
principal amount of the series of New Bonds; |
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the portion of the principal payable upon acceleration of
maturity, if other than the entire principal amount; |
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the date or dates on which the principal of the series of New
Bonds will be payable, and any right that we have to change the
date on which principal is payable; |
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the rate or rates at which the series of New Bonds will bear
interest, if any (or the method of calculating the rate); |
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the date or dates from which the interest will accrue; |
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the dates on which the interest will be payable (Interest
Payment Dates); |
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the record dates for the interest payable on the Interest
Payment Dates; |
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any payments due if the maturity of the New Bonds is accelerated; |
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any option on our part to redeem the series of New Bonds and
redemption terms and conditions; |
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any obligation on our part 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; |
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the denominations of the series of New Bonds; |
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whether the series of New Bonds is subject to a book-entry
system of transfers and payments; and |
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any other particular terms of the series of New Bonds and of its
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 applicable prospectus supplement
for any series of New Bonds will specify 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 us) 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 us) 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)
5
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 (unless
waived) 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 the
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 409, 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:
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a like principal amount of non-interest bearing first and
refunding mortgage bonds (the Class A Bonds, as
more particularly described below), and |
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the lien of the Mortgage on substantially all of our properties
used in the generation, purchase, transmission, distribution and
sale of electricity and any other property which we may elect to
subject to the lien of the Mortgage on the Mortgaged Property. |
The lien of the Mortgage is junior to the lien of our Indenture,
dated as of January 1, 1945 (the Class A
Mortgage) to JPMorgan Chase Bank, successor to Central
Hanover Bank and Trust Company, as trustee (the
Class A Trustee).
If we merge or are consolidated with another corporation and
certain conditions set forth in the Mortgage are satisfied, then
we 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 our 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. We 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
6
authenticated and delivered upon the basis of Class A Bonds
are no longer outstanding, we 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 Description of
the New Bonds The Class A
MortgageSecurity in this prospectus, 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:
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tax liens, mechanics, materialmens and similar liens
and certain employees liens, in each case, which are not
delinquent and which are being contested, |
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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 us, |
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certain leases, and |
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certain other liens and encumbrances. (Granting Clauses and
Section 101) |
The following, among other things, are excepted from the lien of
the Mortgage:
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cash and securities not held under the Mortgage, |
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contracts, leases and other agreements, bills, notes and other
instruments, receivables, claims, certain intellectual property
rights and other general intangibles, |
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automotive and similar vehicles, movable equipment, and
railroad, marine and flight equipment, |
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all goods, stock in trade, wares and merchandise held for sale
in the ordinary course of business, |
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fuel (including nuclear fuel assemblies), materials, supplies
and other personal property consumable in the operation of our
business, |
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portable equipment, |
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furniture and furnishings, and computers, machinery and
equipment used exclusively for corporate administrative or
clerical purposes, |
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electric energy, gas and other products generated, produced or
purchased, |
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substances mined, extracted or otherwise separated from the land
and all rights thereto, leasehold interests, and |
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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 Trustees lien is prior
to the lien on behalf of the holders of the Bonds.
(Section 1607)
7
Issuance of Bonds
The maximum principal amount of Bonds which we may issue under
the Mortgage is unlimited. (Section 201) We 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:
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the aggregate principal amount of Class A Bonds issued and
delivered to the Trustee and designated by us as the basis for
such issuance, |
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70% of the amount of Unfunded Net Property Additions (generally
defined as Property Additions (net of retirements) 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), |
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the aggregate principal amount of retired Bonds, and |
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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 we 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. (Section 104)
Because 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 we may issue on that
basis will be limited by the amount of Class A Bonds which
may be issued from time to time. See 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, we can
issue Bonds only if our Adjusted Net Earnings for 12 consecutive
months within the preceding 18 months is at least twice the
Annual Interest Requirements on:
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all Bonds at the time outstanding, |
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the Bonds then applied for, and |
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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
We 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 Bonds. We 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
We 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, we 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 Bonds, 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
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series would be affected, the Outstanding Bonds of that series)
must consent to amend the Mortgage. (Section 1701) 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:
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We fail to make payments of principal or premium within three
business days, or interest within 60 days, after the due
date, |
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We fail to perform or breach any other covenant or warranty for
a period of 90 days after notice, |
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We file for bankruptcy or certain other events involving
insolvency, receivership or bankruptcy occur, or |
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We default 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 we (a) pay to the
Trustee all overdue interest, principal and any premium on any
Outstanding Bonds and (b) cure 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:
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that Holder previously gave written notice of a continuing Event
of Default to the Trustee, |
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the Holders of a majority in principal amount of Outstanding
Bonds have offered to the Trustee reasonable indemnity against
costs and liabilities and requested that the Trustee take action, |
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the Trustee declined to take action for 60 days, and |
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the Holders of a majority in principal amount of Outstanding
Bonds have given no inconsistent direction during such 60-day
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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 and Indemnification of Trustee
The Trust Indenture Act requires that we give the Trustee, at
least annually, a brief statement as to our compliance with the
conditions and covenants under the Mortgage. (Article Eight)
The Trustee will be under no obligation to exercise any of the
rights or powers vested in it by the Mortgage at the request or
direction of any Holder pursuant to the Mortgage, unless such
Holder shall have offered to the
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Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in
compliance with such request or direction. (Section 1603)
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 our fixed
property and franchises used or useful in our 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 us. 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 to the lien thereof. (Granting Clauses)
The Class A Mortgage prohibits us from acquiring property
subject to prior liens if, following the acquisition, prior lien
bonds would exceed 15% of the aggregate of outstanding bonds
under the Class A Mortgage unless the principal amount of
indebtedness secured by such prior liens does not exceed 70% of
the cost of such property to us 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 secured by the Class A
Mortgage. (Section 16.10)
Issuance
of Additional Bonds
The principal amount of bonds which may be secured by the
Class A Mortgage is currently limited to $5,000,000,000 and
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 secured by the Class A
Mortgage may from time to time be issued on the basis of:
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70% of unfunded net property additions, |
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the deposit of cash, or |
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the retirement of bonds issued under the Class A Mortgage.
(Articles Four, Five and Six, Fifty-third Supplemental
Section 2.02) |
With certain exceptions in the case of bonds issued under the
Class A Mortgage on the basis of the retirement of bonds
issued under the Class A Mortgage, we can issue bonds under
the Class A Mortgage 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 issued
under the Class A Mortgage to be outstanding and all prior
lien bonds. (Section 103 and Articles Four, Five and Six,
Fifty-third Supplemental Section 2.02)
10
We may withdraw, or apply to the purchase or redemption of bonds
issued under the Class A Mortgage, cash deposited with the
Class A Trustee as the basis for the issuance of bonds
under the Class A Mortgage in an amount equal to the
principal amount of bonds which we are then entitled to have
authenticated and delivered under the Class A Mortgage.
(Section 1.03 and Articles Four, Five and Six) Based upon
property additions certified to the Class A Trustee as of
October 31, 2002 (the last date of certification of
property additions under the Class A Mortgage), we have
unfunded net property additions of approximately $454 million,
sufficient to permit the issuance of approximately $318 million
of additional Class A Bonds on the basis thereof.
Retirement credits in the amount of $163.7 million were
available at June 30, 2003.
Sinking
Fund
The Class A Mortgage requires us 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 heretofore issued under
the Class A Mortgage (other than bonds authenticated under
the Class A Mortgage on the basis of retirements of other
bonds and certain retired bonds). We 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 issued
under the Class A Mortgage or may be withdrawn by us
against deposit of bonds issued under the Class A Mortgage.
(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:
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We fail to make payments of principal or interest on any bond
issued and outstanding under the Class A Mortgage when due, |
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We fail to make any sinking fund or purchase fund payment
required under the Class A Mortgage when due, |
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We file for bankruptcy or certain other events involving
insolvency, receivership or bankruptcy occur, and |
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We fail to perform certain covenants or agreements under the
Class A Mortgage. |
Certain of these events become defaults only after the lapse of
prescribed periods of time and/or notice from the Class A
Trustee. (Section 11.01) The Trust Indenture Act, with
which we have covenanted to abide, requires us 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 bonds outstanding under the
Class A Mortgage may declare the principal of all bonds
outstanding under the Class A Mortgage immediately due and
payable. However, if the default is cured, the holders of a
majority in principal amount of bonds outstanding under the
Class A Mortgage may rescind that declaration and waive the
default and its consequences. (Section 11.05)
The holders of a majority in principal amount of bonds
outstanding under the Class A Mortgage 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 outstanding under the Class A
Mortgage has the right to institute any proceeding with respect
to the Class A Mortgage unless:
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the holder previously gave written notice of a default to the
Class A Trustee, |
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the holders of not less than 20% in principal amount of bonds
outstanding under the Class A Mortgage have offered to the
Class A Trustee reasonable indemnity against costs and
liabilities and requested the Class A Trustee to take
action, |
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the Class A Trustee declined to take action for
60 days, and |
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the holders of a majority in principal amount of bonds
outstanding under the Class A Mortgage have given no
inconsistent direction; |
provided, however, that each holder of a bond outstanding under
the Class A Mortgage 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
662/3%
in principal amount of bonds outstanding under the Class A
Mortgage; provided, the bondholders shall have no power:
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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, |
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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 under the Class A
Mortgage, |
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to permit the creation by us 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 |
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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) |
The Class A Trustee will be under no obligation to exercise
any of the trusts or powers of the Class A Mortgage at the
request, order or direction of any of the holders of the bonds
outstanding under the Class A Mortgage, pursuant to the
provisions of the Class A Mortgage, unless each such holder
shall have offered to the Class A Trustee reasonable
security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby.
(Section 16.06)
Amendment of the Class A Mortgage by Vote of Trustee
The Mortgage provides that, if we request the holders of the
Class A Bonds to eliminate the sinking fund provisions of
the Mortgage, the Trustee, as such a holder, will vote to amend
the Class A Mortgage to eliminate the sinking fund
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, we 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.
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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 DTCs
book-entry system has been obtained from sources that we believe
to be reliable, but neither we nor any underwriter, dealer or
agent take 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., DTCs
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 series of the New
Bonds, each in the aggregate principal amount of such series,
and will be deposited with DTC. If, however, the aggregate
principal amount of any series exceeds $500 million, one
certificate will be issued with respect to each $500 million of
principal amount and an additional certificate will be issued
with respect to any remaining principal amount of such series.
DTC, the worlds largest depository, is a limited-purpose
trust company organized under the New York Banking Law, a
banking organization within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a
clearing corporation within the meaning of the New
York Uniform Commercial Code, and a clearing agency
registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC holds and provides asset servicing for over
two million issues of U.S. and non-U.S. equity issues, corporate
and municipal debt issues, and money market instruments from
over 85 countries that DTCs 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, 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). DTC
has Standard & Poors highest rating: AAA. 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 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 DTCs 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
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transaction. Transfers of ownership interests in the New Bonds
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 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
DTCs 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; DTCs 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
New Bond 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. 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, DTCs
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, unless authorized
by a Direct Participant in accordance with DTCs
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 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. DTCs practice is to
credit Direct Participants accounts, upon DTCs
receipt of funds and corresponding detail information from us or
the Trustee, on the relevant payment date in accordance with
their respective holdings shown on DTCs 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
Participants interest in the Global Bonds representing
such New Bonds, on DTCs 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 Bonds representing such New Bonds
are transferred by Direct Participants on DTCs records and
followed by a credit of tendered New Bonds to the Trustees
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
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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
We may offer the New Bonds in any of three ways:
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through underwriters or dealers, |
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directly to a limited number of purchasers or to a single
purchaser, or |
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through agents. |
Each prospectus supplement will set forth:
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the terms of the offering of the New Bonds, |
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the proceeds to us, |
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any underwriting discounts and other items constituting
underwriters compensation, and |
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any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers. |
From time to time, we may change any initial public offering
price and any discounts or concessions allowed or reallowed or
paid to dealers.
By Underwriters
If underwriters are used in the sale, 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 amount of New Bonds underwritten by such underwriter 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. Any initial public offering price and any
discounts or concessions allowed or re-allowed or paid to
underwriters or dealers may be changed from time to time.
We will agree to indemnify the underwriters against some
liabilities, including liabilities under the Securities Act of
1933, or to contribute to payments the underwriters may be
required to make because of any of those liabilities.
Specifically, the underwriting agreement will provide that we
will indemnify the underwriters for losses, claims, liabilities,
expenses or damages arising out of or based on untrue statements
of a material fact contained in this prospectus or the
registration statement of which the prospectus is a part (or any
amendment hereto or thereto) or in any document filed under the
Exchange Act and deemed to be incorporated by reference herein,
or omissions to state material facts required to be stated
herein or therein in order to make the statements contained
herein or therein not misleading, with certain exceptions.
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Direct Sales
We may also sell the New Bonds directly. In this case, no
underwriters or agents would be involved.
By Agents
We may sell the New Bonds directly or through agents designated
by us from time to time. In the applicable prospectus
supplement, we will state the name of any agent involved in the
offer or sale of the New Bonds as well as any commissions
payable by us 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 in this prospectus by reference
from our Annual Report on Form 10-K for the year ended
December 31, 2002 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report
which is incorporated herein by reference (which report
expresses an unqualified opinion and includes an explanatory
paragraph referring to a change in our method of accounting for
operating revenues effective January 1, 2000), and has been
so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
LEGAL OPINIONS
McNair Law Firm, P.A., of Columbia, South Carolina, and H.
Thomas Arthur, Esq., our Senior Vice President and General
Counsel, will pass upon the validity of the New Bonds for us.
Troutman Sanders LLP, of Richmond, Virginia, will serve as
counsel to any underwriters. Troutman Sanders LLP will rely as
to all matters of South Carolina law upon the opinion of H.
Thomas Arthur, Esq.
The statements made under Description of the New
Bonds above, as to matters of law and legal conclusions,
have been reviewed by H. Thomas Arthur, Esq., our Senior Vice
President and General Counsel, and such statements are made upon
the authority of such counsel as an expert. At July 31,
2003, H. Thomas Arthur, Esq., owned beneficially 16,434 (and
options to purchase 70,930), shares of SCANAs Common
Stock, including shares acquired by the trustee under its Stock
Purchase-Savings Program by use of contributions made by
Mr. Arthur and earnings thereon and including shares
purchased by the trustee by use of SCANA contributions and
earnings thereon.
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$100,000,000
South Carolina Electric & Gas Company
First Mortgage Bonds, 5.25% Series due March 1, 2035
PROSPECTUS SUPPLEMENT
March 1, 2005
Joint Book-Running Managers
Banc of America Securities LLC
UBS Investment Bank
Wachovia Securities
Co-Managers
BNY Capital Markets, Inc.
BB&T Capital Markets